Nivika Fastigheter AB (publ) Year-End Report January – December 2025

Nivika reported continued profitable growth driven by acquisitions of high‑yield properties: Q4 rental income rose 13% to SEK 212m, net operating income increased 16% to SEK 151m and profit from property management climbed 16% to SEK 65m (Q4 EPS SEK 0.61). For full year 2025, rental income rose 11% to SEK 789m, NOI increased 15% to SEK 576m, profit from property management was SEK 256m and EPS was SEK 2.66, while comprehensive income rose to SEK 255m; the Board proposes raising the dividend to SEK 0.72 per share. The balance sheet shows a property portfolio of ~SEK 13.4bn, net LTV of 51.4% and high occupancy (residential 99%, commercial 95%), with management signaling a strategic shift toward higher‑yield assets.

Analysis

Market structure: Nivika’s shift to higher‑yield assets (NOI +15% y/y, rental income +11% y/y) benefits acquisitive regional landlords, local contractors and brokers while pressuring low‑yield, central‑city office specialists. Residential tightness (economic occupancy 99%) and stable commercial occupancy (95%) signal demand resilience in the West Swedish triangle, supporting cap‑rate compression for mid‑quality assets but increasing competition for high‑yield stock. Cross‑asset: rising LTV (51.4% from 46.9%) and a 2.0x interest coverage ratio make Nivika‑style credits more sensitive to SEK swap moves; a 100bp adverse move would materially widen spreads on covered bonds and high‑yield corporate paper and boost volatility in interest‑rate derivatives MTM.

Risk assessment: Tail risks include a rate shock (>150–200bp) that triggers >10% downward revaluation of properties, covenant breaches if LTV approaches ~60% or interest coverage falls <1.5x, and a large tenant default in industrial/warehouse segments. Immediate (days–weeks) risk is mark‑to‑market derivative volatility; short term (3–6 months) is integration risk from acquisitions and dividend sustainability; long term (12–36 months) is execution of the high‑yield pivot and concentration in the West triangle. Hidden dependencies: reliance on local economic growth, refinancing windows and access to SEK credit markets; catalysts include Riksbank moves, major tenant news, or large asset disposals.

Trade implications: Tactical long exposure to regional, residential‑heavy landlords (e.g., Castellum CASTE.ST, Balder BALD‑B.ST) over 6–12 months to capture NOI momentum; avoid/short office‑centric names (e.g., Fabege FABG.ST) as hybrid work risks persist. Use options to hedge funding risk: buy 12‑month puts 10–15% OTM on high‑leverage peers (SBB SBB.ST) or enter protective collars on long positions. Entry: within 2–6 weeks ahead of AGM/dividend capture; exit or trim if LTV >57% or swap rates move +100bp.

Contrarian angles: The market underprices concentration and execution risk from rapid portfolio repricing—dividend increases (SEK 0.72 vs 0.64) can mask cashflow pressure if capex or maintenance is deferred. Conversely, investor fear over leverage may be overdone given occupancy resilience; historical parallels (post‑rate peak rotations 2012, 2020) show regional residential landlords outperforming office names once rates stabilise. Unintended consequence: aggressive buying of high‑yield assets may compress future yields and reduce forward returns; watch acquisition valuation metrics closely (target acquisition cap‑rate >200bp spread to swap curve for safety).

Key Decisions for Investors

• Establish a 2–3% portfolio position long Castellum (CASTE.ST) and Balder (BALD‑B.ST) split 60/40, horizon 12 months to capture regional NOI growth; implement stop‑loss/trim if either company’s LTV >57% or interest coverage <1.6x.
• Initiate a 6–12 month pair trade: long CASTE.ST (1.0x) / short Fabege (FABG.ST) (1.0x) to express preference for regional/residential exposure over central‑office risk; target spread capture of 10–20% relative return, reassess at 6 months.
• Buy 12‑month puts 10–15% OTM on SBB (SBB.ST) equal to 1% portfolio notional as a hedge against sector funding shock; fund by selling 3‑month covered calls on CASTE.ST sized to reduce net premium by ~40–60%.
• Avoid direct exposure to small, highly leveraged Swedish REIT bonds; instead allocate new credit purchases to Swedish covered bonds or senior bank paper with maturities <=3 years and coupons >swap+120bp to limit roll/refinancing risk.
• Monitor three triggers before adding risk: (1) Riksbank policy decisions over next 30 days, (2) any public disclosure of acquisition cap‑rates or purchase price multiples from Nivika/peers, and (3) quarter‑end LTV movements—add only if swap curve stabilises or LTV falls below 50%.