Year-end Report 2025 - Successful year for John Mattson with growth targets exceeded

John Mattson reported a positive 2025 with rental revenue of SEK 673.0m (+4.7%), net operating income SEK 487.0m (+5.9%) and income from property management SEK 223.3m (SEK 2.95/sh, +14.6% per share). Net Reinstatement Value rose to SEK 7,629.1m (SEK 101.71/sh, +7.4% per share) and property values totaled SEK 14,539.5m; earnings after tax were SEK 397.2m (SEK 5.22/sh). The company recorded SEK 321.5m in property value gains, -SEK 37.4m on interest-rate derivatives, invested SEK 261.7m, divested properties at premiums and repurchased shares, and the board proposes a SEK 0.25/share dividend (SEK 18.75m). Management signals continued capital allocation toward new production in H1 2026 while noting geopolitical uncertainty but a strong balance sheet and long interest-rate duration.

Analysis

Market structure: John Mattson (JOMA.ST) benefits directly — NRV rose to SEK101.71/sh (+7.4% y/y) and surplus ratio hit 72.4%, signalling operational efficiency and capital-light value extraction (divestments at premium + buybacks). Losers are higher‑leverage, office-heavy Swedish REITs whose relative NAV sensitivity to rates and vacancy risk is higher; small local developers face stiffer competition as JOMA returns to selective new production in H1 2026. Supply/demand: modest restart of production (nursing home in Bromma) implies limited near-term new-stock pressure in Stockholm submarkets; rents should remain stable, supporting NOI growth of mid-single digits.

Risk assessment: Tail risks include a sharp Riksbank rate shock (+100bp) that re-prices valuations and mark-to-market losses on interest-rate derivatives (derivative hit was –SEK37.4m in 2025), or regulatory changes to elderly-care funding that hit the Bromma project. Immediate (days/weeks): share rerating from buybacks/dividend announcement; short-term (3–12 months): execution risk on new production and realized divestment gains; long-term: NAV sensitivity to cap rates (a 50bp cap‑rate move ~>3–5% NAV swing). Hidden dependencies: credit covenants, LTV and interest‑rate duration; catalyst watchlist: Riksbank decisions, Q1/Q2 2026 transaction closes, municipal approvals.

Trade implications: Direct: long JOMA.ST on valuation gap to NRV (buy threshold outlined below) sized 2–3% portfolio; pair: long JOMA vs short SBB.ST or CAST.ST (1–1.5% each) to express stock‑specific rerate. Options: if liquid, buy 9–15 month calls (OTM) sized 0.5–1% NAV to capture rerate or sell covered calls to boost yield if holding. Rotate capital toward Swedish residential REITs and away from office/retail names; take profits if market price reaches ≥100% NRV or if NRV growth falls below +3% y/y.

Contrarian angles: Consensus underestimates the durability of JOMA’s surplus ratio and capital return optionality — buybacks + dividend policy (30% target) are credible rerating levers if maintained. Overdone risks: small‑cap illiquidity could compress realized gains; new production restart could temporarily increase leverage and capex (watch LTV >55%). Historical parallel: Nordic midsize REITs have rerated after disciplined buybacks and visible dividend policy (post‑2020 cases); but absent a permanent improvement in cap‑rate trends, upside may be capped to NAV convergence rather than multiple expansion.

Key Decisions for Investors

• Establish a 2–3% long position in JOMA.ST if shares trade at or below 90% of NRV (SEK101.71 × 0.90 ≈ SEK91.5). Target exit at 100% NRV within 12 months (implied +10–15% upside); apply stop‑loss at 80% NRV (~SEK81.4) or reduce size by 50% if reported LTV rises above 55% on next quarter report.
• Implement a 1–1.5% pair trade: long JOMA.ST vs short SBB.ST (or CAST.ST) 1–1.5% to hedge market beta; close or rebalance if spread narrows to <5% or widens beyond 20% relative to entry within 6–12 months.
• If options are available/liquid, buy 9–15 month JOMA call options sized to 0.5–1% NAV (or Jan 2027 LEAP) to capture rerating from buybacks/dividend policy; alternatively, after establishing long, sell 3–6 month covered calls to harvest yield and reduce cost basis if implied vol >15%.
• Monitor two binary catalysts over next 60 days and act: (A) municipal approval/tender outcome for Bromma nursing home — if delayed >6 months, reduce long exposure by 50%; (B) Riksbank move: if policy rate rises ≥25bp unexpectedly, hedge 30–50% of position by buying 3–6 month puts or tightening stops.