Wallenstam (WALL) Q2 2016 earnings summary

Executive summary

• H1 rental income rose 2% to SEK 789m and income from property management increased 9% to SEK 350m; net income fell to SEK 1,325m from SEK 1,981m.

• Net asset value growth was 15.1% for the latest 12 months, excluding dividends and share repurchases; average growth during the first 2.5 years of the 2014–2018 plan was 13.4%, above the 10% annual goal.

• Property value gains were SEK 1,615m, including SEK 561m from new residential production; unrealized derivative changes were -SEK 366m.

Financial highlights

• H1 rental income was SEK 789m versus SEK 771m; like-for-like rental income grew 6%.

• H1 net operating income rose 3% to SEK 577m from SEK 560m; excluding acquisitions and disposals, it increased more than 7%.

• H1 income from property management reached SEK 350m versus SEK 322m; Q2 result was SEK 184m versus SEK 171m.

• H1 pre-tax result was SEK 1,663m versus SEK 2,432m; result before unrealized value changes and impairments was SEK 414m versus SEK 566m.

• Property sales totaled SEK 730m in H1, completed at prices 18% above latest valuations; realized property value gains were SEK 113m.

Outlook and guidance

• The 2014–2018 plan targets average annual net asset value growth of at least 10%, excluding dividends and share buybacks; latest 12-month growth was 15.1%.

• The plan targets starting construction on 7,500 homes by 2018; average annual net asset value growth over its first 2.5 years was 13.4%.

• At period-end, 1,695 apartments were under construction; plan thresholds include equity/assets of at least 30% and realized interest coverage of at least 2x.