Wallenstam (WALL) Q4 2016 earnings summary

Executive summary

• 2016 profit before tax was SEK 4,198m and profit after tax SEK 3,348m; net asset value growth, excluding dividends and buybacks, was 22.6%, above the 10% annual target.

• Property management and in-house rental construction generated SEK 1.9bn of value; management described 2017 prospects as stronger than 2016.

• Portfolio included 7,500 rental apartments and 1,000 commercial customers; self-sufficient in renewable energy since 2013.

• Focus on growth-market properties and value creation through cost-efficient new construction, successful letting and property management.

Financial highlights

• FY rental income was SEK 1,607m, up 4% with like-for-like growth of nearly 7%; net operating income was SEK 1,173m, up nearly 4%, and income from property management was SEK 733m, up 9%.

• Unrealized property-value gains were SEK 3,470m, including SEK 1,195m from rental-housing development; profit before tax was SEK 4,198m and profit after tax SEK 3,348m.

• Profit before unrealized value changes and impairment charges was SEK 865m vs SEK 1,027m; 11 properties were sold during 2016.

• Q4 rental income was SEK 410m vs SEK 390m and income from property management was SEK 169m vs SEK 160m.

• Realized property gains were SEK 187m on sales of SEK 1,179m; EPS was SEK 10.1 vs SEK 8.3, with Q4 net income of SEK 1,701m and EPS of SEK 5.2.

Outlook and guidance

• Business Plan 2018 targeted average annual net asset value growth of at least 10%; reported 2016 growth was 22.6%.

• Construction pipeline totaled 1,973 apartments, with occupations scheduled from Q1 2017 through 2019.

• Business-plan goal was to start production of 7,500 homes; 2,500 had been started to date, with ~2,000 homes in production at year-end.

• Management expected 2017 to be stronger, with over 1,000 apartments scheduled for occupancy and additional projects entering production.