CTP The high road to CEE, fasten seatbelts please

CTP hosted its CMD in Romania (2nd market) with a side trip to Serbia. CTP warehouses look very similar everywhere, but meeting the local teams offers a lot of additional info. The visit to the Bucharest-West park perfectly illustrated how the CTP machine ticks. CTP explains their high Yield on Cost (YoC) by “being their own contractor”. As most contractors have low margins, we believe the situation is more complex. In a nutshell, CTP builds parks like US farms grow their crops: large scale surfaces. CTP can develop and time its pipeline much more efficiently. The most important barrier is obtaining the enormous plots of permittable land close to transport and labour. CTP also adds a community aspect to their parks to lure tenants. We remain cautious on the development pace, but see no immediate risk from our conversations last week. We lift our TP from 17.50 to 19.25.