Guidance hike amid improved Q4 cost structure; Chg.

Management now projects rental income at the upper end of the previous range of € 52-54m (eNuW: € 55m) and lifted the FFO I expectation to € 9-11m (old: € 5-7m; eNuW old/new: € 7.8m/€ 9.2m). This represents a material upgrade (+67% at mid-point for FFO) compared to the earlier guidance, which had assumed further meaningful disposals in H2’25 (eNuW: € 25-40m). The revised outlook is consistent with the latest quarterly trends as 9M FFO I already came in at € 8.3m.

The postponement of asset sales means rental income remains supported by a higher asset base, partially offsetting the elevated vacancy (17.4% at 9M). While vacancy remains above the medium-term target (<10%), management reiterates that leasing progress and selective capex should support future occupancy. In fact, letting performance has also shown sequential improvements (112k sqm YTD)

As previously discussed, the company needs to redeem € 50m of its corporate bond in ‘25 and ‘26 to avoid penalty fees under the refinancing agreement. The shift of disposals into 2026 means that this threshold will not be met this year, as communicated before, implying a 3% penalty. However, this is only partly P&L relevant in 2025 and cash-relevant only at maturity. The company continues to prepare 2026 disposals to meet the next threshold (eNuW: >€ 75m at ±0% BV discount).

While the guidance upgrade shows that commercial real estate in B and C locations is still not a seller’s market (Q3 still deal volume still 70% below Q3’22 level), it also displays the resilience of DEMIRE’s cash generation despite refinancing constraints and elevated vacancy. Cost discipline continues to support margins even in this difficult environment, and the larger portfolio base provides temporary earnings relief until market conditions allow acceptable pricing for disposals.

Shares remain deeply discounted currently trading 75% below the company’s NAV. We thus continue to recommend BUY, especially for investors focused on special situations, and keep our PT unchanged at € 1.00 based on our NAV model.