CTP: great story, fairly valued (downgraded to HOLD)

We continue to see CTP as one of the best stories in European real estate. A simple, focused investment case, a quality portfolio, value-accretive growth, well-managed. CTP builds at a c.10% yield on cost, while it raises debt at an all-in cost of c.4%, and it books its portfolio on a 5-6% net initial yield. The revaluation gains on developments allow almost all of the construction capex to be debt-funded. The spread between the development yield and the cost of debt is wide, and would remain attractive even if the development yield slips. At the current levels, however, CTP’s premium valuation (1.1x 2025E P/B, sub-5% 2025E FFO yield) appears to reflect many of the positives already. CTP’s 30m sqm GLA target by 2030E is impressive, and likely requires M&A. This carries execution risks, including a dilution of returns. Weaker leasing demand, and market sentiment towards logistics shifting are other important risks. After its strong 27% total return ytd, we have downgraded CTP to HOLD (from Buy), with a new price target (PT) of EUR 20.5, waiting for evidence that faster growth can be consistent with the returns CTP has generated on its investments historically.