Raven Russia is a Guernsey registered property investment company specialising in Russian commercial real estate. The portfolio focus is investment and development of high quality Class A warehouse complexes in major cities let to Russian and international tenants.
Recent FY17 results and the distribution to ordinary shareholders were both ahead of market expectations, and continuing stabilisation of group finances coincides with increasingly positive economic and property market data. That should shift the investment focus back on the group’s core business and Raven’s competitive positioning as a market leading provider of Russian warehousing and 3rd party logistics. It has capacity to grow, and the potential to capitalise upon Russia’s determination to modernise its economy, supply chain and infrastructure.
The results featured 10% y-o-y NOI growth, 19% in underlying EPS, and a 50% increase in the final distribution to 3p/share. Diluted NAV/share was also 13% ahead at 80c (57.5p), backed by the first uplift in appraised asset values for five years.
Raven has capitalised on £211m raised via two convertible preference share issues to build the sustainability of its financial base. The proceeds funded (a) $209m of high-yield acquisitions, which have added c $24m to the rent roll, and (b) debt reduction and renegotiation of facility terms, including reduced annual amortisation rates.
The shares are underpinned by earnings growth and an attractive yield (paid via a tender offer to buy back shares) and the positive NAV outlook. The group’s financial footing has been assisted by the improved macro and domestic real estate market backdrops. Key economic data (GDP, inflation, interest rates) are stabilising, core lettings and investment markets are operating more conventionally.
Our forecasts are conservative i.e. absorb the impact of the transition to Rouble rents but assume no further acquisitions despite $267m of year-end cash, which could clearly have a material positive impact on NOI and EPS.
