DEFAMA Deutsche Fachmarkt AG
(CDAX, Real Estate, DEF GR) | RESEARCH | |||||||||||||||||||
Buy | Value Indicators: | EUR | Warburg ESG Risk Score: | 2.3 | Description: | |||||||||||||||
ESG Score (MSCI based): | 3.0 | |||||||||||||||||||
NAV (WRe) 23e: | 28.45 | |||||||||||||||||||
Commercial real estate company | ||||||||||||||||||||
EUR 26.90 | FFO-Yield 23e: | 25.34 | Balance Sheet Score: | 3.8 | focused on retail parks in Northern | |||||||||||||||
(EUR 24.60) | Market Liquidity Score: | 0.0 | and Eastern Germany | |||||||||||||||||
Market Snapshot: | EUR m | Shareholders: | Key Figures (WRe): | 2021e | ||||||||||||||||
Price | EUR 24.40 | Market cap: | 107.85 | Freefloat | 65.0 % | LTV: | 58.1 % | |||||||||||||
No. of shares (m): | 4.42 | MSC Invest GmbH | 29.0 % | Equity Ratio: | 17.8 % | |||||||||||||||
Upside | 10.2 % | Freefloat MC: | 70.10 | Geminus GmbH | 4.0 % | |||||||||||||||
Supervisory board | 2.0 % | |||||||||||||||||||
Ø Trad. Vol. (30d): | 69.97 th | |||||||||||||||||||
Continuous growth supported by quality improvement & yield compression
-
Good Q2 development: DEFAMA recently released strong H1 figures which were in line with our estimates. The top line of EUR 8.46m
(WRe: 8.4m) jumped 28% due to successful growth activities. Adjusted EBITDA (w/o disposal gain of Bleicherode of EUR 2.6m) improved
26% to EUR 5.4m (WRe: EUR 5.28m) and adjusted net profit of EUR increased ~16% to 1.4m (WRe: 1.35m). The FFO margin was stable at 41% with an FFO increase of 26%. The impact of Covid-19 remains manageable with a collection ratio of 92% and 99% in Q1 and Q2 respectively. The deferred rental payment sums up to EUR 250k or 1.6% of estimated revenue in 2021. The company booked provisions for a larger amount but a partial release seems possible. - Growth: DEFAMA has acquired two properties so far in 2021 with an investment volume of EUR ~11.6m and expected rental income of more than EUR 1.3m. The expected net rental income includes the anticipation of successful letting activities in the acquired HanseCenter in Gardelegen which currently has a high vacancy rate of 38%. Management is confident of achieving this rent level as it was already in negotiations with possible tenants before signing the purchase. In terms of further growth, DEFAMA is well prepared to achieve its targeted annual acquisition volume p.a. of EUR 15-20m, as it currently has a cash position of EUR ~5m and the pipeline is well filled according to the management. In addition to this inorganic growth, DEFAMA is making additional investment in the portfolio of EUR >5m (e.g. renovation & expansion in Löwenberg, Büdelsdorf, Lübbenau) which will lead to additional rental income and/or secure the income stream from these properties.
- Guidance: The 2021 FFO guidance of EUR 7.1m was confirmed (~FFOPS EUR 1.61) which would represent growth of 21% (WRe: +23%) despite sale of Bleicherode and should be reached. The guidance uplift for the expected net profit from EUR 3.1m to more than EUR 5m resulted from the disposal gain of ~EUR 2.6m (pre-tax) of this property. With additional liquidity from the revaluation of loans in the prolongation process (~at least EUR 2m p.a.) DEFAMA seems to be prepared to grow further without any larger cap raise and to stick to its attractive double-digit FFO growth per share.
- We confirm our Buy recommendation and increase our price target to EUR 26.9 reflecting yield compression in DEFAMA's focused asset class which was already visible in the valuation uplift of one peer. The FFO yield for 2023 of nearly 9% remains very attractive given DEFAMA's excellent growth track record.
