Estimates to come up

Like clockwork

Weekly Real Estate Matrix

Performance and valuation data for Nordic real estate stocks as of 5 July 2024.

Fabege (Hold, TP: SEK85.00) - Another quarter with soft lettings

Following a Q2 report with soft rental market KPIs and, in our view, no positive indications for the weakening Stockholm office rental market, we have cut our 2025–2026e EPS by c1–3%. We reiterate our HOLD and SEK85 target price, as we find the 2025e P/FFO of 18x unattractive despite a 42% discount to last reported NAV.

Catena (Hold, TP: SEK575.00) - Decoupling from European peers

Following the solid Q2 results and sector outperformance YTD, we have downgraded to HOLD (BUY), but raised our target price to SEK575 (515). Although we still like the case long-term, our downgrade is based on: 1) a stretched valuation versus European logistics peers; 2) our 2025–2026e PFPM 4–6% below consensus; and 3) short-term market oversupply potentially leading to lower project development gains in the next few years.

Q2 starts and transaction updates

The slow market recovery in Nordic CRE transactions continued in June. Moreover, a large transaction in Stockholm, Sweden, supports commercial brokers’ estimated current CBD yields. The Q2 reporting season has started, with continued indications of a weakening office rental market in Sweden. The weighted-average implied EBITDA yields on the stocks we cover are 4.34% for 2024e and 4.74% for 2025e.

Flags for divestments in H2'24

Earnings capacity continue up

Estimates to come up somewhat

Better top line and NOI margin

Things continue to look up

We reiterate our April view that financing improvements trump all other concerns. Balder and Nyfosa up to BUY, Castellum down to HOLD.

Last quarter of negative CEPS growth

Minor estimate changes. Several positives starting to be seen. Attractive long-term story: up to BUY (Hold).

Brimming coffers

25 quarters of occupancy >90% and historically low gearing. Time to grow: BUY (Hold), TP SEK 120 (95).

Sector-high cash return

CEPS raised for '24e-'26e. More forward-leaning from here. Compounding quickly: BUY, TP SEK 290 (240).

Mediocre at best

4% CEPS CAGR since 2009 in the best of all possible worlds. We favour other names in the sector: HOLD (Buy).

Making the right decision

Solid divestment in Sundbyberg. Good mix between newbuilds and refurbishments. GAV discount of ~15% vs. 10y avg. of ~8%.

Solid equity story

Things are looking up, with solid growth and vacancies potentially bottoming out. Sector-high growth at historically low multiples. BUY, TP of SEK 105.

Trading above key peers

Nordic RevPar continuing higher. Deals likely in H2'24. Trading above key peers: HOLD, TP SEK 180 (170).

Time to be more forward-leaning

Growth to continue in Q2'24e. Renovations are the key growth driver. HOLD, TP of SEK 20.

Too slow with too few divestments

Divestments take down top line and NOI, but too slow and too low volume to handle bonds. Written procedure done, debt burden high; HOLD, TP of SEK 5 (9).