NOI fell 7% q-o-q due to vacancies, up 14% y-o-y

Strong balance sheet allows for growth ambitions

Last reported P/EPRA NAV in line with past average

Long-term vacancy outlook unchanged
Q1 rental income was EUR 5.1m (4.5m) and the earnings of EUR 20.6m was EUR 0.4m below our FY’21e. The industry’s highest surplus ratio remains above 90%, and NOI was EUR 4.6m (+14% y-o-y). Recurring pre-tax profit was EUR 2.5m (+8%) but ~+14% adj. for an EO item. The seemingly dramatic uptick in vacancies – occupancy rate fell to 90.7% (92.6% Q4 and 95.7% Q1’20) – was 1) mainly from the ongoing Pine project in Riga, where tenants have moved out from smaller premises, and 2) slightly longer times to fill vacant premises. Eastnine’s long-term vacancy outlook is unchanged in Q1, at 4.5%, about the same as in H1’20. There is some risk that a more hesitant market could have a more sustained impact on vacancies, but that is not our main view. We reduce ‘21e RE somewhat but expect a gradual improvement back to 95% in Q1’22e.

Other investments drove asset uplifts
Property value revisions of EUR 1.5m, or 0.4% of the portfolio value, was below our forecast of 1.0% due to the higher vacancies. We lower ‘21e value changes to 2.6% as a result (4.0%). However, indexation was somewhat higher than forecast. Other investments (valued at ~EUR 104m) contributed EUR 2m in unrealized value changes. With other investments unleveraged, NIBD/total assets at 29.8% provides good firepower for acquisitions. Two days before the Q1 report, Eastnine announced EUR 36m in acquisitions in Vilnius (~66%) and Riga (~33%) with expected access before end of Q2. It was financed ~50/50 between bank loans and cash. Key tenants in the Riga property are Microsoft and CBRE. A EUR 3.2m dividend from other investments in Q2e explains the adj. CEPS deviation.

Fair share price range of SEK 105-178 on ‘21e P/EPRA NAV
On the last reported P/EPRA NAVPS, Eastnine is trading in line with its historical average and ~15% below core peers.
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