Initiation: Targeted property investment in emerging Europe
Secure Property (SPDI) is focused on growing operating cash flow by acquiring commercial and industrial properties in South-East and Eastern Europe, with strong tenants and at attractive prices. Future capital gains are a prospect. The May acquisition of a logistics centre in Romania and additional acquisitions expected by management in the near term (our forecasts assume c US$30m) are leveraging equity raised in 2013 with new debt; a full-year contribution from these should significantly increase 2015 cash flow. There is uncertainty about the Ukraine assets, which represent a material but decreasing share of the current total although cash flows are substantially pegged to the US dollar. Management believes the crisis may be a catalyst to unlock Ukraine’s economic potential after years of underperformance. Meanwhile, SPDI seeks further substantial growth and diversification via acquisitions funded by new equity and debt (see p 13).
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