Heimar hf. – Valuation as of 1 Jan 2025

Key assumptions

• Rental revenue is projected to grow by an average of 3% per year during the forecast period, in line with the increase in the Consumer Price Index (CPI).
• Operating expenses are assumed to average 32% of operating income per year during the forecast period.
• The revaluation of investment properties corresponds to the increase in the CPI, 4% in 2025 and 3% per year thereafter throughout the forecast period.
• The average cost of interest-bearing debt is estimated at 3.5–4.0% in real (CPI-indexed) terms, equivalent to 6.5–7.5% nominal interest rates during the forecast period. Financing is assumed to be in ISK.
• The return on the book value of equity holdings in associates is projected at 15% per year during the forecast period.
• Income tax is assumed to be 20% per year during the forecast period and is calculated on profit excluding the share of results from associates. It is recognized as a tax liability, but no income tax payments are expected due to tax losses carried forward and tax depreciation.
• No investments are assumed in investment properties during the forecast period.
• Dividend payments amount to 9.1% of the previous year’s total comprehensive income in 2025 and 75% from 2026 onwards, assuming an equity ratio of around 33%.
• The terminal growth rate at the end of the forecast period is 3.0%, equivalent to zero real growth.
• See other general assumptions under “Valuation.”
• A nominal required return on equity of 10% is assumed when discounting the forecasted results for 2025–2034.

Results

• Based on the above assumptions, the estimated share value is ISK 45.5 as of 1 January 2025.