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RESEARCH: BlackWall – Cashed up, Ready To Create Value

FYI | Sep 24 2019

This story features BLACKWALL LIMITED. For more info SHARE ANALYSIS: BWF

Pitt Street Research finds vindication in BlackWall's intention to spin off the Wotso flexible workspace business.

BlackWall: Wotso's Rapid Expansion

By Pitt Street Research

BlackWall Limited ((BWF)) announced on 2 August 2019 that it was spinning out its Wotso flexible workspace business into a separate listed company.

We see this development as a positive, allowing the BlackWall group to capitalize on increasing investor awareness of flexible workspace as a growing segment of the commercial property stock in Australia. The move comes at a time when BlackWall has substantial cash resources to invest advantageously should distressed assets become available.

BlackWall’s enviable cash position

When we initiated on BlackWall in late January 2019, the company was about to complete the sale of its flagship Bakehouse Quarter project for $380m. That transaction finally settled on 18 April 2019.

In our view, the story of the Bakehouse Quarter deal demonstrates what we call the ‘BlackWall Way’ of creating value for property investors.

Base case valuation $2.10 per share

Hence, we value BlackWall at $2.10 per share (base case) by providing equal weights to the DCF calculation of $2.55 and a SOTP relative valuation of $1.64 per share. This is slight upgrade to our initial valuation from January 2019.

Cashed up and ready to create value

A demonstrated core competence of BlackWall is the ability to acquire distressed property assets, imaginatively re-profile those assets, and then grow substantial value for its investors over subsequent property investment cycles. BlackWall now has, for the first time, substantial cash resources to anchor any new projects being structured.

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