One of the pioneers of real estate securitization in Bulgaria, Bulgarian Real Estate Fund REIT (BREF) is expected to provide approx. 6% dividend yield, ELANA Trading analysts conclude in their latest corporate profile on one of the most liquid stocks on the Bulgarian Stock Exchange. Since inception, Bulgarian Real Estate Fund REIT has successfully exited office space projects worth more than EUR 40m and returned to investors EUR 13.5m via dividends or 10% 5-year average dividend yield. No dividends were provisioned for 2014, as BREF registered revaluation loss.
Awakening real estate market paves the way for new solid profits
ELANA Trading analysts note in their research report that while the real estate market in Bulgaria already showed awakening, the company is set on path of new solid profits. Sector growth is driven by rising office space demand from continuing IT and BPO outsourcing service to Bulgaria. Bulgarian Real Estate Fund is expected to set on a new track of steady profits as it started investing in new office investment projects where it has built up considerable expertise.
Bulgarian Real Estate Fund: Snapshot
The REIT was established in 2004 and built up a diversified portfolio of real estate projects skewed in the office and the retail segments, representing 30% and 25% of the fund’s portfolio respectively. Portfolio allocation looks like this: retail (25%), office (30%), holiday properties (10%), investment plots (28%), agricultural land (0.2%) and cash & cash equivalents (7%).
One of the most liquid stocks on the Bulgarian Stock Exchange
BREF is among the best corporate governance companies on the Bulgarian Stock Exchange. It is also one of the most liquid stocks and one of the companies with the biggest free float on the market of 67%. The REIT is also a component of the BGREIT index which tracks 7 of the biggest REITs on the market.
Real estate trends
In 2014, Bulgaria’s real estate market saw the highest level of investment activity for the last five years. The prime office segment in Sofia enjoys solid fundamentals due to strong occupier demand fueled mostly by the IT and business process outsourcing sectors. As a result the market is expected to see further yield compression with rates going down to 8 per cent or even below for top quality assets by 2016 compared to around 9% in 2014.