Wihlborgs Fastigheter AB (FRA:1EJ) Q4 2024 Earnings Call Highlights: Record Rental Income and ...

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Wed, Feb 12, 2025, 12:02 AM 4 min read

Q4 Rental Income: SEK1.059 billion, a new record for one quarter.
Net Letting: Positive with SEK30 million for Q4.
Income from Property Management (Q4): Up 23% to SEK452 million.
Full Year Rental Income (2024): Increased by 8% to SEK4.174 billion.
Operating Surplus (2024): Increased by 8% to SEK2.996 billion.
Result for the Period (2024): SEK1.706 billion, corresponding to SEK5.55 per share.
EPRA NRV: Increased by 8% to SEK93.58 per share, adjusted for paid dividend.
Occupancy Rate: 91%, excluding project and land.
Running Yield: 5.6%, 6.4% if fully let.
Equity Assets Ratio: 38.1%.
Loan-to-Value (LTV): 50.9%.
Interest Coverage Ratio (2024): 2.5 times.
Net Debt to EBITDA: 9.9 times.
Dividend Proposal: SEK3.20 per share.
Investment Properties Value: SEK59.168 billion.
Full Year Signed New Leases: SEK371 million.
Q4 Profit for the Period: SEK860 million.
Available Funds (End of 2024): SEK3.7 billion.

Warning! GuruFocus has detected 9 Warning Signs with FRA:1EJ.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Wihlborgs Fastigheter AB (FRA:1EJ) achieved a new record in rental income for Q4 2024, amounting to SEK1.059 billion.
Income from property management increased by 23% to SEK452 million in Q4 2024.
The company reported a positive net letting of SEK30 million for Q4 2024.
The Board proposes a dividend of SEK3.20 per share, reflecting confidence in financial stability.
Wihlborgs Fastigheter AB (FRA:1EJ) has maintained a strong occupancy rate of 91% across its portfolio, excluding projects and land.

Negative Points

The macroeconomic backdrop remains weak, with expectations of improvement over the coming quarters.
Higher vacancy rates have been noted, attributed to the gap between tenant move-outs and move-ins.
The company anticipates terminations in Q1 2025, including a significant termination from SAAB, impacting rental income.
The net debt to EBITDA ratio is close to 10 times, which could be a concern if it increases further.
The acquisition of properties from Granitor will temporarily increase the loan-to-value (LTV) ratio by approximately 2%.

Q & A Highlights

Q: In the report, you mentioned that the macroeconomic backdrop remains weak and that you expect it to improve over the coming quarters. Are you already seeing any change in your leasing discussions with tenants? A: Ulrika Hallengren, CEO: At the moment, it's approximately the same as we've seen during the last year. Tenants are keen to find the right solution and are willing to pay for quality. The main question is how to find the best way to work ahead. We see a mix of expansion and downsizing, with more positive trends, but decisions take time.

Q: On the Granitor portfolio acquisition, do you see any asset management potential in the six yielding assets, or is it mostly from the two development properties in Lund? A: Ulrika Hallengren, CEO: It's a good running portfolio with possible improvements in energy savings and tenant improvements, but overall, it's a very good running portfolio.

Q: Regarding the funding of the Granitor acquisition, how should we think about this and the capital structure as a whole? A: Arvid Liepe, CFO: We can fund the transaction with existing credit facilities, which would have an immediate effect on LTV by approximately 2 percentage points. We're not worried about this increase as cash flow generation will gradually bring LTV downwards. We're comfortable with net debt to EBITDA around 10.5 times.

Q: Are you considering making a material additional acquisition at this point in time, and would you consider issuing shares? A: Arvid Liepe, CFO: We have the mandate to issue shares up to 10% of the total number of outstanding shares. It's a tool we can use if the opportunity is right and the size justifies it. However, the current transaction's effect on LTV is not large enough to warrant using this tool.

Q: Could you give examples of terminations expected in Q1 and how large they are? A: Ulrika Hallengren, CEO: The largest expected termination is from SAAB, moving to Lund, which will be about SEK30 million.

Q: The vacancy rate increased by 2 percentage points quarter-on-quarter. Why are you confident it will decrease by the end of '25? A: Ulrika Hallengren, CEO: It's a combination of new leases moving in and ongoing discussions. For example, in Helsingborg, the numbers will improve by at least 2 percentage points in October. We have good products and enough discussions to maintain a positive flow.

Q: How much do you plan to invest in '25 compared to the SEK2 billion in '24? A: Ulrika Hallengren, CEO: Without giving a specific forecast, we usually expect between SEK1.5 billion and SEK2 billion. It might be closer to SEK2 billion, depending on the largest projects.

Q: Regarding the Granitor acquisition, when do you expect to start projects on the land acquired in Lund? A: Ulrika Hallengren, CEO: The industrial part could proceed quickly, but it will take time. We don't expect to start this year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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