Eastnine - Going for more in Warsaw

• Solid Q3 across the board
• Firm management guidance on more M&A
• P/CEPS <14x with strong fundamentals

Q3 report takeaways

Eastnine delivered a Q3 report with sales -1%, NOI -1%, rec PTP +2% and EPRA NRV 0% vs our expectations. Occupancy was stable and net letting a small negative. We lower our CEPS estimates by ~2-1% for 2025e-2026e, driven by slightly lower top-line assumptions on future move-outs, and partly due to a larger-than-expected cash position. The large cash position takes up net financial expenses in the near term, and although the explanation (upcoming M&A) makes 100% sense, and we clearly understand the dynamics, we do not model template acquisitions on the back of their binary nature, which leads to negative CEPS revisions. We do, however, want to stress that we expect positive revisions going forward (see more below).

Warsaw the preferred location for more M&A

Management was very firm in its outlook statements and in the conference call that it is looking to add more acquisitions. The preferred location is Warsaw, where it most recently (Q4'24) completed the EUR 280m acquisition of Warsaw Unit. The 2025e net LTV and NIBD/EBIT stand at ~46.4% and ~8.4x, respectively, which allows for further growth. We have several examples of companies in the Swedish real estate space that have moved from an LTV target of ~50% to ~55% in the recent 3–6 months (partly on the back of very supportive credit markets and banks), and we find no evidence why Eastnine would not be open to the same approach.

Strong fundamentals for more growth ahead

Contrary to the Swedish office companies, Eastnine has solid occupancy (~97%), high NOI margins (~93-94%), low amounts of capex (~0.5% of property value or <10% of NOI during the past couple of years) and high cash generation (CEPS/EPRA NRV at ~6.2% in 2026e). The share is trading at a 2026e P/CEPS <14x, and as stated earlier, we believe there is more upside potential to estimates.