Publity AG (DE:PBYG) is an asset manager with long-term experience of investing in German office buildings. It is the largest servicer of non-performing loans (NPLs) in Germany and is able to acquire assets from restructuring German banks. It focuses entirely on asset management and is not distracted by property and facility management. It evaluates and analyses more than 1,000 assets per year, acquiring individual assets for its clients, rather than making portfolio acquisitions. It currently has AUM of €3bn and a potential deal pipeline of more than €26bn. Current valuations are attractive relative to sector comparatives, despite having the highest yield in its peer group.
Strategy: “Manage to core”
publity’s strategy is to invest in properties that need cosmetic improvement and offer attractive earnings potential. With intensive asset management, these properties can be transformed into core property holdings. This is the “manage to core” strategy. publity focuses on property requiring limited investment spending, including property used as security for non-performing loans, which has often been neglected.
Financials: Driven by expansion in AUM
Net profit almost doubled in 2016 to €23.1m. Sales increased 75% to €41.6m and net income improved 86% to €23.2m. The company expanded the business significantly in 2016, driven by the large increase in AUM and the first disposals from a joint venture portfolio. There was a significant (255%) increase in AUM to €3bn and the 2017 target was raised to €5.2bn (from €5bn). AUM of €7bn is also expected by the end of 2018. The targeted dividend of €2.80 per share for 2016 was confirmed at the recent AGM.
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