Invest Securities has raised its recommendation on Foncière Lyonnaise (SFL) shares from 'sell' to 'neutral', following a drop in the share price, while the target price has been raised slightly, from 60.6 to 60.8 euros.

The 1st half of the year showed a good operating performance in line with the excellent health of the market for the best Parisian offices, the core of SFL's portfolio. In fact, organic rental growth rose sharply by +10.1% against a backdrop of near-perfect occupancy rates (99.6%)", notes the analyst.

Invest nevertheless points out that this performance was largely offset by the sharp rise in financial expenses (RNR/share, +1.8% to 1.16E).

Over six months, NTA NAV is down -8.1%, due to a -4.1% drop in asset values, crystallizing a still too low yield of 3.4% (+35bp). As a result, further falls in asset values are highly likely (-16% by the end of 2024, according to Invest Securities estimates).

Nevertheless, its large pipeline of projects (900mE by 2026) and good debt profile should enable RNR to post a good medium-term growth profile (including +6.1% in 2023 and +10.6% in 2024)', stresses the broker.


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