WOOD Flash – Atrium: 3Q18 – rental income and FFO spot on our estimates, EUR 0.27 DPS reinstated for 2019E

We expect Atrium to benefit from a lower cost of debt (the result of the recent refinancing exercise), and better-quality buildings (the result of the ongoing portfolio repositioning), which should translate into higher achievable like-for-like growth in CEE going forward, in our view. Combined with lower overheads, driven by lower legal costs and general cost-cutting initiatives, this should drive c.4% annual FFO I growth over 2017-21E, on our estimates. We see Atrium generating around 6-7% FFO RONAV throughout our forecast horizon, broadly in line with companies like Klepierre and Unibail-Rodamco. Trading at 0.75x P/BV and an 8.4% FFO yield, on our 2018E estimates, Atrium is not expensive. That said, the relative valuation gap between Atrium and other European retail stocks has nearly closed, as the share prices of its peers continue to trend down. Currently, many of the big European retail real estate names trade at around 7-9% 1Y forward FFO yields, on the Bloomberg consensus. As the visibility on Russia remains low, we maintain our HOLD rating on Atrium. Our 12M price target (PT) of EUR 4.14/share offers c.14% upside from current levels.