Montea Updating Model and Property tour feed-back
Last Friday, we were driven by bus along a list of Montea properties, animated by comments from CEO Jo De Wolf. Afterwards, a discussion was held on the balance sheet impact from the quantum shift in interest rates. The logistic REITS in particular have suffered from panic around yield expansion and potential impact on the debt ratio. Over 1H22, the indexation of rent has been mostly responsible for positive FV adjustments, not yield compression. As inflation remains rampant in Europe, there is no reason to believe that negative FV adjustments will wipe out much equity over 2H22. Nevertheless, with interest rates adrift as central banks lost control over their monetary experiment, there is a risk for rising cap rate impact on FV into FY23 as inflation will cool down eventually. Hence, we adjusted our model to include yield expansion and negative FV adjustments in FY23. This has no material impact on our EPRA EPS estimates, but we adjust our debt ratio and NTA estimates for FY23-24. Montea has been managing a cautious balance sheet with enough headroom to execute its Track24 program. We maintain our Accumulate, but trim our target price to 100 EUR. This equals 4.4% net earnings yield over our FY23 estimate. In this note, we explain the model changes and some comments from the property tour.Montea Comm VA, formerly Montea CVA, is a Belgium-based real estate investment trust specialized in logistics and semi-industrial real estate in Belgium, the Netherlands and France. The Company's property portfolio represents approximately a surface of 584,694 Square meters (m2) across 37 sites. Its group companies include, among others, Montea Management NV, Montea Comm. VA, Acer Park NV, Montea Nederland NV, Montea Almere NV, Montea Rotterdam NV, SCI Actipole Cambrai, SCI Sagittaire, SCI Saxo, SCI Sevigne, SCI Socrate and SCI 3R. In addition, the Company also partners with Decathlon.
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