Wallenstam (WALL) Q3 2016 earnings summary

Executive summary

• Rolling 12-month net asset value growth was 16%, ahead of the business-plan goal of 10% average annual growth through 2018.

• Focus remained on efficient property management and new construction to generate value; management said the business was on track with its plan.

Financial highlights

• Income from property management increased 10% YoY; rental income rose 3% in comparable properties and 4% from new properties entering management.

• Operating expenses increased 1%, or SEK 3m; excluding SEK 7m of property tax, expenses were ~SEK 4m lower YoY, partly offset by ~SEK 3m from colder weather.

• Financial expenses fell SEK 26m; the average interest rate for the period was 2.07%.

• Profit after tax decreased mainly due to negative derivative revaluations; property value growth was SEK 1.9bn, or ~6%, during the period.

Outlook and guidance

• Business-plan goal through 2018 is average annual net asset value growth of 10%; the 7,500-unit construction guideline supports, but does not alone determine, that goal.

• ~1,600 apartments were under construction at September-end; management expected more construction starts in Q4, including 133 apartments started in Gothenburg in October.

• Most new rental housing is intended for in-house management; management expects this to continue supporting property management income.