Wallenstam (WALL) Q3 2016 earnings summary

Executive summary

• Jan-Sep income from property management rose 10% YoY to SEK 564m; profit after tax fell to SEK 1,646m from SEK 2,167m.

• Unrealized property-value gains were SEK 1,852m, partly offset by derivative losses; rolling 12-month NAV growth reached 16.1%, above the 10% annual target.

Financial highlights

• Jan-Sep rental income rose 3% to SEK 1,197m; excluding acquired and sold properties, rents increased 7%.

• Property operating surplus increased 4% to SEK 889m; growth excluding portfolio changes was just under 8%, with comparable-property growth of ~3%.

• Jan-Sep income from property management was SEK 564m versus SEK 512m; Q3 income rose 13% to SEK 214m from SEK 190m.

• Jan-Sep profit before tax was SEK 2,078m versus SEK 2,674m; profit after tax was SEK 1,646m versus SEK 2,167m, and EPS was SEK 5.0 versus SEK 6.5.

• Unrealized property-value gains were SEK 1,852m, including SEK 702m from new rental construction; derivative revaluation was a SEK 378m loss.

Outlook and guidance

• Business Plan 2018 targets average NAV growth of at least 10% annually, excluding dividends and buybacks; rolling 12-month growth was 16.1%.

• Investment focus remained ~SEK 3bn annually in new projects; the plan targets 7,500 homes started by 2018, with 1,617 apartments in production at quarter-end.

• The project portfolio contained 13,000 apartments; new construction in progress was expected to be occupied from Q4 2016 through 2018.