Tags
Adler Real Estate, BIW, Conwert Immobilien Invest, Deutsche Annington Immobilien, Deutsche Wohnen, Estavis, Gagfah, German property, Grand City Properties, GSW Immobilien, KWG Kommunale Wohnen, LEG Immobilien, NAV discount, Patrizia Immobilien, REIT, residential property, Stavros Efremidis, TAG Immobilien, Taliesin Property Fund, Youniq
It’s a year now since I completed my German residential property series (Parts I, II, III, IV & V, and the first part of this post offers a brief recap) so it’s a good time to take another look. With winter drawing in fast, why not whip up a plate of sauerbraten & pour a (very) large stein of beer, and we’ll begin:
I’m ignoring companies with non-English IR websites. This may be a personal prejudice, but sometimes it can be hard enough to decipher a company’s communications & (underlying) performance without suffering a language barrier too! For practical reasons, I’m also ignoring sub-10 million market caps, plus companies with a relatively minor German property allocation. [But here’s a fairly comprehensive list of these companies]. I’m kicking out Youniq (YOU:GR) (see comments below), plus Speymill (SYG:LN) which has disposed of its German property to Jim Mellon. However, I’ve added two big IPOs from earlier this year (Deutsche Annington & LEG), plus Adler who ramped up its residential portfolio this year (& added an English IR website). Finally, I’ll still treat Deutsche Wohnen & GSW as separate companies, even though the takeover of GSW’s now a done deal. [GSW may well remain a separately listed company]. This leaves us with 13 companies, a baker’s dozen – the vast majority of which are residential pure plays. They should serve as a good proxy for the entire sector:
Conwert Immobilien Invest (CWI:AV)
Deutsche Annington Immobilien (ANN:GR)
Grand City Properties (GYC:GR)
Taliesin Property Fund (TPF:LN)
[Note Conwert & Estavis have nearly a third of their portfolios invested in commercial property – this allocation will likely continue to decrease. Note also, nearly a quarter of Conwert’s portfolio is invested in Austria].
[NB: If you’re seeking (greater) exposure to Berlin/E German property, these are probably the best companies to focus on: Conwert, Taliesin, GSW, Deutsche Wohnen, Estavis & TAG Immobilien].
The specific focus on residential property is no accident – it’s increasingly common in the past number of years, as companies bid on large municipal portfolios & bulked up to achieve increasing economies of scale. This trend’s acquired additional momentum in the past year or two, as large-cap/pure play residential companies have increasingly traded at a premium to NAV. And judging by far higher US REIT valuations (on average, despite recent setbacks), there could be a lot more mileage to be enjoyed by investors. Meanwhile, German companies remain (understandably) focused on a continued land grab for cheap property – but when they eventually re-focus on FFO, tax efficiency & dividends, it may well usher in a fresh revaluation phase.
Of course, when it comes to property everybody’s looking for something different… It’s far better for me to come up with a selection of rankings, which should provide a good feel for the sector & perhaps suggest a few research candidates. [NB: All ratios are based on Nov-20th eod share prices. I’ve confirmed/calculated & double-checked all figures, but please do your own research & confirmation if you’re considering a particular company. I’ve also derived certain figures, and/or made adjustments, as appropriate – email me if you wish to clarify any details]. To change it up a bit, in each category I’ll generally provide a Top 5 plus some sector stats – let’s start with:
EUR Value per Sqm:
Values are cheapest in E Germany, begin to increase as you head West, and then jump substantially as you go down South. Surveying the table, value’s actually less about location & more about access to large-scale/cheap portfolio purchases – North Rhine-Westphalia (NRW) has provided the best opportunities to date. [Though I suspect we’ll see increasing activity & focus on Berlin/E Germany going forward]. The sector average is EUR 959 per sqm, while a EUR 900 per sqm market cap weighted average reflects the purchase discounts & economies of scale larger companies can achieve. On a relative or even absolute basis, I hardly need to remind you how cheap these values are..!
