Halister News

(Bloomberg) -- TAG Immobilien shares rise as much as 4%, the most in 2 months, on volume that’s 90% of the 3-month average. Deutsche Bank initiated coverage of the stock earlier Tuesday with a hold rating and target price of EU12.

• Deutsche Bank says almost half of debt book can be refinanced over next 3 years, potentially cutting cost of debt by ~70bps
• Co. outperformed most peers last year with 3.3% LFL top-line growth, of which 1.6% came from rental growth and 1.7% from vacancy reduction: Deutsche Bank
  • Doesn’t expect rents to grow more, owing to structurally weaker locations and limited modernization upside
  • Still, increased capex could help with vacancy reduction
  • Deutsche Bank sees 50bps vacancy reduction annually until 2018, helping average top-line growth to ~2% a year
  • Sees risk of div. cut if sales proceeds don’t deliver enough cash flow, and says high leverage could lead to structurally higher cost of debt in downturn

DATA

• Stock has risen 5.1% month-to-date vs a 0.8% rise in the Stoxx 600 Real Estate index; is up 6% YTD vs a 2.5% fall in the SX86P index
• Of 15 analyst ratings, 4 are buys, 7 holds and 4 sells, with an average PT of EU11.5 implying ~-5% downside