Annual Report • Feb 17, 2023
Annual Report
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AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industrial segment
Profit from property management for 2023, meaning profit before revaluations and tax, based on the current property portfolio, announced acquisitions and divestments and current exchange rates, is expected to amount to SEK 3,600 M.
| Selected key performance indicators1)2) | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 Jan-Dec |
2021 Jan-Dec |
2020 Jan-Dec |
2019 Jan-Dec |
2018 Jan-Dec |
2017 Jan-Dec |
|||
| Profit from property management per Class A and B share after dilution, SEK | 9.70 | 7.99 | 6.62 | 5.51 | 4.31 | 3.70 | ||
| Change compared with preceding year, % | 21 | 21 | 20 | 28 | 16 | 24 | ||
| Earnings per Class A and B share after dilution, SEK | 7.75 | 30.04 | 10.78 | 12.13 | 9.24 | 8.85 | ||
| Dividend per Class A and B share, SEK (2022 proposed) | 2.70 | 2.15 | 1.65 | 1.30 | 1.00 | 0.90 | ||
| Net debt/EBITDA, multiple | 7.1 | 5.8 | 6.4 | 6.6 | 7.4 | 8.1 | ||
| Interest coverage ratio, multiple | 7.1 | 6.5 | 5.7 | 4.9 | 4.2 | 3.7 | ||
| Debt ratio at the end of the period, % | 45 | 42 | 43 | 44 | 47 | 50 | ||
| Properties' market value at the end of period, SEK M | 52,682 | 46,067 | 37,548 | 32,625 | 29,024 | 23,771 | ||
| Yield, % | 5.8 | 6.0 | 6.3 | 6.4 | 6.8 | 6.9 |
1) Definitions of key performance indicators are provided on pages 31-32.
2) The calculation of alternative performance measures is provided on pages 33-34
Sagax's business concept is to invest in commercial properties, mainly in the warehouse and light industrial segments.
Sagax's goal is to generate attractive risk-adjusted return for the company's shareholders. This is to be achieved by accomplishing the following operational targets:
Sagax has the following financial targets:
The table and charts below illustrate the outcome for the past five years in relation to the financial targets:
| Financial targets | ||
|---|---|---|
| Outcome rolling 12 months |
Five-year average |
|
| Return on equity, measured over a five-year period, shall exceed 15% per year |
8% | 22% |
| Profit from property management per Class A and B share shall increase by a minimum of 15% per year |
21% | 21% |
Sagax has a long-term "buy and hold" approach to its investments. Sagax does not engage in property trading activities other than occasional sales of properties that no longer meet the company's investment criteria. Sagax's property development activities are limited and projects are carried out primarily after they have been let.
To achieve the company's operational and financial targets the company has adopted the following strategies.
Property acquisitions and investments in the existing portfolio aim to increase cash flow and diversify rental revenue, thereby reducing the company's operational and financial risks.
Sagax invests in commercial properties, mainly in the warehouse and light industrial segments. These property segments combine low rates of new construction with stable occupancy levels, generating stable cash flow and opportunities for long-term value creation. Sagax invests in add-on acquisitions and in existing properties.
In addition to direct investments Sagax invests in properties via joint ventures and associated companies. This enables the company to invest in markets that Sagax cannot reach successfully on its own. The indirect investments allow Sagax to team-up with specialised management teams and to leverage Sagax's general industry knowledge to develop attractive investments.
The financial structure of Sagax is designed with a clear focus on operating cash flow and interest coverage ratio. This is expected to create both good prerequisites for expansion and attractive return on equity.
The chart on page 4 shows that Sagax's cash flow from operating activities largely corresponds to its profit from property management. The difference is mainly due to joint ventures and associated companies, where dividends instead of profit from property management are recognised as cash flow from operating activities.
Sagax endeavours to have well-balanced fixed interest and loan maturity profiles to secure its operating cash flow. The company's strategy is to fund its interest-bearing debt mainly by issuing senior unsecured bonds in the EUR and SEK markets. Sagax also finances its operations via issuance of commercial paper in EUR and SEK. Sagax can also raise debt in the bank markets if favourable. Moody's Investors Service has rated Sagax Baa3"with "Positive outlook".
Profit from property management per Class A and B share
The company has three classes of shares: Class A, B and D common shares. The Class A and B shares participate fully in the company's profit or equity. The Class D participates in a dividend of up to SEK 2.00 per share and year. The aim with the Class D shares is to attract investor categories that value stable and regular dividends while limiting dilution for the holders of common shares of Class A and B.
Sagax's long-term perspective applies to the company's asset management strategy. Sagax endeavours to attract reputable and creditworthy tenants. The company prioritises long-term customer relationships even if this entails foregoing higher rental levels. This is regarded as being advantageous since it reduces the risk of vacancies, while leading to lower costs for letting premises and adapting premises to tenant needs.
Sagax invests primarily in regions experiencing stable population growth and that have diversified business activities. The risk of a decline in occupancy rates and rent levels due to a weaker rental market is regarded as low due to the stable population growth and the diversified business operations in these markets. Sagax's largest markets are Stockholm and Helsinki, which are regarded as offering favourable conditions for long-term growth.
The company mainly enters into net leases. This strategy protects the company's operating cash flow from increases in expenses resulting from changes in property taxes, consumption levels or rates for utilities.
The aim of Sagax's sustainability activities is to avoid short-term gains arising at the expense of negative longer-term consequences. The company's investing activities, management and funding are conducted to achieve the best possible long-term – meaning sustainable – outcome.
The planning, governance and monitoring of sustainability activities follow Sagax's organisational structure with well-defined delegation of responsibilities and authorities. Sustainability activities are based on applicable legislation and internal policies. Sagax has identified the following focus areas:
Heating premises and the use of electricity account for the largest share of properties' energy use. Sagax continuously takes action to reduce its energy consumption.
Sagax works actively to combat all forms of corruption, and has a whistle-blower function available on the Sagax website and a Code of Conduct for Suppliers.
Sagax's business model is characterised in all areas by a long-term approach. Short-term gains are subordinate to the company's long-term value creation. Accordingly, sustainability work is integrated into the business model.
The development of the company is dependent on highly skilled employees. For this reason, it is important that the company is an attractive employer that can attract and has the ability to retain highly skilled personnel. Sagax employees are expected to assume responsibility for their work duties and serve as good representatives of the company's values and culture.
The Ruutanakorventie 2 property in Pirkkala, just outside Tampere, Finland, was acquired in the fourth quarter. The property is fully let and encompasses 2,200 square metres of lettable area.
The profit/loss and cash flow items below refer to the January to December 2022 period. The comparative items refer to the year-earlier period. Amounts for the balance-sheet items and comparative figures refer to the position at the end of the period.
Profit from property management rose 19% to 3,339 M (2,805), of which SEK 766 M (713) from joint ventures and associated companies. The increase in profit from property management was attributable to property acquisitions and higher profit from property management in joint ventures and associated companies. Profit from property management per Class A and B share after dilution rose 21% to SEK 9.70 (7.99).
Changes in the value of properties increased profit by SEK 2,233 M (6,340), of which SEK 536 M (2,464) referred to changes in value from joint ventures and associated companies. The changes in value were primarily due to changed capitalisation rates and higher inflation expectations.
Revaluation of financial instruments had an impact on profit of SEK –2,025 M (1,966), of which SEK 315 M (108) from joint ventures and associated companies. The revaluation of listed shares accounted for SEK –2,611 M (1,700). The revaluation of financial instruments attributable to joint ventures amounted to SEK 123 M (134), while fixed income derivatives accounted for SEK 419 M (132) and other financial instruments for SEK 43 M (0).
Profit after tax for the year was SEK 2,718 M (9,807).
Rental revenue rose 19% to SEK 3,696 M (3,100). Revenue was primarily positively affected by property acquisitions. Revenue was also impacted positively by SEK 130 M compared with last year due to the EUR strengthening against the SEK.
During the year, rental revenue in comparable portfolios increased 4.4% (0.9) excluding currency effects. The segments with the largest increases were Spain with 8.9%, France 5.4% and Finland 4.9%.
Other revenue amounted to SEK 31 M (23).
Demand was healthy in all segments during the year. The economic occupancy rate amounted to 96% (96). During the year, the vacancy value rose SEK 220 M (134) due to tenants vacating premises and declined SEK 207 M (159) due to new lettings. Fixed-term rent discounts for new tenants increased SEK 1 M (2) to SEK 38 M (37) on an annual basis at the end of the year. Acquisitions and property divestments during the year impacted the vacancy value by a net SEK 14 M (–3). In total, the vacancy value increased SEK 36 M (decrease: 24) to SEK 171 M (135) at year end.
At the end of the year, notice of termination had been served for leases with a rental value of SEK 107 M (107), of which leases with notice of vacating the premises accounted for SEK 104 M (105) and leases with
Change in rental revenue in comparable portfolio, excluding currency effects, compared to the same period previous year
notice of renegotiation for SEK 3 M (2). Of the leases for which notice had been received, vacancies corresponding to a rental value of SEK 70 M will occur in 2023. Lettings of premises to tenants who have not yet occupied reduced the adjusted vacancy value by SEK 49 M (34). Net lettings corresponding to a rental value of SEK 43 M will occur in 2023. The adjusted vacancy value was SEK 229 M (207).
Operating and maintenance costs amounted to a total of SEK 430 M (324). Expenses for property tax increased to SEK 178 M (153). Other property expenses rose to SEK 87 M (73). The increase was primarily due to property acquisitions and price increases for heating and electricity. In comparable portfolios, property expenses increased 13% (4) excluding currency effects.
Central administration costs amounted to SEK 174 M (147), corresponding to 4.7% (4.7) of the year's rental revenue. The increase in costs is the consequence of a larger organisation.
At year end, Sagax had 94 (87) employees. Functions such as property caretaking and on-call operations are outsourced. Sagax has offices in Stockholm, Helsinki, Paris, Rotterdam, Barcelona and Frankfurt.
Profit from joint ventures and associated companies for the year amounted to SEK 1,375 M (2,718), of which profit from property management accounted for SEK 766 M (713), changes in the value of fixed income derivatives for SEK 315 M (108) and changes in the value of properties for SEK 536 M (2,464). Other items amounted to SEK 108 M (–9) and were primarily attributable to the acquisition of shares in Torslanda Property Investment AB at a price that was below the NAV. Profit from joint ventures and associated companies was charged with tax of SEK 351 M (558). Refer also to page 13 for additional information.
Signed leases and leases terminated
| Country | Total |
|---|---|
| Sweden | 38 |
| Finland | 28 |
| France | 12 |
| Netherlands | 9 |
| Spain | 6 |
| Germany | 1 |
| Total | 94 |
| 2022 | 2021 | |
|---|---|---|
| Amounts in SEK M | Jan-Dec | Jan-Dec |
| Opening vacancy for each year | 135 | 159 |
| Vacancies | 220 | 134 |
| New lettings | –207 | –159 |
| Change in discounts provided | 1 | 2 |
| Vacancy value, acquired properties | 19 | 11 |
| Vacancy value, sold properties | –5 | –14 |
| Change in exchange rates | 8 | 2 |
| Closing vacancy value | 171 | 135 |
| Terminated for renegotiation | 3 | 2 |
| Terminated lease, not vacated | 104 | 105 |
| Letting, not occupied | –49 | –34 |
| Adjusted closing vacancy value | 229 | 207 |
| New lettings | Vacancies | |||
|---|---|---|---|---|
| Year of occupancy and vacancy |
No. of leases |
Rental value, SEK M |
No. of leases |
Rental value, SEK M |
| 2023 | 24 | 43 | 72 | 70 |
| 2024 | 2 | 6 | 10 | 18 |
| 2025 | – | – | 3 | 6 |
| 2026 | – | – | 1 | 2 |
| 2027 | – | – | 1 | 8 |
| >2027 | – | – | – | – |
| Total | 26 | 49 | 87 | 104 |
| Segment | Rental value, SEK M |
Vacancy value, SEK M1) |
Economic vacancy rate1) |
Lettable area, sqm |
Vacant area, sqm |
Vacancy rate by area |
|---|---|---|---|---|---|---|
| Sweden | 991 | 73 | 7% | 905,000 | 70,000 | 8% |
| Finland | 1,711 | 56 | 3% | 1,393,000 | 53,000 | 4% |
| France | 651 | 18 | 3% | 610,000 | 18,000 | 3% |
| Netherlands | 518 | 15 | 3% | 597,000 | 13,000 | 2% |
| Spain | 203 | 3 | 2% | 298,000 | 8,000 | 3% |
| Germany | 108 | 7 | 6% | 85,000 | 12,000 | 15% |
| Rest of Europe | 12 | – | – | 6,000 | – | – |
| Total | 4,195 | 171 | 4% | 3,895,000 | 176,000 | 5% |
1) The vacancy value and economic vacancy rate take into account both vacancies and discounts provided.
