Wallenstam AB
STO:WALL B
Wallenstam AB
Wallenstam AB, entrenched in the annals of Swedish real estate history, exudes a steadfast presence in the urban development arena, focusing primarily on residential and commercial properties. Founded in 1944, the company has etched its legacy by gradually transforming from a regional player into a significant force on the national stage. With its headquarters in Gothenburg, Wallenstam has strategically expanded its portfolio across major cities like Stockholm and Helsingborg. The company’s operational prowess lies in its ability to grasp demographic trends, allowing it to construct rental apartments that cater to the varying needs of urban residents. This versatility, paired with a commitment to sustainable practices, has forged a reputation for delivering high-quality living spaces intertwined with green energy initiatives.
Financially, Wallenstam’s strategy hinges on a cyclic model of construction, development, and property management. By retaining ownership of most of its developments, the company ensures a steady stream of rental income. This stream is augmented by strategic property sales, unlocking the embedded value within their expansive portfolio. Wallenstam also dives into the green energy sector, generating and selling renewable energy through wind power. This diversification not only aligns with the company’s sustainability ethos but also establishes an ancillary revenue source. Ultimately, their mastery in balancing development ambitions with robust financial management underscores Wallenstam’s enduring appeal in the real estate market.
Earnings Calls
In the first quarter of 2025, Wallenstam reported a 7% increase in net operating income (NOI), totaling SEK 570 million. This growth was driven by a SEK 52 million rise in rental income, with residential properties growing by 4% and commercial by 1.6%. The company successfully launched a new residential project, Nacka Grace, receiving accolades in 2024. Occupancy rates remain robust at 96% overall, with residential at 100%. Wallenstam also initiated energy-saving projects aimed at enhancing sustainability. Operating expenses rose by 10%, primarily due to rising management costs and energy tariffs, but the company continues to demonstrate steady demand and performance.
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Good morning, and welcome to the presentation of the first quarter of 2025 of Wallenstam. My name is Susann Linde, CFO and Head of Investor Relations here at Wallenstam.
So what had happened this first quarter then we have taken possession of the property in the picture as of last January this year, it's Sergel scraper in the CBD of Stockholm. So now we are also on the commercial market in Stockholm.
We also vacated 4 commercial properties in Garda and Hogsbo in Gothenburg as of February 3. We have also bought a land for future project in Stockholm, Stora Skondal close to Drevviken.
We have also continued to buy back shares during the quarter and have repurchased a total of 5 million additional shares. We now have an average price of total -- of the total 10 million shares that we have in our own holding of SEK 46.17 per share.
Our newly constructed residential property, Nacka Grace, which we completed during the quarter, has won an award for Sweden's finance new construction in 2024. It's great that it is being recognized as it is a very beautiful house.
So how does Wallenstam look today? Yes, almost like last quarter. Half of the residentials -- half of the rental value is from residentials and the other part from commercials. And we also keep to a good occupancy rate of, in total, 96% and 97% in economic occupancy rate, with residential being 100% let out and commercials 91% of occupancy rate. So we see a stable demand for our product.
We are focused on improving our energy classes and 60% of the rental value has energy Class 1A to C and is slightly lower towards the end of the year due to the fact that we have vacated properties during the quarter and the Sergel scraper has entered the holding. And there, we will take energy saving measures when we renovate that property.
We have also decided to start an energy-saving project of our properties in R cksta in Stockholm, which consists of approximately 900 apartments, which will also lead us improving Scope 2 which is also one of our climate goals.
So how about our income statement for the first quarter then? Our operation is going well, and we can see a continued improvement of the profit. Our net operating income for the quarter is increasing by 7%, and we recognized a surplus ratio of almost 74%. But let us go to next page to see more details.
As I said, our NOI increased by 7% by SEK 35 million. Of that, the rental income increased by SEK 52 million, which is 7% up, where the comparable holdings and the new construction almost contribute to half each. In the comparable holdings, the residential's grows on average 4% and the commercials by 1.6%.
During the quarter, we have a net of onetime compensations of SEK 12 million because of compensation for early relocation. The operating expenses are increased by almost 10%, SEK 18 million, where SEK 3 million of the increase is because of the completed new construction.
Regarding property maintenance, water and district heating, the expenses increases mainly because of increased property management than last year, but also because of tariff increases like earlier.
So in total, we recognized an NOI of plus SEK 35 million and amounts to SEK 570 million in total. So this first quarter, we have completed 343 rental apartments, and they are fully let.
