The share

Castellum’s goal is for the company’s share over the long term to yield a competitive return in relation to risk, and to have a high level of liquidity. The risk level should be lower than the industry average. All actions are based on a long-term perspective and the company presents frequent, transparent, true and fair financial statements to shareholders, capital and credit markets, and the media that facilitate external assessment and evaluation of the company and the share.

Castellum has a goal of 10% yearly growth in income from property management. The outcome for 2020 was 7%, and over the last ten years the average yearly increase was 7%.

The Castellum share

Castellum is one of the major listed property companies in Sweden. Since 1997, the company’s share has been listed on Nasdaq Stockholm Large Cap under the symbol CAST. The Board intends to propose that the Annual General Meeting approve a dividend of SEK 6.90 per share, an increase for the 23rd consecutive year.

Castellum’s market capitalisation (i.e. the value of all shares outstanding in Castellum) amounted to SEK 57.9 billion (60.1), as of December 31, 2020. This corresponds to approximately 11% of the total market capitalisation, SEK 528 billion, of dedicated Swedish property companies. Furthermore, Castellum’s market capitalisation corresponds to approximately 1% of the total market capitalisation – approximately SEK 9,297 billion – of all listed Swedish companies.

The number of Castellum shares outstanding is 277,092,708 (273,201,166). In 2020, a total of 286 million (270) shares were traded, equivalent to an average of 1,137,000 shares (1,080,000) per trading day, corresponding on an annual basis to a turnover rate of 104% (99). The share turnover is based on statistics from Nasdaq Stockholm, Cboe CXE EU, Turquoise and Cboe BXE EU.

Proposed dividend

The Board intends to propose to the Annual General Meeting to approve a dividend of SEK 6.90 per share, an increase of 6% year-on-year. The dividend is proposed to be distributed to the shareholders in two equal payments of SEK 3.45 each. The payout ratio amounts to 56%, based on income from property management before tax.

If the Annual General Meeting approves the Board’s proposal, the record date for the first dividend will be Monday, 29 March 2021. This means that the final day for trading shares including the dividend is Thursday, 25 March 2021.

Record date for the second dividend is Monday, 27 September 2021, meaning that the final day for trading shares including the dividend is Thursday, 23 September 2021. The first dividend is planned for Thursday, 1 April 2021, and the second dividend is planned for Thursday, 30 September 2021.

The proposed dividend, equivalent to 56% of income from property management and 3% of the net asset value, exceeds Castellum’s objective of distributing at least 50% of income from property management, taking into account investment plans, consolidation needs, liquidity and financial position in general. Unrealised changes in value, positive or negative, are thus not included in the distributable earnings.

Net asset value

Net asset value describes the total equity that the company manages for its owners. On this basis, Castellum wants to generate stable return and growth at low financial risk. When assets and liabilities are measured at fair value, the net asset value can be calculated using shareholders’ equity in the balance sheet. It should be taken into account, however, that the effective tax is lower than the reported nominal tax rate, due in part to the possibility of selling properties in a tax-efficient manner, and in part to the time factor which means the tax is to be discounted.

Long-term net reinstatement value (EPRA NRV) can be calculated to SEK 214 per share (195). The share price at the end of the year was thus 98% (114) of the long-term net reinstatement value.

6.90 SEK

The Board intends to propose that the Annual General Meeting approve a dividend of SEK 6.90 per share, an increase for the 23rd consecutive year.

1.6%

During 2020, the total yield of the share, including the dividend of SEK 6.50, was –1.6%.

Why Castellum is of interest to investors

Castellum is one of Sweden’s largest property companies and has a long-term approach to strategy, growth in property value, income from property management and dividends.

Stable growth since the IPO in 1997

Since 1997, Castellum has enjoyed average annual growth in income from property management of 10% in SEK per share and dividend growth of 11% per year, corresponding to a payout ratio of 52%.

Strong balance sheet and low financial risk

Castellum’s goal is that the loan-to-value ratio should not permanently exceed 50%. At the end of 2020, it totalled 44%. The target interest coverage ratio is at least 200%. At the end of 2020, it totalled 530%.

