S IMMO is seen to release a sound set of Q3 results on November 29th, as revenues are seen to increase 22% yoy to € 79.8m. Rental income looks set to grow 20% yoy to € 47.5m, which should be mainly driven by 2022 acquisitions and only a minor visible effect from the most recent acquisition of the Twin Towers in Vienna. Revenues from hotel operations are seen to have another strong performance with 30% yoy growth to € 19.0m, driven by seasonality as well as the absence of any CoV restrictions. While the company did not conduct an external revaluation of the portfolio in Q3, we expect minor negative valuation effects to the tune of € -8m resulting from property disposals (e.g. Adlerhof in Vienna was sold for € 48m).

Aside from the operating performance, S IMMO recently provided major newsflow:

• Share buyback: In late Q3, management resolved on a share buyback program of up to 736k shares at € 15 max. per share, equalling c. 1% of share capital. A sensible move to create shareholder value, in our view, as the stock is currently trading 48% below NTA despite industry leading metrics (35% LTV, 5.5% NIY, 48% equity ratio). Still, in light of the low trading volumes and strict buyback regulations of the Vienna Stock Exchange, we do not expect the company to repurchase the targeted volume as the program ends at YE. So far 107k shares have been repurchased.
• Wienerberg portfolio completed: In late October, S IMMO announced to acquire the remaining four objects of the Wienerberg portfolio (e.g. Twin Towers). The properties have a lettable area of 81k sqm and generate € 8.4m. Given the comparably high vacancy rates, we estimate a purchase price < € 200m (vs € 217 in LOI). The deal is seen to be financed mainly with existing cash (eNuW: € 400m after Q3).
• New major LOI: S IMMO signed an LOI for a portfolio in Czech Republic, comprising 138k sqm and generating € 28m. Given a 6% GIY (eNuW), the purchase price should be around € 470m. First parts of the LOI look set to be closed in H1’24, as S IMMO will likely inherit existing financing at attractive levels paired with financing from its strong cash positions.

S IMMO continues to provide one of the most attractive risk/reward profiles in the industry based on excellent metrics. Reiterate BUY with a € 17 PT based on NTA and DDM.