Warehouses De Pauw Credit rating upgrade from Moody's to A3

Moody's upgraded WDP's long-term issuer rating to A3 from Baa1 with a stable outlook. This reflects its solid operating performance and prudent financial policy. We expect WDP to end FY25 with an LTV around 40% and a Net Debt to EBITDA around 7.3x. The average cost of debt now stands at 2.3%. This will increase gradually as new investments and debt maturities kick in. However, a better debt rating will slow the increase. We estimate this can reduce borrowing costs by 20-30 bps as the company now attracts a broader pool of investors. As this lowers the cost of capital for new projects, it has an advantage in bidding for new projects against competitors with a higher hurdle rate. In an expensive market like Germany, that can be a catalyst to get deals done. We believe the valuation of WDP is attractive and its Blend27 program remains on track to achieve its goals.