CA Immo confirmed at BUY, TP 36.5 - Stable performance, prime assets should continue to perform
We confirm CA Immo at BUY with a new TP of EUR 36.5 per share (down from EUR 39.0) on the back of (1) a stellar fundamental 1H performance despite the lockdown, (2) stable expectations for 2H, (3) good portfolio quality with a large proportion of financially healthy tenants and (4) ample cash to take advantage of potential market opportunities that might arise. Uncertainty surrounding offices still remains; nevertheless, the marsket has shown some resilience so far and we see demand for prime properties to remain in favour of investors and tenants. CA Immo is currently valued at discounts of 20% to its IFRS NAV and 32% to its EPRA NAV, which would imply an IFRS BV decrease of EUR 550 mn (11% of portfolio) if we assume that in the long run a 1.0x multiple is justified (past two years premium of ca. 10%). We consider this as somewhat overdone due to (1) the focus on prime offices, (2) the fact that valuation impacts so far have been limited and BV even increased in 1H, (3) a decrease in interest rates (wider yield spread vs. government bonds, investors looking for yield) which should be supportive for the valuation and (4) continued development and zoning activities that should support the portfolio value.CA Immobilien Anlagenis a real estate investment company. Co. invests in commercial real estate, comprising hotel, residential, office, industrial, storage space, and logistics. Co. is also active in project development business. Co.'s activities are focused in Austria, Germany and Eastern Europe. Co. has 263 subsidiaries (including 24 joint ventures) in the following countries: Germany, Austria, Hungary, Luxembourg, Bulgaria, Netherlands, Slovakia, Cyprus, Russia, Czech Republic, Poland, Croatia, Ukraine, Romania and Serbia. Co., through its subsidiaries, is engaged in creation of entire urban districts, acquisition of real estate, project development, as well as property renovation.
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