Quarterly Report • May 11, 2023
Quarterly Report
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Q1Interim Report January-March 2023
At the Orgelpipan 7 property on Klarabergsgatan, Stockholm, THE WORKS signed a lease for approximately 2,500 square metres of office space. THE WORKS provides cost-effective co-working in properties that are under development. Investigations are being carried out for future redevelopment and expansion for Orgelpipan 7.
The brand Stone Island signed a lease for a new store at the Packarhuset 4 property in Bibliotekstan. Concurrent with this new opening, the brand will vacate from its previous store in the area.
At the NK department store in Stockholm, the luxury brand Loewe reallocated to a larger department of approximately 140 square metres.
The Hööks brand opened a pop-up store of approximately 200 square metres in the Femman shopping centre in Gothenburg. Hööks offers a wide range of products for the outdoors as well as for equestrian sport sector aiming towards riders, horses and dogs.
The Hair & Beauty department of approximately 260 square metres opened on the street level at the NK department store in Gothenburg.
| Jan-Mar | Jan-Mar | Jan-Dec | |||
|---|---|---|---|---|---|
| SEK m | 2023 | 2022 | 2022 | ||
| Net revenue, property management, gross | 551 | 499 | 2,055 | ||
| Rent revenue, intra-Group | -49 | -50 | -200 | ||
| Net revenue, property management, net | 503 | 449 | 1,855 | ||
| Gross profit, property management | 331 | 288 | 1,235 | ||
| Unrealised changes in property value, investment properties | -906 | 227 | -209 | ||
| Operating profit | -575 | 517 | 1,089 | ||
| Net profit for the period | -499 | 380 | 722 | ||
| Fair value of properties, SEK bn | 48.9 | 49.2 | 49.5 | ||
| Net loan-to-value ratio, properties, % | 20.0 | 18.7 | 18.7 | ||
| Interest coverage ratio, multiple | 6.2 | 7.6 | 7.7 | ||
| EPRA vacancy rate, % | 5.4 | 6.7 | 4.0 | ||
| EPRA EPS, SEK | 1.25 | 1.15 | 5.07 | ||
| EPRA NRV per share, SEK | 195 | 199 | 201 |
Net revenue from property management excluding intra-Group rents of SEK 48.5 million (50.3) totalled SEK 502.9 million (448.7) for the period. The increase was attributable primarily to indexation as well as higher gross rents related to new leases and renegotiations. Since early 2022, net revenue was charged with vacant premises attributable to the entire Inom Vallgraven 12 block in Gothenburg being emptied for the Johanna project. Operating expenses amounted to SEK -172.2 million (-160.7). Operating expenses increased during the period, mainly related to higher energy costs. Gross profit was SEK 330.7 million (288.0) excluding intra-Group rents.
The sales-based rent supplement is reported during the fourth quarter.The sales-based rent supplement for the preceding year totalled SEK 12.0 million, of which the NK properties accounted for SEK 9.9 million. Apart from the sales-based rent supplement, there are no other material seasonal variations in rents.
The property management results for each business area are reported on page 9.
Other segments comprise NK Retail and other operations. Other operations consist of Cecil Coworking, NK e-commerce and the parking business in Parkaden.
Net revenue for NK Retail amounted to SEK 177.5 million (164.1). Costs excluding intra-Group rents of SEK -29.5 million (-33.7) were SEK -177.3 million (-162.9). Gross profit for NK Retail excluding intra-Group rental costs was SEK 0.2 million (1.2). Sales for NK Retail are impacted by seasonal variations, with the first quarter of the year normally being the weakest and the fourth quarter the strongest.
Net revenue for other operations amounted to SEK 34.3 million (31.0). Costs excluding intra-Group rents of SEK -19.0 million (-16.6) were SEK -20.9 million (-17.1). Gross profit excluding intra-Group rental costs was SEK 13.4 million (13.9).
For further information, see Segment Reporting on page 9.
Central administration totalled SEK -13.0 million (-12.8). Unrealised changes in value of investment properties totalled SEK -906.4 million (227.0). For further information, see pages 4-5.
Net financial income and expense totalled SEK -52.2 million (-38.0). Interest income was SEK 1.8 million (0.0). Borrowing costs totalled SEK -48.2 million (-32.4) and interest expenses for leasing, primarily ground rents, totalled SEK -5.8 million (-5.6). The increase in financial expenses for borrowing was largely attributable to a higher average interest rate. For further information, see pages 5-6.
The Group's tax for the period was SEK 127.9 million (-99.3), of which SEK -26.5 million (-19.1) in current tax and SEK 154.4 million (-80.2) in deferred tax. The change in deferred tax can be attributed to the period's negative unrealised changes in the value of the property holdings.
The consolidated net result was SEK -499.4 million (380.0). The decrease can be attributed to the period's negative unrealised changes in the value of the property holdings.
The fair value of the Hufvudstaden property holdings is based on an internal valuation, where classification takes place on level 3 according to IFRS 13. The assessed value as at March 31, 2023 was SEK 48,909 million (49,547 at year-end). The decrease can be attributed to negative unrealised changes in value of the property holdings but was partially offset by investments during the period. Rentable floor space totalled approximately 386,100 square metres (386,600 at year-end).
The total rental vacancy rate as at March 31, 2023 was 8.5 per cent (7.0 at year-end) and the total floor space vacancy rate was 13.0 per cent (11.2 at yearend). The rental vacancy rate, excluding current development projects (EPRA vacancy rate), totalled 5.4 per cent (4.0 at year-end). The increase in the rental vacancy rate, excluding current development projects, was primarily attributable to a couple of office tenants relocating. New leases have already been signed for several of these spaces.
Total investments for the period amounted to SEK 283.8 million (203.3).
At present, current and planned projects are worth approximately SEK 3 billion. Major projects are presented in the table below.
