Ascencio 1H25 results: EPRA earnings above estimates but tougher retail market

Ascencio reports 1H25 EPRA earnings above our expectations due to lower than expected financial charges. There is negative rent reversion on renewals which has been a common factor for Ascencio as the ERV -contractual rent gap was 10.6% in 2023. The gap is closing with a negative impact on contractual rents. This has been an argument for our hold recommendation in the past 3 years. The occupancy dropped by 1.1% on signs of a weaker retail market and this even excluding the Casa bankruptcy (3 units) which accounts for 0.7%. Ascencio will also indirectly be hit by the Cora bankruptcy as this tenant attracts footfall to its retail parks. Ascencio does not have direct Cora exposure but 10% of its contractual rents are on retail parks with Cora exposure. The fair value of the portfolio is flat which is in large contrast with other quoted retail RE peers. We don't believe there is a risk for the dividend given the low payout ratio and EPRA earnings above our estimates. The high dividend yield is the key reason to invest in the stock for many of its shareholders. Still, the negative headlines can weigh on the story. Hold recommendation repeated.
1H25 results (4Q24-1Q25)