Trade Estates: Greek retail parks – a dividend growth story (HOLD - initiation of coverage)
We initiate coverage of Trade Estates (TE) with a HOLD rating and a 12M price target (PT) of EUR 1.7/share, implying 11% upside. Trade Estates’ EUR 0.49bn portfolio consists mostly of big-box retail assets and retail parks in Greece. Many of the assets were transferred from Fourlis. Fourlis companies (IKEA, Intersport and Trade Logistics) remain the most important tenants, at the current stage. Long lease terms mean good visibility on rental income, which should continue to increase with inflation via automatic indexation. Trade Estates has a pipeline of seven development projects. The largest are a retail park (with IKEA and Intersport, among other tenants), to be developed at the Ellinikon (the old Athens airport urban regeneration project) by 2027E, and a large logistics centre just west of Athens, to be completed by the end of 2025E. The developments should grow the portfolio to EUR 0.79bn by 2028E, pushing the net LTV to c.55% by 2025-27E, from c.43% currently, we estimate. We believe the earnings growth should translate directly into higher dividends, as TE targets to pay out 80-90% of its FFO.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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