Home Invest Belgium EUR 26.7m ABB to fund committed pipeline

Last week, Home Invest Belgium raised EUR 26.7m in an accelerated book building at an issue price of EUR 14.90, 29.11% below last reported NTA at 1Q23 of EUR 21.02. The issue generates more liquidity to serve its current committed FY23-FY24 capex plan of 73.0m. We assume EUR 17.5m of this EUR 73.0m is already spent over 1H23. The equity raise has a pro-forma positive impact of 3.2% on the 1Q23 RREC debt ratio (JV debt incl.) and lowers our YE23 debt ratio estimate from 55.3% to 51.8%. Our EPRA NTA estimate drops from EUR 19.96 to EUR 19.53 by YE23. The 10% ABB dilutes our per share estimates but is partly compensated by lower interest costs. The transaction has a dilutive impact on our TP that drops from EUR 19.0 to EUR 17.5.
Overall, we remain positive on Belgian residential real estate and HOMI's energy neutral portfolio. The market is less regulated compared to neighbouring countries which allows to fully pass on inflation. The structural trend will boost ERV growth in the medium term. Occupancy rates stay high as there is a lack of energy neutral dwellings and household ownership affordability shrinks. However, we remain concerned on the high pay-out ratio in a rising interest rate environment. Cash is king and by distributing all of its profit there is no operational CF left to serve its committed pipeline in our model. Despite the ABB, the debt ratio remains above 50% in the medium term which is high in this new real estate environment. We reiterate our HOLD recommendation at a new TP of EUR 17.5.