Warehouse Estates Belgium A WEB of 3 different real-estate segments

We initiate coverage on Warehouse Estates Belgium (WEB) with an ACCUMULATE recommendation and a EUR 39.0 TP. We believe the stock is slightly undervalued at a forward looking P/E multiple of 9.1x . A recent acquisition of approx. EUR 14.9m (from the Wagner family) pushed the debt-to-assets (DTA) ratio upwards by 2.5%. Therefore the DTA crosses the 50% mark in our FY24 estimates. With a strong reference shareholder like the Wagner family we believe the legal and credit risk is mitigated. However some earnings dilution risk remains. We are positive on the out-of-town retail segment (70.7%) despite our mild recession scenario over FY24. The wide tenant diversification spreads the economic risk over different segments. On the other hand, we are neutral on the logistics (18.2%) portfolio as the market vacancy is rising in Charleroi. We are negative on the office segment (10.3%) and expect downwards pressure at contract breaks.