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 decreased the price target from EUR 16.80 to EUR 12.80.

Full year reporting was close to FBe, but management continue to batten down the hatches with macro headwinds growing stronger. GCP will now recommend to the June AGM that a dividend not be paid on 2022 earnings in order to preserve liquidity. This follows the December decision not to call the January 2023 perpetual notes or defer coupon payments. Rental growth potential will also be gated this year with portfolio vacancies at a record low (4.2%) and tenants wrestling with inflation and soaring energy bills. FFO 1 will take a hit in 2023 (guidance: €170m to €180m), mainly on the reset perpetual notes. We have also upped the risk free rate in our model to 2.4% (1.5%) to track the development in the German 10y Bund, which points to a €12.8 TP (old: €16.8). Our rating remains Buy.