Reconstruction of Vildmannen 7 in Bibliotekstan is now in its final phase. Work with the façades is complete and the building is now weatherproof. Interior work with installations, bathrooms and plumbing systems as well as retail premises continues. Outside the building, the street environment is being restored. All office spaces of approximately 2,900 square metres have been leased to Cirio Law Firm. Several leases for retail spaces have been signed, including with Chanel Fragrance and Beauty Boutique and A.P.C., each of about 100 square metres. The new building will offer highly modern and efficient offices as well as attractive stores in a unique environment. Accession to premises will begin in July this year.
In the Hästhuvudet 13 property, at the Sveavägen and Kungsgatan intersection in Stockholm, a major redevelopment of approximately 3,100 square metres of office space and upgrade of technical installations is being undertaken. The project is expected to be completed around the turn of the year 2023/2024.
The extensive redevelopment and expansion of the Johanna project continues at the Inom Vallgraven 12 block in Gothenburg. During the quarter, work with planning, sheet piling, foundation and frame as well as new window openings was carried out. Environmental remediation and an archaeological investigation were completed. The first of two cranes was erected in the block.
The project comprises a total of approximately 44,000 square metres gross area and rentable floor space is expected to increase by approximately 11,600 square metres. Completion is expected late 2025 or early 2026.
At the end of each quarter, Hufvudstaden carries out an internal valuation of each individual property. The purpose of the valuation is to assess the fair value of the property holdings. To assure the quality of the valuation, external valuations of parts of the property holdings are obtained at least once a year. A continuous update is made during the year of the internal valuation of the properties in order to take account of purchases, sales and investments. Hufvudstaden also examines on a continuous basis whether there are other indications of changes in the fair value of the properties. These indications could take the form, for example, of major leases, terminations, and material changes in the yield requirements.
In the light of the above, the unrealised change in value of the property holdings for the period was SEK -906.4 million (227.0). The total value of the property holdings as at March 31, 2023 was SEK 48.9 billion, including investments for the period. The unrealised change in value is mainly due to higher yield requirements.
The average yield requirement increased by 4 basis points compared to the fourth quarter of 2022 and stood at 3.8 per cent at the above valuation (3.7 at year-end).
Valuation of the property holdings is carried out by assessing the fair value of each individual property. The valuation is made using a variation of the location price method, known as the net capitalisation method. The method involves setting the market's yield requirement in relation to the net operating income of the properties. In the case of other project properties and undeveloped land, the valuation is based on a completed building with a deduction of construction costs, as well as financial expenses and the cost of vacant space that arose during the construction period.
The yield requirement is based on information compiled about the market's yield requirement for actual purchases and sales of comparable properties in similar locations. If few or no deals have been concluded in the property's sub-area, transactions in the adjoining area are analysed. Even transactions that have yet to be finalised or other impacting factors provide guidance on market yield requirements.
The yield requirement can vary between different regions and different sub-areas within the regions.
| Project floor space (sq m) |
Of which added floor space |
Estimated investment1) |
Estimated completion |
||||
|---|---|---|---|---|---|---|---|
| City | Property | Status | Type of premises | (sq m) | (SEK m) | (year) | |
| Stockholm | Vildmannen 7 | Current | Office, retail & residential |
4,800 | 4,800 | 800 | 2023 |
| Stockholm | Hästhuvudet 13 | Current | Office | 3,100 | - | 135 | 2023/2024 |
| Stockholm | Orgelpipan 7 | Local planning | Office | - | - | - | - |
| Gothenburg | Inom Vallgraven 12 block |
Current | Office, retail & restaurant |
31,600 | 11,600 | 2,200 | 2025/2026 |
| Gothenburg | NK Gothenburg | Local planning | Office, retail & restaurant |
- | - | - | - |
1) Includes estimated costs for rent losses and financing that are continuously recognised in profit and loss as well as costs for evacuation. The investment in the Vildmannen 7 property includes extraordinary costs resulting from the fire in 2017.
Account is also taken of the type of property, the technical standard, the construction of the building, and major investment requirements. For leasehold properties, the calculation is based on a yield requirement that is 0.20 percentage points higher than for equivalent properties where the land is freehold. The net operating income of the properties is based on market rent revenue, the long-term rental vacancy rate, and normalised operating and maintenance costs. If there is greater uncertainty than normal, this is offset by increased direct yield requirements in the valuation.
When carrying out the valuation, the following yield requirement figures for office and retail properties have been applied:
| Stockholm | 3.4-3.8 per cent |
|---|---|
| Gothenburg | 4.3-4.6 per cent |
| Property holdings, average | 3.8 per cent |
1) Valuation date: March 31, 2023.
Fair value is an estimation of the probable sales price on the market at the time of the valuation. However, the price can only be set when a transaction has been completed. In the case of an external property valuation, a range is often given to indicate the degree of uncertainty surrounding the estimates of fair value. The value range is usually +/- 5 per cent but can vary depending, among other things, on the market situation, the technical standard of the property, and investment requirements.
Hufvudstaden's property holdings are valued at SEK 48.9 billion, with a degree of uncertainty of +/- 5 per cent, would mean that the estimated fair value varies by +/- SEK 2.4 billion. Below are the key factors that influence the valuation and the consequent impact on profit or loss before tax.
| Change, +/- | Impact on profit | |
|---|---|---|
| or loss before | ||
| tax, +/- | ||
| Rental revenue | SEK 100/sq m | SEK 1,060 m |
| Property costs | SEK 50/sq m | SEK 530 m |
| Rental vacancy rate | 1.0 percentage points | SEK 670 m |
| Yield requirement | 0.25 percentage points | SEK 3,350 m |
1)Valuation date: March 31, 2023.
