Investors House

Investors House announced yesterday (11 January) that its zoning plan for Neilikkatie 17 in Tikkurila, Vantaa has been confirmed. This will enable the construction of 10,000 m2 apartments and Investors House has signed in June 2021 a preliminary agreement for the plot sale. The estimated pre-tax impact of the deal is around EUR 3m and will be booked to the Q4 2022 result. The deal is expected to close during H1 2023 and the cash flow impact will be visible during 2023, according to the company. We have not included the deal in our estimates as the timing has been uncertain while we have estimated the impact to be EUR 2m eventually, so the financial impact of the deal is around EUR 1m higher than we have expected. The transaction will further strengthen Investors House’s strong financial position and based on our calculations enables M&A of over EUR 30m. However, given the recent market turbulence, we do not believe Investors House to be in a hurry to conduct acquisitions, which are likely to focus on the Service segment with the Real Estate segment’s relative share of Investors House’s NAV declining.

Investors House reported Q3 revenue of EUR 1.9m, 1% above our estimate, and net operating income (NOI) of EUR 0.9m, 47% above our EUR 0.6m forecast, as Real Estate posted clearly lower property costs, explained by a significantly increased share of net leases. Adjusted EBIT including associates was EUR 0.7m in Q3, 37% above our EUR 0.5m estimate. The Q3 EPRA result was EUR 0.7m and declined by 21% y/y, owing to divestments conducted in Q4 2021. The share of revenue from Services was 54%. Investors House has succeeded in streamlining its operations and balance sheet by distributing Ovaro shares and an extra dividend of EUR 1 per share, which has reduced the EPRA NRV discount further to 12%, from 40% at the end of 2021. The company is waiting for the market to stabilise before it enters new investments, as it sees further downside to valuations. Marketing material commissioned by Investors House.

Investors House reported Q3 revenues of EUR 1.9m, 1% above our estimate. Net operating income was EUR 0.9m, 47% above our EUR 0.6m estimate as Real Estate-segment NOI was stronger than we expected. Services-segment EBIT was weak and there are quarterly fluctuations in the segment depending on e.g. success fees. The Q3 reported operative result (EPRA) was EUR 0.7m, down 21% y/y and was a result of significant disposals in the Real Estate-segment in Q4 2021. Reported EBIT of EUR 0.3m included EUR -0.3m of fair value changes and EUR 0.1m of losses from disposals. The 2022 guidance is intact: the operating result to decline significantly owing to divestments conducted in Q4 2021. EPRA NRV was EUR 5.70 per share, down from EUR 6.46 at the end of Q2 2022. EPRA NRV declined 33% from EUR 8.55 a year ago as an extra dividend of EUR 1.0 was distributed. The Services business accounted for 54% of sales and Real Estate for 46%, same as a year ago. Equity ratio remained strong at 58%. Investors House trades at a 12% discount to EPRA NRV and the discount has declined slightly from 16% after the Q2 report. The company has a very strong cash position following Real Estate divestments and is patiently waiting for new investment opportunities. It appears that no new transactions will be made in the short-term as the CEO believes it will take time for prices and yields to stabilise in the market. We expect a slightly positive share price reaction on Investors House’s Q3 report.

Investors House reported Q2 revenue of EUR 1.9m, 5% below our estimate, mainly owing to Services. Net operating income (NOI) was EUR 0.6m, 29% below our EUR 0.9m forecast, as Real Estate posted elevated property costs. Adjusted EBIT including associates was EUR 0.5m, 37% below our EUR 0.8m estimate. The Q2 EPRA result was EUR 0.4m and declined by 48% y/ y owing to divestments conducted in Q4 2021. The share of revenue from Services was 57%. Investors House has succeeded in streamlining its operations and balance sheet by distributing Ovaro shares and an extra dividend of EUR 1 per share, which has reduced the EPRA NRV discount to 16% from 25% after the Q1 report and from 40% after the Q4 2021 report. Marketing material commissioned by Investors House.

Investors House reported Q2 revenues of EUR 1.9m, 5% below our estimate, mainly owing to weaker top line in Services while Real Estate top line was as we expected. Net operating income was EUR 0.6m, 29% below our EUR 0.9m estimate as Real Estate-segment NOI was weak, 26% below our estimate. Services-segment EBIT was 30% below our estimate. The Q2 operative result (EPRA) was EUR 0.4m, down 48% y/y and was a result of significant disposals in the Real Estate-segment in Q4 2021. Reported EBIT of EUR 0.5m included no fair value changes. The 2022 guidance is intact: the operating result to decline significantly owing to divestments conducted in Q4 2021. EPRA NRV was EUR 6.46 per share, down from EUR 6.74 at the end of Q1 2022. EPRA NRV declined 20% from EUR 8.11 a year ago as an extra dividend of EUR 1.0 was distributed. The Services business accounted for 57% of sales and Real Estate for 43% compared to 54% and 46% a year ago, respectively. Equity ratio remained strong at 55%. Investors House trades at a 16% discount to EPRA NRV and the discount has declined from 25% after the Q1 report. The company has a very strong cash position following recent Real Estate divestments and is patiently waiting for new investment opportunities. We expect a slightly negative share price reaction on Investors House’s Q2 report.

