Real estate investor Kennedy Wilson Europe (RWE) is preparing to embark on a £1.3 billion shopping spree across the continent which looks set to reward investors.

In the eight months since it listed (28 Feb), the investor has spent £1.1 billion buying properties in the UK and Ireland, which account for 64% and 36% of its portfolio. However, the company could buy properties in Italy and Spain as it hopes to benefit from expected de-leveraging as struggling companies seek to raise cash. Property consultant Cushman & Wakefield estimates there is a pipeline of €38.5 billion worth of such transactions across the continent.

New additions to its portfolio could see net asset value (NAV) rise and leverage fall. At £10.50 a share the stock is trading a 5.2% premium to its 997.6p EPRA NAV. The gap is expected to close. Davy, a broker, forecasts Kennedy Wilson’s NAV will reach £10.07 at the end of this month and £10.67 a year later. Loan-to-value has already fallen to 26.5% from 32.5% following a £351.5 million share sale (21 Oct).

Shareholders will benefit from the expected NAV improvements. Davy’s analysts forecast that the company will pay 8.4p a share dividend this year, leaping to 39.1p a share in 2015, putting the stock on prospective 0.8% and 3.7% yields, respectively.

Kenney Wilson buys office, retail, industrial, hotels and residential properties. Its portfolio was worth £976.1 million in October. The company has also spent some £200 million buying loan portfolios.

The premium is no reason to ignore the stock. Shares remains bullish as the company prepares to beef up its portfolio.