Well diversified portfolio

The focus is on commer­cial properties with a contract port­folio of approxi­mately 5,700 customers from a variety of business categories re­flecting Swedish, Danish and Finnish business life. Risk diver­sification is thus broad, and the single largest contract re­pre­sents approximately 2%.

Local operations with focus on sustainability

Currently, Castellum is found in some 14 cities in Sweden, plus Copenhagen and Helsinki, with local organisations. The know-how to create sustainable properties is a prerequisite for having relevant, future-proof transactions.

Credibility through transparency

Castellum’s ambition is to provide up-to-date, accurate information about company performance that is fully adequate for investment decisions concerning the company’s shares.

Net asset value

 

 

MSEK

 

SEK/share

Equity according to the balance sheet

 

48,243

 

174

Reversed

 

 

 

 

Derivatives according to the balance sheet

 

1,132

 

4

Goodwill according to the balance sheet

 

–1,480

 

–5

Deferred tax according to the balance sheet

 

11,376

 

41

Net reinstatement value (EPRA NRV)

 

59,271

 

214

Deduction

 

 

 

 

Goodwill due to acquisition of United Spaces

 

–193

 

–1

Estimated real liability, deferred tax 4%1)

 

–2,285

 

–8

Net tangible assets (EPRA NTA)

 

56,793

 

205

Deduction

 

 

 

 

Derivatives according to above

 

–1,132

 

–4

Deferred tax

 

–9,091

 

–33

Net disposal value (EPRA NDV)

 

46,570

 

168

1.

The net estimated real deferred tax liability has been estimated at 4% based on a discount rate of 3%. Further, assessments have been made that tax loss carry forwards are realised with a nominal tax of 21.4%, and that the properties are realised in 50 years and where the entire portfolio is sold indirectly in corporate wrappers where the buyers’ tax discount is 7%.

Earnings

Income from property management per share, adjusted for tax attributable to income from property management (EPRA EPS) amounted to SEK 11.25 (10.44). Based on the share price, this resulted in a yield of 5.4% (4.7) corresponding to a multiple of 19 (21). This visible income from property management should be adjusted for long-term increase in value of the property portfolio and effective tax paid.

Earnings per share after tax amounted to SEK 20.52 (20.68) in 2020. Based on the share price, this yields a return of 9.8% (9.3) corresponding to a P/E ratio of 10 (11).

Total yield

Total yield reflects the development of the share price plus dividends paid during the period.

The Castellum share price at year end was SEK 208.70 (222.00), equivalent to a market capitalisation of SEK 57.9 billion (60.1) calculated on the number of shares outstanding. The total return on the share in 2020, including dividend of SEK 6.50, was –1.6% (38.9).

Growth, yield and financial risk

 

 

2020

 

3 yrs avg/yr

 

10 yrs avg/yr

Growth

 

 

 

 

 

 

Rental income SEK/share

 

4%

 

5%

 

3%

Income from prop. mgmt SEK/share

 

7%

 

10%

 

7%

Net profit for the year after tax SEK/share

 

neg.

 

neg.

 

7%

Dividend SEK/share

 

6%

 

9%

 

8%

Long-term EPRA NRV, SEK/share

 

10%

 

12%

 

10%

Property portfolio SEK/share

 

6%

 

8%

 

8%

Change in values on properties

 

3.9%

 

4.8%

 

3.3%

Yield

 

 

 

 

 

 

Return on long-term EPRA NRV

 

13.4%

 

15.6%

 

14.7%

Return on equity

 

13.1%

 

17.6%

 

16.7%

Return on total capital

 

7.5%

 

9.5%

 

8.3%

Total return per share (incl. dividend)

 

 

 

 

 

 

CASTELLUM

 

–1.6%

 

18.7%

 

14.4%

Nasdaq Stockholm (SIX Return)

 

14.8%

 

14.0%

 

11.4%

Real Estate Index Sweden (EPRA)

 

–4.3%

 

19.2%

 

