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Atrium Ljungberg
Quarterly Report • Apr 16, 2020
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Quarterly Report
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Q1| 2020 INTERIM REPORT 1 JANUARY–31 MARCH
"STABLE PROFIT FOR THE FIRST QUARTER. FUTURE IMPACT OF THE CORONAVIRUS PANDEMIC IS DIFFICULT TO ASSESS."
RENTAL INCOME, LIKE-FOR-LIKE PORTFOLIOS, %
+1.6
PROFIT BEFORE CHANGES IN VALUE, SEK MILLION
311
INVESTMENTS IN ATRIUM LJUNGBERG'S HELD PROPERTIES, SEK MILLION
570
SIGNIFICANT EVENTS DURING THE FIRST QUARTER
- › An agreement to sell Farsta Centrum for almost SEK 4 billion was signed and the property will be vacated on 1 June 2020.
- › A green bank loan for SEK 920 million for the Life City project in Hagastaden was signed with Nordic Investment Bank.
- › New land allocations were received as compensation for returning the Hamnmästaren land allocation in Slussen to the City of Stockholm.
- › The decision was made to start the Katarinahuset reconstruction project in Slussen in Stockholm.
- › Net sales increased to SEK 733 million (SEK 665 m), of which rental income increased to SEK 648 million (SEK 633 m).
- › The operating surplus from property management increased to SEK 435 million (SEK 427 m), an increase of 2.0 per cent. This increase is mostly due to new lettings and renegotiations in office properties, as well as lower property costs resulting from a mild winter.
- › Profit before changes in value increased to SEK 311 million (SEK 306 m).
- › Unrealised changes in the value of investment properties amounted to SEK –1,486 million (SEK 148 m). This change in value is mostly explained by lower market values for retail properties, which is linked to greater uncertainty and a deterioration in cash flows. Unrealised changes in the value of derivatives amounted to SEK –236 million (SEK –160 m) as a result of lower market interest rates.
- › Profit for the period amounted to SEK –1,134 million (SEK 220 m). This reduction is mostly explained by negative changes in property values and lower tax costs.
- › Net letting amounted to SEK 2 million (SEK –8 m), of which SEK 14 million (SEK 4 m) referred to project properties.
- › No forecast is being given for 2020. The previous forecast that was presented in the 2019 year-end report amounted to SEK 1,200 million. Farsta Centrum was sold after we had given this forecast. Added to this is the difficulty in assessing the effects of the coronavirus pandemic, both in terms of the tenants' needs for any rent relief and the impact on Atrium Ljungberg from any bankruptcies, but in particular because we don't know how long the coronavirus pandemic will last.
| Key ratios 1) | Quarter 2020 Jan–Mar |
Quarter 2019 Jan–Mar |
Full year 2019 Jan–Dec |
|---|---|---|---|
| Property value including properties held for sale, SEK m | 47,597 | 44,765 | 48,509 |
| Operating surplus margin, % | 67 | 67 | 69 |
| Average interest rate for interest-bearing liabilities, % | 1.6 | 1.7 | 1.6 |
| Share price, SEK/share | 154.80 | 158.80 | 226.00 |
| EPRA NAV, SEK/share | 202.00 | 193.37 | 215.12 |
| Financial goals 1) | |||
| Investments in held properties, >SEK 2,000 million per year | 570 | 398 | 1,810 |
| Return on equity, R12 >10% over time | 7.1 | 15.6 | 12.9 |
| Gearing ratio, <45% | 44.1 | 41.8 | 41.7 |
| Interest coverage ratio, >2.0 | 4.4 | 4.6 | 4.4 |
1) See page 22 for the full key ratios table and pages 28–29 for definitions.
Q1 2020 ATRIUM LJUNGBERG 1 This interim report has been prepared in Swedish and translated into English. In the event of any discrepancies between the Swedish and the translation, the former shall have precedence.
CEO'S STATEMENT
It's difficult to believe that it's only been a few weeks since the coronavirus crisis took hold. When people are ordered to stay at home, not to travel and not to meet each other, it quickly has a negative impact on many businesses. A reduction in demand has led to a high number of redundancies. The capital market has also reacted by increasing margins on both bonds and commercial papers. All of this is having an impact on our business in the short term. It is difficult to predict what will happen in the long term, as no-one knows how long this pandemic will last, or how long and deep any recession might be.
RETAIL
The coronavirus pandemic has mostly affected us through the reduction in the number of visits to our retail hubs. Approximately 30 per cent of our rental income comes from consumer durables (clothes, shoes, etc.), restaurants and cafes. These businesses have seen up to 70 per cent drop in sales. The FMCG sector and pharmacies have experienced the opposite, seeing an increase in their sales. Although only a small proportion, just one percent, of our rental income is linked to sales results, we will be affected by tenants not being able to pay their rental costs. We're also noticing an increase in the number of company reorganisations and bankruptcies in the retail segment.
The government has delivered several support packages for business, including a proposal to provide rent support to property companies that offer vulnerable tenants rent relief in the second quarter. This proposal involves the state providing support in arrears via the County Administrative Boards for half of the reduction in rent for landlords that halve the rent for their tenants. However, there are still many uncertainties about which tenants will be covered by this support and the proposal must also be approved by the EU Commission. If theoretically Atrium Ljungberg were to offer a 50 per cent rent relief for all tenants in consumer durables, cafes and restaurants and receive state support for all of this relief, this would represent a reduction in revenues of SEK 45 million for the second quarter. We are going to assess each tenant individually to see whether rent relief is necessary. The decision will be based on the specific needs and circumstances of each tenant.
OFFICES
Contracted rent for our offices accounts for 50 per cent of our total portfolio. There is currently stability among most of our tenants, even though some sectors are being affected by this crisis. It is mainly companies working with events and conferences that are seeing a drop in demand, but also some consultancy companies.
PROPERTY VALUATION
The transaction market performed extremely well in the first two months of the year, reporting new record prices per m2 for offices. However, the market quickly turned at the beginning of March. As a result this means that we've decided to keep the office valuations unchanged from the beginning of the year. In terms of retail properties, a price adjustment should have taken place, based on the current situation for our retail tenants, which will affect operating net at least in the short term. We've also slightly adjusted the yield requirement upwards. As a whole we have written down our property value by approximately SEK 1.5 billion, which is 3 per cent of the total value.
SALE OF FARSTA CENTRUM
At the beginning of March we sold Farsta Centrum for almost SEK 4 billion. This deal is our biggest ever and comprises more than 100,000 m2 of letting area. The market was very favourable at the time of the sale. We will vacate Farsta Centrum on 1 June.
A NOBEL CENTER IN SLUSSEN
I'm extremely proud of the settlement we reached with the City of Stockholm, which has paved the way for the construction of a Nobel Center in Slussen. This agreement meant that we returned our
" We are one of the biggest property owners in Slussen, so we want to be involved and develop the site for the future. I'm proud that we've been able to help make the development of the new Nobel Centre a reality.
Hamnmästaren land allocation, an office project of 20,000 m2 GFA. By way of compensation, we received a land allocation in Slussen for a new 8,000 m2 retail hub adjacent to the forthcoming Mälarterrassen, and approximately 4,500 m2 GFA for a hotel planned for construction above the underground entrance at Södermalmstorg. This agreement also included land allocations in Hagastaden for offices comprising 23,000 m2 GFA and 310 tenant-owned dwellings, and finally a hotel in Slakthusområdet measuring 4,000 m2 GFA. We are one of the biggest property owners in Slussen, so we want to be involved and help develop the site and make it more attractive. Establishing a new Nobel Center is not only important for Slussen, but also for the whole of Stockholm and Sweden.
KATARINAHUSET
At the end of 2018 we acquired Katarinahuset in Slussen and we started the preparation work for a project as soon as we took possession at the beginning of 2019. This work has been successful and we've now moved on to the next stage, making a decision to start the reconstruction of Katarinahuset. The investment is estimated to be SEK 980 million and the project should be completed by the first quarter of 2023. After the reconstruction, the building will be home to ultramodern offices with a unique view, a hotel and several restaurants.
I believe strongly in Slussen and I'm convinced that it will be a wonderful place once the reconstruction work is complete.
PROFIT AND FORECAST
No forecast is being given for 2020. The previous forecast that was presented in the 2019 year-end report amounted to SEK 1,200 million. Farsta Centrum was sold after we had given this forecast. Added to this is the difficulty in assessing the effects of the coronavirus pandemic, both in terms of the tenants' needs for any rent relief and the impact on the company from any bankruptcies, but in particular because we don't know how long the coronavirus pandemic will last. Obviously, we're reviewing the company's costs in light of the current situation.
In recent weeks, I, just like many other people, have mostly been working from home. Although it has worked perfectly from a technical point of view, many of us are missing all our colleagues who give us so much energy every day at work. For me, it has shown how important the office is, and I'm sure this is true for many other people.
Annica Ånäs, CEO
ATRIUM LJUNGBERG AS AN INVESTMENT
As a shareholder of Atrium Ljungberg, you receive a stable dividend yield at a low risk. At the same time, you have the potential for a healthy long-term total yield on your investment with regard to the company's interesting project portfolio on attractive growth markets. Investing in Atrium Ljungberg also means investing in sustainable urban development.
FOUR REASONS TO OWN SHARES IN ATRIUM LJUNGBERG:
STABLE DIVIDEND YIELD
The dividend yield over the past five years has been 2.9 per cent per year on average. The dividends paid per share by the company since its listing on the stock exchange in 1994 have never dropped.
POTENTIAL FOR GOOD VALUE GROWTH
With a planned investment rate of SEK 2 billion per year and a goal of 20 per cent return on new build and extension projects, Atrium Ljungberg, and therefore the share, has excellent potential for good value growth over time. The total return over the past five years has been 19 per cent per year on average.
Share's total yield
Dividend yield, % Total return, %
LOW FINANCIAL RISK
We are in a strong financial position, with solid key ratios such as a low gearing ratio and a high interest coverage ratio, and an investment grade rating from Moody's of Baa2 with a stable outlook.
Gearing ratio and interest coverage ratio
SUSTAINABLE URBAN DEVELOPMENT
Sustainability work is integrated in the business model where we continuously develop our areas in a sustainable direction. We are a longterm player that takes responsibility
for the impact of our business on human beings and the environment.