Based on the valuation of the property holdings, the net reinstatement value (EPRA NRV) is SEK 39.4 billion or SEK 195 per share. Net tangible assets (EPRA NTA) were SEK 37.1 billion or SEK 183 per share following a deduction of estimated actual deferred tax liabilities. This assessment is made in the light of current tax legislation, which means that properties can be sold via a limited company without tax implications. The estimated actual deferred tax has been assumed to be 5 per cent.
| SEK m SEK/share | ||
|---|---|---|
| Equity | 30,216.4 | 149 |
| Reversal | ||
| Recognised deferred tax1) | 9,218.6 | 46 |
| EPRA NRV | 39,435.0 | 195 |
| Deduction | ||
| Intangible assets | -92.1 | -1 |
| Estimated actual deferred tax 5% | -2,237.5 | -11 |
| EPRA NTA | 37,105.4 | 183 |
| Reversal | ||
| Intangible assets as above | 92.1 | 1 |
| Recognised deferred tax1) less | ||
| estimated actual deferred tax | -6,981.1 | -35 |
| EPRA NDV | 30,216.4 | 149 |
1) Deferred tax according to the balance sheet related to investment properties and right-of-use assets attributable to ground rents.
The office rental market in Stockholm City remained stable, with good demand on mainly modern and flexible offices in the best locations. Vacancy levels remained within the normal range and in Stockholm's most attractive locations – Bibliotekstan, Norrmalmstorg/Hamngatan, and the Hötorget area – market rents for modern offices were estimated at SEK 6,700–9,200 per square metre and year, excluding the property tax supplement. Demand in the market for retail premises was stable and several leases were signed. The market rents for retail premises in prime commercial locations were in the range of SEK 11,000–24,000 per square metre and year, excluding the property tax supplement.
In the central sub-markets of Gothenburg, the demand was mainly for modern and flexible office premises. Vacancies were higher than the normal range and market rents in the most attractive locations were between SEK 3,200–4,000 per square metre and year, excluding the property tax supplement. For retail premises in central commercial locations, market rents were between SEK 3,000–13,000 per square metre per year, excluding the property tax supplement.
The Group's renegotiations for office premises have developed positively, while renegotiations for retail premises led to lower rents.
Hufvudstaden's financing requirements are met through a number of the major Nordic banks and the capital market. Total borrowings as at March 31, 2023 amounted to SEK 9,500 million (9,000 at year-end). Interest-bearing net debt was SEK 9,074 million (8,547 at year-end). In addition, the lease liability according to IFRS 16 amounted to SEK 714 million (712 at year-end), and total net debt was SEK 9,788 million (9,259 at year-end). In addition to outstanding loans, there are unutilised loan commitments amounting to SEK 5,000 million.
Hufvudstaden has an MTN programme totalling SEK 12,000 million, and a commercial paper programme amounting to SEK 3,000 million. The outstanding amount in bonds was SEK 6,000 million and there was SEK 1,000 million in commercial paper. Hufvudstaden ensures that at any point in time there are unutilised loan assurances to cover all outstanding commercial paper. As at March 31, 2023, cash and cash equivalents and unutilised loan commitments amounted to SEK 5,426 million, which covers all maturities for the next three years.
| Loan/facility type | Framework/ | Unutilised |
|---|---|---|
| facility volume | ||
| MTN programme | 12,000 | 6,000 |
| Comm. paper programme | 3,000 | 2,000 |
| Bank loans and commitments | 7,500 | 5,000 |
The average fixed interest period was 1.5 years (1.7 at year-end), the average capital tie-up period was 2.5 years (2.6 at year-end), and the average effective rate of interest was 2.5 per cent (1.9 at year-end) including, and 2.3 per cent (1.7 at year-end) excluding, the cost of unutilised loan commitments. The capital tie-up period for commercial paper loans was calculated based on the underlying loan commitments. To achieve the desired interest payment structure, borrowing takes place at both a fixed and variable rate of interest. Of the long-term borrowings, SEK 5,000 million carries a fixed rate of interest. Financial assets and liabilities are recognised at amortised cost, which essentially concurs with fair value, apart from the bond loans. For bond loans with a fixed rate of interest, the surplus value is SEK 346.1 million (397.3 at year-end). These values were calculated on the basis of level 2 in IFRS 13, which means that the value has been calculated based on official market listings.
| Maturity, | Credit | AER, | Proportion, |
|---|---|---|---|
| year | amount, | %1), 2) | % |
| SEK m | |||
| < 1 | 4,500 | 3.7 | 48 |
| 1 - 2 | 2,000 | 1.2 | 21 |
| 2 - 3 | 500 | 1.2 | 5 |
| 3 - 4 | 2,500 | 1.4 | 26 |
| Total | 9,500 | 2.5 | 100 |
1) The cost for unutilised loan commitments is allocated in the table in the period in which the credit matures.
2) The average effective rate excluding cost for unutilised loan commitments was 2.3 per cent.
| Maturity, | Bank | Bonds/ | Total | Unutilised |
|---|---|---|---|---|
| year | loans | Comm.paper | ||
| < 1 | 1,000 | 2,000 | 3,000 | 1,000 |
| 1 - 2 | - | 2,000 | 2,000 | 1,000 |
| 2 - 3 | 500 | 500 | 1,000 | 1,000 |
| 3 - 4 | - | 2,500 | 2,500 | 1,000 |
| 4 - 5 | 1,000 | - | 1,000 | 1,000 |
| Total | 2,500 | 7,000 | 9,500 | 5,000 |
A framework for green bonds was established in September 2021. The aim is to finance green properties and investments in projects promoting climate transition and sustainability. A total of SEK 1.5 billion has been issued in green bonds. During the previous year, Hufvudstaden signed green loan agreements that comply with the issuing institutions' framework for green financing. Green loan agreements amounted to SEK 1.5 billion and total green financing amounted to SEK 3.0 billion at the end of the period, corresponding to 32 per cent of total borrowing. The goal is to gradually increase the share of green financing.
Hufvudstaden Class A shares are listed on Nasdaq Stockholm. The company's Class C shares were delisted from Nasdaq Stockholm in January 2020. The company had 34,796 shareholders at the end of the period. The proportion of foreign ownership as at March 31, 2023 was 20.5 per cent (21.0 at year-end) of the total number of outstanding shares. The Class A share price as at March 31, 2023 was SEK 140.70, and total market capitalisation of all shares based on the Class A share price was SEK 29.7 billion.
