25th Mar 2022 16:00
(Alliance News) - A takeover offer for Hibernia REIT PLC comes as no surprise given the stock's discount to its net tangible asset value and its limited ability to correct this, said broker Davy.
Hibernia on Friday agreed to a EUR1.08 billion takeover offer from Benedict Real Estate Bidco Ltd, a subsidiary of a real estate private funds owned by Brookfield Asset Management.
Shares in the Dublin-based real estate investment trust were 36% higher at 134.20 pence on Friday afternoon in London. The stock has gained 37% over the past 12 months.
Under the agreement, Brookfield will acquire Hibernia REIT for EUR1.63 per share in cash, comprising EUR1.60 per share, and a dividend of 3.4 cents.
Excluding the dividend, the offer price reflects a 36% premium to Hibernia's closing price of EUR1.18 on Thursday in Euronext Dublin, as well as a 3.0% premium company's EPRA net tangible assets per share of 158.7 cents at the end of December.
The deal was "hard to say no to", said Irish broker Davy.
"Share buybacks did not close the discount to NTA and neither did significant asset disposals at book value. Irish REIT legislation is highly restrictive on any further share buybacks, so there were no further actions available to management," said Davy.
The broker continued that it believes all sub-sectors within listed real estate, with the primary exception of logistics, are undervalued.
"The undervaluation and underperformance in hard asset sectors this cycle are a common response to overvaluation and outperformance in the previous cycle. This now provides enormous opportunities for investors," said Davy.
Hibernia REIT expects the acquisition to be completed within the second quarter of 2022.
By Lucy Heming; [email protected] and Dayo Laniyan; [email protected]
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