WOOD Flash – GTC: CEO suggests Lone Star should not sell below EPRA NAV (EUR 2.37/share, or c.PLN 10.17/share)
In an interview with Bloomberg, GTC's CEO Thomas Kurzmann has said that Lone Star is in talks with two final bidders, suggesting that Lone Star should not sell its 62% stake in GTC at a price below the 3Q18 EPRA NAV (EUR 2.37/share, or c.PLN 10.17/share). This is in line with our view: we believe GTC is significantly undervalued at current levels; all the more so, as the 9M18 results showed that the company is en route to exceed our 2018E FFO estimate, in our view. If we annualise the 9M18 FFO, we arrive at EUR 61m, or PLN 0.56/share, on the current exchange rate. This would translate into a FFO yield of 6.7% on yesterday's close (the shares gained 5% after Bloomberg published the interview). With its large development pipeline, GTC screens as the fastest-growing European real estate name, on the Bloomberg consensus. On its current share price, it also ranks among the cheapest. We forecast a 15% FFO CAGR over 2017-22E, despite integrating a recession into our forecasts. We reiterate our BUY rating, and our PT of PLN 10.4/share offers 25% upside.Globe Trade Centre is the parent company of the capital group, Globe Trade Centre (the Group). The Group is engaged in the development and rental of office and retail space and the development and sale of residential units. The Group is a real estate company in Central and Eastern Europe and South-eastern Europe, operating in Poland, Romania, Hungary, Croatia, Serbia, Bulgaria, and Slovakia. Additionally, it co-owns land in Ukraine and Russia and operates in the Czech Republic. The Group's portfolio comprises: completed office buildings and office parks as well as retail and entertainment centres; residential projects; and undeveloped plots of land and suspended projects.
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