DEFAMA DEUTSCHE FACHMARKT AG DEFAMA Deutsche Fachmarkt AG (DEF GY) | Real Estate
Large portfolio acquisition after capital increase
Last Friday, the company announced its first large portfolio acquisi tion after the recent successful capital increase with a gross proceed of EUR 10.3m. DEFAMA will acquire in total five properties located in the federal state of Rhineland-Platine for an acquisition volume of EUR 15m, which together generate annual rents of EUR 1.3m. DEFAMA´s large acquisition underpins in our view the company's ambition to accelerate portfolio growth, which we believe could re sult in an upgrade of the conservative FY 25e targets (FFO of EUR 11m/annualized rents of EUR 24m) in the foreseeable future. Including the latest acquisition, we estimate that DEFAMA has already ac quired properties for in total approx. EUR 22m in FY 22e. Hence, the company has already reached its annual acquisition volume target of EUR 15m-20m very early this year. We therefore see a high likelihood for further acquisitions in the remainder of the year and now target an acquisition volume of EUR 25m for FY 22e (prev.: EUR 20m). In total, we think DEFAMA is now in a comfortable financial position to exe cute on portfolio growth in the foreseeable future after the recent high inflow of liquidity. Our positive stance on the investment case re mains unchanged and we continue to stick to our Buy rating. We slightly lower our PT to EUR 31.50 (32.50) due to negative dilution ef fects from the recent capital increase.
■ Changes in estimates: Our FFOPS estimates for FY 22e/FY 23e decrease by -7% respectively -5%, reflecting negative sharehold er dilution.
■ Valuation: DEFAMA trades at an P/FFO 23e multiple of 13.3x, its peers at 15.1x.
Fundamentals (in EUR m)1
Sales
EBITDA
EPS adj. (EUR) FFO
DPS (EUR)
Operating Cash Flow (EUR) Dividend paid (EUR) Capital expenditures (EUR)
Ratios1
EV/EBITDA PCFR
P/E adj.
2018
9
6
0.46
3.6
0.40
3
1
31
2018
19.6
8.7
25.9
Dividend yield (%) EBIT margin (%) Gearing (%) PBV
3.3
39.5
396.8
2.7
1Sources: Bloomberg, Metzler Research
2019
Buy | |
unchanged | |
Price* | EUR 27.80 |
Price target | EUR 31.50 (32.50) |
April 25, 2022
* XETRA trading price at the close of the previous day unless stated otherwise in the Disclosures
Market Cap (EUR m)1 133
Enterprise Value (EUR m)1 274
Free Float (%)1 65.0
Price (in EUR)1
2020
2021e
2022e
2023ePerformance (in %)1
0.51
11
7
0.57
15
9
1.14
17
13
20 23 Share 13 15 Rel. to Prime All Share 0.78 0.90
0.45
4.6
0.48
5.9
0.51
7.1
8.6 10.0 0.54 0.58
Changes in estimates (in %)1
Sales
4
5
7
8 8 EBIT
2
2
2
2 3 EPS
16
38
30
25 20
2019
Sponsored Research
2020
1m 0.0 1.2
3m
12m
1.5 43.3
8.1 53.7
2021e 2022e 2023e
0.0 0.0 0.0
0.0 2.7
0.0 3.2
-7.9 -4.7
2021e
2022e
2023e
19.4
21.5
18.4
21.7 19.7
10.5
281.7
10.9
32.5
40.1
2.7
2.8
10.5
420.5
11.7 10.1
34.8
38.6
2.4
3.5
24.4
432.9
35.8 31.0
1.8
55.4
4.3
1.9 2.1
40.2 40.0
424.6 425.1
4.1 3.7
Author: Stephan Bonhage
Financial Analyst Equities+49 69 2104-525stephan.bonhage@metzler.com
Information for professional clients and eligible counterparties - not to be passed on to private clients 1
Background information on the latest acquisition
Negative dilution effects from the recent capital increase should be man ageable
The acquisition of five properties in Rhineland-Platine marks the the third acquisition of the year, after DEFAMA already bought one property in Schneeberg (Sax ony) and one property near Wolfsburg (Lower-Saxony). DEFAMA will pay EUR 15m for these five properties located in the towns Hachenburg, Heiligenroth and
Lahnstein. They together generate annual rents of EUR 1.3m, which leads to an ac quisition multiple of 11.5x. According to DEFAMA, roughly 80% of rents can be contributed to tenants with strong credit ratings, including DM, Getränke Hoff mann, JYSK, Kik, Matratzen Concord, TEDi and Total. In our view, the companies can be considered as typical tenants for the company, apart from the service station operator Total. With the recent transaction, the company increased its annual ized FFO to over EUR 9.1m respectively EUR 1.91 per share.