At the 2001 Annual General Meeting, a conversion clause was added to Hufvudstaden's Articles of Association. Shareholders have the right at any time to request conversion of Class C shares into Class A shares. In the first quarter of 2023, no Class C shares were converted into Class A shares.
| Number of | Number of | Equity | Votes | |
|---|---|---|---|---|
| Share class | shares | votes | % | % |
| A (1 vote) | 203,000,110 | 203,000,110 | 96.1 | 19.7 |
| C (100 votes) | 8,271,823 | 827,182,300 | 3.9 | 80.3 |
| Total | 211,271,933 1,030,182,410 | 100.0 | 100.0 |
Treasury shares held at March 31, 2023 totalled 8,965,000 Class A shares, corresponding to 4.2 per cent of all shares issued and 0.9 per cent of the total number of votes. No buyback took place during the period or after the end of the reporting period. At the 2023 Annual General Meeting, the Board of Directors was granted renewed authorisation to acquire Class A shares up to 10 per cent of all issued shares and to transfer treasury shares held by the company.
| Other | |||
|---|---|---|---|
| Total number | Treasury | share | |
| Million shares | of shares | shares | holders |
| As at January 1, 2023 | 211.3 | 9.0 | 202.3 |
| Buyback | - | - | - |
| As at March 31, 2023 | 211.3 | 9.0 | 202.3 |
The Group is mainly exposed to financing, interest and credit risks and changes in the value of its property holdings.
The geopolitical security situation in Europe has deteriorated sharply due to the war in Ukraine following Russia's invasion. This has resulted in negative effects on the financial markets. The impact on the energy market was also large, with periodically significantly higher prices. Inflation is at its highest level for a long time, largely driven by higher prices for energy, food and materials. To combat inflation, several central banks have increased policy rates.
Other than the above, no other material risks or uncertainties have been identified apart from those described in the Annual and Sustainability Report 2022.
No material transactions with related parties took place during the period.
Hufvudstaden applies the EU-endorsed IFRS standards. This interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting, and applicable provisions of the Swedish Annual Accounts Act. Disclosures according to IAS 34.16A are presented in both the financial statements and in other parts of the interim report. Accounting policies and computation bases remained unchanged from the most recent Annual and Sustainability Report.
New and amended standards that took effect in 2023 have not had any significant effects on the Group's financial reporting.
Half-year Report January-June 2023 August 24, 2023 Interim Report January-September 2023 November 9, 2023 Year-end Report 2023 February 15, 2024 Annual and Sustainability Report 2023 February 2024 Annual General Meeting 2024 March 21, 2024
The information in this Interim Report is information that Hufvudstaden AB (publ) is obligated to publish under the EU Market Abuse Regulation and the Securities Market Act. The information was published through the auspices of the persons named below on May 11, 2023.
This information is also published on Hufvudstaden's website, www.hufvudstaden.se.
Questions can be answered by Anders Nygren, President, or Åsa Roslund, Vice President and CFO, on telephone +46 8 762 90 00.
| January March |
January March |
January December |
|
|---|---|---|---|
| GROUP, SEK m | 2023 | 2022 | 2022 |
| Net revenue1) | |||
| Property management, gross | 551.4 | 499.0 | 2,054.7 |
| Rent revenue, intra-Group | -48.5 | -50.3 | -199.8 |
| Property management, net | 502.9 | 448.7 | 1,854.9 |
| Other segments | 211.8 | 195.1 | 890.9 |
| 714.7 | 643.8 | 2,745.8 | |
| Property management expenses Maintenance |
-13.3 | -11.5 | -32.1 |
| -98.0 | -85.7 | -355.0 | |
| Operation and administration | -59.3 | -62.0 | -227.0 |
| Property tax Depreciation |
-1.6 | -1.5 | -5.9 |
| Property management expenses | -172.2 | -160.7 | -620.0 |
| Other segments, gross expenses | -246.7 | -230.3 | -972.0 |
| Rental expenses, intra-Group | 48.5 | 50.3 | 199.8 |
| Other segments, net expenses | -198.2 | -180.0 | -772.2 |
| Operating expenses | -370.4 | -340.7 | -1,392.2 |
| Gross profit | 344.3 | 303.1 | 1,353.6 |
| - of which Property management | 330.7 | 288.0 | 1,234.9 |
| - of which Other segments | 13.6 | 15.1 | 118.7 |
| Central administration | -13.0 | -12.8 | -55.7 |
| Operating profit before changes in value | 331.3 | 290.3 | 1,297.9 |
| Changes in value, investment properties | -906.4 | 227.0 | -209.1 |
| Operating profit or loss | -575.1 | 517.3 | 1,088.8 |
| Financial income and expense | -52.2 | -38.0 | -184.5 |
