Our 'BB-' issuer rating on Stendörren Fastigheter AB (publ) (Stendörren) is unchanged following the publication of its fourth-quarter 2021 results.
Continued focus on operating efficiency supports EBITDA margin
Stendörren reported a 3.4% year-on-year increase in rental revenue in 2021, to SEK 653m from SEK 631m in 2020 and SEK 10m above our estimate for the year. Stable operating costs and improved central administration costs improved the EBITDA margin to 62.7% for the full year, from 57.5% in 2020. This was marginally above our expectation of 62.5%. During the fourth quarter, Stendörren received building approval for several new projects in Sweden, which we expect to commence as soon as tenants are signed up. The company further increased its geographic reach through property acquisitions in Copenhagen and Lillestrøm, Norway.
Unrealised value changes reduce loan to value
During the fourth quarter, Stendörren increased its level of sustainability-linked funding, which now totals SEK 1.7bn. The company reduced its vacancy levels marginally over the quarter, while increasing its average fixed-interest period. NCR-adjusted loan to value (LTV) was 54.5% at year-end, compared with our estimate of 56.8%. The difference reflects SEK 457m in unrealised value changes reported in the fourth quarter. We make no adjustments to our current estimates, which we updated in our recent annual review, published 19 Jan. 2022.
Figure 1. Stendörren key credit metrics, 2017–2021
| SEKm | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Total revenue | 453 | 537 | 592 | 651 | 656 |
| NCR-adj. EBITDA | 265 | 304 | 309 | 374 | 411 |
| NCR-adj. EBITDA-margin | 58.5% | 56.6% | 52.2% | 57.5% | 62.7% |
| NCR-adj. investment properties | 6,494 | 8,486 | 9,372 | 9,758 | 11,931 |
| NCR-adj. net debt | 3,684 | 5,166 | 5,703 | 5,763 | 6,501 |
| Total assets | 6,624 | 8,735 | 9,608 | 10,233 | 12,290 |
| NCR-adj. net debt/EBITDA | 13.9x | 17.0x | 18.5x | 15.4x | 15.8x |
| NCR-adj. EBITDA/net interest | 2.5x | 2.3x | 1.7x | 1.9x | 2.1x |
| NCR-adj. net LTV | 56.7% | 60.9% | 60.9% | 59.1% | 54.5% |
| Average remaining lease term (years) | 4.9 | 4.0 | 4.0 | 3.8 | 3.7 |
| Occupancy rate | 91.0% | 89.0% | 88.0% | 87.0% | 89.0% |
| Average debt maturity (years) | 2.4 | 2.6 | 2.3 | 2.6 | 2.5 |
| Average fixed-interest period (years) | 2.2 | 2.0 | 2.4 | 2.5 | 3.7 |
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