vorgehensweise von finanzanalysten bei der bewertung von

Vorgehensweise von

Finanzanalysten bei der

Bewertung von Immobilienunternehmen

Prof. Dr. A. Stefan Kirsten

Bochum, January 2017

Die Passivseite – Equity - Analysts

© Prof. Dr. A. Stefan Kirsten, January 2017,

• Principles of Finance– Real assets vs. Financial assets

– Why do we need capital differentiation?• Liability

• Tenure

• Other features (covenants, rating etc)

– Disintermediation

– Financial Strategy

• Liabilities & Equity

– Equity

• Different Classes

• How to raise Equity? – Initial Public Offering

– Debt

• Secured

– Mortgage – Hypotheken

– Bilateral/Multilateral Loans

– CMBS/RMBS - GRAND

• Unsecured

– Corporate Loans

– Bonds – Unbesicherte Anleihen

• Pensions



• Financial Communication– Equity

• Investor Relations

• Formal Financial Communication (BaFin; Börse etc.)

– Debt

• Creditor Relations

• Rating



Balancing Assets as well as Liabilities & Equity

Quelle: FAZ



Key Questions

• Why do we need analysts?

• Why do banks employ any research?

• What drives analysts?

• Why are there different types of research?

• How objective are analysts?

• What pressures them?

• Which interest has the company (issuer)?



Debt and Equity as Option

Equity

Debt

Assets

Payoff

level

Debt (Put)

Book Value of Debt

(strike price)

Equity (Call)

Value of Assets

– Equity and Debt are options on the assets of a company

– It shows the clear relationship

• Equity is the Call

• Debt is the PutSource: JPM

Alternative views on Equity and Debt



Principles

(Source: Zirguezi: 2012)



Disintermediation is like Cloud Computing



Communication MUST be focusedtowards the receiver

Sender

Receiver



Advise

Order

Communication to the Capital Market - Overview

Goal:Out performance

Basis:Right investment decision

Goal: Fee generation

Basis:Right investment advise

Goal: Fair Valuation of the stock at the capital market

Basis:Professional Capital Market Communications

Company

Investor Relations

Capital Market Communications

Investor

• Retail Investor

• Institutional Investor

• Mutual Funds Manager

• Equity-research(buy-side-analyst)

supported by

Broker/Retail bank

• Investment Advisor

• Sales force

• Equity-research(sell-side-analyst)

supported by



Parameters and its influences

Economic Situation

Sector Environment and

Competition

Company performance

Equity Story

Disclosure

Influence of the Company

Influence of Investor Relations

low high low high



IPO - Interfaces at go/no-go decisions

Public

External within

syndicate

Internal with

banks & lawyers

Internal



Case related research

• Research bridges the information gap between

the issuer and the investor

– Macro – Global macro research, maybe even multi asset

– Sector – Overview

– IPO – Initiation report

– Company related – In depth report

– Regular reporting (YE, QII etc.) – quantitative update

– Event news – Flash reporting



Opinions create volatility

1

Cash Flow (FFO & Dividend

€ per share)

2

Portfolio Valuation

(Adj. EPRA NAV€ per share)

3

Stock Market Valuation(Stock price € per share)

• Regulated market

• No cluster risk due to high degree of granularity

• Robust business model

• Market prices for assets are much more relevant than interest rate levels

• Additional material factors are supply/ demand imbalance and sustainable market rent growth

• Only partly driven by performance and portfolio valuation

• Negatively correlated to bund yields and interest rates

• Subject to additional macro considerations

21,7 22,7 24,2~30.0 ~31.5*

2013 2014 2015 2016(E) 2017(E)

0,95 1,001,30

~1.63~1.80

0,67 0,740,94

1,12~1.26

2013 2014 2015 2016(E) 2017(E)FFO DPS

* excl. any assumptions for further yield compression

Layer Development Main drivers

IPO 2014 2015 2016

High degree of stability and predictability of underlying business (layer 1) and portfolio valuation

(layer 2) is not reflected in share price development (layer 3), as equity markets appear to apply

valuation parameters that are substantially less material for Vonovia’s operating performance.



Selected examples

1. Macro research – DB house view

2. Sector research – quantitative – UBS

3. Sector review – qualitative – BNP Exane

4. Sub-sector review – German residential – MS

5. Issuer Analysis – VNA on BNP Exane

6. Company Analysis VNA – CS

7. Event research – UBS Conference

8. Event research – UBS on VNA/CWI

9. Event research – MS Morning Mail

10. Company – IR Monthly Barometer

11. Company – Critical Analysis Kempen vs VNA

12. Company – Perception Study VNA by Makinson Cowell



Summary

1. Analysts are agents

2. Analysts are intermediaries

3. Communication is always focused towards the receiver

1. Company to Analyst

2. Analyst to Investor

4. Different styles in investing require different styles in research

5. The issuer needs information symmetry, everybody else asymmetry

6. The pressure comes from too much, too fast, too detailed

7. The quantitative analysis is only a basis for forming an opinion

8. It focuses on GAAP and non-GAAP sector specific KPI’s

9. The main objective is to compare

1. Amongst Sectors

2. Amongst Issuers

3. Over time



Raise no false expectations



Questions & Answers

Prof. Dr. A. Stefan Kirsten

[email protected]



Key Documents

Analyst Presentation Prospectus

Purpose Inform Sell Side Analysts Inform stock exchange & public

Representation (Haftung) none Full – company and management

Originators Banks & Company Lawyers & Company

Form Powerpoint Text