Qrf City Retail Increased middle term dividend expectations

Yesterday evening QRF reported its 1H24 results. It is the first full reporting since its exit from the Dutch market and Pelican JV closing announced in 1Q23. The debt ratio has improved by 8.54% vs FY23, while keeping the EPRA EPS in line with 2H23 results. This is despite the drop in rental income from the Dutch exit because rental loss is offset by lower interest costs. The interest rate is hedged at 107%. Future rental growth will be generated by the delivery of the office part of the Veldstraat 88 of which 84% is let. QRF officially communicates to target investment yields above 6.45% for further investments. As a comparison the JV closings were at 12.5-15.1% annualized IRR well above the hurdle rate. Given the positive results, QRF increases the dividend outlook from EUR 0.80 to EUR 0.84 in the medium term. In our view the market did not react positive enough to the 1Q23 announced triggers so we again repeat our EUR 13.0 TP and BUY rating.