Fabege (FABG) Q2 2024 earnings summary

Executive summary

• Rental income increased to SEK 1,731m for Jan–Jun 2024, up 3% year-over-year, with like-for-like growth of 8%, and net operating income also improved despite a challenging rental market and property divestments.

• Net letting was negative at SEK -74m, mainly due to renegotiations and tenant downsizing, with occupancy rate declining to 90%, but long-term prospects remain positive.

• Profit before tax improved to SEK -769m from SEK -3,222m year-over-year, mainly due to lower negative property revaluations, but result after tax was SEK -682m.

• Transaction and financial markets have stabilized, with increased liquidity, healthier conditions, and improved access to capital.

• Moody’s rating remains Baa2 with a negative outlook.

Financial highlights

• Rental income for H1 2024 was SEK 1,731m, up from SEK 1,685m year-over-year; like-for-like income increased by 8%.

• Profit from property management was SEK 659m, down from SEK 703m year-over-year.

• Unrealized property value changes totaled SEK -1,461m to SEK -1.5bn; property value now SEK 77.6bn.

• Surplus ratio at 73%; average interest rate at 3.17% at end of June.

• Earnings per share: SEK -2.17 (improved from SEK -8.06 year-over-year).

Outlook and guidance

• Long-term occupancy target remains 94-95%, but current rate is about 90%; recovery expected over several years.

• Net letting target of SEK 80m annually unlikely to be met in 2024, but positive figures expected in the second half.

• Priorities for 2024 include increasing occupancy, cost control, enabling future projects, refinancing bond maturities, and maintaining ESG leadership.

• Rental income projected to exceed SEK 900m per quarter by end of 2025/early 2026 as new tenants move in.

• Market activity is expected to remain cautious, but stable rent levels and improved access to capital are anticipated.