Product Marketing Manager, Criat

Raghav Chandra Mathur

Product Marketing Manager

Next-Generation Credit Analytics Provider

Criat

Criat specializes in new-generation data-driven credit analytics. Leveraging our industry-leading DeepCredit analytical technologies, we produce daily-updated forward-looking credit assessment and valuation to help financial institutions stay ahead of risks. Coupled with use-case-driven applications, we extract insights, answer questions and enable smarter credit decisions.

Thematic (Sector/Industry)

<ul>
<li>Europe’s Real Estate sector has been dealing with a protracted slowdown in growth and financing availability that has seen the industry battle rising borrowing and refinancing costs, increasing the repayment burden on Developers, REITs and Real Estate Services providers.</li>
<li>The downturn has been especially pertinent for the Real Estate Owners and Developers as they navigate the higher-for-longer interest rate environment.</li>
<li>However, this trend hasn’t been pervasive throughout the Euro Area.</li>
</ul>


Europe’s Real Estate sector has been dealing with a protracted slowdown in growth and financing availability that has seen the industry battle rising borrowing and refinancing costs, increasing the repayment burden on Developers, REITs and Real Estate Services providers.
The downturn has been especially pertinent for the Real Estate Owners and Developers as they navigate the higher-for-longer interest rate environment.
However, this trend hasn’t been pervasive throughout the Euro Area.


EU Real Estate Holds Steady Amidst Structural Slowdown

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

The Hang Seng, EURO STOXX 50, MSCI ACWI ex-US, and MSCI EAFE display bearish short-term inflections. Additionally, 10-year yields in the US and Germany are breaking down below key support. These deteriorating market dynamics raise concerns of a deeper pullback, however other indicators remain largely positive. As a result, we continue to see a mixed, but overall constructive market. Actionable themes highlighted in today's report include Health Care and Real Estate.

The Hang Seng, EURO STOXX 50, MSCI ACWI ex-US, and MSCI EAFE display bearish short-term inflections. Additionally, 10-year yields in the US and Germany are breaking down below key support. These deteriorating market dynamics raise concerns of a deeper pullback, however other indicators remain largely positive. As a result, we continue to see a mixed, but overall constructive market. Actionable themes highlighted in today's report include Health Care and Real Estate.

Global Equity Strategy: Mixed Market Environment Continues As Yields Break Down

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>The offer price has been reopened following the results of the offer period: Brookfield has received acceptances over 50.5% of the voting rights and now controls 71% of alstria.</li>
<li>Depending on the results, Brookfield may initiate procedures to initiate a delisting, but will not squeeze-out for at least three years. Liquidity of the shares will be much lower.</li>
<li>Brookfield may lower the dividend payout. The shares are trading at 3.4% FFO yield and 2.6% dividend yield, meaning that there are better opportunities elsewhere. Recommendation is tender.</li>
</ul>


The offer price has been reopened following the results of the offer period: Brookfield has received acceptances over 50.5% of the voting rights and now controls 71% of alstria.
Depending on the results, Brookfield may initiate procedures to initiate a delisting, but will not squeeze-out for at least three years. Liquidity of the shares will be much lower.
Brookfield may lower the dividend payout. The shares are trading at 3.4% FFO yield and 2.6% dividend yield, meaning that there are better opportunities elsewhere. Recommendation is tender.


Brookfield/​Alstria Office REIT: Additional Acceptance Period

<ul>
<li>The bid came finally at €19.5/share in cash, above expectations and almost same level as Capital IQ consensus 22e NAV (€19.37/share). </li>
<li>The offer  has been well timed and taking advantage of the slow recovery in German offices. Brookfield increased its shareholding since bid rumors surfaced.</li>
<li>Gross spread is c. 0% for a friendly deal highly likely to close, at current offer price. Wait for share price weakness before setting up a position.</li>
</ul>


The bid came finally at €19.5/share in cash, above expectations and almost same level as Capital IQ consensus 22e NAV (€19.37/share). 
The offer  has been well timed and taking advantage of the slow recovery in German offices. Brookfield increased its shareholding since bid rumors surfaced.
Gross spread is c. 0% for a friendly deal highly likely to close, at current offer price. Wait for share price weakness before setting up a position.


Brookfield/Alstria Office REIT: Agreed Takeover Offer

On 21 July, Bloomberg reported that Canadian <a href="https://www.smartkarma.com/entities/brookfield-asset-management-cl-a" target="_blank" data-smartkarma-citation="entities:25297:1" rel="noopener">Brookfield Asset Management-Cl A (BAM/A CN)</a> was working with advisers as it considers a potential bid for <a href="https://www.smartkarma.com/entities/alstria-office-reit-ag" target="_blank" data-smartkarma-citation="entities:21582:1" rel="noopener">alstria office reit-ag (AOX GR)</a><a href="https://platform.marketintelligence.spglobal.com/web/client?auth=inherit#company/profile?KeyProductLinkType=2&amp;id=4160242" target="_blank" rel="noopener"></a>. alstria office's shares jumped on the news and closed 9% higher. A buyout of the company would be the biggest take-private deal in Germany in 2021. On the same day, alstria stated it "takes note of the press rumours with respect to a potential takeover offer by Brookfield Asset Management Inc.".
The interest of Brookfield in alstria is a bet on German office market recovery. The portfolio of alstria should hold well in value vis-à-vis any further waves of the pandemic. Moreover cash flows are stable as alstria is mainly exposed to public sector tenants with long-term leases and it has stable occupancy rates.
Before the pandemic, alstria used to trade at a premium to BV, as of 23 July, it traded at 0.94x, and it is showing a remarkable recovery since the lows of November 2020, driven by vaccination campaigns and the soon-to-happen "back-to-office".
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On 4 March 2021, S&amp;P upgraded Alstria to BBB+ (outlook stable) on sustained low debt leverage (low ratio of debt to debt plus equity of 27.6%), material share of public tenants and long lease maturity profile and robust liquidity profile.
A takeout price could come in at €18.68, a 10% premium over the last reported EPRA NTA and 6.4% premium to the closing price on 23 July. My PT is economic-profit based and equates to a 1% discount to EPRA NTA 22e (source Capital IQ consensus). alstria trades at 3.5% FFO yield. and 3% dividend yield.
German property values continue to increase. The ECB does not seem worried about inflation as long as the delta variant is spreading and will not stop its debt purchasing program in the short term, therefore monetary policy will likely remain unchanged.
Recommendation is Long AOX GR, PT €18.68.


