Trading at ~0.55x reported P/EPRA NRV
Ears to the ground – useful in times like these
Fastpartner continues to see strength in its markets, albeit with a small decline, and most of its tenants should have the means to handle CPI-adjusted rental increases in Q1. FPAR’s presence in a selected few municipalities, its in-house property management and consequent close relations to tenants could fend off vacancies that would have otherwise arisen. The company admits to some tenant risk in the light industrial segment due to thinner margins. On cost inflation and possible risks to investments in existing properties, FPAR has left its project cycle with seemingly good timing and limited remaining investments.
Limited impact from energy prices
Fastpartner is exposed to electricity regions SE3+4, where prices are up ~150% in Q3; we assume most of the effect will remain in ’23-’24. Nevertheless, a fair portion of opex (we assume 2/3) is forwarded to tenants, which limits the impact. We also assume a small lag effect, as some prices are hedged for ~6m. NOI is up thanks to higher indexation forecasts of 6.0% in 2023 (3.0%) and 4.0% in 2024 (2.5%). The estimate cuts on CEPS stem from updated interest rate assumptions in accordance with the Riksbank’s most recent rate path (September). In addition, we assume four margin increases of 10bps in ’23-’24e and add to that 4bps in Q3-Q4’22 to reflect the SEK 300m bond issued in September at 3.15% vs. 1.12% previously.
Historically low LTV while trading ~40-50% below 5y average
Fastpartner withheld a defensive approach to the transaction market when prices were rising in ’20-’21. This has allowed for a moderate net LTV of 42.8% (Q2’22) which puts the company in a position where it can act should opportunities arise. The share is trading at ~12x reported P/IFPM and ~0.55x P/EPRA NRV, which is ~40-50% below its five-year averages and roughly in line with selected peers.
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