Take-up was up in European Offices in Q3 21, however vacancy was stable sequentially and lfl growth was negative, especially in France (-4%). Residential Germany was the key driver of the consolidated 0% lfl
Companies: Covivio SA
It looks like the crisis hasn’t impacted Covivio that much. However, both rising vacancy and incentives in the region of Paris in Q2 21 (offices) are a persisting concern. Short-term catch-up continues.
Aside both the unsurprising performances of Hotels (-46%, but RevPar down 84%) and German Residential (+3.4%), European Offices were down 1.1% lfl in Q1 21. Our estimate was a positive 0.5% in Q4 20. Revenue now embarks the rising vacancy of Q2-Q3 20 in full.
The first cracks were confirmed in peripheral locations as far French offices were concerned. Hotels were experiencing the all but surprising collapse without accounting for a strong cut in book values. German residential was supporting the big picture.
The increasing vacancy was the premise of negative organic performance as from Q4 20 in the Office segment. Some recent deliveries could mask an organic decline for a while (Offices), as far as consolidated figures are concerned.
Values were almost stable in H1 20. Neither valuers nor the transaction market itself acted in the new reality. We observed a yield compression of 10-20bp on the full portfolio despite negative macros.
Forget the insignificant (good) Q1 20 figures. The current discount of c. 40% vs. the latest NAV (December 2019) will be consumed by progressive dilution (dividend in scrip), write-off of GAV (10-15% as a minimum), and a remaining ex-post discount of 20-25% only. The safety harness looks therefore insufficient, should values be down by more than the above-mentioned 10-15% mark.
Covivio decided to buy the listed Godewind in Germany, or a fully cash €1.2bn deal. It will extend its European Offices platform (France / Italy) following its successful residential German investment and alongside its Hotels branch. The recent share price catch up, from €90 in August 2019 to €110 today, translates the global shareholders’ race for yield, pushing the market to value Offices well above NAVs. The party continues.
The share now trades far above its latest NNNAV. Even if we do not detect an emergency, we believe that some end-markets are at risk. We do not identify a buy opportunity on Covivio and stick to our negative stance.
The positive revaluations were close to zero in both French and Italian Offices, once the pipeline’s contribution is excluded. The good news was… Berlin and its 9% value growth in H1 19 vs. December 2018, thanks both healthy lfl growth and very strong additional yield compression. However, the full impact of the rent-freeze policy is not included at all. The next imprtant date being February 2020 (FY 19 figures), the market will keep in mind today’s good news for a while.
Nice quarter with positive news on the organic growth front as well as on the pre-let ratio concerning 2019 expected deliveries. Capital gains (margin) on disposals are now close to the neutral area, but we do not expect massive negative revaluations by the end of H1 19 according to Q1 figures. However, the market cannot expect significant valuation improvements on the standalone portfolio (excluding pipeline delivery). Released EPS momentum will slow from H2 19.
Covivio is an other property company to announce (slight) deleveraging. This behaviour is now spreading to all asset classes as Covivio owns offices (Grand Paris, Italy), homes (Germany), hotels (Europe). Compression yield probably stopped on H2 18 (Offices/France). Germany shows another strong year with additional 12% revaluation.
FdR released its FY17 results. Rental income increased by 3.9% yoy at €927.4m, with a portfolio valued at €21bn (+10% yoy). The company has agreed to sell €1.4bn worth of assets to reduce its exposure to Telecom Italia and the non-core offices in France. FdR also extended its Spanish exposure, with the acquisition for €559m of 17 hotels. Overall, the published numbers were above our expectations.
FdR published an H1 recurring net profit of €198.3m, up 12% yoy. Rental revenues recorded 3% growth (organic +1.9%, of which 4% from German residential). The occupation rate stood at 96.6%. LTV was around 42.9% vs. 44.6% in FY16.
With acquisitions in Berlin, Milan, Barcelona and Madrid, the portfolio value increased by 9% yoy (3% lfl), standing at €21bn. EPRA NAV was up a notable 10% to €6.6bn (€88.4 per share). The development pipeline reached €4.1bn, of which 83% in offices (Paris, Milan, Ly
We have updated our model on FDR following the €508m worth of acquisitions made in Q1 and the €400m capital increase.
Acquisitions were primarily made in Spanish Hotels (€305m at yield 5.7%) and in German Resi for €180m at a yield 3.8%, and finally €22m in Italy at a yield 6%.
