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Premia Properties | Built for growth, priced for caution

Growth acceleration on higher capex and capital increase firepower – Premia delivered solid H1’25 results, with gross rental income up +€8.2m yoy to €17.9mn and adj. EBITDA more than doubling to €11.2mn, reflecting the full-year contribution of 2024 property additions. Following the €40mn share capital increase in July, we have revised our forecasts to reflect the enlarged investment plan. For 2025e we now expect revenues of €35.1mn, adj. EBITDA of €23.3mn (+3% vs prior) and net income of €20.2m (lower than before due to higher financial costs). We also project somewhat lower NAV /share than before (c-6% in 2025e) due to the dilution arising from the additional shares. Looking into 2026–27, stronger rental income from the expanded pipeline lifts EBITDA by c21-29% vs our prior forecasts, with FFO rising to €15.4m and €19.9m for 2026-27e from €10.5m in 2025e.

Investment plan of €180m; c4% CAGR in NAV/share through to 2028e – Following the share capital increase, PP’s expansion plan now targets €180mn in CapEx in 2025-27e (vs €50mn incorporated in our prior forecasts). Key transactions to date include the €64mn acquisition of the Sunwing Arguineguin hotel in Spain, a total investment of around €73mn for two hotels in Kos, as well as student housing redevelopment projects in Xanthi, Larissa, and Kaisariani. This investment plan will drive a 23% CAGR in gross rental income for 2024–2028e and rebase GAV to c€718mn by 2028e, namely c10% CAGR. We see NAV per share growing at c4% CAGR over the same period, as PP balances expansion with disciplined capital allocation, maintaining a 50% dividend payout ratio as % of FFO.

Leverage to stay higher than peers – Despite the €40m equity raise implemented in July, leverage remains at the upper end of sector norms, with net LTV at c53% proforma for the capital increase. We expect LTV to peak at 61% in 2025e before easing to 56% by 2028e. The newly raised funds have been swiftly deployed, accelerating portfolio growth and enhancing income visibility — a constructive development, yet one that also implies limited remaining balance sheet capacity. In our view, to sustain future expansion, Premia may need to pursue additional measures to improve balance sheet flexibility and align leverage more closely with peers.

Valuation – Premia’s shares are up c7% YTD, with the discount to NAV narrowing, from >40% earlier this year to less than 35% on 2025e NAV currently. Despite this re-rating, the stock still trades at deep value territory, reflecting persistent investor caution over leverage and balance sheet flexibility. We base our PT on a 25% discount to 2026e adj. NAV, a slightly wider discount than the 20% we use for other REICs, given the higher leverage. This results in a PT of €1.57/share, reduced from €1.62 previously, reflecting the combined effect of higher estimates, roll-over of our valuation to 2026 and the higher share count arising from the share capital increase. In our view, there is some scope for re-rating as cash flow visibility strengthens and leverage gradually normalizes.