Currency in -
Last close As at 08/06/2023
-15.14
▲ −0.08 (−0.53%)
Market capitalisation
EUR1,114m
Research: Real Estate
S Immo has a track record of cleverly anticipating regional/sectoral real estate cycles in Europe. This includes the expansion into CEE in the early 2000s, later investments in the German residential and office markets and subsequent diversification outside of Berlin. Its active approach has allowed the company to post five- and 10-year EPRA NAV total returns (TR) to end-2019 of c 23% and 14% pa, respectively. Its current focus is on secondary German residential and office markets (eg Erfurt) and selective CEE investments. In the longer term, it plans to pursue development projects using its extensive landbank in the Berlin commuter belt.
S Immo |
Successfully exploiting property market cycles
Real estate |
Deutsches Eigenkapitalforum 2020
14 October 2020 |
Share price graph Share details
Business description
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Analyst
S Immo is a research client of Edison Investment Research Limited |
S Immo has a track record of cleverly anticipating regional/sectoral real estate cycles in Europe. This includes the expansion into CEE in the early 2000s, later investments in the German residential and office markets and subsequent diversification outside of Berlin. Its active approach has allowed the company to post five- and 10-year EPRA NAV total returns (TR) to end-2019 of c 23% and 14% pa, respectively. Its current focus is on secondary German residential and office markets (eg Erfurt) and selective CEE investments. In the longer term, it plans to pursue development projects using its extensive landbank in the Berlin commuter belt.
EPRA NAV down c 10% in H120 due to listed holdings
S Immo reported an EPRA NAV of €23.78 per share at end June 2020 vs €26.45 at end 2019, with the decline largely attributable to the lower share prices of its minority stakes in IMMOFINANZ and CA Immo (down 36% and 21% in H120, respectively, despite broadly stable EPRA NAV). S Immo’s portfolio saw a varying degree of impact from the COVID-19 crisis in H120, with hotel operations (including also its two owner-operated Marriott hotels) facing the greatest headwinds alongside retail properties. Conversely, residential and office properties remained largely unaffected and were even subject to positive revaluations of €19.5m and €12.0m in H120, respectively (driven by yield compression).
Retaining a strong balance sheet
S Immo’s rental income in Q220 reached €29.4m (down by only c 1% y-o-y). Rent collection in the office and residential segments remained strong (c 95% for offices), while retail (including in particular its Sun Plaza shopping centre in Bucharest) saw a greater impact of lockdown. The company’s balance sheet remains robust with a moderate net LTV of 44.6% and a cash position of c €224m at end June 2020. Part of the cash has already been spent post the balance sheet date on the acquisition of the Zagrebtower office complex in Croatia, share buyback and equity/convertible investments in IMMOFINANZ. S Immo will also pay a dividend of €0.70 per share out of FY19 earnings (implying a yield of 4.6%).
Valuation: Discount to FY20e NAV of c 17%
S Immo shares are currently trading at an FY20e P/NAV of 0.8x (based on Refinitiv consensus), which sits on par with its peer group. Furthermore, S Immo trades broadly in line with peers on FY21e and FY22e multiples (up to 10% premium based on FY22e figures). The shares offer funds from operations yields of 4.2% and 5.2% based on FY20e and FY21e numbers, respectively.
Consensus estimates
Source: S Immo data, Refinitiv consensus at 12 October 2020 |
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Research: Consumer
The 2019/20 season was typically successful from a sporting perspective, which reaffirmed Borussia Dortmund’s position as one of the leading football teams in Germany and Europe. The coming year is likely to be more challenging financially due to the operating restrictions necessitated by COVID-19, but the company is well-placed to deliver a strong recovery in earnings if restrictions ease, albeit visibility on these is limited. The valuation reflects the uncertain outlook as it is trading at a significant (166%) discount to our sum-of the-parts valuation, broadly in-line with historic sales multiples, and at a discount to its peers.
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