Castellum (Buy, TP: SEK150.00) - Strong EBIT, soft net lettings
The key highlights of the Q3 report were a 4% beat of our EBIT forecast and an end to property value write-downs following seven consecutive quarters. We have raised our 2025–2026e EBIT by 5% but cut our FFOPS by 4–5% on the surprising uptick in average interest funding cost of 3.4% (3.0% in Q2). We have lowered our target price to SEK150 (155), but we reiterate our BUY as we consider the 2025–2026e P/FFO of 14–13x appealing and as its implied yield gap (implied yield – 5Y SEK swap rate) is at its 20-year average.Castellum operates as a real estate company in Sweden. Co.'s real estate portfolio is located in five regions: Greater Gothenburg, Oresund Region, Greater Stockholm, Malardalen and Eastern Gotaland. At Dec 31 2013 Co.'s real estate portfolio comprised 626 properties, of which 324 were office/retail properties, 263 were warehouse/industrial properties, 16 were for project, and 23 were undeveloped land.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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