WOOD Flash – Graphisoft Park: 2Q20 results - impact on valuations limited (so far); 12% FFO yield attractive
Graphisoft Park reported its 2Q20 results yesterday evening. Following the payment of the special dividend, the net LTV increased to 33%, compared to 23% at the end of 1Q20. The stock is down 22% ytd, in total return terms, and is currently trading at a 45% discount to NAV, and at an FFO yield of nearly 12%, on the annualised 2Q20 FFO. Operationally, Graphisoft Park has benefitted from strong leasing demand in the Budapest office market during the past three-to-four years. As vacancies across Budapest were declining and the average rents started to trend up, the buildings in the Park are no longer rented at a premium to the market. While we expect to see further revaluation losses booked in the next 6-18 months, we believe Graphisoft Park is likely to retain most of its tenants. As long as we are right, and the rates remain low, we believe the drop in values should not exceed 5-15% of the portfolio value. We believe that Graphisoft Park is currently trading at attractive levels. Further developments and, potentially, a takeover by a larger peer, could be the key triggers for a rerating, we believe.Graphisoft Park SE Ingatlanfejleszto Europai Rt is a Hungary-based company engaged in the real estate operations. The Company operates as a holding and provides management, financial and administrative services to its subsidiaries. As of December 31, 2011, the Company operated two subsidiaries, Grpahisoft Park Kft, engaged in the real estate development; and Graphisoft Park Services Kft, responsible for property operation tasks. The total area of the Company's properties was nearly 18 hectares. As of December 31, 2011, the Company's two subsidiaries, Graphisoft Park Universitas Kft and GP3 Kft merged into Graphisoft Park Kft. As of December 31, 2011, the Company's parent entity was Graphisoft SE.
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