Neinor Homes is one of Spain’s leading residential developers and real estate asset managers.
After approving the 75% shareholder remuneration plan announced as part of its Strategic Plan, the company has shifted its strategic focus from a high dividend yield to a business with sustained, capital-efficient growth thanks to the development of its asset management business (co-investments). This will allow the company to grow EPS at a double-digit rate over the coming years, serving as its main driver of growth. Its goal was to reach €500 million in assets under management within 5 years, and in just 18 months, it has closed a management agreement valued at over €1.2 billion.
At Tenvalue, we maintain a different view than the analyst consensus, which, despite revising its estimates upwards following the achievement of milestones and Neinor Homes’ results, we continue to believe they are not adequately valuing the asset management business by assuming it will not be recurring. In our opinion, this is a profitable and sustainable business with high growth potential and at least as recurrent as traditional property development.
Additionally, Neinor has completed the divestment process of its BTR (build-to-rent) portfolio for a value of 325 million euros and has optimised its balance sheet by refinancing its corporate debt, allowing the company to extend maturities and provide itself with more available capital, thereby supporting its sustainable growth strategy.
By a simple sum of parts, applying a market average forward P/E ratio to the traditional development business for the year 2030 (12.4x) and a multiple on earnings for the asset management business of 21 times (the average of comparables), the expected IRR in a base case is 13.8%.
