Wallenstam (WALL) Q4 2016 earnings summary

Executive summary

• Property portfolio valued at SEK 37bn across Stockholm and Gothenburg; rental income SEK 1.6bn, with ~2,000 apartments under construction at year-end.

• Net asset value growth was 23% in 2016; the three-year business-plan average was 16%, against a 10% annual target.

Financial highlights

• Income from property management increased 9% YoY, supported by new construction entering operation, lettings and efficient property management.

• Net operating income increased 4%; comparable holdings including new construction increased 7%.

• Rental income rose SEK 58m: new construction added SEK 61m, successful lettings and commercial negotiations SEK 40m, while 11 property sales reduced income SEK 43m.

• Unrealized property value changes were SEK 3.5bn, including SEK 1.2bn from new construction; derivative valuation changes reduced earnings by SEK 130m.

• Realized gains on investment properties were SEK 170m; 11 properties sold at 20% above valuation, with sale prices 107% above acquisition and investment costs.

Outlook and guidance

• Almost 2,000 apartments were under construction at year-end; 75% are planned for retention and management, with the remainder to be sold.

• Construction starts depend on planning processes and municipal readiness; starts may shift by one or two months across quarters.

• Gothenburg rent negotiation of 1.3% applies to both 2016 and 2017, with the impact coming through from 2017.

• The board proposed a 13% dividend increase to SEK 1.70 per share, equivalent to a 2.4% direct yield.