NEPI Rockcastle: Still best in class, but fairly valued after rally (downgraded to HOLD)
NEPI Rockcastle (NRP) is up nearly 50% since our September 2020 sector report, where we identified the company as one of our top picks in the CEE real estate universe. It remains the best shopping centre landlord in Europe, we believe, due to its quality portfolio, hands-on management, low leverage (31.5% LTV) and excellent cost structure (best ROE in the sector). We also appreciate NRP’s conservative accounting of rent discounts. We see c.EUR 200m of room for acquisitions – if deployed, this could boost the FFO by around EUR 10-15m. That said, the visibility on shopping centre values is limited, and we cannot rule out further revaluation losses. The current uptick in inflation and the resulting increase in bond yields is also not helping the case for yield compression, in our view. The fiscal consolidation in Romania (which accounts for 40% of NRP’s rental income) could translate into lower wage growth. This could mean slower rental growth than in the past, especially against the backdrop of rising e-commerce. We have toned down our estimates on back of the still-high number of COVID-19 cases across CEE, and reduce our 12M price target (PT) slightly, in turn, to EUR 6.0/share (from EUR 6.1/share). We downgrade the stock to HOLD.NEPI Rockcastle is engaged in developing, acquiring and holding commercial properties, either directly or indirectly through the acquisition of listed equities.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.