Retail Estates Model update, maintain BUY
We adjust our EPRA EPS forecasts for the fiscal years 23/24 and 24/25 downwards as we had higher Capex spending in our model before. As the share price has been trading 20% below NTA, the company opts not to issue new shares and is now spending Capex below historic averages. On the other hand, a lower debt-ratio's has been a more important factor for share price performance than EPS growth. Hence, we maintain our target price at EUR 76 based on our DCF calculation. Retail estates owns a well-diversified portfolio that focuses on home improvement and DIY. The recently emerged problems of the FUN group does not have a significant impact on vacancy. We believe these 8 prime locations will be absorbed by the market quite easily. The yield expansion trend has also reversed as experts were too pessimistic before. We maintain our BUY rating and TP of 76.Retail Estates is a niche fixed-capital real estate investment fund that invests in retail properties located on the periphery of residential areas or along access roads to urban centers. Co. buys properties from third parties or builds and markets shop premises for its own account. The outlets have a built on surface areas of between 500m2 and 3,000m2. A typical retail property has an average surface area of 1,000m2. As of Mar 2010 Co. had 399 premises in its portfolio. The retail lettable area amounted to 398,754m2.
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