Cofinimmo Finally the long awaited dividend cut to 5.20
Cofinimmo reports FY24 results above our estimates at EUR 6.50 EPRA EPS vs 6.43 KBCSe. The difference is driven by lower corporate taxes (EUR 3m). Over FY25, Cofinimmo guides EUR 6.20 EPRA EPS and EUR 5.20 DPS slightly above our estimates but below CSS (EUR 6.28, EUR 5.37). We brought our estimates down after the successful completion of the EUR 235.0m divestment plan which made the previous dividend no longer viable. Cofinimmo has a limited committed cost-to-come of approx. EUR 120.0m to deliver EUR 330.0m assets in FY25/26. It will add EUR 80.0m cost-to-come (EUR 26m due diligence, EUR 54m other) in FY25. It's the first time the company gives guidance on its CoD at 2.2% till FY28 (first bond repayment), up from 1.4% today. As Cofinimmo is still in an early point of the interest rate cycle this is the dominant factor for future EPS growth. The dividend cut was well flagged to the market by analysts and put technical pressure on the stock in the past few months. We believe this to reverse now as the valuation is undemanding at an approximately 9.7% dividend yield, well covered this time. Therefore we repeat our BUY rating and EUR 72.0 TP.Cofinimmo is a fixed capital real estate investment trust. Co. specializes in rental property. Its core investment segments are office property and nursing and care institutions. The portfolio also includes a Distribution property networks segment. Most of Co.'s assets are in Belgium. The foreign part consists of nursing homes/ clinics and the MAAF agencies network in France and the Pubstone portfolio in the Netherlands. Co.'s operations are organized into four segments: Offices, Nursing homes/Clinics, Distribution property networks, and Public-Private Partnerships.
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