Divestments to come in Q2'24

Wallenstam AB: 1 director

A director at Wallenstam AB bought 16,000 shares at 47.180SEK and the significance rating of the trade was 55/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearly...

Weekly Real Estate Matrix

Performance and valuation data for Nordic real estate stocks as of 26 April 2024.

Q1 reporting season kicks off

Q1 reporting season kicked off this week, with results from Nyfosa, Entra, Wallenstam, Fabege, KMC Properties, Pandox, and Catena. In other news, Public Property Invest is to be listed on the Oslo stock exchange on 29 April. The weighted-average implied EBITDA yields on the stocks we cover are 4.75% for 2024e and 5.04% for 2025e.

Enough is enough

The FABG share is down 25% YTD vs. the sector at -7%. Valuation support from both NAV and CEPS. Up to HOLD (Sell), TP of SEK 90 reiterated.

Fabege (Hold, TP: SEK85.00) - Rental market concerns remain

We have cut our 2025–2026e EPS by c6–4% on rising market interest rates, following a soft Q1 report, where focus was on a further weakening Stockholm office rental market. We found net lettings disappointing at SEK-36m and the minor vacancy rate uptick soft. We reiterate our HOLD, but have cut our target price to SEK85 (100).

Pandox (Hold, TP: SEK175.00) - Q1 in line, fairly valued

Q1 FFOps was in line with our estimate but below Infront consensus. While we have made only minor forecast changes, following the recent share performance and as the stock is trading close to our target price, we have downgraded to HOLD (BUY) but reiterate our SEK175 target price.

Solid across the board

Wallenstam (Sell, TP: SEK40.00) - Eyeing project starts once again

We consider the Q1 results neutral, and, adjusting for a JV one-off, we were in line on PFPM. Wallenstam is looking to start a development project in Q2 (only the second since Q3 2022), and management stated that rents have risen considerably in new developments and that it will only start projects in the best locations to meet demand right now. We consider the valuation demanding on cash earnings, and reiterate our SELL and our SEK40 target price.

5% beat vs consensus

Miss even incl. one-off items

Entra (Hold, TP: NOK105.00) - Continued asset value decline

Entra reported weaker underlying Q1 results than we expected, as well as still-declining asset values (-2.5% QOQ) due to higher yield valuations. On increased market interest rates, we have cut our 2024–2026e FFO by c12–16%. We reiterate our HOLD, but have lowered our target price to NOK105 (115).

Not what we wanted, but 100 is the new 80

Weak report on most metrics. Large long-term potential. BUY, TP of NOK 135.

Wihlborgs (Buy, TP: SEK105.00) - Strong Q1 net lettings, as expected

The Q1 results were solid, with strong net lettings (as flagged) and a 4% consensus beat on PFPM (albeit fully explained by a one-off). Following a good start to Q2 lettings, we see potential for the strong net-lettings trend to continue. We reiterate our BUY and have raised our target price to SEK105 (100) on a tweaked valuation.

Nyfosa (Hold, TP: SEK100.00) - Sector outperformance petering out

Despite raising our target price to SEK100 (91) on tweaked valuation, we have downgraded Nyfosa to HOLD (BUY), finding the valuation rich after strong sector outperformance (since October, it has gained c100% versus the sector’s 37%), on: 1) the risk of an uptick in market interest rates given its relatively high leverage and short interest-rate duration; 2) rather soft rental-market KPIs; and 3) insider divestment from founder Mr Engwall.

Solid but unexciting credit

Credit neutral Q1. A solid name among high yields. But bonds are largely de-risked and it shows in prices.

EPBD the big story this week

The Energy Performance of Buildings Directive (EPBD) was approved on 12 April, requiring the modernisation of existing real estate in the EU, and will soon enter the Official Journal of the EU. In other news, KMC Properties bought a new asset and appointed an interim CEO, JM got a new CEO, while Castellum announced a divestment and new leases, and Atrium Ljungberg kicked off Q1 reporting season. The weighted-average implied EBITDA yields on the stocks we cover are 4.74% for 2024e and 5.01% for 2...

Citycon OYJ: Regular update

Our credit view of this issuer reflects its significant exposure towards necessity shopping and high leverage.

Wihlborgs (Buy, TP: SEK100.00) - Back up to BUY ahead of Q1

We have upgraded Wihlborgs to BUY (HOLD) and raised our target price to SEK100 (90). We no longer see a near-term risk to the stock from material asset write-downs, but rather expect investors to focus on healthy momentum in lettings at Wihlborgs. With a positive outlook for Q1, we forecast strong net lettings, and are 3% above Infront consensus on profit from property management (PFPM). The results are due at 07:30 CET on 23 April.

Atrium Ljungberg (Hold, TP: SEK200.00) - Cost control behind PFPM beat

Strong cost control and an energy-cost tailwind gave a 5% PFPM beat, while the uptick in vacancy rate and negative net letting (second consecutive quarter) were key negatives. We have cut our 2025–2026e EPS by 2–3%, mainly on market interest-rate changes. We reiterate our HOLD and have lowered our target price to SEK200 (220) on a tweaked valuation yield. Benefiting from a strong hedging portfolio in 2023 (FFOPS +16% YOY, among the best in the sector), we expect muted FFOPS growth in our forecas...