Cofinimmo Posts 8.3% Rise in Earnings Despite Rental Growth Slowing

Cofinimmo COFB kicked off 2026 with a solid first quarter, reporting EPRA earnings of €62 million, an 8.3% year-on-year gain. That works out to €1.63 per share, though this figure includes a €0.12 drag linked to asset disposals.

The Belgian real estate player confirmed its full-year target of €6.35 EPRA earnings per share, signaling confidence despite some headwinds. Occupancy levels ticked up to 98.5% by March's end, which is a positive indicator given the broader industry's challenges.

Breaking down occupancy by segment, healthcare properties proved especially resilient at 99.4%, distribution centers nearly fully occupied at 99.8%, while office spaces lagged relatively behind at 93.5%. It's no secret that offices have been under pressure amid shifting work habits and economic uncertainties.

Meanwhile, the EPRA net tangible asset value crept up 1.1% since December to €93.98. The company's yield also saw an uptick - the EPRA initial yield hit 5.5%. On leverage, the debt-to-assets ratio was trimmed to 42.1%, with borrowing costs stable at 1.5% thanks to full hedging.

During the quarter, Cofinimmo wrapped up €20 million in new investments alongside €30 million in disposals. Their 2026 outlook bumps net investments to €200 million, balancing €310 million planned acquisitions with €110 million expected sales.

Rental income growth showed signs of slowing, though it still managed a 0.7% increase year-over-year, totaling €88.8 million. On a like-for-like basis, rental growth cooled to 1.1% from 2.9% the same quarter last year. This slowdown reflects mixed rental performance: indexation contributed 2.0%, new leases added 0.8%, but tenant departures and lease renegotiations trimmed 1.3% and 0.4%, respectively.

Segment-wise, healthcare rents grew 1.6%, distribution networks picked up 2.2%, but offices suffered a 2.1% rental drop. Asset valuations mostly followed suit, with the portfolio down 0.1%. Healthcare assets held steady, distribution dipped marginally by 0.1%, and offices dropped 0.7%. France's healthcare properties took a 0.5% valuation hit, linked to recent fiscal changes and inflation revisions.

Though rental momentum has lost some steam, Cofinimmo's strong occupancy and asset quality particularly in healthcare have kept earnings on an upward track. The office segment still grapples with market adjustments, which might be a lingering concern for landlords focusing on that space.

In a market where real estate trends can shift quickly, Cofinimmo's balancing act between growth and managing slower segments will be interesting to track throughout the year. Will healthcare's strength be enough to offset office sector weaknesses if the broader economy continues to wobble?