Changes in Estimates: | Comment on Changes: | ||||||||||||||||||||||||
+ / - | 2022e | + / - | 2023e | + / - We | only | slightly | adjust | our estimates in several P&L lines. The big | |||||||||||||||||
FY End: 31.12. | 2021e | ||||||||||||||||||||||||
in EUR m | (old) | (old) | (old) | picture | visible | in the | expected | operating | improvement | remains | |||||||||||||||
unchanged, as company has delivered on its growth path and its | |||||||||||||||||||||||||
Total revenues | 17.77 | 0.0 % | 20.11 | 0.0 % | 22.56 | 0.0 % | |||||||||||||||||||
consequent optimization of the portfolio. | |||||||||||||||||||||||||
FFO I | 7.23 | 0.2 % | 8.38 | -0.3 % | 9.45 | 0.1 % | |||||||||||||||||||
FFOPS I | 1.64 | 0.2 % | 1.90 | -0.3 % | 2.14 | 0.1 % | |||||||||||||||||||
Net income | 5.15 | -0.4 % | 3.56 | -0.8 % | 4.03 | 0.3 % | |||||||||||||||||||
EPS | 1.17 | -0.4 % | 0.80 | -0.8 % | 0.91 | 0.3 % | |||||||||||||||||||
FY End: 31.12. | CAGR | ||||||||||||||||||||||||
in EUR m | (20-23e) | 2017 | 2018 | 2019 | 2020 | 2021e | 2022e | 2023e | |||||||||||||||||
Rental income | 5.10 | 7.61 | 9.53 | 12.19 | 14.93 | 16.89 | 18.95 | ||||||||||||||||||
Change yoy | 67.9 % | 49.2 % | 25.1 % | 27.9 % | 22.5 % | 13.2 % | 12.2 % | ||||||||||||||||||
EBIT | 2.67 | 3.59 | 4.50 | 5.62 | 9.28 | 7.68 | 8.62 | ||||||||||||||||||
FFO I | 2.58 | 3.65 | 4.62 | 5.87 | 7.25 | 8.36 | 9.46 | ||||||||||||||||||
FFO I-margin | 50.6 % | 47.9 % | 48.4 % | 48.2 % | 48.6 % | 49.5 % | 49.9 % | ||||||||||||||||||
EBT | 1.77 | 2.25 | 2.78 | 3.49 | 6.67 | 4.76 | 5.43 | ||||||||||||||||||
Net income | 1.36 | 1.68 | 2.06 | 2.51 | 5.13 | 3.53 | 4.05 | ||||||||||||||||||
EPS | 0.38 | 0.46 | 0.51 | 0.57 | 1.16 | 0.80 | 0.92 | ||||||||||||||||||
FFOPS I | 0.73 | 1.01 | 1.14 | 1.33 | 1.64 | 1.89 | 2.14 | ||||||||||||||||||
DPS | 0.34 | 0.40 | 0.45 | 0.48 | 0.55 | 0.60 | 0.65 | ||||||||||||||||||
Dividend Yield | 3.8 % | 3.4 % | 2.9 % | 2.7 % | 2.3 % | 2.5 % | 2.7 % | ||||||||||||||||||
Book Value / Share | 3.18 | 4.10 | 5.50 | 5.61 | 6.22 | 6.42 | 6.69 | ||||||||||||||||||
Rel. Performance vs CDAX: | |||||||||||||||||||||||||
1 month: | 13.9 % | P / E | 23.2 x | 25.0 x | 30.1 x | 30.9 x | 21.0 x | 30.6 x | 26.7 x | ||||||||||||||||
6 months: | 16.4 % | Price / Book | 2.8 x | 2.6 x | 2.5 x | 3.1 x | 3.9 x | 3.8 x | 3.6 x | ||||||||||||||||
P / NAVPS | 1.1 x | 1.2 x | 1.3 x | 1.2 x | 1.4 x | 1.3 x | 1.2 x | ||||||||||||||||||
Year to date: | 10.8 % | ||||||||||||||||||||||||
FFO I-Yield | 8.2 % | 8.7 % | 7.5 % | 7.6 % | 6.7 % | 7.7 % | 8.8 % | ||||||||||||||||||
Trailing 12 months: | 12.3 % | ||||||||||||||||||||||||
ROE | 12.4 % | 12.3 % | 10.2 % | 10.2 % | 19.6 % | 12.6 % | 14.0 % | ||||||||||||||||||
LTV | 61.1 % | 62.0 % | 58.2 % | 60.2 % | 58.1 % | 59.1 % | 59.5 % | ||||||||||||||||||
Company events: | |||||||||||||||||||||||||
Guidance: | 2021e: FFO of EUR ~7.1m, Net profit (HGB) of EUR >5.0m | ||||||||||||||||||||||||
Analyst | |||||||||||||||||||||||||
Andreas Pläsier | COM M ENT | Published 24.08.2021 08:15 | 1 | ||||||||||||||||||||||
aplaesier@warburg-research.com | |||||||||||||||||||||||||
+49 40 309537-246 |
DEFAMA Deutsche Fachmarkt AG
RESEARCH
EPRA-NAV per share development | FFO per share development |
in EUR | in EUR |
Source: Warburg Research | Source: Warburg Research |
Company Background
- Founded in 2014 and headquartered in Berlin, DEFAMA focuses on the acquisition, ownership and management of retail parks in German small and medium-sized cities, predominantly in Northern and Eastern Germany.
