Heimstaden Bostad - comment

Heimstaden Bostad AB reported FY25 results showing broad-based improvement across all key credit and operating metrics. Occupancy remained strong at 98.7%, rental growth reached 4.6%, and operating expenses declined by 6%, together driving record net operating income growth of 72.2%. Deleveraging via the privatisation programme continues; while progress trails the original targets on a book-value basis, higher-than-expected gross premiums mean that realised sales are ahead of the two-year privatisation plan established at the start of FY24. Somewhat unexpectedly, management made no commitment to dividend resumption, despite S&P-defined LTV expected at c.50–52% and interest coverage of approximately 1.8x at year-end—both supportive of the current credit rating. We expect pressure to build from equity partners and the Heimstaden AB board for dividends to recommence, with FY27 the most likely starting point.