Heimstaden (HEIM) Q3 2024 earnings summary

Executive summary

• Like-for-like rental growth reached 6.3% year-over-year, with rental income up 2.9% to SEK 4,017 million compared to Q3 2023.

• Net operating income rose to SEK 2,934 million, with NOI margin improving to 73.0% from 69.5% a year earlier.

• Privatisation sales totaled SEK 2,409 million for the quarter, with 516 units sold at a 24.6% premium to book value.

• Real economic occupancy increased to 98.7%, and property values grew by 0.8% compared to a decline last year.

• S&P assigned a B- rating with Negative Outlook in October 2024.

Financial highlights

• Rental income for Q3 2024 was SEK 4,017 million, up from SEK 3,905 million in Q3 2023; YTD rental income grew 3.8% to SEK 11,836 million.

• Net operating income margin reached 73.0% for the quarter and 69.2% LTM, marking 11 consecutive quarters of growth.

• Property expenses decreased to SEK 1,423 million, mainly due to cost control and lower utility costs.

• Net gains from property divestments were SEK 474 million, with cumulative privatisation sales at SEK 6,410 million since program inception.

• Change in fair value of investment properties was SEK 2,600 million (0.8% of fair value), reversing a loss of SEK -4,946 million last year.

Outlook and guidance

• Occupancy is expected to remain strong through year-end, with structural vacancy below 2%.

• Capital expenditure budget for 2024 has been reduced, with focus on projects that are immediately accretive to credit metrics.

• 956 new units are expected to be delivered in Q4 2024, and 1,105 units in 2025.