Aedifica Short-term defence is the best medium-term offence
We remove our Suspended rating after the successful closing of the EUR 380.4m rights issue at EUR 52.0 per share. Due to the dilution of the rights issue, a lower capex to control the debt-to-assets ratio in the lower 40% region and a higher fair value correction of the investment portfolio we change our target price to EUR 70.0 per share and keep our BUY recommendation.Short term control of the debt-to-assets ratio, medium term optionality
We don't expect Aedifica to immediately employ the cash it has raised. In the short term it will be used to fund the committed pipeline. The capex that remains to be invested amounts to EUR 450m over the next 3 years with the weight in FY23-24. We prefer to not see immediate deals as prime market yields have not corrected enough to make deals accretive at the current capital cost. If distressed sales come to the market in the medium term, Aedifica has the optionality to employ its cash buffer. However, the size of the rights issue only allows for medium asset/M&A sizes as the dividend payout ratio increases to 85% and 451.0m capex remains to be invested. For larger ticket sizes additional fire power is needed. This could be achieved with an additional ABB or a structured deal.
Dillution is the heavy price to pay
The EUR 52.0 issue price of the rights issue is an approx. 35% discount to the 1Q23 reported NTA per share of EUR 80.0. The dillution is significant and lowers our per share EPRA earnings estimates from EUR 5.01 to EUR 4.77 in FY23 and from EUR 5.14 to EUR 4.53 in FY24. We keep the dividend constant at EUR 3.80 per share by increasing the pay-out ratio to 85%. As a result of the higher pay-out ratio, lower investment pace to control the debt-to-assets ratio and fair value corrections on the investment portfolio, our model shows an EPRA NTA over FY23-24 that fluctuates around approx. EUR 72.5 per share.
Stock dividend
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.
We are a financial services provider for several types of professional clients, each with distinct needs.
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