Of course, ultimately one might argue price equates to location, but I probably stopped listening… Yes, there’s some truth to the equation, but it’s mostly a crock – dreamed up by real estate agents wanting you to pay up & fatten their commissions. [Don’t get me wrong – I’m certainly not implying every word out of their mouths is a lie…I mean, they have to sleep occasionally, don’t they?!] Trouble is, people are tremendously insecure about property, which means they’re suckers for this kind of shite – so it tends to become a self-fulfilling prophecy. Personally, I believe the cheaper a property, the safer it is & the more upside potential it presents – particularly true of German residential property, I believe, especially at this point in the cycle. Anyway, yield is the great equalizer – one property might be a multiple of another in terms of value, but I’ll happily bet their yields are pretty similar. Let’s take another look:
Property Yield:
Again, we’re looking at a real bargain here – the sector enjoys a 6.8% portfolio yield, while the weighted average yield edges up to 7.0% – presumably assisted by the purchase discounts larger companies manage to capture. Hmmm, now which would you prefer: Managing large blocks of German apartments, or the latest US property craze – i.e. trying to assemble & manage thousands of individual rental homes?! [Then again, I’m asking the wrong question – US REIT investors will pretty much buy anything you shove down their throats. But God forbid you offer them German property… ;-)] Of course, these portfolio values & yields aren’t necessarily what an investor gets – it all depends on what they pay:
Price/Book Value:
[NB: I prefer to calculate NAV based on an average of IFRS & EPRA NAVs].
I’ve included a Top 6 here, as KWG & Conwert essentially overlap. [Note also: Two companies end up unfairly ranked from a P/B perspective: i) Patrizia has an external EUR 10 billion of Assets under Management (AUM), which isn’t reflected in its NAV, and ii) Grand City has an 8.4% yield – presuming convergence with the sector average, it would be much more reasonably priced]. The sector itself continues to trade ’round book value, with the large-caps mostly priced between 1.0-1.2 times book. Considering large-cap property company valuations in other developed markets, plus the relative gap in property yields & (particularly) valuations, an increased premium to NAV (say, of 20-30%) would appear to be warranted (& sustainable) for the market leaders. Of course, no property company’s cheap if it’s over-leveraged:
[Note: I prefer to calculate Net Loan-to-Value (LTV) as follows (& see my related comments here):
(Borrowings + Financial Derivative Liabilities + (Convertible/Preference Liabilities + Pension/Employee Liabilities + Government Loans/Repayable Grants etc.) * 50% – Cash/Marketable Securities – Derivative Financial Assets) / (Current/Non-Current/Held-for-Sale Property)]
Clearly it’s good news across the board (in fact, only Adler has a Net LTV in excess of 65%). Equity issuance, debt amortization, re-financing & property revaluations have left the sector in an enviable position – with a cap weighted average of only 55%. Admittedly, the average is flattered by Deutsche Annington & LEG, which IPOed with surprisingly low leverage. Noting the banks are clearly comfortable financing 60-65% LTVs, I’d expect the sector average to creep back up over time. Considering current German residential property valuations, and its price history, I’m pretty confident that kind of leverage doesn’t present a significant financial risk for investors.
So, what’s worth buying?! Well, some like to focus on the market leaders:
The Top 5 might all be outliers here – benefiting from positive deal & news flow, and/or a revaluation from undeserved valuations. What’s more revealing is the 11% cap weighted average gain – wow, the sector’s actually been a global laggard this year! Now, I don’t think for a second that this undermines my investment thesis – it simply reflects the return of risk-on in the markets. Too many investors have short memories & even shorter attention spans, plus there’s a multitude of far sexier investments beckoning right now… Personally, I’m perfectly happy to keep/add to my German property exposure as a core low-risk (& potential high-reward) portfolio holding. After all, we could wake up any day to a fresh wave of revulsion, risk-off, European sovereign debt crisis, bank asset write-downs, call it what you will…German residential property’s still a great place to hide.
And speaking of, others (inc. myself, perhaps) are always tempted by the laggards:
Or one might argue sticking with the large-caps makes the most sense:
These obviously possess some natural advantages, and brokers, investors & the media will mostly focus on the well-known names. More importantly, the large-caps may be the only practical (listed) investment option for institutions who want to increase sector exposure. [Damn, I really should listen to myself more…especially about simple market realities like this!] Bearing that in mind, let me highlight the companies I find most interesting now. First, we should look back – I was particularly keen on:
Youniq (YOU:GR): Yes, I was intrigued by student housing, but certainly didn’t suggest buying this loser (down 66% YTD!). I can’t determine the underlying portfolio metrics, the past year’s news flow & write-downs inspire no confidence, cash flow’s problematic & now leverage is threatening to hit dangerous levels. I don’t care how cheap it is (a 0.36 P/B!) – unless there’s a radical change/turn-around here, Youniq’s now off my radar.
