Our 'BBB' issuer rating on Axfast AB (publ) (Axfast) is unchanged following the publication of its fourth-quarter 2021 results.
Acquisition and new contracts strengthen revenues
Axfast reported full-year revenues of SEK 572m, compared with our estimate of SEK 562m and the SEK 564m recorded in 2020. Revenues were supported by the acquisition of the Lysbomben building in Stockholm in June, and increased revenues from finalised projects. Excluding this income, revenues elsewhere were marginally lower due to preparation for a refurbishment project which resulted in vacancies at one property. Axfast's NCR-adjusted net operating income margin was 71.5% for the full year, an increase from 70.7% in 2021, while the NCR-adjusted EBITDA margin was 66.2%, slightly below our estimate of 67.6% due to higher-than-expected central administrative costs. While the company's current vacancy level is somewhat higher than its peer group average, the contracted occupancy level, once current projects are finalised, should rise to above 95%.
Credit metrics supported by unrealised value changes
Axfast reported an unrealised 12% increase in property values, reflecting both increased revenues in the portfolio and yield compression. The increase in value resulted in an NCR-adjusted net loan-to-value (LTV) ratio of 22.8% for the full year, compared with our estimate of 26.3%. NCR-adjusted interest coverage was 4.0x, in line with our expectation.
Figure 1. Axfast key credit metrics, 2017–2021
| SEKm | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Total revenue | 562 | 595 | 594 | 564 | 572 |
| NCR-adj. EBITDA | 427 | 404 | 389 | 383 | 379 |
| NCR-adj. EBITDA-margin | 76.0% | 67.9% | 65.5% | 67.9% | 66.2% |
| NCR-adj. investment properties | 12,932 | 14,729 | 15,436 | 16,187 | 19,562 |
| NCR-adj. net debt | 3,602 | 3,840 | 3,204 | 3,315 | 4,452 |
| Total assets | 6,504 | 7,521 | 6,885 | 6,949 | 8,135 |
| NCR-adj. net debt/EBITDA | 8.4x | 9.5x | 8.2x | 8.7x | 11.8x |
| NCR-adj. EBITDA/net interest | 3.5x | 3.8x | 4.1x | 4.5x | 4.0x |
| NCR-adj. net LTV | 27.9% | 26.1% | 20.8% | 20.5% | 22.8% |
This commentary does not constitute a rating action.
Contacts:
Mille Fjeldstad, analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com
Marcus Gustavsson, analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com