Risks in tax and costs
Ahead of Castellum’s Q3 results on 20 October (08:00 CET), we are 2% below SME consensus on NOI, on higher seasonal costs. Our fear remains higher taxation from the two outstanding tax white papers, and long-term rising interest rates. Office market rents continue to be strong, but the above risks limit valuation in our view. We reiterate our SELL recommendation, but have adjusted our NAV-based target price to SEK120 (115).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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