PropertyEU: European retail REITs mind the gap between share price and NAV
According to PropertyEU,
Atrium’s share price has trailed NAV for the best part of the year, reaching a 20% trading discount shortly before the Gazit bid, but the company is the not the only retail REIT in Europe with such a gap, analysts suggest. ‘There has been a paradigm shift from online shopping, and investors – perhaps belatedly – are rightly questioning how to value retail assets,’ says Rob Virdee, analyst at Green Street Advisors. ‘There is undoubtedly a place for physical retail, and the bifurcation between the best retail assets and the rest will continue to play-out. At the moment however, many assets are being tarred with the same brush.’
According to Green Street’s calculations, Intu, which has seen material valuation declines over the past year, is in particular trouble: the returns implies by its share price are ‘unlikely to be attractive enough for private market buyers to transact’. Intu’s recent H1 results revealed that capital values declines aggressively by 9.6% across the portfolio (-10.4% in the UK, values ‘unchanged’ in Spain). Meanwhile, net rental income on a like-for-like basis fell by 7.7% to £205.2 mln, with vacancy and CVAs reducing rent by 7%. Intu is trading at a 70% discount to its June-end NAV according to Goodbody.
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