Major SBB Cannot Be Ignored Short-Term; Upgrade to Hold

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Major SBB Cannot Be Ignored Short-Term; Upgrade to Hold

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negative revaluations cannot be ruled out (-16% in portfolio value since 2022). Over SEK24bn of

disposals achieved an average 2% premium to carrying value, but asset-level outcomes ranged

from -4% to +12%. Finally, SBBs are clearly EPS accretive and should support CAST’s share price

short term, with another SEK11bn still to come.

However, the office market remains “sluggish” (CEO) - Too many near-term disposals would

shrink the company, and we currently expect a -5% EPRA Earnings CAGR in 2025-28E (vs. +3.4%

per share), while the office market remains “sluggish”, CEO said. Q2 net leasing was slightly

positive at SEK28m, taking H1-26 to SEK110m (o/w SEK-466m of termination notices). However,

excluding the entire SEK140m Ericsson lease at Infinity, net leasing would have been SEK-30m. As

a result, economic vacancy rose to 12.5%, +170bp vs. Dec-25. In addition, lease extensions and

renegotiations represented 12% of annualized rents, with an average -1% rental uplift vs. flat in

FY-25.

Upgrade to Hold on major SBBs; PT raised to SEK125 - Buybacks representing 25% of Dec-25

share count cannot be ignored short-term. Yet once the SBB boost fades, focus should return to

remaining operating challenges: weak Swedish office demand and yield-expansion risk (+25bp last

month in Kista, to a 7% net yield). Returning proceeds is attractive, but suggests no better accretive

investments are currently available in the group's markets. 2027e credit metrics remain tight: 53.7%

EPRA LTV, 2.4x ICR, 11x ND/EBITDA. The shares trade at a 19% discount to NTA26e (vs. -25% for

Diversified and -50% for Offices) and on a 15x P/FFO26e (vs. 17x for Diversified and 12x for Offices).

Stephanie Dossmann * | Equity Analyst