The Q4 results were a positive surprise across the board: forward-looking metrics like net leasing were up SEK 16m and renegotiations amounted to SEK 46m, with an average rental uplift of 28%. Moreover, the earnings capacity was up by 6.4% q-o-q, leading to our positive estimate revisions of ~8% for NOI. The revisions filter through well to the bottom line, with our CEPS estimates up by ~17% for 2022e and ~13% for 2023e.
…with increased activity on all fronts…
The balance sheet has long had the capacity for increased investments, and there seems to have been a slight positive domino effect, especially in the latter part of 2021. Stendörren finalised SEK 668m (150m) in acquisitions during the year, with new entries in Norway and Denmark, and completed investments in developments and the portfolio of SEK 256m (200m). 2022 has started at a strong pace, with a fourth acquisition in Denmark (~SEK 42m) and three granted building permits in Södertälje, Västerås and Uppsala. We include SEK 200m in template acquisitions for 2023e and 2024e and expect a ramp-up in investments in the coming years. Nevertheless, we find positive estimate revisions likely, given that the new organisation has clearly built up momentum. The potential project pipeline is huge, which in combination with bolt-on acquisitions at high net initial yields makes for a very interesting cocktail.
…and so much more to be done
There is potential to trim the vacancy rate of 11% and the increased focus on asset management could, in our view, lead to sector-high like-for-like rental income growth. We also see the scope for further yield compression, even though it clearly compressed in the quarter (unchanged yield of 5.7% due to acquisitions at higher NIY). The share is trading at NTM P/IFPM of 24.5x and a premium to EPRA NRV of
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