Grainger is creating value from redeployment of capital into market-rented assets. These assets deliver an attractive yield which can be reinvested to compound medium term returns. Increasing institutional investment will drive valuations. Valuing Grainger on a liquidation approach using NNNAV is unfair. We retain an NNNAV approach for the reversionary assets and apply a 1.5x implied P/B to market-rented assets to arrive at a blended 295p 12m TP. Grainger is one of our Key Buys for 2015.
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