Valuation of Norwegian Property ASA

Abstract

Norwegian Property ASA was established in 2006 with the goal of having an extensive and liquid portfolio of commercial real estate. The company is today considered to be dividend-driven with a goal of paying 30-50% of its ordinary profit after tax as dividends to shareholders. The ownership structure in NPRO consists of John Fredriksen as a large blockholder with 80% of the shares. Portfolio of prime assets NPRO’s primarily location is the Oslo area with 96% of their total property holdings. Aker Brygge and Fornebu accounts for approximately 80% of the total Oslo portfolio. The company’s Stavanger portfolio consist of only 4% and has been converted from a commercial building to a combined residential and commercial property. The residential units in Stavanger will be put on sale in 2021. Increased portfolio and rental income The level of activity in the transaction market has been high over several years with record low interest rates. We have witnessed the second largest level of transactions ever registered in 2020, and NPRO had the biggest deal with the purchase of Telenor HQ at Fornebu. This transaction will expand their total property portfolio of about 500 000 sqm, and with an overall market value of 23,5BNOK. Valuation – Hold Rating A thorough valuation is based on a present value approach by discounting future cash flows, and a relative valuation using multiples. Both approaches implied a share price close to today’s market price. Based on these estimations, a hold rating is issued with a target price of 16 NOK, suggesting an upside below 10%. Going forward, I consider the risk factors to be manageable and future estimates achievable for Norwegian Property ASA.