• Rec. PTP -6% vs ABGSCe
• Sector-low LTV leaves room to grow
• Limited revisions, all eyes on CMD in 3w

Small miss on both NOI and net interest

Eastnine delivered a Q1 report with rental income of EUR 9m (-1.2% vs ABGSCe), NOI of EUR 8m (-1.6% vs ABGSCe) at a NOI margin of 92.2% (-0.3% vs ABGSCe). Net financials were higher than expected as maturing loans were refinanced at a higher interest rate than previously, leading to rec. PTP of EUR 5m being -6.1% vs ABGSCe. Occupancy came down -40 bps sequentially to 92.7% and the WAULT was extended 0.3 years to 4.1 years. Like-for-like rental growth decreased 0.0% (9.0% in 4Q'23). Earnings capacity IFPM decreased to EUR 21m, which is -3.0% q-o-q and -2.0% vs. ABGSC 2024e.

Small positive on value changes

Property value revisions in the quarter amounted to EUR 1.5m (0.3% of property value), compared to our estimate of EUR 2.0m (0.3% of property value), even as the average property valuation yield increased 10 bps to 6.5% (up 100 bps since peak yields of 5.5% in 1Q'22). The net LTV (ABGSC definition) decreased -0.4pp q-o-q to 26.8%, and the average interest rate increased 70 bps sequentially to 4.7%. EPRA NRV per share came in at EUR 18.8 (-0.8% vs ABGSCe).

Conclusion

With net LTV still at bottom of sector at 26.8%, Eastnine is well positioned to deliver acquisitions. If we assume that Eastnine can do EUR 200m of acquisitions in e.g. Poland at a NIY of ~7%, using ~EUR 125m of cash and EUR 75m of new debt with an all-in cost of ~5.5%, we estimate that annualised CEPS estimates would increase by ~20%, with Eastnine still staying below a net LTV of 50%. The company is hosting a CMD 15-17 May in Poland, where we expect to learn more about the growth strategy, transaction market and target geographies going forward. Conf. call tomorrow at CET 10.00 Link: https://financialhearings.com/event/48634