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Investing.com - Jefferies upgraded Grand City Properties (ETR:GYC) from Hold to Buy on Monday, raising its price target to EUR14.00 from EUR12.00, citing an improving outlook for the German real estate company.
The upgrade comes as Jefferies expects long-term like-for-like rental growth of approximately 3.7% for Grand City Properties, noting the company’s value-add portfolio is strongly reversionary at 22% versus estimated rental value.
Despite expectations that funds from operations will remain subdued for the next few years due to upcoming refinancing of its hybrid bond in 2026, Jefferies highlighted that Grand City Properties has suspended its dividend for three consecutive years and completed several liability management transactions.
The firm pointed out that Grand City Properties has reduced its leverage significantly, with its EPRA loan-to-value ratio expected to decrease to 42.2% in 2025 from 48.7% in fiscal year 2023, potentially creating room to reinstate dividends for fiscal year 2025.
According to Jefferies, Grand City Properties stock currently trades at a 59% discount to its 2025 estimated net tangible assets per share and at a 9.8x price-to-FFO I multiple for 2025, representing an attractive entry point despite expectations that the company will remain a net seller in 2025.
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