Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wihlborgs Fastigheter AB (FRA:1EJ, Financial) achieved a new record in rental income for Q3, amounting to 1,043 million SEK.
- Rental income increased by 7% to 3,150 million SEK for the first nine months of 2024.
- The company signed new leases worth 96 million SEK in the last quarter, marking a record high level for a third quarter.
- The occupancy rate remains strong at 93% across their portfolio, indicating stable demand.
- Wihlborgs Fastigheter AB (FRA:1EJ) has a robust pipeline of ongoing projects and future investments, indicating potential for growth.
Negative Points
- Higher financing costs have increased by 2.5 times, impacting the financial net.
- The equity assets ratio has slightly decreased compared to 12 months ago.
- The interest cover ratio has decreased to 2.5 times, reflecting the impact of higher interest rates.
- There is a potential for increased vacancy rates due to new projects and acquisitions.
- The company faces challenges in the current economic environment, with some businesses struggling.
Q & A Highlights
Q: Can you provide more details on the reversion you are capturing by signing leases at higher rent levels than those terminated? Are there specific regions with more reversionary potential?
A: The difference between signed and terminated leases is positive, indicating market rents are developing positively, though not dramatically. Regions like Lund and Malmo show strong potential, and there are signs of possible changes in market rents in Copenhagen.
Q: Do you expect market rental growth to exceed inflation in the near to medium term?
A: Yes, we are slightly above inflation, driven by tenants seeking better quality spaces.
Q: How does the current market compare to three months ago, considering some say we are in a recession?
A: While it's challenging and requires persistence, there are opportunities as companies seek to improve their workplaces. The situation is slightly better now than three months ago.
Q: What is Wihlborgs' exposure to coworking tenants, and what trends are you seeing in this space?
A: Less than 1% of our rental income comes from general coworking actors. They are a small portion of the market but provide a good complement. We've had success with themed coworking spaces, such as those focused on media and MedTech sectors.
Q: With high activity in the rental market, do you see opportunities in the transaction market?
A: We continuously look for opportunities that complement our portfolio, considering both developed products and development projects. However, changes can be costly, so total calculations must be favorable.
Q: How do you expect net letting to impact vacancy rates, considering your project pipeline and potential acquisitions?
A: Vacancy could temporarily increase due to new projects and acquisitions, but this is part of normal operations and growth strategy.
Q: With the current interest rate environment, how are you approaching capital allocation for development and acquisitions?
A: We have not felt restricted by interest rates and continue to invest in new builds and refurbishments. We remain disciplined in acquisitions, seeking the right opportunities at the right price.
Q: Could you provide more details on the recent sale of building rights in Copenhagen?
A: The building rights were valued at approximately 62-63 million SEK and sold for 72 million SEK, indicating a decent profit.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
