Street Calls of the Week
Prisma Properties AB reported robust financial results for Q3 2025, with significant year-over-year growth in rental income and net operating income. The company’s stock saw a modest increase of 0.4% following the announcement, reflecting investor optimism.
Key Takeaways
- Rental income rose by 25% year-over-year to SEK 123 million.
- Net operating income increased by 24% to SEK 109 million.
- The company aims to double its property portfolio value by 2028.
- Prisma Properties is expanding its presence in the Nordic region.
Company Performance
Prisma Properties demonstrated strong performance in Q3 2025, capitalizing on its strategic focus in the Nordic real estate market. The company’s rental income and net operating income both showed substantial growth compared to Q3 2024. With a high occupancy rate of 98.3% and a diversified tenant base, Prisma is well-positioned to continue its upward trajectory.
Financial Highlights
- Revenue: SEK 123 million, up 25% YoY
- Net Operating Income: SEK 109 million, up 24% YoY
- Profit from property management: SEK 61 million, up 32% YoY
- Surplus ratio: 89%
Outlook & Guidance
Prisma Properties plans to double its property portfolio value from SEK 8 billion to SEK 16 billion by 2028. The company targets an annual net asset value (NAV) growth of 15% and aims to achieve a SEK 1 billion annual development run rate. Ongoing development projects and strategic acquisitions are central to this growth strategy. With a market capitalization of $436 million and a price-to-book ratio of 0.88, InvestingPro data suggests the stock may be undervalued relative to its assets. Discover more insights and access comprehensive analysis with InvestingPro’s detailed research reports, available for over 1,400 stocks.
Executive Commentary
CEO Fredrik Mässing emphasized the company’s growth potential, stating, "We see a possibility to increase up to SEK 16 billion within three years." He also highlighted Finland as a key market for future deals, saying, "Currently, we see the best deals in Finland."
Risks and Challenges
- Market Competition: Intense competition in the Swedish grocery segment could impact future growth.
- Interest Rate Fluctuations: Changes in interest rates could affect financing costs.
- Economic Conditions: Macro-economic pressures in the Nordic region could influence tenant demand.
Q&A
During the earnings call, analysts inquired about Prisma Properties’ growth strategy and acquisition plans. CEO Fredrik Mässing addressed these concerns, underscoring the importance of aligning new acquisitions with the existing portfolio and maintaining a strong yield on development projects. With a gross profit margin of 78.36% and revenue growth of 14.15% in the last twelve months, the company demonstrates strong operational efficiency. For more detailed financial metrics and expert analysis, explore InvestingPro, where you’ll find additional ProTips and comprehensive valuation tools.
Full transcript - Prisma Properties AB (PRISMA) Q3 2025:
Conference Moderator: Welcome to Prisma Properties’ Q3 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing the pound key 5 on their telephone keypad. Now, I will hand the conference over to CEO Fredrik Mässing and CFO Martin Lindqvist. Please go ahead.
Fredrik Mässing, CEO, Prisma Properties: Good morning, everyone, and thank you for joining today’s presentation of our Q3 report, where Martin and I will take you through the key events and financial highlights. This quarter, we continue to have strong momentum. Our strategy keeps delivering results and we’re growing in both size and profitability. Let’s go through the key highlights. Yesterday, we communicated updated financial targets, where we have adjusted our net LTV target to 55%. The decision is part of our strategy to increase investment capacity and create long-term shareholder value, which reflects our transition from a build-up phase to a more capital-optimized growth phase. Our goal is to double our portfolio from 8 to 16 billion by the end of 2028, driven by profitable development projects, acquisitions, and asset contribution deals, while still maintaining financial stability.
I’m proud to share that our earnings capacity is up 46% compared to last year, a result of strong operational performance and disciplined capital allocation. During and after the quarter, we have communicated several acquisitions in both Sweden and Finland. So far this year, we have signed and closed acquisitions of a total amount of approximately SEK 1.3 billion. I would like to highlight the recent acquisitions of two new ICA Maxi stores, properties that will align very well with our modern portfolio and further increase our exposure to the grocery segment. Since the IPO, we’ve shown that we can not only deliver profitable development projects but also identify and execute on attractive acquisitions. In Q3, we continue to see strong rental income growth, up 25% year over year. Rental income reached SEK 123 million compared to SEK 98 million last year.
