Q4 net operating income came in lower (by -10%) due to a lower net operating margin in the acquired Signatur portfolio (16% of Trianon’s total number of apartments) and higher energy costs than we had anticipated. But as the reported earnings capacity improved (by 5%), and we have updated our project assumptions, we trim our estimates by 2-4%. We received clarity on the calculations for the earnings capacity and have adjusted net financials accordingly, which explains our 12-14% cut on cash earnings. As for the outlook, more competition in the transaction market makes acquisitions a less likely cash earnings driver post the effects from these on 2022e numbers (~4% rental income increase). Instead, we believe projects and renovations will grow in importance, and in ’22e-’24e, we model rental income growth from these of 4-3%, implying growth to income from property management of 5-7%.
Projects support coming value changes
Turning to value uplifts and gross earnings, Trianon’s focus on development projects has increased and its development pipeline has grown to ~3,000 jointly and wholly owned apartments (1,335 wholly-owned in Q4’21 vs 852 in Q4’20). Since Q3‘21, an annual project profit target of SEK 100m has been established. In ’21-’22e, production should be started on 700 apartments in total, of which ~200 were started in 2021. We currently think 115-60% of the profit target will be reached in ’22e-’24e, corresponding to ~30% of our expected annual value changes. Also, the average reported valuation yield for residentials (73% of TRIAN’s property value) of 3.6% is still markedly above direct market yields, which coupled with a higher CF = solid outlook for value changes.
‘23e P/EPRA NRV of 1.07x, ~10% above peers
Trianon is trading at ~10% above the average of Balder and Wallenst ... Läs mer på Introduce
Aktuellt
SENASTE
