Premia Properties | 2024 Delivers, 2025 Reloads
Upward revisions on 2024 delivery and ECB rates easing – Premia reported an 18% yoy increase in FY’24 revenue to €22.4m, driven by CPI-linked rental uplifts and incremental income from newly added assets. Annualized rental income now stands at c€30m, reflecting a gross yield >7% on income-producing assets. The company’s GAV reached c€498m, up 62% from c€307m in 2023, underscoring the successful execution of PP’s expansion strategy. Looking ahead, we have revised our estimates to reflect the combined effect of higher capex in 2025-26, lower cost of debt, and slightly higher revaluation gains, in light of the monetary policy easing. These result in significantly higher FFO of €11.8mn for 2025 (vs €8mn in our previous report and €4.1mn in 2024), supporting an increased dividend of €0.06/share (vs €0.03/share in 2024), based on a minimum 50% payout of FFO. We have also raised our NAV c9% vs our prior forecast, which is the main driver behind the upgrade to our PT.CapEx of €50m in 2025e; c8% CAGR in NAV through to 2027e – PP’s expansion plan targets €160m in CapEx over 2024–2026. With >€80m already executed (reflecting the cash component of the NLTG hotel deal), we model €50mn for 2025e and €30m for 2026e. Key 2024 investments included the €112.5mn acquisition of two hotels from NLTG, a 32% stake in Village Shopping & More (€14.1m), and the delivery of the AADE office building and Xanthi student apartments, whose full rental contribution is expected in 2025. Looking ahead, remaining investments focus on student housing, offices, hospitality, and commercial assets. These transactions support a 23% CAGR in gross rental income for 2024–2027, with GAV projected to grow at c7% CAGR to €607mn and NAV at c8% CAGR to €253m by the end of the 3-year period.
Equity raise to unlock next leg of growth, but leverage to stay higher than that of peers – With leverage at the upper end of sector norms (LTV at 58%), the current financing structure has reached its limits. As a result, and in order for PP to support further growth, the AGM approved a share capital increase of up to €40mn (up to 80m new shares), expected to be executed by end-June. Based on the company’s 60/40 debt-to-equity target, the raise implies investment capacity of up to €100mn, potentially generating €7mn in incremental rental income at a c7% gross yield. We currently do not embed the capital increase and associated capex in our numbers. Pro-forma for the capital injection, net LTV will settle near 52%, namely still higher than sector norms. We thus reckon that further actions (e.g. asset rotations) will be required to enhance balance sheet flexibility and bring leverage more in line with peers.
Valuation – PP’s shares have had a tepid performance ytd, in sync with other REICs. The stock remains at c44% NAV discount, much higher than the discount of Trade Estates/Briq (30-35%) and EU REICs (c25%), a level which leaves limited room for downside, in our view. We have recalibrated our valuation now basing our PT on a c25% discount to adj. NAV (vs 20% previously, considering the higher leverage vs peers), resulting in a PT of €1.62/share, reiterating our Buy rating.
Pasal Development S.A.. Pasal Real Estate Development SA is a Greece-based company engaged in the real estate development sector. Its main activities include land and property development; financing and construction of commercial properties such as shopping malls, retail parks, big boxes, parking parks, and shops as well as properties that can be used as logistic centers, office buildings and secondary residence; the lease and sale of properties, as well as the provision of consulting and management services in the real estate sector. The Company has completed a number of commercial projects in the areas of Athens, Thessaloniki, and abroad. Pasal Real Estate Development SA also operates in Cyprus as well as in Serbia, through its wholly owned subsidiaries, Pasal Cyprus Ltd and Pasal Development Doo Beograd, respectively.
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