The Atrium Ljungberg share Sales, million shares per month
70 NUMBER OF PROPERTIES
48 PROPERTY VALUE, SEK BILLION
CONTRACTED ANNUAL RENT, SEK BILLION
2.5
1,171 TOTAL LETTING AREA, 1,000 M2
93 LETTING RATE EXCLUDING PROJECT PROPERTIES, % 338 AVERAGE NUMBER OF EMPLOYEES
CONSOLIDATED INCOME STATEMENT
| Amounts in SEK m | Quarter 2020 Jan–Mar |
Quarter 2019 Jan–Mar |
Full year 2019 Jan–Dec |
12 months 2019/2020 Apr–Mar |
|---|---|---|---|---|
| Rental income | 648 | 633 | 2,577 | 2,593 |
| Net sales, project and construction work | 84 | 32 | 233 | 285 |
| Net sales | 733 | 665 | 2,811 | 2,878 |
| Property management costs | ||||
| Service charge-related costs | –56 | –58 | –197 | –195 |
| Other operating costs | –56 | –52 | –202 | –206 |
| Management costs | –43 | –41 | –173 | –174 |
| Repairs | –11 | –15 | –54 | –51 |
| Property tax | –44 | –38 | –174 | –180 |
| Non-deductible VAT | –3 | –3 | –11 | –11 |
| –213 | –206 | –810 | –817 | |
| Project and construction work costs | –87 | –37 | –276 | –327 |
| Gross profit | 432 | 422 | 1,724 | 1,734 |
| – of which gross profit/loss property management (operating surplus) | 435 | 427 | 1,767 | 1,776 |
| — of which gross profit/loss from project and construction work | –3 | –5 | –43 | –41 |
| Central administration, property management | –18 | –19 | –80 | –80 |
| Central administration, project and construction work | –4 | –7 | –16 | –13 |
| –23 | –25 | –96 | –93 | |
| Financial income | 1 | 0 | 2 | 3 |
| Financial expenses | –91 | –84 | –362 | –369 |
| Leasehold fees | –9 | –7 | –34 | –36 |
| –99 | –91 | –395 | –402 | |
| Profit/loss before changes in value | 311 | 306 | 1,234 | 1,239 |
| Changes in value | ||||
| Properties, unrealised | –1,486 | 148 | 2,283 | 649 |
| Properties, realised | –3 | 17 | 73 | 53 |
| Derivatives, unrealised | –236 | –160 | –90 | –166 |
| Derivatives, realised | – | – | –50 | –50 |
| –1,725 | 5 | 2,216 | 486 | |
| Profit before tax | –1,414 | 311 | 3,450 | 1,724 |
| Current tax | –22 | –34 | –63 | –50 |
| Deferred tax | 302 | –56 | –580 | –222 |
| 280 | –91 | –643 | –271 | |
| Profit/loss for the period | –1,134 | 220 | 2,807 | 1,453 |
| Other comprehensive income | ||||
| Items which will be reclassified to profit/loss | ||||
| Cash flow hedging | 4 | 4 | 16 | 16 |
| Tax attributable to cash flow hedging | –1 | –1 | –3 | –3 |
| Total other comprehensive income | 3 | 3 | 13 | 12 |
| Total comprehensive income for the period | –1,131 | 223 | 2,819 | 1,466 |
| The profit/loss for the period and the total comprehensive income for the period are entirely attributable to the parent company's shareholders |
||||
| Earnings per share, SEK | –8.74 | 1.69 | 21.59 | 11.19 |
PROFIT, JANUARY–MARCH 2020
CHANGES IN THE PROPERTY PORTFOLIO
The profit for the year was impacted as follows by earlier property transactions: Contributions from the acquisition of 14 properties in Slakthusområdet, which were taken into possession on 11 June 2019. In 2020 these properties are being classified as project properties. Kolding 1 and Kolding 2 in Ärvinge, Kista, were vacated on 30 September 2019.
NET SALES
The Group's net sales for the quarter increased to SEK 733 million (SEK 665 m), of which rental income comprised SEK 648 million (SEK 633 m). Rental income increased by 1.6 per cent in the likefor-like portfolio compared with the same quarter of the previous year, of which office properties increased by 4.6 per cent and retail properties decreased by 2.4 per cent. This reduction in rental growth for retail properties has mostly been caused by vacancies, higher discounts and negative renegotiations. The increase in rental income is mostly explained by new lettings and renegotiations in office properties.
During the year, non-recurring payments of SEK 2 million (SEK 2 m) were received for premature vacating of premises.
RENTAL INCOME TREND
| Quarter 2020 1/1–31/3 |
Quarter 2019 1/1–31/3 |
Change, % |
|
|---|---|---|---|
| Like-for-like portfolio | 585 | 576 | 1.6 |
| Non-recurring payments | 2 | 2 | |
| Project properties | 62 | 42 | |
| Properties acquired | – | – | |
| Properties sold | – | 13 | |
| Rental income | 648 | 633 | 2.4 |
At the end of the quarter the market value for the like-for-like portfolio was SEK 40,222 million, corresponding to 85 per cent of the property portfolio's total value.
Like-for-like net rental income growth
– Strong development in the office segment
PROPERTY COSTS
Property costs amounted to SEK 213 million (SEK 206 m). For the like-for-like portfolio property costs decreased by 3.4 per cent compared with the corresponding quarter last year. This reduction in property costs is mostly explained by lower costs for electricity, heating and snow clearance resulting from a mild winter and lower repair costs. Other operating costs increased due to higher costs for expected bad debt losses.
PROPERTY COSTS TREND
| Quarter 2020 1/1–31/3 |
Quarter 2019 1/1–31/3 |
Change, % | |
|---|---|---|---|
| Like-for-like portfolio | –187 | –193 | –3.4 |
| Project properties | –26 | –8 | |
| Properties acquired | – | – | |
| Properties sold | – | –5 | |
| Property management costs | –213 | –206 | 3.4 |
GROSS PROFIT/LOSS PROPERTY MANAGEMENT
The gross profit for property management (operating surplus) increased to SEK 435 million (SEK 427 m). This increase is mostly due to new lettings and renegotiations in office properties, as well as lower property costs in the like-for-like portfolio resulting from a mild winter and low snowfall.
For the like-for-like portfolio, the gross profit for property management increased by 4.1 per cent compared with the corresponding quarter of the previous year.
The operating surplus margin amounted to 67 per cent (67%), which as of this report, includes the effect of implementing IFRS 16.
GROSS PROFIT/LOSS PROJECT AND CONSTRUCTION WORK
The gross profit for project and construction work amounted to SEK –3 million (SEK –5 m). The improvement in gross profit is mostly due to a higher cost allocation to development projects.
Internal Group sales in TL Bygg for the first quarter amounted to SEK 73 million (SEK 75 m), which corresponds to 47 per cent (71%) of total sales. TL Bygg's gross profit, including intra-Group transactions amounted to SEK 11 million (SEK 5 m). The increase
Operating surplus and operating surplus margin
– Effect of the implementation of IFRS 16 is included from Q1 2019 onwards
in gross profit is mostly explained by higher sales and a higher allocation to projects compared with the same quarter of the previous year.
SEASONAL EFFECTS
The operating surplus is impacted by seasonal variations in operating costs. Generally, costs are higher during the first and last quarter of the year, primarily caused by higher costs of heating and property maintenance.
CENTRAL ADMINISTRATION
Central administration is comprised of costs for the company management as well as central support functions. Costs of central administration for property management amounted to SEK 18 million (SEK 19 m). Costs of central administration for project and construction work amounted to SEK 4 million (SEK 7 m).
FINANCIAL NET
Financial income and expenses including leasehold fees for the first quarter amounted to SEK -99 million (SEK -91 m). This increase is mostly due to higher interest-bearing liabilities and an increase in the variable interest rate during the quarter. The average interest rate at the end of the period amounted to 1.6 per cent (1.7%). For more information, refer to the section on financing on pages 16–17.
CHANGES IN VALUE
Unrealised changes in the value of investment properties amounted to SEK –1,486 million (SEK 148 m). This change in value is mostly explained by lower market values for retail properties. For more information, refer to the section on property values on pages 8–10.
Unrealised changes in the value of derivatives amounted to SEK –236 million (SEK –160 m) as a result of lower market interest rates.
Realised changes in the value of investment properties amounted to SEK –3 million (SEK 17 m).
SICKLA – Sickla is continuing to develop into a vibrant city district with a mixture of offices, apartments, culture and retail. We build on Sickla's identity and cultural history, with new, modern office and apartment buildings being constructed next to old industrial buildings.
TAX
The current tax for the period amounted to SEK –22 million (–34). The current tax has been affected by tax deductible depreciation and investments. Deferred tax amounted to SEK 302 million (SEK –56 m), which was mainly impacted by unrealised changes in the value of properties and derivatives.
The company tax rate for the 2020 tax year is 21.4 per cent. The next reduction will take place in 2021, and the company tax rate will then be 20.6 per cent. The deferred tax liability has been calculated at the lower tax rate since tax liabilities are not expected to be realised in any significant extent in 2020.
The Group's accumulated tax deficit amounted to SEK zero million (SEK 9 m) and comprises the base of the Group's deferred tax receivable.
The residual tax value of the property stock amounts to SEK 18,182 million (SEK 15,781 m).
TAX CALCULATION FIRST QUARTER OF 2020
| Data | Data | |
|---|---|---|
| SEK m | current tax | deferred tax |
| Reported profit/loss before tax | –1,414 | |
| Tax deductible | ||
| depreciation | –173 | 173 |
| investments | –49 | 49 |
| Non-taxable/non-deductible | ||
| changes in the value of properties, unrealised | 1,486 | –1,486 |
| changes in the value of properties, realised | 3 | –3 |
| changes in the value of derivatives, unrealised | 236 | –236 |
| consolidated capitalisation of borrowing | –5 | 5 |
| consolidated internal profit | 9 | –9 |
| Other fiscal adjustments | 9 | 40 |
| Taxable profit/loss before loss carry-forwards | 101 | –1,467 |
| Change in loss carry-forwards | –9 | – |
| Taxable profit/loss | 92 | –1,467 |
| Of which 21.4 per cent current/20.6 per cent | ||
| deferred tax | –20 | 302 |
| Correction of tax from previous years | –2 | |
| Reported tax expense | –22 | 302 |
PROFIT
The profit before changes in value increased to SEK 311 million (SEK 306 m).
The profit for the period amounted to SEK –1,134 million (SEK 220 m), corresponding to SEK –8.74/share (SEK 1.69).
PROFIT AND INVESTMENT FORECAST
The previous forecast that was presented in the 2019 year-end report amounted to SEK 1,200 million. Farsta Centrum was sold after we had given this forecast. Added to this is the difficulty in assessing the effects of the coronavirus pandemic, both in terms of the tenants' needs for any rent relief and the impact on Atrium Ljungberg from any bankruptcies, but in particular because we don't know how long the coronavirus pandemic will last.
CONSOLIDATED BALANCE SHEET, SUMMARY
| Amounts in SEK m | 31/3/2020 | 31/3/2019 | 31/12/2019 |
|---|---|---|---|
| ASSETS | |||
| Investment properties | 42,514 | 43,859 | 47,513 |
| Right-of-use asset, leaseholds | 981 | 1,114 | 1,305 |
| Goodwill | 165 | 225 | 225 |
| Other non-current assets | 196 | 51 | 73 |
| Derivatives | 14 | – | 82 |
| Total non-current assets | 43,871 | 45,249 | 49,198 |
| Development properties | 1,104 | 906 | 997 |
| Current assets | 491 | 434 | 411 |
| Cash and cash equivalents | 965 | 420 | 457 |
| Assets held for sale | 4,402 | – | – |
| Total current assets | 6,962 | 1,760 | 1,865 |
| Total assets | 50,833 | 47,009 | 51,062 |
| EQUITY AND LIABILITIES | |||
| Equity | 20,984 | 20,240 | 22,784 |
| Deferred tax liability | 4,401 | 4,638 | 5,106 |
| Non-current interest-bearing liabilities | 19,374 | 18,727 | 20,211 |
| Non-current finance lease liability | 981 | 1,114 | 1,305 |
| Derivatives | 655 | 521 | 348 |
| Other non-current liabilities | 227 | 206 | 222 |
| Total non-current liabilities | 25,638 | 25,205 | 27,193 |
| Current interest-bearing liabilities | 1,054 | – | – |
| Other current liabilities | 1,791 | 1,564 | 1,086 |
| Liabilities directly attributable to Assets held for sale | 1,365 | – | – |
| Total current liabilities | 4,211 | 1,564 | 1,086 |
| Total equity and liabilities | 50,833 | 47,009 | 51,062 |
SALE OF FARSTA CENTRUM
On March 9th Atrium Ljungberg signed an agreement to sell Farsta Centrum to Stadsrum Fastigheter AB. The purchase price is based on an underlying property value of SEK 3,979 before deductions for deferred tax, with 1 June 2020 as the agreed date of closing. The sale will be recognised in quarter two.
