Foncière Lyonnaise gains more than 1% in Paris as Invest Securities raises its recommendation on the stock from 'sell' to 'neutral', while the target price is raised slightly from 60.6 to 60.8 euros.

The 1st half of the year showed a good operating performance in line with the excellent health of the market for the best Parisian offices, the core of SFL's portfolio. In fact, organic rental growth rose sharply by +10.1% against a backdrop of near-perfect occupancy rates (99.6%)", notes the analyst.

Invest nevertheless points out that this performance was largely offset by the sharp rise in financial expenses (RNR/share, +1.8% to 1.16E).

Over six months, NTA NAV is down -8.1%, due to a -4.1% drop in asset values, crystallizing a still too low yield of 3.4% (+35bp). As a result, further falls in asset values are highly likely (-16% by the end of 2024, according to Invest Securities estimates).

Nevertheless, its large pipeline of projects (900mE by 2026) and good debt profile should enable RNR to post a good medium-term growth profile (including +6.1% in 2023 and +10.6% in 2024)', stresses the broker.

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