The first project is Nacka Grace, where we have completed 66 apartments during the quarter. In a very popular -- it's a very popular project in Nacka, Nacka Grace, which I said won a price for the most beautiful new construction. And it was also here that we shut our year -- not year-end report this first quarter film for this quarter. This project is now completely completed, and all apartments are fully rented of total 169 apartments.
We have also started another completion in Nacka, and this concerns Alta Torg kvarter 1 where we have completed 106 apartments that we have now been let, and we have 85 apartments left to complete. All the commercial premises are fully let as of today.
We have also completed and let 12 apartments in Adellovet in Farsta. Here, we have 160 apartments left before it's completely completed. It is nicely located by Drevviken and the land that I said that we have bought this first quarter it's on the opposite side of Drevviken from this project.
Then we go on to Kallebacks in Gothenburg and our urban development project here. Here, we have completed and moved in, in 159 apartments in this Terrasser kvarter 6. We have 139 apartments left to complete after the summer.
If we look at the total income from property management and includes administration expenses and financial net, we recognized an increase by almost 16% and the total income of property management of SEK 314 million. The administration expenses has increased under total by SEK 10 million compared to previous year. The increase is mainly due to new IT systems and also increased personnel expenses.
The administration expenses here in the income from property management are also affected by a rebooking of project costs as a one-off adjustments of SEK 7 million. It was last year that we did that. So when we compare these 2 figures, we have SEK 80 million in difference here, but just SEK 10 million in total.
The financial net is improving by 14% despite a higher average debt by SEK 2.3 billion compared last year. The average interest rate during this first quarter was 2.54%, which is 70 basis points lower compared to the same period last year, but the average interest rate on the closing date amounts to 2.5%.
We haven't made any additional hedges during the quarter, but we have continued to hold SEK 22 billion in interest rate derivatives and have 68% of the loan volume interest rate hedged. We have an average interest rate fixation period of 47 months. The interest coverage ratio during the quarter is 2.8x.
If we move on to the profit, including value changes. If we start by commenting on the changes in value of our properties, we recognized a net value increase of SEK 123 million. It is mainly an effect of higher net operating income. We haven't adjusted any direct yield requirements during the quarter. And the value changes in financial instruments is amounting to plus SEK 100 million because of the increased loan interest rates during this first quarter.
So in total, we recognized a profit after tax of SEK 573 million compared to previous year of SEK 333 million, so plus of SEK 240 million compared to last year. We still have a stable balance sheet with an equity ratio of 44% and an LTV of 47%. Our investment properties has a value of SEK 68 billion. Properties in operation has a value of almost SEK 63 billion and projects in progress and land for future new construction amounts to SEK 5 billion.
As I said before, we haven't adjusted our direct yield requirements. The effective yield requirements are now 4.6% on average for commercials and 3.6% for residentials. The average has moved by 1 basis point compared to last quarter from 4.5 and 3.7 because of sales and completed constructions. 56% of the property value is in residential and the other part in commercials. Transactions have had a net positive impact on the value of the properties of SEK 1.8 billion.
In total this year, this first quarter, we have invested SEK 524 million in our new construction and also reconstruction, which is on the same level as last year for the same period.
And on next page, we can see our ongoing projects. We now have 1,177 apartments on production. We have started 2 projects during this first quarter consisting of 216 apartments. And here, you can see [ Hans ] starting 100 projects and this is Kallebacks that he starts in Gothenburg in our urban development project there, and we also have started this now kvarter 1 of total 177 apartments in total, and this will start to be completed in 2027.
We have also started the second phase here in -- on Sten Sture in CBD central Gothenburg. It's right to the opposite Scandinavium, The Arena, here in Gothenburg. We will renovate the existing part of the building and build 4 new floors on top of that by -- of 39 apartments and it will look like the first house you can see here in the picture. And it feels fantastic to add new apartments to such a central location here in Gothenburg.
And if we end this presentation with the balance sheet and the equity and interest-bearing liabilities, we have increased our interest-bearing liabilities by approximately SEK 2 billion during the quarter. They amount to SEK 32.5 billion. And we still have a strong balance sheet, as I said, with an equity of 44% and an LTV of 47%, and it has -- the LTV has increased by 1 basis points compared to last year -- last quarter. The NAV amounts to SEK 58.4 per share.
So that was what I plan to talk about this quarter. And if you have any questions, please e-mail me, and I will try to answer all your questions or you can also attend to the Swedish call that we have at the same time as we send this one. So please contact me if you have any questions, and thank you for listening.