WOOD Flash – CA Immo: 3Q16 – getting into pole position ahead of the merger negotiations

CA Immo (CAI) reported a decent set of 3Q16 figures yesterday evening, with FFO (EUR 0.28/share) up 18% qoq and 50% yoy, surpassing both our and the consensus estimate of EUR 0.24/share. This was driven by the dividends received from CAI's 55m Immofinanz shares, a continued decline in financing expenses and the ongoing repurchase of its own shares. CA Immo thus fully offset the fallout in rental income, which was some 2.4% lower yoy (but slightly ahead of our estimate), as a result of the disposals of non-core properties carried out throughout the year. With the results fuelled further by the closing of some of the sales agreed earlier in the year, the EPRA NAV was EUR 26.25/share, up some 2% qoq and a whopping 19% yoy, following the 2Q16 bonanza (as CA Immo booked EUR 96m high-quality revaluation gains during 2Q16, which pushed the EPRA NAV up 4% qoq, despite the EUR 0.50/share dividend that was paid out in May).
With the FFO I amounting to EUR 0.74/share for 9M16 (EUR 0.98/share on an annualised basis, which would value CAI at a 6.0% FFO I yield), CA Immo looks to be well on track to exceed its 2016E FFO guidance of at least EUR 0.90/share, which management has reiterated. As the uncertainty over the outcome of the upcoming merger negotiations with Immofinanz continues to weigh on the share price, CAI shares are trading at a mere 62% P/EPRA NAV.