- The investment strategy is to "buy and hold" assets with high occupancy and minor capex needs for a purchase price of ~10x annual rent.
- Investment volumes are EUR 1 - 5 million per asset. Anchor tenants are nationwide retailers.
Competitive Quality
- Real estate competence: founder, major shareholder and CEO Matthias Schrade, previously oversaw as a board member responsible for acquisitions for a non-listed real estate company based in Munich.
- Unique focus: the company competes for assets that are too large for individual investors and too small for institutional investors and can "buy low".
- Strong access to local public banks networks, for whom real estate financings for DEFAMA projects are large and important deals. They in turn know smaller tenants well.
- Focus on leading centers in smaller cities ("big fish in a small pond").
Geographical breakdown of rental | Rental income by sector |
income | % of rental income |
% of total rental income |
Source: Warburg Research
COM M ENT | Published 24.08.2021 | 2 |
DEFAMA Deutsche Fachmarkt AG
RESEARCH
Valuation
2017 | 2018 | 2019 | 2020 | 2021e | 2022e | 2023e | |
P / E | 23.2 x | 25.0 x | 30.1 x | 30.9 x | 21.0 x | 30.6 x | 26.7 x |
P / NAVPS | 1.1 x | 1.2 x | 1.3 x | 1.2 x | 1.4 x | 1.3 x | 1.2 x |
Price / Book | 2.8 x | 2.6 x | 2.5 x | 3.1 x | 3.9 x | 3.8 x | 3.6 x |
P / FFOPS I | 12.2 x | 11.5 x | 13.4 x | 13.2 x | 14.9 x | 12.9 x | 11.4 x |
FFO I-Yield | 8.2 % | 8.7 % | 7.5 % | 7.6 % | 6.7 % | 7.7 % | 8.8 % |
ROE | 12.4 % | 12.3 % | 10.2 % | 10.2 % | 19.6 % | 12.6 % | 14.0 % |
Equity Ratio | 21 % | 19 % | 24 % | 18 % | 18 % | 17 % | 16 % |
Company Specific Items
2017 | 2018 | 2019 | 2020 | 2021e | 2022e | 2023e | |
NAV/Share | 8.42 | 11.02 | 13.46 | 16.86 | 18.85 | 20.21 | 21.78 |
Vacancy Rate | 2.7 % | 4.3 % | 4.0 % | 3.7 % | 3.7 % | 4.0 % | 4.0 % |
COM M ENT | Published 24.08.2021 | 3 |
DEFAMA Deutsche Fachmarkt AG
RESEARCH
Consolidated profit and loss
In EUR m | 2017 | 2018 | 2019 | 2020 | 2021e | 2022e | 2023e |
Total revenues | 5.83 | 9.09 | 11.21 | 14.58 | 17.77 | 20.11 | 22.56 |
Rental income | 5.10 | 7.61 | 9.53 | 12.19 | 14.93 | 16.89 | 18.95 |
Change yoy | 67.9 % | 49.2 % | 25.1 % | 27.9 % | 22.5 % | 13.2 % | 12.2 % |
Property operating costs | 1.24 | 2.21 | 2.63 | 3.40 | 4.21 | 4.67 | 5.23 |
Property management costs | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Rental profit | 4.58 | 6.87 | 8.57 | 11.18 | 13.56 | 15.45 | 17.32 |
Income from property sales | 0.00 | 0.00 | 0.00 | 0.00 | 2.60 | 0.00 | 0.00 |
Other revenues | 0.12 | 0.08 | 0.07 | 0.12 | 0.25 | 0.24 | 0.27 |
Gross profit | 4.70 | 6.95 | 8.64 | 11.30 | 16.41 | 15.69 | 17.59 |
Administration expenses | 0.35 | 0.70 | 0.70 | 0.81 | 1.00 | 1.13 | 1.26 |
Personnel expenses | 0.47 | 0.72 | 1.04 | 1.50 | 1.83 | 2.05 | 2.30 |
Other operating income/expenses | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Unfrequent items | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
