Sela Real Estate on recommendation with an upside of 50% – real estate

Significant stock recommendation

Real Estate Rock
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Of Shmuel Selvin, after the publication of the annual reports according to which the fund managed to maintain stability – despite the challenging corona year (expansion later in the article). Analyst Shai Lipman of “Value Base” raises the target price to NIS 10.57 per share, compared to yesterday’s closing price of NIS 7.09 per share. This is a 49% upside that Lipman attributes to a multiplier of 14 on the expected FFO for 2021.

According to him, “By virtue of being a Reit fund, Sela Real Estate is at a low level of risk, maintains a leverage threshold of up to 60% and makes a regular dividend distribution. Property occupancy as of the end of 2020 stands at about 96% similar to the situation at the end of 2019 (97%). In 2020, the company renewed 213 contracts for properties with an area of ​​approximately 80,000 square meters. The company has properties amounting to 455 thousand square meters. The expected dividend for 2021 is approximately NIS 102.5 million – from this it follows that the fund’s annual dividend yield is expected to be approximately 7.1%. ”

The forecast: a slight increase of a maximum of 3% in FFO and NOI
The company has updated its upward forecasts in a range of a maximum of three percent, ie not significantly, and expects that the annual NOI will be in the range of NIS 212-220 million and that the FFO will be in the range of NIS 153-158 million. The company expects an increase in the dividend to NIS 102.5 million, compared to NIS 94 million last year.

Revenue for the quarter fell by 2% and NOI shrank by 5%
The company’s income from rent and property operations for the fourth quarter amounted to NIS 58.1 million, a decrease of 2% compared to the corresponding period last year. The NOI for the fourth quarter amounted to NIS 51.6 million, a decrease of 4.9% compared to the corresponding period. The Same Property NOI amounted to NIS 47.7 million – a fall of about 12.1% compared to the corresponding period.

The FFO amounted to NIS 37.7 million, a decrease of 2.6% compared to the corresponding period last year, which embodies a real FFO of 19.4 agorot per share, a decrease of 4% compared to the corresponding period last year.

Gadi Elikam, CEO of Sela Real Estate: “Despite the corona crisis, Sela Real Estate has managed to maintain stable results in 2020. During the year, the company was able to populate vacant areas and extend existing agreements while increasing rents and maintaining high occupancy rates. About 56% of the company’s retail space is leased to anchor tenants and vital businesses, whose average lease term is about 5 years. The company has a return FFO “11%, the highest of all real estate companies, which allows a dividend to be distributed to investors at a rate of more than 7% and at the same time maintain the financial strength of the company.”

Despite the corona: revenues remained stable
The Company’s income from rent and property operations in 2020 amounted to NIS 2.37 billion, similar to 2019. The annual FFO amounted to NIS 152.8 million, an increase of 1.4% compared to the corresponding period last year, due to a decrease in the Company’s financing cost and a decrease. In revenue as a result of the corona crisis. The annual NOI amounted to NIS 213.3 million, a decrease of 0.7% compared to 2019.

Sela celebrated her victory over the takeover attempt
Recently, Sela Real Estate reported on raising NIS 80 million from properties and a building in a private share issue, in an issue that took place after a two-month struggle, the shareholders’ meeting rejected the offer of

a building
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Directed by Dudu Zabida to take over Sela and cancel his status as a Reit Foundation. 72% of rock stakeholders voted against the takeover bid, while the majority needed to pass it was 75%. Private and institutional investors have supported keeping the company in its current form, for all the tax benefits derived from it.

“We strongly believe that towards the middle of 2021 or in the third quarter the economy will start to return to normal and Sela Capital will be there,” said Sela Real Estate Chairman Shmuel Selvin who celebrated his victory in an interview with BizPortal. “In Corona we were very little damaged and this quarter the real estate will also return and we are with it. Whoever is in serious trouble, we go towards him. Yes, there are those who have difficulty, but they are on the margins. ”

The Harit Sela Real Estate Fund owns 36 income-producing properties in the country in an area of ​​455,000 square meters and 161,000 square meters of parking spaces. The hotel’s income-producing assets amount to NIS 3.4 million with an occupancy rate of approximately 96%. The company’s market value is approximately NIS 1.46 billion.