Everyone is gonna become old someday and some of us will eventually not be able to take care of ourselves anymore. With the population of Europe ageing, I found it interesting to look into companies which help seniors live and age with dignity. Aedifica was one of these companies so let’s take a quick look at it!
Aedifica is a fast-growing Belgian REIT specialized in health care real estate, in particular housing for seniors with care needs.
Company profile
Aedifica has established itself in recent years as a leader in the European listed real estate sector and has the ambition to further expand this position in the coming years.
By investing in quality buildings that generate recurring and indexed rental income and offer potential for capital gains, Aedifica aims to offer its shareholders a reliable and sustainable real estate investment with an attractive yield.
Taken from investor relations.
The portfolio
Aedifica has been growing really fast in recent years due to several public offerings of new shares, this has led to high growth and share appreciation in recent years combined with a high-quality portfolio.
As we can see Aedifica has some degree of diversification in its portfolio although it’s mostly focused on its core business of senior care.
These facilities have a rental yield of about ~5.8% and a 100% occupancy rate as of September 2020 which indicates that their facilities are high quality and even during covid have performed very well.
Aedifica has long lease terms with its tenants (weighted average unexpired lease term of 19.5 years!) which forms a strong base for the company.
Unlike their segment diversification, Aedifica is more diversified geographically, this wasn’t always the case but since 2013 Aedifica has been expanding aggressively into other europian countries. It has done that successfully mostly through acquisitions and development leading to a better-diversified portfolio and stunning growth of portfolio value and rental income.
You may or may not then come up with the question of tenant diversification when looking at the portfolio and luckily Aedifica has made some nice charts for us to look at:
Growth potential
But enough looking at its current portfolio, we are only interested in the future! Europe’s population is increasingly ageing and living longer: by 2060, it’s expected that more than 10% of the population will be aged over 80. This provides a good base trend for the company to build on.
The company has a nice piple of development projects, but more investement (which will probably happen through issuing new shares) could be needed. the company does currently have a debt to assests ratio of about 40% with a max investement capacitiy of around €1.8 billion (based on a max 60% debts to assets ratio).
Rental income has grown nicely (in the most recent quarter a 20% YoY increase was reported) and the company expects to growth it further through continues investements and aquicsitions. It wants to continue its solid trakc record of dividends while keeping its focus on growth. Note that in the graph bellow the dps isn’t adjusted to new share offerings.
The company seems to have good room for growth with a good track record and reasonalbe diversification geographically and among tenants. Diversifications in bussines is much less which leaves it as a pure play health care reit. With it’s current market cap of around ~€3 billion I think it still has room to grow (especially as it’s share price hasn’t really recovered since covid which in my eyes is unreasonable).
Aedifica trades under ticker AED on Euronext Amsterdam and Brussels but isn’t available on T212 as of writing (wink wink).
All charts come from the latest quarterly presentation.
Disclaimer: I nor anyone I know owns any shares of Aedifica.
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Am gonna buy more now haha