Heimstaden Bostad - comment

Operationally, the business has continued to make progress with rental growth of 5.6% and occupancy increased to 98.4%. Additionally, driven by the rental growth and reduction in cost inflation, the NOI margin grew to 66% (from 61% last year). The Company has cancelled all dividends for FY23. Bostad’s privatisation program has commenced ahead of plan with initial sales (262 units) achieving a 32% premium to book. The Company continue to access the secured market, with the funding mix showing the expected decline in unsecured (from 44% to 34%) as Bank debt increases (from 26% to 36%). This was always expected in the short term, but we anticipate Heimstaden Bostad will need to access the unsecured market in FY24 or early FY25 at the latest. Portfolio valuation decline was only -1.6% driven by yield expansion in Sweden and Germany with other regions showing stability.