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Eastnine - Transaction adds 18% to EC IFPM

26 november 2024

<a id="bm-comp-df65a866-f40e-4456-9cd1-a9f8312b7743" name="bm-comp-df65a866-f40e-4456-9cd1-a9f8312b7743" class="BMCustomAnchor"></a><table><tr><td bm-component-id="df65a866-f40e-4456-9cd1-a9f8312b7743" style="vertical-align: top; width:100.000000%;"><ul><li>The largest office transaction YTD in Europe adds ~40% to topline</li><li>Share issue at Q3 EPRA NRV a clear positive</li><li>'25e P/CEPS ~12x post transaction, share to trade up</li></ul></td></tr></table><a id="bm-comp-418d4a49-6a0b-46e9-b81e-99b06d2ac012" name="bm-comp-418d4a49-6a0b-46e9-b81e-99b06d2ac012" class="BMCustomAnchor"></a><table><tr><td bm-component-id="418d4a49-6a0b-46e9-b81e-99b06d2ac012" style="vertical-align: top; width:100.000000%;"><h3 class="bm-h3">Acquires large property in Warsaw</h3><p>Eastnine has acquired a 59,800 sqm office building, Warsaw Unit from Warsaw Unit NV, a subsidiary of the Ghelamco group. As part of the consideration, Eastnine has today carried out a set-off issue of 8.8m new shares in Eastnine to the Seller at a subscription price of EUR 4.68 per share, corresponding to the long-term net asset value per share in Eastnine as of Q3 2024. As a result of the acquisition, Eastnine's income from property management per share increases by ~18% to EUR 0.32, while long-term NAV per share is unchanged at EUR 4.68. The LTV increase to ~50%, including an EUR 10m unsecured three-year loan from Estonian LHV Pension funds that Eastnine has issued.</p><h3 class="bm-h3">Gross yield of 6.4%</h3><p>The price of EUR 280m corresponds to EUR 4,682 per sqm and the property is fully leased to more than 20 tenants, e.g., Warta, Allegro, Danske Bank and Telia. Moreover, rental income amounts to EUR 18m p.a, and the WAULT is 5.1 years. Thus, the gross yield is 6.4%, and after the transaction, Poland is &gt;50% of Eastnine's rental income.</p><h3 class="bm-h3">Solid deal, share to trade up</h3><p>Given an ~18% increase in CEPS, the share is trading at a 2025e P/CEPS of ~12x on yesterday's close. This transaction was rumoured a few weeks ago, meaning it's not a total surprise. Still, we expect the share to trade up ~10% given the deal, especially since Eastnine was able to raise capital at NAV, thus keeping its LTV at ~50%.</p></td></tr></table>

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