Final Q1 results

This week, Aurora Eiendom, Balder, Citycon and Kojamo reported their Q1 results, wrapping up our reporting season. Our overall sector impression is that tenant demand-related KPIs were solid but that the indications seen in Q4 of a strong recovery became fainter in Q1. We expect interest rates and credit spreads in the bond market to be the key sector drivers. The weighted-average implied EBITDA yields on the stocks we cover are 4.21% for 2022e and 4.45% for 2023e.

More Q1 results, and small purchases by insiders

We reiterated our HOLD on Hufuvdstaden and Corem this week following their Q1 results, while Citycon’s report was on the soft side. The sector continues to underperform in the wake of rising interest rates and widening credit spreads, and there were some small purchases by insiders during the week. The weighted-average implied EBITDA yields on the stocks we cover are 4.00% for 2022e and 4.44% for 2023e.

Q1 results wrap-up

Following their Q1 results, we reiterated our BUYs on Catena Fastigheter and Fabege, downgraded Castellum to HOLD (BUY) and Entra to SELL (HOLD), and reiterated our SELLs on Wallenstam and SBB. The weighted-average implied EBITDA yields on the stocks we cover are 4.03% for 2022e and 4.33% for 2023e.

Q1 results and a tender offer

This week, Nyfosa reported Q1 results, which in our view were better than suggested by the share price reaction. Atrium Ljungberg’s Q1 results looked solid, but we expect 2022 to be a ‘middle year’ in terms of growth and see no potential near-term share-price catalysts. Stenhus Fastigheter (20%-owned by Balder) made a combined shares/cash tender offer to acquire Randviken Fastigheter (9%-owned by SBB Norden) after the latter had been listed for less than a year. The weighted-average implied EBIT...

New LTV guidelines, a bond issue and a transaction

This week EPRA published new guidelines for standardised LTV calculations in the real estate sector, Swedish house price data for February was released, Balder issued a bond, and Diös sold assets for SEK373m. Credit margins and interest rates are rising, and yield gaps are continuing to narrow. The weighted-average implied EBITDA yields on the stocks we cover are 3.95% for 2022e and 4.22% for 2023e.

An initiation, Viceroy open letter, rising bond margins & transactions

This week, we initiated coverage of Aurora Eiendom with a BUY and NOK120 target price. Viceroy sent another open letter regarding SBB Norden to the Norwegian government. Catena sold two small assets, with a high gain on book values, and announced a new lease, while Nyfosa sold 13 properties. A Castellum bond issue confirmed that bond credit margins are on the rise. The weighted-average implied EBITDA yields on the stocks we cover are 3.64% for 2022e and 3.94% for 2023e.

Building costs to rise, yield gap narrows

Building-material wholesalers have warned of significant price hikes due to escalating material, shipping and energy costs. Viceroy has published another open letter regarding SBB Norden. Long-term interest rates have started to climb, while yield gaps are narrowing in several names. The weighted-average implied EBITDA yields on the stocks we cover are 3.87% for 2022e and 4.15% for 2023e.

Russia cuts, house prices, other news

We have cut our forecasts for profits in Russian property development to zero. Norwegian residential prices carried on rising in February. Viceroy published an open letter to the authorities regarding two transactions SBB made in its Norwegian kindergarten portfolios. The weighted-average implied EBITDA yields on the stocks we cover are 3.87% for 2022e and 4.15% for 2023e.

Reporting season concludes

While the tragic events in Ukraine and coming sanctions should have limited direct impact on covered companies, the risk premium and general economic effects may affect the sector. Viceroy published an update on SBB Norden earlier this week that could lead to higher volatility for SBB traded instruments (equity and bond). The Q4 reporting season concluded with results from SBB, Catena, KMC and Corem. The weighted-average implied EBITDA yields on the stocks we cover are 3.90% for 2022e and 4.19% ...

Two upgrades and a downgrade

This week, we upgraded Wihlborgs and Castellum to BUY while we cut Nyfosa to HOLD. Furthermore, we reiterated our BUYs for Olav Thon and HOLDs for Kojamo and Citycon. The weighted-average implied EBITDA yields on the stocks we cover are 3.49% for 2022e and 3.99% for 2023e.

