First Berlin Equity Research has published a research update on Grand City Properties S.A. (ISIN: LU0775917882). Analyst Ellis Acklin reiterated his BUY rating and maintained his EUR 12.80 price target.
First quarter reporting was close to FBe and confirmed our view that the landlord can manage the challenging macro environment. Rental growth
(LFL: +2.6%) and FFO 1 of €47m outperformed 2023 guidance calling for LFL net rent of 1% to 2% and FFO 1 of €170m to €180m. But this is expected to be the peak quarter this year. Record low portfolio vacancies (4.2%) and tenants saddled with much higher living costs will limit rent increase opportunities over the short-term. Plus, expenses for the reset perpetual notes will have a greater impact on FFO 1 going forward. Liquidity and capital structure metrics are holding up well and were boosted by disposals tallying €100m in Q1. Our rating remains Buy with a €12.8 TP.