Branicks - comments

The FY 24 results were broadly aligned with our expectations. We expect an A&E for the bonds in H2. Devaluation of property is slowing (-6%) in 2024, but there should be stability this year. The €278m in Promissory Notes, maturing in July 2025, will be repaid from cash and sale proceeds. Branicks seeks to make €650m - €900m in sales from its portfolio in 2025. The Promissory notes are at the Branicks level, so the sales need to focus on the Branicks portfolio. If we assume 30% LTV is bank debt and €100m of the €240m cash on hand is used => €250m in asset sales would need to be completed by July. We think there may still be some Promissory Notes rolling into the A&E of the bond. The company has not yet formulated a plan for the SUNs, but we expect action before the notes go current in September. There is also €102m of bank loans due, but management expects to roll these debts on similar terms. One caller raised the special auditor issue at VIB; a group of minority shareholders want an auditor to look at the upstream loan from VIB to Branicks. Management blocked the last attempt at the AGM in August 2024. The loan is due in July 2025, but management is in discussions with VIB about the terms, and we expect an extension. We expect VIB management to agree to the extension and object to the Special Auditor proposal. We are preparing an update and will publish it shortly.