Our rental income and net operating income estimates are up due to an adjustment from our last report regarding the impact from acquisitions in Q1’22. We leave our net operating margin and central admin forecasts intact; the latter supported by the earnings capacity. The large beat on financial net (SEK -26m vs ABGSCe SEK -54m) was due to the redemption of the hybrid bond with its subsidiary, which had a positive effect of above SEK 30m, and as such, the underlying performance was in line with our estimates. However, cash earnings per share benefitted from the one-off, explaining the large deviations in percent. As for the property management, the Q4 numbers revealed that, e.g., more tenants are distributed on longer average contracts (more about this on page 3).
No hybrid means better adjusted EPRA NRV
Our EPRA NRV estimates are up by 12-14% due to 1) the 6% beat vs. our estimates, and 2) as the hybrid bond was redeemed, so we no longer subtract its value from equity. The balance sheet metrics improved significantly in 2021, and compared to the best previous quarter, Q3, net LTV fell from ~81% to ~70%, and the equity ratio rose from ~29% to ~30%. If the company delivers on its property management in the coming quarters, we see the potential for improved financing options and that the SEK 800m unsecured bond (~7.25% interest) could be redeemed.
~11x and 0.41x 2023e P/IFPM and P/EPRA NRV
Oscar Properties is now valued at ~11x and ~0.41x on ’23e P/IFPM and P/EPRA NRV. This is ~15-20% below peers (Castellum, FastPartner and Wihlborgs) on P/IFPM while ~50% below on P/NRV. We adjust our fair value range to SEK 11-14 implying ‘23e P/IFPM and P/EPRA NRV of 14-18x and 0.49x-0.63x. Soon after the Q4 report, Oscar Properties announced that its next event will be a capital markets day (CMD) on 15 March w
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