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On 21 July, Bloomberg reported that Canadian Brookfield Asset Management-Cl A (BAM/A CN) was working with advisers as it considers a potential bid for alstria office reit-ag (AOX GR). alstria office's shares jumped on the news and closed 9% higher. A buyout of the company would be the biggest take-private deal in Germany in 2021. On the same day, alstria stated it "takes note of the press rumours with respect to a potential takeover offer by Brookfield Asset Management Inc.".
The interest of Brookfield in alstria is a bet on German office market recovery. The portfolio of alstria should hold well in value vis-à-vis any further waves of the pandemic. Moreover cash flows are stable as alstria is mainly exposed to public sector tenants with long-term leases and it has stable occupancy rates.
Before the pandemic, alstria used to trade at a premium to BV, as of 23 July, it traded at 0.94x, and it is showing a remarkable recovery since the lows of November 2020, driven by vaccination campaigns and the soon-to-happen "back-to-office".



On 4 March 2021, S&amp;P upgraded Alstria to BBB+ (outlook stable) on sustained low debt leverage (low ratio of debt to debt plus equity of 27.6%), material share of public tenants and long lease maturity profile and robust liquidity profile.
A takeout price could come in at €18.68, a 10% premium over the last reported EPRA NTA and 6.4% premium to the closing price on 23 July. My PT is economic-profit based and equates to a 1% discount to EPRA NTA 22e (source Capital IQ consensus). alstria trades at 3.5% FFO yield. and 3% dividend yield.
German property values continue to increase. The ECB does not seem worried about inflation as long as the delta variant is spreading and will not stop its debt purchasing program in the short term, therefore monetary policy will likely remain unchanged.
Recommendation is Long AOX GR, PT €18.68.






Brookfield/Alstria Office REIT: Potential Takeover

Germany

Alstria Office REIT-AG is a real estate investment trust that acquires, owns, and manages real estate in Germany.  The Company focuses on German office real estate markets.

Price Gauge
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alstria office reit-ag (AOX GR)

EU Real Estate Holds Steady Amidst Structural Slowdown

Europe’s Real Estate sector has been dealing with a protracted slowdown in growth and financing availability that has seen the industry battle...

Criat

Global Equity Strategy: Mixed Market Environment Continues As Yields Break Down

The Hang Seng, EURO STOXX 50, MSCI ACWI ex-US, and MSCI EAFE display bearish short-term inflections and 10-year yields in the US and Germany are...

Vermilion Research

Brookfield/Alstria Office REIT: Additional Acceptance Period

Brookfield now controls 71% of alstria and has reopened the offering period until 3 February. It intends to act as a long-term shareholder and will...

Jesus Rodriguez Aguilar

Brookfield/Alstria Office REIT: Agreed Takeover Offer

Considering Q3 results, the offer price is not particularly generous, but the premium offered means the bid is highly likely to be succeed. Gross...

Jesus Rodriguez Aguilar

Brookfield/Alstria Office REIT: Potential Takeover

A takeout price could come in at €18.68, 10% premium overlast reported EPRA NTA, 6.4% premium to last closing price. PT is economic-profit...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

EU Real Estate Holds Steady Amidst Structural Slowdown

Europe’s Real Estate sector has been dealing with a protracted slowdown in growth and financing availability that has seen the industry battle...

Criat

Global Equity Strategy: Mixed Market Environment Continues As Yields Break Down

The Hang Seng, EURO STOXX 50, MSCI ACWI ex-US, and MSCI EAFE display bearish short-term inflections and 10-year yields in the US and Germany are...

Vermilion Research

Brookfield/​Alstria Office REIT: Additional Acceptance Period

Brookfield now controls 71% of alstria and has reopened the offering period until 3 February. It intends to act as a long-term shareholder and will...

Jesus Rodriguez Aguilar

Brookfield/Alstria Office REIT: Agreed Takeover Offer

Considering Q3 results, the offer price is not particularly generous, but the premium offered means the bid is highly likely to be succeed. Gross...

Jesus Rodriguez Aguilar

Brookfield/Alstria Office REIT: Potential Takeover

A takeout price could come in at €18.68, 10% premium overlast reported EPRA NTA, 6.4% premium to last closing price. PT is economic-profit...

Jesus Rodriguez Aguilar

Brookfield/Alstria Office REIT: Additional Acceptance Period