Warehouses Estates Belgium Good operational results, hit on interest costs

Warehousese Estates Belgium reports FY24 results below our and its own expectations. The operational results are in line but the interest costs are higher than expected at 3.6% average CoD vs 3.2% expected. EPRA earnings are up +4.4% YoY. The EPRA EPS is down however at -2.9% due to the CiK done at the beginning of FY24. This dilution effect should be gone in FY25. The dividend stays flat pushing the pay-out ratio to 93.7% which we believe is too high. It is likely the largest part of interest rate increases is behind us as the EURIBOR 3m is at 2.52% and we assume the credit spread at 100 bps. WEB is at a high point of the interest rate cycle so future operational growth should be translated in bottom line growth. It guides a small increase in EPRA earnings in FY25. Given the approximate 5% miss in our estimates we decrease our TP equally from EUR 40.0 to EUR 38.0 and repeat our HOLD recommendation.