In the balance sheet as of 31 March 2020 the assets and liabilities attributable to Farsta Centrum have been classified as Assets held for sale and Liabilities directly attributable to Assets held for sale.
Assets held for sale amount to SEK 4,402 million, of which SEK 3,979 million have been reclassified from Investment properties, SEK 324 million from Right-of-use asset, leaseholds, and SEK 60 million from Goodwill.
Liabilities directly attributable to Assets held for sale amount to SEK 1,365 million, of which SEK 549 million has been reclassified from Non-current interest-bearing liabilities, SEK 404 million from Deferred tax liability, and SEK 324 from Non-current finance lease liability.
EFFECT OF THE CORONAVIRUS PANDEMIC
There is greater uncertainty when valuing the balance sheet items due to the ongoing coronavirus pandemic.
This is particularly true for the valuation of Investment properties and applies to both the development of market prices and future operating net, as it is difficult to assess the duration and extent of the pandemic at this point in time. For more information about the valuation of properties, see page 9.
Payments of rents for the first quarter were not effected by the coronavirus pandemic as the due date for payment was 31 December 2019. For the second quarter, only advance rent notifications that have already been paid are capitalised.
CONSOLIDATED CHANGE IN EQUITY
| Attributable to the parent company shareholders | |||||
|---|---|---|---|---|---|
| Other capital con | Profit brought | ||||
| Amounts in SEK m | Share capital | tributions | Hedging reserves | forward | Total equity |
| Opening balance as of 1 January 2019 | 333 | 3,960 | –26 | 16,429 | 20,696 |
| Profit/loss for the period | 220 | 220 | |||
| Other comprehensive income | 3 | 3 | |||
| Acquisition of own shares | –48 | –48 | |||
| Dividend, SEK 4.85/share | –631 | –631 | |||
| Closing balance as of 31 March 2019 | 333 | 3,960 | –23 | 15,970 | 20,240 |
| Profit/loss for the period | 2,587 | 2,587 | |||
| Other comprehensive income | 10 | 10 | |||
| Acquisition of own shares | –51 | –51 | |||
| Closing balance as of 31 December 2019 | 333 | 3,960 | –13 | 18,506 | 22,784 |
| Profit/loss for the period | –1,134 | –1,134 | |||
| Other comprehensive income | 3 | 3 | |||
| Acquisition of own shares | –19 | –19 | |||
| Unused dividend, SEK 5.00/share | –649 | –649 | |||
| Closing balance as of 31 March 2020 | 333 | 3,960 | –11 | 16,703 | 20,984 |
There are a total of 133,220,736 (133,220,736) shares, of which 4,000,000 (4,000,000) are class A shares and 129,220,736 (129,220,736) are class B shares. One class A share grants entitlement to ten votes and one class B share grants entitlement to one vote. Atrium Ljungberg acquired 118,000 class B shares in the first quarter of 2020 (297,000). At the end of the quarter the company owns 3,500,000 class B shares. As of 31 March 2020 the number of outstanding shares amounts to 129,720,736 (130,162,736). The average number of outstanding shares for the period from 1 January 2020 to 31 March 2020 amounts to 129,820,209 (130,360,814).
MARKET AND PROPERTY PORTFOLIO
THE PROPERTY MARKET
The transaction volume for the first quarter amounted to almost SEK 64 billion, an increase of 40 per cent compared with the same quarter of 2019. Hemfosa accounted for approximately SEK 29 billion of this total. The number of deals completed reduced by approximately 30 per cent compared with the same quarter of 2019. Many of these transactions were initiated before the coronavirus pandemic and we are now starting to see deals not being carried out because of the greater levels of uncertainty.
The yield requirements for office properties continued to clearly decrease at the start of the period, but the greater uncertainty related to the coronavirus pandemic is assumed to have had the opposite effect on yield requirements at the end of the period, resulting in a neutral effect for the quarter as a whole.
The effects of the coronavirus pandemic have been particularly noticeable for retail properties. The consumer durables market has been hit by a reduction in customer flows, while the FMCG sector initially saw an increase in demand, partly because of people stocking up on food. The yield requirements for retail properties increased during the quarter.
For tenant-owned dwellings, the downward trend in the supply of new builds continued at the start of 2020. However, homebuyers have adopted a cautious approach because of the coronavirus pandemic.
PROPERTY PORTFOLIO
Our property portfolio is concentrated to central locations in the growth regions of Stockholm, Gothenburg, Malmö and Uppsala, with Stockholm accounting for 72 per cent of the contracted annual rent. At the end of the quarter our property portfolio contains a total of 70 properties (51) with a total letting area of 1,171,000 m2 including garage (1,166,000).
14 leaseholds were taken into possession in Slakthusområdet in Stockholm in June 2019. In September 2019 the leaseholds for the residentials Kolding 1 and Kolding 2 in Ärvinge, Kista, were vacated.
In the third quarter of 2019, som office properties were reclassified as retail properties as a result of an internal redistribution. The fair value is approximately SEK 500 million, whick affects the comparison figures.
As of 1 April 2020 the contracted annual rent amounted to SEK 2,548 million (SEK 2,553 m). Excluding Farsta Centrum, the contracted annual rent amounts to SEK 2,261, of which SEK 478 million relates to retail, and it is distributed among our areas as follows: 32% Gränbystaden, 31% Sickla Köpkvarter, 20% Mobilia, 14% Stockholm other and 3% Forumkvarteret. The economic letting rate including project properties was 92 per cent (93%), and excluding project properties, 93 per cent (94%). The EPRA vacancy rate was therefore 7 per cent (6%). The lower letting rate has been caused, for example, by some tenants moving out of offices in Hagastaden and Medborgarplatsen,
and by tenants moving out of the Katarinahuset property project as the building starts to be emptied.
The average remaining term for contracted rent excluding residentials and parking was 3.3 years (3.5 years).
Contracted annual rent per premises type
– Half comprises offices
Contracted annual rent per premises type excluding Farsta
– The proportion of offices is increasing to 54 per cent
| Offices | 54 % | SEK 1,230 m | |
|---|---|---|---|
| Retail | 21 % | SEK 478 m | |
| FMCG | 5 % | SEK 117 m | |
| Restaurant | 5 % | SEK 112 m | |
| Culture/Education | 5 % | SEK 103 m | |
| Other | 5 % | SEK 103 m | |
| Health care | 3 % | SEK | 68 m |
| Residentials | 2 % | SEK | 49 m |
Contracted annual rent per region
– Only in strong growth regions
Rental value per m2 and letting rate
NET LETTING
Net letting, i.e. newly signed contracted annual rents with deductions for annual rents lost due to terminated contracts, amounted to SEK 9 million (SEK –33 m) during the first quarter, of which SEK 20 million (SEK –15 m) refers to project properties. Both newly signed contracts and terminations are spread across most of our areas in both retail and offices.
The time lag between net letting and its effect on profit is assessed to be 3–12 months.
Net letting
PROPERTY VALUATION
During the first quarter, Atrium Ljungberg internally valued the entire property portfolio and assumed yield requirements have been subject to quality assurance by Forum Fastighetsekonomi.
The market valuation is based on analyses of completed property transactions for properties of a similar standard and in a similar location, in order to assess the market's yield requirements. There is greater uncertainty than normal for the valuation assumptions due to the situation at the end of the quarter with the ongoing coronavirus pandemic; so to reduce this uncertainty, more valuation meetings were held with external valuation experts than for a standard quarterly valuation. The assessments that have been made are based on the property transactions that have been carried out, and an assessment of the market changes that took place in March. The valuation also entails cash flow calculations, with individual assessments of the earning capacity of each individual property. Assumed rental levels in conjunction with contract expirations correspond to assessed longterm market rent levels. Operating costs have been assessed on the basis of the company's actual costs.
DEVELOPMENT PROPERTIES
Development properties are properties that are developed or intended to be developed into tenant-owned dwellings and then be sold. The development properties are reported as the lowest of the investments made and the estimated net realisable value.
| Rental value and letting rate | 1/4/2020 | 1/4/2019 | |||||
|---|---|---|---|---|---|---|---|
| Premises type | Rental value, SEK m |
Rental value, SEK/ m2 1) |
Letting rate, % | Rental value, SEK m |
Rental value, SEK/ m2 1) |
Letting rate, % | |
| Offices | 1,302 | 2,832 | 92 | 1,267 | 2,844 | 94 | |
| Retail | 983 | 3,485 | 94 | 991 | 3,497 | 94 | |
| Other | 238 | 2,018 | 92 | 226 | 1,965 | 94 | |
| Residentials | 49 | 1,722 | 99 | 87 | 1,452 | 100 | |
| Garage/parking | 60 | E/T | 94 | 56 | E/T | 93 | |
| Business area Property | 2,632 | 2,963 | 93 | 2,628 | 2,906 | 94 | |
| Project properties | 132 | 78 | 106 | 73 | |||
| Total | 2,764 | 92 | 2,734 | 93 | |||
| Letting rate, % | Rental value, SEK/ m2 1) |
Rental value, SEK m |
|
|---|---|---|---|
1) m2 excluding garage.
CHANGE IN VALUE
The unrealised change in value during the period amounted to SEK –1,486 million (SEK 148 m). The majority of this change in value relates to retail properties, where the value was adjusted down by SEK –1,470 million. The change is caused by an adjustment in the yield requirement of 0.3 percentage units due to higher risk, and a change in value of lower operating net both in the short term through higher rent discounts and in the long term in the form lower market rents and higher vacancies.
Unrealised changes in value, properties
| Quarter | Quarter | |
|---|---|---|
| 2020 | 2019 | |
| SEK m | 1/1–31/3 | 1/1–31/3 |
| Change in yield requirements | –791 | – |
| Change in operating net, etc. | –695 | 148 |
| Total | –1,486 | 148 |
FORUMKVARTERET – The reconstruction project in Forumkvarteret in the centre of Uppsala is now complete. We have created an urban inner city district here, with new, modern offices, rental apartments, stores, restaurants and cafes.
