German residential developer The Grounds Real Estate Development AG is reshaping its business model after posting a significantly reduced first-half loss for 2025. The company cut its consolidated net loss to €3.7 million — down from €8.1 million a year earlier — even as revenue, liquidity, and equity declined. The strategic pivot now underway is aimed at expanding its asset management business, a move designed to stabilise earnings and reduce dependence on the volatile development cycle.
Financial performance: smaller losses, weaker balance sheet
In the first half of 2025, The Grounds generated €2.9 million in revenue, a modest figure reflecting a sluggish property transaction environment. Operating profit (EBIT) improved to –€1.1 million, compared to –€4.3 million in the same period of 2024, while the net loss narrowed by more than half.
However, the company’s balance sheet showed signs of strain. Cash reserves fell sharply from €27.6 million at the end of 2024 to €5.6 million by June 2025, largely due to investments and repayment of financial liabilities. Equity also declined to €44.1 million, down from around €50.7 million, reducing the equity ratio to 26 %. Management nonetheless reaffirmed its full-year outlook, expecting revenue of €9–11 million and a break-even EBIT by year-end.
Strategic shift: asset management takes centre stage
The most significant development is The Grounds’ increasing focus on asset and portfolio management, which the company views as a key growth engine. This transition was highlighted by a new mandate to manage real estate assets for the Ziegert Group, covering roughly 1,100 residential and commercial units with a total value of around €660 million. The mandate is expected to generate over €3 million in net revenue and more than €1 million in positive EBIT in 2025.
“We foresee net sales revenues exceeding €3 million, together with a positive contribution of more than €1 million to the EBIT,” said CFO Andrew Wallis.
The company’s strategic reorientation has been strengthened by a new ownership structure. In December 2024, H.I.G. Realty, part of global investment firm H.I.G. Capital, became a majority shareholder through a capital increase — providing both funding and institutional support for the asset management expansion.
Key challenges ahead
Despite the improved earnings trend, The Grounds faces several headwinds. Liquidity remains tight, reflected in a negative operating cash flow of €32.3 million in the first half of the year. The company is also dealing with a dispute over a logistics property in Hangelsberg, which could affect its 2025 results. Moreover, lower equity and reduced cash reserves limit financial flexibility, making the success of its asset management expansion crucial to long-term stability.
What this means for investors
For investors, The Grounds’ first-half results show a company in transition. While traditional development revenue remains under pressure, the rapid growth of its fee-based asset management segment could provide more predictable income streams and reduce exposure to property market volatility. If the firm can execute on its new strategy, resolve legacy issues, and meet its revenue targets, 2025 could mark a turning point toward a more resilient business model.
Looking ahead
The next six months will be critical. The company’s ability to deliver €9–11 million in revenue, achieve a balanced EBIT, and grow its asset management portfolio will shape investor confidence. If successful, The Grounds could emerge from 2025 with a stronger, more diversified income base — and a clearer strategic identity in Europe’s evolving real estate landscape.