16.0%

Real Estate Index Europe (EPRA)

 

–10.0%

 

2.5%

 

8.5%

Real Estate Index Eurozone (EPRA)

 

–7.4%

 

1.0%

 

8.0%

Real Estate Index Great Britain (EPRA)

 

–15.9%

 

–1.5%

 

7.1%

Financial risk

 

 

 

 

 

 

LTV ratio

 

44%

 

44%

 

48%

Interest coverage ratio

 

530%

 

486%

 

375%

Dividend yield

Dividend yield – the company’s dividend divided by the current share price – represents the yield shareholders receive in cash every year following the resolution by the Annual General Meeting. The key ratio thus expresses the relationship between two different “spheres”: Castellum’s performance in the form of dividends and the stock market’s pricing of the company. The valuation thus reflects the market’s view of the dividend yield required to achieve a total return that matches the required market yield for the Castellum share.

The proposed dividend of SEK 6.90 (6.50) corresponds to a dividend yield of 3.3% (2.9) based on the share price at the end of the year.

The Castellum share’s price trend and turnover from the IPO on 23 May 1997 until 31 December 2020

Net asset yield and earnings incl. long-term change in value

In companies managing real assets, such as property, the income from property management only reflects part –albeit a large part – of the overall result. The definition of a real asset is that its value is protected. This means that over time – and with proper maintenance – the real asset increases in value to compensate for inflation.

The net asset value (i.e. the denominator of the income/capital yield ratio) is adjusted annually in accordance with IFRS regulations for changes in value. In order to provide an accurate figure of the yield, the numerator – that is, the income – must be similarly adjusted. The income from property management reported must therefore be supplemented with a component of change in value as well as effective tax to produce an accurate view of income and yield.

One problem is that changes in value can vary greatly between years and quarters, thus leading to volatile results. For a long-term player with a stable cash flow and a properly compiled asset portfolio, the long-term change in value can be used to adjust the numerator in the equation.

Net asset yield and earnings incl. long-term change in value

 

 

 

 

Sensitivity analysis

 

 

 

 

–1%-point

 

–1%-point

Income from prop. mgmt 2020

 

3,380

 

3,380

 

3,380

Change in values on properties (10-year average)

 

3,141

 

2,189

 

4,092

As %

 

3.3%

 

2.3%

 

4.3%

Current tax, 9%

 

–356

 

–356

 

–356

Earnings after tax

 

6,165

 

5,213

 

7,116

Earnings, SEK/share

 

22.25

 

18.81

 

25.68

Return on EPRA NRV

 

11.6%

 

9.8%

 

13.4%

Earnings/share price

 

10.7%

 

9.0%

 

12.3%

P/E ratio

 

9

 

11

 

8

Shareholder value created

At the IPO in May 1997, Castellum’s asset portfolio amounted to approximately SEK 10 billion, income from property management to approximately MSEK 300 and shareholders’ equity to approximately SEK 4 billion. Since then, Castellum has created shareholder value by increasing shareholder’s equity to SEK 59 billion and dividends of approximately SEK 14.9 billion have also been distributed as of 31 December 2020. The asset portfolio grew over the same period to approximately SEK 103 billion at the end of 2020, while income from property management increased to SEK 3.3 billion.

Valuation

The investor’s required yield for a given share forms the basis for valuation over the long term. The required yield is based on the required yield for secure investments plus a risk premium for shares. The risk premium, and thus the required yield varies from share to share as well as over time. This is partly due to the risk investors perceive with a particular company, which they want to be compensated for: the higher the risk, the higher the required yield. Depending on the investor’s – or rather the investor collective’s – assessment of the share’s future total return (dividend yield plus change in share price) and risk level, an acceptable share price will emerge.

