Banimmo sells its 12k m2 retail asset in Eragny for € 18.65m and books an impressive 34% IRR on a two years period. The sales price coincides with our estimates and confirms our € 13 target price. Buy reiterated.
News:
Banimmo announced the signing of an unconditional sales agreement for its retail asset in Eragny (France). This asset was acquired at the end of December 2010 for an amount of approx. € 12.5m. At that moment, it was rented to a single tenant Castorama whose contract would end in 2011. Banimmo invested approx. € 3m in the building and succeeded in maintaining the tenant while extending its rental contract with an additional 9years, making it an ideal investment product.
This transaction confirms the value of Banimmo’s development pipeline. Furthermore, it reassures that the disposal deferral with a couple of months (thereby missing the FY12 objective) was not a wrong decision in order to get a correct price for its assets.
We were banking on a sales price of € 16.3m for this asset, while we also estimated a lower capex. Hence, the gain on disposal coincides with our expectations and strongly confirms our Buy rating.
Conclusion:
With this transaction, Banimmo has already attained half of our forecasted FY13 result on disposals. Hence, we see our target price of € 13 p.s. confirmed.