Grand City Properties (GYC:GR): A great pick, up 52% YTD…except I didn’t buy it! Judging by their recent (deal) history, I suspect management will continue to rack up superior NAV performance here – but at this point in time, GYC looks rich enough to me.
Conwert Immobilien Invest (CWI:AV): What can I say… Despite the poor performance YTD, and its perplexing NAV discount, I continue to see attractive upside potential here – I mean, it’s on a bloody 0.63 P/B!
AT this point, I also potentially like:
LEG Immobilien (LEG:GR): LEG’s down 3% YTD – while its fellow IPO, Deutsche Annington, is up 18%. This divergence in performance looks unwarranted, particularly as LEG’s metrics are (a little) better ‘cross the board.
Gagfah (GFJ:GR): The WOBA-Dresden lawsuit is now a distant memory, and the company’s completed a very successful re-financing of its 2013 & 2014 debt cliff. Despite this, it trades on a 0.89 P/B which looks like an undeserved discount to its large-cap peers.
TAG Immobilien (TEG:GR): The TEG share price continues to suffer some after-effects from the recent Rolf Elgeti revelations. Whether these allegations are (finally) determined to be true or false, or simply lax governance, I suspect it’s ultimately irrelevant to the company’s current/future intrinsic value. The impact on NAV should be relatively immaterial, and it obviously won’t be a risk/issue going forward (whether Elgeti stays or goes).
And of course, that just leaves…
KWG Kommunale Wohnen (BIW:GR): Yes, it’s still nearest & dearest to my heart – and a 5.6% portfolio holding. Its poor (7)% YTD performance is really just a calendar phenomenon, as I’ve enjoyed a 19% gain versus my write-up price a year ago. Let’s first review their progress in the past year.
Actually, I posted a follow-up piece in May, so we only need to focus on their interim report & their recent Q3 release. As you’ll note, the company continues to report steady operational progress & to re-affirm FY-2013 guidance. However, the company will probably remain in digestion mode ’til 2014, as it continues to absorb & renovate its more recent acquisitions. A lot of investors seem to focus & thrive on deal news in the sector, which probably explains some of the waning enthusiasm for KWG this year. Of course, this ignores the progress & potential that’s going on below the surface – in the past year, the vacancy rate on KWG’s Investment portfolio has declined from 33% to 22%. With a Core portfolio vacancy rate of just 2.8%, this puts overall vacancies at close to 13% – which presents another significant opportunity.
Cash flow’s positive, and their current Net LTV’s around 54%. Their portfolio continues to be one of the cheapest in the entire sector, with a value of EUR 726 per sqm & a 7.3% yield. Net equity also continues to advance, with EUR 10.63 IFRS & EUR 11.56 EPRA NAVs as of end-June. Averaging these, and tweaking for Q3’s EUR 1.2 million net profit, I arrive at a EUR 11.17 (average) NAV – which makes it the cheapest stock in the sector, trading on a 0.55 Price/Book. Of course, the obvious cloud here is Conwert’s 75.7% majority stake in KWG. Predictably, this has prompted a rash of conspiracy theories amongst the company’s private investors… But I think there’s a different & bigger picture to consider here:
Screwing over KWG’s minority shareholders in a takeover, or some other form of market exit, would be a pointless exercise for Conwert. Its current (IFRS) net equity’s almost EUR 1.1 billion, while the value of KWG’s minority interest is a mere EUR 42 million – in fact, the market value of that interest is a tiny EUR 24 million. So any potential gain for Conwert would be immaterial…
What really interests & excites Conwert is the ridiculous 37% discount its share price still suffers. This is somewhat mystifying – I have to wonder if investors still think Conwert’s some kind of pre-crisis Austrian company, up to its tits in E European property & too much debt. Which couldn’t be further from the truth – only 3% of its portfolio is now outside Austria & Germany, and its latest Net LTV is just 58% (plus management continues to cut expenses & improve cash flow). In fact, it’s really not even an Austrian property company any more – how many investors realize 74% of Conwert’s portfolio is now in Germany? And a majority of this allocation’s invested in cheaper E German property? And its higher EUR 1,099 per sqm valuation & lower 6.2% yield (vs. its German peers) simply reflects the more expensive valuation of its 23% Austrian portfolio allocation? [Note a fairly similar differential exists between Berlin & Munich property, for example].
