Cofinimmo To cut or not to cut

In this note we update our model after the year-end divestment sprint of Cofinimmo. We think the share price did not recover enough after beating the divestment guidance. A dilutive equity raise is now avoided, which was the main fear of the market. Likely the timing of the announcement had influence. With only EUR 100.0m capex in FY25/26 and continued asset divestments, the debt-to-assets ratio will stay close to 43.0% in FY25/26. We expect flat portfolio valuations in FY25 for the healthcare portfolio and minimal corrections in the office segment as 75% is now in the CBD area (mainly Leopold). Due to the execution of the divestment program, our FY25 EPS estimate no longer covers the EUR 6.20 DPS. We already flagged the dividend cut in earlier notes but did not update the figure as there was uncertainty regarding the divestments. Now we estimate a full reset at a pay-out ratio of 83% or EUR 5.10 per share. This implies a well-covered dividend yield of 9.5% which makes it an absolute BUY. In line with our EPS cuts we lower our TP from EUR 75.0 to EUR 72.0.