Q1 NOI up 16% y-o-y, to SEK 88m

EPRA NAVPS up 31% y-o-y, 22% for ‘21e

‘22e P/CEPS of 19.9x, vs. sector avg. of 19.2x

High transaction activity despite competition
With the signing of a six-year government office agreement in Q1 and the 6,000 sqm conversion from retail to community service property (CSP), Entré-Rolf (Torghuset) is now at full speed (est. completion in ’22). Upon completion, above 80% of Trianon’s properties will be classified as residential and CSP. In spite of a highly competitive transaction market, Trianon acquired an office property in central Malmö that will be converted into residential, and it expanded to a new municipality (Svedala) through a well-managed SEK 161m portfolio at SEK 11,500/sqm (we appraise TRIAN’s portfolio avg. cost at ~SEK 17,000/sqm). Total NOI improved to SEK 88m (+16% y-o-y and -5% vs. ABGSCe). SEK 2m in pandemic effects and a colder winter than last year explain the somewhat lower outcome than ABGSCe. Net leases of SEK 3.8m was the highest since Q2’19 (2.2m Q1’20).

Large value beat and improved financials in Q1
Property values grew by 3% (we expected 0.8%) in Q1, driven by a mix of refurbishments, newly signed leases, and yield compression. The yield requirement for the total portfolio is at 4.5% compared to residential peer Amasten at 4.1% (Q4’20). We raise FY’21e value revisions by 2pp, to 5.5%, after the ~2pp beat. The N12m cash yield of 6.5% (6.2-6.5% last 2 years) boosted by positive value changes resulted in the highest y-o-y growth (adj. for DPS) in EPRA NAVPS since ’17, at 31%, to SEK 109. A 4.5% + 3m Stibor bond of SEK 348m was exchanged with bank loans at much lower interest rates, which will show as a lower avg. interest rate in Q2e (2.1% currently).

Growth above the sector in terms of pace & consistency
After a flat share price from August ’19 to the start of April ’20, TRIAN is up 11% in the last month, which is 4% above the sector average of 19.2x at a ‘22e P/CE of 19.9x. The low operational risk assets of res
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