Last Update 03 Dec 25

FABG: Leadership Change And Urban Projects Will Shape Outlook Into 2026

Narrative update on Fabege analyst price target

Analysts have maintained their SEK 85.98 price target for Fabege, reflecting unchanged assumptions on discount rate, long term revenue growth, profit margin, and future P E multiples, as they continue to see the company fairly valued under current market conditions.

What's in the News

The board has appointed Bent Oustad, currently CEO of Norwegian Property ASA and a Fabege board member since 2024, as Fabege's new CEO effective December 1, 2025. The appointment highlights his leadership in complex urban development projects (Key Developments).
Fabege signed a seven year lease with Ruff for around 900 square meters at Drottninggatan 89 in central Stockholm. Ruff will open a modern indoor golf facility with mini golf, simulators, restaurant, and bar by December 2025, with renovation focused on reuse and recycling of materials (Key Developments).
Fabege is selling 7,800 square meters of development rights in part of the Paradiset 23 property in Stadshagen to Besqab for SEK 200 million in cash. The transfer is expected in early May 2026 and the transaction is expected to have an earnings effect of SEK minus 6 million before tax and SEK 22 million including reversal of deferred tax (Key Developments).
The sale at Paradiset 23 follows a new local development plan enabling demolition of an existing office block to make way for housing. Fabege continues developing the Paradiset 27 office project, Tegelterassen, with total lettable office space of about 36,000 square meters including potential extensions (Key Developments).
Fabege and Techarenan are deepening their partnership as Techarenan establishes its headquarters in Arenastaden, reinforcing the district's role as a fast growing business hub. The companies have also confirmed that Techarenan 2026 will again be held at Strawberry Arena on February 11 to 12, attracting global entrepreneurs, investors, and decision makers (Key Developments).

Valuation Changes

Fair Value Estimate remains unchanged at SEK 85.98, indicating no revision to the overall equity valuation.
The discount rate is stable at 10.12 percent, suggesting no change in perceived risk profile or required return.
Revenue growth edged down marginally from 2.74 percent to 2.74 percent, a negligible adjustment with no material impact on the model.
The net profit margin eased fractionally from 85.31 percent to 85.31 percent, reflecting only rounding-level refinements.
The future P/E ratio is essentially unchanged at about 11.16 times, signaling a consistent view of Fabege's long-term earnings multiple.

Prime Stockholm assets, sustainable property focus, and readiness for demand recovery position Fabege for higher occupancy, rental income, and NAV growth.
Strong balance sheet, green finance access, and digital initiatives enable financing flexibility, cost efficiency, and the attraction of premium tenants.
Heavy exposure to weak Stockholm office demand and falling asset values threatens revenue growth, margin stability, and heightens operational and financial risks.

Catalysts

About Fabege

A property company, primarily engages in the development, investment, and management of commercial premises in Sweden.What are the underlying business or industry changes driving this perspective?

Fabege's concentrated portfolio in prime Stockholm locations positions it to benefit from ongoing urban migration and population growth, supporting future increases in occupancy rates and rental income as office demand slowly recovers (impact: revenue, margins).
The company's strong commitment to sustainable, certified properties-including new energy initiatives and a refreshed green finance framework-makes its assets more attractive to ESG-conscious tenants and investors, which could enable higher occupancy, rental pricing power, and lower long-term vacancy (impact: revenue, NAV growth).
Limited new office supply in Stockholm combined with a development pipeline that's ready to be activated upon tenant pre-leasing ("build-to-suit" vs. speculation) positions Fabege to capture value-add and development gains from future growth in demand, supporting earnings and NAV expansion (impact: revenue, earnings, NAV).
Robust balance sheet, relatively conservative loan-to-value (43%) and strong access to capital markets-including green bonds-gives Fabege flexibility to refinance debt at better terms as interest rates potentially fall, reducing financing costs and supporting stable net margins and dividends (impact: net margins, earnings stability).
Ongoing digitalization and investment in smart property management (e.g., collaboration with Myrspoven to optimize energy use) not only supports cost efficiency but also helps attract technology-oriented, premium tenants seeking flexible workspaces, putting upward pressure on future rental income and improving operational margins (impact: revenue, net margins).

Fabege Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Fabege's revenue will grow by 1.8% annually over the next 3 years.
Analysts assume that profit margins will increase from 5.7% today to 81.2% in 3 years time.
Analysts expect earnings to reach SEK 3.0 billion (and earnings per share of SEK 7.1) by about September 2028, up from SEK 202.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.7x on those 2028 earnings, down from 121.1x today. This future PE is lower than the current PE for the GB Real Estate industry at 16.7x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.37%, as per the Simply Wall St company report.

Fabege Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistently weak demand in the Stockholm office market, as evidenced by rising vacancy rates and continued negative net lettings, signals structural challenges that can depress rental income and occupancy over the long term, directly impacting revenue and earnings.
Reliance on a concentrated portfolio in Stockholm offices increases vulnerability to local economic downturns and sector volatility, exposing Fabege to heightened regional risks that could reduce both rental revenue and asset valuations, pressuring margins.
The company is experiencing negative like-for-like rental growth (−3.3%) and unfavorable outcomes from recent renegotiations (−3% on extended contracts), indicating potential downward pressure on market rents and limited reversionary upside, negatively impacting future revenue growth and net margins.
Unrealized property value declines (−SEK 650 million) and persistent negative changes in asset values suggest ongoing valuation risk, which could erode equity, limit refinancing options, and increase debt service pressure, ultimately affecting net margins and earnings stability.
Despite a strong balance sheet and manageable loan-to-value ratios, the prolonged period of high vacancies, slow letting activity, and minimal new project starts reflect execution and absorption risks in development, risking delayed revenue recognition and compressing earnings if market conditions fail to recover as expected.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of SEK84.125 for Fabege based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK120.0, and the most bearish reporting a price target of just SEK61.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK3.7 billion, earnings will come to SEK3.0 billion, and it would be trading on a PE ratio of 10.7x, assuming you use a discount rate of 7.4%.
Given the current share price of SEK77.75, the analyst price target of SEK84.12 is 7.6% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

FABG: Leasing and Property Sale Will Shape Balanced Outlook Amid Changing Discount Rates