Our 'BBB+' issuer and issue ratings for Fastighets AB Stenvalvet (Stenvalvet) are unchanged following the publication of its third quarter results. Rental revenue, EBITDA and property valuation were largely in line with our expectations, and the credit metrics remain fully commensurate with our rating.
Results in line with expectations
Rental income of SEK 211m (compared to SEK 207m for 2019Q2) and EBITDA margin above 70% are as expected. Stenvalvet has decreased the percentage of lease maturing before end of 2020 from 16% to 10% but has marginally decreased their occupancy ratio to 95% as of 2019Q3, from 96.5% as of 2019Q2. The 12-month rolling yield remains stable at 5.1% and the property portfolio has an average remaining lease time of 5.7 years.
We expect financials to remain stable
Stenvalvet reported an LTV of 50%, EBITDA to net interest of 5.7x and net debt to EBITDA of 10.7x, which commensurate with our 'BBB+' guidelines. The divestment of properties totalling SEK 1.1bn was settled after the end of the third quarter and has led to a temporary increase in reported loan to value (LTV) at 50%, slightly above our expectations. We do, however, expect the company to report LTV in line with expectations for 2019Q4. Some 43% of the company's external debt matures within the next 12 months, of which SEK 1.1bn certificates. The upcoming maturities are somewhat high and above the company's financial policy. We do, however, expect to see this volume decrease in the fourth quarter with the settlement of the divestments. In addition to the proceeds from divestments, the company's liquidity position is supported by back-up facilities of SEK 1.2bn, SEK 220m in cash and equivalents and an owner commitment of SEK 500m in equity injections. Stenvalvet reports that the progress with its forthcoming MTN program is on track.
Analyst contact details:
Mille O. Fjeldstad, +47 99 03 89 16, mille.fjeldstad@nordiccreditrating.com
Sean Cotten, +46 735 600 337, sean.cotten@nordiccreditrating.com
This commentary does not reflect a rating action.