LRE: No surprises from the Investors’ day
No surprises from the Investors’ day
The Company held its Investors’ day last Friday. The main highlights were:
- According to the company, the net rents should be €95Mn in 2020, up from €70.4Mn 2017e, in line with our estimates. This calculation excludes €12.0Mn of reversionary potentials estimated by the company and €8.0Mn from the investment of the remaining firepower at an average 6% yield.
- The company expects €380Mn from assets sales between 2018 and 2021. This is broken down as: (1) offices for €170Mn, (2) the Lagasca 99 residential complex for €110Mn, (3) €100Mn from mature retail assets.
- The committed capex is €247Mn, in line with our estimates. In addition, the company expects to acquire retail assets for €220Mn between 2018 and 2021.
- The company expects a NAV of €923Mn at the end of 2017, in line with our estimates, increasing by c.8% per year.
- Lar España set its dividend policy to a 5% return on NAV. This suggests a €46Mn dividend in 2018e. This is slightly higher than expected (€39Mn). On top of this payment, the company will distribute extraordinary dividends from the divestments.
- Regarding the management contract that matures in March 2019, the company said that it is negotiating some changes with its main shareholders. In any case, Lar España will continue being externally managed by Grupo Lar.
We maintain our Buy recommendation.
The guidance given by the company is in line with our estimates, except for the higher than expected dividend. The company did not provide any visibility on the terms of the management contract from March 2019. We expect the investor day to have a neutral impact on the stock price. We maintain our Buy recommendation with a target price of €10.1/share.
Lar Espana Real Estate SOCIMI SA is a Spain-based company primarily engaged in the operation of retail Real Estate Investment Trusts (REITs). The Company specializes in acquiring, managing and renting real estate assets within the Spanish market. Its business activities are divided into three segments: Shopping Centers, Offices, as well as Logistics. The Shopping Centers area is responsible for operation of a number of shopping malls, namely Txingudi, Las Huertas, Albacenter, Anec Blau, Hiper Albacenter, and Nuevo Alisal, among others. The Offices segment invests in office properties, such as Arturo Soria, Cardenal Marcelo Spinola, Egeo and Eloy Gonzalo. The Logistics division focuses on managing logistics warehouses, including Alovera I and Alovera II. The Company also owns a plot for residential properties development. It is a parent of a number of entities, such as Lar Espana Inversion Logistica SA, Gran Via Centrum Holdings SAU, Global Noctua and Puerta Maritima Ondara.
Bankinter S.A. is a Spanish brokerage firm established in 1989. The company's line of business includes the provision of market research and trading services for Equity and Fixed Income products.
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