Warehouses De Pauw Macro storm brewing or a market normalisation ?

Over the last couple of weeks, logistics and WDP in particular have been hammered by economic fears in Europe. We believe the market enters a post-COVID normalisation phase and that structural growth drivers will remain resilient. For years, WDP anticipated a tougher economic climate. It brought its LTV% down to 35% in anticipation of distressed asset sales. While speculative developers have retreated, WDP has not found large scale opportunities in Germany. In France, some portfolios are floating on the market as part of fund rotations (not distressed). WDP has to strike a balance between “FOMO” as interest rates are declining or wait for better opportunities. Based on its historic track record, we are confident that any upcoming deals will be earnings enhancing. We raise our rating from Accumulate to Buy as WDP is cheap on a cash earnings basis vs. peers.