Commissioned Research

Article by:
Nordea Markets

Eastnine has commissioned Nordea Markets to produce a research report with the aim of providing investors with quality research on the company.

Q4 2017 review – The Melon and the momentum

The quarter in numbers

Eastnine’s Q4 2017 showed good performance in all segments: direct real estate was up 6.9% q/q with low leverage, real estate funds were up 2.9% and other investments were up 11.8% (mostly due to a positive revaluation of Melon Fashion Group). 3 Bures was revalued at the upper range of our potential range while MFG was revalued to the upper range of our previous fair value range. Q4 NAV was EUR 242.5m, the discount to the reported NAV was ~15% at year end and return on NAV for the quarter came in at 7.9%

Valuation and revision to fair NAV

We use peer discounts for real estate and historical discounts for Eastnine’s other investments, adjusting for recent developments such as cost improvements. We arrive at a fair value of SEK 82-120, applying a discount of ~3-22% to our NAV.

For the investor that is interested in the latest report on Eastnine, we provide the full downloadable report here.

Eastnine acquires Alojas Biznesa Centrs in Riga

On Friday, Eastnine announced the acquisition of Alojas Biznesa Centrs, a fully rented class-A office complex located in the intersection of Krišjāņa Valdemāra iela and Alojas iela close to Riga, Latvia. The transaction totals EUR 29.6m, 16% of which accounts for a class-B office facility and a building currently dedicated to retail adjacent to the centre. As the company reports that the facilities will add some EUR 2.4m in rental income a year, it seems as if the acquisition yield is around 6.5%, assuming a surplus ratio of ~80%.

Upcoming report on 16 February

In the upcoming report, we look out for news on MFG, which we expect to be impacted by tailwinds from Russian macro trends and recent efforts within the company. We also look out for possible revaluations and divestments among non-core investments.

For the investor that is interested in the latest report on Eastnine, we provide the full downloadable report here.

A pure real estate company in the works

Institutional Private investors need quality research, which should be balanced, insightful, timely, readable and financially rigorous, and should also be made readily available.

Eastnine was founded and listed as East Capital Explorer by asset manager East Capital
in 2007 as an investment company targeting the growing Eastern European economies.
More specifically, its target was companies with strong growth outlooks driven by
domestic consumption. In May 2016, the investment agreement with East Capital was
terminated, and the company became independent with its own investment organisation
and introduced a strategic shift towards acquiring and developing directly owned real
estate properties in the Baltic capitals.

For the investor that is interested in the previous report on Eastnine, we provide the full downloadable report here.

Disclaimer

Nordea Markets is the commercial name for Nordea’s international capital markets operation. The information provided herein is intended for background information only and for the sole use of the intended
recipient. The views and other information provided herein are the current views of Nordea Markets as of the date of this document and are subject to change without notice. This notice is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient. The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision.
The document has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination.
Nordea Bank AB (publ), Company registration number/VAT number 516406‐0120/SE663000019501. The board is domiciled in Stockholm, Sweden.

Conflict of interest

Readers of this document should note that Nordea Markets has received remuneration from the company mentioned in this document for the production of the marketing material. The remuneration is predetermined and is not dependent on the content. It is important to note that past performance is not indicative of future results. Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction. This document may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.

Issuer review

This report has been reviewed, for the purpose of verification of fact or sequence of facts, by the issuer of the relevant financial instruments mentioned in the report prior to publication. The review has led to changes of facts in the report. Completion date: 21 February 2018, 12:25 CET