* Solid Q3 report but...
* ...higher rates weigh on estimates
* 2027e P/CEPS of 11x vs coverage average of 13x
Q3 report in line with expectations
Fastpartner delivered solid Q3 results with all items largely in line with our and Factset consensus expectations. The average valuation yield was flat q-o-q at 5.2% and the average paid interest rate increased by 0.1pp q-o-q to 3.9%. We lower our CEPS estimates by ~5-6% for 2027e-28e, driven by higher market rates, counteracted somewhat by share buybacks completed in the quarter.
Solid momentum in lettings continues
Occupancy improved by ~2pp q-o-q to 91.0%, and 91.4% (adj. for projects). Management noted that they have fairly solid momentum in letting discussions, albeit these have tapered off since mid-September, when rates started to increase. During the quarter they signed two larger lettings 6,000 sqm office/logistics with Best Transport in Spånga and 4,300 sqm showroom with Autoropa on a 20-year lease in Frihamnen. We think this supports a positive stance, although data points on rent levels and investment volumes are scarce, making it difficult to assess the financial impact. And, as the company does not report net letting, visibility on top-line progression is low. Guidance on IFPM NTM was down by ~1% q-o-q to SEK 780m, driven by higher market rates we are ~4% below with an IFPM NTM of SEK 748m. Operationally, management wants to concentrate the portfolio on the larger cities in Sweden, aiming to complete some transactions before year-end, but not indicating a targeted volume.
2027e P/CEPS of 11x, coverage average of 13x
The share is trading at 2027e P/CEPS of 11x, below the average in our coverage of 13x and the average for office peers in our coverage at 12x. On '27e P/EPRA NRV, the share is trading at 0.4x compared to office peers at 0.7x.