BREF – 2022 Q1

After reporting positive 2021 annual results amid a very turbulent year
with Revenues increasing over 18% and Net Profit growing more than 40% to
keep superb Net Profit Margin of 45.7%, BREF keeps the stable performance.
• Rental revenues increased 16% to BGN 3,364th compared to last year’s
Q1 of BGN 2,885th. This is due to the new tenants in the newest asset in their
portfolio – Synergy Tower.
• Sizeable increase in Current Assets, which is due to the sale of one of their
properties – Bricolage Varna – in Q2, 2022, after reaching an agreement for sale
in Q1 2022. This account will decrease in Q2 noting the completion of the sale.
• An agreement was reached to sell Bricolage Varna for EUR 6,800,000. The
deal is expected to be finalized by in Q2, 2022. Additionally, the land plot in
Mladost 4, Sofia, was sold in Q1, 2022, for EUR 350,000. The sales allow for a very
comfortable cash cushion to meet dividend payments or possible unexpected
costs associated to asset renovation.
• The Synergy Tower is getting operational in phases as it started in
September 2021. There are no delays and completion goes as per plan. The
existing occupancy of 26% will likely be increased significantly in 2022.
Negotiations are underway for a large portion of the GLA with a government
backed institution, where conditions are agreed, but final tenant agreement has
not been signed yet. The process is in the final stages and once completed, it will
secure a significant amount of the rental revenue.
• With a current market price of BGN 2.16 we see the stock as greatly
undervalued with 45% potential from the NAV of BGN 3.14 (derived from BGN
108,801,000 equity and 34,641,925 outstanding shares). We believe investors
abstain from purchases due to the geopolitical uncertainty, however, the
portfolio seems to be generating steady returns even in worst case scenarios,
which do not consider the upside of their main asset, Synergy Tower. Stock price
increased 9.09% in Q1 2022.

Full report can be downloaded here.