Heimar hf.: Q1 Earning Preview

Core Insights - The company is experiencing strong demand for commercial real estate, with rental income increasing by 4.3% year-on-year, while Like-for-Like portfolio growth stands at 1.2% [1][8][9] Operations and Performance - Operating revenues for Q1 2025 reached ISK 3,686 million, with rental income contributing ISK 3,486 million [8] - EBITDA for the quarter was ISK 2.45 billion, reflecting a 3.2% increase compared to the previous year [8][9] - Net profit decreased to ISK 1.4 billion from ISK 3.9 billion in the same period last year [8] - The company’s investment properties are valued at ISK 194 billion, with a fair value change of approximately ISK 1.5 billion in Q1 [8][10] - The occupancy rate of the portfolio is around 97%, based on income as a percentage of full occupancy potential [10] Strategic Initiatives - The company has sold assets worth ISK 3.3 billion in 2024, achieving prices over 10% above book value, resulting in a nearly 2% decrease in total square meterage of the portfolio since the end of 2022 [2] - A refinancing strategy has been implemented, extending bank loan maturities from 2026 to 2031, with no debt maturities in 2025-2026 except for an ISK 1,240 million bond maturing in July [3][20] Investment and Growth - The company plans to continue its share buyback program as long as market value remains below book value plus deferred tax liabilities [5] - The acquisition of Gróska is expected to add approximately 25,000 square meters to the asset base [6] - The company is pursuing additional acquisitions, including Tryggvagata ehf., with an enterprise value of ISK 6,375 million [14] Market Position and Outlook - Heimar is positioned as an attractive investment opportunity, with nearly half of its revenues coming from public entities and listed companies [7] - The company has signed 24 lease agreements covering nearly 7,770 square meters in Q1, reflecting strong demand for commercial space [15] - Renovations and new developments are underway, including a new office building expected to attract tenants by summer 2025 [15][16] Sustainability Efforts - Sustainability initiatives are a priority, with ongoing BREEAM certifications for three properties and the installation of electric vehicle charging stations [17][18] Financial Position - The company maintains a strong financial position, with an equity ratio of 31.9% and a leverage ratio of 62.8% [19] - Cash and cash equivalents at the end of the period were ISK 5.1 billion, with access to undrawn credit facilities totaling ISK 4.7 billion [19]