Interview Opco-Propco split
Martine Menko, Investment Officer at Pensioenfonds Vervoer
“Internal and external split is a logical step”
Q-Park's financial reporting may be more explicit and more transparent, so that it is possible to compare its financial results with other operational real estate companies. The results, EBITDA for example, remain below target. In the short-term there is no prospect of a further improvement of the results other than through cost savings.
Competition in the parking industry is intensifying, turnover and margins are under pressure. At the same time, the covenants with the banks are strict, increasing the risk. The covenant for the end of 2014 with a requirement of net debt ratio equal to 7.5 x EBITDA was achieved at the close of 2013, which means that the result is less dependent on disposals from the investment property portfolio.
The decision to pay dividend will meet the needs of investors in the short-term. But in the long-term, this will prove to be a risky policy, as there is no sustainable profit on which to base the dividend policy in the longer-term. After all, profit is currently dependent on cost savings and the disposal of investment property.
The internal split is logical considering the differences in the risk and profiles of the two business units: Opco and Propco. This could have a positive effect on refinancing opportunities and conditions as well as for the liquidity of the share. A long-term strategic perspective per business unit, based on a broad macroeconomic perspective is important to clarify where growth can be generated: from owned property and operation, leased property and operation or only management.