Norwegian Property (Hold, TP: NOK11.00) - NAV potential unlikely to be realised
Higher property costs than forecast drove a Q2 earnings miss, and with yield compression also coming to an end, NPRO reported negative asset value changes on write-downs in Stavanger and cash flow effects from assets sold Given the low yields in Oslo’s CBD, we see pressure from rising interest rates in the coming years. We are concerned NAV potential may not be realised due to the low share liquidity, and reiterate our HOLD, but have raised our target price to NOK11 (10)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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