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.

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%.