Our 'BBB+' issuer and issue ratings on Swedish property company Vacse AB (publ) (Vacse) are unchanged following the publication of its second-quarter results.
Earnings metrics improve in line with expectations
Vacse's second-quarter report was in line with our expectations. Revenues in the quarter were SEK 92.4m (compared with SEK 89.6m in the second quarter of 2019) and EBITDA was SEK 72m (SEK 69m), corresponding to an EBITDA margin of 78% (77%) for the quarter.
Vacse has continued strengthening its interest coverage ratio; it stood at 5.6x as of 30 Jun. 2020. The company reports that its project properties are developing according to plan. Vacse's largest project, Färgskrapan (to be finalised in the second half of 2020) in Sollentuna, has been externally valued with a positive effect of SEK 110m. The project still has a vacancy rate of about 12%, but Vacse says it is in talks with several potential tenants. The average remaining lease term of the management property portfolio has increased to 11.1 years (from 10.5 years in the fourth quarter of 2019) and is expected to remain around these levels as new contracts enter the portfolio due to finalisation of projects and acquisitions over the next few years. The occupancy rate has dropped marginally to 99.1%, which correspond to the vacancies at the Färgskrapan project.
Financial position continues to strengthen
During the quarter, Vacse extended its maturity profile to 3.6 years. The company has extended upcoming bank maturities of SEK 712.5m that previously would have matured in April 2021 to the second half of 2022. It has also renewed a revolving credit facility of SEK 700m (previously SEK 600m) with time to maturity of three years, plus two 1-year options. The loan-to-value ratio decreased to 39.3% during the period.
Vacse's liquidity profile remains adequate given a cash position of SEK 157m as of 30 Jun. 2020 and the revolving credit facility, which was unutilised as of that date.
This comment does not constitute a rating action.
If you have any questions, please contact:
Mille O. Fjeldstad, credit rating analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com