Q4 gains, but interest rates rallying

The Q4 reporting season is underway, and results are showing solid value uplifts on lower yields in Q4. However, in the market, interest rates have rallied, leading to a large asset rotation, with highly leveraged stocks falling and more cash-rich and lower-LTV names holding up well. The weighted-average implied EBITDA yields on the stocks we cover are 3.23% for 2022e and 3.81% for 2023e.

High expectations for NAV growth ahead of Q4 results

This week, we saw a strong read-across to Fabege from unlisted peer Vasakronan’s solid Q4 results; SBB Norden and Sagax acquired additional assets; interest rates were on the rise; and we have high expectations for strong NAV growth in the upcoming Q4 results, driven by value uplifts. The weighted-average implied EBITDA yields on the stocks we cover are 3.07% for 2021e and 3.70% for 2022e.

A large lease, insider purchases, and raised construction sector outlo...

This week, Wihlborgs signed a large lease in Malmö, raising occupancy on its ongoing developments from 37% (in Q3) to 63%, and SBB reported several insider purchases. In other news, we changed our view on the Nordic construction and housebuilding sector to overweight (neutral) on our raised long-term growth assumptions, while Nordic real estate stocks generally were volatile due to interest rate concerns. Finally, we downgraded Self Storage Group to SELL (HOLD). The weighted-average implied EBIT...

Management changes, potential catalysts, and raised guidance

This week, Rutger Arnhult became Castellum’s permanent CEO after the departure of his predecessor, while separately the CFO announced her resignation. Elsewhere SBB Norden raised its total EPS guidance (including unrealised asset value gains). The weighted-average implied EBITDA yields on the stocks we cover are 3.11% for 2021e and 3.71% for 2022e.

Transactions and share purchases

Data shows Castellum has bought more shares in Entra, and this week several transactions were announced and one potential, while we hosted a conference call with Skanska. The weighted-average implied EBITDA yields on the stocks we cover are 3.17% for 2021e and 3.70% for 2022e.

Transactions and new targets

This week, Entra made a major acquisition, Skanska announced a new division and Cibus new targets, Diös and Wihlborgs made acquisitions, and we reiterated our BUY on Aros Bostad following its Q3 results. The weighted-average implied EBITDA yields on the stocks we cover are 3.07% for 2021e and 3.55% for 2022e.

M&A, plans for a potential spin off, and insider transactions

This week Corem announced plans to spin off its residential building rights into a new JV, a bidding war broke out for 24 Storage, Citycon bought back shares, and Wallenstam, SBB and Nyfosa completed transactions. The weighted-average implied EBITDA yields on the stocks we cover are 3.04 % for 2021e and 3.57 % for 2022e.

Another tender offer

This week we reiterated our BUY on Castellum as we have consolidated Kungsleden in our forecasts, raising our 2022–2023 EPS by 13–10%. Further, we reiterated our BUY on KMC Properties following its Q3 results, the 2022 Swedish lease agreement indexation will be 2.8%, residential price growth is slowing in Sweden, and SBB Norden has made a tender offer for Amasten and issued B-shares worth cSEK0.5bn, partly to Wallenstam. The weighted-average implied EBITDA yields on the stocks we cover are 3.04%...

This week saw more Q3 results, with Hufvudstaden, Balder and Veidekke reporting. Castellum announced it had reached 90% acceptance from Kungsleden’s share-holders and will complete the merger. Nyfosa continues to focus on growth and issued its first hybrid bond, while Catena announced two logistics/warehouse project starts. Weighted-average implied EBITDA yields on the stocks we cover are 3.20% for 2021e and 3.59% for 2022e.

More Q3 reports and other updates

Q3 reporting season continued this week, with Self Storage Group, Kojamo, and SBB Norden releasing results. In other news, Entra indicated it was one of the parties interested in Oslo Areal, and Nyfosa is set to enter Norway through a JV structure. The weighted-average implied EBITDA yields on the stocks we cover are 3.21% for 2021e and 3.59% for 2022e.