Essentially, Conwert management’s recognized the most promising route to a premium valuation is (ideally) a German-listed/large-cap German residential property portfolio. With that in mind, they’re still targeting an increase in their German property exposure (to at least 80%) in the next two years. They also plan to decrease their commercial exposure from 30% today (to a target of 20%, which I suspect they’ll easily surpass). Their majority stake in KWG’s obviously integral to this whole strategy. And it presented them with an opportunity to bring Stavros Efremidis (KWG’s former CEO) in-house & place him in charge of their German business.
I expect they’ll continue to take a ‘build & wait’ approach in the near-term. But if KWG and/or Conwert continue to be neglected by investors, I’m sure they’ll consider more aggressive measures to close the current valuation gap. Reasonable leverage allows them to consider share repurchases, or a tender – but other strategies might include bulking up KWG, spinning-out Conwert’s German portfolio, reversing some/all of it into KWG, etc. Again, any advantage gained from shafting minorities – for example, by inflating the value of properties sold to KWG – would prove fairly immaterial. And it could easily provoke wider NAV discount(s), which would entirely defeat the purpose! Anyway, I hardly need go on – if a KWG shareholder can’t see past this (real or imagined) risk, there’s a simple solution:
Just switch into Conwert shares!
Frankly, that’s probably the ‘worst-case’ scenario I foresee for KWG shareholders anyway – i.e. they might end up owning Conwert shares. As I’ve outlined, I see no reason to consider that a potentially alarming prospect. Meanwhile, I note KWG’s cheaper P/B ratio, its near 30% divergence in share price performance (vs. Conwert) since the end of June, and most importantly its record of value creation in the past six years:
Dec-07: EUR 6.47
Dec-08: EUR 6.53
Dec-09: EUR 6.59
Dec-10: EUR 7.23
Dec-11: EUR 8.41 (EPRA NAV)
Dec-12: EUR 11.19 (EPRA NAV)
End Q3-13: EUR 11.64 (EPRA NAV, estimated)
Yup, I’ll happily stick with KWG. 🙂 And I think it deserves a 1.04 P/B valuation (i.e. the sector’s cap weighted average) in the fullness of time – which implies a EUR 11.66 Fair Value per share, for an Upside Potential of 90%. Of course, a potential convergence in KWG’s portfolio yield (to 7.0%) would also offer some incremental upside. Now, all that’s left is for me to repeat this observation – German residential property is (still):
‘Perhaps one of the safest & most attractive asset classes in Europe, or even the world‘.
- KWG Kommunale Wohnen AG (BIW:GR): EUR 6.14
- Market Cap: EUR 97.5 million
- Net LTV: 54.0%
- Price/Book: 0.55
- Tgt P/B: 1.04
- Tgt Mkt Cap: EUR 188.9 million
- Fair Value: EUR 11.66
- Upside Potential: 90%
Wexboy 
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such a quality portfolio of articles. keep it up
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sirius is making a new equity raise. I think 0.24 is a good price with better visibility due to refinancing. DTZ raised property value. LTV will be under 60%. Unproductive land will be sold. Rent developtment looks good and yield stays high. Dividend is promised for 2014. As with Gagfah I will sell when dividend investors hopefully will pour in 🙂
Martin,
Yes, SRE’s become a much more investable share now & should begin to steadily pick up new investors. Financial risk’s now essentially eliminated, as the Net LTV will be well under 50% post these transactions. Unfortunately, we’ve had plenty of write-downs & dilution along the way, so share price & NAV may finally end up kinda meeting in the middle (unfortunately, this tends to happen quite often with cheap asset situations). I estimate adjusted NAV will now be around EUR 0.404, so NAV discount’s much smaller now (than when I first looked at SRE).
Karoo has basically won the war here against the activists (Weiss reported they’ve basically completed their exit the other day), and SRE’s now a pretty regular German commercial property company (I’m sure they’ll commence a dividend asap) which will be increasingly valued & compared to its peer group. Clearly this should offer further upside potential (and hopefully shareholders will see some further re-valuation gains), but it’s no longer a special situation-type investment.
Cheers,
Wexboy
Yes. And I think SRE is quite good example of principle of “margin of safety”. When you buy company with sufficient discount to fair value, as you originally recommended to do, you can withstand lot of headwinds (write downs, dilutions and difficulties in disposing property & refinancing) and still make money.
Thx for the idea (and ~30-40% gain for me, even with all the the difficulties during the journey)!
Good to hear, John
Yes, many think a margin of safety is required to save investors from complete disaster, but often it proves useful simply because the investment story/thesis works out differently than you expect. In those cases, a margin of safety will hopefully ensure you still earn a positive return despite the different turn of events – at worst (ideally), it means your investment was simply ‘dead money’.
