Wallenstam (WALL) Q3 2017 earnings summary

Executive summary

• Jan–Sep income from property management rose 10% to SEK 621m; net profit was SEK 1,781m vs SEK 1,646m, and pretax profit was SEK 2,245m vs SEK 2,078m.

• Rolling 12-month net asset value growth, excluding dividends and buybacks, reached 21.4%, above the 10% annual target through 2018.

• Rental growth, cost-efficient construction, strong occupancy and valuation gains supported results; wind-power assets incurred a SEK 300m impairment.

Financial highlights

• Jan–Sep rental income rose 5% to SEK 1,257m, or 8% excluding acquired and sold properties; net operating income increased 7% to SEK 953m, or 10% on that basis.

• Q3 rental income rose 5% to SEK 428m; income from property management increased 7% to SEK 230m and net profit was SEK 334m vs SEK 319m.

• Unrealized property value gains were SEK 1,817m, including SEK 389m from new construction and SEK 1,428m from properties in operation for at least one calendar year.

• Jan–Sep property and apartment sales totaled SEK 615m, with realized gains of SEK 49m; residential and development-property sales generated SEK 52m net profit.

Outlook and guidance

• Target: average annual net asset value growth of at least 10% through 2018, excluding dividends and buybacks; rolling 12-month growth was 21.4%.

• 2,349 apartments were in production at period-end; ~85% of the near-2,500-unit pipeline comprised rental apartments.

• Projects proceed when economic and quality return requirements are met; planned condominium projects can switch to rentals if demand weakens.

• Management cited generally stable interest-rate conditions, low borrowing costs, a strong balance sheet and the project pipeline as support for continued growth.