| Profit or loss before tax | -627.3 | 479.3 | 904.3 |
| Tax | 127.9 | -99.3 | -182.3 |
| Net profit or loss | -499.4 | 380.0 | 722.0 |
| Other comprehensive income | - | - | - |
| Total comprehensive income or loss for the | |||
| period | -499.4 | 380.0 | 722.0 |
| Average number of outstanding shares | 202,306,933 | 202,306,933 | 202,306,933 |
| Net earnings for the period per share before and | |||
| after dilution, SEK | -2.47 | 1.88 | 3.57 |
| 1) For a breakdown of net revenue, see table on page 10. |
| March 31, | March 31, | December 31, | |
|---|---|---|---|
| GROUP, SEK m | 2023 | 2022 | 2022 |
| Investment properties | 48,909.4 | 49,205.8 | 49,546.9 |
| Right of use assets | 713.5 | 713.7 | 711.0 |
| Other non-current assets | 167.9 | 155.0 | 165.4 |
| Total non-current assets | 49,790.8 | 50,074.5 | 50,423.3 |
| Current assets | 958.6 | 1,058.7 | 812.1 |
| Total assets | 50,749.4 | 51,133.2 | 51,235.4 |
| Equity | 30,216.4 | 30,920.0 | 31,262.0 |
| Non-current interest-bearing liabilities | 6,500.0 | 6,500.0 | 6,500.0 |
| Deferred tax liabilities | 9,098.8 | 9,242.3 | 9,253.2 |
| Non-current leasing liabilities | 706.1 | 705.4 | 702.8 |
| Other non-current liabilities | 102.7 | 92.7 | 104.0 |
| Other provisions | 31.3 | 32.8 | 31.7 |
| Total non-current liabilities | 16,438.9 | 16,573.2 | 16,591.7 |
| Current interest-bearing liabilities | 3,000.0 | 2,600.0 | 2,500.0 |
| Current leasing liabilities | 8.2 | 9.1 | 9.0 |
| Other liabilities | 1,085.9 | 1,030.9 | 872.7 |
| Total current liabilities | 4,094.1 | 3,640.0 | 3,381.7 |
| Total equity and liabilities | 50,749.4 | 51,133.2 | 51,235.4 |
| GROUP, SEK m | January March 2023 |
January March 2022 |
January December 2022 |
|---|---|---|---|
| Equity, opening balance | 31,262.0 | 31,066.0 | 31,066.0 |
| Total comprehensive income or loss for the period | -499.4 | 380.0 | 722.0 |
| Dividend | -546.2 | -526.0 | -526.0 |
| Equity, closing balance | 30,216.4 | 30,920.0 | 31,262.0 |
| January March |
January March |
January December |
|
|---|---|---|---|
| GROUP, SEK m | 2023 | 2022 | 2022 |
| Income before tax | -627.3 | 479.3 | 904.3 |
| Depreciation/impairments | 20.0 | 20.6 | 53.4 |
| Changes in value, investment properties | 906.4 | -227.0 | 209.1 |
| Other changes | -0.5 | 0.8 | -0.4 |
| Income tax paid | -26.5 | -19.1 | -91.2 |
| Cash flow from current operations | 272.1 | 254.6 | 1,075.2 |
| before changes in working capital | |||
| Increase/decrease in inventory | -4.7 | -5.3 | -69.9 |
| Increase/decrease in operating receivables | -174.3 | -199.3 | -35.2 |
| Increase/decrease in operating liabilities | 212.0 | 201.1 | 54.2 |
| Cash flow from current operations | 305.1 | 251.1 | 1,024.3 |
| Investments in properties | -268.9 | -189.2 | -966.3 |
| Investments in other non-current assets | -14.9 | -14.1 | -51.5 |
| Cash flow from investments | -283.8 | -203.3 | -1,017.8 |
| Loans raised | 1,500.0 | 800.0 | 2,800.0 |
| Amortisation of loan debt | -1,000.0 | -900.0 | -3,000.0 |
| Amortisation of leasing debt | -2.5 | -2.4 | -9.5 |
| Dividend paid | -546.2 | -526.0 | -526.0 |
| Cash flow from financing | -48.7 | -628.4 | -735.5 |
| Cash flow for the period | -27.4 | -580.6 | -729.0 |
| Cash and cash equivalents at the beginning of the period | 453.0 | 1,182.0 | 1,182.0 |
| Cash and cash equivalents at the period-end | 425.6 | 601.4 | 453.0 |
| Cash flow from current operations per share, SEK | 1.51 | 1.24 | 5.06 |
| Cash flow for the period per share, SEK | -0.14 | -2.87 | -3.60 |
The Group's operations are divided into three segments, property management, NK Retail and other operations. Other operations comprise of Cecil Coworking (Business Area Stockholm) and NK e-commerce and the parking business in Parkaden AB (Business Area NK). The segments are divided into the business areas, which are in line with the Company's operational control system.
| Business Area | Business Area | Business Area | Intra-Group | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Stockholm | NK | Gothenburg | elimination | Total | ||||||
| Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | ||
| GROUP, SEK m | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Property management | ||||||||||
| Net revenue | 347.3 | 307.9 | 121.1 | 116.7 | 83.0 | 74.4 | -48.5 | -50.3 | 502.9 | 448.7 |
| Property management expenses | -79.6 | -72.5 | -64.5 | -60.3 | -28.1 | -27.9 | -172.2 | -160.7 | ||
| Gross profit property | ||||||||||
| management | 267.7 | 235.4 | 56.6 | 56.4 | 54.9 | 46.5 | -48.5 | -50.3 | 330.7 | 288.0 |
| NK Retail | ||||||||||
| Net revenue | 177.5 | 164.1 | 177.5 | 164.1 | ||||||
| Expenses | -206.8 | -196.6 | 29.5 | 33.7 | -177.3 | -162.9 | ||||