The recent capital increase with a gross proceed of EUR 10.3m sets in our view the prerequisite for a possible acceleration of the portfolio expansion. The company has now a comfortable liquidity position, allowing to invest more strongly into its existing properties or execute a higher acquisition dealflow in the near future. In that regard, we believe that DEFAMA´s FY 25e targets (FFO of EUR 11m/annual ized rents of EUR 24m) appears to be conservative and could be upgraded in the foreseeable future. In total, the company has issued 380,000 new shares at the re cent capital increase, representing approx. 8.6% of the previous share count of ~4.4m shares. The dilution of shareholders should be therefore manageable and could in our view be gradually offset by a higher portfolio growth momentum in the coming years.
Changes in estimates
We lower our FFOPS estimates for FY 22e/FY 23e by -7% respectively -5% after in corporating the new number of outstanding shares into our estimates. For FY 22e, we now expect an annual acquisition volume of EUR 25m (prev.: EUR 20m), result ing in slightly higher rental income and FFO estimates for FY 23e than previously anticipated. In total, we continue to expect double-digit percentage rental income and FFO growth at DEFAMA in the coming years (M´e: 16.8% sales CAGR 20-23e).
Valuation
We derive our new PT of EUR 31.50 from our updated peer group valuation. Be side the closest German peers DKR (BUY/PT EUR 17.60) and VIB Vermögen, the peer group now also comprises several North American REITs, which have similar to DEFAMA a relevant exposure to grocery-anchored properties in their property portfolio.
Key Data
Company profile
CEO: Matthias Schrade
CFO: -
Berlin, GermanyDEFAMA, headquartered in Berlin, is a large German real estate company that specializes in the acquisition and management of retail parks. Acquisition targets are retail parks in small and medium-sized German cities, preferably in Northern and Eastern Germany. As of the 31.12.2021, DEFAMA´s property portfolio com prised 50 properties.
Major shareholders
Matthias Schrade (26%), Supervisory board (2%)
Key figures
P&L (in EUR m)
2018
%
2019
%
2020
%
2021e
%
2022e
%
2023e
%
Sales
9
55.9
11
23.3
15
30.1
17 16.6
20
17.6
23 16.0
EBITDA
6
42.3
7
27.3
9
27.6
13 50.2
13
-6.5
15 16.2
EBITDA margin (%) EBIT
60.9
-8.7
62.9
3.2
61.7
-1.9
79.4 28.8
63.1
-20.5
63.2 0.2
4
34.5
4
25.3
6
25.1
9 67.4
8
-14.6
9 15.4
EBIT margin (%) Financial result EBT
39.5
-13.8
40.1
1.6
38.6
-3.8
55.4 43.6
40.2
-27.4
40.0 -0.5
-1
-49.0
-2
-28.7
-2
-23.9
-3 -22.1
-3
-17.6
-4 -15.2
2
27.1
3
23.3
3
25.8
7 95.0
5
-26.9
6 15.5
Taxes
-1
-34.3
-1
-28.7
-1
-38.7
-2 -79.9
-1
29.7
-1 -15.5
Tax rate (%) Net income Minority interests
-24.5 n.a.
-25.6 n.a.
-28.2 n.a.
-26.0 n.a.
-25.0 n.a.
-25.0 n.a.
2 25.0
2
21.5
3
21.4
5
101.0
4
-25.9
4 15.5
0 n.m.
0
-48.8
0
-62.9
0
169.7
0
0.0
0 0.0
Net Income after minorities Number of shares outstanding (m) EPS adj. (EUR)
2 4 0.46 0.40
23.4 2.1 20.7 17.6
2
22.5
3
21.9
5
100.9
4
-26.0
4 15.6
4
11.9
4
9.1
4
0.0
5
8.6
5 0.0
0.51
9.5
0.57
11.7
1.14
100.9
0.78
-31.9
0.90 15.6
DPS (EUR) Dividend yield (%)
0.45
12.5
0.48
6.7
0.51
6.3
0.54
5.9
0.58 7.4
Cash Flow (in EUR m)
3.3 n.a.