Property portfolio (excluding right-of-use asset, leasehold rights)
SEK m Quarter 2020 Jan–Mar Quarter 2019 Jan–Mar Investment properties Fair value at the beginning of the period 47,513 43,310 43,310
| Acquisitions (after deduction of latent tax) | 3 | 18 | 1,174 |
|---|---|---|---|
| Reclassification to Assets held for sale | –3,979 | – | – |
| Sales | – | – | –1,031 |
| Investments in held properties | 463 | 383 | 1,704 |
| Unrealised changes in value | –1,486 | 148 | 2,283 |
| Other | – | – | 73 |
| Fair value at the end of the period | 42,514 | 43,859 | 47,513 |
| Development properties | |||
| At the beginning of the period | 997 | 891 | 891 |
| Investments in tenant-owned dwelling projects |
107 | 15 | 106 |
| Development properties, at the end of the period |
1,104 | 906 | 997 |
| Properties included in Assets held for sale | 3,979 | – | – |
| Property portfolio, total 1) | 47,597 | 44,765 | 48,509 |
Full year 2019 Jan–Dec
1) Excluding Right-of-use asset, leaseholds
Change in the property portfolio
Dividend yield per premises type
| 31/3/2020 | 31/12/2019 | ||
|---|---|---|---|
| % | Interval | Average | Average |
| Offices | 3.5–6.3 | 4.3 | 4.3 |
| Retail | 3.7–6.3 | 5.2 | 4.9 |
| Residentials | 2.3–3.8 | 3.7 | 3.7 |
| Other | 3.5–6.3 | 4.8 | 4.8 |
| Total | 2.3–6.3 | 4.6 | 4.5 |
Dividend yield per region
| 31/3/2020 | 31/12/2019 | ||
|---|---|---|---|
| % | Interval | Average | Average |
| Stockholm | 2.3–6.2 | 4.5 | 4.5 |
| Uppsala | 3.8-5.8 | 5.2 | 5.0 |
| Malmö | 3.8–6.3 | 5.6 | 5.4 |
| Gothenburg | 4.4–5.0 | 4.5 | 4.5 |
| Total | 2.3–6.3 | 4.6 | 4.5 |
| 31/3/2020 | 31/3/2019 | |||||
|---|---|---|---|---|---|---|
| Property type | Letting area, '000 m² |
Fair value, SEK m |
Fair value, SEK/m² 1) |
Letting area, '000 m² |
Fair value, SEK m |
Fair value, SEK/ m² 1) |
| Office properties | 609 | 23,563 | 49,279 | 688 | 23,861 | 44,528 |
| Retail properties | 333 | 12,588 | 46,687 | 367 | 15,531 | 49,840 |
| Residentials | 45 | 1,288 | 33,542 | 82 | 2,038 | 29,007 |
| Business area Property | 987 | 37,440 | 47,621 | 1,137 | 41,430 | 45,144 |
| Project properties | 61 | 4,619 | E/T 2) | 23 | 2,148 | E/T 2) |
| Land and development rights | – | 456 | – | 281 | ||
| Total Investment properties | 1,048 | 42,514 | 1,160 | 43,859 | ||
| Development properties | 8 | 1,104 | 6 | 906 | ||
| Property portfolio, total 3) | 1,056 | 43,618 | 1,166 | 44,765 | ||
| Assets held for sale | 115 | 3,979 | ||||
| Property portfolio, total, including assets held for sale | 1,171 | 47,597 |
1) Standardised with area excluding garage.
2) Letting area for new builds is not reported until the project is completed and the figures therefore do not accurately represent the actual situation.
3) Excluding Right-of-use asset, leasehold rights.
INVESTMENTS AND PROJECTS
CONFIRMED AND COMPLETED PROJECTS
During the first quarter, investments in held properties amounted to SEK 570 million (SEK 398 m), of which SEK 321 million (SEK 202 m) was in project properties and SEK 107 million (SEK 15 m) in development properties. Investments in project properties relate primarily to projects in Sickla, Mobilia, Barkarbystaden and Hagastaden. The other investments relate mostly to tenant adaptations in properties in Kista, Sickla, Uppsala and Malmö.
The remaining investment volume for confirmed projects amounted to SEK 3,740 million as of 31 March 2020.
STOCKHOLM
SICKLA, NACKA
Curanten – At Sickla Station, we are building a healthcare destination, with stores, cafes and restaurants on the ground floor. The project comprises a total of 11,500 m2 , which includes 9,900 m2 for healthcare. Adaptation of the premises for tenants is currently underway. Occupancy is planned for the end of 2020. In March a new rental contract was signed with the municipality of Nacka for more than 1,500 m2 for public services. Contracts have already been signed with Sickla Hälsocenter, Alva Barnklinik and GHP Specialisttandläkarna in Nacka and Diagnostiskt Hudcenter. Contracts have been signed with Kronans Apotek, Reload Superfoods and Bastard Burgers for the ground floor.
Tapetfabriken – The old wallpaper factory directly next to Marcusplatsen in Sickla is now being developed into a hotel. We have signed an agreement with Nordic Choice Hotels for a hotel with 240 rooms, conference premises, event spaces, a restaurant and a lobby measuring 2,000 m2 . The hotel is planned to open in the spring of 2021.
Nobelbergsgaraget – The framework has been put into place for the garage and supplementary areas for restaurants, offices and service, and completion is expected to take place at the end of 2020. The parking garage will include around 100 parking spaces. This property is a 3D property under Brf Sicklastråket.
Panncentralen – The former boiler room at Nobelberget is being reconstructed and extended to create a modern pre-school with six departments and an outdoor play area. Rental contracts have been signed with Jensen Education, which plans to open at the end of 2020.
Brf Sicklastråket – The tenant-owned apartment project containing 68 tenant-owned apartments is the first residential block to be built in Nobelberget.
Sales started for this project in the autumn of 2018 and in the end of the first quarter 2020 binding contracts had been signed for 78 per cent of the apartments. These apartments are being built on top of Nobelbergsgaraget, and the district is expected to be ready for occupancy at the end of 2020.
Sickla Galleria, phase IV – On top of the existing shopping centre, we are creating approximately 200 parking spaces in order to meet the increased need for parking linked with the Curanten and Stationshuset projects. Approximately 2,000 m2 of existing retail space has been vacated, and new areas covering almost 3,000 m2 have been created for retail and service. The foundation work is currently underway and is expected to be complete in the third quarter of 2021.
SLUSSEN
Katarinahuset in Slussen – In March 2020 a decision was made to start a reconstruction project in Katarinahuset and in the spring the building is being emptied to enable demolition work to go ahead. Following the reconstruction work, the building will be home to modern offices with a unique view, and we are also planning for a hotel and several restaurants. We are also planning to develop the building's roof terrace so that the general public can access it via Mosebacke and Katarinahissen. This renovation work is expected to be complete in the first quarter of 2023. The investment amounts to SEK 980 million.
CONT. OUR INVESTMENTS AND PROJECTS
HAGASTADEN
Life City – Life City is being built next to New Karolinska Solna University Hospital. The building comprises 27,500 m2 and an investment of SEK 1.9 billion including land acquisitions. We are creating a new meeting place here for life science activities. The biggest tenant is Academic Work, which signed an agreement for 17,000 m2 .
Tunnelling work beneath the building has been completed. The framework is currently being erected and should be finished by the summer of 2020. This project is on schedule with the first tenants expected to move in during the fourth quarter of 2021. The entire building is planned for completion in the spring of 2022.
BARKARBYSTADEN, JÄRFÄLLA
Bas Barkarby – Construction of the first phase of Bas Barkarby started in the second quarter of 2019 and comprises approximately 25,000 m2 . Here we will be bringing together education with the business community and culture to create an entirely new meeting place. Järfälla Municipality will lease almost 11,000 m2 for upper secondary education, a multi-purpose hall, a library and other cultural activities. Bas Barkarby will also comprise offices, a restaurant and a gym. The framework is currently being erected and work is underway on the facade. Occupancy is expected to begin in the first quarter of 2022 and the entire building is expected to be fully completed in the summer of 2022.
Bas Barkarby will be directly connected to western Stockholm's new hub for the underground railway, long-distance trains, commuter trains and buses.
MALMÖ
MOBILIA
Mobilia Torghuset – Work on an extension of approximately 13,100 m2 is being completed. The rental apartments are fully let and the tenants will be moving in at the end of April and beginning of May. Funnys Äventyr has taken possession of its premises and is currently building its environments. The premises for Nordisk Film are currently being adapted and are expected to open at the same time as Funnys Äventyr in the fourth quarter of 2020. In terms of retail,
agreements have been signed with New Yorker, Specsavers, Intersport, Deichman, Sketchers and Yogiboost. In the spring of 2020 Sweden's largest living wall is being installed on the facade of Torghuset.
UPPSALA
GRÄNBYSTADEN
Gränby Entré, building 3 – We have constructed three buildings containing rental apartments, commercial premises and offices adjacent to Gränbystaden Galleria. Building 3 contains 66 rental apartments, offices and premises for restaurants, gyms and other activities. The apartments are now occupied and the work on the last commercial premises is ongoing.
Parkhusen, block 1 – We are building a residential block called Parkhusen with approximately 250 apartments close to both Gränbystaden Galleria and Gränbyparken. Parkhusen will create an urban frontage and a clearly defined entrance to the park. Block 1 comprises 44 rental apartments with commercial premises on the ground floor. Construction started in the project in March 2020 and it is expected to be completed in the second quarter of 2021. The apartments will be mediated through Uppsala Bostadsförmedling.
FORUMKVARTERET
Forumkvarteret – The major reconstruction work in Forumkvarteret in the centre of Uppsala will be completed in the second quarter. This reconstruction project has included both the office and retail sections in order to create an urban inner city district.
POTENTIAL DEVELOPMENT PROJECTS
Our current project portfolio with new builds and property development projects enables future investments of approximately SEK 28 billion, which includes potential land acquisitions through land allocations.
In terms of area, more than 40 per cent of the project portfolio comprises residentials, 40 per cent is for officies, while the remainder is retail/service, education and culture. The project portfolio is divided among the majority of our areas with Sickla, Slakthusområdet,
BAS BARKARBY – Bas Barkarby will be directly connected to western Stockholm's new hub for the underground, long-distance trains, commuter trains and buses. The district will be transformed into a new meeting place in Järfälla, combining business, culture and education.
Gränbystaden and Hagastaden accounting for approximately 84 per cent. The rate at which we can complete the projects depends on the market situation and the detailed development plan process. A project is not usually started until we have secured a minimum yield level in the form of signed lease contracts.
POTENTIAL PROJECT STARTS 2020-2022
STOCKHOLM
In Sickla, sales are in progress of the first tenant-owned apartments of a total of 500 at Nobelberget. The launch of phase two for almost 60 tenant-owned apartments with ground floor premises is planned
for 2020. The development of the remaining apartments will be carried out gradually based on market demand. At Nobelberget, we are creating an attractive and dense urban environment with residentials as well as office premises and cultural activities.
We have a development right for approximately 7,500 m2 GFA at Sickla Station, where the future underground will be linked with the cross-town light rail link, the Saltsjöbanan Line and bus services. Work is underway on a new detailed development plan with an extended development right that includes a 23-storey building and approximately 23,000 m2 GFA. Consultation on the detailed development plan is complete and the examination of the plan is scheduled before the summer. Atrium Ljungberg and Region Stockholm are working jointly
Confirmed projects
| Total | Of which | Rental | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Residential | Parking, | investment, | remaining, | Fair value, | value, SEK | Letting | ||||
| Project, property, municipality | Retail | Offices | units | Other | GFA | SEK m 1) | SEK m | SEK m | m 2) | rate, % |
| New builds and extensions | ||||||||||
| Curanten, Sicklaön 83:22, Nacka | 1,600 | 9,900 | 530 | 230 | 39 | 46 | ||||
| Tapetfabriken, Sicklaön 83:22, Nacka | 10,500 | 4,600 | 440 | 180 | E/T 3) | 100 4) | ||||
| Nobelbergsgaraget, Sicklaön 83:45, Nacka | 600 | 3,400 | 60 | 30 | 4 | – | ||||
| Sickla Galleria phase IV, Sicklaön 83:22, Nacka | 5,000 | 6,300 | 140 | 110 | 16 | – | ||||
| Life City, Molekylen 1, Stockholm | 27,500 | 4,400 | 1,840 | 1,090 | 109 | E/T 3) | ||||
| Bas Barkarby, Barkarby 2:64, Järfälla | 5,000 | 19,300 | 830 | 640 | 54 | E/T 3) | ||||
| Mobilia Torghuset, Bohus 8, Malmö | 3 500 | 3,800 | 5,800 | 550 | 160 | 31 | 94 5) | |||
| Gränby Entré, building 3, Gränby 21:5, Uppsala | 1,200 | 1,300 | 3,400 | 240 | 20 | 15 | 88 6) | |||
| Parkhusen, block 1, Gränby 25:1, Uppsala | 100 | 2,700 | 120 | 90 | 6 | |||||
| Reconstruction | ||||||||||
| Panncentralen, Sicklaön 83:33, Nacka | 1,000 | 90 | 60 | E/T 3) | 100 | |||||
| Katarinahuset, Stockholm | 2,700 | 18,500 | 3,900 | 980 | 940 | 126 | - | |||
| Forumkvarteret, Dragarbrunn 27:2, Uppsala | 6,200 | 7,500 | 1,400 | 1,200 | 340 | 30 | 50 | 93 | ||
| Tenant-owned dwellings | ||||||||||
| Brf Sicklastråket, Sicklaön 83:43, Nacka | 4,500 | 300 | 160 | E/T | 78 8) |
Total 20,900 59,800 15,800 50,400 19,900 6,460 3,740 3,533 7) 1) Including any land acquisition in connection with the project implementation, but excluding any initial values such as the market value of a demolished building.
