Fastpartner: Rec. PTP miss on soft NOI margin - ABG

- Soft NOI margin, higher financials, rec PTP -13% vs ABGSCe
- Value changes of -2.8% vs ABGSCe at -3.2%
- New swap agreements of ~SEK 1.0bn (~6% of debt)

Rec PTP -13% vs ABGSCe, -38% y-o-y
Fastpartner delivered a Q4 report with rental income of SEK 555m (+2% vs ABGSCe) with a margin of 65.3%, driving NOI of SEK 362m (-3% vs ABGSCe). The NOI margin declined 2.5pp y-o-y and was 3.2pp below ABGSCe. Like-for-like property costs increased 7.9% y-o-y vs. 4.7% in Q3'23, and the increase was driven by both higher operating expenses and maintenance costs. Net financial expenses were slightly higher than we anticipated, bringing rec PTP -13% vs ABGSCe. The occupancy rate was flat q-o-q at 92.9% (93.0% adjusted for projects, down 10 bps q-o-q).

Taking baby steps
Property value changes in the quarter amounted to SEK -955m (-2.8% of property value) compared to our estimate of SEK -1.1bn (-3.2%) and the property valuation yield expanded to 5.2% (+30 bps q-o-q from 4.90%). Fastpartner has been one of the companies with the highest share of floating debt, but it seems like it decided to enter into some interest rate swap derivates of ~SEK 1bn (6% of total debt) during Q4; in total ~18% is hedged. Moreover, FastPartner updated its financing policy where at least 30% of debt should be hedged longer than three years. This will help short-term estimates somewhat (2024/2025) as the long-term rates currently are significantly lower than the 3M STIBOR.

Conclusion
Soft underlying performance with NOI -3% vs ABGSCe while occupancy of 93% is a historically strong figure for FastPartner. Moreover, the current tax amounted to SEK -66m (+27m), likely driven by interest deduction limitations, leading to CEPS of SEK 0.15 vs. ABGSCe at SEK 0.54. The Q4 miss in combination with interest rate swaps should lead to minor negative estimate revisions (rec. PTP) from consensus of ~2-4%.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/fastpartner/Equity-research/2024/2/fastpartner---rec.-ptp-miss-on-soft-noi-margin/