Sell Rating on Castellum: Operational Weakness and Elevated Leverage Outweigh Discounted Valuation

In a report released yesterday, Bart Gysens from Morgan Stanley maintained a Sell rating on Castellum AB, with a price target of SEK120.00.

Bart Gysens has given his Sell rating due to a combination of factors tied to Castellum’s operational softness and capital structure. The latest results show falling earnings per share, slightly declining like-for-like net rental income, rising vacancy above 10%, and negative net leasing for the year, alongside a further write-down of the property portfolio, all of which point to weaker underlying momentum despite the headline discount to NAV.

At the same time, leverage remains high with loan-to-value now above 50% and portfolio yields that still look tight versus historical levels, keeping balance-sheet risk in focus. Management’s choice to cancel the cash dividend for 2025 and channel roughly SEK 1.2 billion into buybacks instead underscores the priority of capital allocation at a large discount, but also limits immediate income for shareholders, leading Gysens to see better risk‑reward elsewhere in European property names and to maintain an Underweight stance on Castellum.