Letting area, m²
2) Excluding premiums and any net sales result.
3) Rental value/letting rate is not reported as a subtotal with regard to individual business transactions.
4) The letting rate including parking amounts to 94 per cent. Parking is let closer to completion.
5) The letting rate for commercial premises amounts to 92 per cent. The letting rate for residentials is 100 per cent.
6) The letting rate for commercial premises amounts to 77 per cent. The letting rate for residentials is 100 per cent.
7) Divided into SEK 2,423 million for new building and extensions, SEK 950 million for reconstructions and SEK 160 for tenant-owned dwelling projects.
8) The percentage of apartments sold with binding contracts, percentage of number.
CONT. INVESTMENTS AND PROJECTS
on projects that involve construction of elements for the new station entrance. The building will also contain offices and other commercial premises. The ground work started in March, including piling and shafts for the new ticket hall.
Detailed development planning work is in progress for a new 16-storey residential building with approximately 80 apartments. This will be at the eastern section of Sickla Galleria shopping centre by the second planned underground entrance at Sickla Station. The preparatory work on the station entrance is planned for the autumn of 2021.
GOTHENBURG
At Lindholmen in Gothenburg analyses are underway to see whether additional development rights could be created for offices measuring 20,000 m2 in the existing property.
MALMÖ
At Mobilia in Malmö we have a development right of 6,800 m2 GFA for offices on Trelleborgsvägen. Construction could potentially start in the first quarter of 2021 once Torghuset is complete.
UPPSALA
In Gränbystaden, the development of Uppsala's second city centre continues. Construction of the first residential block in Parkhusen is planned to start in the first quarter of 2020, but there is also the potential for approximately 200 additional apartments within the framework of the existing detailed development plan. We are also looking into the possibility of starting a detailed development plan to further develop and condense the area that is currently the outdoor car park next to the shopping centre.
In northern Gränbystaden there is the possibility of developing 5,000 m2 GFA for offices and retail on the remaining land within the existing detailed development plan.
We also have a land allocation with a development right for a potential 45,000 m2 GFA south of Gränbystaden Galleria. The plan is to develop the area with a new office cluster and residentials. Detailed development planning is underway and expected to be complete in 2020.
SLUSSEN
Having recently signed the agreement with the City of Stockholm, Atrium Ljungberg is now one of the largest property owners in Slussen. This agreement involves us returning the Hamnmästaren measuring 20,000 m2 GFA right on the quayside at Stadsgårdskajen in front of our Glashuset property. This will allow the new Nobel Centre to be built on the site.
As part of this agreement we have received several land allocations in Slussen, Hagastaden and Slakthusområdet as compensation for Hamnmästaren. In Slussen we now have the opportunity to develop the retail site comprising approximately 8,000 m2 under Södermalmstorg. We are planning retail and service here combined with areas that link the various methods of public transport together; the Saltsjöbanan line, the underground and the bus terminal in Katarinaberget. The retail hub is adjacent to the future Mälarterrassen, a public building comprising more than 7,000 m2 GFA with a view of the old town in Stockholm, Gamla Stan, and the water. We are planning cafes, restaurants and some cultural offerings here. Occupancy is planned for 2025.
The Ormen district is a development right of approximately 4,500 m2 , with a hotel planned to be built above the underground entrance. This is expected to be completed at the same time as the retail hub.
In Slussen we also have the Ryssbodarne district, a land allocation that is partly in front of Katarinahuset, and above both Stadsgårdsleden and Saltsjöbanan. The Ryssbodarne district is a triangular development right comprising more than approximately 7,000 m2 GFA
CONT. OUR INVESTMENTS AND PROJECTS
across five floors, where we are planning offices with public spaces on the ground floors. Production will start in 2025 at the earliest, with potential occupancy in 2027.
Atrium Ljungberg already owns Glashuset and Sjömansinstitutet and also acquired Katarinahuset in the autumn of 2018 through an exchange deal with Folksam. This means that we are now developing approximately 75,000 m2 GFA in Slussen, which is expected to be complete in 2027.
We are continuing to work well with the city, creating an incredible meeting place together for the future. Slussen will become a destination for both tourists and people living in Stockholm; a vibrant hub in the commercial heart of Söder.
SLAKTHUSOMRÅDET
In June 2019, we took possession of 14 properties totalling more than 50,000 m2 of letting area. We also have an option to acquire an investment property of 32,000 m2 of letting area. The option of ordering land allocations of approximately 100,000 m2 GFA is also on the table. The acquisitions and developed land allocations amount to a total of approximately 200,000 m2 GFA for offices and residentials, supplemented with culture, retail, a restaurant, hotel, education, etc. The total investment up to 2030, including acquisitions, amounts to around SEK 8 billion.
Slakthusområdet is one of Stockholm's largest urban development projects. In the autumn we worked with the City of Stockholm to complete a preliminary study for the northern part of Slakthusområdet. Our objective was to be able to create good occupation values and provide opportunities for activities to continue 24 hours a day. An increase in volumes is proposed in order to achieve this, creating a better mix of activities in the area. Quality assurance work is currently underway and the planning work for the northern part of the site is expected to begin in 2020. The intention is to create a strong destination; a meeting place for food, culture and experiences in Stockholm, an engine for the entire Söderort.
| Total 3) 4) | 208,000 | 468,000 | 28,000 | ||
|---|---|---|---|---|---|
| Uppsala | Uppsala | Retail | 5,000 | 23,000 | |
| Uppsala | Uppsala | Offices | 23,000 | ||
| Uppsala | Uppsala | Residential | 20,000 | 35,000 | |
| Södermalm | Stockholm | Culture/ restaurant |
7,000 | ||
| Södermalm | Stockholm | Offices | 48,000 | ||
| Södermalm | Stockholm | Hotels | 5,000 | ||
| Södermalm | Stockholm | Retail | 16,000 | ||
| Sundbyberg | Sundbyberg | Offices | 14,000 | ||
| Slakthusområdet | Stockholm | Culture/ restaurant |
11,000 | ||
| Slakthusområdet | Stockholm | Retail | 28,000 | ||
| Slakthusområdet | Stockholm | Offices | 81,000 | ||
| Slakthusområdet | Stockholm | Residential | 44,000 | ||
| Slakthusområdet | Stockholm | Education | 7,000 | ||
| Sickla | Nacka | Offices | 24,000 | ||
| Sickla | Nacka | Residential | 41,000 | 94,000 | |
| Sickla | Nacka | Education | 9,000 | ||
| Mobilia | Malmö | Offices | 5,000 | ||
| Hagastaden | Stockholm | Retail | 1,000 | ||
| Hagastaden | Stockholm | Offices | 24,000 | 25,000 | |
| Hagastaden | Stockholm | Residential | 37,000 | ||
| Lindholmen | Gothenburg | Offices | 29,000 | ||
| Barkarby | Järfälla | Offices | 20,000 | ||
| Municipality | type 1) | exists | plan required | SEK m 2) | |
| Premises | develop ment plan |
detailed development |
Potential investments, |
||
| Detailed | Change to | ||||
| Project area, m², GFA |
Potential projects Potential projects by premises type
– Residentials and offices account for almost 85 per cent of the area
Potential projects by detailed development plan
Education, 2 % Hotel, 1 %
– There is a detailed development plan for over 31 per cent of the area
plan exists, 31 % plan required, 69 % Detailed development plan exists, 31 %
Potential projects by area
– The largest proportion of area is related to Stockholm
Potential projects at underground stations
Sundbyberg, 2 % Malmö, 1 %
– 73 per cent of the area at new or existing underground stations
stations, 7 % Other communications, 27 %
1) Anticipated premises use may change and may include other elements.
2) The investment volume relates to investments in existing properties and future development
rights, including any land acquisitions. 3) Of which around 23,000 m2 relates to reconstruction and around 171,000 m2 GFA relates to land allocations.
4) Of which around 60,000 m2 relates to reconstruction and around 161,000 m2 GFA relates to land allocations.
FINANCING
THE FINANCIAL MARKET
The end of the first quarter was dominated by the coronavirus pandemic. The assessment of the National Institute of Economic Research is that this pandemic will have extremely negative impacts on both the global economy and the Swedish economy. This may result in a significant increase in unemployment and a drop in demand. Governments and central banks have already announced wide-ranging support packages and they are expected to go even further. The coronavirus pandemic has led to liquidity problems on the financial markets, making it difficult for many companies to finance themselves on the capital market.
Atrium Ljungberg has a strong financial position with a low gearing ratio. The sale of Farsta Centrum will provide a cash injection of approximately SEK 4 billion in June, which will further strengthen this position in the second quarter. The effect of this sale is a reduction in the gearing ratio of 5 percentage units, based on the balance sheet as of 31 March.
During the last quarter, the variable rate, 3M Stibor, rose from 0.15 per cent at the beginning of the year to 0.31 per cent at the end of the quarter. The 10-year swap interest rate decreased from 0.67 per cent at the beginning of the year to 0.39 per cent at the end of the quarter.
INTEREST-BEARING LIABILITIES
Atrium Ljungberg meets its financing requirements through the capital market, Nordic banks and direct financing. Interest-bearing liabilities at the end of the quarter amounted to SEK 20,979 million (SEK 18,727 m). During the first quarter interest-bearing liabilities increased by SEK 769 million, which was mostly due to investments in ongoing projects. This increase in liabilities has mainly handled by the new non-secured financing with Nordic Investment Bank. Outstanding bonds under the MTN programme amounted to SEK 7,838 million (SEK 7,958 m).
The average interest rate at the end of the quarter amounted to 1.6 per cent (1.7%). Including unutilised loan guarantees the average interest rate was 1.7 per cent (1.8%). The average fixed interest term was 5.0 years (4.1 years) and the average capital commitment term was 4.4 years (4.7 years). The interest coverage ratio for the first quarter amounted to 4.5 (4.4). According to the company's financial goals, the gearing ratio is to be less than 45 per cent over the long term. The average interest rate at the end of the first quarter amounted to 44.1 per cent (41.8%).
