Investors House

Investors House posted net operating income of EUR 0.8m for Q3, 12% below our EUR 0.9m estimate. EPRA earnings of EUR 0.9m were largely in line with our expectation. In conjunction with the Q3 report, Investors House announced it that it had exited the majority of its 20.4% holding in Ovaro in three transactions, using Ovaro shares as payment. The remaining Ovaro shares, approximately 740,000, will be distributed to Investors House shareholders in December. This should clarify the company's structure and we view it as a positive move given the difficulties the company has had with the transformation of Ovaro. Marketing material commissioned by Investors House.

At its CMD in Helsinki on 28 September 2020, Investors House presented its new strategy for 2020-23, which marks a clear shift from growth in the strategy period 2015-19 to increasing income stability and enabling continued dividend growth. Under its new strategy, Investors House aims for the majority of income to be generated by stable and recurring income – eg rental income, income from real estate funds and services – and a smaller part of income from 'lumpier' sources, eg own or co-owned project developments. The strong balance sheet, with a 59% equity ratio, should enable high and growing shareholder remuneration, and the company aims to maintain the equity ratio above 45% in the long term. It has an attractive pipeline of own development projects and new funds, which could be launched in the near future. Marketing material commissioned by Investors House.

Investors House reported net operating income of EUR 1.9m for Q2 2020, 6% below our estimate of EUR 2.0m. Adjusted EBIT of EUR 1.3m was 26% below our estimates, mainly because of higher costs than expected from growth initiatives and because of disappointing performance from the Service business. The biggest change as of Q3 is that IVH Kampus, of which Investors House owns 42%, will no longer be consolidated, but treated as an associated company; this has a negative impact on group sales and a positive impact on the equity ratio. The EUR ~50m residential project in Tikkurila is ongoing, but is estimated to account for over 60% of the group's total assets once completed. Marketing material commissioned by Investors House.

Investors House reported a disappointing Q1, but the negative earnings deviation was partly explained by higher-than-normal Q1 costs, including property tax. Investors House has been marginally impacted by COVID-19 but it is preparing for changes in the market environment. The EUR ~50m residential project in Tikkurila is ongoing and could be an important value driver for the company in the next few years. Marketing material commissioned by Investors House.

Investors House performed better operationally in Q4 than we expected, with Real Estate and Services both performing well. Associated companies (eg Ovaro) burdened reported numbers again. EPRA NAV declined, owing to the partial distribution of Ovaro shares to Investors House shareholders, but we believe this will be positive for valuation in the long term. A new fund – with a target size of EUR 150m focusing on real estate project loans – is in the planning phase. Investors House is also proceeding with its residential development project for Tikkurila in Vantaa, which we estimate should reach EUR 50m in size and could boost earnings starting in 2022.

Investors House's Q3 was operationally better than we estimated. Both the Real Estate and Service divisions posted an improvement in revenue and profitability. Q3 was quiet on the transaction front, but a EUR 14m office property transaction with significant residential development potential was announced after the end of the quarter. We have included the transaction in our estimates, which partly explains our significant sales and EBIT revisions. The distribution of Ovaro shares to Investors House shareholders, or possibly an alternative solution to the associated company, could be the next positive trigger. - Marketing material commissioned by Investors House

Investors House reported adjusted EBIT of EUR 1.35m for Q2 2019, which was better than our EUR 1.19m estimate. Net operating income of EUR 1.51m was also better than our EUR 1.39m estimate. The real estate operations are performing well while services' result declined from the exceptionally strong Q1. The company is proceeding with reshaping its operations and will distribute the 25.2% stake in Ovaro (former Orava REIT) to its shareholders. This measure takes away focus on Ovaro's problems and could help in reducing the 20% EPRA NAV discount in Investors House. Marketing material commissioned by Investors House.

Investors House reported adjusted EBIT of EUR 0.75m for Q1 2019, which was broadly in line with our forecast and Thomson Reuters consensus of EUR 0.8m. The company has already raised EUR 60m for its new real estate fund (targeted fund size EUR 60-100m) and the strategy execution is proceeding according to plan; Investors House now covers the full value chain of real estate investing, from the development properties (outsourced to external parties) to offering investment products such as its real estate funds (via its subsidiary Dividend House). Marketing material commissioned by Investors House.

Investors House reported Q4 EBIT of EUR 1.9m, well above our and Thomson Reuters' consensus of EUR 1.2m. The outperformance was spurred by the solid development of associated companies such as Ovaro. The company has successfully launched the new real estate fund and it has raised EUR 30m for the fund and another EUR 30m of commitments (targeted fund size is EUR 60-100m). We believe Investors House is in a good position to execute its strategy of providing a comprehensive offering for real estate investors. Marketing material commissioned by Investors House

Investors House hosted a capital markets day yesterday where the main topic was the current strategy of creating a comprehensive product and service offering (real estate business, various services, and a real estate fund). We believe that the strategy is proceeding according to plan and that the business model is becoming more diversified and more scalable. We make only small estimate revisions based on divestments and a slightly lower management fee assumption for the new fund (1.25% of gross asset value versus 1.50% earlier).