Unexpected tenant departures reduce visibility - HOLD vs BUY - TP 19,2€ (vs 20,7€)
Affine’s Q1 2015 sales figures were disappointing. The rent-roll is down -8.1% and -5.2% LFL, due to two unexpected departures from important assets that will take some time to re-let. We are revising downwards our FFO estimates for years 2015 to 2017 by an average of 7.2%. Furthermore, the stock has strongly outperformed the sector since the beginning of the year, filling in the longer term valuation gap with the market. We downgrade to HOLD from BUY adjusting our TP to €19.2 vs €20.7, which traduces : a 16,5% discount to NAV, a dividend yield of 5,2%, a 2015 FFO multiple of 15.1x.Affine is a property company specializing in commercial property. Co. is engaged in real estate activities and leasing activities. Co.'s activities are divided into four poles: a Parisian pole (offices), and 3 regional poles (offices, retail, warehouses & industrials). Office premises in French regions represent 43% of the portfolio and contain major assets such as the Lille Europe tower; Retail focuses on commercial properties, which consist chiefly of city-centre retail areas; and Warehouses and Industrials represents the logistics properties of the Affine group, including several types of platform, most of these being bi-modal (rail/road).
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