Trianon: Respected property management in the south - ABG
This is a third party research report and does not necessarily reflect our views or values
We increase our indexation assumptions for ’23e and ’24e
52bps increase to the average interest rate in ’22e-’24e
~1.15x P/EPRA NRV and ~30x P/IFPM in ’23e
NOI margin rebound in ’22e
Due to increased market CPI expectations, we raise our indexation assumptions by 100bps to 2.5% for ’23e and by 50bps to 2.0% for ’24e. There are no other major changes to our topline estimates since our post-Q4 update. For Q1’22e, we estimate that rental income will grow by ~5% q-o-q (~11% y-o-y) to SEK 168m, driven by the full effect from the SEK 630m acquisition in December. For 2022, we forecast a rental income growth of +12% y-o-y. The NOI margin in ’21 was depressed by the Signatur takeover, but we believe that TRIAN will improve this margin in 2022, leading to a NOI growth of 16% y-o-y.
We forecast an EPRA NRV CAGR of 10% in ’21-’24e
We forecast value revisions of ~0.8% in Q1 and 3.1-2.8% in ’22-‘24. From the value changes, around 5% stem from renovations and ~25% from projects. In combination with the cash earnings from property management, we estimate an EPRA NRV CAGR of 10% in ’21-’24e. As for our full real estate coverage, we have assumed 100bps in gradual interest rate increases until ’24e. Note that ~52% of outstanding debt should be impacted in ’22-’24 (~46% in ’22) due to the maturities of its interest rates and swaps. As a result, TRIAN’s average interest rate is revised upwards by 52bps. Due to the increased macroeconomic uncertainty, we have also decreased our assumptions for yield compression in the ’22-’24 forecast period.
Growth expectations and valuation above peers
Our estimated EPRA NRV CAGR in ’21-’24e (11%) is above the average Infront Data consensus for Balder and Wallenstam (~10%). TRIAN is trading at a ~15% premium to ’23e EPRA NRV and ~30x to ’23e P/IFPM, some ~20% (P/EPRA NRV) and ~40% (P/IFPM) above the average of Balder and Wallenstam. Our unchanged fair value range of SEK 195-225 corresponds to next 12 months P/EPRA NRV of 1.22-1.41x and P/IFPM of 30-35x.
Läs mer på ABG Sundal Collier
52bps increase to the average interest rate in ’22e-’24e
~1.15x P/EPRA NRV and ~30x P/IFPM in ’23e
NOI margin rebound in ’22e
Due to increased market CPI expectations, we raise our indexation assumptions by 100bps to 2.5% for ’23e and by 50bps to 2.0% for ’24e. There are no other major changes to our topline estimates since our post-Q4 update. For Q1’22e, we estimate that rental income will grow by ~5% q-o-q (~11% y-o-y) to SEK 168m, driven by the full effect from the SEK 630m acquisition in December. For 2022, we forecast a rental income growth of +12% y-o-y. The NOI margin in ’21 was depressed by the Signatur takeover, but we believe that TRIAN will improve this margin in 2022, leading to a NOI growth of 16% y-o-y.
We forecast an EPRA NRV CAGR of 10% in ’21-’24e
We forecast value revisions of ~0.8% in Q1 and 3.1-2.8% in ’22-‘24. From the value changes, around 5% stem from renovations and ~25% from projects. In combination with the cash earnings from property management, we estimate an EPRA NRV CAGR of 10% in ’21-’24e. As for our full real estate coverage, we have assumed 100bps in gradual interest rate increases until ’24e. Note that ~52% of outstanding debt should be impacted in ’22-’24 (~46% in ’22) due to the maturities of its interest rates and swaps. As a result, TRIAN’s average interest rate is revised upwards by 52bps. Due to the increased macroeconomic uncertainty, we have also decreased our assumptions for yield compression in the ’22-’24 forecast period.
Growth expectations and valuation above peers
Our estimated EPRA NRV CAGR in ’21-’24e (11%) is above the average Infront Data consensus for Balder and Wallenstam (~10%). TRIAN is trading at a ~15% premium to ’23e EPRA NRV and ~30x to ’23e P/IFPM, some ~20% (P/EPRA NRV) and ~40% (P/IFPM) above the average of Balder and Wallenstam. Our unchanged fair value range of SEK 195-225 corresponds to next 12 months P/EPRA NRV of 1.22-1.41x and P/IFPM of 30-35x.
Läs mer på ABG Sundal Collier