REIT SECTOR REPORT: IN A SWEET SPOT (ANÃLISIS BANCO SABADELL)
In a sweet spot.The sector is in a sweet spot: rising rents along with ultra-low interest rates, or in other words, the best of both worlds. We release a sector report in which we reiterate our BUY recommendation in MRL (T.P. € 15.79/sh., +9% vs. previous T.P.) and LRE (T.P. € 9.82/sh., -10%), whereas in COL, following the strong performance in 2019 (+42%) we downgrade our recommendation from BUY to SELL (T.P. € 12.35/sh., +11%). We expect +13% NAV growth (2018-21) in COL, +7% in MRL and -1% in LRE. These figures, reflecting the different growth outlooks in the office and retail segments, are trading with a -26% discount to NAV in LRE, -13% in MRL and +9% in COL. Our top pick in the sector is MRL, thanks to its risk/reward ratio.
Lar Espana Real Estate SOCIMI SA is a Spain-based company primarily engaged in the operation of retail Real Estate Investment Trusts (REITs). The Company specializes in acquiring, managing and renting real estate assets within the Spanish market. Its business activities are divided into three segments: Shopping Centers, Offices, as well as Logistics. The Shopping Centers area is responsible for operation of a number of shopping malls, namely Txingudi, Las Huertas, Albacenter, Anec Blau, Hiper Albacenter, and Nuevo Alisal, among others. The Offices segment invests in office properties, such as Arturo Soria, Cardenal Marcelo Spinola, Egeo and Eloy Gonzalo. The Logistics division focuses on managing logistics warehouses, including Alovera I and Alovera II. The Company also owns a plot for residential properties development. It is a parent of a number of entities, such as Lar Espana Inversion Logistica SA, Gran Via Centrum Holdings SAU, Global Noctua and Puerta Maritima Ondara.
Merlin Properties SOCIMI SA is a Spain-based company engaged in the operation of a real estate investment trust (REIT). The Company focuses on the acquisition, management and rental of commercial properties located in the Iberian Peninsula, primarily in Spain. The Company's activities are divided into the following segments: Office buildings, operating a portfolio of office space; High-street retail, engaged in leasing retail stores; Shopping centers, engaged in managing department stores; Logistics, operating logistics warehouses and distribution centers, and Others. The Company's other activities include property management services rendered to third parties.
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