European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

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On 25 March, <a href="https://immofinanz.com/en/news/immofinanz-ag-price-increase-for-the-announced-voluntary-public-takeover-offer-to-the-shareholders-of-s-immo-ag" target="_blank" rel="noopener">Immofinanz increased the offer price by 23%</a>, to €22.5 per share (less than 4% below my TP).
<ul>
<li>The offer price represents 47.2x EV/Fwd EBITDA,  18.4x P/Fwd E and 1.18x P/Fwd BV.</li>
</ul>
S Immo shares are currently trading at a 3% FFO yield and offer a 1.9% dividend yield (source: Capital IQ consensus). Diluted EPRA NNNAV per share as of YE 2020 was €20.67 (vs. €20.02 at Q3 2020).
The improved offer price seems fair, but not overly generous, at the same level at which S Immo was trading in December 2019, around €22.5 per share. The market seems happy with this outcome.
Immofinanz quickly improved its opening gambit as S Immo's shares were trading higher than the initial offer. The improved offer price represents 2.9% 21e FFO yield and almost the same as mean consensus ind. NAVPS.
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Recommendation is long, TP €22.5 (around the same level as mean consensus ind NAVPS, supported by FFO/share yield). The shares are trading at a gross spread of 4.4%, c. 9% annualised. Patience may be needed to build a position.
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On 25 March, Immofinanz increased the offer price by 23%, to €22.5 per share (less than 4% below my TP).

The offer price represents 47.2x EV/Fwd EBITDA,  18.4x P/Fwd E and 1.18x P/Fwd BV.

S Immo shares are currently trading at a 3% FFO yield and offer a 1.9% dividend yield (source: Capital IQ consensus). Diluted EPRA NNNAV per share as of YE 2020 was €20.67 (vs. €20.02 at Q3 2020).
The improved offer price seems fair, but not overly generous, at the same level at which S Immo was trading in December 2019, around €22.5 per share. The market seems happy with this outcome.
Immofinanz quickly improved its opening gambit as S Immo's shares were trading higher than the initial offer. The improved offer price represents 2.9% 21e FFO yield and almost the same as mean consensus ind. NAVPS.


Recommendation is long, TP €22.5 (around the same level as mean consensus ind NAVPS, supported by FFO/share yield). The shares are trading at a gross spread of 4.4%, c. 9% annualised. Patience may be needed to build a position.


On the evening of 14 March, <a href="https://www.smartkarma.com/entities/immofinanz-ag" target="_blank" data-smartkarma-citation="entities:22547:1" rel="noopener">IMMOFINANZ AG (IIA AV)</a> announced its intention to launch a voluntary takeover offer to acquire the 72.5% stake in <a href="https://www.smartkarma.com/entities/s-immo-ag" target="_blank" data-smartkarma-citation="entities:22559:1" rel="noopener">S IMMO AG (SPI AV)</a> it does not already own for approximately €930 mn.
<ul>
<li>
Immofinanz currently holds approximately 26.49% of S Immo.
</li>
<li>
S Immo indirectly holds 10.86% of Immofinanz.
</li>
<li>
S Immo currently holds a 6% stake pct in <a href="https://www.smartkarma.com/entities/ca-immobilien-anlagen-ag" target="_blank" data-smartkarma-citation="entities:22540:1" rel="noopener">CA Immobilien Anlagen AG (CAI AV)</a>.
</li>
<li>
At the end of January 2021, Ronny Pecik (CEO of Immofinanz), was to step down upon the completion of the sale of his c. 10.7% stake in Immofinanz to Aggregate Holdings.
</li>
</ul>
<ul>
<li>
To make things more interesting, Aggregate Holdings is interested in CA Immo, which itself is the object of a bid by Starwood (see <a href="https://www.smartkarma.com/insights/ca-immo-starwood-mandatory-offer" target="_blank" data-smartkarma-citation="insights:46905" rel="noopener">CA Immo - Starwood: Mandatory Offer</a> and <a href="https://www.smartkarma.com/insights/ca-immo-raised-offer-aggregate-s-potential-competing-offer" target="_blank" data-smartkarma-citation="insights:48625" rel="noopener">CA Immo: Raised Offer, Aggregate's Potential Competing Offer</a>).
<ul>
<li>
Aggregate confirmed that it may be considering a takeover bid for CA Immo, which could jeopardize the current bid of Starwood (largest shareholder with a c. 30% stake). Immediately after its sweetened offer of €34.44 per share was placed, the share price rose above that level and has remained ever since.
</li>
<li>
In 2018, Pecik himself was instrumental in Starwoods's acquisition of its stake in CA Immo, which resulted in the failure of Immofinanz’s own takeover bid for CA Immo at the time, prompting it to acquire its 26.49% stake in S Immo instead. As mentioned, S Immo also owns an almost 12% stake in Immofinanz.
</li>
</ul>
</li>
<li>
Recent announcements, bid and shareholder changes are raising expectations of a three-way merger between CA Immo, Immofinanz and S Immo.
</li>
</ul>
The offer price seems low (closing price on the last trading session prior to the release), quite under the level at which S Immo was trading in December 2019, around €22.5 per share. Diluted EPRA NNNAV per share as of Q3 2020 was €20.02. The move by Immofinanz looks more like an opening gambit and shares are trading 8% higher vs. offer on exceptions of a sweetened offer and/or a move by Aggregate.
S Immo shares are currently trading at an FY20e P/NAV of 0.81x (based on Capital IQ consensus), around the same level as peers, equally with regards to FY21e and FY22e. The shares offer FFO yields of 2.9% and 4.0% based on FY20e and FY21e numbers, respectively.
Target price is €23.1 per share (around the same level as consensus ind NAVPS, supported by FFO/share yield), 18% higher than current levels.