This growth was driven by acquisitions, completed projects, and CPI-adjusted leases. Net operating income increased by 24%, reaching SEK 109 million compared to SEK 88 million in Q3 2024. Profit from property management increased to SEK 61 million, up 32% year over year. The property valuation yield remained fairly unchanged, but we’re seeing an increased interest and improved sentiment for our segment, which makes us confident that we will see improvements in the coming quarters. This quarter, we continue to sign several new long lease agreements. Net letting this quarter amounted to SEK 19 million, which was driven by many new signed leases in Denmark. Prisma has delivered positive net letting every quarter since the metric was introduced in the beginning of 2023.
This quarter, our WALT decreased from 8.3 to 7.8 years, and our occupancy rate declined slightly to 98.3%, an effect of the recent acquisitions we have made in the quarter. Martin, would you like to make a comment on the cash position?
Martin Lindqvist, CFO, Prisma Properties: Yes, it’s important to note that the cash position is affected by the temporary depositions that we made. They are booked as a receivable in the balance sheet. They relate to the acquisition we closed on October 1 for Jakobstad and Seinäjoki, but also to projects in Aarhus and Holstebro in Denmark. Aarhus will start in Q4. Adjusted for the depositions, the cash position is SEK 530 million.
Fredrik Mässing, CEO, Prisma Properties: This quarter, we have made some adjustments to better highlight the strength and stability of our rental income. Instead of showing all tenants individually, we now present our top 10 tenants at group level. We also refined the category split to make us more comparable to peers and to better reflect our high share of grocery-related income. The previous grocery category is now renamed grocery and daily goods, and this quarter includes income from Tokmanni Oy across all markets. This provides a more accurate representation of how we view tenants such as Dollar Store, Tokmanni Oy, Big Dollar, who in many ways complement or even partly compete with traditional grocery chains. I’m also glad to share that Kesko have entered our top 10 list, a tenant we aim to continue to further expand with in Finland.
We continue to have a high WALT of 7.8 years, but due to the recent acquisitions, we now have more lease agreements expiring in the coming years. We will do our utmost to defend them and maximize our WALT. Our property management team has already started the work of extending leases that added during the quarter.
Martin Lindqvist, CFO, Prisma Properties: Property portfolio, the property value now is above SEK 8 billion, continuing to trend up. The yields, as we mentioned, are very stable since Q2, and the assets that we have added now are the NP3 acquisition together with projects in Tromsø, Vänersborg, and Ilmajoki, and minus a minor divestment of an asset in Randers in Denmark. The unrealized value changes in the quarter amounted to SEK 56 million and mainly relate to project profits.
Fredrik Mässing, CEO, Prisma Properties: This quarter, we have finalized three projects and added four new ones. Currently, we have nine ongoing projects with an expected average yield on cost of 7.7%. We are ramping up our development activity, and we’re confident that we will soon reach our target of an annual run rate of SEK 1 billion. New projects that have been added this quarter include two projects in Haderslev in Denmark, where we have started the construction of a Netto Store, Big Dollar, and a QSR restaurant with an expected completion in the end of Q2 2026. In Tromsø, Norway, we have started the construction of a Rusta and a Jysk with an expected completion in Q2 2026. Lastly, in Ilmajoki, Finland, we have started the construction of a K City Market and a Rusta with an expected completion in Q3 2026.
Our development organization continues to deliver, and all previously announced projects have been started. This quarter, we have added another four new projects to the list, projects that are set to start from Q2 2026 and forward. In Tierp, we are planning to develop 10,000 square meters of grocery and discount retail. We have two projects in Umeå, where we are planning to develop a grocery store and a QSR restaurant, and in Värnamo, where we’re planning to develop a QSR restaurant, where we have signed a 20-year lease with KFC. New projects will continue to be added to the pipeline over the coming quarters.
Martin Lindqvist, CFO, Prisma Properties: The ownership structure, shareholders as of September 30, basically no changes, same usual suspects in the owner list. I think that K’s Capitalförvaltning has increased somewhat, but otherwise, this is the same list as previous quarters. Financial update, the rental income up 25% year on year, NOI up 24%, and the surplus ratio is 89% in the quarter if we exclude the segmented property, which is up from 86% in Q2. The increase in the absolute NOI does not fully materialize on the income from property management, and that is due to that we had very high interest income in the comparison period. If you remember, the very high cash position after the IPO generated high interest income, and back then, Stibor was also higher, so the rate for interest income was much higher.
If we look on the rental income sequentially, rental income is up $5 million in the quarter sequentially from Q2, and that is, of course, increased by the inclusion of the NP3 portfolio and some project completions, minor project completions, but reduced also from the sale of the Uppsala asset and the small divestment in Randers and lower income from the segmented property. We also have slightly, may have been $1 million conservative on the income when we took in the final balances on the acquisitions, but should also remember to calculate with the segmented property, etc. Capital structure, the net LTV is up from 35% to 38%, and the presence from new banks in the balance sheet is continuing to increase. The average interest is 4.06%, continuing to trade down, and is 4.02% with assuming that all rates would be fixed at September 30.
