Intervest Offices & Warehouses New capital for balance sheet headroom

Yesterday afternoon, Intervest raised EUR 49.2m in an Accelerated Book Building at an issue price of 18.50, 9.7% below last trading and 28% below last reported NTA of 25.6. While over the last couple of years, new capital typically served new development activities, this issue creates more headroom for its debt ratio that hit 50% over 3Q22. The mantra of levering the balance sheet to the max has reversed as fast as central banks raised interest rates as they woke up to an inflation nightmare. All real-estate segments are bracing for the potential impact of yield expansion on the FV and Debt% as ERV indexation might not fully compensate. The press statement specifically warns for yield expansion in NL that hit the FV by 32m since 3Q22 (CBRE). We are not worried about the LT impact in NL as ERV indexation is spread over time and NL new building regulation has tightened significantly and will limit new supply. This should support ERV levels over time. In general, we believe that an extra 5% buffer on the debt ratio (10% of FV) should be able to withstand the yield expansion impact over the next 4-6 quarters. The 10% ABB is dilutive for NTA as well as for our EPRA EPS and dividend estimates. Nevertheless, the dividend yield remains one of the most attractive yields in the REIT-BE market. We decrease our target to account for the dilutive impact from the ABB, but maintain our Buy recommendation. INTO has a relatively busy pipeline with high-profile projects like the GC Singel office, the Zeebrugge terminal, the PWC building conversion and Genk GL. With the issue out of the way, the company can now focus on the execution.