WRDEF - Wereldhave: Residential Gains To Drive Returns As Rising Rates Offset Rent Indexation

• Wereldhave marginally boosted outlook for direct result to 1.55-1.65 EUR/share on the back of higher indexation and leasing activity.
• I estimate that should the ECB raise rates by 150-200 bps, higher funding costs should largely offset 2% rent indexation.
• By 2027 direct result per share may drop as low as 1.27 EUR/share absent indexation or rise to 1.84 EUR/share absent higher interest rates.
• My base case is that direct result per share remains largely flat in the coming years, with residential gains and property revaluations driving returns.
• 88% of the debt is with a fixed percentage which coupled with gradual ECB hikes may delay the full impact of higher rates.

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