Over the short term, supply and demand for the share in question affect share price movements and set the current share price. Factors affecting price in the short term (apart from current investor assessments of the share’s long-term yield) include industry outlook, macroeconomic assessments, geopolitical events, allocation aspects, the potential yield on alternative investments, and regulations. Over the long term, the company’s actual performance in terms of total return and growth become crucial to share price development. As shown in the table on page 77, Castellum has achieved a total average yield of 14% per year over the past ten years, of which dividend yield represents approximately 4% and share price development around 10%, with a risk level for the Swedish property market that is moderate. The average dividend growth for the same period amounted to 9% per year.

Shareholders

Castellum had approximately 85,000 shareholders (57,000) at year end, an increase of roughly 49% compared with year-end 2019. The proportion of registered shares abroad amounted to 48% (55) at the end of the year. The largest owner constellations confirmed as of 31 December 2020, are shown in the table below.

Listed property companies

Source: Bloomberg, Holdings.se

Castellum’s property value and income from property management since the IPO, 1997

Investor Relations

Investor relations are primarily based on quarterly financial reports, press releases related to significant commercial events and presentations by Castellum. Presentations take place in connection with quarterly financial reports, visits from investors and analysts, and investor meetings both in Sweden and abroad. The large share of foreign shareholders means that there are extensive contacts with foreign investors. Additional market and financial information is provided on the Group’s website, www.castellum.com.

Acquisitions and transfers of own shares

The 2020 Annual General Meeting gave a mandate to the Board up untilthe next Annual General Meeting to acquire and transfer shares. The acquisitionmay include no more than the number of shares that corresponds at any time to 10% of the total number of shares outstanding. In May 2020, 170,203 shares were repurchased at an average price of SEK 165.12. On 31 December 2020, the company’s holding of treasury shares amounted to 170,203 shares corresponding to 0.06% of the number of shares registered. During the fourth quarter, a share issue in kind of 4,061,745 shares was carried out in conjunction with the acquisition of a property group in Helsinki, Finland.

Shareholders as of 31 December 2020

Shareholders

 

Number of shares, thousand

 

Percentage of votes/capital

Rutger Arnhult

 

49,400

 

17.8%

APG Asset Management

 

16,145

 

5.8%

BlackRock

 

13,503

 

4.9%

Vanguard

 

8,356

 

3.0%

Länsförsäkringar Fonder

 

7,884

 

2.8%

Handelsbanken Fonder & Liv

 

7,729

 

2.8%

AMF Pension & Fonder

 

6,991

 

2.5%

Norges Bank

 

6,565

 

2.4%

Lannebo Fonder

 

5,640

 

2.0%

Swedbank Robur Fonder

 

3,698

 

1.3%

Szombatfalvy-sfären

 

3,631

 

1.3%

Folksam

 

3,287

 

1.2%

Amundi

 

3,192

 

1.2%

Principal Global Investors

 

2,834

 

1.0%

State Street Global Advisors

 

2,793

 

1.0%

BNP Paribas Asset Management

 

2,405

 

0.9%

Cohen & Steers

 

2,269

 

0.8%

Third Swedish National Pension Fund

 

2,148

 

0.8%

SEB Fonder & Liv

 

2,114

 

0.8%

Nordea Fonder

 

2,056

 

0.7%

ACTIAM

 

1,816

 

0.7%

C WorldWide Asset Management

 

1,801

 

0.6%

AFA Försäkring

 

1,799

 

0.6%

Avanza Pension

 

1,593

 

0.6%

Castellum Board and Executive Management

 

177

 

0.1%

Other shareholders registered in Sweden

 

48,170

 

17.4%

Other shareholders registered abroad

 

69,097

 

25.0%

Total shares outstanding

 

277,093

 

100%

Source: Holdings by Modular Finance AB. Data collected and analysed from Euroclear, Morningstar, Finansinspektionen, Nasdaq and Millistream.

