Our 'BBB+' issuer and issue ratings on Swedish property manager Fastighets AB Stenvalvet (publ) (Stenvalvet) are unchanged following the publication of its third-quarter results.
Earnings metrics in line with expectations
Stenvalvet's third-quarter report was in line with our expectations. Revenues in the quarter were SEK 229m (compared with SEK 214m in the third quarter of 2019) and EBITDA was SEK 162m (SEK 154m), corresponding to an EBITDA margin of 71% (72%).
Stenvalvet's revenues, generated 68% directly and 24% indirectly from government funded tenants, remain largely unaffected by the COVID-19 pandemic. The company's occupancy ratio of 96% was as we expected. Stenvalvet added one property to its portfolio during the quarter, and reports that its development projects are progressing according to plan.
New bonds diversify financial structure and ensure most funding is unsecured
Stenvalvet's interest coverage ratio was 5.4x at end-September, down from 5.7x a year earlier, but stable since end-June. Interest rates corresponding to 80.3% of the total debt portfolio were hedged through swaps or fixed interest as of end-September, mitigating some risk. The average loan maturity at end-September was 3.6 years, up from 3.5 years at end-June, and the average interest maturity was 4.7 years (4.4 years in the previous quarter).
In October, Stenvalvet issued a senior unsecured bond of SEK 700m, effectively reducing secured debt to total debt to below 50% from 82% a year earlier.
In our assessment, Stenvalvet's liquidity profile is likely to remain adequate, supported by a strong cash position of SEK 294m as of end-September, and the proceeds from the October bond issue.
This commentary does not constitute a rating action.
If you have any questions, please contact:
Mille O. Fjeldstad, credit rating analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com