Strong FY18, growing operational resilience
Raven Property Group is a Guernsey registered property company specialising in investment and development of high-quality Grade A warehouse complexes in major Russian cities. Its portfolio is let to both Russian and international tenants.Raven had a fundamentally strong FY18, although headline comparisons were affected by a weaker Rouble and FY17 figures boosted by land sales.
End December portfolio occupancy was 89% (FY17: 81%) and local currency rents, ERVs and asset values were all ahead y-o-y.
Management has improved the resilience of operating financials over the last few years, progressively converting USD leases and debt into mainly RUB/EUR denomination. All USD debt should be exited this year, and legacy USD leases converted over the next 24-36 months. That will reduce group exposure to potential forex mismatches, while interest rate hedges add visibility to medium term debt costs.
Politics remains a source uncertainty and underlines the value of an ongoing transition to a Rouble-based operating model. That process is well on track and our forecasts are supported by acquisitions, better occupancy and the move from USD to RUB debt facilities.
The market outlook is positive - in management’s opinion better than at any time since 2014 - as demand for warehouse and logistics space benefits from both overall economic recovery and eCommerce’s growing importance locally.
Raven announced a 1.75p final distribution, paid by way of tender offer (buy back of two shares in every 51 held), a distribution of 3p/share for the year, and a yield above 7%. That process continues to reduce ordinary shares in issue and will progressively underpin EPS and NAV/share.
Raven Industries is a technology company providing a range of products to customers within the industrial, agricultural, geomembrane, construction, commercial lighter-than-air and aerospace/defense markets. The company has three reportable segments: Applied Technology Division, which includes application controls, GPS-guidance steering systems, field computers, automatic boom controls, information management tools, and injection systems; Engineered Films Division, which produces plastic films and sheeting for geomembrane, agricultural, construction, and industrial applications; Aerostar Division, which provides products that include high-altitude stratospheric balloons and radar systems.
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