The Nest Egg Portfolio: Wereldhave: A Missed Opportunity To Cut The 10% Dividend Yield

Introduction
In this edition of the Nest Egg Portfolio, we will have another look at Wereldhave (OTC:WRDEF) whose share price remains under severe pressure despite having exited the Finnish commercial real estate market by selling its asset. The balance sheet was strengthened with the proceeds of this sale, but the lower rental income this year will put additional pressure on the dividend.
Did you miss the previous edition of the Nest Egg Portfolio where I explained why I remain happy with my exposure to BT Group (BT)? You can re-read it here.
Portfolio update
I remain confident in my long position in Wereldhave
At the end of last year, Wereldhave, the Dutch REIT focusing on Tier 2 and Tier 3 commercial real estate, announced it was selling its asset in Finland for a gross consideration of 516M EUR. This price tag was approximately 8.5% below the book value at the end of the first semester of 2018, and this strengthened my view Wereldhave’s assets on the balance sheet were priced based on quite optimistic assumptions.

Source: Yahoo Finance
Those optimistic assumptions weren’t a deal breaker for me, as I had previously run my own numbers to determine a more accurate and realistic fair value of the properties assuming a higher required rental yield for my own NAV calculations. Although my NAV result came in substantially lower than the official NAV/share, there was plenty of upside potential to the fair value derived from my own calculations. I... Read more