Financial expenses, excluding the interest component of IFRS 16 Leases, increased to SEK –492 M (-419) due to the increase in interest-bearing liabilities and higher market interest rates impacting new borrowing. The average interest rate on interest-bearing liabilities was 1.7% (1.4) on the balance sheet date.
The interest component of IFRS 16 Leases was unchanged at SEK –28 M (–28). This expense primarily comprised site leaseholds and ground rents.
Financial income amounted to SEK 235 M (113) and mainly comprised dividends on shares in Nyfosa and interest income from bonds and other financial investments.
Sagax uses external valuations to determine the market value of its properties. As per the balance sheet date, 99% of the properties had been externally valued. The changes in value for the properties amounted to SEK 1,697 M (3,876), of which unrealised changes in value amounted to SEK 1,709 M (3,870). Of the unrealised changes in value, SEK 488 M (597) was attributable to management and SEK 1,221 M (3,273) related to general change in market value and transactions. The changes in the value were positive for the first three quarters of the year and turned negative in the fourth quarter, refer to the table below. The main reason for the decline in value in the fourth quarter was higher capitalisation rates that was to som extent offset, partly by increased future rental revenue due to a higher rate of inflation than previously assumed, and partly due to transactions. Refer also to page 12 for additional information.
| Unrealised changes in value | |
|---|---|
| Amounts in SEK M | Jan–Dec 2022 |
| New lettings/Renegotiations | 620 |
| Vacancies/Renegotiations | –132 |
| General change in market value and transactions | 1,221 |
| Total | 1,709 |
The change in value of financial instruments was SEK –2,340 M (1,858). The change in value attributable to fixed income derivatives amounted to SEK 104 M (24). Revaluation of listed shares resulted in an unrealised change in value of SEK –2,611 M (1,700), of which SEK –2,295 M (1,567) pertained to the holding in Nyfosa AB. The revaluation of financial instruments attributable to joint ventures amounted to SEK 123 M (134). Other financial instruments were revalued by SEK 43 M (0).
Sagax recognised a tax expense of SEK 586 M (736), of which the current tax expense was SEK 63 M (112) and the deferred tax expense amounted to SEK 523 M (624). The tax expense recognised in other comprehensive income amounted to SEK 42 M (6). The Group's deferred tax liabilities at year end amounted to SEK 3,779 M (3,087).
Cash flow from operating activities before changes in working capital amounted to SEK 3,015 M (2,346). Changes in working capital had an impact of SEK 212 M (32) on cash flow. Investing activities had an impact of SEK –5,902 M (–7,023) on cash flow, while cash flow from financing activities amounted to SEK 2,666 M (4,703). In total, cash and cash equivalents changed SEK –8 M (59) during the year.
The Parent Company, AB Sagax, is responsible for stock market issues, such as financial reporting and stock market information. Services between Group companies are charged on commercial terms and conditions and in accordance with market-based pricing. Intra-Group services comprise management services. The Parent Company's management fees from Group companies amounted to SEK 96 M (67).
| Amounts in SEK M | |
|---|---|
| First quarter | 870 |
| Second quarter | 996 |
| Third quarter | 664 |
| Fourth quarter | –821 |
| Total | 1,709 |
Profit from property management for 2023, meaning profit before revaluations and tax, based on the current property portfolio, announced acquisitions and divestments and current exchange rates, is expected to amount to SEK 3,600 M.
Current earnings capacity is reported in conjunction with interim reports and year-end reports.
The table below shows the company's earnings capacity on a 12-month basis on 1 January. It is important to note that this capacity cannot be compared with a forecast for the forthcoming 12 months because it does not contain assessments about, for example, future vacancies, the interest rate scenario, currency effects, rent trends or changes in value.
The rental value is based on contractual rental revenue on an annual basis, with addition for estimated market rents for vacant premises. Property expenses are based on actual outcomes over the past 12 months adjusted for the holding period. Central administration costs
| Amounts in SEK M | 1 Jan 2023 | 1 Jan 2022 |
|---|---|---|
| Rental value | 4,195 | 3,459 |
| Vacancy | –171 | –135 |
| Rental revenue | 4,024 | 3,324 |
| Property expenses | –704 | –563 |
| Net operating income | 3,319 | 2,761 |
| Central administration | –174 | –147 |
| Joint ventures and associated companies | 818 | 780 |
| Net financial items | –398 | –354 |
| Lease expenses | –28 | –28 |
| Profit from property management | 3,538 | 3,012 |
| Tax | –637 | –542 |
| Profit after tax | 2,902 | 2,470 |
| – of which, holders of Class D shares | 252 | 252 |
| – of which, holders of Class A and B shares | 2,650 | 2,218 |
| Run rate yield, % | 6.3 | 5.9 |
| Net debt/run rate EBITDA, multiple | 6.5 | 5.4 |
are based on actual outcomes over the past 12 months. Net financial items are calculated based on interest-bearing liabilities and assets on the balance sheet date. Expenses for interest-bearing liabilities are based on the Group's estimated average interest rate, plus financing costs allocated over time and costs attributable to credit facilities that were unutilised on the balance sheet date. Financial income attributable to the current finance lease asset that arose as a result of the sale of 36 properties in Spain to the tenant is included in the amounted of SEK 132 M in the calculation of net financial items as per 1 January 2023. Lease expenses essentially pertain to site leasehold fees that are based on actual outcomes over the past 12 months adjusted for the holding period. Dividends attributable to the company's holdings of listed shares were not taken into account in the earnings capacity. Tax is calculated at the standard tax rate of 18% (18). Translation from EUR took place at the closing rate of SEK 11.13 (10.23).
Shares in profit in joint ventures and associated companies are calculated in accordance with the same assumptions as for Sagax, taking into account the size of the participations.
On 31 December 2022, the property portfolio comprised 751 (673) properties with a lettable area of 3,895,000 square metres (3,759,000). At year end, the rental value and contractual annual rent amounted to SEK 4,195 M (3,459) and SEK 4,024 M (3,324), respectively. This corresponded to an economic occupancy rate of 96% (96).
During the year, Sagax invested SEK 3,917 M (5,483), of which property acquisitions accounted for SEK 3,202 M (4,824).
Properties were acquired with a total lettable area of 288,000 square metres. The largest investment referred to a portfolio of 65,000 square metres of lettable area in the France segment. A total of SEK 715 M (658) was invested in the existing property portfolio. Of this amount, SEK 269 M referred to property maintenance and SEK 232 M to new construction. In addition, SEK 158 M was invested in connection with new lettings and SEK 56 M in return for rent supplements. A total of SEK 74 M was invested in solar power facilities and energy-saving actions.
Six properties in Finland were divested during the year for a total consideration of SEK 59 M.
In addition, an agreement was signed to divest a portfolio of 36 properties in Spain with a total lettable area of 163,000 square metres. The propery portolio has been sold to Coop Group, which is also the tenant of the properties. The purchase price is EUR 180 M plus a fixed payment of EUR 10 M in additional purchase price or rental revenue at Sagax's discretion. Closing is expected to take place during 2023. Due to the divestment of the properties to the tenant and closing expecting to take place in 2023, the relevant investment properties have been reclassified as current finance leases in accordance with IFRS 16. These properties have been excluded from the description of the property portfolio and the calculation of property-related key figures as per the balance sheet date.
The yield for the year in relation to market value at the end of the period amounted to 5.8% (6.0). The total return on the property portfolio was 9.3% (15.3). During the period, the weighted inflation rate was 9.4% in the markets where Sagax is active. The total return adjusted for inflation amounted to –0.1% (10.7).
| Market value | Contractual | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Segment | SEK M | Share | SEK per sqm |
No. of properties |
Lettable area, sqm |
Vacant area, sqm |
Rental value, SEK M |
Economic occupancy rate |
annual rent, SEK M |
| Sweden | 14,782 | 28% | 16,300 | 114 | 905,000 | 70,000 | 991 | 93% | 919 |
| Finland | 17,876 | 34% | 12,800 | 218 | 1,393,000 | 53,000 | 1,711 | 97% | 1,655 |
| France | 7,971 | 15% | 13,100 | 195 | 610,000 | 18,000 | 651 | 97% | 634 |
| Netherlands | 7,383 | 14% | 12,400 | 129 | 597,000 | 13,000 | 518 | 97% | 503 |
| Spain | 3,221 | 6% | 10,800 | 84 | 298,000 | 8,000 | 203 | 98% | 200 |
| Germany | 1,305 | 2% | 15,400 | 9 | 85,000 | 12,000 | 108 | 94% | 101 |
| Rest of Europe | 143 | 0% | 22,200 | 2 | 6,000 | – | 12 | 100% | 12 |
| Total | 52,682 | 100% | 13,500 | 751 | 3,895,000 | 176,000 | 4,195 | 96% | 4,024 |
| Amounts in SEK M | Property acquisitions |
Existing portfolio |
Total | Share of total investments |
Divestments | Reclassification to finance leases |
Net investments |
|---|---|---|---|---|---|---|---|
| Sweden | 136 | 223 | 359 | 9% | – | – | 359 |
| Finland | 779 | 302 | 1,081 | 28% | –59 | – | 1,022 |
| France | 1,611 | 63 | 1,674 | 43% | – | – | 1,674 |
| Netherlands | 283 | 31 | 314 | 8% | – | – | 314 |
| Spain | 289 | 98 | 387 | 10% | – | –2,003 | –1,616 |
| Germany | 103 | – | 103 | 3% | – | – | 103 |
| Rest of Europe | – | – | – | – | – | – | – |
| Total | 3,202 | 715 | 3,917 | 100% | –59 | –2,003 | 1,855 |
Sagax has a diverse lease structure, which increases the company's opportunities to maintain an stable occupancy rate. To reduce the risk of lower rental revenue, Sagax endeavours to create long-term relationships with the company's existing tenants and to achieve favourable diversification in terms of the length and size of its leases.
Sagax's annual rent at year end was distributed between 2,245 leases (2,009). The table below presents the size of Sagax's leases in relation to the Group's annual rent at year end. The table shows that 2,237 leases (1,997) each had a rental value of less than 1% of the Group's annual rent. The total rental value for these leases accounted for 88% (81) of Sagax's annual rent. In addition, Sagax is party to seven leases (ten) with a rental value corresponding to 1–2% of the Group's annual rent. Combined, these leases total 10% (13) of Sagax's annual rent. Only one (two) of Sagax's leases had an annual rental value that accounted for more than 1% of the Group's annual rent. This lease represented 2% (6) of the Group's contractual annual rent.
Sagax's tenants operate in a variety of sectors. Companies in the manufacturing industry account for 14% (15%) of rental revenue. Automotiverelated operations, including sales, service and manufacturing and food-related operations account for 13% (12) and 11% (15) of rental revenue, respectively. Diverse tenant industries is considered to lower the risk of vacancies and rent losses. The main sectors are presented in the pie chart below.
