Our 'BB' issuer rating on NP3 Fastigheter AB (publ) (NP3) is unchanged following the publication of its first-quarter results.
Margins adversely affected by harsh winter weather
NP3's first-quarter report was in line with our expectations. Revenues in the quarter were SEK 291m (compared with SEK 266m in the first quarter of 2020) and EBITDA was SEK 177m (SEK 168m), corresponding to an EBITDA margin of 60.7% (63.2%) for the period. The net operating income margin was 65.2% (68.0%) for the quarter and 73.9% (72.1%) for the last 12 months. The company said that the reduced margins were a result of increased costs related to harsh winter weather.
The average remaining lease term in NP3's portfolio was 4.1 years, while the occupancy rate was 93%, unchanged from a quarter earlier.
During the quarter, NP3 continued to pursue its rapid growth ambitions, entering into an agreement to acquire six properties in Falun, Borlänge, Gävle and Västerås, at a valuation of SEK 500m. The transaction will close in the second quarter of 2021. Since the reporting date, the company has acquired an additional three properties in Västerås and Örnsköldsvik valued at SEK 295m.
Loan-to-value reduced on the back of positive revaluations
The NCR-adjusted loan-to-value (LTV) ratio (taking into account 50% debt treatment of preference shares) was 61.1%, a decrease from 62.6% a year earlier. The reduction in LTV was to a large extent explained by positive valuation gains. The NCR-adjusted EBITDA to net interest ratio was 3.2x, broadly unchanged from a year earlier. Cash holdings amounted to SEK 304m at the end of the quarter. The average interest rate was 2.74%, while the average interest fixing was 1.8 years. During the quarter, NP3 renegotiated a significant portion of its outstanding debt, resulting in average debt maturity increasing to 2.6 years, from 1.9 years at end-2020.
Figure 1. NP3 key credit metrics, 2017–Q1 2021
SEKm | 2017 | 2018 | 2019 | 2020 | LTM to 31 Mar. 2021 |
---|---|---|---|---|---|
Total revenue | 677 | 842 | 1,006 | 1,091 | 1,118 |
NCR-adj. EBITDA | 436 | 546 | 668 | 764 | 774 |
NCR-adj. investment properties | 7,732 | 10,496 | 11,474 | 12,665 | 13,105 |
NCR-adj. net debt | 4,704 | 6,797 | 7,165 | 7,983 | 8,005 |
Total assets | 7,959 | 10,677 | 11,937 | 13,352 | 14,024 |
NCR-adj. debt/EBITDA | 10.8x | 12.4x | 10.7x | 10.4x | 10.3x |
NCR-adj. EBITDA/interest | 3.8x | 3.5x | 3.3x | 3.2x | 3.2x |
NCR-adj. LTV | 60.8% | 64.8% | 62.5% | 63.0% | 61.1% |
This commentary does not constitute a rating action.
If you have any questions, please contact:
Marcus Gustavsson, credit rating analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com
Mille O. Fjeldstad, credit rating analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com