Care Property Invest Market volatility creates Catch-22
Due to CPI's expansive investment strategy, their debt ratio increased from 48.5% in 2019 to 51.9% by H122. To support ongoing investments while staying out of the danger zone of a 55% debt ratio, we expect them to lower capex growth and come to equity markets below current NTA which will have a dilutive effect. The window of ABB opportunities close to the NTA has closed during recent market sell off. A combination of high leverage, dilution and an increasing average cost of debt to 3% adjusts our EPS expectations to 1.17 vs 1.29 by FY24. Over 2022 we expect inflation linked rents to be higher than yield expansion so we still see fair values of investment properties going up. Real estate experts appraise properties based on recent deals. No new deals equals no cap rate adjustments. Therefore we start simulating a lagged yield expansion of 50 bps as of 1Q23. We believe the market has priced this in too aggressively and maintain our BUY rating at a lower TP of EUR 22.2.Care Property Invest NV. Care Property Invest NV, formerly Serviceflats Invest NV, is a Belgium-based real estate investment company that builds and finances housing for pensioners. The Company specializes in premises equipped with technologies ensuring safety and comfort of elderly people. In addition, Care Property Invest designs, builds, supervises the progress of a number of construction works, monitors the budget and finances projects in the long term. Care Property Invest NV cooperates mainly for public health care center in Antwerp -Openbaar Centrum voor Maatschappelijk Welziijn (OCMW), including Berchem. The Company focuses its activities on the Belgian market. It operates through a number of subsidiaries, such as Ter Bleuk NV, Siger SA and Konli BVBA and VSP Wolvertem bvba.
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