Eastnine: Higher occupancy off-set lower Q2 NOI - ABG
- NOI +63% y-o-y and -4% vs ABGSCe - Rec PTP -1% vs ABGSCe, EC IFPM +1.7% q-o-q - Occupancy up 1.1pp q-o-q, estimates unchanged
ANNONS
Recurring PTP -1% vs ABGSCe Eastnine delivered a Q2 report with rental income of EUR 15.2m (-2% vs ABGSCe) and NOI of EUR 14.2m (-4% vs ABGSCe). Central admin costs and net interest expenses were both better (below expectations), leading to recurring PTP of EUR 7.9m being -1% vs ABGSCe. Occupancy came up 1.1pp sequentially to 97.1% and the like-for-like rental income growth was solid at 5.1% y-o-y. The earnings capacity (EC) IFPM increased to EUR 33m, which is +1.7% q-o-q and -3.4% vs. ABGSCe N12M (which include CPI etc and lower base rates).
Negative value changes, net LTV down 0.4pp q-o-q to 47.7% Property value changes in the quarter amounted to -EUR 2.4m (-0.25% of property value), where we had anticipated +0.4%. The valuation yield was +4bps q-o-q, while the rounding takes it from 6.5% to 6.6%. The net LTV (ABGSC definition) decreased by 0.4 pp q-o-q to 47.7% and the average interest rate was down q-o-q to 4.4% vs 4.5% in Q1'25. EPRA NRV per share came in at EUR 4.9 (-3% vs ABGSCe).
Conclusion Q2 recurring PTP was -1% vs ABGSCe, driven by lower topline, partly off-set by better net financial expenses. Solid operational figures such as higher occupancy (97.1%, +1.1pp q-o-q) and small negative net letting of -EUR 247k stands out positively compared to office peers. The earnings capacity IFPM per share increased by 1.7% sequentially and is -3.4% vs our N12M estimate, but we believe EAST will make up most of the difference on net financial items due to recently lowered base rents (expectations), which are not fully captured by the EC. Similarly, the earnings capacity rental income increased by 1% q-o-q and is broadly in-line with ABGSCe N12M, meaning we do not expect topline estimates to move materially on the back of lower recognised rent in Q2 alone. All in all, we expect consensus estimates to remain roughly unchanged, and we expect the share to trade broadly in line with the real estate sector today.
