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Berenberg touts 'attractions' of GCP Student Living, but stays at 'hold'
5th Jul 2021 17:16
(Sharecast News) - Analysts at Berenberg think a takeover price for GCP Student Living of 190.0p to 230.0p could be justified "given the attractions of the space".
After the close of trading on 2 July the company confirmed press speculation regarding buyout interest from Scape Living and iQSA Holdco Lmtd..
However, GCP also said that it was anticipating a "material increase" in its property valuation for the period to 30 June 2021.
On the back of the news from the company, shares of GCP shot 14.18% higher on Monday to reach 193.20p, having finished the previous session at 169.20p.
For Berenberg, the long-term fundamentals of the London student accommodation sector were "strong" and recent underperformance due to Covid-19, and the cash drag from the failed acuqisition of Scape Canalside had left the shares at an "attractive" level.
If confirmed, the offer would likely be made at a level in excess of GCP's last reported estimate of net tangible assets of 179.0p and its own June 2021 NAV forecast of 183.0p, like other recent transaction in the UK real estate sector, the analysts added.
They also pointed out the positives from GCP's 61% exposure to the London market for Purpose Built Student Accomodation due to the limited supply - because of regulations - and because there was the largest range of alternatove uses.
Nevertheless, they had been anticipating that GCP would make a "substantial acquisition" in the back half of 2021, absent which they reduced their estmates for the company's earnings per share by about 5%.
"Given that the shares will likely open higher this morning, we intend to take stock of any movement and adjust our price target and recommendation accordingly at a later date."
Berenberg therefore kept its recommendation for the shares at 'hold' and its target price at 150.0p.
The consortium constituted by Scape Living and iQSA Holdco Lmtd. now had until 30 July to announce its firm intention to buy GCP.
After the close of trading on 2 July the company confirmed press speculation regarding buyout interest from Scape Living and iQSA Holdco Lmtd..
However, GCP also said that it was anticipating a "material increase" in its property valuation for the period to 30 June 2021.
On the back of the news from the company, shares of GCP shot 14.18% higher on Monday to reach 193.20p, having finished the previous session at 169.20p.
For Berenberg, the long-term fundamentals of the London student accommodation sector were "strong" and recent underperformance due to Covid-19, and the cash drag from the failed acuqisition of Scape Canalside had left the shares at an "attractive" level.
If confirmed, the offer would likely be made at a level in excess of GCP's last reported estimate of net tangible assets of 179.0p and its own June 2021 NAV forecast of 183.0p, like other recent transaction in the UK real estate sector, the analysts added.
They also pointed out the positives from GCP's 61% exposure to the London market for Purpose Built Student Accomodation due to the limited supply - because of regulations - and because there was the largest range of alternatove uses.
Nevertheless, they had been anticipating that GCP would make a "substantial acquisition" in the back half of 2021, absent which they reduced their estmates for the company's earnings per share by about 5%.
"Given that the shares will likely open higher this morning, we intend to take stock of any movement and adjust our price target and recommendation accordingly at a later date."
Berenberg therefore kept its recommendation for the shares at 'hold' and its target price at 150.0p.
The consortium constituted by Scape Living and iQSA Holdco Lmtd. now had until 30 July to announce its firm intention to buy GCP.