Our 'BBB+' long-term issuer and issue ratings on Fastighets AB Stenvalvet (publ) (Stenvalvet) are unchanged following the publication of its third-quarter results.
Increase in rental income drives improved EBITDA and margins
Distribution of rental income between operating segments was largely unchanged from the second quarter. Total rental income increased by SEK 10m, or 5%, quarter on quarter, while operating costs remained constant. NCR-adjusted EBITDA increased by 16.3% from the second quarter, and by 5.6% year on year to SEK 171m. The net operating income margin continued to increase, rising to 73.3% from 72.6% in the second quarter, and 71.7% in the corresponding quarter of last year. This compares with our expectation of 71-72%.
Portfolio stabilises after eventful second quarter
Average contract duration was up slightly, from 5.5 years to 5.7 years, driven mainly by an increase in long-term contracts spanning beyond 2030. Economic occupancy remained stable at around 96%, in line with our expectations.
NCR-adjusted loan to value (LTV) rose slightly by 5bps to 41.3% in the third quarter, following a sharp decrease in the second quarter driven by a significant increase in property values. However, LTV was still much lower than the end-2020 level of 45.3%, but in line with our revised expectations. The small increase from the second quarter was mainly driven by an increase in NCR-adjusted net debt, reflecting a reduced cash position due to acquisitions during the third quarter.
In November, Samhällsbyggnadsbolaget i Norden AB (SBB) announced the acquisition of 23% of the shares in Stenvalvet from Kåpan Pensioner Försäkringsförening. Pending approval from the current owners, SBB will become Stenvalvet's joint second-largest owner together with Kåpan Pensioner.
Figure 1. Stenvalvet key credit metrics, 2017–Q3 2021
| SEKm | 2017 | 2018 | 2019 | 2020 | LTM to 30 Sep. 2021 |
|---|---|---|---|---|---|
| Total revenue | 742 | 812 | 888 | 890 | 909 |
| NCR-adj. EBITDA | 503 | 541 | 586 | 595 | 615 |
| NCR-adj. EBITDA-margin | 67.8% | 66.6% | 66.0% | 66.9% | 67.7% |
| NCR-adj. investment properties | 9,941 | 11,105 | 12,070 | 13,564 | 16,093 |
| NCR-adj. net debt | 4,770 | 5,121 | 5,116 | 6,147 | 6,639 |
| Total assets | 10,321 | 11,484 | 12,541 | 13,990 | 16,943 |
| NCR-adj. net debt/EBITDA | 9.5x | 9.5x | 8.7x | 10.3x | 10.8x |
| NCR-adj. EBITDA/net interest | 6.2x | 5.7x | 5.5x | 5.4x | 5.3x |
| NCR-adj. net LTV | 48.0% | 46.1% | 42.4% | 45.3% | 41.3% |
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