Eastnine: Earnings capacity up post acquisition - ABG

Earnings capacity IFPM +3.5% vs ABGSCe
Eastnine delivered a Q2 report with rental income of EUR 9.3m (-0.5% vs ABGSCe), NOI of EUR 8.7m (-1.7% vs ABGSCe) at a NOI margin of 93.0% (-1.1 pp vs ABGSCe). Central admin came in better than expected, while net financials were slightly above ABGSCe leading to rec. PTP of EUR 5m being -0.8% vs ABGSCe. Occupancy came up 0.5pp sequentially to 93.6% and the WAULT was extended 0.4 years to 4.2 years. Earnings capacity IFPM increased to EUR 23m, which is 7.1% q-o-q and +3.5% vs. ABGSCe 2024e.

Negative on value changes driven by yield expansion
Property values declined somewhat in the quarter by EUR -5.0m (-0.9% of property value), where we had anticipated an increase of EUR 2.0m (0.34% of property value). The miss was explained by the valuation yield expanding 20 bps to 6.7% (up 120 bps since peak yields of 5.5% in Q1'22). Post the acquisition in Poznan, net LTV (ABGSC definition) increased 11.4pp q-o-q to 38.3%, and the average interest rate was flat q-o-q at 4.7%. EPRA NRV per share came in at EUR 4.8 (in-line vs ABGSCe). Net LTV is still at bottom of sector, leaving room for further acquisitions in 2024.

Conclusion
Towards the end of Q2, Eastnine delivered on its promise to deploy capital towards high yielding acquisitions in Poland. The company acquired an EUR 79.3m property in Poznan from Skanska. While not explicitly stated at time of announcement, we estimate a net initial yield of ~6.75% (including rental discounts). We believe further acquisitions (e.g. in Warsaw) are to be expected, further driving CEPS

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/eastnine/Equity-research/