Shareholders distributed by country, 31 Dec 2020
Share price/net asset value
Yield, earnings per share
Dividend yield
Ten-year summary

 

 

2020

 

2019

 

2018

 

2017

 

2016

 

2015

 

2014

 

2013

 

2012

 

2011

Key metrics, SEK/share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income

 

21.94

 

21.31

 

20.41

 

18.97

 

19.33

 

20.12

 

20.23

 

19.81

 

18.74

 

17.80

Income from prop. mgmt

 

12.35

 

11.52

 

10.81

 

9.26

 

8.80

 

8.11

 

7.67

 

7.12

 

6.64

 

6.21

Net income for the year

 

20.52

 

20.68

 

27.28

 

21.51

 

21.20

 

15.24

 

6.41

 

9.03

 

7.79

 

3.76

Dividend (for 2020, proposed)

 

6.90

 

6.50

 

6.10

 

5.30

 

5.00

 

4.25

 

3.99

 

3.69

 

3.43

 

3.21

Property value

 

372

 

348

 

326

 

297

 

259

 

221

 

199

 

200

 

192

 

179

Valuation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from prop. mgmt per share/Share price

 

5.9%

 

5.2%

 

6.6%

 

6.7%

 

7.0%

 

7.7%

 

7.2%

 

8.2%

 

8.3%

 

8.4%

Share price/Income from prop. mgmt per share

 

17

 

19

 

15

 

15

 

14

 

13

 

14

 

12

 

12

 

12

Income from prop. mgmt after tax per share (EPRA EPS)/Share price

 

5.4%

 

4.7%

 

5.9%

 

6.1%

 

6.6%

 

7.5%

 

6.8%

 

8.0%

 

7.9%

 

8.2%

Dividend/Share price (dividend yield)

 

3.3%

 

2.9%

 

3.7%

 

3.8%

 

4.0%

 

4.1%

 

3.8%

 

4.2%

 

4.3%

 

4.3%

Price/Net reinstatement value (EPRA NRV) per share

 

98%

 

114%

 

93%

 

90%

 

94%

 

94%

 

107%

 

94%

 

92%

 

88%

The share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market capitalisation, MSEK

 

57,865

 

60,651

 

44,627

 

37,811

 

34,123

 

19,795

 

20,024

 

16,416

 

15,137

 

13,989

Total return, Castellum share

 

–1.6%

 

38.9

 

22.3%

 

15.4%

 

23.8%

 

2.3%

 

26.9%

 

13.1%

 

13.0%

 

–3.1%

Nasdaq Stockholm (SIX Return)

 

14.8%

 

35%

 

–4.4%

 

9.5%

 

9.6%

 

10.4%

 

15.8%

 

28.0%

 

16.5%

 

–13.5%

Real Estate Index Sweden (EPRA)

 

–4.3%

 

53.7%

 

15.3%

 

15.9%

 

7.2%

 

25.4%

 

37.1%

 

20.6%

 

16.2%

 

–13.0%

Real Estate Index Europe (EPRA)

 

–10.0%

 

29.7%

 

–7.7%

 

13.4%

 

–4.5%

 

18.8%

 

26.5%

 

10.1%

 

28.7%

 

–9.2%

Real Estate Index Eurozone (EPRA)

 

–7.4%

 

21.0%

 

–8.2%

 

17.7%

 

4.7%

 

17.4%

 

24.1%

 

5.6%

 

29.2%

 

–14.2%

Real Estate Index Great Britain (EPRA)

 

–15.9%

 

30.6%

 

–13.0%

 

12.7%

 

–8.5%

 

12.1%

 

22.5%

 

22.6%

 

29.9%

 

–8.1%

Payout ratio, income from prop. mgmt

 

56%

 

56%

 

56%

 

57%

 

57%

 

52%

 

52%

 

52%

 

52%

 

52%

Payout ratio, long-term EPRA NRV

 

3.2%

 

3.3%

 

3.5%

 

3.4%

 

3.8%

 

3.8%

 

4.0%

 

4.0%

 

4.0%

 

3.8%

Share Price, SEK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Closing share price, final trading day of the year

 

208.70

 

220.00

 

163.35

 

138.40

 

124.90

 

104.73

 

105.94

 

86.85

 

80.08

 

74.01

highest share price during the year

 

257

 

223.00

 

170.25

 

140.00

 

133.50

 

125.38

 

108.02

 

93.27

 

81.99

 

84.60

lowest share price during the year

 

