We revise our rental income estimates based on three events: the SEK 195m divestment in Eskilstuna, increased indexation assumptions for ’23-‘24e and the SEK 109m acquisition in Oslo. First, transfer of ownership in Eskilstuna will take place by the end of ’22, and hence impacts our income estimates negatively first in ’23 (~-2.5%). Second, CPI market expectations have increased (>5%), and like our interest rate forecasts (explained below), we take a moderate stance and raise our indexation assumptions to 3-2.5% ’23-’24e (+150bp and 100bp). Third, the Oslo acquisition increases our ’22e rental income by ~0.4%. Finally, STEF has been granted four building permits since the end of ‘21, which we explain in greater detail on page 3.
We forecast an EPRA NRV CAGR of 14% in ’21-’24e
We forecast value uplifts of 1.1% for Q1 and 4.8% for ‘22. Our EPRA NRV per share estimates remain largely unchanged and correspond to SEK 193 in Q1, +4% q-o-q and +34% y-o-y. Our ’21-’24e EPRA NRV CAGR amounts to 14%. Despite assuming some template acquisitions (SEK 200m per year), net LTV falls to ~45% in ‘24e (50% in Q1’22e). We assume +100bp in gradual interest rate increases until ’24, but note a limited impact of +36bp due to STEF’s comparatively long interest maturity relative to other companies of its size (3.7 years) and a limited portion of its outstanding debt (18%) maturing in 2022 to 2023.
Faster growth while trading ~45-75% below peers
We estimate an IFPM CAGR of 24% in ’21-’23. This is a high comparative figure, as illustrated by the figure for Catena – the only peer with consensus figures – at 10%. STEF is trading at a premium to EPRA NRV (last reported) of ~40%, compared to peers at 74% (Catena) and 174% (Sagax). Our fair value range of SEK 275-315 implies NTM P/IFPM ...
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