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Palace Capital has released a good trading update of for the 6 months to 30 September. The Group has achieved good progress both across the portfolio and in sales achieved at Hudson Quarter. With cash reserves rising, the Group continues to look for value creative opportunities to recycle capital which should realise value for shareholders. Buy
Companies: Palace Capital plc
We see the UK Government’s Net Zero Strategy as being overall helpful but not especially definitive. Amongst our coverage group, Drax Group (DRX LN) and Velocys (VLS LN) benefit from the Humberside CCS cluster prioritisation and Velocys from SAF support. The amount of renewables is likely to boost the need for flexibility solutions where Drax, Gore Street (GSF LN) and SIMEC Atlantis (SAE LN) can benefit. Hydrogen companies ITM (ITM LN) and Powerhouse Energy (PHE LN) are likely to find support. T
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The third quarter continued to enjoy record CIB revenues and loan provision recoveries. Consensus expectations have now largely aligned with our projections, thus leaving limited upside potential in our view.
Companies: Barclays PLC
Non-Standard Finance (‘NSF’), one of the leading providers of unsecured credit to UK adults, published interim results for the half year to 30 June 2021 on 28 September. Overall, these showed a significantly lower loss before tax due to improved operational performance and lower below the line charges. The group also reported that current trading was ahead of plan primarily due to strong collections performance. Discussions with the FCA regarding the redress programme for guarantor loans custome
Companies: Non-Standard Finance Plc
NextEnergy Solar Fund’s investment in NextPower III opens up geographic opportunities in Latin America, Asia and other parts of Europe much earlier than could have been delivered by direct project investment. Additionally, the JV announcement with energy storage system (ESS) developer Eelpower is also an attractive way to accelerate portfolio diversity as well as opening up the door to further asset growth. By working with partners experienced in different geographies and the energy storage segm
Companies: Nextenergy Solar Fund
What’s new: Tatton’s interims trading update confirm it has “delivered strong growth in all its key metrics during the period including revenue, profits and assets under management” (AUM). It is “trading in line with expectations”.
Companies: Tatton Asset Management Plc
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Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz. Offer TBA. Due early Nov.
Life Science REIT to join AIM raising up to £100m. This will be the first London listed real estate investment trust (REIT) focused on UK life science properties providing investors with exposure
Companies: SYS1 ARE SO4 SNG TMG TMT OHG IDE KIBO MRL
AuM pushed on in Q2, hitting £10.8bn – including the acquisition of the Verbatim funds (+13% in H1 organic only). Crucially, net inflows have remained strong through the whole of H1 at £109m avg pcm. This flow momentum underpins an encouraging outlook, both near and medium-term. We leave our forecasts unchanged although note risk to the upside heading into H2. We will review our model again at the Interims. Given the pace of growth and scale of opportunity from already established relationships,
Gore Street’s trading update confirms expectations of a strong trading environment for batteries in both the GB and Irish markets. Driven principally by high gas prices creating electricity market volatility and with tight capacity margins likely to remain, we see the company continuing to generate excess cash returns in this financial year at least.
Companies: Gore Street Energy Storage Fund PLC
Currently, Gore Street Energy Storage Fund (GSF) primarily relies on revenue from frequency response services, including Dynamic Containment (DC), to estimate near-term returns. The dislocation in the UK power market has led to a sharp rise in returns available from energy arbitrage leaving GSF’s assets well placed to benefit from this increased volatility. In September, those of GSF’s GB storage assets that participated in the actively-traded GB power markets generated revenues that were signif
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Arrow Exploration Corp. (AIM: AXL ; TSXV: AXL) , the oil and gas exploration and production company, has conditionally raised approximately £8.8m and is due to complete its dual listing on AIM on 25 Oct. Market cap c£13.1m.
Devolver Digital to join AIM, an award-winning digital video games publisher and developer in the indie games space. Recently awarded indie 'Publisher of the Year 2021' by GamesIndustry.biz.
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Companies: Chrysalis Investments Limited
Today's news & views, plus announcements from BHP, MGGT, RIO, BWY, MONY, BGO, YOU, AVAP, PCA & SOLG.
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TMT Investments PLC have provided a portfoloio update. We have published research on this which is attached and a snapshot of the research is below.
The venture capital company investing in high-growth technology companies has moved one step closer to its first IPO driven exit. In a portfolio update announced this week TMT noted that its portfolio company Backblaze, Inc. publicly filed with the SEC on 18 October 2021. TMT currently holds a 9.97% interest in Backblaze, Inc. (pre its expected fun
Companies: TMT Investments
Companies: Shaftesbury PLC