What valuation methodology and assumptions did Enlight Research use to arrive at the €22.86 fair value?

Valuation methodology

Enlight Research applied a discounted‑cash‑flow (DCF) model that is standard for listed real‑estate funds. The model projects the fund’s net operating income (NOI) from its property portfolio over a 5‑year horizon, incorporates expected rental growth, vacancy‑adjusted yields and operating‑cost inflation, and then discounts those cash flows back to equity using a fund‑specific cost of equity (derived from a CAPM‑based discount rate). The terminal value is calculated with a perpetual growth rate that reflects the long‑run inflation‑linked rent escalations typical for Estonian and Baltic assets. The resulting present value of the cash‑flow stream is divided by the current share count to produce the €22.86 fair‑value per share in the “base” scenario.

Key assumptions behind the €22.86 estimate

Trading implications

The €22.86 fair‑value sits roughly 20 % above the last closing price on the Tallinn exchange, indicating a sizable upside in the current market environment. With the DCF model anchored on relatively conservative rental‑growth and a modest discount rate, the valuation is not overly optimistic, leaving room for the price to appreciate if the market re‑prices the fund’s growth potential or if the dividend yield (≈5 % at current levels) attracts yield‑seeking investors. From a technical standpoint, the stock is still trading in the lower half of its 52‑week range, and the next support level (≈€19.5) could act as a short‑cover trigger. Recommendation: consider a long‑position with a target near €23–24, placing a stop‑loss just below €19.5 to guard against a potential pull‑back if macro‑inflation or occupancy concerns materialise.