Interest–bearing liabilities
– SEK 21.0 billion in liabilities with 41 per cent green financing
Capital structure
– Secured loans correspond to 19 per cent in relation to total assets
MOBILIA – Mobilia has a strong sustainability focus and the vision is to transform it into the greenest city district in Malmö. Sweden's largest living wall is currently being installed on the facade of the new Torghuset.
Unutilised loan guarantees in addition to loan guarantees which cover outstanding commercial paper amounted to SEK 1,382 million (SEK 2,960 m). The unutilised overdraft facility amounted to SEK 300 million (SEK 300 m).
COLLATERAL
Atrium Ljungberg's borrowing is partly secured by real estate mortgages. Of the interest-bearing liabilities, SEK 9,860 million (SEK 9,084 m) is secured by mortgage deeds which corresponds to 19 per cent (19%) in relation to the total assets.
GREEN FINANCING
Atrium Ljungberg is creating attractive and sustainable cities. As part of our sustainability strategy, we are focusing on improving resource efficiency, which will reduce our environmental impact. This also makes it possible to apply green financing for operations. Green financing accounts for 41 per cent (24%) of the total loan volume. At the end of the quarter, there were SEK 5,400 million (SEK 4,500 m) in green bonds outstanding, as well as SEK 3,274 million (SEK – m) of green bank loans.
Development of financing sources
– The increase in debt volume has mostly been achieved through the capital market SEK billion
16 Q1 2020 ATRIUM LJUNGBERG
CONT. FINANCING
Fixed interest
| Average interest, | |||
|---|---|---|---|
| Maturity date | Amount, SEK m | Percentage, % | % 1) |
| 2020 | 5,881 | 28 | 1.2 |
| 2021 | 800 | 4 | 0.7 |
| 2022 | 400 | 2 | 1.6 |
| 2023 | 736 | 3 | 1.5 |
| 2024 | 1,480 | 7 | 1.6 |
| 2025 and thereafter | 11,682 | 56 | 2.0 |
| Total | 20,979 | 100 | 1.6 |
1) The average credit margin for variable interest rates is spread over the time segment during which the derivative falls due for payment. The average interest is recognised excluding the cost of unutilised loan guarantees.
Capital commitment
| Maturity date | Amount, SEK m | Percentage, % |
|---|---|---|
| 2020 | 238 | 1 |
| 2021 | 3,585 | 17 |
| 2022 | 4,980 | 24 |
| 2023 | 2,271 | 11 |
| 2024 | 2,329 | 11 |
| 2025 and thereafter | 7,576 | 36 |
| Total | 20,979 | 100 |
Gearing ratio and interest coverage ratio
– A stable gearing ratio with a reduced interest level resulting in an increased interest coverage ratio
DERIVATIVES
At the end of the quarter, the derivative portfolio comprised SEK 13,734 million (SEK 9,796 m) in interest rate swaps and currency swaps, with maturity between 2022 and 2030. In addition, there is SEK 500 million in forward-starting interest swaps beginning in 2021. Currency swaps are used to eliminate the currency exposure that arises when bonds are issued in Norwegian krone.
The derivatives portfolio is valued at market rate in conjunction with every closing of the accounts and the change in value is reported via the income statement. The unrealised change in the value of derivatives during the first quarter amounted to SEK –236 million (SEK –160 m) as interest rates decreased on the terms covered by the derivatives during the quarter. The deficit net book value of the derivatives portfolio totalled SEK –641 million (SEK –521 m) at the end of the period.
PUBLIC RATING
The company has an investment grade rating from the credit rating agency Moody's and was awarded Baa2 grade with a stable outlook.
– The average interest rate is stable, despite the capital commitment and fixed interest rate terms
LIFE CITY – In March we signed a green bank loan with Nordic Investment Bank worth SEK 920 million. This loan is for the Life City project in Haga staden. The building is going to be certified in accordance with BREEAM Excellent and will be ready to move into at the end of 2021.
CONSOLIDATED CASH FLOW STATEMENT
| Amounts in SEK m | Quarter 2020 Jan–Mar |
Quarter 2019 Jan–Mar |
Full year 2019 Jan–Dec |
12 months 2019/2020 Apr–Mar |
|---|---|---|---|---|
| OPERATING ACTIVITIES | ||||
| Profit/loss before changes in value | 311 | 306 | 1,234 | 1,239 |
| Reversal of depreciation, amortisation and impairment | 4 | 1 | 13 | 17 |
| Other items not included in the cash flow | –125 | –17 | –62 | –171 |
| Tax paid | –14 | –8 | –27 | –33 |
| Cash flow from operating activities before | ||||
| changes in working capital | 175 | 283 | 1,158 | 1,050 |
| Net change in working capital | 18 | 59 | 192 | 151 |
| Cash flow from operating activities | 193 | 342 | 1,350 | 1,201 |
| INVESTMENT ACTIVITIES | ||||
| Acquisition of investment properties | –3 | –18 | –1,174 | –1,159 |
| Investments in held properties and tenant-owned dwelling pro jects |
–570 | –398 | –1,810 | –1,982 |
| Sale of investment properties | – | – | 1,031 | 1,031 |
| Investment in financial fixed assets | –1 | –7 | –5 | 1 |
| Purchase/sale of equipment | –3 | – | –17 | –20 |
| Cash flow from investment activities | –577 | –423 | –1,975 | –2,129 |
| FINANCING ACTIVITIES | ||||
| Change in other non-current liabilities | 5 | 3 | 20 | 22 |
| Loans raised | 2,941 | 644 | 5,709 | 8,006 |
| Amortisation of debts | –2,034 | –434 | –4,016 | –5,616 |
| Exercise of derivatives | – | – | –235 | –235 |
| Dividends paid | – | – | –631 | –631 |
| Buy-back of own shares | –19 | –48 | –99 | –70 |
| Cash flow from financing activities | 893 | 166 | 748 | 1,475 |
| Cash flow for the period | 509 | 85 | 122 | 546 |
| Cash and cash equivalents at the beginning of the period | 457 | 335 | 335 | 420 |
| Cash and cash equivalent at the end of the period | 965 | 420 | 457 | 965 |
COMMENTS ON THE CASH FLOW STATEMENT
The cash flow for the period amounted to SEK 509 million (SEK 85 m). The higher cash flow compared to the same period of the previous year is mostly explained by the change in financing activities.
The cash flow from operating activities amounted to SEK 319 million (SEK 342 m), corresponding to SEK 2.46/share (SEK 2.59/share).
Investment activities have contributed to a negative cash flow of SEK –703 million (SEK –423 m), primarily attributable to investments in held properties, which amounted to SEK -570 million (SEK -398 m).
The cash flow in financing activities amounted to SEK 893 million (SEK 166 m) as a result of new loans.
Available liquidity amounted to SEK 2,647 million (SEK 3,680 m) and comprised bank deposits of SEK 965 million (SEK 420 m), unutilised overdraft facilities of SEK 300 million (SEK 300 m) and unutilised lines of credit of SEK 1,382 million (SEK 2,960 m) in addition to credit facilities covering outstanding commercial paper.
SUSTAINABILITY
SUSTAINABLE ENTERPRISE
One of Atrium Ljungberg's overall operational goals is Corporate Social Responsibility. In this context we have defined four sustainability goals which are monitored quarterly:
- › By 2021, 100 per cent of our investment properties will be environmentally certified (with the exception of project properties and properties acquired over the past two years).
- › Energy consumption per m2 will decrease by 30 per cent between 2014 and 2021.
- › The proportion of green lease contracts will be 50 per cent of the contracted annual rent at the end of 2021.
- › We will be one of Sweden's best workplaces, which forms part of our aim to have sustainable employees and to be an attractive employer.
ENVIRONMENTAL CERTIFICATION
We have chosen to certify our commercial premises in accordance with BREEAM and our residentials in accordance with Miljöbyggnad. On 31 March 2020, 52 per cent (35%) of letting area was certified.
ENERGY CONSUMPTION
Electricity is responsible for the greatest share of our energy consumption. Usually, we provide our tenants with electricity and charge them on the basis of actual consumption, which creates incentives for resource efficiency. A majority of our properties use district heating as their heat source. The cooling that is installed in our properties is provided by purchased district cooling and by self-generated cooling. Compared with the 2014 reference year, energy intensity has fallen by 18 per cent (15%) per m2 .
ENERGY INTENSITY
| Change | ||||
|---|---|---|---|---|
| 2019/2020 | 2018/2019 | compared to | ||
| kWh/m² | 1/4–31/3 | 1/4–31/4 | Change | 2014 1) |
| Heating | 67 | 71 | –6% | –27% |
| Property electricity | 46 | 50 | –8% | –31% |
| District cooling | 16 | 20 | –20% | –18% |
| Sub-total property energy | 129 | 141 | –9% | –28% |
| Tenant electricity | 59 | 59 | 0% | –5% |
| Tenant electricity, estimated | 17 | 18 | –6% | –41% |
| Process cooling | 14 | 14 | 0% | – |
| Total energy intensity | 219 | 234 | –6% | –18% |
1) Reference year.
Energy intensity
– 41 per cent of the total energy intensity comprises the tenants' energy used for their activities
SUSTAINABLE EMPLOYEES
We have taken part in the Great Place to Work® evaluation of "Sweden's best workplaces" since 2011. Our goal is to achieve an average index of 85 per cent. In 2019 we exceeded our goal and achieved an index of 87 per cent (88%).
GREEN LEASE CONTRACTS
Sustainable and cost-efficient solutions are created in close collaboration between tenants and property owners. Green lease contracts are an example of a joint undertaking to reduce environmental impact together; they comprise energy, waste and transportation, for example. The goal is for green contracts to account for at least 50 per cent of contracted annual rent by the end of 2021.
| 1/4/2020 | 1/4/2019 | |
|---|---|---|
| Green lease contracts, share of contracted annual rent | 39% | 28% |
ECONOMIC VALUE DISTRIBUTED
Atrium Ljungberg creates value by management, development and acquisition of properties. The generated economic value mainly comprises rental income, investments and unrealised changes in the value of properties. There is a description below of how the created economic values are distributed between suppliers, employees, lenders, society and the owners.
| Quarter | Quarter | Full year | 12 months | |
|---|---|---|---|---|
| SEK m | 2020 Jan–Mar |
2019 Jan–Mar |
2019 Jan–Dec |
2019/2020 Apr–Mar |
| Directly generated economic value |
||||
| Revenue | –993 | 670 | 5,026 | 3,364 |
| Economic value distributed | ||||
| Payments to suppliers | 740 | 633 | 2,401 | 2,509 |
| Salaries and compensation to employees |
69 | 62 | 261 | 268 |
| Fees and compensation to the Board and CEO |
8 | 9 | 33 | 32 |
| Payments to financiers, net | 95 | 87 | 372 | 380 |
| Tax to society | 100 | 114 | 404 | 391 |
| Dividends to shareholders | 649 | 631 | 631 | 649 |
| Total distributed economic value | 1,662 | 1,536 | 4,103 | 4,229 |
| Economic value — remaining in the company |
–2,654 | –866 | 924 | –865 |
TAX
Atrium Ljungberg's directly distributed economic value to society comprises taxes and leasehold fees. Taxes mainly comprise current tax, property tax, non-deductible VAT and stamp duty. The rules on these taxes are monitored carefully as this is an essential part of the commercial offer with requirements for high predictability and minimisation of administrative expenses. Read more about Atrium Ljungberg's tax policy on our website www.al.se or on page 35 in our 2019 Annual Report.
| SEK m | Quarter 2020 Jan–Mar |
Quarter 2019 Jan–Mar |
Full year 2019 Jan–Dec |
12 months 2019/2020 Apr–Mar |
|---|---|---|---|---|
| Current tax | 22 | 34 | 63 | 50 |
| Property tax | 44 | 38 | 174 | 180 |
| Non-deductible VAT | 25 | 17 | 79 | 87 |
| Stamp duty | – | 18 | 55 | 37 |
| Taxes | 91 | 107 | 370 | 354 |
| Leasehold fees | 9 | 7 | 34 | 36 |
| Society | 100 | 114 | 404 | 391 |
GREEN FINANCING
Atrium Ljungberg is able to implement green financing as a direct result of our sustainability work, with a clearly defined link to our sustainable projects. This accounts for 41 per cent (24%) of the total loan volume. At the end of the quarter, there were SEK 5,400 million (SEK 4,500 m) in green bonds outstanding, as well as SEK 3,274 million (SEK – m) of green bank loans.