According to Sagax's management strategy, the company strives to secure long-term leases and an even distribution of contract maturities over the years. This is deemed to reduce the risk of significant variations in the Group's occupancy rate. Leases representing 45% of the annual rent expire in or after 2027. 11–15% of annual rent expires each year between 2023 and 2026.
<1% 3,535 88 2,237 2 4 Total 4,024 100 2,245 2 5
| Lease terms | ||||
|---|---|---|---|---|
| Year of expiry | No. | Area, sqm | SEK M | Share |
| 2023 | 848 | 474,000 | 556 | 14% |
| 2024 | 424 | 527,000 | 591 | 15% |
| 2025 | 385 | 652,000 | 615 | 15% |
| 2026 | 192 | 409,000 | 447 | 11% |
| 2027 | 115 | 374,000 | 360 | 9% |
| >2027 | 281 | 1,283,000 | 1,454 | 36% |
| Total | 2,245 | 3,719,000 | 4,024 | 100% |
Sagax prepares its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). The company has decided to measure its properties at fair value according to Level 3 of IFRS 13 Fair Value Measurement.
Sagax uses external valuations to determine the market value of its properties. The valuations are carried out by independent valuation companies and updated on a quarterly basis.
The total market value of Sagax's 751 properties (673) was established at SEK 52,682 M (46,067) on 31 December 2022. Exchange rate fluctuations during the year resulted in property values denominated in EUR and DKK increasing by SEK 3,051 M (518).
The unrealised change in value for the year amounted to SEK 1,709 M (3,870) corresponding to a change in value of 3.4%. In the same period, weighted inflation rate was 9.4% in the markets where Sagax operates. Accordingly, the change in value, adjusted for inflation, amounted to –5.5%.
The unrealised change in value in the fourth quarter was SEK –821 M, corresponding to a change in value of –1.5%. Of the unrealised change in value, SEK 62 M was attributable to asset management and SEK –883 M was mainly related to higher capitalisation rates. The negative effects were partly offset by increased future rental revenue driven by a higher rate of inflation and transactions.
| SEK M | No. | |
|---|---|---|
| Property portfolio, 31 December 2021 | 46,067 | 673 |
| Acquisition of properties | 3,202 | 119 |
| Investments in the existing portfolio | 715 | |
| Divestment of properties | –59 | –6 |
| Reclassification to receivables1) | –2,003 | –36 |
| Subdivisions, property | 1 | |
| Currency translation effect | 3,051 | |
| Unrealised changes in value | 1,709 | |
| Property portfolio, 31 December 2022 | 52,682 | 751 |
1) Contracted divestments that have not been closed were reclassified as current finance lease asset in accordance with IFRS 16. For additional information, refer to page 10 and page 16.
Higher interest rates and less favourable funding terms continued to negatively affect liquidity in the property market. Few comparative transactions has been carried out in the third and fourth quarters of 2022, while demand for warehouse and industrial premises remained healthy. Uncertainty in the value assessments is thus higher than normal.
The valuations were carried out in accordance with generally accepted international valuation methods. As of 31 December 2022, 99% of the properties were valued by authorised property appraisers from independent valuation companies. For other properties, the market value was determined as the acquisition price or internal valuations were applied.
The principal method of appraisal used was cash flow calculations in which the present value of net operating income, investments and residual values was calculated. The calculation period was adjusted to the remaining term of existing leases and varies between five and 20 years. In general, the calculation period is ten years. For more information, see Sagax's 2021 Annual Report, page 92.
The discount rate for the present value calculation of cash flows (4.7– 16.5%), the discount rate for the present value calculation of residual values (4.8–16.5%) and the capitalisation rate for the residual value calculations (4.0–14.0%) are based on transactions carried out and on individual assessments of the risk level and market position of each property.
The weighted discount rate for the present value calculation of cash flows and residual values for the property portfolio increased to 7.8% (7.2) and 7.9% (7.4), respectively. The weighted capitalisation rate rose to 6.3% (6.0).
Group's rental value
12 This document is an in-house translation of the Swedish Interim report. In the YEAR-END REPORT 2022 event of discrepancies, the Swedish original will supersede the translation.
In addition to the directly owned property portfolio, Sagax has invested in joint ventures and associated companies since 2010. The investment objective is to reach markets that Sagax does not have the capacity to reach, but which are considered attractive. The accumulated investments amounted SEK 3,230 M, which has generated an accumulated dividend of SEK 2,375 M to Sagax. The carrying amount of these investments amounted to SEK 11,022 M (9,818), of which 91% comprised Hemsö Fastighets AB, Söderport Property Investment AB and NP3 Fastigheter AB.
The investments contributed a total of SEK 766 M (713) to profit from property management during the year and SEK 577 M (373) to the cash flow. Sagax's share of changes in the value of properties amounted to SEK 536 M (2,464) and the share of changes in the value of derivatives was SEK 315 M (108).
Sagax indirectly owns 15% of Hemsö, with the remaining share owned by the Third Swedish National Pension Fund. Hemsö conducts operations in Sweden, Germany and Finland. Operations consist of owning, managing and developing public properties. For more information, refer to www.hemso.se.
Sagax owns 50% of Söderport, with the remaining share owned by Nyfosa AB. Söderport's operations consist of owning, managing and developing properties in Sweden. Sagax handles the financial administration and most of the asset management.
A corresponding 75% of Söderport's rental value of SEK 1,068 M was located in Stockholm on 31 December 2022. Söderport's vacancy value amounted to SEK 47 M corresponding to an economic occupancy rate of 96%. During the year, Söderport acquired 20.9% of the votes and capital in the subsidiary Torslanda Property Investment AB and thereafter owns 99.0% of all shares.
Sagax owns 50% of Fastighetsaktiebolaget Ess-Sierra, with the remainder owned by NP3 Fastigheter AB. The operations entail owning and managing properties, mainly for home improvement retail. The lettable area amounts to 184,000 square metres, the majority of which comprises warehouse premises and home improvement retail. Most of the properties are situated in university and regional towns. Sagax handles the financial administration and asset management.
Sagax owns 21.9% of the votes and 16.0% of the capital in NP3. The market value of Sagax's shareholding amounted to SEK 2,553 M and the carrying amount to SEK 2,133 M (1,900). NP3 is a property company focusing on commercial properties with high yields mainly in northern Sweden. The company's property portfolio encompassed 488 properties with a total property value of SEK 19.8 billion and a rental value of SEK 1,880 M on 31 December 2022. NP3 is listed on Nasdaq Stockholm, Large Cap. For more information, refer to www.np3fastigheter.se.
Sagax owns 24.0% of the votes and 21.8% of the capital in Emilshus. The market value of Sagax's shareholding amounted to SEK 672 M and the carrying amount to SEK 645 M (437). Emilshus acquires, develops and manages commercial properties in Småland and nearby growth regions. The company's property portfolio encompassed 125 properties with a total market value of SEK 7.1 billion on 31 December 2022. Emlishus is listed on Nasdaq Stockholm, Mid Cap. For more information, refer to www.emilshus.com.
| Hemsö | Söderport | Ess-Sierra | |||||
|---|---|---|---|---|---|---|---|
| Jan-Dec 2022 | Jan-Dec 2021 | Jan-Dec 2022 | Jan-Dec 2021 | Jan-Dec 2022 | Jan-Dec 2021 | ||
| Sagax's ownership, % | 15 | 15 | 50 | 50 | 50 | 50 | |
| Sagax's share of comprehensive income, SEK M | 352 | 1,149 | 532 | 905 | 65 | 54 | |
| Sagax's share of profit from property management, SEK M |
295 | 271 | 234 | 236 | 32 | 30 | |
| Rental revenue, SEK M | 4,073 | 3,614 | 907 | 853 | 93 | 89 | |
| Profit from property management, SEK M | 2,309 | 2,145 | 492 | 504 | 65 | 59 | |
| Profit for the year, SEK M | 2,563 | 8,189 | 1,149 | 1,900 | 130 | 109 | |
| 31 Dec 2022 | 31 Dec 2021 | 31 Dec 2022 | 31 Dec 2021 | 31 Dec 2022 | 31 Dec 2021 | ||
| Book value of the ownership interest, SEK M | 4,928 | 4,568 | 2,991 | 2,622 | 320 | 291 | |
| No. of properties | 480 | 441 | 84 | 83 | 39 | 33 | |
| The properties' book value, SEK M | 84,879 | 75,737 | 14,197 | 12,882 | 1,610 | 1,429 | |
| Lettable area, sqm | 2,400,000 | 2,218,000 | 769,000 | 743,000 | 184,000 | 181,000 | |
| Lease term, years | 9.6 | 9.6 | 4.2 | 4.6 | 6.5 | 6.6 | |
| Economic occupancy rate, % | 98 | 98 | 96 | 95 | – | – | |
| Interest-bearing liabilities, SEK M | 49,567 | 42,498 | 6,936 | 6,209 | 869 | 786 | |
| Loan maturity, years | 6.3 | 6.8 | 2.4 | 2.4 | 2.0 | 2.9 | |
| Fixed interest, years | 5.6 | 6.3 | 1.7 | 2.3 | 1.0 | 1.8 | |
| Market value of derivatives, SEK M | 247 | 161 | 153 | –124 | – | – |
Consolidated equity amounted to SEK 33,463 M (31,079) on 31 December 2022. During the year, equity increased as a result of comprehensive income of SEK 3,303 M, decreased due to share dividends of SEK –935 M and increased on account of incentive plans of SEK 15 M.
Sagax's interest-bearing liabilities at year end amounted to SEK 32,294 M (26,354). An amount corresponding to SEK 30,077 M (24,009) of liabilities was recognised in EUR. Exchange rate fluctuations increased interest-bearing liabilities by SEK 2,339 M (352).
Listed bonds loans amounted to SEK 28,508 M (23,198). The remaining interest-bearing debt comprised commercial paper of SEK 1,572 M (2,891) and liabilities to banks of SEK 2,215 M (265).
Unsecured liabilities including commercial paper corresponded to 94% (99) of interest-bearing liabilities.
The interest coverage ratio amounted to 7.1 (6.5) times and the debt ratio to 45% (42) at year end. Net interest-bearing debt for the past 12 months was 7.1 (5.8) times EBITDA and 6.5 (5.4) times run rate EBITDA, see page 9 for more information.
A total of SEK 7,631 M (13,997) in loans was raised during the year, of which SEK 3,117 M (10,131) in the form of bond loans under the framework of Sagax's EMTN programme. Repayments during the period totalled SEK 4,050 M (7,880). Net interest-bearing debt amounted to SEK 24,364 M (16,214).
The average remaining fixed interest and loan maturity terms were 3.2 years (4.0) and 3.7 years (4.3), respectively, at year end. The average interest rate on interest-bearing liabilities was 1.7% (1.4), including the effect of derivatives on the balance sheet date.
