Our 'A-' issuer and issue ratings on Vacse AB (publ) (Vacse) are unchanged following the publication of its fourth-quarter 2021 results.
Newly tenanted properties provide continued stability in earnings
Vacse reported a 13% year-on-year increase in rental income in the fourth quarter to SEK 118.2m, bringing rental income for the full year to SEK 459m, with income streams supported by new properties entering the portfolio in the course of the year. The NCR-adjusted EBITDA margin for the full year was 76.3%, down from 77.2% for fiscal 2020, but only marginally below our expectation of 77%, which we nevertheless regard as solid.
Unrealised value changes reduce loan to value
Average contract duration fell in the course of the year, from 10.8 years to 9.9 years, while occupancy rates remained close to 100%.
Vacse reported unrealised value changes of SEK 508m during the fourth quarter, reflecting a reduction in average yield to 4.5% and revaluations of former development projects that are now tenanted. The value changes resulted in a reduction in NCR-adjusted loan to value (LTV) to 37.2% from 39%, below our estimate of 39%. The company reduced its average interest rate during the fourth quarter to 1.7% from 1.8%, contributing to strong NCR-adjusted EBITDA/net interest of 5.8x, which compares favourably with our projection of 5.6x for the full year.
Vacse reported upcoming maturities of SEK 1.2bn, including a SEK 490m senior unsecured bond maturing in June 2022 and a SEK 709m secured bank loan maturing in October 2022. As of end-2021, Vacse had SEK 479m in cash and equivalents and an unutilised revolving credit facility of SEK 700m, effectively reducing refinancing risk.
Figure 1. Vacse key credit metrics, 2018–2021
| SEKm | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|
| Total revenue | 340 | 369 | 384 | 459 |
| NCR-adj. EBITDA | 263 | 282 | 296 | 350 |
| NCR-adj. EBITDA-margin | 77.4% | 76.5% | 77.2% | 76.3% |
| NCR-adj. investment properties | 5,943 | 6,525 | 7,169 | 8,923 |
| NCR-adj. net debt | 2,416 | 2,657 | 2,793 | 3,320 |
| Total assets | 6,166 | 6,702 | 7,431 | 9,506 |
| NCR-adj. net debt/EBITDA | 9.2x | 9.4x | 9.4x | 9.5x |
| NCR-adj. EBITDA/net interest | 4.1x | 5.1x | 5.6x | 5.8x |
| NCR-adj. net LTV | 40.7% | 40.7% | 39.0% | 37.2% |
| Average remaining lease term (years) | 10.8 | 10.1 | 10.8 | 9.9 |
| Occupancy rate | 100.0% | 100.0% | 100.0% | 99.7% |
| Average debt maturity (years) | 2.4 | 2.5 | 3.1 | 3.8 |
| Average fixed-interest period (years) | 3.1 | 4.5 | 5.3 | 4.6 |
This commentary does not constitute a rating action.
Contacts:
Mille Fjeldstad, analyst, +4799038916, mille.fjeldstad@nordiccreditrating.com
Yun Zhou, analyst, +46732324378, yun.zhou@nordiccreditrating.com