Castellum (Sell, TP: SEK155.00) - High P/NAV; FFO growth set to stall
With the share price having rallied to 1.19x Q2 EPRA NNNAV, we have downgraded to SELL (HOLD), finding the valuation too rich, while we have raised our target price to SEK155 (150). With interest rates set to rise from 2019, we also expect funds from operations to stop growing as financing costs increase almost as much as EBIT. We are in line with consensus ahead of the Q3 results, due at est. c08:00 CET on 17 October.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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