S Immo (SPI): Future strategy depends on takeover bid

London, UK, 17 June 2021

S Immo (SPI): Future strategy depends on takeover bid

So far, S Immo has weathered the COVID-19 crisis relatively well, with its EPRA net tangible assets (NTA) per share down by only c 6% between end-2019 and end-March 2021, mostly due to the impact on its hotels (c 9% of its property portfolio at present). Its future investments agenda depends on the outcome of the IMMOFINANZ takeover bid. Success would trigger a review of its hotel and residential strategy, whereas a failure would likely result in the sale of its minority stakes in both listed peers, with proceeds redeployed into new properties to further enhance its FFO1.

S Immo shares trade at 0.89x its last reported EPRA NTA of €24.79 per share. While this implies a 13% premium to peer median of 0.79x, it does not yet reflect the portfolio uplift in April 2021 (partially assisted by the Berlin rental cap repeal). Based on Refinitiv consensus, the FFO1 yield for FY21e and FY22e is 3.3% and 4.1%, respectively, 159bp and 108bp below peer median, respectively.

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