The public bid for its entry begins today Trade Estates AEEAPa group company Fourlison the Greek Stock Exchange with the sale price of the shares to have range from 1.92 euros (bottom price) to 2.13 euros per share (top), although everything indicates that it will eventually close at the maximum price since the interest is very high and the stock already contains several equity advantages for the investor that we will analyze below.
First of all, let us mention that Trade Estates AEEAP was founded in July 2021 and is active in the real estate investment sector, holding a high-quality and high-yield portfolio (downcycle resilient & necessity retail) with a strategic focus on Commercial Parks and Omni-Channel Logistics centers in Greece, Bulgaria and Cyprus.
In fact, the part of the strategic activity in the Commercial Parks through the TOP Parks gives Trade Estates one important investment asset as it is the only Greek AEEAP moving in this fast growing market worldwide with Greece still being the tail, which means there is huge room for growth in the coming years.
The latest and strongest trend in global retail, Retail Parks are free-standing spaces with free parking and numerous stores catering to the basic needs of the average household. They are the familiar ones”power centers” in America that have been making waves for years.
For example, the last major acquisition of Trade Estates in Smart Park feature a variety of shopping and entertainment outlets, open spaces for walking and outdoor activities, and a children’s playground with 75 tenants (indicatively we mention: Sklavenitis, OPAP, Zara, H&M, Jumbo, Intersport, Hondos Center, Marks & Spencer, GAP, Dekathlon, KFC, Flocafe. Mc’ Donalds, etc.) while there are 30 other prospective tenants looking for space since the completeness as you understood flirts 100% . The number of visitors exceeds 6.1 million per year, and the trend is even increasing. After all, more or less most of us have been to Smart Parks and have understood what is going on.
The final form of the Trade Estates portfolio with Smart Parks includes 14 properties (one under development), with total fair value of 342,149 sq.m. at 457 million euros, portfolio return at 7.1% and annualized rental income according to the financial data of the first half of 2023 at 32 million euros.
But why the participation in the three-day public offering from November 1 to 3 has attracted great interest from new investment funds and why the Trade Estates share at 2.13 euros in the highest price range is considered a very good investment option for medium-long-term investors ;
Five are mainly the key ingredients that give it the element of intense stock appeal.
- First the big discount of 19.2% which the share will have at 2.13 euros in relation to the net value (NAV) of 2.64 euros. You see the big deal of the acquisition of “Smart Park” by the company REDS directly gave an excellent bonus to the new shareholders since it was acquired for 110 million euros while its value was valued at 127 million euros. From the locker room, the score is +17 million euros in favor of the new shareholders.
- The second and perhaps most important is the function of Trade Estates’ equity as a ‘hybrid bond” which will yield a dividend yield starting at 5% and reaching over 7% by 2027. That is, the year in which investments worth 292 million euros will have been implemented, bringing the value of the portfolio to 650 to 700 million euros with flagship Commercial Park at “The Ellinikon” with a budget of 68 million euros. The dividend will even be given twice. One will be in the form of a pre-dividend in December and the rest will be given in July. This is exactly the most correct function of the share value of a listed AEAAP to be able to attract intense investment interest. That is, the strong growing dividend yield for an investor who wants to invest in the real estate industry and has long-term capital. No, I put them in now, I’m going to the cashier tomorrow.
- The third, which is another strong bonus for the shareholders, is the statement – commitment of the group president Mr. Vassilis Fourlis that: “despite the fact that we have the obligation to distribute 50% of the net annual profits – Funds From Operations (FFO) of Trade Estates, we have taken the strategic decision to we distribute 80% to 90% of our profits». In other words, what else can he say that attracts the investor, institutional or not.
- The fourth is of course the capital gain that the share can bring from the gradual increase in its share price on the board of the Greek Stock Exchange, not only from the above-mentioned rapid development of the Commercial Parks and the overall upward performance of the company’s sizes, but also from the strong impetus of the Greek economy , the giant investments in real estate and the “rebaptized” investment stock market.
- And the fifth is the very positive negotiation mechanisms that have been put in place as it will have the largest free float in the industry, at 27%, while there is a plan within the next two years from the listing, for the main shareholders to limit their stake to 50%, further increasing the dispersion to 40%. We all know that the free float in a listed company is very important for the marketability of a share and especially in the AEEAP sector where if we exclude Premia Properties and Briq Properties the rest have a serious trading problem with the very small trading volumes. What do I do with the good stocks in the portfolio if I can’t sell them to a proper depth of buyers.
But the biggest gainer from the trading of Trade Estates on the Greek Stock Exchange, beyond the organization itself with the entry of a new healthy and promising company, is the group Fourlis (FRLK), where with this move it will write significant goodwill. In fact, the big plus for the group comes at the time the stock value is at a bargain price increasing even more its margin of increase.
Imagine that based on the upper price of €2.13, Trade Estates will debut on November 8 with a valuation of €256.7m at the same time as the group has a market capitalization of €211m. And note that entry will be with a bonus discount for new shareholders of the order of 19.3%. From there and then where to start and where to end since all the rest in the group seem to have zero or even more negative value. Guess the doubling of IKEA’s EBITDA profits from the first half of 2022 of 9.9 million euros to 18.26 million euros in the corresponding half of this year is… an illusion?
Diagrammatically, however, the share in this corrective course of the market has found itself from 5 euros in July to the very strong support of 4 to 3.90 euros. The next wave movement now cultivated in the diagrammatic background will bring the stock price within the range of 5.50 to 5.45 euros thus opening a channel of communication with the zone of high 2018 (!) of 6.20 to 6 euros with the group being in the years 2023 at its best stepping on the gas for the future.
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November 1, 2023