Of Sagax's interest-bearing liabilities, SEK 28,230 M (22,699), or 87% (86), bear fixed interest rates. The company has interest-rate caps and interest-rate swaps with a total nominal value of SEK 1,486 M (2,802), corresponding to 5 % of interest-bearing liabilities.
| Fixed interest | Loan maturity | ||||||
|---|---|---|---|---|---|---|---|
| Year of expiry | SEK M | Interest rate | Share | SEK M | Share | ||
| 2023 | 4,097 | 2.3% | 13% | 902 | 3% | ||
| 2024 | 5,998 | 2.0% | 19% | 5,759 | 18% | ||
| 2025 | 4,467 | 2.4% | 14% | 5,494 | 17% | ||
| 2026 | 3,322 | 1.8% | 10% | 3,322 | 10% | ||
| 2027 | 3,320 | 1.5% | 10% | 5,059 | 16% | ||
| >2027 | 11,090 | 0.9% | 34% | 11,757 | 36% | ||
| Total/average | 32,294 | 1.7% | 100% | 32,294 | 100% |
| Net debt | ||
|---|---|---|
| Amounts in SEK M | 31 Dec 2022 | 31 Dec 2021 |
| Interest-bearing liabilities | 32,294 | 26,354 |
| Interest-bearing assets | –927 | –676 |
| Listed shares | –6,927 | –9,380 |
| Cash and cash equivalents | –76 | –84 |
| Net debt | 24,364 | 16,214 |
Sagax's working capital amounted to SEK 2,750 M (1,173) on 31 December 2022. At the same date, unutilised credit facilities including back-up
facilities for commercial paper programmes amounted to SEK 9,427 M (7,399). No additional collateral needs to be pledged to utilise these credit facilities.
| Listed bonds, 31 December 2022 | |||||||
|---|---|---|---|---|---|---|---|
| Maturity | Interest base | Nominal amount, SEK M |
Liability, SEK M | Effective interest | Coupon rate | Maturity date | ISIN code |
| 2019-2023 | Floating interest | 500 | 500 | 3.52%1) | Stibor 3M+0.90% | 16 Jun 2023 | XS2093119175 |
| 2019-2023 | Fixed interest | 250 | 250 | 1.18% | 1.13% | 16 Jun 2023 | XS2093119845 |
| Total/average | 750 | 750 | 2.74% |
| Total/average | 2,500 | 2,494 | 1.49% | ||||
|---|---|---|---|---|---|---|---|
| 2021-2029 | Fixed interest | 500 | 500 | 1.01% | 1.00% | 17 May 2029 | XS2342227837 |
| 2021-2028 | Fixed interest | 500 | 497 | 0.88% | 0.75% | 26 Jan 2028 | XS2291340433 |
| 2020-2027 | Fixed interest | 300 | 298 | 1.26% | 1.12% | 30 Jan 2027 | XS2112816934 |
| 2022-2026 | Fixed interest | 300 | 299 | 1.78% | 1.62% | 24 Feb 2026 | XS2447539060 |
| 2019-2025 | Fixed interest | 400 | 401 | 2.05% | 2.25% | 13 Mar 2025 | XS1962543820 |
| 2018-20242) | Fixed interest | 500 | 499 | 2.10% | 2.00% | 17 Jan 2024 | XS1877540465 |
| Maturity | Interest base | EUR M | Liabilities, EUR M | Effective interest | Coupon rate | Maturity date | ISIN code |
| Nominal amount, |
1) STIBOR adopted 16 December 2022.
2) Sagax repurchased bonds with a nominal amount of EUR 205 M after the end of the period.
| Derivative contracts, 31 December 2022 | |||||
|---|---|---|---|---|---|
| Amounts in SEK M | Nominal amount |
Years to maturity |
Market value 31 Dec 2022 |
Market value 31 Dec 2021 |
Change for the period |
| Nominal interest-rate swaps1) | 581 | 2.6 | 2 | –74 | 76 |
| Interest-rate caps | 1,214 | 0.6 | 12 | 0 | 12 |
| Currency futures | – | – | – | 2 | –2 |
| Total | 1,795 | 1.3 | 14 | –72 | 86 |
1) Included contracted interest-rate swaps of a nominal SEK 309 M from 16 January 2023.
| Financial covenant in | |||
|---|---|---|---|
| EMTN programme | 31 Dec 2022 | 31 Dec 2021 | |
| Rating according to Moody's Investors Service | Baa3, Positive outlook | Baa3, Positive outlook | |
| Net debt/Total assets | <65% | 35% | 27% |
| Interest coverage ratio | >1.8x | 12.7x | 9.4x |
| Secured liabilities/total assets | <45% | 3% | 0% |
Sources of financing
Distribution between secured and unsecured liabilities
Interest coverage ratio Multiple
Sagax's financial policy sets guidelines and rules for the financial operations to illustrate how financial risks are to be limited. Sagax has the following guidelines for its financial operations.
The following charts illustrates the outcome for the past five years in relation to the company's guidelines.
the financial policy Interest coverage ratio
Sagax reports leases and site leaseholds in accordance with IFRS 16. Right-of-use assets are recognised as an asset with a corresponding liability. Sagax's leases and site leaseholds at year end amounted to SEK 380 M (390).
The interest coverage ratio is to exceed 3.0x according to
2018 2019 2020 2021 2022
Interest-bearing non-current receivables amounted to SEK 746 M (676) and comprised convertible debentures issued by the French company Groupe BMG valued at SEK 628 M (566) maturing on 31 December 2024 and promissory notes valued at SEK 118 M (110) issued in connection with a property divestment in 2021.
Listed shares that are not holdings in associated companies are recognised at the closing price on the balance sheet date and amounted to SEK 3,786 M (4,772). Shares in Nyfosa AB are recognised at SEK 3,278 M (4,043), corresponding to a closing price of SEK 80.60 (156.00) per share. Shares in Cibus Nordic Real Estate AB are recognised at SEK 398 M (598), corresponding to a closing price of SEK 143.40 (246.20) per share. Dividends of SEK 176 M (67) were received during the year.
Current finance leases amounted to SEK 2,008 M (–) and referred to 36 properties in Spain that were divested to Coop Group. Closing is expected to take place during 2023. The divestment is recognised as current finance lease asset in accordance with IFRS 16 since the buyer is also the tenant. The carrying amount corresponds to the purchase price of SEK 2,003 M, and accrued lease interest of SEK 5 M.
Other current assets amounted to SEK 865 M (596) and primarily comprises VAT receivables of SEK 250 M (–), prepaid costs and accrued income of SEK 248 M (207) and rent receivables of SEK 191 M (133).
| 2022 | 2021 | 2022 | 2021 | |
|---|---|---|---|---|
| Amounts in SEK M | Jan-Dec | Jan-Dec | Oct-Dec | Oct-Dec |
| Rental revenue | 3,696 | 3,100 | 971 | 806 |
| Other revenue | 31 | 23 | 3 | 4 |
| Operating expenses | –346 | –250 | –103 | –71 |
| Maintenance costs | –84 | –74 | –28 | –21 |
| Property tax | –178 | –153 | –46 | –38 |
| Other property expenses | –87 | –73 | –28 | –27 |
| Net operating income | 3,032 | 2,573 | 769 | 652 |
| Central administration | –174 | –147 | –66 | –51 |
| Profit from joint ventures and associated companies | 1,375 | 2,718 | –173 | 945 |
| – of which, profit from property management | 766 | 713 | 160 | 184 |
| – of which, changes in value | 852 | 2,572 | –462 | 1,002 |
| – of which, tax | –351 | –558 | 51 | –241 |
| – of which, other | 108 | –9 | 79 | – |
| Financial income | 235 | 113 | 92 | 35 |
| Financial expenses | –492 | –419 | –138 | –104 |
| Financial expense, interest component of leases | –28 | –28 | –7 | –8 |
| Profit including changes in value of joint ventures and associated companies | 3,948 | 4,809 | 477 | 1,470 |
| – of which, profit from property management | 3,339 | 2,805 | 809 | 708 |
| Properties, realised | –12 | 6 | –4 | 8 |
| Properties, unrealised | 1,709 | 3,870 | –821 | 1,537 |
| Financial instruments, realised | 3 | –10 | – | – |
| Financial instruments, unrealised | –2,343 | 1,868 | 589 | 1,075 |
| Profit before tax | 3,305 | 10,543 | 241 | 4,090 |
| Deferred tax | –523 | –624 | 38 | –169 |
| Current tax | –63 | –112 | –5 | –28 |
| Profit for the period | 2,718 | 9,807 | 274 | 3,893 |
| Other comprehensive income | ||||
| – items that may be reversed to profit and loss: | ||||
| Translation differences for foreign operations | 1,478 | 282 | 294 | 30 |
| Share of other comprehensive income for joint ventures | 27 | 8 | –2 | – |
| Translation differences, hedge accounting | –878 | –141 | –184 | –27 |
| Tax on items that may be reversed | –42 | 6 | –11 | 11 |
| Comprehensive income for the period | 3,303 | 9,963 | 371 | 3,907 |
| Earnings per Class A and B share, SEK | 7.76 | 30.09 | 0.66 | 11.46 |
| Earnings per Class A and B share after dilution, SEK | 7.75 | 30.04 | 0.66 | 11.45 |
| Earnings per Class D share, SEK | 2.00 | 2.00 | 0.50 | 0.50 |
| Average no. of Class A and B shares, millions | 317.8 | 317.5 | 318.0 | 317.7 |
| Average no. of Class A and B shares after dilution, millions | 318.3 | 318.0 | 318.5 | 318.0 |
| Average number of Class D shares, millions | 126.3 | 126.2 | 126.3 | 126.2 |
| Amounts in SEK M | 2022 31 Dec |
2021 31 Dec |
|---|---|---|
| Investment properties | 52,655 | 46,067 |
| Investment properties for sale | 27 | – |
| Leases, right-of-use assets | 359 | 355 |
| Joint ventures and associated companies | 11,022 | 9,818 |
| Derivatives | 14 | – |
| Interest-bearing non-current receivables | 746 | 676 |
| Other fixed assets | 168 | 103 |
| Total fixed assets | 64,991 | 57,020 |
| Listed shares | 3,786 | 4,772 |
| Current finance lease assets | 2,008 | – |
| Other current investments | 105 | – |
| Other current assets | 865 | 596 |
| Cash and bank balances | 76 | 84 |
| Total current assets | 6,840 | 5,452 |
| Total assets | 71,831 | 62,472 |
| Equity | 33,463 | 31,079 |
| Non-current interest-bearing liabilities | 29,820 | 23,368 |
| Deferred tax liabilities | 3,779 | 3,087 |
| Derivatives | – | 74 |
| Non-current lease liabilities | 380 | 390 |
| Other non-current liabilities | 299 | 195 |
| Total non-current liabilities | 34,278 | 27,114 |
| Commercial paper | 1,572 | 2,891 |
| Other current interest-bearing liabilities | 902 | 95 |
| Other current liabilities | 1,616 | 1,293 |
| Total current liabilities | 4,090 | 4,279 |
| Total equity and liabilities | 71,831 | 62,472 |
| 2022 | 2021 | 2022 | 2021 | |
|---|---|---|---|---|
| Amounts in SEK M | Jan-Dec | Jan-Dec | Oct-Dec | Oct-Dec |
| Profit before tax | 3,305 | 10,543 | 241 | 4,090 |
| Changes in value of financial instruments | 2,341 | –1,858 | –589 | –1,074 |
| Change in value of properties | –1,697 | –3,876 | 825 | –1,546 |
| Profit from joint ventures and associated companies | –1,375 | –2,718 | 173 | –945 |
| Dividends from joint ventures and associated companies | 577 | 373 | 43 | 30 |
| Dissolution of allocated borrowing costs | 44 | 41 | 9 | 9 |
| Other items not included in cash flow | –31 | –13 | 10 | 2 |
| Tax paid | –149 | –146 | – | 5 |
| Cash flow from operating activities before | ||||
| changes in working capital | 3,015 | 2,346 | 713 | 571 |
| Cash flow from changes in current assets | –159 | –71 | –216 | –19 |
| Cash flow from changes in current liabilities | 371 | 103 | 272 | 80 |
| Cash flow from operating activities | 3,227 | 2,379 | 769 | 632 |
| Acquisition of properties | –3,202 | –4,824 | –288 | –1,560 |
| Property sales | 47 | 867 | 42 | 604 |
| Investments in existing properties | –715 | –658 | –198 | –240 |
| Acquisition of listed shares | –1,617 | –1,949 | – | –286 |
| Purchase of financial instruments | –106 | –7 | –1 | – |
| Sale of financial instruments | 44 | – | – | – |
| Divestment of joint ventures and associated companies | 3 | – | – | – |
| Acquisition of joint ventures and associated companies | –29 | –214 | –18 | –47 |
| Capital contribution to joint ventures and associated companies | –238 | –271 | –115 | – |
| Lending to joint ventures and associated companies | –64 | – | –13 | – |
| Increase in other fixed assets | –58 | –16 | – | – |
| Decrease in other fixed assets | 33 | 50 | 33 | – |
| Cash flow from investing activities | –5,902 | –7,023 | –558 | –1,529 |
| Issue of Class B shares for incentive plan | 15 | 12 | – | – |
| Redemption of preference shares | – | –572 | – | – |
| Dividends paid to shareholders | –935 | –792 | –63 | –63 |
| Proceeds from borrowings | 7,631 | 13,997 | 1,115 | 1,068 |
| Repayment of borrowings | –4,050 | –7,880 | –1,291 | –43 |
| Redemption of financial instruments | 16 | –21 | – | – |
| Decrease in other non-current liabilities | –23 | –52 | –12 | –13 |
| Increase in other non-current liabilities | 11 | 11 | – | – |
| Cash flow from financing activities | 2,666 | 4,703 | –251 | 949 |
| Cash flow for the period | –10 | 59 | –40 | 52 |
| Exchange rate differences in cash and cash equivalents | 2 | – | 1 | – |
| Change in cash and cash equivalents | –8 | 59 | –39 | 52 |
| Cash and cash equivalents at beginning of period | 84 | 24 | 115 | 32 |
| Cash and cash equivalents at end of period | 76 | 84 | 76 | 84 |
| Other | Reserves, | Profit earned incl. net |
|||
|---|---|---|---|---|---|
| Amounts in SEK M | Share capital | contributed capital | translation differences | profit for the period | Total equity1) |
| Equity, 31 December 2020 | 808 | 3,542 | 338 | 17,765 | 22,452 |
| Profit for the period | – | – | – | 9,807 | 9,807 |
| Other comprehensive income | – | – | 155 | – | 155 |
| Comprehensive income for the period | – | – | 155 | 9,807 | 9,962 |
| Transactions with shareholders | |||||
| Issue of Class B shares, incentive plan | 1 | 36 | – | – | 36 |
| Redemption of preference shares | –29 | – | – | –543 | –571 |
| Transaction costs | – | – | – | –1 | –1 |
| Dividends | – | – | – | –776 | –776 |
| Transactions with shareholders | –28 | 36 | – | –1,320 | –1,312 |
| Other transactions | |||||
| Redemption of incentive plan | – | – | – | –30 | –30 |
| Subscription of incentive plan | – | – | – | 7 | 7 |
| Other transactions | – | – | – | –23 | –23 |
| Equity, 31 December 2021 | 780 | 3,578 | 493 | 26,229 | 31,079 |
| Profit for the period | – | – | – | 2,718 | 2,718 |
| Other comprehensive income | – | – | 585 | – | 585 |
| Comprehensive income for the period | – | – | 585 | 2,718 | 3,303 |
| Transactions with shareholders | |||||
| Issue of Class B shares, incentive plan | 1 | 38 | – | – | 39 |
| Dividends | – | – | – | –935 | –935 |
| Transactions with shareholders | 1 | 38 | – | –935 | –896 |
| Other transactions | |||||
| Redemption of incentive plan | – | – | – | –31 | –31 |
| Subscription of incentive plan | – | – | – | 7 | 7 |
| Other transactions | – | – | – | –24 | –24 |
| Equity, 31 December 2022 | 781 | 3,616 | 1,078 | 27,988 | 33,463 |
1) Equity is attributable in its entirety to the Parent Company's shareholders.
