Bankinter |The Spanish Socimis are facing a more than foreseeable downward adjustment to the value of their assets (GAV), in light of the hike in interest rates in the last few months and the potential recession. This decrease in the valuation of their portfolios will have an impact on accounting profit and on leverage, which could already be reflected in certain areas at end-year.
Our analyst team’s view: Negative news, although to a large extent already discounted by the main Socimis. For that reason, they are trading at huge discounts, of between 55% and 65% to NAV (net asset value). In our report on the Property Sector we already anticipated these possible reductions in valuations. As a result, we believe it is still soon to enter the sector. The dividend yield demanded from the listed real estate firms will still have to increase a bit, to levels close to a global 5% average vs 4.4% currently. That said, we do see some opportunities for long-term investors and those with a high risk tolerance.
Vonovia, European leader in rented residential housing, is already discounting an excessively negative scenario, with a dividend yield estimated at over 7% and a discount to NAV of 60%. In the US, we flag: i) Welltower, linked to health, particularly to old people’s homes; ii) Prologis, world leader in logistic assets; iii) Digital Realty Trust, specialising in data centres. In Spain, we only have a Buy recommendation on Inm. Colonial.
