Oscar Properties: Expands within industry/logistics - ABG

SEK 1.1bn acquisition announced at ~SEK 6,500 p. sqm
Adds 34% to earnings capacity IFPM (gross)
Debt financing secured at lower-than-average int. rate

Acquired at lower price than recent Kvalitena acquisition
This morning, Oscar Properties announced a SEK 1.1bn acquisition of a portfolio consisting of logistics and industry properties. The acquired lettable area (161,500 sqm) implies a 30% increase from the ~534,000 sqm owned by Q1’22. The price/sqm of ~SEK 6,500 is below OP’s average of ~SEK 12,700 but that average includes 38% offices where sqm-prices are different. Instead, OP’s most comparable acquisition is probably the SEK 0.9bn acquisition from Kvalitena, closed in November 2021 at ~SEK 9,000 per sqm, to our information. The Kvalitena portfolio primarily held industry properties spread across 15 Swedish cities.

Acquired WAULT of 6.1 years
The acquired portfolio is in five cities (Falun, Hudiksvall, Kumla, Tranås and Växjö) spread throughout Sweden, each within 3 hours (by car) from OP’s respective property management units (in Stockholm and Växjö). Each city has local operating managers on-site and should operate relatively independently. The portfolio increases OP’s WAULT as it is longer (6.1 years) than its average in Q1’22 (3.6 years).

Debt financing secured at 3.5% interest (4.6% avg. Q1’22)
Moreover, the portfolio adds SEK 64m (full-year basis) to OP’s net operating income (NOI), implying an acquired yield of ~6.1%, in line with its average acquisition yield of 6.1% (ABGSCe). Debt and equity will finance the acquisition and OP has obtained debt financing of 3.5%, well below its 4.6% average interest (Q1’22). As such, the acquisition will add an annual SEK 35m to OP’s income from property management (IFPM). In sum, the earnings capacity will as a result of the acquisition improve by 17% (NOI) and 34% (IFPM). Once the terms of the share issue are known, we will also know the impact on IFPM per share.
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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/oscar-properties/Equity-research/2022/5/oscar-properties---expands-within-industrylogistics/