JPM wary of refinancing risks, value declines - cuts Castellum to 'underweight'

Fastighets AB Balder

30/01/2023 09:54

**  J.P.Morgan says it is concerned about Castellum's
 CAST.ST  rising debt costs and capital declines and hence cuts
rating on the Swedish real estate firm to "underweight" from
"neutral," price target by 3.4% to SEK 140
    ** According to the brokerage, fundamental issues linked to
Castellum's balance sheet resilience remain, as it has one of
the highest loan-to-values (LTVs), shortest average debt
maturity, and significant debt refinancing coming up versus the
sector
    ** Castellum is also yet to report a fall in 2022 values
primarily driven by yield expansion, JPM points out
    ** It estimates fairly constructive cumulative capital value
declines of 11% in 2022-2023, adding this seems under-estimated
by the market
    ** JPM expects no dividend payments in 2023 and 2024, and
says the recent dividend cut announced "implies investors are
not getting paid to wait for the recovery to take place" 
    ** The broker sees the year-to-date share rally, driven by
declining yields, is overdone
    ** The stock is down over 5% at 0950 GMT
    ** Out of 13 analysts that cover the stock, five rate it
"strong buy"/"buy", four rate it "hold" and four rate it "sell"
 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))