Our 'BBB-' issuer rating on Swedish property management company LSTH Svenska Handelsfastigheter AB (publ) (Svenska Handelsfastigheter) is unchanged following the publication of its third-quarter results.
Revenues remain largely unaffected by COVID-19
Svenska Handelsfastigheter's third-quarter report was in line with our expectations. Revenues in the quarter were SEK 169m (compared with SEK 148m in the third quarter of 2019) and EBITDA was SEK 121.4m (SEK 105m), corresponding to an EBITDA margin of 72% (71%) for the period. The increase in revenues was mainly due to property portfolio growth through acquisitions.
As of end-September, the occupancy ratio was 95%, improved from 94% as of end-June, while the average lease term was 5.6 years. During the third quarter, Svenska Handelsfastigheter added nine properties totalling 17,760 sqm to its portfolio, as well as 8,200 sqm in land for development. Since the end of the quarter, the company has entered an agreement to acquire a 2,500 sqm property near Malmö.
Financial position still robust
Svenska Handelsfastigheter's financial position remains stable as indicated by an NCR-adjusted loan-to-value ratio of 51% at end-September (82% a year earlier) and an interest coverage ratio of 1.9x (1.7x). The average loan maturity was 4.8 years and the average interest maturity was 3.4 years. During the third quarter, Svenska Handelsfastigheter established an SEK 3bn medium-term note programme and issued a SEK 300m green bond.
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
Marcus Gustavsson, credit rating analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com