These FTSE 250 shares have collapsed in price this year. And they’re now two top value stocks I want to buy in the very near future. Here’s why.
Tritax Eurobox
Just as in the UK, rising interest rates are a huge problem for European companies. The European Central Bank last month raised its benchmark to a record 4%, and more rises could be just around the corner.
This explains why property stocks like Tritax Eurobox (LSE:EBOX) continue to fall in value. This stock — which leases out warehouses and logistics hubs across the continent — has dropped 29% since the start of 2023.
I think this represents a terrific opportunity for investors to consider snapping up a bargain. Right now the company trades on a forward-looking price-to-earnings (P/E) ratio of 8.6 times. It also carries an enormous 9.8% corresponding dividend yield.
Earnings have dropped as interest rates have pulled net asset values (NAVs) down. But a chronic supply shortage in this property sector means rents have continued to march northwards, even as economic conditions have worsened.
Like-for-like rental growth at Tritax Eurobox sped up to 4% during the 12 months to September. This was up from 2.4% a year earlier. Meanwhile, its EPRA vacancy rate (which uses European Public Real Estate Association rules) dropped to 0.3% from 3.3% over the period.
Long-term demand for storage and distribution assets is predicted to soar thanks to the growth of e-commerce and post-pandemic changes to supply chain management. And rental growth is tipped to be especially strong in Germany, a core market for Tritax Eurobox.
Warehouse REIT
Investors who are interested in the property market should also pay Warehouse REIT (LSE:WHR) very close attention today.
Unlike Tritax Eurobox — which has assets in several European countries — this company only has operations in Britain. Therefore it doesn’t have the geographical diversification that can help reduce risk.
The good news, however, is that the UK’s storage property sector is (alongside Germany’s) the biggest in Europe thanks to its huge e-commerce market. And like in Germany, the new project development pipeline is exceptionally weak, meaning rents here might also keep ballooning.
Warehouse REIT’s latest financials showed like-for-like rents up 5.3% during the 12 months to March 2023. Group-wide occupancy, meanwhile, rose to an impressive 95.8% from 93.7% a year earlier.
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I also like this property stock because of its classification as a real estate investment trust (REIT). This states that the company must pay at least 90% of annual rental earnings out in the form of dividends.
This could provide the bedrock for long-term dividend growth. It’s a rule which — combined with the company’s 32% share price fall in 2023 — results in a monster forward dividend yield of 8.9%.
Right now Warehouse REIT also trades on an undemanding P/E ratio of 13.7 times for this fiscal year. It’s a top value stock I’d love to buy following recent market volatility.
