Our opinion on the current state of LTE

Lighthouse Capital (LTE), formerly known as Greenbay, aims to redefine its market position and strategic focus in the wake of challenges faced by the Resilient group of REITs (Real Estate Investment Trusts), which also includes Resilient, Rockcastle, and Fortress. These companies were previously embroiled in controversy following a report by 36One Asset Management, which criticized their cross-shareholdings and their impact on share prices. Lighthouse, particularly, experienced a significant drop in share price from 5420c in December 2017 to as low as 688c in February 2019, following a 20-for-1 share consolidation in November 2018.

Under the leadership of CEO Stephen Delport, Lighthouse Capital is pivoting towards investing predominantly in high-performing assets in Europe, allocating about 80% of its capital to this region. The company's decision to change its name from Greenbay to Lighthouse signifies an effort to distance itself from the Resilient group and establish an independent identity within the property investment sector. This rebranding comes after the Financial Sector Conduct Authority (FSCA) cleared Lighthouse of any involvement in price manipulation within the Resilient group, and subsequent findings in September 2019 exonerated all members of the group from any wrongdoing.

Lighthouse's investment strategy includes significant holdings, such as 882 million shares in Hammerson, valued at approximately 405 million euros as of 3rd May 2021. Additionally, following Resilient's increase in shareholding to over 35% in May 2021, a mandatory offer for the remaining issued shares of Lighthouse was announced at 713c per share. The successful raising of R2.6 billion through an oversubscribed bookbuild in August 2021, aimed at acquiring four shopping malls in France, underscores Lighthouse's ongoing investment activities and growth initiatives.

For the fiscal year ending 31st December 2023, Lighthouse reported a distribution of 2.7 euro cents per share, slightly down from 3.25 cents in the previous period. However, the company's net asset value (NAV) increased to 42 euro cents from 40.5 cents, with a low loan-to-value (LTV) ratio of 14%. Looking ahead, Lighthouse forecasts a distribution of between 2.40 and 2.50 EUR cents per share for FY2024, reflecting a cautiously optimistic outlook in the context of improving macroeconomic conditions, with anticipated reductions in inflation and short-term interest rates in 2024.

Despite experiencing an extended period of sideways market movement, Lighthouse shares have shown signs of an upward trend since October 2023. This positive momentum, coupled with Lighthouse's strategic refocusing on European assets and its status as a rand hedge investment, suggests that the company is positioned as an attractive investment option at current levels for those seeking exposure to the European real estate market.