Fastpartner - Earnings growth above office peers
Recurring PTP growth of 10% and NOI 7% y-o-y in Q1e EPRA NAV to grow 14% in Q1e and 5.1% in ’21e (5.4%) -8% P/CE in ’21e and -5% P/EPRA NAV, vs. sector avg. Operational growth down from 2020 but still distinct We expect rental income to grow by 6% y-o-y in Q1, compared to its L5Y avg. growth rate of 8%.
Around half of this growth stems from the Herrjärva (Solna) acquisition, which began to generate income in Q2’20 and hence contributes y-o-y for the last quarter. This takes NOI to SEK 326m (315m) and recurring PTP to SEK 244m (221m), in Q1. Fastpartner targets 10% yearly growth in rec.
PTP and we estimate 9% for 2021. Finally, our anticipated increase in cash earnings per share, to SEK 1.06 in Q1e, implies ~8% growth in ’21, compared to the L5Y average of 13%. Slightly lower value growth in 2021 Above 85% of Fastpartner’s rental value derives from commercial real estate and 50% from offices alone.
We estimate property value revisions to come down to +3% in 2021 (3.6% in ’20 & 12% in ‘19). This is above KLOV (2%) and KLED (2%) but lower than PLAZ (7%) and WIHL (4%). Our estimated EPRA NAV (adj.
for pref- and d-shares) for Q1 is SEK 86 (77). We forecast a N12m cash yield of 5.5% in ’21 (6.0%). On the back of improved funding costs, we expect net LTV to continue to fall and be below 46% in Q1.
T12m NIBD/EBIT will fall to 11.4x (12.0x). Low multiples than in recent years, due to slower growth rate Fastpartner has historically traded at multiples well above the sector average but now trades 8% below, at 19.1x on ’21e P/CE vs. the sector average of 20.7x.
On ’21e P/EPRA NAV (adj.), the share is trading at 93%, 5% below the sector average of 98%. The five-year average on P/EPRA NAV for Fastpartner is ~25% above the sector average, but it grew distinctly faster during that period than what we pencil in now. The company reports on 22 April..