Regards,
Wexboy
I have had KWG on my watchlist for a while now and I also have a position. My only trouble with KWG is the weak cashflow. If the properties yield 7%+ there should be a higher cashflow. Of course they invest a lot in refurbishment and it is still a bit unclear how they book these investments. I guess some of them should be written off for a lot of years (major investments in the property) and some of them is just regular maintainance. In 2014-15 hopefully we will se the cashflow come trough and even a healthy DPS/Yield in the share. I think 2014 is the year of revaluation of this extremly undervalued story. They should also get cheaper financing on their very safe assets the coming years. Compare Euro/sqm with residential property in other strong parts of EU. Sweden, Norway and Denmark for instance. I have a lot of examples but take a look at Heba (Mcap 300MEUR) who owns residential property (95%) in the suburbs of Stockholm (not at all prime loc). Their property has an average valuation of around 2500 Euros/Sqm ! I think Germany is a similar strong economy but the prices on residential properties is a mystery… Thank you for an interesting blog!
Mr Value,
Thank you!
Based on 7% property yields, you have a good point. But it seems like virtually all management focus in German residential property companies is on deal-flow at present – I expect they could squeeze plenty more out of property management & cash flow if they focused on it exclusively. [An eventual focus on dividends, REIT status, etc. will definitely encourage that focus]. And if you think about it, more generally, a lot of property companies who don’t pay/focus on a dividend generally aim to run themselves on a cash flow break-even basis at best – so I don’t think this sets off any alarm bells.
That being said, I do monitor the cash flow statement (rather than the P&L) closely for property companies, as poor management can really make a mess of cash flow even if they’re not over-leveraged. I’m happy to see KWG has been cash flow break-even/positive for the past year or so, at least, even if you factor in some maintenance capex.
Yes, the (continued) differential in property values in Germany vs. much of the rest of Europe is fairly mystifying. I guess the historical starting points/divergence in government policies & home ownership rates are both key contributors – but as we look ahead, a slow & steady convergence with the rest of Europe (as with most things) seems pretty inevitable to me.
Regards,
Wexboy
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Your valuation technique, appears to me risky. Real estate is highly dependent on location and buying prices. There has been a substantial increase of the value of the underlying property during the past couple of years. Rent has increased but not at the same speed so far and there is some doubt that rent will go up much further. In fact it has stopped increasing and started to slightly move backwards. Most industry people believe that prices will have to be adjusted some time soon. Risk should be lowest with portfolios acquired before 2011. Portfolios acquired in 2012/13 are likely to be overpaid if they are located in one of the big “five”.
An important point that should be considered is the remaining duration of the letting contracts for commercial property. If the duration is low the property could be worth much less…the point I am trying to make is that a portfolio needs to be scrutinized, even though the figures look good at the moment. Just looking at the numbers could be deceptive… Also, I do not see “a continued land grab for cheap property”. This time has passed a while ago. At least around the big five.
Seb
Don’t forget my valuation technique isn’t actually dependent on values (per sqm) – I focus on those simply to highlight the absolute & relative attractions & potential upside of cheap German residential property. In my valuation work, I actually focus on the net asset value of each company (plus its leverage, of course), and validate asset values by checking property yields vs. the market/peer group.
I’m sorry, but I clearly disagree with many of your points – I refer you back to my previous post: https://wexboy.wordpress.com/2012/10/26/german-residential-property-part-ii/ Yes, I know there are plenty of German commentators out there already wringing their hands over a run-up in German property values, rents, etc…frankly, I’d question their perspectives & motives. Because when I look at these charts, in particular:
I have to think the notion of an actual or incipient German property bubble, at this stage of the game, is simply ridiculous… And speaking of bubbles, it’s worth noting again that Germany never even enjoyed one in the first place (i.e. back in 2005-07), unlike most of the rest of the developed world.
Regards,
Wexboy
It looks like the new german government will implement a kind of “Mietpreisbremse” – a “brake for the increase of renting prices”: http://www.tagesschau.de/inland/koaliionsverhandlungen100.html
I dont know how it will work in practise. But if it should work you shouldn’t expect a strongly rising level of flat rents.
Do better not expect to get soon London-level rents in Berlin!
