WOOD Flash – NEPI Rockcastle: 1H20 – no dividend, nearly 4% revaluation loss, encouraging turnover trends
NEPI Rockcastle reached distributable earnings (FFO equivalent) of EUR 0.20/share in 1H20, down 32% yoy, in line with the profit warning published earlier this month. The company wrote off 3.9% value of its portfolio, exceeding our estimate slightly. This has pushed the LTV to 36.1%, slightly above NEPI’s target of 35%. To protect liquidity, the company decided not to pay out a dividend from the 1H20 earnings. Combined with the expected sale of the Romanian office portfolio (which should generate net proceeds of c.EUR 290m), the net LTV is likely to drop back within the targeted range, barring any further revaluation losses. The EPRA NAV stood at EUR 6.65/share, following the revaluation loss. This values NEPI at 63% P/NAV. Management is guiding for approximately a 30% contraction in the distributable earnings per share for the full year, compared with the 2019 result. It assumes a continuation of the trading trends observed to date, and does not consider any impact from potential further lockdowns. The guidance implies 2020E FFO of EUR 0.40/share, and would translate into a 9.3% FFO yield, on the current share price.NEPI Rockcastle is engaged in developing, acquiring and holding commercial properties, either directly or indirectly through the acquisition of listed equities.
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