EBITDA | 3.89 | 5.53 | 7.04 | 8.99 | 13.58 | 12.51 | 14.03 |
Valuation result | 0.00 | 0.00 | 0.00 | 0.00 | 2.60 | 0.00 | 0.00 |
Depreciation of fixed assets | 1.22 | 1.95 | 2.55 | 3.36 | 4.30 | 4.83 | 5.41 |
EBITA | 2.67 | 3.59 | 4.50 | 5.62 | 9.28 | 7.68 | 8.62 |
Amortisation of intangible assets/Goodwill | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
EBIT | 2.67 | 3.59 | 4.50 | 5.62 | 9.28 | 7.68 | 8.62 |
Interest income | 0.00 | 0.00 | 0.01 | 0.01 | 0.00 | 0.00 | 0.00 |
Interest expenses | 0.90 | 1.34 | 1.73 | 2.14 | 2.62 | 2.93 | 3.19 |
Other financial income (loss) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Financial result | -0.90 | -1.34 | -1.72 | -2.13 | -2.62 | -2.93 | -3.19 |
EBT | 1.77 | 2.25 | 2.78 | 3.49 | 6.67 | 4.76 | 5.43 |
Margin | 30.4 % | 24.8 % | 24.8 % | 24.0 % | 37.5 % | 23.6 % | 24.1 % |
Total taxes | -0.41 | -0.55 | -0.71 | -0.71 | -0.71 | -1.22 | -1.38 |
thereof cash taxes | -0.28 | -0.36 | -0.42 | -0.42 | -0.42 | -0.72 | -0.83 |
Net income from continuing operations | 1.36 | 1.70 | 2.07 | 2.51 | 5.14 | 3.53 | 4.05 |
Income from discontinued operations (net of tax) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Net income before minorities | 1.36 | 1.70 | 2.07 | 2.51 | 5.14 | 3.53 | 4.05 |
Minority interest | 0.00 | 0.02 | 0.01 | 0.00 | 0.00 | 0.00 | 0.00 |
Net income | 1.36 | 1.68 | 2.06 | 2.51 | 5.13 | 3.53 | 4.05 |
Number of shares, average | 3.55 | 3.62 | 4.05 | 4.42 | 4.42 | 4.42 | 4.42 |
FFO (II) | 2.58 | 3.65 | 4.62 | 5.87 | 7.25 | 8.36 | 9.46 |
FFO I-margin | 50.6 % | 47.9 % | 48.4 % | 48.2 % | 48.6 % | 49.5 % | 49.9 % |
FFOPS I | 0.73 | 1.01 | 1.14 | 1.33 | 1.64 | 1.89 | 2.14 |
EPS | 0.38 | 0.46 | 0.51 | 0.57 | 1.16 | 0.80 | 0.92 |
EPS adj. | 0.38 | 0.43 | 0.47 | 0.57 | 1.16 | 0.80 | 0.92 |
*Adjustments made for: | |||||||
Guidance: 2021e: FFO of EUR ~7.1m, Net profit (HGB) of EUR >5.0m |
Financial Ratios
2017 | 2018 | 2019 | 2020 | 2021e | 2022e | 2023e | |
Property operating costs / Rental Income | 24.4 % | 29.1 % | 27.6 % | 27.9 % | 28.2 % | 27.6 % | 27.6 % |
Operating Leverage (Real Estate) | 2.4 x | 2.9 x | 5.0 x | 4.6 x | 5.5 x | 8.8 x | 9.3 x |
Rental profit / interest expenses | 5.1 x | 5.1 x | 5.0 x | 5.2 x | 5.2 x | 5.3 x | 5.4 x |
Revenues, EBITDA | Operating Performance | Performance per Share |
in EUR m | in % |
Source: Warburg Research | Source: | Source: Warburg Research | |||
COM M ENT | Published 24.08.2021 | 4 | |||
DEFAMA Deutsche Fachmarkt AG
RESEARCH
Consolidated balance sheet
In EUR m | 2017 | 2018 | 2019 | 2020 | 2021e | 2022e | 2023e |
Assets | |||||||
Goodwill and other intangible assets | 0.01 | 0.01 | 0.03 | 0.02 | 0.02 | 0.02 | 0.02 |
thereof other intangible assets | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
thereof Goodwill | 0.01 | 0.01 | 0.03 | 0.02 | 0.02 | 0.02 | 0.02 |
Property, plant and equipment | 0.03 | 0.08 | 0.11 | 1.39 | 1.41 | 1.42 | 1.43 |