Yes Roger,
I’m certainly not calling for a revaluation to London levels any time soon – but again, I’d take announcements by the authorities with a grain of salt. We’re seeing a giant/ongoing transition in Germany – from public landlords to private landlords (& increased home buying): The authorities don’t want/can’t afford the responsibility or the financial burden of large-scale housing provision any more. But it’s nothing new for politicians to say one thing & do another. What they say in public is probably far different than the assurances & contracts agreed in private with the buyers of municipal housing portfolios… So I wouldn’t believe a lot of what’s being said/proposed.
Of course, some of these measures/proposals may actually go ahead/stick. But politicians & authorities should try remember they’re walking a tightrope here – if they push back against the private landlords too hard, their voters may well end up in poorly serviced/un-renovated apartments. Even worse, they could end up with no willing buyers for all the housing portfolios they still want/need to sell!
Arguably, it’s already in the price anyway: As I constantly remind myself, if I head to Berlin & buy a couple of apartments, they’ll certainly be cheap – but the price I pay won’t be even remotely like the EUR 700-800 per sqm the big boys pay!
Cheers,
Wexboy
But the Bundesbank warned in October that apartment prices in Germany’s biggest cities could be overvalued by as much as 20 per cent (and 10% in the other urban centers):
http://www.ft.com/cms/s/0/e5cb6ab6-3a54-11e3-9243-00144feab7de.html#axzz2lHF35Gka
Secondly, Germany is the only Eurozone country which isn’t experiencing a recession… but a recession is now becoming inevitable in Germany as well.
Germany’s growth is export-driven (inner market demand isn’t big) and the EU accounts for almost two-thirds of German exports.
kostia – well, the Bundesbank always thinks everything’s over-valued, and inflation’s lurking right around the corner…I’d take it with a grain of salt!
Actually, as per the European markets YTD, more & more people see Europe passing an inflection point & getting back on a (tentative) growth path. And obviously the US is increasingly trying/becoming a renewed engine of growth – via the usual (eventual) debauchment of their finances & currency.
But read back through my German property series & see my previous commentary – if things actually take a serious turn for the worse, institutions simply can’t/won’t exit their European investments en-masse. The vast majority of their European allocation can move within Europe at best – it sounds a little bizarre, but one could easily argue a renewed safe-haven flight scenario might end up being potentially more beneficial for German (residential) property than a growth scenario.
Regards,
Wexboy
You make a very compelling case with regard to KWG which is difficult to argue against ..
Wouldn’t it be just great if they paid a dividend – wonder do all these property investment companies re invest everything and distribute nothing ..
Or on a bigger scale do german companies have a lower div yield on average than uk or USA cos.
Df
Thanks David,
Yes, see my comment above: ‘Meanwhile, German companies remain (understandably) focused on a continued land grab for cheap property…’ German (residential) property companies are not a dividend story right now – but I believe their strategy of conserving cash to bulk up their portfolios is definitely the right strategy at this point. I think the market (somewhat grudgingly) recognizes that, awarding them a 1.04 P/B: Despite much higher US valuations generally, I’m unsure a group of non-dividend paying listed US property companies would actually achieve a superior valuation.
Off the top of my head, regular German companies do pay decent dividends, probably better than the US on average. But dividend yields have been creeping up in the US over the last few years, and there’s a lot more emphasis on share buybacks, so overall distributions to US shareholders may actually be higher..?
Cheers,
Wexboy
re Gagfah: Their presentation has improved. Page 26: http://www.gagfah.com/fileadmin/redakteur/pdf/praesentationen/2013/2013-11-12_GFJ-EarningsCall_final_.pdf
This is exactly how I think about it. With refinancing FFO development is predictable and I will sell when dividend is declared (at a higher price hopefully). KWG is abviously cheaper, but another conwert sub ECO BUSINESS IMMOBIlien is cheap, too. I hope they don’t screw minorities at KWG.
Hi Martin,
Yes, I think Gagfah’s the most likely to migrate to the full-blown US REIT model – the influence of Fortress, I guess.
I’m less interested in ECO’s commercial property exposure. With Conwert owning 96%, I suspect the share price is a pretty unreliable indicator – I presume it only remains listed so Conwert can keep its options open (for itself, or a potential buyer). Obviously there’s a desire to sell here – an outright sale of the company would achieve a v nice/further reduction in Conwert’s commercial property exposure. I suspect though they might be weighing the pros & cons of potential bidders wanting a decent discount on the entire company/portfolio vs. selling the portfolio piece-meal over a longer period of time.
Cheers,
Wexboy