Norwegian Property (Buy, TP: NOK14.00) - Attractive valuation on quality
We expect Covid-19 effects and the lower oil price to hit Oslo market rents and vacancy rates from now on. However, with an 11.1% office vacancy rate in Q1 (7.5% in the CBD, Aker Brygge), we believe some of the downside in Norwegian Property has already been removed. We expect the company’s vacancy rate to fall back to market levels (c8%), given the high quality of its assets. This would be positive in our view, even if it has to lower prices. Q1 EBITDA fell shy on a provision of NOK9m for future Covid-19 effects. With a solid NAV discount and attractive assets, we have upgraded to BUY (HOLD), but cut our target price to NOK14 (15).Norwegian Property operates in management, acquisitions, sales and development of commercial real estate, including participation in other companies as well as businesses which are related as such. Co.'s properties primarily comprise office premises with associated warehousing and car parks, and retail and catering space. Co.'s activities are organized in four business areas: marketing and letting; property management; property development; as well as transactions and financing. As of Dec 31 2013, Co. owned 41 office and commercial properties in Norway, located in Oslo, Baerum, at Gardermoen and in Slavenger.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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