| Gross profit NK Retail | -29.3 | -32.5 | 29.5 | 33.7 | 0.2 | 1.2 | ||||
| Other operations | ||||||||||
| Net revenue | 11.5 | 9.7 | 22.8 | 21.3 | 34.3 | 31.0 | ||||
| Expenses | -10.6 | -8.4 | -29.3 | -25.3 | 19.0 | 16.6 | -20.9 | -17.1 | ||
| Gross profit other operations | 0.9 | 1.3 | -6.5 | -4.0 | 19.0 | 16.6 | 13.4 | 13.9 | ||
| Central administration | -13.0 | -12.8 | ||||||||
| Changes in value, | ||||||||||
| investment properties | -906.4 | 227.0 | ||||||||
| Operating profit or loss | -575.1 | 517.3 | ||||||||
| Financial income and | ||||||||||
| expense | -52.2 | -38.0 | ||||||||
| Profit or loss before tax | -627.3 | 479.3 |
| Group | Parent Company | ||||||
|---|---|---|---|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Dec | Jan-Mar | Jan-Mar | Jan-Dec | ||
| SEK m | 2023 | 2022 | 2022 | 2023 | 2022 | 2022 | |
| Rent revenue | 505.7 | 453.4 | 1,870.8 | 379.8 | 338.3 | 1,397.2 | |
| Service revenue | 31.5 | 26.3 | 114.8 | 14.0 | 11.0 | 47.2 | |
| Sale of goods | 177.5 | 164.1 | 760.2 | - | - | - | |
| Total net revenue | 714.7 | 643.8 | 2,745.8 | 393.8 | 349.3 | 1,444.4 |
| GROUP | March 31, 2023 |
March 31, 2022 |
Full year 2022 |
|---|---|---|---|
| Property-related | |||
| Rentable floor space, 1,000 m2 | 386.1 | 386.4 | 386.6 |
| Rental vacancy rate, % | 8.5 | 9.7 | 7.0 |
| Floor space vacancy rate, % | 13.0 | 14.7 | 11.2 |
| Fair value, SEK bn | 48.9 | 49.2 | 49.5 |
| Surplus ratio, % | 68.8 | 67.8 | 69.8 |
| Net operating income, SEK m | 379.2 | 338.3 | 1,434.7 |
| Financial | |||
| Return on equity, % | 0.5 | 3.1 | 2.3 |
| Return on capital employed, % | 1.0 | 3.4 | 2.6 |
| Equity ratio, % | 60 | 60 | 61 |
| Interest coverage ratio, multiple | 6.2 | 7.6 | 7.7 |
| Debt/equity ratio, multiple | 0.3 | 0.3 | 0.3 |
| Net loan-to-value ratio, properties, % | 20.0 | 18.7 | 18.7 |
| Gross margin, % | 48.2 | 47.1 | 49.3 |
| Data per share | |||
| Net earnings per share for the period, SEK | -2.47 | 1.88 | 3.57 |
| Equity, SEK | 149.36 | 152.84 | 154.53 |
| Properties, fair value, SEK | 241.76 | 243.22 | 244.91 |
| Number of outstanding shares, 1,000 | 202,307 | 202,307 | 202,307 |
| Average number of outstanding shares, 1,000 | 202,307 | 202,307 | 202,307 |
| Number of issued shares, 1,000 | 211,272 | 211,272 | 211,272 |
| EPRA | |||
| EPRA Earnings (Earnings from property mgmt. after nom. tax), SEK m | 252 | 233 | 1,025 |
| EPRA EPS, SEK | 1.25 | 1.15 | 5.07 |
| EPRA NRV (Net reinstatement value), SEK m | 39,435.0 | 40,278.8 | 40,635.1 |
| EPRA NRV per share, SEK | 195 | 199 | 201 |
| EPRA NTA (Net tangible assets), SEK m | 37,105.4 | 37,913.9 | 38,270.8 |
| EPRA NTA per share, SEK | 183 | 187 | 189 |
| EPRA NDV (Net disposal value), SEK m | 30,216.4 | 30,920.0 | 31,262.0 |
| EPRA NDV per share, SEK | 149 | 153 | 155 |
| EPRA vacancy rate, % | 5.4 | 6.7 | 4.0 |
| Jan-Mar | Oct-Dec | Jul-Sep | Apr-Jun | Jan-Mar | Oct-Dec | Jul-Sep | Apr-Jun | |
|---|---|---|---|---|---|---|---|---|
| GROUP | 2023 | 2022 | 2022 | 2022 | 2022 | 2021 | 2021 | 2021 |
| Share price, series A share, SEK | 140.70 | 148.30 | 122.30 | 113.00 | 133.80 | 135.20 | 131.10 | 145.50 |
| Net revenue, SEK m | 715 | 746 | 672 | 684 | 644 | 703 | 632 | 635 |
| Return on equity, % | 0.5 | 2.4 | 4.2 | 4.0 | 3.1 | 9.8 | 5.3 | 4.5 |
| Return on equity, adjusted % | 2.8 | 2.9 | 2.9 | 2.9 | 2.6 | 3.0 | 3.3 | 3.4 |
| Equity ratio, % | 60 | 61 | 61 | 61 | 60 | 61 | 60 | 60 |
| Gross margin, % | 48.2 | 48.1 | 51.2 | 50.8 | 47.1 | 48.7 | 55.0 | 55.7 |
| Surplus ratio, % | 68.8 | 68.6 | 71.7 | 71.2 | 67.8 | 68.2 | 73.5 | 72.8 |
| Net operating income, SEK m | 379.2 | 370.3 | 364.9 | 361.2 | 338.3 | 333.3 | 363.2 | 360.1 |
| Net profit or loss per share for the | ||||||||
| period, SEK | -2.47 | -1.63 | 1.46 | 1.86 | 1.88 | 8.33 | 2.48 | 3.73 |
| Equity per share, SEK | 149.36 | 154.53 | 156.16 | 154.70 | 152.84 | 153.56 | 145.23 | 142.75 |
| EPRA EPS, SEK | 1.25 | 1.29 | 1.30 | 1.33 | 1.15 | 1.28 | 1.36 | 1.31 |
| EPRA NRV per share, SEK | 195 | 201 | 203 | 201 | 199 | 199 | 189 | 186 |
| Cash flow per share from current | ||||||||
| operations, SEK | 1.51 | 1.01 | 1.36 | 1.45 | 1.24 | 1.47 | 1.37 | 1.15 |
Hufvudstaden applies the European Securities and Markets Authority (ESMA) Guidelines on Alternative Performance Measures. According to these guidelines, alternative performance measures refer to a financial measurement of earnings performance, financial position, financial result or cash flow not defined according to IFRS or the Swedish Annual Accounts Act. Hufvudstaden is also a member of the European Public Real Estate Associations (EPRA) and reports financial key figures defined by EPRA. Below is the derivation of alternative performance measures. For definitions, see page 14.