| Amounts in SEK M | 2022 Jan-Dec |
2021 Jan-Dec |
|---|---|---|
| Net sales | 118 | 88 |
| Administration costs | –125 | –107 |
| Loss before financial income and expenses | –7 | –19 |
| Profit from participations in Group companies | 1,863 | 1,154 |
| Profit from participations in joint ventures | 109 | 96 |
| Financial income | 1 314 | 745 |
| Financial expenses | –1 305 | –751 |
| Profit before tax and appropriations | 1,974 | 1,224 |
| Appropriations | 35 | 106 |
| Tax | –7 | –2 |
| Profit for the period | 2,002 | 1,328 |
| Total equity, untaxed reserves and liabilities | 40,166 | 34,220 |
|---|---|---|
| Total current liabilities | 6,815 | 6,152 |
| Other current liabilities | 298 | 284 |
| Liabilities to Group companies | 4,847 | 2,885 |
| Current interest-bearing liabilities | 1,670 | 2,983 |
| Total non-current liabilities | 28,050 | 23,825 |
| Deferred tax liabilities | 5 | 4 |
| Liabilities to Group companies | 18,111 | 14,829 |
| Non-current interest-bearing liabilities | 9,935 | 8,992 |
| Untaxed reserves | 22 | 30 |
| Equity | 5,278 | 4,213 |
| Unrestricted equity | 4,347 | 3,283 |
| Restricted equity | 931 | 930 |
| Total assets | 40,166 | 34,220 |
| Total current assets | 25,073 | 19,416 |
| Other current assets | 29 | 77 |
| Receivables from Group companies | 25,044 | 19,308 |
| Cash and bank balances | – | 31 |
| Total fixed assets | 15,093 | 14,805 |
| Other financial fixed assets | 13,378 | 13,080 |
| Receivables from Group companies | 1,714 | 1,725 |
| Tangible fixed assets | 1 | – |
| Amounts in SEK M | 31 Dec | 31 Dec |
| 2022 | 2021 |
21 This document is an in-house translation of the Swedish Interim report. In the YEAR-END REPORT 2022 event of discrepancies, the Swedish original will supersede the translation.
| Changes in value, properties | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Profit items per segment1) | Rental revenue2) | Net operating income | Unrealised | Realised | Total return | |||||
| Amounts in SEK M | 2022 Jan-Dec |
2021 Jan-Dec |
2022 Jan-Dec |
2021 Jan-Dec |
2022 Jan-Dec |
2021 Jan-Dec |
2022 Jan-Dec |
2021 Jan-Dec |
2022 Jan-Dec |
2021 Jan-Dec |
| Sweden | 857 | 817 | 727 | 706 | 667 | 1,350 | – | –27 | 1,394 | 2,029 |
| Finland | 1,436 | 1,233 | 1,141 | 1,001 | 108 | 1,068 | –12 | 31 | 1,237 | 2,100 |
| France | 553 | 372 | 428 | 286 | 363 | 497 | – | – | 791 | 783 |
| Netherlands | 448 | 355 | 407 | 323 | 407 | 656 | – | 2 | 814 | 981 |
| Spain | 299 | 229 | 272 | 208 | 225 | 234 | – | – | 497 | 442 |
| Germany | 93 | 84 | 90 | 82 | –62 | 30 | – | – | 28 | 113 |
| Rest of Europe | 11 | 10 | 9 | 9 | – | 34 | – | – | 9 | 43 |
| Non-specified | – | – | –42 | –42 | – | – | – | – | –42 | –42 |
| Total | 3,696 | 3,100 | 3,032 | 2,573 | 1,709 | 3,870 | –12 | 6 | 4,729 | 6,448 |
| Market value | Investments | Acquisition | Divestment | |||||
|---|---|---|---|---|---|---|---|---|
| Asset items per segment1) | properties | properties | properties | properties | ||||
| 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |
| Amounts in SEK M | 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec |
| Sweden | 14,782 | 13,756 | 223 | 238 | 136 | 156 | – | –424 |
| Finland | 17,876 | 15,347 | 302 | 314 | 779 | 2,153 | –59 | –923 |
| France | 7,971 | 5,374 | 63 | 27 | 1,611 | 713 | – | – |
| Netherlands | 7,383 | 6,090 | 31 | 46 | 283 | 1,039 | – | –3 |
| Spain3) | 3,221 | 4,208 | 98 | 32 | 289 | 762 | – | – |
| Germany | 1,305 | 1,161 | – | – | 103 | – | – | – |
| Rest of Europe | 143 | 132 | – | – | – | – | – | – |
| Total | 52,682 | 46,067 | 715 | 658 | 3,202 | 4,824 | –59 | –1,351 |
1) Sagax's segment division was changed as of 1 January 2022. The former segments that belonged to the same country have been merged into one segment. This means that properties that previously belonged to the Rest of Europe segment are now included in the segments for their respective countries. The former market segments Stockholm and Rest of Sweden are now included in the Sweden segment. Helsinki, University cities in Finland and Rest of Finland belong to the Finland segment. The former Paris segment and the properties situated in the rest of France and that were previously reported in the Rest of Europe segment have formed the France segment. Madrid & Barcelona and the properties situated in the rest of Spain and that were previously reported in the Rest of Europe segment have formed the Spain segment. The properties in Germany that were previously included in the Rest of Europe segment are now included in the Germany market segment. The Netherlands segment is unchanged compared with prior periods and the properties in Denmark are reported as previously in the Rest of Europe segment. Comparative figures have been restated according to the new segment division.
2) All rental revenue pertains to external tenants.
3) An agreement to divest a portfolio of 36 properties was signed in 2022 with closing expected to take place in 2023. The transaction has been reclassified as finance lease asset in accordance with IFRS 16 since the buyer is also the tenant of the properties. For more information, see page 10.
| 2022 Jan-Dec |
2021 Jan-Dec |
2020 Jan-Dec |
2019 Jan-Dec |
2018 Jan-Dec |
2017 Jan-Dec |
|
|---|---|---|---|---|---|---|
| Property-related key figures | ||||||
| Yield, % | 5.8 | 6.0 | 6.3 | 6.4 | 6.8 | 6.9 |
| Surplus ratio, % | 82 | 83 | 83 | 83 | 83 | 83 |
| Occupancy rate by area, % | 95 | 96 | 95 | 95 | 95 | 95 |
| Economic occupancy rate, % | 96 | 96 | 95 | 95 | 95 | 94 |
| Lettable area at the end of the period, '000 sqm | 3,895 | 3,759 | 3,480 | 3,022 | 2,850 | 2,489 |
| No. of properties at the end of the period | 751 | 673 | 673 | 553 | 512 | 495 |
| Financial key figures | ||||||
| Return on total capital, % | 5.7 | 5.9 | 6.6 | 6,7 | 6,8 | 7,1 |
| Return on equity, % | 8.4 | 36.6 | 17.8 | 23,7 | 23,7 | 29,6 |
| Average interest rate, % | 1.7 | 1.4 | 1.8 | 1.9 | 2.2 | 3.0 |
| Fixed interest period incl. derivatives, years | 3.2 | 4.0 | 3.4 | 3.5 | 3.0 | 2.1 |
| Loan maturity, years | 3.7 | 4.3 | 3.4 | 3.8 | 3.6 | 3.1 |
| Equity/assets ratio, % | 47 | 50 | 48 | 48 | 46 | 42 |
| Debt ratio, % | 45 | 42 | 43 | 44 | 47 | 50 |
| Net debt/run rate EBITDA, multiple | 6.5 | 5.4 | 6.4 | 6.6 | 7.1 | 7.7 |
| Net debt/EBITDA, multiple | 7.1 | 5.8 | 6.4 | 6.6 | 7.4 | 8.1 |
| Interest coverage ratio, multiple | 7.1 | 6.5 | 5.7 | 4.9 | 4.2 | 3.7 |
| Interest coverage ratio, EMTN programme, multiple | 12.7 | 9.4 | 6.4 | 5.3 | 4.3 | 4.0 |
| Data per Class A and B share | ||||||
| Price of Class B share at the end of the period, SEK | 236.50 | 305.00 | 169.60 | 136.20 | 65.70 | 49.10 |
| Net asset value, SEK | 106.61 | 97.92 | 66.38 | 56.77 | 44.22 | 35.04 |
| Equity, SEK | 91.33 | 83.93 | 55.19 | 46.86 | 35.70 | 27.15 |
| Equity after dilution, SEK | 91.20 | 83.84 | 55.09 | 46.78 | 35.67 | 27.13 |
| Earnings, SEK | 7.76 | 30.09 | 10.80 | 12.15 | 9.24 | 8.86 |
| Earnings after dilution, SEK | 7.75 | 30.04 | 10.78 | 12.13 | 9.24 | 8.85 |
| Profit from property management, SEK | 9.71 | 8.01 | 6.63 | 5.51 | 4.31 | 3.71 |
| Profit from property management after dilution, SEK | 9.70 | 7.99 | 6.62 | 5.51 | 4.31 | 3.70 |
| Cash flow, SEK | 8.69 | 6.59 | 6.10 | 4.86 | 3.95 | 3.27 |
| Cash flow after dilution, SEK | 8.68 | 6.58 | 6.09 | 4.86 | 3.95 | 3.26 |
| Dividend per share, SEK (proposed for 2022) | 2.70 | 2.15 | 1.65 | 1.30 | 1.00 | 0.90 |
| No. at end of period, millions | 318.0 | 317.7 | 317.3 | 317.1 | 316.8 | 316.5 |
| No. at end of period after dilution, millions | 318.5 | 318.0 | 317.9 | 317.5 | 317.1 | 316.7 |
| Average no., millions | 317.8 | 317.5 | 317.1 | 316.9 | 316.7 | 316.5 |
| Average no. after dilution, millions | 318.3 | 318.0 | 317.7 | 317.3 | 316.9 | 317.0 |
| Data per Class D share | ||||||
| Share price at the end of period, SEK | 26.70 | 33.40 | 32.05 | 36.35 | 31.70 | 29.92 |
| Equity, SEK | 35.00 | 35.00 | 35.00 | 35.00 | 35.00 | 35.00 |
| Earnings, SEK | 2.00 | 2.00 | 2.00 | 2.00 | 2.00 | 2.00 |
| Dividend per share, SEK | 2.00 | 2.00 | 2.00 | 2.00 | 2.00 | 2.00 |
| No. at end of period, millions | 126.3 | 126.3 | 125.8 | 107.8 | 101.9 | 63.6 |
| Average no., millions | 126.3 | 126.2 | 118.4 | 105.7 | 83.0 | 43.1 |
Definitions of key performance indicators are provided on pages 31-32.
