Globalworth: No sleeping on laurels (upgraded to BUY)
Globalworth’s portfolio has more than doubled in the past 18 months, growing from EUR 940m in mid-2017 to over EUR 2.0bn currently. In addition, management still sees further growth opportunities. Apart from the developments under way in Romania, Globalworth has secured exclusivity for EUR 280m of acquisitions in Poland, with a blended yield of over 7.5%. To finance the expansion, management announced the intention to raise an additional EUR 500m of equity. This would improve scale (a lower share of overheads to rental income; better access to financing), as well as the liquidity of the shares. We view the company as an excellent play on the evolution of the CEE office markets, and the broader CEE convergence. Demand for office space in both Romania and Poland continues to exceed expectations, while the room for yield compression in Bucharest remains significant, in our view. While some caution is in place regarding the risk of oversupply in Warsaw, with an average weighted outstanding lease term of 5Y and a high-quality portfolio, Globalworth’s rents should be resilient, in our view. Trading at a 7-8% FFO yield on our 2019-20E, and a touch below its EPRA NAV, we believe Globalworth is attractively valued at current levels. Rolling our model forward one year, we have increased our price target (PT) to EUR 10.8/share, and upgraded our recommendation to a BUY.Globalworth Real Estate Investment is a integrated real estate company operating in the Central and Eastern Europe and South-Eastern Europe region with a primary focus on Romania, where it acquires, develops and directly manages primarily office and logistics/light-industrial real estate assets. Co. has three reportable operating segments: the Offices segment, which acquires, develops, leases and manages offices and spaces; the Residential segment, which builds, acquires, develops and leases apartments; and the Other segment, which acquires, develops, leases and manages industrial spaces and corporate holding offices.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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