Retail Estates FIRST LOOK: 9m Results, DBI boosts EPRA EPS, underlying still beats

Last Friday, RET reported its 9m22/23 results (December end) which came in above our expectations on an adjusted basis. At the beginning of the year, RET had announced an extra-ordinary DBI net profit of EUR 3.8m for the 2017-20 period, which added 0.27 to 9m22/23 EPRA EPS. The underlying EPRA EPS of 4.49 beat our expectation of 4.39, despite slightly lower GRI. Another 3.4m DBI windfall was announced for the 2021 period and other outstanding issues. These have not been taken into account for the 9m22/23 results. The dividend per share projection for this FY was increased from EUR 4.70 per share to 4.90 to account for the DBI windfall.
Occupancy rate also nudged up a couple of bps over the last 3 months. The debt ratio declined to 46.5%, below their 50% target. The FV increased over the last quarter of 2022 on ERV increases, while there was no negative impact from yield expansion. We have cut our Capex expectations down to EUR 80m annually from 120m as the company will leave enough headroom on the debt ratio.
The stock is now trading at approx. 5% discount to NTA. These results confirm the stability of its portfolio and a strong profitability in a tough market environment. Our target is based on a 5% premium. We will revise our estimates based on the DBI impact, but these will end after 2024. The post-DBI tax% estimates are still unclear and could vary between 10 and 25%. Analyst meeting at 11h00 in Ternat.