At year end, Sagax had 23,547 (22,978) shareholders. Sagax's market capitalisation amounted to SEK 78,649 M (101,048).
Sagax has three classes of shares: Class A, B and D common shares. The shares are listed on Nasdaq Stockholm, Large Cap.
Due to the exercise of warrants under the 2019/2022 incentive plan, Sagax issued 366,422 Class B common shares during the year. A total of 446,281,346 shares were outstanding at the end of the year, of which 2,000,000 were Class B treasury shares. According to the Articles of Association, each Class D share is entitled to five times the total dividend on Class A and B shares, although not more than SEK 2.00 per share annually.
Sagax has three warrant plans for the company's employees. In total, Sagax's employees hold warrants corresponding to 0.4% of the number of Class A and B shares outstanding. The company's CEO and Board Members do not participate in the plans. These plans are valid for three years, and encompass the periods 2020-2023, 2021-2024 and 2022- 2025. The subscription price corresponds to the price paid for the Class B share at the start of each warrant plan, converted using the average
share price performance for the listed property companies in accordance with Carnegie's Real Estate Index (CREX) during each three-year period. Accordingly, the warrants will have a value on condition that the price performance of the Sagax share exceeds the average for the listed property companies during each three-year period.
Profit from property management per Class A and B share after dilution on a rolling 12-month basis amounted to SEK 9.70 (7.99), which, compared with the share price of the Class B share at the end of the year, corresponded to a multiple of 24.4 (38.2).
Equity per Class A and B share after dilution amounted to SEK 91.20 (83.84). Net asset value per Class A and B share amounted to SEK 106.61 (97.92). The share price for the Class B share at year end was 259% (364) of equity per Class A and B share and 222% (311) of NAV per Class A and B share.
| Price paid, SEK | Turnover rate on an annual basis, % |
Average trading volume per trading day, SEK M |
||||
|---|---|---|---|---|---|---|
| 31 Dec 2022 | 31 Dec 2021 | 31 Dec 2022 | 31 Dec 2021 | 31 Dec 2022 | 31 Dec 2021 | |
| Class A shares | 239.00 | 303.00 | 24 | 3 | 6 | 1 |
| Class B shares | 236.50 | 305.00 | 35 | 44 | 94 | 135 |
| Class D shares | 26.70 | 33.40 | 71 | 55 | 10 | 8 |
| 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | |
|---|---|---|---|---|---|---|
| 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec | 31 Dec | |
| Share price at the end of period, SEK | 236.50 | 305.00 | 169.60 | 136.20 | 64.70 | 49.10 |
| Profit from property management after dilution, SEK | 9.70 | 7.99 | 6.62 | 5.51 | 4.31 | 3.70 |
| Cash flow after dilution, SEK1) | 8.68 | 6.58 | 6.09 | 4.86 | 3.95 | 3.26 |
| Equity after dilution, SEK | 91.20 | 83.84 | 55.09 | 46.78 | 35.67 | 27.13 |
| Net asset value, SEK | 106.61 | 97.92 | 66.38 | 56.77 | 44.22 | 35.04 |
| Share price/Profit from property management, multiple | 24.4 | 38.2 | 25.6 | 24.7 | 15.0 | 13.3 |
| Share price/Cash flow, multiple1) | 27.3 | 46.4 | 27.9 | 28.0 | 16.4 | 15.1 |
| Share price/Equity, % | 259 | 364 | 308 | 292 | 182 | 181 |
| Share price/Net asset value, % | 222 | 311 | 255 | 240 | 147 | 140 |
1) Cash flow pertains to cash flow from operating activities before changes in working capital.
| Share of voting | Share of | ||||||
|---|---|---|---|---|---|---|---|
| No. of shares | No. of shareholders | Shareholder category | No. | power | Shareholders by country | No. | voting power |
| 1–500 | 16,725 | Private individuals | Sweden | 22,156 | 85% | ||
| 501–1,000 | 1,953 | residing in Sweden | 21,430 | 9% | USA | 57 | 7% |
| 1,001–2,000 | 1,486 | Private individuals | |||||
| 2,001–5,000 | 1,469 | residing abroad | 130 | 0% | UK | 73 | 2% |
| 5,001–10,000 | 692 | Companies/institutions in Sweden |
726 | 75% | Ireland | 30 | 1% |
| 10,001–50,000 | 835 | Companies/institutions | Luxembourg | 46 | 1% | ||
| 50,001– | 387 | abroad | 1,261 | 15% | Other | 1,185 | 4% |
| Total | 23,547 | Total | 23,547 | 100% | Total | 23,547 | 100% |
| No. of shares | Percentage of | |||||
|---|---|---|---|---|---|---|
| Class A shares | Class B shares | Class D shares | Share capital | Votes2) | ||
| David Mindus and companies | 14,000,000 | 63,713,912 | 1,192,228 | 17.7% | 30.0% | |
| Staffan Salén and companies | 5,637,309 | 31,598,279 | 95,600 | 8.4% | 12.9% | |
| Fourth Swedish National Pension Fund | 805,716 | 16,035,529 | 9,535,293 | 5.9% | 4.9% | |
| Third Swedish National Pension Fund | – | 24,227,658 | – | 5.4% | 3.5% | |
| Avanza Pension | 45,599 | 307,759 | 11,766,073 | 2.7% | 1.8% | |
| SEB Fonder | – | 11,849,982 | – | 2.7% | 1.7% | |
| Vanguard | – | 6,992,576 | 4,754,791 | 2.6% | 1.7% | |
| Länsförsäkringar Fonder | – | 10,433,681 | 774,792 | 2.5% | 1.6% | |
| Handelsbanken Fonder | – | 7,969,529 | 834,844 | 2.0% | 1.3% | |
| Rutger Arnhult and companies | – | 332,159 | 8,148,173 | 1.9% | 1.2% | |
| Swedbank Robur Fonder | 500,000 | 7,103,615 | – | 1.7% | 1.8% | |
| BlackRock | – | 7,452,281 | 6,433 | 1.7% | 1.1% | |
| Norges Bank | – | 4,251,528 | 2,857,552 | 1.6% | 1.0% | |
| Filip Engelbert | 241,000 | 1,869,784 | 4,200,000 | 1.4% | 1.2% | |
| Erik Selin and companies | 1,174,959 | 1,971,119 | 1,937,377 | 1.1% | 2.3% | |
| Lannebo Fonder | – | 4,184,715 | – | 0.9% | 0.6% | |
| Patrik Brummer | – | – | 4,066,666 | 0.9% | 0.6% | |
| Second Swedish National Pension Fund | – | 3,941,964 | – | 0.9% | 0.6% | |
| Odin Fonder | – | 3,415,294 | – | 0.8% | 0.5% | |
| Folksam | – | 3,372,301 | – | 0.8% | 0.5% | |
| Total 20 largest shareholders | 22,404,583 | 211,023,665 | 50,169,822 | 63.5% | 71.0% | |
| Other shareholders | 4,196,071 | 80,395,698 | 76,091,507 | 36.0% | 29.0% | |
| Sub-total | 26,600,654 | 291,419,363 | 126,261,329 | 99.6% | 100.0% | |
| Shares held by AB Sagax | – | 2,000,000 | – | 0.4% | 0.0% | |
| Total | 26,600,654 | 293,419,363 | 126,261,329 | 100.0% | 100.0% | |
| – of which, Board and employees | 20,012,565 | 103,419,363 | 6,888,862 | 29.3 % | 45.5 % |
1) The ownership structure on 31 December 2022 is based on information from Euroclear Sweden and Modular Finance.
2) Voting rights for treasury shares held by AB Sagax have been excluded.
| Voting rights and proportion of share capital | |||||
|---|---|---|---|---|---|
| Class of share | No. | Voting rights per share |
No. of votes | Proportion of votes |
Proportion of share capital |
| Class A shares | 26,600,654 | 1.0 | 26,600,654.00 | 39% | 6% |
| Class B shares | 293,419,363 | 0.1 | 29,341,936.30 | 43% | 66% |
| Class D shares | 126,261,329 | 0.1 | 12,626,132.90 | 18% | 28% |
| Total | 446,281,346 | 68,568,723.20 | 100% | 100% |
To prepare the accounts based on generally accepted accounting policies, company management must make judgements and assumptions that affect asset and liability items, revenue and expense items recognised in the accounts and other information provided. The actual outcome may differ from these judgements. Sagax is also exposed to various risks that may be of significance to the company's future business, earnings and financial position.
The valuation of investment properties is significantly affected by the judgments and assumptions made. To reduce the risk of incorrect assessments, 99% of the properties on 31 December 2022 were valued by authorised property appraisers from independent valuation companies. By their very nature, properties valuations are always associated with a certain level of uncertainty.
Sagax prioritises leasing to tenants with a high credit rating and long-term leases, despite these entailing slightly lower immediate earnings. The intention is to reduce the risk of rent losses and the risk of vacancies.
Sagax mainly enters into net leases. This means the tenant accounts for the costs of such items as heating, electricity, property tax, water and sewage, in addition to the contractual rent. Accordingly, Sagax is only affected to a limited extent by changed costs due to changes in consumption or changed rates for such utilities as heating and electricity. More than 95% of Sagax's leases are indexed to the CPI or the equivalent. Annual indexation may, in certain cases, be limited by a CPI ceiling or floor. A small number of leases have annual fixed rental adjustments.
The geographic distribution of Sagax's property portfolio and the industries of its tenants are highly diversified. Sagax's lease structure of many small leases help reduce the risks of vacancies and rent losses.
