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Eastnine

Eastnine

Eastnine is a Swedish long-term real estate manager of modern, sustainable and geographically concentrated office premises at prime locations in the Baltic capitals. ~85% of the property value is located in Vilnius, where it is the largest prime office owner. The remaining ~15% is in Riga, including a smaller development portfolio with expansion potential. 22% of its holdings comprises other investments, including 17% in a retail chain and 5% in a real estate fund. The Baltics are growing faster than the Nordics and the office market is picking up speed, with an increasing inflow of international companies. The region is also technically advanced and has an attractive tax regime.

Historical growth has come chiefly through acquisitions and we expect that to continue in ’21-’23. Recent years’ uptick in both supply and demand for Baltic prime office properties provides good opportunities for Eastnine to expand its market share. We believe its financial position supports expansive growth since 1) average financing costs are just 2.3%, and 2) other investments for ~20% of total assets are unleveraged and enable – at divestment – significant acquisition volumes without reaching harmful LTVs.

Real estate companies are subject to macro risks, supply of premises risk, supply of capital risk, debt availability risk, forex risk, regulatory risk, rental income risk, property cost risk, property value risk and ownership risk. We argue that the key specific risks related to Eastnine are forex risk and portfolio risk.

EURm 2020 2021e 2022e
Rental Income 19 22 22
Rental growth (%) 43,7 12,4 4
Net operating income 17 19 20
NOI margin (%) 91,2 90,4 90,5
CEPS Adj 0,47 0,55 0,59
CEPS Adj. growth (%) 85 17,7 6,5
DPS 0,3 0,34 0,38
EPRA NAVPS 14,6 15,88 17,22
EPS 1,1 0,48 0,51
EPS Adj 1,1 0,48 0,51
P/CEPS Adj. (x) 26,4 22,8 21,4
P/E Adj. (x) 11,2 26,3 24,8
P/EPRANAV (x) 0,85 0,79 0,73
Implicit yield (%) 5,8 5,9 6
div.yield (%) 2,4 2,7 3
LTV (%) 40 38 35,8
EURm 2020 2021e 2022e
Cash earnings 10 12 13
Tax rate (%) -12,5 -15,4 -15,7
Net investments 65 17 20
Acquisitions N/A N/A N/A
Other investments N/A N/A N/A
Divestments N/A N/A N/A
EPS 1,1 0,48 0,51
CEPS 0,47 0,55 0,59
CEPS adj. 0,47 0,55 0,59
Dividend per share Adj 0,3 0,34 0,38
Payout ratio of CEPS (%) 63,7 61,3 64,4
Rental growth (%) 43,7 12,4 4
NOI growth (%) 46,5 11,4 4,1
CEPS growth (%) 85 17,7 6,5
CEPS adj. growth (%) 85 17,7 6,5
Balance Sheet 2020 0 0
Properties 372 389 409
Deferred tax asset 0 0 0
Receivables 2 2 2
Cash and liquid assets 24 24 24
Other assets 104 104 104
Current liabilities 3 0 0
Total assets 502 519 539
Shareholders equity 310 325 341
Minority 0 0 0
Deferred tax 11 16 21
Interest bearing debt 179 178 177
Short-term debt 0 0 0
Derivatives 3 0 0
Total liabilities and equity 502 519 539
Other balance sheet related information 2020 0 0
Net IB debt 149 148 147
Rental area m2 (000) 121 121 121
Rent per m2 159 178 185
Equity ratio (%) 61,7 62,6 63,2
Loan to value (%) 40 38 35,8
Net loan to value (%) 54,5 52,1 49,3
ICR real estate 4 4 4
Interest rate on debt (%) 2 2 2
Occupancy rate (%) 92,6 92,6 92,6
NAV per share 0 0 0
BVPS 14,54 15,25 15,97
EPRA NAV per share 14,6 15,88 17,22
Valuation 2020 0 0
Shares outstanding adj. 21 21 21
Share price 11,33 12,58 12,58
Market cap. (m) 242 268 268
P/E 11,2 26,3 24,8
Net IB debt / share 7 7 7
P/CEPS 26,4 22,8 21,4
P/CEPS adj. 26,4 22,8 21,4
EV/EBIT 13,2 26,4 25,1
Implicit yield (%) 5,8 5,9 6
Yield on BV (%) 4,7 5 5
Dividend yield (%) 2,4 2,7 3
P/NAV 0 0 0
P/EPRA NAV 0,85 0,79 0,73
P/BVPS 0,85 0,83 0,79
EV/NOI 23,63 21,35 20,44
Rental income 19 22 22
Other income 0 0 0
Operating costs -2 -2 -2
Net operating income 17 19 20
NOI margin (%) 91,2 90,4 90,5
Value change realized 0 0 0
Value change unrealized 17 0 0
Administration costs -4 -4 -4
All other income & costs 0 0 0
EBIT 31 16 17
Net financial items -4 -4 -4
Value change derivatives -1 0 0
Pretax profit 27 12 13
Deferred profit tax -3 -2 -2
Current tax 0 0 0
Net profit 24 10 11
Minority interest 0 0 0
Net profit to shareholders 24 10 11
Other income statement related information 2020 2021 2022

Equity research

Read earlier research

Media

Eastnine - Interview with CEO Kestutis Sasnauskas following Q3 results

Main shareholders -

Main shareholders Share capital % Voting shares % Verified
Peter Elam Håkansson 27.2 % 27.2 % 31 Mar 2021
Arbona AB (publ) 10.0 % 10.0 % 31 Mar 2021
Keel Capital 10.0 % 10.0 % 13 Nov 2020
Lazard Asset Management 6.6 % 6.6 % 31 Aug 2020
ICA-handlarnas Förbund 4.5 % 4.5 % 31 Mar 2021
Patrik Brummer 3.7 % 3.7 % 31 Mar 2021
Norges Bank 2.9 % 2.9 % 31 Mar 2021
Kestutis Sasnauskas 2.1 % 2.1 % 31 Mar 2021
Nordnet Pensionsförsäkring 2.1 % 2.1 % 31 Mar 2021
Avanza Pension 2.0 % 2.0 % 31 Mar 2021
Source: Holdings by Modular Finance AB

Insider list -

Name Quantity Code Date
Kestutis Sasnauskas + 4 800 BUY 16 Dec 2020
Kestutis Sasnauskas + 4 000 BUY 16 Dec 2020
Lars Peter Elam Håkansson + 1 541 BUY 24 Nov 2020
Lars Peter Elam Håkansson + 733 BUY 24 Nov 2020
Lars Peter Elam Håkansson + 1 026 BUY 24 Nov 2020
Lars Peter Elam Håkansson + 1 000 BUY 20 Nov 2020
Lars Peter Elam Håkansson + 2 000 BUY 20 Nov 2020
Lars Peter Elam Håkansson + 1 364 BUY 19 Nov 2020
Ylva Westman Sarby + 1 275 BUY 9 Nov 2020
Ylva Westman Sarby + 1 BUY 9 Nov 2020

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