Duplicate HY bond refinancings

This week, Nyfosa and NP3 refinanced parts of their bonds maturing in 2024, Veidekke forecasts few residential starts, Wallenstam announced no project starts in Q1, and we got key new facts in SBB’s annual report. The weighted-average implied EBITDA yields on the stocks we cover are 5.04% for 2023e and 5.40% for 2024e.

Two new sector notes week 13

This week, we published a real estate sector note focusing on the risk for equity raises in the sector and a note on Construction and housebuilders. We are neutral on the Construction and housebuilders while we have an underweight stance on the real estate sector. The weighted-average implied EBITDA yields on the stocks we cover are 5.07% for 2023e and 5.40% for 2024e.

Q4 season wraps up

This week saw the last of the Q4 reports and some large property transactions. We also note continued weak new housing starts and sales in Sweden. The weighted-average implied EBITDA yields on the stocks we cover are 4.82% for 2023e and 5.16% for 2024e.

Solid start to Q4 reporting season

This week Atrium Ljungberg and JM reported Q4 results, Fabege announced a divestment and pre-announced Q4 net lettings, while Moody’s said it expects to conclude its ongoing credit rating downgrade review process of Balder after its Q4 results (due 10 February). The weighted-average implied EBITDA yields on the stocks we cover are 4.17% for 2022e and 4.62% for 2023e.

First Q4 reports and other news

Entra has tapped into the bond market, raising NOK900m in new funding at prices well below Swedish peers’. Nivika and Platzer reported Q4 results. Besqab announced an asset writedown and an equity issue. Wallenstam entered into an agreement on rent indexation in Gothenburg. The weighted-average implied EBITDA yields on the stocks we cover are 4.18% for 2022e and 4.69% for 2023e.

Last deals before Christmas

This week saw a flurry of deals, many in line with BVs – although the largest overall, by Entra (three divestments totalling NOK1.9bn), was 2% below Q3 book values. SBB announced the decision to spin off Neobo, a residential company (formerly Amasten) in 2023, and Sato (majority-owned by Balder) issued its first US private placement (EUR75m unsecured loan). The weighted-average implied EBITDA yields on the stocks we cover are 4.16% for 2022e and 4.88% for 2023e.

A busy news week

Last week, Castellum’s CEO announced he would step down, Balder issued new equity to buy out a hybrid bond, Corem sold some assets, Wallenstam announced 2023 rent adjustment figures, and we published a report on bonds and refinancing risks in the Nordic real estate sector. The weighted-average implied EBITDA yields on the stocks we cover are 4.13% for 2022e and 4.82% for 2023e.

Different markets same refinance risk

Having changed our bond data source from Bloomberg to Stamdata, we have obtained better insight into the large face amount of unlisted Nordic real estate bonds, especially in Norway. While the large volume of bond maturities for Swedish real estate names has received wide attention, the Norwegian sector has appeared less exposed. However, with NOK99bn in outstanding bonds, of which NOK25bn mature in 2023, the risk is not that different. Higher funding costs remain a risk across the Nordic real e...

OBOS acquired large stake in NCC

Last week: 1) OBOS acquired 23% of the votes in NCC; SBB published updated pro forma figures and a brochure for its potential Amasten spin-off; and 3) Moody’s hosted a real estate conference in Stockholm. The weighted-average implied EBITDA yields on the stocks we cover are 4.13% for 2022e and 4.87% for 2023e.

A large sale and other news

In Norway, three highly leveraged, large (unlisted) structured investment funds have been in the media spotlight regarding upcoming bond refinancing. SBB Norden (SBB) announced the largest Nordic portfolio sale so far in 2022, Catena raised equity, and Citycon sold assets. The weighted-average implied EBITDA yields on the stocks we cover are 4.23% for 2022e and 4.91% for 2023e.

Swedish rally on policy rate hike

Yesterday the sector saw a rally in Sweden on a policy rate hike in line with consensus (+75bp). JM is to appeal a recent ruling on accounting principles to the Supreme Court. Balder is set to raise regulated rents by 3.25% in 2023. Fabege’s credit rating outlook was downgraded by Moody’s. Swedish residential prices continued to fall. Cibus issued a EUR70m unsecured bond. The weighted-average implied EBITDA yields on the stocks we cover are 4.13% for 2022e and 4.87% for 2023e.

Management reshuffles post-Q3

This week saw a number of management changes. Moreover, SBB announced the results of its tender offers, S&P revised its credit outlook for Balder, Corem signed an LOI, Aurora Eiendom reported Q3 results, and Castellum’s board proposed a pause in dividends. The weighted-average implied EBITDA yields on the stocks we cover are 4.18% for 2022e and 4.95% for 2023e.

Northern Lights

Aurora Eiendom (Buy, TP: NOK120.00) - Well above our expectations

Q3 rental income surpassed our forecast and reported rental run rates increased much more than expected on property transactions, as yields on these were higher than we estimated. We have raised our revenue, EBIT and EPS forecasts. We reiterate our BUY and have increased our target price to NOK120 (110) due to the stronger implied yields and healthy NIBD/EBIT.

Sector up c30% since the trough

This week, Akelius increased its stake in Castellum, SBB appointed Ylva Sarby Westman as CEO of its residential company spin-off and JM announced it is required to start reporting in line with IFRS IFRIC 15 (completed-contract accounting). We reiterated our SELL on Hufuvdstaden and HOLD on Citycon following their Q3 results. The sector rallied on the US inflation release and has gained c30% (ELSD index) since its trough in mid-October. The weighted-average implied EBITDA yields on the stocks we ...

Castellum shareholder highlights risks

This week, Roger Akelius highlighted financing risk in the sector in an interview in Göteborgs-Posten, and was fairly critical of Castellum’s CEO. Elsewhere, SBB is up c30% since its announcement of a potential spin-off of the residential unit to shareholders, and more Q3 results were published. The weighted-average implied EBITDA yields on the stocks we cover are 4.22% for 2022e and 5.00% for 2023e.

Q3 reporting season continues

We summarise our key takeaways from this week’s Q3 reports below. The weighted-average implied EBITDA yields on the stocks we cover are 4.23% for 2022e and 5.00% for 2023e.

Q3 reporting season in full flow

Rental activity held up well in Q3, on a continued positive post-covid wave. While Entra reported asset writedowns, the Swedish listed names have so far chosen not to. However, we believe this will prove inevitable, despite their strong Q3 figures. Property costs were generally higher than expected on rising energy costs. The weighted-average implied EBITDA yields on the stocks we cover are 4.37% for 2022e and 5.05% for 2023e.

Q3 reporting starts

Atrium Ljungberg kicked off Q3 reporting season with an unchanged asset valuation. KMC Properties gave an update on an equity issue and transaction. Catena signed a new lease agreement with Nowaste Logistics. The weighted-average implied EBITDA yields on the stocks we cover are 4.44 % for 2022e and 4.98 % for 2023e.

Decline continues

On Monday, we reiterated our Underweight sector view (see ‘Equity injection risk increasing’) despite the recent sell-off, as long-term interest rates are rising and we see no improvement in bond markets – raising refinancing risk ahead of numerous bond maturities in the sector in 2023–2024. Akelius is now the main shareholder in Castellum; SBB Norden bought a SEK410m school; and Corem signed a lease in New York. The weighted-average implied EBITDA yields on the stocks we cover are 4.48% for 202...