Reitir fasteignafélag hf. – Valuation as of 1 Jan 2025

Key assumptions

• Operating revenue grows by 8% in 2025 and thereafter in line with the increase in the Consumer Price Index, or 3.0% per year over the forecast period. The company’s management forecast is followed for the 2025 growth estimate.
• Operating expenses amount to 33% of operating revenues on average 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 3.5–3.8% 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.
• Income tax amounts to 20% per year during the forecast period. It is recognised as a tax liability, but no income tax will be paid during the forecast period due to prior-year tax losses and tax depreciation.
• No investments are assumed in investment properties during the forecast period.
• Dividends amount to 24.1% of the previous year’s total comprehensive income in 2025, and 75% from 2026 onward through the forecast period, assuming that the equity ratio remains around 32%.
• 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 121.2 as of 1 January 2025.