Investors House reported Q1 revenue of EUR 1.8m, 16% below our estimate, mainly owing to Services, while net operating income (NOI) was EUR 0.7m, 8% below our EUR 0.8m forecast. Adjusted EBIT including associates was EUR 0.6m, 16% below our EUR 0.7m estimate. The Q1 EPRA result was EUR 0.3m and improved by 187% y/ y. The share of revenue from Services was 56%. Investors House has succeeded in streamlining its operations and balance sheet by distributing Ovaro shares and an extra dividend of EUR 1 per share, which has reduced the EPRA NRV discount to 25% from 40% after the Q4 report. Marketing material commissioned by Investors House.

Investors House reported Q1 revenues of EUR 1.8m, 16% below our estimate, mainly owing to weaker top line in Services. Net operating income was EUR 0.7m, 8% below our EUR 0.8m estimate. The Q1 operative result (EPRA) was EUR 0.3m, up 187% y/y. Reported EBIT of EUR 0.4m included EUR -0.1m of negative fair value changes while we calculate that the adjusted EBIT was EUR 0.6m, 16% below our estimate, explained by lower EBIT of Services. The 2022 guidance is intact: the operating result to decline significantly owing to divestments conducted in Q4 2021. On divisional level, Real Estate top line was above our estimates while Services sales were clearly below. It is worth noting that quarterly result in Services fluctuates owing to e.g. transaction timing. EPRA NRV was EUR 6.74 per share, down from EUR 8.27 at the end of Q4 2021. EPRA NRV declined 15% from EUR 7.90 a year ago as an extra dividend of EUR 1.0 was distributed. The Services business accounted for 56% of sales and Real Estate for 44% compared to 58% and 42% a year ago, respectively. Solidity declined to 54% from 58% in Q4 2021 owing to the extra dividend. Investors House trades at a 25% discount to EPRA NRV and the discount has declined from 40% after the Q4 report. We expect a neutral share price reaction on Investors House’s Q1 report.

Investors House reported Q4 revenue of EUR 3.0m, in line with our estimate, while net operating income (NOI) was EUR 1.3m, 17% below our EUR 1.5m forecast. Adjusted EBIT including associates was EUR 2.0m, 20% above our EUR 1.7m estimate. However, there were net positive one-offs of EUR 0.3m, so when adjusting for these, EBIT was broadly in line with our estimate. The Q4 operating result was EUR 1.0m and improved by 102% y/y. The share of revenue from Services increased y/y to 81%, from 63%. The EUR 46m Kukkula JV in Jyväskylä should start to generate rental income in 2022. We estimate a EUR 0.7-0.8m positive impact on the associated companies line annually, although the long-term potential is more interesting from developing the area, mostly for residential use. With a growing pipeline and a growing Services business, we see good potential for further value creation. Marketing material commissioned by Investors House.

Investors House announced today that it will propose an extra dividend of EUR 1 (~16% dividend yield) for the EGM on 24 January. After recent asset divestments, Investors House has a cash position of EUR 23m, and EUR 23m of potential loan capacity. Additionally, EUR 2.8m will be used to repay debt and EUR 2.8m to be invested in equity stake in the Kukkula JV in Jyväskylä. This leaves Investors House with EUR 34m of potential investment ammo and in addition, Investors House has authorisation to issue 5m new shares if needed. At the CMD today, Investors House reiterated its 2023 strategy, which aims at a profitability development which enables an increasing dividend. The company will also focus on recurring revenues, which is supported by the fact that service income is now higher than income from property leases. In the coming years, Investors House will focus on development projects on its own or with partners, and on increasing property service business. Furthermore, Investors House will maintain its equity ratio above 45%; in Q3 2021 equity ratio was 49%. Investors House will provide a new guidance for 2022 in conjunction with the Q4 report on 3 March. The CMD does not trigger any estimate changes and we will update our numbers once the EUR 1 extra dividend proposal is approved by the EGM on 24 January.

On 25 November, Investors House announced the divestment of associated company IVH Kampus to Swedish real estate company Nyfosa for a total consideration of EUR 56.3m. Investors House owns 48% of IVH Kampus and will receive net proceeds of some EUR 15m from the divestment, taking its cash position to EUR 23m. We estimate a negative impact on Investors House's associates line of slightly more than EUR 1m annually, with a -21% impact on our adjusted EBIT for 2022E-23E. The company will use part of the funds to finance the EUR 46m Kukkula JV in Jyväskylä, Finland, of which it owns one-third. Although the negative EPS impact is ~30% in the near term, we believe the dividend growth story is intact and new investments will gradually contribute to earnings. We keep our fair value range unchanged at EUR 5.7-8.0 per share. Marketing material commissioned by Investors House.