Sagax's financial expenses comprise the single largest expense for the Group. To reduce Sagax's exposure to a rise in interest rates, the Group has a significant portion of fixed-rate loans. To limit interest-rate risk for loans at floating interest rates, interest-rate swaps and interest-rate caps are used. Sagax's funding primarily comprises equity and interestbearing liabilities. Sagax endeavours to secure a long, average remaining term of interest-bearing liabilities to limit its refinancing risk, defined as the risk that refinancing existing debt cannot take place on reasonable terms. The company's long-term funding comprises listed bonds and bank loans. The complete terms and conditions for the bond loans are available at www.sagax.se.
The amounts in the consolidated balance sheet are partly exposed to exchange rate fluctuations, particularly for the EUR. Net exposure on 31 December 2022, assets less liabilities in EUR, amounted to SEK 7,598 M (6,729). In total, net exposure in EUR amounted to 23% (22) of equity. In preparing the consolidated financial statements, the balance sheets of the Group's foreign operations are translated from their functional currencies into SEK based on the exchange rates applying on the balance sheet date: EUR 1 was equivalent to SEK 11.13 and DKK 1 was equivalent to SEK 1.50. Revenue and expense items are translated at the average exchange rate for the year: EUR 1 was equivalent to SEK 10.63 and DKK 1 was equivalent to SEK 1.43. In accordance with IAS 21, the currency effects for foreign operations and hedge accounting are recognised in Other comprehensive income. Other currency effects are recognised in profit or loss.
To limit the risk of potential conflicts of interest, the Group has policies that prohibit Sagax's employees and Board members from:
The policies also specify that senior executives and Board members who borrow against more than 10% of the market value of their shares in Sagax shall notify the company. As per the publication of this report no such notification has been received.
Russia's invasion of Ukraine, higher inflation and rising market interest rates had a negative effect on the financial markets, resulting in, for example, increasing loan margins and greater volatility. The company is monitoring developments to identify and, if possible, address any risks.
Sagax's other risks are described in the 2021 Annual Report, on pages 45-48.
| Currency exposure | ||
|---|---|---|
| 31 Dec | 31 Dec | |
| Amounts in EUR M | 2022 | 2021 |
| Investment properties | 3,393 | 3,147 |
| Other assets | 318 | 112 |
| Total assets | 3,711 | 3,260 |
| Interest-bearing liabilities | 2,703 | 2,342 |
| Other liabilities | 326 | 260 |
| Total liabilities | 3,028 | 2,602 |
| Net exposure | 683 | 658 |
Sagax's exposure to material risks in the company's operations is presented below.
| Sensitivity analysis for property values | |||||||
|---|---|---|---|---|---|---|---|
| –20% | –10% | 0% | +10% | +20% | |||
| Value change, SEK M | –10,536 | –5,268 | 0 | 5,268 | 10,536 | ||
| Debt ratio, % | 52 | 48 | 45 | 42 | 39 | ||
| Sensitivity analysis for changes in the occupancy rate | |||||
|---|---|---|---|---|---|
| –10% | –5% | 0% | +5% | +10% | |
| Occupancy rate, % | 86 | 91 | 96 | N/A | N/A |
| Interest coverage ratio, multiple |
6.4 | 6.7 | 7.1 | N/A | N/A |
| Change | Value change, SEK M | |
|---|---|---|
| Capitalisation rate | +/–0.25% point | –1,756/+1,906 |
| Discount rate | +/–0.25% point | –1,073/+1,093 |
| Rental revenue | +/–5% | +2,257/–2,325 |
| Property expenses | +/–5% | –325/+318 |
| Effect on profit from property |
Effect on | |||
|---|---|---|---|---|
| Amounts in SEK M | Change | management, annual basis |
profit after tax, annual basis |
Effect on equity |
| Economic occupancy rate | +/–1% point | +41/–41 | +34/–34 | +34/–34 |
| Rental revenue | +/–1% | +40/–40 | +33/–33 | +33/–33 |
| Property expenses | +/–1% | –7/+7 | –6/+6 | –6/+6 |
| Interest expenses for liabilities in SEK including fixed income derivatives | +/–1% point | –18/+18 | –14/+14 | –14/+14 |
| Interest expenses for liabilities in EUR including fixed income derivatives | +/–1% point | –18/+12 | –15/+10 | –15/+9 |
| Change in SEK/EUR exchange rate2) | +/–10% | +221/–221 | +178/–178 | +760/–760 |
| Changed rent level for contract maturity in 2023 | +/–10% | +56/–56 | +45/–45 | +45/–45 |
1) Excluding shares in profit of joint ventures and associated companies.
2) Sagax's net exposure to the SEK/EUR exchange rate comprises assets and liabilities recognised in EUR, in addition to revenue and expenses in EUR.
This condensed interim report has been prepared in accordance with International Accounting Standards (IAS) 34 Interim Financial Reporting. The term "IFRS" in this report means application of the International Financial Reporting Standards (IFRS), as adopted by the EU, and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC). The accounting policies and calculation methods are the same as those applied in the 2021 Annual Report and are to be read together with this Annual Report.
There are no amendments to IFRS in 2023 that are deemed to have any material impact on the company's financial statements.
Rounding-off differences may occur.
Transactions with related parties are described in Note 27 of the 2021 Annual Report. No material changes regarding transactions with related parties have taken place in relation to the information presented in the 2021 Annual Report.
On 23 January 2023, Sagax repurchased bonds with a nominal amount of EUR 205 M with maturity in 2024.
The Board of Directors and CEO give their assurance that this interim report provides a fair overview of the company's and the Group's operations, financial position and earnings and describes significant risks and uncertainties faced by the company and the companies included in the Group.
Stockholm, 17 February 2023 AB SAGAX (publ) Corporate Registration Number 556520-0028
Chairman of the Board Board member Board member
Staffan Salén Johan Cederlund Filip Engelbert
David Mindus Johan Thorell Ulrika Werdelin CEO and Board member Board member Board member
This year-end report has not been reviewed by the company's auditors.
This constitutes information that AB Sagax (publ) is legally obliged to publish under the EU's Market Abuse Regulation. The information was released for publication on 17 February 2023 at 10:00 a.m. CET.
The financial calendar is available at www.sagax.se.
| Week beginning 17 April 2023 |
|---|
| 9 May 2023 |
| 9 May 2023 |
| 17 July 2023 |
| 27 October 2023 |
■ Final day for trading including dividend rights 29 March 2023
David Mindus, CEO +46 8 545 83 540, [email protected]
Agneta Segerhammar, CFO +46 8 545 83 540, [email protected]
Visit us at www.sagax.se.
Sagax applies the European Securities and Market Authority's (ESMA) Guidelines on the Alternative Performance Measures. Alternative performance measures refer to financial measures of historical or future earnings trends, financial position, financial results or cash flows that are not defined or stated in the applicable rules for financial reporting, which in Sagax's case is IFRS. The basis of the alternative performance measures provided is that they are used by company management to assess the financial performance and thus are considered to provide valuable information to shareholders and other stakeholders.
The table below presents definitions of Sagax's key performance indicators. The calculation of alternative performance measures is described separately on the following pages.
| Key performance indicators | Description | Reason for alternative performance measure |
|---|---|---|
| Cash flow per Class A and B share |
Profit before tax adjusted for items not included in cash flow less tax paid in relation to the average number of Class A and B shares. Dividends on Class D shares for the period have also been deducted from profit before tax. Dividends received from joint ventures and associated companies have been added to profit before tax. |
The KPI shows the amount of cash flow for the period that can be considered to be attributable to owners of Class A and Class B shares. |
| Debt ratio | Interest-bearing liabilities at the end of the period in relation to total assets at the end of the period. |
The KPI shows financial risk. |
| Dilution | Dilution due to outstanding warrants has been calculated, in line with IAS 33, as the number of Class A and B shares to be issued to cover the difference between the strike price and market price for all potential Class A and B shares (warrants) outstanding, insofar as it is probable that they will be utilised. |
Not an APM. |
| Earnings per Class A and B share |
Profit in relation to the average number of Class A and B shares after taking into account the portion of profit for the period represented by dividends on Class D shares. |
IFRS performance measure. |
| Earnings per Class D share | Class D shares are entitled to five times the total dividend on Class A and B shares, although not more than SEK 2.00 per share annually. |
The KPI shows the shareholders' share of profit. |
| EBITDA | Net operating income less central administration costs plus dividends received from joint ventures and associated companies. |
Sagax uses EBITDA so that the EBITDA/Net debt KPI shows financial risk. |
| Economic occupancy rate | Contractual annual rent directly after the end of the period as a percentage of rental value directly after the end of the period. |
The KPI shows the economic degree of utilisation of the Group's properties. |
| Equity/assets ratio | Equity in relation to total assets. | The KPI shows financial risk. |
| Equity per Class A and B share | Equity at the end of the period in relation to the number of Class A and B shares at the end of the period after taking into account equity attributable to Class D shares. |
The KPI shows the owner's share of equity. |
| Equity per Class D share | Equity at the end of the period as a percentage of the number of common shares at the end of the period. Equity is restricted to SEK 35.00 per Class D share. |
The KPI shows the owner's share of equity. |
| EURIBOR | EURIBOR, or the Euro Interbank Offered Rate, is a daily reference rate based on the average of the interest rates at which euro interbank term deposits are being offered by one prime bank to another within the EMU zone. |
Not an APM. |
| Fixed income derivatives | Agreements on lending rates that may include the factors of time, inflation and/or maximum interest rates. Usually signed to hedge interest rates for interest-bearing loans. |
Not an APM. |
| IFRS | International Financial Reporting Standards (IFRS), to be applied for consolidated financial statements by companies whose securities are listed on a regulated market. |
Not an APM. |
| Interest coverage ratio | Profit from property management, excluding profit from joint ventures and associated companies but including dividends from joint ventures and associated companies, after reversal of financial expenses in relation to financial expenses. |
The KPI shows financial risk. |
| Interest coverage ratio, EMTN programme |
Profit from property management after reversal of financial income and expenses as a percentage of net financial items. |
The KPI shows financial risk. |
| Interest-rate swaps | An agreement between two parties to swap interest rate conditions on loans in the same currency. The swap entails that one party exchanges its floating interest rate for a fixed rate, while the other party receives a fixed rate in exchange for a floating rate. The purpose of an interest-rate swap is to reduce interest-rate risk. |
Not an APM. |
| Joint ventures | Partnership form whereby several owners have a shared controlling influence. |
Not an APM. |
| Key performance indicators | Description | Reason for alternative performance measure |
|---|---|---|
| Net asset value | Recognised equity according to the balance sheet with reversal of reserves for fixed income derivatives, deferred tax on temporary differences on property values and deferred tax on reserves for fixed income derivatives. |
An established indicator of the Group's net asset value that facilitates analyses and comparisons with EPRA NAV. |
| Net debt | Interest-bearing liabilities less interest-bearing assets, cash and cash equivalents, and listed shares. |
The KPI shows the Group's indebtedness. |
| Net debt according to EMTN programme |
Interest-bearing liabilities less listed securities and cash and cash equivalents. |
The KPI shows the Group's indebtedness. |
| Net debt according to EMTN programme/Total assets |
Interest-bearing liabilities less listed securities and cash and cash equivalents in relation to total assets. |
