The Q4 report was mixed, rental income and NOI came in 0.8% and 2.8% below our expectations, respectively, while income from property management was 2.0% above ABGSCe at SEK 246m (231m). The beat was mainly driven by financial income of SEK 18.1m (5.1m). The biggest surprise, however, was the value uplift of 4.7% (ABGSCe was 1.4%), which is a top-tier figure among peers in the sector. Thus, EPRA NRV increased 25% y-o-y to SEK 113.5 (or ~SEK 103.5 adj. for equity instruments). FastPartner (FPAR) is upbeat regarding the market outlook and the company sees great demand for all types of properties in all of its six core markets, i.e. Stockholm, Gothenburg, Malmö, Uppsala, Norrköping and Gävle.
Minor negative underlying estimate revisions
We make minor negative estimate revisions, while we raise CEPS by 1.4% for ‘22e and 3.1% for ‘23e. The key reason is the redemption of preference shares. The equity instrument has served FPAR well since the first issue in 2013, but in the spring of 2021, the company received an Investment Grade rating from Moody’s (Baa3) and the credit agencies treat preference shares as 50% equity and 50% debt. That is probably why FPAR issued more D-shares in September 2021, as that equity instrument is treated as 100% equity.
Leases, completions and M&A to generate growth in ‘22e
FPAR has signed several leases, some projects are set for completion and it has also made some acquisitions. For ’22-‘23, we estimate 15% and 14% CEPS growth, respectively. The share currently trades at ‘22e P/CEPS of 22x and a P/EPRA NRV of 0.97x. These valuation metrics are ~5% (P/CEPS) below, or ~7% (P/EPRA NRV) above the average valuation for peers such as ATLJ, FABG, HUFV & NYF. We update our fair value range to SEK 105-135 (100-130), implying 22x-28x (P/CEPS) and
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