Wallenstam (WALL) Q2 2017 earnings summary

Executive summary

• H1 property-management income rose 12% to SEK 391m; net operating income increased 6% to SEK 615m, supported by successful letting, new construction and efficient management.

• Rolling 12-month net asset value growth was 16.4%; growth excluding dividends and share repurchases was 21.7%, against a 10% annual target through 2018.

• 2,155 apartments were under construction at period-end, including nearly 450 starts during Q2; construction in progress was valued at SEK 4.5bn.

Financial highlights

• H1 rental income was SEK 829m versus SEK 789m; comparable rental income grew 7.8%. H1 net operating income was SEK 615m versus SEK 579m, with comparable net property income up 9%.

• H1 property-management income was SEK 391m versus SEK 350m; Q2 was SEK 200m versus SEK 184m.

• H1 pre-tax profit was SEK 1,818m versus SEK 1,663m and net income was SEK 1,447m versus SEK 1,325m; Q2 net income was SEK 907m versus SEK 1,043m.

• H1 results included unrealized property gains of SEK 1,638m and a SEK 300m wind-power impairment; H1 profit before unrealized value changes and impairment was SEK 371m versus SEK 414m.

• Rental income increased SEK 40m, including SEK 30m from new construction and SEK 29m from letting, offset by SEK 19m from property sales; net operating income rose SEK 36m.

Outlook and guidance

• Business-plan target was average annual net asset value growth of at least 10% through 2018, excluding dividends and share repurchases; rolling 12-month growth on that basis was 21.7%.

• Management expected a prolonged low-interest-rate environment and moderating property-value growth as yield requirements had limited room to fall.

• Projects were ready to start when permits were received; the construction schedule listed 2,155 apartments, with occupancy phased across 2017–2019.