BEFIMMO: Valuation underestimates challenging future
Befimmo, the Belgian pure play office investor and developer, is at a crossroads, trying to identify new opportunities and reinvent the company as various problems have skewed the playing field. With tail risks in the big chunks of the portfolio, we do not rule out a possible 10% rent loss in the Fedimmo portfolio, a need to redevelop assets to find extra yield, and continued pressure on EPS and the debt ratio. Management finally needs to make the right strategic decisions. With this rather gloomy outlook we downgrade the stock from € 49.5 to € 47 with a Reduce rating coming from Hold.Befimmo is engaged in real estate investments. Co.'s activities are dedicated solely to the ownership and management of a real-estate portfolio. As of Dec. 30, 2012, the portfolio consisted principally of office buildings located in Brussels and let to public authorities or private businesses, and office buildings in various town centres in Flanders and Wallonia, let long-term to public authorities, and a building located in the city of Luxembourg.
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