Our 'BBB+' long-term issuer rating on Intea Fastigheter AB (publ) (Intea) is unchanged following the publication of its third-quarter results.
Strong rental income in line with expectations
Intea's rental income for the third quarter was broadly in line with our expectations and some 34% higher than in the corresponding quarter of 2020. The company's NCR-adjusted EBITDA margin for the past 12 months increased to 72.7%, compared with 68.7% a year earlier, and was above our estimate of around 68% over our forecast period through 2023.
Improved net LTV following substantial value increases
As of 30 Sep. 2021, Intea's NCR-adjusted loan-to-value (LTV) ratio was 50.9%, compared with 53.8% three months earlier. The decrease follows substantial increases in value in the property portfolio. Intea's NCR-adjusted net debt/EBITDA was 14.8x, broadly in line with our estimates.
Intea is preparing for an upcoming initial public offering, having announced its intention to list its shares in June this year. Previously outsourced property management functions have been moved in-house and shareholder loans have been converted to equity. We expect more in-house operations to support future margins and that the planned public offering will reduce net LTV to well below 50%, supporting Intea's financial risk profile in the short term.
Figure 1. Intea key credit metrics, 2017–Q3 2021
| SEKm | 2017 | 2018 | 2019 | 2020 | LTM to 30 Sep. 2021 |
|---|---|---|---|---|---|
| Total revenue | 283 | 372 | 488 | 549 | 691 |
| NCR-adj. EBITDA | 169 | 232 | 321 | 383 | 502 |
| NCR-adj. EBITDA-margin | 59.9% | 62.5% | 65.8% | 69.9% | 72.7% |
| NCR-adj. investment properties | 5,345 | 7,004 | 9,371 | 10,238 | 14,568 |
| NCR-adj. net debt | 2,843 | 3,815 | 5,056 | 5,363 | 7,418 |
| Total assets | 5,521 | 7,226 | 9,622 | 10,816 | 15,087 |
| NCR-adj. net debt/EBITDA | 16.8x | 16.4x | 15.7x | 14.0x | 14.8x |
| NCR-adj. EBITDA/net interest | 3.4x | 4.1x | 4.0x | 3.7x | 4.3x |
| NCR-adj. net LTV | 53.2% | 54.5% | 53.9% | 52.4% | 50.9% |
| Average remaining lease term (years) | 6.2 | 6.2 | 6.6 | 6.2 | 5.7 |
| Occupancy rate | 98.5% | 99.0% | 99.0% | 99.2% | 98.5% |
| Average debt maturity (years) | 4.4 | 3.8 | 3.4 | 3.3 | 2.7 |
| Average interest fixing (years) | 4.6 | 4.4 | 4.7 | 4.9 | 4.3 |
This commentary does not constitute a rating action.
Contacts:
Marcus Gustavsson, analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com
Mille Fjeldstad, analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com