UBM released final FY 2023 results which were in line with the preliminary figures published in March. FY sales came in at € 85.3m (eNuW: € 87.9m), implying a yoy decline of 36%. This is again mainly explained by the ongoing weakness of the real estate transaction market, which reached its lowest point since 2010 with a transaction volume of only € 29bn in Germany (-56% yoy). Hence, sales from property disposals almost halved yoy, amounting to € 48.2m (2022: € 85.2m), mainly driven by the disposal of the 34% share in Palais Hansen (Hotel), a non-core disposal in the Czech Republic as well as the ownership transfer of F.A.Z tower to HMG. FY EBT came in at € -39.4m, which was partly due to negative operating leverage but mainly caused by property write-downs to the tune of € 70m, resulting from the weak market environment as well as increased discount rates setting off increasing rent levels.

In recognition of the net loss, management will recommend to the AGM to waive the dividend as a “precautionary measure”. Yet, CEO Winkler reiterated in yesterday’s CC that this does not change the overall policy and that the company will return to be a reliable source of dividends once profitability is regained.

While management provided no guidance for 2024 yet due to the continued lack of visibility in the market, it clearly indicated that the main focus will be on the execution of the timber pipeline (75% of its € 2.3bn pipeline), with the main goal of full letting and disposing the Timber Pioneer, as well as cash management. Regarding the latter, UBM will intensify the disposal of non-strategic, mostly standing, assets (€ 480m total BV) in order to strengthen the liquidity position (€ 152m cash at YE ’23). Here, management stated that it already made good progess and is expecting first disposal sucesses in H1.

Overall, we continue to consider UBM to be well positioned for the pending reopening of the transaction market thanks to its clear focus on Taxonomy compliant hybrid-timber developments. However, the market upturn has so far failed to materialize, which, coupled with continuous outflows at real estate mutual funds, is indicating a slow and steady recovery rather than a rapid upswing. We hence remain cautious regarding ’24e, modelling a 50% likelihood of a Timber Pioneer disposal as well as some smaller disposals of non-core assets.

We reiterate BUY with an unchanged PT of € 28 based on DDM.