2.7 n.a.
2.4 n.a.
1.8 n.a.
1.9 n.a.
2.1 n.a.
2018
%
2019
%
2020 %
2021e
%
2022e
%
2023e
%
Operating Cash Flow Increase in working capital
3 24.1
4 11.1
5 30.6
7 37.0
8 10.3
8 12.0
0 n.a.
0 n.a.
0 n.a.
0 n.a.
0 n.a.
0 n.a.
Capital expenditures 31 42.1
16 -48.4
38 135.7
30 2 -25
-21.7
25 2 -20
-15.8
20 -20.0
Dividend paid 1 70.0
2 29.4
2 27.5
6.7 28.4
6.3 21.1
3 13.7
Free cash flow (post dividend) -29 -45.6
-14 52.2
-35 -152.3
-14 28.3
Balance sheet (in EUR m)
2018
%
2019
%
2020
%
2021e
%
2022e
%
2023e
%
Assets
86 54.8
104 21.6
137 31.1
160 16.8
183 14.3
201 9.8
Goodwill Shareholders' equity Net Debt incl. Provisions Gearing (%)
0 n.a.
0 n.a.
0 n.a.
0 n.a.
0 n.a.
0 n.a.
16 65
43.9 60.2
25 70
50.7 7.0
25 106
2.1 52.4
29 126
15.5 18.9
33 140
13.7 11.5
36 10.0
155 10.1
396.8 n.a.
281.7 n.a.
420.5 n.a.
432.9 n.a.
424.6 n.a.
425.1 n.a.
Net debt/EBITDA
Structure
Tenant strucutre 2020
Sources: Bloomberg, Metzler Research
11.7 n.a.
9.9 n.a.
11.8 n.a.
9.3 n.a.
11.1 n.a.
10.6 n.a.
Disclosures
Recommendation history
Recommendations for each financial instrument or issuer - mentioned in this docu ment - published by Metzler in the past twelve months
Date of dissemi nation
Metzler recommendation * Previous CurrentCurrent price **Price target * Author ***
Issuer/Financial Instrument (ISIN): DEFAMA Deutsche Fachmarkt AG (DE000A13SUL5)
01.03.2022
21.02.2022
03.11.2021
11.10.2021
29.07.2021
19.05.2021
30.04.2021
Buy Buy Buy Buy Buy Buy BuyBuy Buy Buy Buy Buy Buy Buy
28.00 EUR
32.50 EUR Bonhage, Stephan
27.80 EUR
32.50 EUR Bonhage, Stephan
25.00 EUR
27.20 EUR Bonhage, Stephan
24.60 EUR
27.20 EUR Bonhage, Stephan
22.40 EUR
25.50 EUR Bonhage, Stephan
20.00 EUR
23.00 EUR Bonhage, Stephan
19.50 EUR
23.00 EUR Bonhage, StephanIssuer/Financial Instrument (ISIN): Deutsche Konsum REIT-AG (DE000A14KRD3)
15.02.2022
20.12.2021
09.12.2021
04.10.2021
13.08.2021
18.06.2021
17.05.2021
Buy Buy Buy Buy Buy Buy BuyBuy Buy Buy Buy Buy Buy Buy
13.35 EUR
17.60 EUR Bonhage, Stephan
14.00 EUR
17.60 EUR Bonhage, Stephan
14.10 EUR
17.90 EUR Bonhage, Stephan
14.40 EUR
17.90 EUR Bonhage, Stephan
14.65 EUR
17.90 EUR Bonhage, Stephan
15.15 EUR
17.90 EUR Bonhage, Stephan
15.20 EUR
17.90 EUR Bonhage, Stephan
* Effective until the price target and/or investment recommendation is updated
(FI/FX recommendations are valid solely at the time of publication)
** ***
XETRA trading price at the close of the previous day unless stated otherwise herein
All authors are financial analysts
DEFAMA Deutsche Fachmarkt AG 13 . Metzler, a company affiliated with Metzler and/or a person that has worked on compiling this report has reached an agreement with the is suer relating to the production of investment recommendations.
Compiled: April 25, 2022 08:32 AM CEST
Initial release: April 25, 2022 08:32 AM CEST
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Defama Deutsche Fachmarkt AG published this content on 25 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2022 07:18:09 UTC.
