In Q1 26, Altarea did not experience any material impact from geopolitical tensions. The quarter was generally positive, with an increase in bookings in the Residential Development segment.
Retail Property
In the French retail property sector, performance is stabilising with a reduced impact from indexation. The occupancy ratio remains high at 97.1%, and Altarea’s assets continue to attract interest. Footfall has increased by 5%, and tenant revenues have risen by 1.3%. These figures, on a current basis, align with an organic growth rate of 1.2% at the consolidated level. Altarea’s assets have outperformed inflation in France, and the disparity between tenant revenue growth and rent growth highlights the group’s pricing power. While there is no significant underlying momentum, shopping centres are performing well and continue to attract consumers.
Residential Development
The revenue decline in this segment is due to the phasing out of the “old” offering, which now accounts for only 30% of revenue in Q1 26. Currently, 70% of revenue is derived from apartments sold under optimised margin conditions. Altarea is demonstrating its capability to replace the majority of its revenue with higher-profitability products. This shift should be evident in the published margins for H1 26, despite an anticipated overall revenue decline for the year.
The transition aligns with Altarea’s strategy to prioritise profitability over volume. In this sector, including companies like Icade and Nexity, Q1 is typically not indicative of the annual performance. Q4 remains crucial, especially concerning institutional orders.
In 2026, Altarea and its peers may encounter a challenging period, as the year-end could coincide with rising material costs and stable interest rates. These factors may reduce demand (volume effect) and slow operating margin growth. This scenario, previously discussed regarding Nexity, is mitigated for Altarea by its stronger balance sheet.
Currently, Altarea reports no significant impact from geopolitical events, including in April. However, Q1 2026 was notably influenced by a mix effect, with a higher proportion of smaller apartments, such as student residences, being marketed at lower transaction prices. This shift towards higher-margin products will require a significant mix adjustment by the fiscal year’s end. In summary, reliance on institutional investor demand will make the end of 2026 particularly critical, more so than in previous years.
Our assessment indicates that despite the market downturn in Q4 2025, Altarea is performing well and demonstrating agility. However, questions remain about the pace and sustainability of the EBIT rebound, whether measured in euros per million or as a margin. While we share Altarea’s ambition to improve FFO by 2026, we question the speed of this improvement for 2027-2028, considering various inertia factors.
As the market approaches the cycle’s bottom, mix effects and operational indicator volatility become more significant, complicating analysis. For instance, fluctuations in apartment reservations or their types, such as student residences, can significantly impact results. Thus, the 15% increase in reservations, in units, is not particularly meaningful, reducing the ability to understand the cycle. Our analysis suggests these factors are typical of a market lacking a consistent positive trajectory. Nonetheless, Altarea is clearly outperforming a market that continues to adjust and remains vulnerable.
This Q1 26 remains decent, but the overall risk level remains high enough to maintain a cautious rating. In 2026, Altarea will offer shareholders the opportunity to receive the dividend partly in shares, as in previous years.
The reference shareholders, representing 69% of the share capital, have announced their choice of the “in kind” option, meaning 25% in cash and 75% in shares. This is expected to further dilute the NAV per share, which will exacerbate the growing disconnect between the stock price and the NAV published by Altarea itself.