124.20

 

160.65

 

121.20

 

114.80

 

97.87

 

97.96

 

85.94

 

76.14

 

66.20

 

56.61

average (highest/lowest per day)

 

195.44

 

188.32

 

148.05

 

126.59

 

117.62

 

109.18

 

97.49

 

82.82

 

75.73

 

76.95

Number of shares, thousand

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

average

 

273,628

 

273,201

 

273,201

 

273,201

 

234,540

 

164,000

 

164,000

 

164,000

 

164,000

 

164,000

shares

 

277,093

 

273,201

 

273,201

 

273,201

 

273,201

 

172,008

 

172,008

 

172,008

 

172,008

 

172,008

Number of shareholders

 

85,000

 

57,000

 

44,400

 

38,000

 

30,000

 

19,100

 

16,300

 

12,200

 

9,900

 

9,400

Percentage of shareholders registered abroad

 

48%

 

55%

 

55%

 

50%

 

51%

 

50%

 

52%

 

62%

 

60%

 

51%

Turnover, thousand shares per year

 

286,500

 

269,900

 

300,200

 

272,600

 

285,000

 

188,379

 

133,083

 

106,266

 

129,276

 

150,482

Turnover rate per year

 

104%

 

99%

 

110%

 

99%

 

103%

 

114%

 

81%

 

65%

 

79%

 

92%

EPRA measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPRA Earnings (Income from prop. mgmt after tax paid), MSEK

 

3,078

 

2,853

 

2,636

 

2,291

 

1,937

 

1,481

 

1,355

 

1,318

 

1,192

 

1,149

EPRA Earnings (EPS), SEK/share

 

11.25

 

10.44

 

9.65

 

8.39

 

8.26

 

7.84

 

7.17

 

6.97

 

6.31

 

6.08

Long-term net reinstatement value (EPRA NRV), MSEK

 

59,271

 

53,165

 

48,009

 

41,834

 

36,222

 

21,184

 

18,618

 

17,510

 

16,480

 

15,920

EPRA NRV, SEK/share

 

214

 

195

 

176

 

153

 

133

 

112

 

99

 

93

 

87

 

84

EPRA NTA, MSEK

 

56,793

 

51,029

 

46,118

 

39,811

 

35,666

 

20,668

 

18,295

 

17,128

 

1 6,267

 

15,778

EPRA NTA, SEK/share

 

205

 

187

 

169

 

146

 

131

 

109

 

97

 

91

 

86

 

83

EPRA NDV, MSEK

 

46,570

 

42,086

 

38,090

 

32,077

 

27,575

 

15,768

 

13,649

 

13,127

 

12,065

 

11,203

EPRA NDV, SEK/share

 

168

 

154

 

139

 

117

 

101

 

83

 

72

 

69

 

64

 

59

EPRA Vacancy rate

 

7%

 

7%

 

7%

 

9%

 

9%

 

10%

 

11%

 

12%

 

11%

 

11%

EPRA Yield

 

4.8%

 

5.0%

 

5.1%

 

5.3%

 

5.5%

 

6.1%

 

6.4%

 

6.6%

 

6.7%

 

6.7%

EPRA “Topped-up” Yield

 

4.9%

 

5.1%

 

5.2%

 

5.4%

 

5.6%

 

6.3%

 

6.6%

 

6.7%

 

6.9%

 

6.8%

EPRA cost ratio (including direct vacancy costs)

 

24%

 

26%

 

26%

 

28%

 

33%

 

29%

 

29%

 

30%

 

30%

 

30%

EPRA cost ratio (excluding direct vacancy costs)

 

23%

 

24%

 

24%

 

26%

 

30%

 

26%

 

26%

 

26%

 

27%

 

27%

EPRA, the European Public Real Estate Association, is an association for listed property owners and investors in Europe that sets standards for financial reporting such as earnings per share (EPRA EPS),net asset value (EPRA NAV) and triple net asset value (EPRA NNNAV), EPRA Vacancy, EPRA Yield and EPRA “Topped-up” Yield.