Report
Xior Accelerates asset sales to reduce debt ratio
Xior announced a couple of measures in its annual report that will reduce the debt risk significantly over FY23. It completed the announced 60m asset sales of non-core assets. On top of this amount, it will divest another 170m over FY23. In our view, this can not be achieved without selling a big core asset. In previous notes, we have expressed our personal opinion in the past that the Lyngby residential building is a potential candidate for divestment. This building is part of a student complex but acquired as a separate unit for 110m. Although it also contains University related tenants, it consists of apartments with multiple bedrooms. If Xior manages to execute the 170m asset sales, the company expects to decrease the LTV by 3.8% or around 46.5% according to our estimates and all other things equal. Obviously an asset sale will also negatively impact rental income, but the market is now obsessed with debt ratio's and applies a big discount to NTA for companies that are stretched on their balance sheet. This limits their EPRA EPS growth potential as CiK and ABB have become dilutive.The underlying student housing market remains fundamentally strong as panic and FOMO pushes the renting season ever earlier. Candidates largely outnumber available spaces in Benelux. The international study experience has become a fixed part of a CV. Xior can become a platform company that benefits from this trend. Lfl growth is strong at 4.2% and demand remains healthy with further upward pressure on ERV as capped indexation comes through and churn is relatively high. The Xior valuation is cheap as the stock trades 30% below NTA, while the company is de-risking a debt-spiral scenario significantly. We like the current valuation and maintain our target at 44 per share, a 2% premium to NTA.
Underlying
Xior Student Housing N.V.
Xior Student Housing NV is a Belgium-based company active in the field of residential Real Estate. The Company's offer is mainly for students and it includes several types of rooms for rent, including a student house in Leiden.
Provider
KBC Securities
We are a financial services provider for several types of professional clients, each with distinct needs.
Wim Lewi
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