Aedifica New guidance on the investment targets
We increase our EPRA earnings estimates by approximately 4.5% after the FY24 results. In line we increase our target price from EUR 68.0 to EUR 70.0. The increase is driven by the higher than expected topline growth (2.7% like-for-like guided in FY25), the additional investment target of EUR 250.0m and improved operational margin. We expect the operational margin to increase by 35bps to 86.1%. This compares to the 10 year average at 83.4%. The performance is mainly driven by the UK market. Still the EPRA EPS growth in our model is muted at a 1.5% 3-year CAGR. After 2 years of underperformance, Aedifica started to outperform the EPRA developed benchmark. If this continues, we think more growth becomes self-fulfilling due to a lower cost of equity. We repeat our Accumulate rating.Aedifica is a property company, which is specialized in residential real estate. Co.'s portfolio has a superstructure of more than 225,911 sq. m as of June 30 2010. It owns: residential or mixed buildings in Belgian cities with classical leases; buildings with furnished apartments buildings in the heart of Brussels with shorter term leases; senior houses and serviceflats with very long term and triple net leases; and hotels. Co. invests: in existing and already leased buildings; and in projects with future completion. Co.'s activities can be divided into four segments: Residential or mixed buildings; Furnished apartments buildings; Senior houses; and Hotels and others.
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