Publicerad: 30 November 2018, 20:12
The recent numerous bids for real estate companies indicate that the stock market may be too cautious in its valuation of the sector. Therefore, there may be more bids ahead and Kungsleden is a possible takeover candidate.
The recent numerous bids for real estate companies indicate that the stock market may be too cautious in its valuation of the sector. Therefore, there may be more bids ahead and Kungsleden is a possible takeover candidate. This is what Danske Bank’s Property Analyst Henrik Dahlgren tells Fastighetsnytt after EQT made a bid for Stendörren on Tuesday.
EQT Real Estates offers SEK 100.25 per share, which values Stendörren, the portfolio of which includes warehouse and logistics properties in the Stockholm area, at SEK 2.8 billion.
The bid represents a fairly modest premium of 3.8% compared to the Monday share closing price and a premium of 0.25% above the long-term net asset value. A small majority of the owners of Stendörren have already accepted the EQT bid.
Although the premium is low, the overall impression of the recent numerous bids in the sector is that there may be undervalued companies in the sector.
“t is undeniable that when real estate investors bid on the stock exchange with premium, it indicates that the stock market is too conservative in its valuation of the listed portfolios. This is supported by the string of bids in the last two years, including for Victoria Park, D. Carnegie and Sponda. As long as the valuation difference persists, buyouts will continue,” says Henrik Dahlgren.
Earlier this year, the German housing company Vonovia won a bidding war for Victoria Park. In the past, US private equity firm Blackstone made a bid for Finnish Sponda and D. Carnegie, now called Hembla. In the case of Sponda, the bid was made with Areim.
There have also been a couple of takeover bids of smaller real estate companies in recent months. Klövern made a bid for retail-oriented Agora in October and is taking over the entire company. In the same month, Samhällsbyggnadsbolaget i Norden made a bid for the single-property company Karlbergsvägen 77.
In terms of potential takeover candidates, Dahlgren singles out Kungsleden, which, moreover, was also mentioned by another analyst on another occasion.
“They have a good stock focusing on growth regions, a high proportion of offices and an uncomplicated balance sheet,” says Dahlgren.
He also points out that Kungsleden is largely owned by institutions, which may facilitate when trying to get a bid. Institutional owners usually do not have any links to the companies they own, but are only interested in getting as high a return as possible.
Hemfosa is also referred to as a potential candidate. In particular, since the focus on community properties after the spin-off of Nyfosa reduces the operational risk. Here too, institutional ownership is large.
Kungsleden is currently traded at a discount of 22% compared to the long-term net asset value. In the case of Hemfosa, the discount is 3%.
“As long as on-exchange property is cheaper than off-exchange property, it will drive a pressure where we will have more bids for listed companies,” says Dahlgren.
Oskar von Bahr