Investment properties | 51.96 | 81.10 | 93.14 | 127.79 | 141.76 | 156.61 | 170.85 |
Financial assets | 0.24 | 0.26 | 1.70 | 0.12 | 0.45 | 0.45 | 0.45 |
Other long-term assets | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Fixed assets | 52.24 | 81.44 | 94.98 | 129.33 | 143.64 | 158.50 | 172.75 |
Inventories | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Accounts receivable | 0.22 | 0.51 | 0.00 | 0.80 | 0.91 | 0.93 | 0.95 |
Liquid assets | 2.49 | 2.80 | 6.98 | 4.28 | 11.46 | 8.07 | 8.03 |
Other short-term assets | 0.83 | 0.59 | -2.56 | -0.66 | -7.95 | -4.58 | -4.56 |
Current assets | 3.17 | 4.34 | 9.29 | 7.38 | 13.39 | 10.01 | 10.01 |
Total Assets | 55.41 | 85.79 | 104.28 | 136.71 | 157.02 | 168.51 | 182.76 |
Liabilities and shareholders' equity | |||||||
Subscribed capital | 3.55 | 3.90 | 4.42 | 4.42 | 4.42 | 4.42 | 4.42 |
Capital reserve | 6.15 | 10.03 | 17.31 | 17.31 | 17.31 | 17.31 | 17.31 |
Retained earnings | 1.59 | 2.06 | 2.56 | 3.07 | 5.78 | 6.65 | 7.83 |
Other equity components | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Shareholders' equity | 11.29 | 15.99 | 24.29 | 24.81 | 27.51 | 28.39 | 29.56 |
Minority interest | 0.10 | 0.38 | 0.39 | 0.40 | 0.40 | 0.40 | 0.40 |
Provisions | 0.36 | 1.01 | 0.43 | 0.51 | 0.51 | 0.51 | 0.51 |
thereof provisions for pensions and similar obligations | 0.18 | 0.21 | 0.21 | 0.25 | 0.25 | 0.25 | 0.25 |
Financial liabilities (total) | 43.07 | 67.79 | 76.52 | 110.25 | 127.74 | 138.35 | 151.43 |
Short-term financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Accounts payable | 0.19 | 0.30 | 0.51 | 0.29 | 0.42 | 0.42 | 0.42 |
Other liabilities | 0.51 | 0.70 | 2.54 | 0.86 | 0.84 | 0.84 | 0.84 |
Liabilities | 44.13 | 69.79 | 79.99 | 111.91 | 129.51 | 140.12 | 153.20 |
Total liabilities and shareholders' equity | 55.41 | 85.79 | 104.28 | 136.71 | 157.02 | 168.51 | 182.76 |
Financial Ratios
2017 | 2018 | 2019 | 2020 | 2021e | 2022e | 2023e | |
Return on Capital | |||||||
ROA | 3.1 % | 2.4 % | 2.2 % | 2.1 % | 3.5 % | 2.2 % | 2.3 % |
ROE | 12.4 % | 12.3 % | 10.2 % | 10.2 % | 19.6 % | 12.6 % | 14.0 % |
FFO I / Equity | 0.2 x | 0.3 x | 0.2 x | 0.2 x | 0.3 x | 0.3 x | 0.3 x |
Solvency | |||||||
Net Debt | 40.76 | 65.20 | 69.75 | 106.23 | 116.53 | 130.54 | 143.66 |
Net Financial Debt | 40.58 | 64.99 | 69.54 | 105.98 | 116.28 | 130.28 | 143.41 |
Net Fin. Debt / EBITDA | 10.4 x | 11.7 x | 9.9 x | 11.8 x | 8.6 x | 10.4 x | 10.2 x |
LTV | 61.1 % | 62.0 % | 58.2 % | 60.2 % | 58.1 % | 59.1 % | 59.5 % |
Equity Ratio | 20.5 % | 19.1 % | 23.7 % | 18.4 % | 17.8 % | 17.1 % | 16.4 % |
LTV | ROE | Book Value per Share |
in % | in EUR |
Source: Warburg Research | Source: Warburg Research | Source: Warburg Research | |||
COM M ENT | Published 24.08.2021 | 5 | |||
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Disclaimer
Defama Deutsche Fachmarkt AG published this content on 24 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 August 2021 19:30:04 UTC.