Fastpartner: Project pipeline drives up estimates - ABG

- Rec. PTP 7% below ABGSCe
- CEPS est. +2.7-0.6% for '25-26e due to projects
- Share trading at a ~3% premium on '25e P/CEPS

Top-line miss driven by divestments
Fastpartner reported Q2 rental income of SEK 574m (-1.4% vs ABGSCe) with the NOI margin falling for the third quarter in a row to 73.6%, resulting in reported NOI of SEK 423m (-3.7% vs ABGSCe). The top-line miss was due to three divestments (8,593 sqm, ~0.5% of lettable space) that were done at a 26% premium to book and a yield of ~4% according to media reports. Weaker results at the top of the income statement filtered through to rec. PTP, coming in at SEK 188m (-7% vs ABGSCe) even though net financials were a bit better than expected.

Project pipeline delayed and increased
Fastpartner's balance sheet is looking more and more robust, with Q2'24 net LTV at 47.8% and the ICR increasing for three consecutive quarters with Q2'24 coming in at 1.84x (ABGSC def.) Value changes in the quarter were negligible, at <0.1% of property values (vs. -0.4% ABGSCe) even as the valuation yield increased by 20 bps q-o-q to 5.4%. Another encouraging sign is the fact that Fastpartner's project pipeline expanded from 3.7% of property values to 5.1% of property values, albeit with the two projects expected to be completed in Q2'24 delayed to Q3'24.

P/CEPS premium dwindles in '25e
Fastpartner is well-positioned to benefit from falling interest rates, with ~83% floating debt per Q2'24. Combining this with project completions coming closer to the end of 2024 (at greater volume), we raise our '25e-'26e CEPS estimates by 2.7-0.6%. The share has historically traded at a premium to the sector, and continues to do so at ~18x '25e P/CEPS (~3% premium to the sector at ~17.6x). However, that premium dwindles to a 0.5% P/CEPS premium in '26e. Fastpartner is trading at a 29% discount to '25e NAV compared to other office-focused peers at an average discount of 26%

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/fastpartner/Equity-research/2024/7/fastpartner---project-pipeline-drives-up-estimates/