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Publication
Entra ASA : equity valuation
| Name: | Description: | Size: | Format: | |
|---|---|---|---|---|
| 5.15 MB | Adobe PDF |
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Abstract(s)
Entra is one of Norway’s leading real estate companies with a property portfolio of approximately 1.2 million sqm and rental income of NOK 1,77 billion (2014). Their business concept is focused around owning, letting and managing high quality office buildings with central locations. Despite a rapid fall in oil prices last fall, the consensus estimates points at a short-lived downturn for the Norwegian economy. This downturn is expected to have a relatively moderate impact on the office rental market. Yet, real rents are expected to decrease in the following years. In the long run, the rental prices typically grow with inflation. The rental income is expected to continue its positive trend, as relatively few contracts are maturing in the coming years. The strong presence of public tenants in the portfolio (76%) should also limit the counterparty risk. On the cost side, the EBIT margin is expected to increase as the company expects lower costs going forward. An enterprise DCF model is used to determine the fair value of Entra's shares. The valuation is based on a thorough analysis of the rental market in each of Entra's geographical areas. Extra care has also been taken to research the Norwegian Tax Code, as it is an important determinant of value for real estate companies. The aim of this thesis has been to estimate the fair value of Entra ASA. The results are also compared to the fair value estimate given by DNB Markets.