Hibernia Reit

framework123

Appreciate any thoughts on buying some stock in this company..Id like to get some exposure to Irish property, esp office letting etc.
Their results out today seem positive, I find there financial statement a little difficult to follow they seem to have EPRS EPS + IFRS EPS, which should I consider?
Also there net rental profit seems to include revaluations/other gains, surely property revaluation shouldn't be in an income statement or maybe I am misreading it..

Thanks for any feedback

http://www.hiberniareit.com/news/news-2016/2016-05-24.aspx

F

TG860

framework123 wrote: »

Appreciate any thoughts on buying some stock in this company..Id like to get some exposure to Irish property, esp office letting etc.
Their results out today seem positive, I find there financial statement a little difficult to follow they seem to have EPRS EPS + IFRS EPS, which should I consider?
Also there net rental profit seems to include revaluations/other gains, surely property revaluation shouldn't be in an income statement or maybe I am misreading it..

Thanks for any feedback

http://www.hiberniareit.com/news/news-2016/2016-05-24.aspx

F

I've also been looking at the Hibernia REIT recently and it appears to be a decent investment at the current price.
The EPRA NAV at March 31 2016 was 130.8 cent, while the current share price today is €1.28, with a dividend of 0.8c per share to come in August.

I would say that the majority of the NAV growth and activity in this REIT seems to been more towards property development rather than simply owning properties and renting them out.

In the past I've always been put off looking too far into Hibernia as it's usually commanded a high premium to NAV, presumably in expectation of the investment gains that they've since realized on some of their property developments.
They still have some development activity ongoing, which probably makes them higher risk in the event of a downturn than say, the Ires REIT which mostly is just buying existing property.

However,the market outlook for commercial property in Ireland over the next 3/4 years seems pretty promising for them I think. (Rising rents, little new supply, etc.)
They also have plenty of finance ( around €300 m unutilised to fund new investments and their existing developments) which should be positive for the increasing the yield in the long term.

All in all, I think the shares are probably at a good price at the moment given it's trading at a discount to NAV, with some decent upside potential from both their existing developments in progress and rising rents on existing properties held.

philippoc93

Time to buy was at €1.14 or 13% discount to NAV during early November. Good assessment TG860

daheff

philippoc93 wrote: »

Time to buy was at €1.14 or 13% discount to NAV during early November. Good assessment TG860

I still think there is upswing for this stock. I got in previously at 1.23.5 (apr15) and out at 1.41 (Aug 16). Got back in recently at 1.18. currently at 1.20

Can see it moving back around 1.30 mark (I hope!!).

philippoc93

I expect it to with the new development coming online and rents across Ireland increasing,  Their funds from operations (Income) will follow suit and the market will reward with a higher valuation. Unlike the UK REITS, particularly the ones with big exposure to rents in "The City", Hibernia's rents are sound, although I'm not that happy about the concentration in Twitter as a client. But its a risk I'm willing to accept in a small market like Dublin.

daheff

philippoc93 wrote: »

I expect it to with the new development coming online and rents across Ireland increasing,  Their funds from operations (Income) will follow suit and the market will reward with a higher valuation. Unlike the UK REITS, particularly the ones with big exposure to rents in "The City", Hibernia's rents are sound, although I'm not that happy about the concentration in Twitter as a client. But its a risk I'm willing to accept in a small market like Dublin.

Agreed

but IRES is a good play too....residential rents will increase next year (end of 2 year cap) and they will have a better return. Tempted to invest there too...but then my stock portfolio is overly reliant on property (2* REITs and 2* Banks)

philippoc93

Can appreciate that. I've a sizable position in Cairn Homes at the moment, although I believe the price has gotten a little ahead of itself in the last month. I've written a detailed article about the company on Seeking Alpha that you might find interesting. I'll share a link here with you once it's cleared with the editors. I expect this to happen tomorrow as I only published it today. 

In summary, based on current info and my best guesses (I've valued the company using a standard DCF), I'd place a fair value range on the stock of Eur 1.12-1.19. It's currently at 1.28, so using a DCF approach I think it's slightly overvalued.  However, using a P/B multiple of 1.5, which is standard for homebuilders globally, it's not. Basically, I think Cairn Homes is a really exciting company at the moment, but I wouldn't be buying it at it's current price. I don't think the risk/reward profile would be in your favour. One to watch though and I'll be adding on any significant weakness in the price. 

I've been focused on the U.S. market over the last year (Microcaps and Oil & Gas), but I'm starting to look closer to home to see what value is out there. I plan to have a look at the banks at some stage and I'll let you know if I get around to it. What's your current thesis on the banks?

philippoc93

http://seekingalpha.com/article/4029120-cairn-homes-capitalize-growing-irish-housing-industry

Link to article as promised