| March 31, | March 31, | Full year | |
|---|---|---|---|
| SEK m Net asset value, see page 5. |
2023 | 2022 | 2022 |
| Net debt | |||
| Non-current interest-bearing liabilities | 6,500 | 6,500 | 6,500 |
| Non-current leasing liabilities | 706 | 705 | 703 |
| Current interest-bearing liabilities | 3,000 | 2,600 | 2,500 |
| Current lease liabilities | 8 | 9 | 9 |
| Cash and cash equivalents | -426 | -601 | -453 |
| Net debt | 9,788 | 9,213 | 9,259 |
| Equity ratio | |||
| Equity | 30,216 | 30,920 | 31,262 |
| Total assets | 50,749 | 51,133 | 51,235 |
| Equity ratio, % | 60 | 60 | 61 |
| Net loan-to-value ratio, properties | |||
| Net debt | 9,788 | 9,213 | 9,259 |
| Carrying amount, properties | 48,909 | 49,206 | 49,547 |
| Net loan-to-value ratio, properties, % | 20.0 | 18.7 | 18.7 |
| Interest coverage ratio | |||
| Profit or loss before tax | 210 2) | 1,236 2) | 904 |
| Reversal of changes in value | 906 | -227 | 209 |
| Financial expense1) | 216 2) | 152 2) | 166 |
| Total | 1,332 | 1,161 | 1,279 |
| Financial expense1) | 216 2) | 152 2) | 166 |
| Interest coverage ratio, multiple | 6.2 | 7.6 | 7.7 |
| EPRA Earnings (Earnings from property mgmt. after nom. tax) | |||
| Operating profit or loss before changes in value | 331 | 290 | 1,298 |
| Financial income and expense | -52 | -38 | -185 |
| Earnings from property management | 279 | 252 | 1,113 |
| Current tax, earnings from property management | -27 | -19 | -88 |
| EPRA Earnings (Earnings from property mgmt. after nom. tax) | 252 | 233 | 1,025 |
| Average number of outstanding shares, million | 202.3 | 202.3 | 202.3 |
| EPRA EPS, SEK | 1.25 | 1.15 | 5.07 |
| EPRA vacancy rate, % | |||
| Rental value for vacant space, in total | 205 | 214 | 155 |
| Rental value for vacant space, project | 76 | 66 | 68 |
| Total rental value | 2,417 | 2,220 | 2,214 |
| Vacancy rate, in total, % | 8.5 | 9.7 | 7.0 |
| Vacancy rate, project, % | 3.1 | 3.0 | 3.0 |
| EPRA vacancy rate, % | 5.4 | 6.7 | 4.0 |
1) Excluding fees for withdrawal of mortgage deeds.
2) Recalculated 12 months.
Net revenue amounted to SEK 393.8 million (349.3). The increase was attributable primarily to indexation as well as higher gross rents related to new leases and renegotiations. Since early 2022, net revenue was charged with vacant premises attributable to the entire Inom Vallgraven 12 block in Gothenburg being emptied for the Johanna project.
Operating expenses amounted to SEK -217.3 million (-195.0). Maintenance costs increased mainly due to larger development projects. Energy costs were also a factor. Gross profit was SEK 176.5 million (154.3). Net financial income and expense totalled SEK -44.3 million (-30.3).
Cash and cash equivalents at the end of the period amounted to SEK 419.0 million (559.4). Investments in properties and inventory amounted to SEK 172.4 million (90.0).
The Company is mainly exposed to financing, interest and credit risks. Other than what is stated for the Group on page 6, no other material risks or uncertainties have been identified apart from those described in the Annual and Sustainability Report 2022.
No material transactions with related parties took place during the period.
The Parent Company applies RFR 2 Accounting for Legal Entities and the Swedish Annual Accounts Act. This interim report has been prepared in accordance with Section 9 of the Annual Accounts Act, Interim Financial Statements. The accounting policies and basis for calculations remain unchanged from the Annual and Sustainability Report 2022.
| January March |
January March |
January December |
|
|---|---|---|---|
| PARENT COMPANY, SEK m | 2023 | 2022 | 2022 |
| Net revenue1) | 393.8 | 349.3 | 1,444.4 |
| Operating expenses | -217.3 | -195.0 | -835.3 |
| Gross profit | 176.5 | 154.3 | 609.1 |
| Central administration | -13.0 | -12.8 | -55.8 |
| Operating profit | 163.5 | 141.5 | 553.3 |
| Other financial income and expenses | -44.3 | -30.3 | 4.7 |
| Profit after financial items | 119.2 | 111.2 | 558.0 |
| Appropriations | - | - | -115.1 |
| Profit before tax | 119.2 | 111.2 | 442.9 |
| Tax | -24.6 | -23.1 | -91.3 |
| Profit for the period | 94.6 | 88.1 | 351.6 |
| Statement of comprehensive income, SEK m | |||
| Profit for the period | 94.6 | 88.1 | 351.6 |
| Other comprehensive income | - | - | - |
| Total comprehensive income for the period | 94.6 | 88.1 | 351.6 |
1) For a breakdown of net revenue, see table on page 10.
| March 31, | March 31, | December 31, | |
|---|---|---|---|
| PARENT COMPANY, SEK m | 2023 | 2022 | 2022 |
| Investment properties | 8,713.3 | 8,302.3 | 8,589.5 |
| Other non-current assets | 6,084.3 | 6,089.9 | 6,086.5 |
| Total non-current assets | 14,797.6 | 14,392.2 | 14,676.0 |
| Current assets | 900.1 | 1,003.8 | 771.6 |
| Total assets | 15,697.7 | 15,396.0 | 15,447.6 |
| Restricted equity | 1,978.7 | 1,978.7 | 1,978.7 |
| Non-restricted equity | 1,984.4 | 2,172.5 | 2,436.0 |
| Total equity | 3,963.1 | 4,151.2 | 4,414.7 |
| Untaxed reserves | 51.0 | 52.8 | 51.0 |
| Provisions | 912.0 | 909.5 | 911.5 |
| Non-current liabilities | 6,596.6 | 6,587.0 | 6,597.8 |
| Current liabilities | 4,175.0 | 3,695.5 | 3,472.6 |
| Total equity and liabilities | 15,697.7 | 15,396.0 | 15,447.6 |
Stockholm, May 11, 2023
Anders Nygren President
This Interim Report has not been the subject of an examination by the Company's auditor.
