Lower results, higher NAV driven by the market - HOLD vs BUY - TP 32€ (vs 31€)
The results are positive from a market perspective and in spite of lower ordinary profits, given that NAV growth continues apace due to yield compression and that the company has managed to complete almost €100m of acquisitions, a total which has not been seen since 2013. The FY 2016 result will be lower YoY. 2017 will see the full contribution from recent acquisition and current financing conditions, as well as strategic asset management initiatives made in the H1 16. Since we raised our recommendation in March (due to the obvious speculative potential, even though the company denies that it is likely to sell the control, as well as in respect for the NAV outlook), the stock has risen 19.7% (dividend reinvested) outperforming the IEIF SIIC France index by 5.4%. We raise our estimates to discount the new investment, raising our TP to €32 vs. €31, and our recommendation to NEUTRAL vs BUY.Terreis a property management company. Co. specializes in acquiring, managing or building properties which generate rental income. Co.'s portfolio consists mainly of office and retail premises essentially located in Paris, France. For commercial premises, priority is given to properties with uncapped rent (travel agencies, estate agencies, professional practices) located in the main commercial districts right in the heart of the city center. For offices, Co. excludes high-rise buildings from its portfolio. In Paris, priority is given to historic properties in a prime location.
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