Trianon: Don’t underestimate the residential segment - ABG

NOI trimmed by ~1-2% and CEPS by ~4% We note rental income estimate potential Trading ~25% below 4-year P/IFPM average Consensus for residentials might be too low
Higher energy costs drive down the NOI margin by 1.0pp in ‘22e and 0.5pp in ’23 & ‘24e, respectively. Moreover, we have raised our central admin forecasts slightly after the higher-than-expected figure in Q2. We note that rents for residentials in Malmö historically has superseded CPI (by ~50% since 1998 and ~25% since 2011). In addition, an agreement in May between the property owners’ association and the tenants’ association (TA) in Sweden lays out how rents can be determined from 2023. We believe the agreement could move the advantage from the TAs to the residential property owners, such as Trianon. These factors combined serve as rental income estimate potential, as we are more conservative and only pencil in moderate growth vs. current CPI forecast (2.5% in ‘23 & 2.0% in ‘24) and 0.1-0.2% in uplifts from renegotiations of commercial leases in ’22-’24.