Oscar Properties: Set for further divestments - ABG

Net operating income -17% vs. ABGSCe IFPM in earnings capacity down ~50% Occupancy rate at 87% (88% in Q1)
Negative income from property management and net profit Rental income came in at SEK 105m (51m), compared to our forecast of SEK 116m. Net operating income was SEK 70m (22m) and the NOI margin 66% (44%), compared to our estimates of SEK 84m and 72%. Central admin was hurt by a one-off of SEK 2.6m. Income from property management (IFPM) amounted to SEK -16m (SEK -27m) compared to our forecast of SEK 14m. In the earnings capacity, IFPM fell by 48% in absolute numbers and 50% per share. The occupancy rate amounted to 87% (88% in Q1). The average interest rate was 5.0% (4.6% in Q1).

More divestments to come in the autumn according to CEO Property value changes amounted to SEK 51m (51m) or 0.7% vs. ABGSCe 0.4%. SEK 104 of this (unrealized) is due to improved NOI, while SEK -51m (realized) relates to divestments of detached houses in Skurusund and completion of the Plania project in Stockholm. The valuation yield was flat q-o-q (-0.1 bps y-o-y) at 5.8%. EPRA NRV per share was roughly flat q-o-q (+8% y-o-y) at SEK 17.2, roughly in line with our forecast of SEK 17.4. Net LTV was 71.5% compared to 70.8% in Q1. The CEO mentions in the report comment that Oscar Properties has divested properties for SEK 333m during and after Q2 that were acquired for SEK 300m. He further emphasises that Oscar Properties will continue to divest during the autumn to free up liquidity to amortise on loans.

~13x 2023e P/IFPM of and 0.26x P/EPRA NRV On pre-Q2 estimates, the share is valued at ~13x 2023e P/IFPM and a 74% discount to EPRA NRV. OP is higher leveraged than the sector (~71% net LTV Q1’22 vs. ~46% avg. of peers CAST, FPAR, and WIHL) while it is valued some 20% above (P/IFPM) and 60% below (P/EPRA NRV). We have a fair value range of SEK 5.5-8.0.

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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/oscar-properties/Equity-research/2022/7/oscar-properties---set-for-further-divestments/