Warehouses Estates Belgium 1H24 results: strong operations, increased TP
Yesterday evening Warehouses Estates Belgium reported 1H24 results slightly above our expectations. Rental income was 3.4% higher than initially expected due to a recovery in occupancy rate and further divergence of contractual rents vs ERV's (Estimated Rental Value). WEB demonstrates cost control despite new expenses related to the EUR 15.5m acquisitions in 1H24 and improved (EPRA+ESG) reporting. Its operating margin increased from 65.3% to 69.8%. The EPRA earnings came in in line with our expectations at EUR 5.9m. The higher rental income and cost savings were offset by higher than expected interest costs. In this note we increase our FY24 and FY25 estimates by 2% and 6% respectively. The bulk is driven by higher operational efficiency. This increases our target price from EUR 38.0 to EUR 40.0 per share. We repeat our HOLD recommendation as the upside to our target price is limited.Warehouses Estates Belgium SCA is a Belgium-based real estate investment trust, mutual fund. It mainly invests in commercial, office, semi-industrial and industrial buildings. The Company has rental agreements with public administrations, international and national companies. Warehouses Estates Belgium SCA has a property portfolio in Anderlues, Berchem, Binche, Charteroi, Couillet, Courcelles, Eupen, Fleurus, Gosselies, Jumet, Leuze, Lodelinsart, Marchienne-au-Pont, Nalinnes and Naninne, Jette and Ypres. The Company's tenants are Media Markt, Cedicora, Rackstore, Tractebel Engineering, Forever Products, Michelin Belux, Intercarrelages, Eupener Karting, Tercel Oilfield Products Belgium and Hainaut Caravaning Center, among others.
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