The KPI shows financial risk. |
| Net debt/Total assets | Interest-bearing liabilities less interest-bearing assets, cash and cash equivalents, and listed shares as a percentage of total assets. |
The KPI shows financial risk. |
| Net investments | The net of property acquisitions and investments in the current property portfolio, as well as sales of properties. |
The KPI shows the investment volume. |
| Occupancy rate by area | Contracted area directly after the end of the period as a percentage of total lettable area directly after the end of the period. |
The KPI shows the occupancy situation. |
| Profit from property management |
Profit excluding changes in value and tax. | An indicator of the earnings generation in the operations, excluding changes in value. |
| Profit from property management per Class A and B share after dilution |
Profit from property management for the period reduced by dividends on Class D shares divided by the average number of Class A and B shares after dilution. |
An indicator of the earnings generation of the assets, excluding the changes in value accruing to holders of Class A and B shares. |
| Property | Pertains to properties held under title or site leasehold. | Not an APM. |
| Rental revenue, comparable portfolios |
Rental revenue from properties that were included in the portfolio for the entire reporting period and the entire comparative period. Project properties and properties that were acquired or sold are not included. |
The KPI shows the trend in rental revenue excluding non-recurring effects, such as prematurely vacating premises, not impacted by acquired and sold properties. |
| Rental value | The contractual annual rent applicable directly after the end of the period, with supplements for estimated market rents for vacant premises. |
The key performance indicator shows the Group's income potential. |
| Return on equity | Profit for the period, recalculated to 12 months, as a percentage of aver age equity (opening and closing balances) divided by 2 for the period. |
The KPI shows how shareholders' capital yields interest during the period. |
| Return on total capital | Profit for the period, recalculated to 12 months, after net financial items after reversal of financial expenses as a percentage of average total assets for the period. |
The KPI shows the ability to generate earnings on the Group's assets, excluding financing costs. |
| Run rate EBITDA | Net operating income according to current earnings capacity less central administration costs plus dividends received from joint ventures and associ ated companies rolling 12 months. |
Sagax uses EBITDA so that the EBITDA/Net debt, run rate KPI shows financial risk. |
| Run rate yield | Net operating income (including property administration) according to current earnings capacity with add-back of site leasehold fees, as a per centage of the carrying amounts of the properties at the end of the period. |
The KPI shows the earnings generation of the operations before financial expenses and central administration costs are taken into account. |
| Secured liabilities/total assets | Liabilities secured with pledged assets as a percentage of total assets. | The KPI shows financial risk for bond holders. |
| STIBOR | STIBOR, or Stockholm Interbank Offered Rate, a daily reference rate based on the average of the interest rates at which banks offer to lend unsecured funds to other banks in SEK in the Swedish wholesale money market. |
Not an APM. |
| Surplus ratio | Net operating income for the period as a percentage of rental revenue for the period. |
The KPI shows the profitability of the properties. |
| Total return on property portfolio |
Total of adjusted net operating income and unrealised changes in property value during the period as a percentage of the closing property value adjusted for unrealised changes in value for the period. |
The KPI shows earnings generation and value growth for the properties for a period. |
| Total return on shares | Total of the change in the share price during the period and the dividend paid during the period as a percentage of the share price at the end of the preceding year. |
The KPI shows the total return that accrues to shareholders. |
| Triple net lease | A type of lease whereby the tenant pays, in addition to the rent, all costs incurred on the property that would normally have been paid by the prop erty owner. These include operating expenses, maintenance, property tax, site leasehold fees, insurance, property caretaking, etc. |
Not an APM. |
| Yield | Net operating income for the period (including property administration) with add-back of site leasehold fees, recalculated to 12 months, adjusted for the holding periods of the properties during the period and translated at closing exchange rates as a percentage of the carrying amounts of the properties at the end of the period. |
The KPI shows the earnings generation of the operations before financial expenses and central administration costs are taken into account. |
| Amounts in SEK M unless otherwise stated |
2022 Jan-Dec |
2021 Jan-Dec |
|---|---|---|
| Return on equity | ||
| Profit after tax | 2,718 | 9,807 |
| Addition for translation to annual value | – | – |
| Adjusted profit after tax | 2,718 | 9,807 |
| Average equity | 32,272 | 26,766 |
| Return on equity | 8% | 37% |
| Return on total capital | ||
| Profit from property management | 3,339 | 2,805 |
| Addition for translation to annual value | – | – |
| Financial expenses | 520 | 447 |
| Addition for translation to annual value | – | – |
| Profit before financial expenses | 3,859 | 3,252 |
| Average total capital | 67,133 | 54,725 |
| Return on total capital | 6% | 6% |
| Occupancy rate by area | ||
| Contracted area, '000s sqm | 3,719 | 3,625 |
| Total lettable area, '000s sqm | 3,895 | 3,759 |
| Occupancy rate by area | 95% | 96% |
| Debt ratio | ||
| Interest-bearing liabilities | 32,294 | 26,354 |
| Total assets | 71,831 | 62,472 |
| Debt ratio | 45% | 42% |
| Yield | ||
| Net operating income | 3,032 | 2,573 |
| Add-back of site leasehold fees | –25 | –26 |
| Addition for translation to annual value | – | – |
| Holding adjustment, acquisitions/divestments | –77 | 139 |
| Currency translation to closing rate | 112 | 44 |
| Adjusted net operating income | 3,042 | 2,730 |
| Carrying amounts of properties | 52,682 | 46,067 |
| Yield | 5.8% | 6.0% |
| EBITDA | ||
| Net operating income | 3,032 | 2,573 |
| Central administration | –174 | –147 |
| Dividends from joint ventures and associated companies |
577 | 373 |
| EBITDA | 3,435 | 2,799 |
| Equity per Class A and B share | ||
| Equity | 33,463 | 31,079 |
| Equity attributable to Class D shares | –4,419 | –4,419 |
| Equity attributable to Class A and B shares | 29,044 | 26,660 |
| No. of shares | 318,020,017 317,653,595 | |
| No. of shares after dilution | 318,459,519 317,984,595 | |
| Equity per Class A and B share, SEK | 91.33 | 83.93 |
| Amounts in SEK M unless otherwise stated |
2022 Jan-Dec |
2021 Jan-Dec |
|---|---|---|
| Economic occupancy rate | ||
| Contractual annual rent | 4,024 | 3,324 |
| Rental value | 4,195 | 3,459 |
| Economic occupancy rate | 96% | 96% |
| Run rate yield | ||
| Net operating income according to current | ||
| earnings capacity | 3,319 | 2,761 |
| Add-back of site leasehold fees | –25 | –26 |
| Adjusted net operating income | 3,294 | 2,735 |
| Carrying amount of properties | 52,682 | 46,067 |
| Run rate yield | 6.3% | 5.9% |
| Run rate EBITDA | ||
| Net operating income according to current earnings capacity |
3,319 | 2,761 |
| Central administration | –174 | –147 |
| Dividends from joint ventures and associated | ||
| companies | 577 | 373 |
| Run rate EBITDA | 3,722 | 2,987 |
| Profit from property management | ||
| Profit after tax | 2,718 | 9,807 |
| Tax | 937 | 1,294 |
| Changes in value | –316 | –8,297 |
| Profit from property management | 3,339 | 2,805 |
| Profit from property management per Class A and B share after dilution | ||
| Profit from property management | 3,339 | 2,805 |
| Dividends attributable to Class D shares | –253 | –253 |
| Adjusted profit from property management | 3,086 | 2,552 |
| Profit from property management per Class A and B share after dilution, SEK |
9.70 | 7.99 |
| No. of Class A and B share after dilution | 318,301,177 318,010,050 | |
| Profit from property management per Class A | ||
| and B share, preceding period | 7.99 | 6.62 |
| Annual growth rate, % | 21% | 21% |
| Rental revenue, comparable portfolios |
| 3,696 | 3,100 |
|---|---|
| –751 | –381 |
| – | 93 |
| –12 | – |
| 2,932 | 2,812 |
1) The preceding period has been adjusted so that the exchange rate is the same as in the current period.
after dilution, SEK 91.20 83.84
Equity per Class A and B share
| Amounts in SEK M | 2022 | 2021 |
|---|---|---|
| unless otherwise stated | Jan-Dec | Jan-Dec |
| Cash flow per Class A and B share | ||
| Profit before tax | 3,305 | 10,543 |
| Items not affecting cash flow | –141 | –8,051 |
| Tax paid | –149 | –146 |
| Dividends attributable to Class D shares | –253 | –253 |
| Cash flow | 2,762 | 2,093 |
| Cash flow per Class A and B share after dilution, SEK |
8.68 | 6.58 |
| Net debt | ||
| See page 14. | ||
| Net debt according to EMTN programme | ||
| Interest-bearing liabilities | 32,294 | 26,354 |
| Cash and cash equivalents and listed shares | –7,003 | –9,464 |
| Net debt according to EMTN programme | 25,291 | 16,890 |
| Net debt according to EMTN programme/Total assets | ||
| Net debt according to EMTN programme | 25,291 | 16,890 |
| Total assets | 71,831 | 62,472 |
| Net debt according to EMTN programme/ | ||
| Total assets | 35% | 27% |
| Net debt/EBITDA | ||
| Net debt | 24,364 | 16,214 |
| EBITDA rolling 12 months | 3,435 | 2,799 |
| Net debt/EBITDA | 7.1x | 5.8x |
| Net debt/run rate EBITDA | ||
| Net debt | 24,364 | 16,214 |
| EBITDA, run rate | 3,722 | 2,987 |
| Net debt/EBITDA run rate | 6.5x | 5.4x |
| Net debt/Total assets | ||
| Net debt | 24,364 | 16,214 |
| Total assets | 71,831 | 62,472 |
| Net debt/Total assets | 34% | 26% |
| Earnings per Class A and B share1) | ||
| Profit after tax | 2,718 | 9,807 |
| Dividends attributable to Class D shares | –253 | –253 |
| Adjusted profit after tax | 2,465 | 9,554 |
| Earnings per Class A and B share after dilution, | ||
| SEK | 7.75 | 30.04 |
| Interest coverage ratio | ||
| Profit from property management | 3,339 | 2,805 |
| Amounts in SEK M | 2022 | 2021 |
|---|---|---|
| unless otherwise stated | Jan-Dec | Jan-Dec |
| Interest coverage ratio, EMTN programme | ||
| Profit from property management | 3,339 | 2,805 |
| Net financial items | 285 | 334 |
| Profit from property management before net financial items |
3,624 | 3,139 |
| Interest coverage ratio | 12.7x | 9.4x |
| Equity/assets ratio | ||
| Equity | 33,463 | 31,079 |
| Total assets | 71,831 | 62,472 |
| Equity/assets ratio | 47% | 50% |
| Net asset value | ||
| Equity | 33,463 | 31,079 |
| Equity attributable to Class D shares | –4,419 | –4,419 |
| Reversal of derivatives | –14 | 74 |
| Reversal of deferred tax | 3,990 | 3,383 |
| Reversals due to joint ventures | 930 | 1,019 |
| Net asset value | 33,950 | 31,136 |
| NAV per Class A and B share after dilution, SEK | 106.61 | 97.92 |
| Secured liabilities/total assets | ||
| Secured liabilities | 1,895 | 189 |
| Total assets | 71,831 | 62,472 |
| Secured liabilities/Total assets | 3% | 0% |
| Total return on property portfolio | ||
| Adjusted net operating income | 3,042 | 2,573 |
| Unrealised changes in value | 1,709 | 3,870 |
| Total | 4,751 | 6,443 |
| Carrying amounts of properties | 52,682 | 46,067 |
| Unrealised changes in value | –1,709 | –3,870 |
| Total | 50,973 | 42,197 |
| Total return | 9.3% | 15.3% |
| Surplus ratio | ||
| Net operating income | 3,032 | 2,573 |
| Rental revenue | 3,696 | 3,100 |
| Surplus ratio | 82% | 83% |
1) IFRS performance measure.
Reversal of profit from property management joint
Adjusted profit from property management before
Dividend from joint ventures and associated
ventures and associated companies –766 –713
companies 577 373 Financial expenses 520 447
financial expenses 3,670 2,912 Interest coverage ratio 7.1x 6.5x
AB Sagax is a property company whose business concept is to invest in commercial properties, primarily in the warehouse and light industrial segment. Sagax's property holdings on 31 December 2022 amounted to 3,895,000 square metres, distributed between 751 properties. AB Sagax (publ) is listed on Nasdaq Stockholm, Large Cap. More information is available at www.sagax.se.
AB Sagax (publ), Engelbrektsplan 1, SE-114 34 Stockholm, Sweden Corp. Reg. No. 556520-0028 Tel: +46 8 545 83 540 www.sagax.se
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