A decent Q1 came in ~2% above (CEPS) and ~2% below (EPRA NRV) ABGSCe. The Q1 occupancy rate of 92.1% (from 91.1% in Q4) is higher thanks to several factors, including acquisitions and net leasing. The strong ~30,000 sqm net leasing in 2021 (~8,000 in 2020, ~13,000 in 2019) is currently lending support and will likely do so in the next few quarters as FPAR’s rental income lags net leasing by ~9-12 months. Even though FPAR does not report net leasing in its quarterly reports, other names with Stockholm exposure (ATRLJ & CAST) have highlighted a clear pick-up in the leasing market so far into 2022.
Higher project investments is the new normal
We note that the CEO remains optimistic about FPAR’s ability to renegotiate its debt terms as he highlights the recently (mid-April) issued bond at STIBOR 3m + 1.90bps (+80bps vs. the bond issued in August ’21), which he means stands steady compared to the Swedish capital market at large (+70-450bps). We leave our interest rate estimates unchanged (+64bps gradually until ‘24e). FPAR continues to emphasize larger project focus on the back of a fierce transaction market. We judge that the current =SEK 800m per annum is reasonable up until 2023, and raise our capex assumptions to 800m (680m) for ’22-‘23e.
~20% below (P/IFPM) and ~5% above (P/EPRA NRV) peers
Our estimated EPRA NRV CAGR of 8% in ’22-‘24e is below FastPartner’s ROE target of above 12% p.a. Furthermore, 8% is a touch below the avg. Infront cons. growth for a peer group of ATLJ, FABG, HUFV and NYF (cons. figures for EPRA NRV figures are only available for FABG, HUFV and NYF whereas IFPM figures are only available for ATLJ and FABG). FPAR is trading at ‘22e P/IFPM of ~16x and a P/EPRA NRV of 0.79x, which are ~-20% (P/IFPM) and ~+5% (P/EPRA NRV) above the peer average. Our fair value of SEK 100-130, im ...
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