Weekly Real Estate Matrix

Sector optimism

In the past week, Citycon divested a retail asset in Norway, Logistea updated its financial targets following the merger with KMC Properties, Cibus carried out a rights issue as it is targeting M&A in the daily-goods property sector, and we saw sector optimism at DNB’s Nordic Real Estate & Construction Conference. The weighted-average implied EBITDA yields on the stocks we cover are 4.21% for 2024e and 4.65% for 2025e.

Weekly Real Estate Matrix

Bonds, market data and investments

This week, Castellum issued a EUR500m bond loan, and according to Bloomberg, Catena is contemplating launching 1–2 green bonds next week. Pandox acquired another UK asset, Logista and Public Property Invest look set to join the FTSE EPRA index, and finally, August data for Swedish and Norwegian house prices and commercial transaction volumes was published. The weighted-average implied EBITDA yields on the stocks we cover are 4.26% for 2024e and 4.70% for 2025e.

Buy the consolidator

Hufvudstaden up to HOLD, layoffs in construction sector and rate cut

This week we upgraded Hufuvdstaden to HOLD following its Q2 results, JM is laying off 145 employees, and the Riksbank cut the policy rate by 25bp to 3.50%. While we retain our neutral stance on the Swedish real estate sector, we have turned slightly more positive since last month’s reduction in long-term market interest rates. The weighted-average implied EBITDA yields on the stocks we cover are 4.27% for 2024e and 4.71% for 2025e.

More Q2 results and other news

The Q2 reporting season is again underway, following the summer break, with results from Olav Thon and Kojamo. In other news, Pandox announced it is considering a large UK investment, Norges Bank signalled the policy rate will not be cut near-term, and in Sweden, CPI has increased on an expected cut. The weighted-average implied EBITDA yields on the stocks we cover are 4.29% for 2024e and 4.74% for 2025e.

More Q2 results, a profit warning and an equity raise

This week, Kojamo issued a profit warning for Q2 and the full year. Balder, Castellum, Citycon and Sagax reported Q2 figures. Corem issued new shares. The weighted-average implied EBITDA yields on the stocks we cover are 4.26% for 2024e and 4.69% for 2025e.

Q2 reporting season in full swing

The Q2 reporting season continued this week, with Atrium Ljungberg, Wallenstam, Wihlborgs, Fabege, Public Property Invest and Catena reporting results. The weighted-average implied EBITDA yields on the stocks we cover are 4.34% for 2024e and 4.74% for 2025e.

Public Property Invest (Buy, TP: NOK20.00) - Solid H1, attractive valu...

NOI, EBIT and NAV were broadly in line with our H1 forecasts. Financing costs were lower than expected, resulting in a 10% FFOps beat in H2, but with new funding financing costs will increase financing costs in 2025e. We believe the stock is still trading at an attractive valuation on implied yields and 2025e P/FFO, especially given the strong balance sheet. We reiterate our BUY and NOK20 target price.

Public Property Invest - Initiation of coverage - Solid foundations

With a core of public tenant-based assets in Norway, we believe Public Property Invest (PPI) is a solid real estate company with strong cash flow and a healthy balance sheet. While unlisted Norwegian real estate syndicates will likely have to refinance and recapitalise, PPI looks set to harvest growth opportunities. We expect it to obtain an investment-grade rating over time, reducing interest-rate costs. With the financial muscle to make acquisitions, we believe bolt-ons could raise FFOps. We i...