In one move, property deals seen adding 42 pct to value of Fourlis shares

The establishment of a real estate subsidiary by Fourlis, one of Greece’s biggest retailers, will unlock considerable value for the company, says Eurobank Securities.

As a result, the brokerage upped its target price on Fourlis shares to 6.20 euros each, implying an upside of 42 percent from its current price levels. Eurobank Securities reiterated its buy rating on the share.

On Friday, Fourlis stocks closed at 4.36 euros on the Athens bourse, climbing 6.5 percent in the last six months, versus gains of 12 percent in the broader market.

Fourlis is the franchise owner of IKEA stores in Greece, Cyprus and Bulgaria. It also has sporting apparel stores in these three countries plus Turkey and Romania.

The company is expanding its brick-and-mortar business in a bid to support growth plans, reflecting the view held by many that concerns over the demise of physical stores are over-exaggerated.

The company owns seven properties, consisting mainly of big box retail outlets and logistics centers with a total gross asset value of 185 million euros. The assets will be transferred to subsidiary real estate investment company (REIC) Trade Estates that is currently being set up.

Fourlis has also applied to list shares in Trade Estates on the Athens stock exchange.

The group plans to double investments in retail properties in coming years to 400 million euros in a move aimed at acquiring properties that will accommodate new stores.

“With the share price still c25% below pre-pandemic levels, operating momentum likely to stay positive and the establishment of the REIC primed to unlock the value of the real estate, we advocate looking through near term volatility, reiterating our Buy recommendation,” said Eurobank Securities.

“The upcoming REIC demerger will unlock the value of Fourlis’s real estate through tax benefits and, particularly, re-rating of the rental income within the REIC,” the brokerage added.