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NAV above market price

  • 14-11-2016 2:54pm
    #1
    daheff
    Registered Users, Registered Users 2 Posts: 5,994 ✭✭✭


    Ok,


    spotted this the other day

    wrote:
    DJ Hibernia 1H NAV Rises, Sees Possible Brexit Boost for Dublin
    LONDON-- Irish real estate company Hibernia REIT PLC (HBRN.DB) Thursday said it sees a possibility for the Dublin office market to benefit from the U.K. leaving the E.U. as it reported a rise in net asset value and lower interim pretax profit.

    European real estate association net asset value per share, a main industry metric, rose by 2.9% in the six months ended September 30 to 134.6 euro cents ($1.46).

    Pretax profit fell to EUR32.4 million from EUR74.8 million over the same period the previous year.

    "While it is still early days, we are optimistic regarding the Dublin office market's prospects to benefit from the UK's decision to leave the EU, although we recognise that the timing and terms remain unclear and there are risks to the wider Irish economy," the company said.

    -Write to Rory Gallivan at rory.gallivan@wsj.com; Twitter: @RoryGallivan

    (END) Dow Jones Newswires

    November 10, 2016 03:59 ET (08:59 GMT)

    Copyright (c) 2016 Dow Jones & Company, Inc.

    Current market price is 1.19 EUR.

    Unless I'm missing something here, the market is undervaluing this stock vs its NAV?

    I get the profit has almost halved vs last year, but it still looks to be a buy to me. Any thoughts?


Comments

  • #2
    Francie Barrett
    Registered Users, Registered Users 2 Posts: 17,018 ✭✭✭✭Francie Barrett


    It's not that uncommon for a REIT to trade under NAV. British Land for example have a market price of £5.89 and a NAV of £9.19.


  • #3
    irish_investr
    Registered Users, Registered Users 2 Posts: 49 ✭irish_investr


    Yes, this happens especially with REITs and Closed-End funds, where (among other things) supply and demand play a part in determining market price. In theory, the shares could trade at a fairly substantial premium or discount, but in practise it usually tends to be a discount, at least in recent history.

    In the case of REITs, well, buildings are not exactly the most liquid of assets. Memory and gut feeling tells me that this category has been much more prone to trading freezes than other types of fund. So, I guess its only right that investors are compensated for this extra risk.


  • #4
    philippoc93
    Registered Users, Registered Users 2 Posts: 14 ✭philippoc93


    I added some on the recent dip at about 13% discount to Net Asset Value or at €1.14. It's an interesting topic at the moment as most REITs in the US were trading at premiums to NAV until the pullback in November due to fear of rising rates. I think the discount is unwarranted as I believe Hibernia's FFO grows significantly over the next 2-3 years.


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