64 units of renovated apartments in Q3 Stated net initial yield fell 30bp q-o-q, to 4.1% Material project pipeline
52% more renovated apartments in ’21 to drive org. growth
As of 1 September, Signatur Fastigheter is fully consolidated into Trianon’s balance sheet, corresponding to 14% of Trianon’s property value in Q3. A notable factor in the Q3 report was the record-high number of renovated apartments, at 64 units vs. 40 at most in any previous quarter. Trianon is guiding for another 68 apartments in Q4, as its full-year target of 200 renovated apartments remains in place (+52% y-o-y). We expect several growth drivers in ’22-’23, e.g., renovations, CPI, announced acquisitions and finalised projects. We estimate the Entré conversion project will have the largest impact in ‘22, and Hyllie, Sege Park and Svedala in ‘23. Trianon has gradually expanded its in-house project pipeline, and including joint-venture owned projects, the total pipeline has almost doubled from a year ago, to 1,744 apartments, corresponding to 36% of total apartments in the current portfolio; 62% of these are set to be completed between 2022 and 2024. We have slightly raised our ’22-’23 estimates for central admin and net interest.
Next 12-month price/cash earnings of 39x
We estimate a 2021-2023 EPRA NRV (adj. for div.) and CEPS CAGRs of 20% and 21%, respectively, versus our sector averages of 15% and 11%. The share has rallied almost 100% since April and is currently trading at a NTM P/CEPS of 39x and a NTM premium to EPRA NRV of 84%.