Entra (Hold, TP: NOK95.00) - Good Q3 operationally, but more equity might still be needed
Q3 was in line on rental income, but 9% above on FFO (cash EPS) with solid net letting of NOK29m/year. As expected, there was no H2 DPS as higher interest rates put pressure on values and ICRs. The ICR was 1.9x and the EPRA LTV was 54.7% (51.6% using Moody’s standard), both below IG ranges. We still believe Entra might need more equity to remain IG, and have cut our target price to NOK95 (105); however, we reiterate our HOLD.Entra ASA (Entra) is a Norway-based real estate company. It is engaged in development, letting and management of energy efficient buildings. Its portfolio comprises over 100 buildings with a total area of more than 1.3 million square meters and focus on office real estate in central locations. Entra is also engaged in project and land development activities. Its business is organized into four segments (regions) around Norway's four largest cities: Central Oslo, Greater Oslo, Southern and Western Norway, and Central and Northern Norway. Its strategic areas of concentration include Oslo and surroundings, Bergen, Stavanger and Trondheim. The Company is focused on the public sector, which represents approximately 80% of Entra's customers and tenants. Its legal structure comprises more than 40 property companies and special purpose vehicles (SPVs), a property management company Papirbredden Eiendom AS, several joint ventures and Oslo S Utvikling AS, a property development company.
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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