- 1Q26 indicative DPU of 3.423 €cents rose 1.5% YoY, in line with our estimates and forming 25.6% of our FY26e forecast. 1Q26 NPI declined 1.3% YoY due to asset divestments ahead of capital recycling into investments completed end-March 2026. On a like-for-like basis, NPI increased 2.3%, driven by a 3.7% growth in logistics/light industrial. Distributable income edged up 0.4% YoY, while DPU outpaced at 1.5% on the back of security buybacks (2.1mn securities repurchased YTD).
- Portfolio occupancy inched up 0.2ppt QoQ to 92.8%, with 37k sqm of leases (2.3% of portfolio) secured in 1Q26 at a positive rent reversion of 3.9%. €85mn of investments were deployed in 1Q26, comprising a €35mn logistics asset at a 6.0% NOI yield and a €50mn additional investment into AiOnX via a mandatory convertible loan (MCL) carrying a fixed 7.25% annual cash coupon, which is expected to drive a c.2% DPU accretion.
- Maintain BUY with an unchanged DDM-derived TP of €1.89 and no change to our forecasts. SERT’s portfolio is c.8% under-rented, providing scope for further positive rent reversions. Its investment in AiOnX offers both recurring coupon income and meaningful NAV upside potential as development milestones are achieved. Amid rising inflation stemming from the Middle East conflict, SERT’s portfolio is relatively resilient given rental indexation across most leases (est. 3% annual rental growth), which should drive organic growth. In addition, exposure to higher utility costs is limited, as these are largely borne by tenants. FY26e DPU is expected to remain in line with FY25, implying an attractive 8.7% dividend yield, while trading at a compelling 0.75x P/NAV.
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