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COLONIAL: FY2020 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'20 vs. 4Q'19 Results
Gross rental revenues: € 80.0 M (-10.1% vs. -12.4% BS(e));
Recurring Net Profit: € 26.0 M (-25.7% vs. -28.6% BS(e));
FY2020 vs. FY2019 Results
Gross rental revenues: € 340.0 M (-3.4% vs. -4.0% BS(e));
Recurring EBITDA: € 272 M (-4% vs. -5% BS(e));
Recurring Net Profit: € 138.0 M (-0.7% vs. -1.4% BS(e));
The results were in line with expectations (and slightly above the company’s EPS guidance from December). Recurring EPS stands at € 0.27/sh. (-1% vs. € 0.26 guidance).
These numbers are affected by the divestitures made (€ 313 M or ~3% of total), which had a negative effect, leading rental revenues to fall by -3%. LfL rents dropped by -1%, affected by certain retail assets and Covid-19, but adjusted for the scope of consolidation, this set of results would show +5% growth in recurring EPS (vs. -1% incl. asset sales). The EPRA vacancy rate as of the end of the year stood at 5% (4% as of 3Q’20).
As for release spreads, the numbers continue to be positive: +17% in total; Barcelona, +45%, Madrid +15% and Paris +6%.
The appraisal of the portfolio shows +1.2% LfL growth for the full year (meaning that 2H’20 improves vs. -0.2% in 1H’20) thanks to Paris (+4% thanks to yield compression), which offsets Madrid’s and Barcelona’s poor performance (-3% bth). Due to asset sales, the total value of the portfolio decreases by -1.4%.
NAV per share fell by -1.7% on the year (+1.7% incl. the dividend) to € 11.47, which we believe is a good result considering how difficult 2020 was.
We believe that the stock is backed by the system’s current liquidity levels thanks to a scenario of ultra low interest rates and a limited prime product offering, although in the short-term we expect to see a decline in rents and EPS as a result of the asset sales made, which will be accounted in 2021, and the possible increase in the vacancy rate for some assets (which we do not think will be significant, as only 13% of contracts mature in 2021 and ~50% of them have already expressed their intention to renew). We do not expect any market reaction to these results. We reiterate our BUY recommendation. BUY. Target Price: € 9.04/sh (upside 10.04%)