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Research: Real Estate
Raven Property Group has conditionally agreed terms on the acquisition of a Grade A warehouse in Moscow. The all-cash acquisition is expected to complete by late September and should have a positive effect on earnings and cash flow. Management hopes to announce further accretive acquisitions during the year. We will review our estimates with the interim results, due for publication on 28 August 2018. Despite economic sanctions, the Russian economy has continued to grow and real estate agents forecast that warehouse demand in the key Moscow region will continue to outstrip supply.
Raven Property Group |
Accretive acquisition agreed |
Acquisition |
Real estate |
13 August 2018 |
Share price performance
Business description
Analysts
Raven Property Group is a research client of Edison Investment Research Limited |
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Raven Property Group has conditionally agreed terms on the acquisition of a Grade A warehouse in Moscow. The all-cash acquisition is expected to complete by late September and should have a positive effect on earnings and cash flow. Management hopes to announce further accretive acquisitions during the year. We will review our estimates with the interim results, due for publication on 28 August 2018. Despite economic sanctions, the Russian economy has continued to grow and real estate agents forecast that warehouse demand in the key Moscow region will continue to outstrip supply.
Year end |
NOI* |
PAT** |
EPS** |
DPS |
Adj NAV***/ |
Yield |
P/adj NAV |
12/16 |
151.7 |
47.1 |
6.81 |
2.5 |
52 |
5.6% |
0.86 |
12/17 |
166.7 |
56.8 |
7.41 |
4.0 |
60 |
9.0% |
0.74 |
12/18e |
154.6 |
32.6 |
4.92 |
3.0 |
62 |
6.7% |
0.71 |
12/19e |
150.1 |
29.9 |
4.78 |
3.0 |
64 |
6.7% |
0.70 |
Note: *NOI is net operating income. **PAT and EPS (fully diluted) are underlying, excluding valuation movements, depreciation, share-based payments and exceptional items. ***NAV is underlying and fully diluted, excluding goodwill, deferred tax on valuation gains, fair value movements on derivative contracts and cumulative FX movements on preference shares. EPS and NAV assume convertible preference share conversion.
Raven has reached agreements, conditional on the satisfaction of certain escrow arrangements, with two selling parties, both incorporated in Russia, to acquire a c 59k sqm Grade A warehouse building, immediately adjacent to the c 195k sqm Sever logistics park in Moscow, which it acquired in November 2017. The property to be acquired is well known to Raven: it is 78% let, with an unexpired weighted average lease term of nine years and annual rent indexation of 6%. The current annualised lease income, before indexation, is RUR231.2m (c US$3.4m at US$=RUR68), rising to RUR271.7m (US$4.0m) when fully let. The consideration totals RUR2.45bn (US$36.2m), with RUR160.0m (US$2.4m) deferred for six to eight months. This is to be met from existing cash resources (end 2017 cash and equivalents were US$266.6m), and in our last published note we illustrated the potential for acquisitions to more than offset rent reversion to current market levels and return the company to growth.
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Disclaimer
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Disclaimer
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UmweltBank’s (UBK) lending activity in H118 illustrates the considerable demand for green construction financing amid high residential demand in Germany. Moreover, the impact of recent regulatory changes in the renewable energy segment so far seems to be less pronounced than initially expected. A successful placement of the junior green bond, which is currently underway, would equip the bank with a capital base allowing it to leverage these favourable trends and further grow its loan portfolio. UBK shares continue to trade at a P/BV of 1.2x in 2018e, which looks low relative to the bank’s ROE (which we forecast at 11.8% in FY18).