Cofinimmo Model update: A year of portfolio rebalancing

COFB guides a zero net capex leading to flat results in FY23: EUR 6.95 EPS and EUR 6.20 DPS. It expects EUR 300m investments in mainly HC RE and EUR 300m divestments mainly in the office segment. As a point of reference, COFB divested approx. EUR 140m over FY22. However, YTD FY23 we have not seen office transactions in the Brussels decentralized area/periphery. We expect to see an uptake in divestments in 2H23. We therefore set our divestment capex estimates to EUR 245m and investment capex estimates to EUR 236m in FY23, below the guidance. If successful, the net zero capex strategy will control the debt to assets ratio. At the current share price and by assuming a successful divestment plan, we believe a large ABB/rights issue is not likely to happen but we do include a stock dividend with 33% uptake in our estimates. This has pushed our per share estimates below their guidance. The stock dividend and investment slowdown lowers gross debt. Also, COFB is currently 100% hedged which decreases to 90% in FY24. As a result, the average CoD increases 26bps in FY23 to 1.46%, 1.74% in FY24 and 1.84 in FY25.