Basically, there’s no material difference between the 4.06% and 4.02%. With a stable Stibor, there’s no point in really reporting this difference. The ICR, we see continuing steadily to climb up to 2.5 this quarter. The earnings capacity includes the acquisition in Jakobstad and Seinäjoki per October 1, as well as completed projects in Vänersborg, Göringe, and Östhammar. Otherwise, no major changes in the assumptions, and Fredrik, with that, we tie back to your initial comment, we are up 46% since one year ago in the earnings capacity. With that, we open for Q&A.
Conference Moderator: If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Stefan Bjellå from Nordia. Please go ahead.
Good morning, and thank you for the presentation. I have a couple of questions, which I will ask you one by one. Starting off with the new financial target, one of the targets was to double the property value from 8 to 16 billion. I’m just wondering, how did you arrive at that target? Should we expect that this target implies that you will significantly increase the acquisition pace going forward?
Fredrik Mässing, CEO, Prisma Properties: As a listed company, we need to be much, much bigger. Currently, we’re on SEK 8.1 billion. We see a possibility to increase up to SEK 16 billion within three years, including if you look at the pipeline we have in both projects and developments, but also in the future, look at asset contribution deals. That is an assumption we made, and we believe that is achievable, SEK 16 billion.
All right. Thank you. In terms of acquisition opportunities, where do you see the best opportunities, and what yields would you like to acquire for you to evaluate the acquisition?
Currently, we see the best deals in Finland. Now we’ve entered Finland, but we need to build up a critical mass in the portfolio to be able to grow in that market. Currently, Finland, but we also see some possibilities in Sweden also. When it comes to development, we see the main focus is Denmark and Sweden.
Okay. In terms of yields in the projects that you have ongoing, you have a yield on cost of 7.7%. Do you think that you can maintain that level going forward in the projects?
Absolutely. We can be transparent and say, okay, if you look at the Q2, we had a yield on cost of 8%. Now we have 7.7%. This is based on that we have more grocery projects. We still get our profit margins, but the yield on cost will, in general, be lower when we’re developing grocery compared to discount retail.
On acquisitions, the acquisitions that you have announced so far have been on relatively high yields. Reading real estate consultants’ reports and so on, you sense that yields are coming down and the competition for, for example, grocery retail is increasing. Should we expect that the future acquisition that you will do will be on slightly lower yields?
I mean, the benefit of doing developments and acquisitions is that we can do the transition. We will do acquisitions as long as we find attractive deals. In the future, if the yields are going down, it’s good for the company, but we’ll focus more on developments. Market-wise, Sweden is the market with the highest competition within the grocery segment. It’s also high competition in Sweden and Denmark, Finland and Denmark, but especially in Sweden. Therefore, we’ve put more focus on the Finnish market at the moment. If you look at the acquisition we made, it’s plus 7. Depending on which category we focus on, if it’s grocery or it’s discount or QSR, the yields can spread between 7 up to 9. The most important new acquisition is that it’s aligned with our current portfolio. It’s modern, long lease agreements, and the right tenants.
Perfect. Another question on the financial target, the target to grow NAV 15% annually. Do you still have that target, or has that been replaced with the new property value target?
Oh, it’s still in place.
Okay. When it comes to an acquisition you announced a couple of months ago, the properties in northern Sweden, which you acquired from NP3, in the press release you said that you will access those properties in Q3. I’m wondering, could you say which month in Q3 it was? Was it October, November, or sorry, I mean, August or September or something like that?
The NP3 was in July.
In July. All right. One final question from me when it comes to the earnings capacity. If I look at the reported central admin, it’s a bit above the level which is indicated by the earnings capacity. Do you think it will continue to be so for a couple of quarters before you reach the central admin in the earnings capacity in the actual reported numbers?
Martin Lindqvist, CFO, Prisma Properties: We have 11 in central admin in the quarter, and we have 44 in central admin in the earnings capacity. I would say that’s in line.
That’s very in line. Yeah. Yeah. Okay. That’s right. Okay. Those were my questions.
Thank you.
Conference Moderator: As a reminder, if you wish to ask a question, please dial the pound key 5 on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Fredrik Mässing, CEO, Prisma Properties: Thank you for joining today’s presentation. We wish you all a great day and a nice weekend ahead.
Martin Lindqvist, CFO, Prisma Properties: Thank you.
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