SEGMENT REPORTING
Atrium Ljungberg's segmentation is based on two business areas: Properties and Project and construction work.
2020 Jan–Mar
| Project and | Non-allocated | |||||
|---|---|---|---|---|---|---|
| Project | construction | items and | ||||
| Amounts in SEK m | Properties | development 1) | TL Bygg | work | eliminations | The Group |
| Rental income | 654 | –6 | 648 | |||
| Net sales, project and construction work | 6 | 157 | 163 | –79 | 84 | |
| Net sales | 654 | 6 | 157 | 163 | –84 | 733 |
| Property management costs | –217 | 4 | –213 | |||
| Project and construction work costs | – | –4 | –146 | –151 | 64 | –87 |
| Gross profit | 437 | 1 | 11 | 12 | –17 | 432 |
| Central administration | –18 | –1 | –3 | –4 | – | –23 |
| Financial income and expenses | –99 | –99 | ||||
| Profit/loss before changes in value | 419 | 0 | 7 | 8 | –116 | 311 |
| Changes in value 2) 3) | –1,489 | –236 | –1,725 | |||
| Tax | 280 | 280 | ||||
| Profit/loss for the period | –1,070 | 0 | 7 | 8 | –72 | –1,134 |
| Investments and acquisitions | 466 | 107 | – | 107 | 4 | 577 |
| Assets, at the end of the period | 47,474 | 1,104 | 195 | 1,299 | 2,060 | 50,833 |
2019 Jan–Mar
| Project and | Non-allocated | |||||
|---|---|---|---|---|---|---|
| Project | construction | items and | ||||
| Amounts in SEK m | Properties | development 1) | TL Bygg | work | eliminations | The Group |
| Rental income | 636 | –3 | 633 | |||
| Net sales, project and construction work | 14 | 106 | 120 | –88 | 32 | |
| Net sales | 636 | 14 | 106 | 120 | –91 | 665 |
| Property management costs | –209 | 3 | –206 | |||
| Project and construction work costs | –8 | –101 | –109 | 72 | –37 | |
| Gross profit | 427 | 6 | 5 | 11 | –16 | 422 |
| Central administration | –19 | –1 | –6 | –7 | – | –25 |
| Financial income and expenses | –91 | –91 | ||||
| Profit/loss before changes in value | 408 | 5 | –1 | 5 | –107 | 306 |
| Changes in value 2) 3) | 165 | –160 | 5 | |||
| Tax | –91 | –91 | ||||
| Profit/loss for the period | 573 | 5 | –1 | 5 | –357 | 220 |
| Investments and acquisitions | 383 | 15 | – | 15 | – | 398 |
| Assets, at the end of the period | 44,973 | 906 | 162 | 1,068 | 969 | 47,009 |
1) The profit within project development mainly refers to costs of investigations at early project stages and ongoing development projects.
2) Properties, unrealised SEK –1,486 million (SEK 148 m). Properties, realised SEK –3 million (SEK 17 m).
3) Unrealised change in value, derivatives SEK –236 million (SEK –60 m).
SEGMENT REPORTING, cont.
Revenue type per segment
2020
Jan–Mar
| Project and | Non-allocated | |||||
|---|---|---|---|---|---|---|
| Project | construction | items and | ||||
| Amounts in SEK m | Properties | development | TL Bygg | work | eliminations | The Group |
| Rental income | 654 | –6 | 648 | |||
| Net sales, project and construction work | ||||||
| of which Turnkey contracts, fixed price | 29 | 29 | –0 | 29 | ||
| of which Turnkey contracts, open account | 58 | 58 | –57 | 1 | ||
| of which Performance contracts, fixed price | 0 | 0 | 0 | |||
| of which Performance contracts, open account | 69 | 69 | –15 | 54 | ||
| of which Other | 6 | 6 | –6 | – | ||
| Total Net sales, project and construction work | 6 | 157 | 163 | –79 | 84 | |
| Total Net sales | 654 | 6 | 157 | 163 | –84 | 733 |
2019 Jan–Mar
| Project | Project and construction |
Non-allocated items and |
||||
|---|---|---|---|---|---|---|
| Amounts in SEK m | Properties | development | TL Bygg | work | eliminations | The Group |
| Rental income | 636 | –3 | 633 | |||
| Net sales, project and construction work | ||||||
| of which Turnkey contracts, fixed price | 14 | 14 | –2 | 12 | ||
| of which Turnkey contracts, open account | 51 | 51 | –48 | 3 | ||
| of which Performance contracts, fixed price | 13 | 13 | – | 13 | ||
| of which Performance contracts, open account | 28 | 28 | –24 | 4 | ||
| of which Other | 14 | 14 | –14 | – | ||
| Total Net sales, project and construction work | 14 | 106 | 120 | –88 | 32 | |
| Total Net sales | 636 | 14 | 106 | 120 | –91 | 665 |
KEY RATIOS 1) 2)
| Quarter | Quarter | Full year | 12 months | |
|---|---|---|---|---|
| PROPERTY-RELATED KEY RATIOS | 2020 Jan–Mar |
2019 Jan–Mar |
2019 Jan–Dec |
2019/2020 Apr–Mar |
| Letting rate excluding project properties, % | 93 | 94 | 94 | 93 |
| Letting rate including project properties, % | 92 | 93 | 93 | 92 |
| Operating surplus margin, % | 67 | 67 | 69 | 68 |
| Letting area, '000 m² | 1,171 | 1,166 | 1,176 | 1,171 |
| Investments in Atrium Ljungberg's held properties, SEK m | 570 | 398 | 1,810 | 1,982 |
| Number of properties at the end of the period | 70 | 51 | 70 | 70 |
| FINANCIAL KEY RATIOS | ||||
| Equity/assets ratio, % | 41.3 | 43.1 | 44.6 | 41.3 |
| Gearing ratio, % | 44.1 | 41.8 | 41.7 | 44.1 |
| Interest coverage ratio | 4.4 | 4.6 | 4.4 | 4.4 |
| Average interest rate for interest-bearing liabilities, % | 1.6 | 1.7 | 1.6 | 1.6 |
| Return on equity, % | –20.7 | 4.3 | 12.9 | 7.1 |
| Return on equity, excluding changes in value, % | 4.2 | 4.5 | 4.6 | 4.7 |
| Return on total assets, % | –10.3 | 3.5 | 8.0 | 4.4 |
| Return on total assets excluding changes in value, % | 2.5 | 2.7 | 2.7 | 2.6 |
| DATA PER SHARE | ||||
| Earnings per share, SEK | –8.74 | 1.69 | 21.59 | 11.19 |
| Profit/loss before changes in value less nominal tax, SEK | 1.88 | 1.85 | 7.47 | 7.50 |
| Cash flow, SEK | 2.46 | 2.59 | 10.38 | 10.22 |
| Equity, SEK | 161.76 | 155.48 | 175.48 | 161.76 |
| Share price, SEK | 154.80 | 158.80 | 226.00 | 154.80 |
| Weighted average number of shares, thousands | 129,820 | 132,019 | 130,005 | 129,872 |
| Number of outstanding shares at the end of the period, thousand | 129,721 | 130,163 | 129,839 | 129,721 |
| EMPLOYEES | ||||
| Average number of employees | 338 | 313 | 320 | 326 |
EPRA KEY RATIOS 1)
| Quarter 2020 |
Quarter 2019 |
Full year 2019 |
|
|---|---|---|---|
| Jan–Mar | Jan–Mar | Jan–Dec | |
| EPRA Earnings, SEK m | 291 | 271 | 1,172 |
| EPRA EPS, SEK/share | 2.24 | 2.08 | 9.03 |
| EPRA NAV, SEK m | 26,204 | 25,170 | 27,931 |
| EPRA NAV, SEK/share | 202.00 | 193.37 | 215.12 |
| EPRA NNNAV 3), SEK m | 24,575 | 23,727 | 26,561 |
| EPRA NNNAV 3), SEK/share | 189.45 | 182.29 | 204.57 |
| EPRA Vacancy rate | 7% | 6% | 6% |
EPRA NAV, EPRA NNNAV and share price
1) See the definitions on pages 28–29, and see the reconciliation for key ratios at www.al.se.
2) The operating surplus margin, equity/assets ratio, return on total assets, and the return on total assets excluding changes in value have been adjusted. In 2019 these key ratios were calculated excluding the effect of the implementation of IFRS 16 Leases, but comparison figures are now available that include the effect of this implementation.
3) For calculation of current net worth (EPRA NNNAV), an estimated deferred tax of 4.0 per cent has been used.