On the evening of 14 March, IMMOFINANZ AG (IIA AV) announced its intention to launch a voluntary takeover offer to acquire the 72.5% stake in S IMMO AG (SPI AV) it does not already own for approximately €930 mn.


Immofinanz currently holds approximately 26.49% of S Immo.


S Immo indirectly holds 10.86% of Immofinanz.


S Immo currently holds a 6% stake pct in CA Immobilien Anlagen AG (CAI AV).


At the end of January 2021, Ronny Pecik (CEO of Immofinanz), was to step down upon the completion of the sale of his c. 10.7% stake in Immofinanz to Aggregate Holdings.




To make things more interesting, Aggregate Holdings is interested in CA Immo, which itself is the object of a bid by Starwood (see CA Immo - Starwood: Mandatory Offer and CA Immo: Raised Offer, Aggregate's Potential Competing Offer).


Aggregate confirmed that it may be considering a takeover bid for CA Immo, which could jeopardize the current bid of Starwood (largest shareholder with a c. 30% stake). Immediately after its sweetened offer of €34.44 per share was placed, the share price rose above that level and has remained ever since.


In 2018, Pecik himself was instrumental in Starwoods's acquisition of its stake in CA Immo, which resulted in the failure of Immofinanz’s own takeover bid for CA Immo at the time, prompting it to acquire its 26.49% stake in S Immo instead. As mentioned, S Immo also owns an almost 12% stake in Immofinanz.




Recent announcements, bid and shareholder changes are raising expectations of a three-way merger between CA Immo, Immofinanz and S Immo.


The offer price seems low (closing price on the last trading session prior to the release), quite under the level at which S Immo was trading in December 2019, around €22.5 per share. Diluted EPRA NNNAV per share as of Q3 2020 was €20.02. The move by Immofinanz looks more like an opening gambit and shares are trading 8% higher vs. offer on exceptions of a sweetened offer and/or a move by Aggregate.
S Immo shares are currently trading at an FY20e P/NAV of 0.81x (based on Capital IQ consensus), around the same level as peers, equally with regards to FY21e and FY22e. The shares offer FFO yields of 2.9% and 4.0% based on FY20e and FY21e numbers, respectively.
Target price is €23.1 per share (around the same level as consensus ind NAVPS, supported by FFO/share yield), 18% higher than current levels.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

After failing to break above resistance, global equities (MSCI ACWI) have had a rough start to the third quarter. Continued weakness in global manufacturing and the U.S.-EU tariff escalation raises the potential for a breakdown in global equities, however our outlook remains neutral as long as the MSCI ACWI remains confined to its horizontal range. In today's report we highlight attractive and actionable set-ups within technology, construction and engineering, and real estate.

After failing to break above resistance, global equities (MSCI ACWI) have had a rough start to the third quarter. Continued weakness in global manufacturing and the U.S.-EU tariff escalation raises the potential for a breakdown in global equities, however our outlook remains neutral as long as the MSCI ACWI remains confined to its horizontal range. In today's report we highlight attractive and actionable set-ups within technology, construction and engineering, and real estate.

Global Equity Strategy: Prevailing Trends Persist

Most major indexes are currently trading at the lower end of their May trading ranges. Barring improving headlines regarding tariffs &amp; trade or comments from the Fed suggesting a potential rate cut on the horizon we believe global markets are vulnerable to further weakness. We review all major markets and highlight attractive opportunities within Japan, and global real estate developers, and consumer staples stocks.

Most major indexes are currently trading at the lower end of their May trading ranges. Barring improving headlines regarding tariffs &amp; trade or comments from the Fed suggesting a potential rate cut on the horizon we believe global markets are vulnerable to further weakness. We review all major markets and highlight attractive opportunities within Japan, and global real estate developers, and consumer staples stocks.

Major Indexes Testing Support & Vulnerable to Further Weakness

Global markets are holding at support levels and we reiterate, our neutral but constructive outlook . In today’s report we highlight actionable stocks within countries that are displaying bullish price and relative strength trends, including Japan, Hong Kong, Italy and Norway.

Global markets are holding at support levels and we reiterate, our neutral but constructive outlook . In today’s report we highlight actionable stocks within countries that are displaying bullish price and relative strength trends, including Japan, Hong Kong, Italy and Norway.

Global Equity Strategy: Overweight TOPIX, Hang Seng

Austria

S IMMO AG is a property investment company that invests in diversified real estate in Eastern Europe. The Company invests in prime real estate in Austria, Germany and countries in Central and Southeastern Europe. S IMMO's portfolio includes residential, office, retail space and hotels.

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S IMMO AG (SPI AV)

S-Immo Raised Offer, Attractive Spread

Long, TP €22.5 (around the same level as mean consensus ind NAVPS, supported by FFO/share yield). The shares are trading at a gross spread of 4.4%,...

Jesus Rodriguez Aguilar

Game of Thrones in Austrian Real Estate

Immofinanz's move looks like an opening gambit, shares are trading 8% higher on exceptions of a sweetened offer and/or a move by Aggregate. SPI...

Jesus Rodriguez Aguilar

Global Equity Strategy: Prevailing Trends Persist

After failing to break above resistance, global equities (MSCI ACWI) have had a rough start to the third quarter. Continued weakness in global...

Vermilion Research

Major Indexes Testing Support & Vulnerable to Further Weakness

Most major indexes are currently trading at the lower end of their May trading ranges. Barring improving headlines regarding tariffs & trade or...

Vermilion Research

Global Equity Strategy: Overweight TOPIX, Hang Seng

Global markets are holding at support levels and we reiterate, our neutral but constructive outlook . In today’s report we highlight actionable...

Vermilion Research

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