Our 'BB-' issuer rating on Stendörren Fastigheter AB (publ) (Stendörren) is unchanged following the publication of its first-quarter 2022 results.
Revenues improving while costs remain stable
Stendörren reported revenues of SEK 177m for the first quarter of 2022, a 10% increase year on year, supported by improved occupancy ratio and average rent per sqm. Occupancy for the full year 2022 is expected to be further underpinned by the new contracts in the former Exploria property, which account for 2–3% of rental value. The net operating income margin improved to 73% in the first quarter of 2022 from 69% a year earlier. The NCR-adjusted EBITDA margin for the 12 months ended 31 Mar. 2022 improved to 63.8% from 59.7% at the same date in 2021. As Stendörren has secured 80% of its energy costs for 2022 and 2023, and 50% for 2024, we expect less volatility in margins over the next few quarters than for peers.
Metrics slightly stronger
NCR-adjusted net loan to value (LTV) decreased to 53.6% as of 31 Mar. 2022 as a result of unrealised changes in property values of SEK 129m and a relatively unchanged level of debt. This compares with our expectation of 56.8% for the full year 2022. NCR-adjusted EBITDA/net interest remained stable at 2.1x and, given that 89% of the company's interest-bearing debt is covered by interest rate hedges, we expect this figure to remain relatively stable. The company has SEK 1.2bn in short-term debt, consisting mostly of bank debt, which we believe Stendörren will successfully refinance.
Figure 1. Stendörren key credit metrics, 2018–Q1 2022
| SEKm | 2018 | 2019 | 2020 | 2021 | LTM to 31 Mar. 2022 |
|---|---|---|---|---|---|
| Total revenue | 537 | 592 | 651 | 656 | 672 |
| NCR-adj. EBITDA | 304 | 309 | 374 | 411 | 429 |
| NCR-adj. EBITDA margin | 56.6% | 52.2% | 57.5% | 62.7% | 63.8% |
| NCR-adj. investment properties | 8,486 | 9,372 | 9,758 | 11,931 | 12,224 |
| NCR-adj. net debt | 5,166 | 5,703 | 5,763 | 6,501 | 6,554 |
| Total assets | 8,735 | 9,608 | 10,233 | 12,290 | 12,702 |
| NCR-adj. net debt/EBITDA | 17.0x | 18.5x | 15.4x | 15.8x | 15.3x |
| NCR-adj. EBITDA/net interest | 2.3x | 1.7x | 1.9x | 2.1x | 2.1x |
| NCR-adj. net LTV | 60.9% | 60.9% | 59.1% | 54.5% | 53.6% |
| Average remaining lease term (years) | 4.0 | 4.0 | 3.8 | 3.7 | 3.7 |
| Occupancy rate | 89% | 88% | 87% | 89% | 90% |
| Average debt maturity (years) | 2.6 | 2.3 | 2.6 | 2.5 | 2.3 |
| Average fixed-interest period (years) | 2.0 | 2.4 | 2.5 | 3.7 | 3.5 |
This commentary does not constitute a rating action.
Contacts:
Yun Zhou, analyst, +46732324378, yun.zhou@nordiccreditrating.com
Marcus Gustavsson, analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com