WOOD Flash – GTC: 3Q22 in line, FFO slightly ahead of last year's level, LTV at 44%

GTC’s 3Q22 results were in line with our estimates. With a risk to values ahead and the 2026E EUR 500m bond tranche quoted at a double-digit yield on Bloomberg, the focus is on the balance sheet. The LTV increased marginally, to 44%, driven chiefly by the investment in the innovation park in Ireland. GTC expects to close the sale of the Matrix A and B offices in Zagreb, and the Forest offices in Debrecen, by the year-end. If successful, we estimate that these disposals could generate a net cash inflow of around EUR 100m, nearly offsetting the Irish investment. During the quarter, GTC also bought a 34% stake in a fund investing in Slovenia and Croatia, in a EUR 13m related party transaction. Going forward, management is not ruling out going ahead with the equity raising. The proceeds could bring the leverage down, and finance resi for rent investments in Poland and investments in renewable generation assets in CEE. These initiatives could pay off, but the higher share of investments where GTC is a minority investor could be detrimental to the clarity of the equity story, in our view. The complex ownership structure could also make it difficult to assess the performance of these projects. In the near term, we expect the attention to be on the disposals, the revaluation result, and the extent of the indexation and service charge passthrough. The FFO seems to be on track to reach c.EUR 69-70m, management believes. The stock is trading at 0.6x P/EPRA NTA and a c.9% FFO yield.