Stoneweg Europe Stapled Trust "Value up as risks diminish and growth outpaces"

Research evidence excerpt

Stoneweg Europe Stapled Trust "Value up as risks diminish and growth outpaces"

Stoneweg Europe Stapled Trust UBS Research

Executive summary

Real estate's inflation-hedge qualities to show

European property assets offer an inflationary hedge through CPI-linked/similar typeleases. Case in point, SERT's like-for-like (LFL) NPI growth rates had even trended as high Sponsored

as +3-5% p.a. across 2023-25. However, a lot of this growth was offset by the rebasing

of portfolio interest rates to much higher levels. As the rate environment normalises, and

rents continue to grow, the above should equate to inflationary top line growth flowing

through to the bottom line, supporting visibility over the near term ~2% p.a. type

growth rates in income and NAV. ResearchSERT's strategy unchanged, but at the cusp of acceleration

Since the days of being known as Cromwell European REIT, SERT and the broader This

sponsor group have been making significant progress to restructure its entities and is creation aacquire new capabilities, particularly within the data center business. While data centers

remain a core focus, we think SERT's strategy largely remains unchanged - create value and

and recycle capital. In its years of history, SERT has been steadily undertaking assetenhancement initiative (AEI) projects, optimising assets to raise rents, and divesting non- sponsored

core assets. We think data centres offer more optionality and accelerate income/

NAV growth for unitholders. We expect growth in value of SERT's data centre fundholdings to add an additional 2-3% p.a. NAV growth on top of the typical inflationary dissemination research

1-2% growth rate p.a., bringing 7%/12% cumulative DPU/NAV changes across 2025- of

28E. the report