Fastpartner - Lowered 2025 IFPM targets - ABG

Q1 NOI in line, IFPM -5% on higher financial costsRevised 2025 IFPM target (SEK 1.0bn vs SEK 1.5bn)LTV to stay below 50%, full bank financing a way forwardQ1 report with changed 2025 IFPM targetFastpartner delivered a Q1 report with rental income of SEK 556m (ABGSCe at SEK 550m) and the NOI margin expanded y-o-y. IFPM amounted to SEK 167m, which was ~5% below ABGSCe, fully explained by higher-than-expected net financial expenses. We believe the main takeaways from the Q1 report are (1) Occupancy continues to increase, FPAR now has a track record of a gradually increased occupancy rate during the last three years, (2) Like-for-like rental income growth of 12.1%, i.e. FPAR was able to pass through inflation, (3) Financial expenses continue to weigh on earnings and estimates, i.e. CEPS come down another 3-5% during our forecast period, and (4) FPAR revised its 2025 IFPM target to SEK 1.0bn (previously SEK 1.5bn). We currently estimate a 2025e IFPM of SEK 930m, i.e. ~7% below the target.FPAR should be able to go 100% bilateral bank debtFastpartner currently has ~45% of its outstanding debt split between seven different bonds (total volume of SEK 7.5bn). The bond maturities are relatively evenly split between 2023 and 2027 (lowest annual maturity of SEK 1.1bn in 2024 and highest annual maturity of SEK 2.1bn in 2027), and Fastpartner clearly stated that it is of strategic importance/interest to keep its IG-rating. With a property portfolio of less than SEK 40bn, combined with a net LTV peak at ~48.5% (ABGSC Q4'23e) and an ICR trough at ~2.1x (ABGSC 2023e), we find no reason why Fastpartner would need/have to keep its IG-rating. The quality of the assets in combination with the credit metrics should allow for significantly increased bilateral bank debt.2023e P/CEPS at ~18x and P/NAV at ~0.75xFastpartner is trading in line with the real estate sector average (P/CEPS of ~17x, P/NAV of ~0.75x), while the net LTV is lower (~47.5% in 2023e vs the sector average at ~51%).Läs mer på ABG Sundal Collier