Capital employed. Total assets reduced by non-interestbearing liabilities and deferred tax liabilities.
Central administration. Costs for Group management and Group staff functions, costs for maintaining the Company's stock exchange listing, and other costs common to the Company.
Debt/equity ratio. Net debt in relation to equity at the end of the period.
EPRA. European Public Real Estate Association. An interest association for listed property companies in Europe.
EPRA Earnings - Earnings from property management after nominal tax. Operating profit or loss before items affecting comparability and changes in value minus financial income and expense and computed current tax, excluding a carryforward of unutilised tax losses. The tax deducted has been calculated with account taken of tax-deductible depreciation and investments.
EPRA NDV - Net Disposal Value. Shareholders' equity according to the balance sheet.
EPRA NRV - Net Reinstatement Value. Shareholders' equity according to the balance sheet after reversal of interest rate derivatives and deferred tax according to the balance sheet, excluding deferred tax on assets and/or liabilities other than investment properties and right-of-use assets attributable to ground rents.
EPRA NTA - Net Tangible Assets. Shareholders' equity according to the balance sheet after reversal of derivative instruments and deduction for intangible assets, adjusted for estimated actual deferred tax instead of nominal deferred tax.
Equity ratio. Equity at the end of the period in relation to total assets.
Gross margin. Gross profit in relation to net revenue.
Interest coverage ratio. Profit or loss after net financial income/expense, excluding items affecting comparability and changes in value, plus financial expense in relation to financial expense. In the interim accounts, net profit or loss after net financial income/expense, excluding items affecting comparability and changes in value, as well as financial expense, have been recalculated on a full-year basis with no adjustments for seasonal variations that normally arise in the operations.
Items affecting comparability. Items of a non-recurring nature and which make it difficult to compare between two given periods.
MTN programme. Medium Term Note is a bond programme with a term of 1-15 years.
Net debt. Interest-bearing liabilities including lease liabilities and decided dividend minus current investments and cash and cash equivalents.
Net loan-to-value ratio, properties. Net debt in relation to the carrying amount of properties.
Earnings from property management. Operating profit or loss before items affecting comparability and changes in value minus financial income and expense.
Return on capital employed. Profit or loss before tax plus financial expense in relation to average capital employed. In the interim accounts, the return has been recalculated on a full-year basis with no adjustments for seasonal variations that normally arise in the operations and with the exception of items affecting comparability and changes in value.
Return on equity. Net profit or loss in relation to average equity. In the interim accounts, the return has been recalculated on a full-year basis with no adjustments for seasonal variations that normally arise in the Company's operations and with the exception of items affecting comparability and changes in value.
Return on equity, adjusted. Net profit or loss, excluding changes in value, in relation to average equity. In the interim accounts, the return has been recalculated on a fullyear basis with no adjustments for seasonal variations that normally arise in operations.
Tax. Total tax for the Group comprises both current tax and deferred tax.
Average number of outstanding shares. Weighted average number of outstanding shares during a defined period.
Earnings per share. Net profit or loss for the period in relation to the average number of outstanding shares during the period.
EPRA EPS. EPRA Earnings in relation to the average number of outstanding shares during the period.
Equity per share. Equity in relation to the number of outstanding shares at the end of the period.
Annual rent. Gross rent at the end of the period, including supplements, calculated on an annual basis. Vacant premises are reported at the Estimated Rental Value (ERV).
Bibliotekstan. The area between Norrmalmstorg, Birger Jarlsgatan, Stureplan, and Norrlandsgatan, and which contains stores with high-class brand, restaurants and cafes.
EPRA vacancy rate. Estimated Market Rental Value (ERV) of vacant space divided by the ERV of all property holdings. Current development projects are excluded.
Fair value. The estimated market value of the properties.
Floor space vacancy rate. Vacant floor space in square metres in relation to the total rentable floor space.
Fredstan. The area around Fredsgatan between Brunnsparken and Trädgårdsföreningen, where the vision is to offer a unique range of stores, restaurants, and cultural events and facilities.
Market value, properties. The amount for which the properties could be exchanged between knowledgeable, willing parties in an arm's length transaction. In accounting terms, this is known as "fair value".
Net operating income. Net revenue from property management including intra-Group rent revenue less costs for property management.
Property tax supplement. Property tax payments received from tenants.
Rental vacancy rate. Estimated Market Rental Value (ERV) of vacant space divided by the ERV of all property holdings.
Surplus ratio. Net operating income as a percentage of net revenue from property management including intra-Group rent revenue.
In some cases, there has been rounding off, which means the tables and calculations do not always tally.
This document is in all respects a translation of the original Interim Report in Swedish. In the event of any differences between this translation and the Swedish original, the latter shall prevail.
Hufvudstaden was founded in 1915 and rapidly became one of the leading property companies in Sweden. Today it is one of the country's strongest brands in the property sector. The brand is well known and represents high quality, good service, and long-term thinking in the management and development of the Company's commercial properties in the most attractive business locations in Stockholm and Gothenburg.
Shaping the city of the future together, since 1915.
Hufvudstaden will be consistently perceived as, and prove to be, the most attractive property company in Sweden.
With properties in central Stockholm and central Gothenburg, Hufvudstaden will offer successful companies high-quality office and retail premises in attractive marketplaces.
Hufvudstaden will:
Customer focus. Hufvudstaden will work in close cooperation with its customers and contribute to continuously improving their business potential and competitiveness.
Quality. Systematic quality management will ensure the highest possible level of quality in all of the company's products and services.
Competence development. Systematic development of the knowledge and skills of personnel will be ensured, with focus on professional know-how and values.
Business development. Active business development and adaptation to the digitalization of society will create added value in the property holdings.
Sustainability. Hufvudstaden will work actively and in the long term to ensure financial, environmental and social sustainability.
NK 100, SE-111 77 Stockholm Visiting address: Regeringsgatan 38 Telephone: +46 8 762 90 00 Email: [email protected] Website: www.hufvudstaden.se Company registration number: 556012-8240 Registered office: Stockholm
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