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REITs Annually 2021

SECTOR NEWS (2021): INDUSTRIAL SPACE REBOUNDED, WHILE OFFICE AND RETAIL SPACE CONTINUED TO SUFFER THE ADVERSE EFFECTS OF THE PANDEMIC

 Office space market yield decreased by 0.25 p.p. to 7.5%, while prime rents remained flat at EUR 15/sq.m. 2021 take-up advanced to 154.9k sq.m, while vacancy rate jumped by 3.2 p.p. to 16.8%.

 Retail space market yields remained flat at 7.5%, while prime rents declined in shopping centres to EUR 34/sq.m. Vacancy rate decreased by 2.9 p.p. to 5% in 2021.

 Industrial RE market benefited from the growth in e-commerce. Although vacancy increased from 4% to 4.1%, rent levels in large-sized units advanced to 4.3 EUR/sq.m (+7.5% YoY). Yields fell by 0.75 p.p. to 7.5%.

 Agricultural land market in Bulgaria registered almost flat performance with a slight downward bias in terms of rents and land prices, due to dry 2020 season; we expect the growth to resume in both, justified by higher grain prices and EU subsidies.

 Advance Terrafund [ATER] sold directly x8.6 more land YoY, with significant increase of premium over book value on higher grain prices and inflation fears. We expects DPS of BGN 0.72, based on 90% of cash on hand.

 Bulgarian Real Estate Fund [BREF] received use permit for part of Synergy Tower and welcomed its first tenant. The occupancy of Business Park One office building declined, which weighed on rental income. Expected annual DPS of BGN 0.0578.

 Elana Agrocredit [EAC] registered 36.7% YoY drop in financed leases to BGN 6.6m. Conservative expectation of dividend payout during 2022 of BGN 0.0669 per share.

 Bravo Property Fund [BPF] lost a tennat in Q2’21, bringing occupancy to 76%, but managed to secure a new lease in Q4‘21, which brought occupancy to 84.3%.

 Sopharma Properties [SFI] didn’t conduct its usual yearly capital raise, due to favourable change in legislation, allowing REITs to adjust their distributable profit for principal payments. Expected annual DPS for 2021 of BGN 0.164.