Colonial SFL In line - further deleveraging plans announced on the call will be welcomed by market: 1Q26 First Take & Conf. Call Takeaways

Research evidence excerpt

Colonial SFL In line - further deleveraging plans announced on the call will be welcomed by market: 1Q26 First Take & Conf. Call Takeaways

Vanessa M Guy AC Europe Equity Research

(44-20) 7742-4521 14 May 2026 J P M O R G A N

vanessa.guy@jpmorgan.com

Investment Thesis, Valuation and Risks

Colonial SFL (Neutral; Price Target: €6.40)

Investment Thesis

Colonial is a unique play on European office markets with a focus on Paris, Madrid and

Barcelona. We rate Colonial’s portfolio very highly, as it is located in prime locations with

strong management. We also see a strong development pipeline, adding modern and

efficient space in core locations. Our reservation for now, despite the more stable yields, is

the LTV, which continues to screen high.

Valuation

Our Dec-27 target price for Colonial is based on our total returns-based European Valuation

Model, which takes into account whether a company creates or destroys value. We argue that

companies that have a positive spread between returns and their weighted average cost of

capital (WACC) should trade at a premium to NNAV, whereas those with a negative spread

should be priced below NNAV. We apply this spread to the invested capital, discount back,

and add/subtract to our NNAV forecast to derive our price target.

Risks to Rating and Price Target

• Colonial is heavily concentrated in the office sector and hence any change in demand

for space (impacted by economic growth) is likely to affect occupancy, rents and income

potential.

• There is also risk from debt financing, given the capital-intensive nature of real estate,

the requirement to finance the company is affected by the appetite of lenders to lend.

Colonial has limited near-term need for additional debt, although this remains a longer-

term risk.