Release Date: October 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Entra ASA (LTS:0R3Y, Financial) reported a rental income growth of 4.4% when adjusted for divestments and one-offs.
- The company's net asset value increased for the first time since Q1 2022, currently at NOK160 per share.
- Entra ASA's effective leverage is now below 50%, indicating improved debt metrics.
- The company completed a project in Sandvika Malmskriverveien 16 on time and NOK11 million below the initial project cost, achieving a yield on cost of 5.6%.
- Entra ASA achieved the highest ranking in the GRESB score with five stars and received EPRA gold level for sustainability reporting.
Negative Points
- Rental income for the quarter was NOK63 million below the same quarter last year due to divestments.
- The company experienced a negative net letting of NOK76 million in the quarter.
- Occupancy rate decreased to 94.4%, below the company's targets.
- The Board decided not to pay out dividends for the first half to focus on strengthening the balance sheet.
- The letting market activity slowed down in the third quarter, with a less progressed leads pipeline.
Q & A Highlights
Q: Could you provide some more color on the net lettings and the three terminated leases?
A: Sonja Horn, CEO, explained that the net letting was less progressed due to a slowdown in market activity. The three terminated leases were different cases: one was a downsizing company in Oslo, another was a tenant in Bergen that outgrew their space, and the third was a public tenant that moved due to cost. These terminations were unfortunate but part of the competitive market environment.
Q: Is there a timing effect in the net letting where you expect to see more leases signed in Q4?
A: Sonja Horn, CEO, stated that while Q4 is generally active, no significant increase in lease signings is expected. The timing depends on the progression of current leads and letting processes, which take time to conclude.
Q: What are the expectations for the Norwegian economy and interest rates?
A: Sonja Horn, CEO, noted positive outlooks for the Norwegian economy with expected GDP and employment growth. Interest rates are believed to have peaked, with the first policy cut anticipated in the first quarter of the next year.
Q: How is Entra ASA addressing the vacancy in its portfolio?
A: Sonja Horn, CEO, mentioned that 75% of the vacancy is in attractive spaces, and they are confident in letting these spaces over time. However, it may take time due to the competitive market environment, especially in the small lease segment.
Q: What is the outlook for property values and the transaction market?
A: Sonja Horn, CEO, indicated that property values are believed to have bottomed out, and the transaction market is expected to see increased activity. Prime yields are anticipated to start declining from 2025 onwards, supported by tightening credit margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
