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Investing.com -- Shares of Wihlborgs Fastigheter fell by 1.5% following the release of the company’s financial results, which showed a mix of in-line rental income and a decrease in occupancy rates.
The company’s rental income for the fiscal year 2024 matched Barclays (LON:BARC)’ estimates at SEK 4,174 million and was consistent with the Infront consensus. However, the occupancy rate saw a 2 percentage point drop quarter-over-quarter to 91%.
Despite a challenging economic environment, Wihlborgs reported a like-for-like rental value increase of 2.7%, outpacing the October Consumer Price Index (CPI) in Sweden, which was at 1.6%. This increase, however, did not translate to like-for-like rental income, which slightly declined by 0.2%.
The company’s net lettings remained positive for the 39th consecutive quarter, adding SEK 13 million. Additionally, the cost of debt for the company continued its downward trend, falling 38 basis points over the quarter.
The Swedish Property Research Forum (SEPREF) estimated a 2% increase in prime Malmo rent over the fourth quarter of 2024, which aligns with the company’s performance. Wihlborgs also declared a dividend per share of SEK 3.20, slightly exceeding Barclays’ estimate of SEK 3.18 and aligning with consensus, representing a 2% increase year-over-year (YoY).
However, the company noted an impact on occupancy due to a temporary gap between lease terminations and new move-ins, as well as a higher than usual rate of bankruptcies. These factors did not lead to significant rent losses but did result in vacant premises. The company anticipates a lower occupancy rate in the first half of the year but expects recovery towards the end of the year.
Wihlborgs has managed to slightly reduce its loan-to-value (LTV) ratio to 50.9%, down from 51.2% in the previous quarter, and has seen a decrease in net debt to EBITDA, reaching the lowest level since 2012. The interest coverage ratio (ICR) remained flat quarter-over-quarter at 2.5 times.
Barclays commented on the company’s outlook, stating, "Outlook speaks of caution given continued uncertain times and while access to capital is good, from banks as well as the bond market, the economic recovery is weak."
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