Q: Thoughts on ERE results and would this be a long term buy at these levels?
5i Research Answer:
Average monthly rents rose 6%; net operating income rose 9% (5% on same property basis); occupancy is high at 99%; Debt ratio is OK at 54.3%. Payout ratio did rise to 75.4% from 67.1%. It has a new CEO but one with significant experience. We would consider the results 'fine' however the valuation of 19X cash flow is near the top of the sector, and with possible European recession and the small size of the company some caution we think is advised. We would be OK with slow accumulation but would prefer a lower valuation to reflect the risks.