Grivalia Properties Real Estate Investment Co. (GRVVF, Financial)(ATH:GRIV, Financial) is a Greek property owner and a holding of Fairfax Financial (FRFHF, Financial) (TSX:FFH, Financial). Fairfax is operated by investing legend Prem Watsa (Trades, Portfolio). The stock has been growing in a tough economic climate—Greece.
Grivalia has 101.26 million shares outstanding, the stock trades for 9 euros ($10.56) and the market cap is 911.34 million euros. The adjusted net asset value per share (according to the company) is 8.97 euros, so the stock is trading at about net asset value. According to the Financial Times, the dividend is 0.19 euros and the dividend yield is 2.11%. Not bad.
Much of this report will come from a company presentation. The market value of real estate is 876 million euros. I like that management let us know the market value instead of book value. The average lease is 10.7 years. Approximatley 37% of rents come from office, 32% from retail, 18% from mixed use, 6% from logistics and 7% from special use. The occupancy rate is 93%, which is pretty good.
Most of the properties are located in Greece, but there are also buildings in Romania, Serbia, Luxembourg and an island development in Panama. Revenues grew from 19 million euros in 2013 to 32 million euros in 2017. Profit before tax grew from a loss of 8 million euros in 2013 to 32 million euros in 2017. Some of the major tenants include Eurobank (EGFEF, Financial) with 22.5% of contracts, the Greek state with 22%, Praktiker (LTS:0O6H, Financial) with 17% and The Mart with 8.8%. That sounds like a pretty good group of tenants. I do not think Amazon (AMZN, Financial) is going to threaten the Greek State or Eurobank.
Isla Pedro Gonzalez, off the coast of Panama, was purchased from a real estate group for 27 million euros. A contract has been signed with the Ritz-Carlton to develop the property. This sounds interesting. Grivalia is also partnering with several hotels around Europe.
Fairfax owns 51.43% of shares, Wellington 11.16%, Brandes 5% and Pimco 5%. As you can see, Grivalia is tightly controlled. Since 2006, a shareholder would have received a 3.66% return with dividends. A holder of the Greek exchange Athex would have lost 81% in value. Fairfax purchased its holdings in Grivalia from Eurobank a few months ago. An initial purchase was made two years ago. The stock is probably pretty thinly traded in the U.S., so you might want to buy in Europe if you have an interest.
You can tell Watsa was digging around for some ideas in troubled Greece. He came up with this well-fortified real estate company. Watsa has been known as a sometimes deep-value investor. I like the fact management does not pour on additional shares every year like so many REITs do in the United States. That is why many value investors avoid them.
I do not see much news on the stock in the U.S., nor do I see much information from Fairfax. Grivalia is a small holding for Fairfax.
Judging from pictures, it seems much of Grivalia’s property is new. The tenants are first rate. I do not think it will be receiving much of a threat from the internet. What you get in the stock is a real estate company trading at NAV that does not dilute shareholders and has a nice dividend. As time goes on and with new properties built, the NAV and funds from operations should grow. This should push the stock price higher. At least, this is what Fairfax is hoping for.
Disclosure: We do not own shares. We do own Fairfax bonds.
