Weekly Real Estate Matrix

Performance and valuation data for Nordic real estate stocks as of 10 May 2024.

Swedish policy rate cut, an upgrade and a downgrade

Sweden’s Riksbank cut the policy rate this week to 3.75% (4.0%); our estimates are based on another four cuts by end-2025. During the week we upgraded Veidekke to BUY, downgraded Castellum to HOLD, and reiterated our HOLD on Kojamo and SELL on Hufvudstaden and Sagax. The average implied EBITDA yields on the stocks we cover are 4.40% for 2024e and 4.79% for 2025e.

Weekly Real Estate Matrix

Performance and valuation data for Nordic real estate stocks as of 3 May 2024.

On track

European occupancy continues up. Minor estimate changes for '25e-'26e. Trading above key peers, we reiterate HOLD.

Q1 reporting continues

This week, Castellum and Balder reported Q1 results, Wihlborgs announced a new lease, and SBB corrected 2023 profits and dissolved Unobo. Norges Bank has signalled interest rates might stay higher for longer. K2A has halted preference dividend payments. The weighted-average implied EBITDA yields on the stocks we cover are 4.69% for 2024e and 4.97% for 2025e.

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.

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.

Miss even incl. one-off items

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...

Fully valued near-term

We maintain a neutral sector stance, but see near-term setbacks and consider risks tilted to the downside near-term due to strong sector performance in the past month, while market interest rates have risen. We expect two years of zero NAV growth, on average, due to yield expansion, and the sector theme to be deleveraging, with limited capex. We see few potential company-specific catalysts, leaving share prices largely driven by macro factors. We consider the sector fully valued near-term, at an...

Vacancy uptick in Stockholm

This week, Citymark announced vacancies in the Stockholm office market are now higher than during the 2007–2008 financial crisis. Selvaag Bolig (SELL, TP NOK25) released KPIs for Q1, where unsold inventory was at an all-time high. Norwegian house prices rose 0.9% in March and 5.9% YTD. Entra announced leases. Corem announced that it aims to issue bonds. The weighted-average implied EBITDA yields on the stocks we cover are 4.62% for 2024e and 4.88% for 2025e.

Transactions, debt repurchase, and National Transport Plan

This week, Corem, Catena and Vasakronan (which re-entered the M&A arena after a more than 5-year absence) announced property transactions, SBB saw its share price rise by 29% on the week after retiring long-term debt, and the Norwegian government unveiled a somewhat smaller budget in its latest National Transport Plan (NTP), with a weak read-across to the local construction and consultancy sector, in our view The weighted-average implied EBITDA yields on the stocks we cover are 4.54% for 2024e a...

Pandox AB: 1 director

A director at Pandox AB sold 2,000,000 shares at 170.000SEK and the significance rating of the trade was 74/100. 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 s...

Insider transactions, SBB rating lowered and lease contracts

There were several insider transactions this week. Also, SBB offered to buy back certain hybrid and senior bonds, and credit agencies lowered their ratings in response. Corem announced new leases, and a large Norwegian real estate syndicate was taken over by one of its bondholders. The weighted-average implied EBITDA yields on the stocks we cover are 4.60% for 2024e and 4.86% for 2025e.

Modest 2024–2026 growth outlook

We expect flattish 2024–2025 NAVps growth for our Swedish coverage, due to too-low asset writedowns in 2023, but 7% in 2026e assuming stabilised yields. We forecast a 2024–2025 FFOps CAGR of 5%, held back by: 1) maturing interest rate hedges; 2) expected rental growth slow-down; and 3) deleveraging hurting investment capacity. However, we consider this priced in at a sector NAV median discount of 27%. We maintain a neutral sector stance, and our top picks are Catena, Castellum, Nyfosa and Pandox...

Last Q4 report and other updates

Last Q4 report and other updates Q4 reporting season for our covered names concluded this week with SBB’s results. Citycon has taken over Kista and issued a bond, and we cut our target price. Balder bought back hybrid bonds, Nyfosa is evaluating strategic options for its Söderport holding, and Pandox agreed to sell DoubleTree by Hilton Montreal. The weighted-average implied EBITDA yields on the stocks we cover are 4.85% for 2024e and 5.13% for 2025e.

Q4 reports flurry

Q4 reports flurry This week, Nyfosa reported solid Q4 results, but the market focused on it scrapping its dividend for 2023. Catena’s NAV grew by c7% QOQ in Q4, due to a landbank write-up, while Sagax reported 15% YOY PFPMPS growth for 2023. Corem also cut its dividend for 2023 and NAV dropped by 14% during the quarter. For KMC Properties, one-offs resulted in Q4 EBIT missing our estimate, while Citycon completed a share issue of EUR48.2m. The weighted-average implied EBITDA yields on the stock...

Mixed Q4s and a minor equity raise

Mixed Q4s and a minor equity raise This week, Castellum reported soft Q4 results, with net lettings of SEK-51m and soft market comments. Wihlborgs raised its DPS and carried out a modest asset writedown of only 0.5%. Hufvudstaden’s occupancy was solid, while Kojamo’s 2024 FFO guidance was below consensus. In other news, Balder said it would carry out a minor equity raise of cSEK1.2bn. The weighted-average implied EBITDA yields on the stocks we cover are 4.8% for 2024e and 5.2% for 2025e.

Widening gap in asset writedowns

Widening gap in asset writedowns This week, Fabege reported solid Q4 results, but with a rather soft rental market outlook. Wallenstam’s Q4 PFPM fell 19% YOY, and the report surprisingly included no asset writedowns, while Entra reported a 4.2% QOQ drop in asset values, taking the decline since its peak values to c16%. Pandox’s Q4 operating results were mixed, but it updated its guidance for ongoing investments, resulting in a SEK300m NOI uptick for 2026e. The weighted-average implied EBITDA yi...