Q4e: Improving market outlook

Executing on its strategy - BUY

Public Property Invest (Buy, TP: NOK22.00) - Building its portfolio pr...

Public Property Invest has continued to build its portfolio of high-yielding assets, adding properties worth cNOK810m since mid-December (taking post-Q3 investments to cNOK1.3bn). As a result, we have raised our 2025e revenue by c8.3% and 2026e by 8.6%; however, with an increased share count, the NAV and EPS effect is limited. Our focus in the Q4 results (due at 07:00 CET on 13 February) will be earnings capacity. We reiterate our BUY and NOK22 target price.

Weekly Real Estate Matrix

Set for another subdued year

Volatile market interest rates, coupled with rental market weakness, indicate 2025 could be another year of subdued sector performance. The sector is trading at discounts to its historical averages on P/FFO (15.4x NTM) and NAV (26% discount), while the tight implied yield gap looks less appealing. Deleveraging efforts over the past three years have improved EBIT/NIBD metrics and reduced sector risk. We maintain our neutral stance, with one SELL recommendation. Our top sector picks are Balder, Ny...

Weekly Real Estate Matrix

Transaction volumes on the up

Nordic property transaction volumes improved in December, with strong growth YOY in Norway and Sweden, albeit still far below ATH levels. In other news, Fabege made a mixed-use asset divestment at a 4% discount to BV, while we published Q4 previews for Sagax, Catena, Sveafastigheter and Wallenstam. The weighted-average implied EBITDA yields on the stocks we cover are 4.44% for 2024e and 5.06% for 2025e.

Weekly Real Estate Matrix

Rising SWAP rates hit sector, weak rental update

The sector has traded down in recent weeks on rising long-term SWAP rates, resulting in multiples contraction, but we do not expect significant changes to consensus 2025–2026e FFO/EPS. This week, Corem issued a Q4 net letting-related profit warning, confirming the terminated lease in Stockholm’s Kista district, and Sveafastigheter announced a CFO change. The weighted-average implied EBITDA yields on the stocks we cover are 4.42% for 2024e and 5.10% for 2025e.

Weekly Real Estate Matrix

Transactions and an upgrade

This week, Public Property Invest and Cibus Nordic Real Estate (Cibus) announced acquisitions, while Entra closed an asset sale 13% above book value. On Thursday, we upgraded Atrium Ljungberg to HOLD (SELL), and trimmed our target price on Balder (one of our sector top picks) to NOK90 (92) while reiterating our BUY. The weighted-average implied EBITDA yields on the stocks we cover are 4.48% for 2024e and 5.06% for 2025e.

Weekly Real Estate Matrix

SEK10bn deal, residential prices and several deals by PPI

This week, we raised our 2025e FFOps for PPI by 16.5% on recent transactions, Skanska divested assets, K-Fastigheter and Brinova agreed a SEK10bn residential deal, and we published a residential prices update. The weighted-average implied EBITDA yields on the stocks we cover are 4.39% for 2024e and 4.94% for 2025e.

Public Property Invest (Buy, TP: NOK22.00) - 2025e FFOps raised by 16....

QTD, PPI has announced acquisitions for cNOK445m and issued a 5.25-year EUR300m bond at 4.625%. Given the increased portfolio, we have raised our 2025–2026e rental income, and combined with reduced financing forecasts, we have raised our EPS and FFO estimates by c16.5%. We continue to like the strong balance sheet and attractive valuation and have increased our target price to NOK22 (21). We reiterate our BUY.

Weekly Real Estate Matrix

New bonds, bond turmoil and transactions

This week, both Public Property Invest and Citycon issued c5-year EUR bonds. SBB received additional letters from bondholders expressing an intention to accelerate regarding its Eurobonds. NCC announced the sale of a SEK3.6bn newbuild in Solna, Stockholm, while Skanska announced an internal transaction and JM the sale of a Finnish residential property. The weighted-average implied EBITDA yields on the stocks we cover are 4.38% for 2024e and 4.93% for 2025e.

Weekly Real Estate Matrix

Final Q3s and several transactions

Approaching year-end, property transactions appeared to see the typical seasonal uptick in the past week. Also, Q3 reporting season concluded with Sveafastigheter and SBB Norden releasing their results. Finally, Kojamo announced the appointment of its new CEO. The weighted-average implied EBITDA yields on the stocks we cover are 4.34% for 2024e and 4.88% for 2025e.

Weekly Real Estate Matrix

Transactions, CMD and halted DPS

This week Balder, Citycon and SBB announced divestments, Public Property Invest was assigned an IG rating by Fitch, and Corem hosted its CMD. The weighted-average implied EBITDA yields on the stocks we cover are 4.45% for 2024e and 5.01% for 2025e.