Trianon is a real estate company that owns, manages, acquires and develops properties in Malmö, Skåne. The property portfolio encompass rental apartments (62%), retail (22%), office (5%), social infrastructure (10%). Rental apartments and social infrastructure properties account for 72%. Trianon divides it geographic exposure into City (30%), Limhamn/Slottsstaden (21%), Lindägen/Hermodsdal/Oxie (41%) and Rosengård (8%).
Trianon has ~900 apartments in its current project portfolio. The company guides that construction on most of these apartments will be started in 2020 and 2021. We see potential in development profits and an increase in CEPS from its current project portfolio. We argue that Trianon’s book value/sqm is low compared to rental apartment trading peers and residential prices in Malmö, which is why we argue that the company’s properties may be subject to a potential value uplift.
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 specific risks related to Trianon are ownership risk, geographical risk and dependency on certain individuals in the business.