QUARTERLY SUMMARY
INCOME STATEMENTS
| 2020 | 2019 | 2019 | 2019 | 2019 | 2018 | 2018 | 2018 | |
|---|---|---|---|---|---|---|---|---|
| Amounts in SEK m | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Rental income | 648 | 644 | 653 | 647 | 633 | 613 | 601 | 597 |
| Net sales, project and construction work | 84 | 93 | 62 | 46 | 32 | 48 | 55 | 59 |
| Net sales | 733 | 737 | 715 | 693 | 665 | 661 | 656 | 656 |
| Property management costs | –213 | –216 | –194 | –195 | –206 | –218 | –178 | –175 |
| Project and construction work costs | –87 | –107 | –77 | –55 | –37 | –60 | –66 | –65 |
| Gross profit | 432 | 415 | 445 | 443 | 422 | 383 | 412 | 416 |
| – of which gross profit/loss property management (operating surplus) | 435 | 428 | 460 | 452 | 427 | 395 | 423 | 422 |
| — of which gross profit/loss from project and construction work | –3 | –14 | –15 | –9 | –5 | –12 | –11 | –6 |
| Central administration, property management | –18 | –23 | –17 | –21 | –19 | –21 | –17 | –17 |
| Central administration, project and construction work | –4 | –3 | –3 | –3 | –7 | –10 | –6 | –11 |
| –23 | –26 | –20 | –25 | –25 | –31 | –23 | –28 | |
| Financial income and expenses | –99 | –99 | –107 | –97 | –91 | –76 | –72 | –76 |
| Profit/loss before changes in value | 311 | 289 | 318 | 321 | 306 | 276 | 317 | 312 |
| Properties, unrealised | –1,486 | 686 | 283 | 1,166 | 148 | 1,125 | 174 | 717 |
| Properties, realised | –3 | 13 | 49 | –7 | 17 | 112 | –1 | 6 |
| Derivatives, unrealised | –236 | 464 | –179 | –215 | –160 | –97 | 99 | –70 |
| Derivatives, realised | – | –50 | – | – | – | – | 1 | – |
| –1,725 | 1,113 | 152 | 945 | 5 | 1,140 | 272 | 653 | |
| Profit before tax | –1,414 | 1,402 | 469 | 1,265 | 311 | 1,417 | 589 | 965 |
| Tax | 280 | –358 | 65 | –258 | –91 | –115 | –171 | 151 |
| Profit/loss for the period | –1,134 | 1,044 | 534 | 1,007 | 220 | 1,301 | 418 | 1,116 |
| KEY RATIOS 1) 2) | ||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | 2018 | 2018 | 2018 | |
| Property-related key ratios | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 |
| Letting rate excluding project properties, % | 93 | 94 | 93 | 93 | 94 | 95 | 95 | 95 |
| Letting rate including project properties, % | 92 | 93 | 92 | 93 | 93 | 94 | 94 | 94 |
| Operating surplus margin, % | 67 | 66 | 70 | 70 | 67 | 64 | 70 | 71 |
| Letting area, '000 m² | 1,171 | 1,176 | 1,177 | 1,216 | 1,166 | 1,129 | 1,167 | 1,139 |
| Investments in Atrium Ljungberg's held properties, SEK m | 570 | 666 | 402 | 417 | 398 | 583 | 401 | 411 |
| Number of properties at the end of the period | 70 | 70 | 69 | 68 | 51 | 51 | 53 | 53 |
| Financial key ratios | ||||||||
| Equity/assets ratio, % | 41.3 | 44.6 | 43.8 | 42.5 | 43.1 | 45.9 | 44.0 | 43.9 |
| Gearing ratio, % | 44.1 | 41.7 | 41.8 | 43.2 | 41.8 | 41.9 | 43.8 | 42.4 |
| Interest coverage ratio | 4.4 | 4.3 | 4.2 | 4.6 | 4.6 | 4.6 | 5.4 | 5.1 |
| Average interest rate for interest-bearing liabilities, % | 1.6 | 1.6 | 1.7 | 1.7 | 1.7 | 1.6 | 1.4 | 1.6 |
| Return on equity, % | –20.7 | 18.8 | 10.0 | 19.4 | 4.3 | 25.8 | 8.6 | 23.5 |
| Return on equity, excluding changes in value, % | 4.2 | 4.1 | 4.6 | 4.9 | 4.5 | 4.3 | 5.1 | 5.0 |
| Return on total assets, % | –10.3 | 11.8 | 4.6 | 11.2 | 3.5 | 13.3 | 6.0 | 9.6 |
| Return on total assets excluding changes in value, % | 2.5 | 2.4 | 2.6 | 2.7 | 2.7 | 2.5 | 2.8 | 2.8 |
| Data per share | ||||||||
| Earnings per share, SEK | –8.74 | 8.07 | 4.13 | 7.74 | 1.69 | 9.93 | 3.18 | 8.44 |
| Profit/loss before changes in value less nominal tax, SEK | 1.88 | 1.75 | 1.93 | 1.94 | 1.85 | 1.65 | 1.88 | 1.85 |
| EPRA EPS, SEK | 2.24 | 2.28 | 2.38 | 2.30 | 2.08 | 2.06 | 2.61 | 2.13 |
| Cash flow, SEK | 2.46 | 2.28 | 2.59 | 3.45 | 2.59 | 2.05 | 3.36 | 1.75 |
| Equity, SEK | 161.76 | 175.48 | 167.41 | 163.27 | 155.48 | 158.64 | 148.67 | 145.46 |
| Long-term net worth (EPRA NAV), SEK | 202.00 | 215.12 | 209.27 | 204.65 | 193.37 | 194.82 | 184.62 | 182.13 |
| Current net worth (EPRA NNNAV), SEK 3) | 189.45 | 204.57 | 195.00 | 191.80 | 182.29 | 184.93 | 175.28 | 171.17 |
| Share price, SEK | 154.80 | 226.00 | 217.50 | 167.80 | 158.80 | 152.00 | 161.20 | 144.60 |
| Weighted average number of shares, thousands | 129,820 | 129,839 | 129,839 | 129,991 | 132,019 | 131,107 | 131,536 | 132,240 |
| Number of outstanding shares at the end of the period, thousand | 129,721 | 129,839 | 129,839 | 129,839 | 130,163 | 130 460 | 131,529 | 131,576 |
1) The operating surplus margin, equity/assets ratio, return on total assets, and the return on total assets excluding changes in value have been adjusted. In 2019 these key ratios were calculated excluding the effect of the implementation of IFRS 16 Leases, but comparison figures are now available that include the effect of this implementation. The key ratios for 2018 do not include any effects from the implementation of IFRS 16, as the standard entered into force on 1 January 2019. See definitions pages 28–29.
2) See reconciliation for key ratios on Atrium Ljungberg's website.
3) For calculation of current net worth (EPRA NNNAV), an estimated deferred tax of 4.0 per cent has been used.
PARENT COMPANY
The parent company's operations comprise Group-wide functions and the organisation for the management of the properties owned by the parent company and the subsidiaries.
Net sales amounted to SEK 84 million (SEK 112 m). The operating profit/loss amounted to SEK –9 million (SEK 3 m). Profit/loss after financial items amounted to SEK –130 million (SEK 61 m).
Interest-bearing liabilities amounted to SEK 17,500 million (SEK 14,703 m). These funds finance the parent company's property portfolio and are lent on to other Group companies.
INCOME STATEMENT, SUMMARY BALANCE SHEET, SUMMARY
| Amounts in SEK m | Quarter 2020 |
Quarter 2019 |
Full year 2019 |
|---|---|---|---|
| Jan–Mar | Jan–Mar | Jan–Dec | |
| Rental income | 20 | 39 | 144 |
| Management income | 64 | 73 | 328 |
| Net sales | 84 | 112 | 472 |
| Property costs | –8 | –16 | –53 |
| Management and administration expenses | –81 | –88 | –400 |
| Capital gain/loss from sale of properties | – | – | 184 |
| Depreciation | –4 | –5 | –20 |
| Operating profit | –9 | 3 | –186 |
| Earnings from shares in Group companies | – | – | 1,419 |
| Interest income and similar profit items | 156 | 153 | 268 |
| Interest expenses and similar profit items | –276 | –95 | –660 |
| –120 | 58 | 1,028 | |
| Profit after financial items | –130 | 61 | 842 |
| Appropriations | 0 | 0 | 29 |
| Profit before tax | –129 | 61 | 870 |
| Current tax | 0 | 0 | –6 |
| Deferred tax | 35 | –1 | 91 |
| 35 | –1 | 85 | |
| Profit/loss for the period | –94 | 60 | 955 |
| Amounts in SEK m | 31/3/2020 | 31/3/2019 | 31/12/2019 |
|---|---|---|---|
| ASSETS | |||
| Property, plant and equipment | 915 | 1,463 | 922 |
| Financial non-current assets | 1,145 | 891 | 1,062 |
| Current assets | 23,894 | 20,062 | 22,165 |
| Total assets | 25,954 | 22,416 | 24,150 |
| EQUITY AND LIABILITIES | |||
| Equity | 6,842 | 6,762 | 7,606 |
| Untaxed reserves | 8 | 61 | 8 |
| Provisions | 79 | 99 | 79 |
| Non-current liabilities | 17,093 | 14,708 | 16,337 |
| Current liabilities | 1,932 | 786 | 120 |
| Total equity and liabilities | 25,954 | 22,416 | 24,150 |
OTHER INFORMATION
BUY-BACK OF SHARES
On 28 March 2018, the Board of Atrium Ljungberg decided to initiate a buy-back of its own shares. The buy-back programme started on 20 April 2018. The aim of the programme is to secure the supply of shares in accordance with the Group's stock option programme, and to give the Board more flexibility in its work on the company's capital structure, which will therefore help to increase shareholder value. As of 31 March the company owned 3,500,000 class B shares. The buyback has been in the range of SEK 132.20–169.36 per share.
NUMBER OF OUTSTANDING SHARES
At the end of the period the parent company had issued a total of 94,500 call options, which entitle Atrium Ljungberg's staff to acquire the equivalent number of class B shares. The underlying share price reached a rate during parts of this period that would justify a redemption of these options. However, no dilution from the utilisation of these options has been taken into account when calculating earnings per share, as the effect is immaterial.
RETAIL SECTOR'S SALES TREND
In the first two months of the year, total sales at our four regional retail hubs – Sickla, Farsta Centrum, Gränbystaden and Mobilia – increased by an overall 3.7 per cent compared to the same quarter of the previous year.
ACCOUNTING POLICIES
Atrium Ljungberg's consolidated accounts have been prepared in accordance with the International Financial Reporting Standards (IFRS). The Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act. The parent company applies Swedish Financial Reporting Board's recommendation, RFR2 Accounting for Legal Entities, and the Swedish Annual Accounts Act. The accounting policies applied conform to those described in the 2019 Annual Report.
Parent company's accounting policies
The parent company applies the same accounting policies as the Group with the exceptions and additions regulated in RFR2, Accounting for Legal Entities.
CONT. OTHER INFORMATION
Instead of applying IFRS 16, the parent applies RFR 2 (IFRS 16 pp. 2–12); as the parent company is the lessee, it means that lease payments are expensed on a straight-line basis over the term of the lease.
The parent company recognises derivatives at the lower of cost and fair value. There are negative fair values as of 31 March 2020, which means that a liability of SEK 655 million (SEK – m) has been recognised in the balance sheet. A negative change in value of SEK 306 million (SEK – m) has been recognised in Income statement in Interest expenses and similar profit items. From 31 December 2019 hedge accounting is not applied to derivatives in the parent company.
Valuation method for investment properties
Investment properties are valued at fair value in the Balance Sheet. The valuation took place in accordance with level 3 in the IFRS valuation hierarchy.
Valuation method for derivatives
Derivatives are valued at fair value in the balance sheet. Pursuant to the IFRS valuation hierarchy, the fair value of derivatives has been valued in accordance with level 2. This level means that the valuation is based on input data other than the listed prices, and which are observable for the asset or the liability, either directly or indirectly. The derivative agreements (ISDA agreements) include an option to net obligations in respect of the same counterparty.
Fair value interest-bearing liabilities
The Group's recognised interest-bearing liabilities including liabilities attributable to Assets held for sales amount to SEK 20,979 million (SEK 18,727 m) and their fair value amounts to SEK 21,249 million (SEK 18,923 m). The fair value calculation is based on discounted estimated future cash flows. The discounting is effected on the basis of current market rates plus the relevant borrowing margin. The valuation is hereby conducted with IFRS valuation hierarchy level 2. Atrium Ljungberg is of the opinion, with regard to other financial assets and liabilities reported at amortised cost, that the differences between book values and fair values are insignificant.
EPRA
Atrium Ljungberg reports EPRA EPS, EPRA Vacancy rate, EPRA NAV as well as EPRA NNNAV in accordance with the European Public Real Estate Association's definitions.
When calculating the EPRA NNNAV (the triple net asset value), an estimated deferred tax of 4.0 per cent has been used for properties. The calculation of the tax rate is based on a discount rate of 3 per cent (real) and the fact that the property portfolio is realised over 50 years, where 10 per cent of the properties are sold through transfer of property with a nominal tax rate of 20.6 per cent, and that 90 per cent are sold indirectly through transfer of shares with a tax deduction for the buyer of 6 per cent.
ALTERNATIVE PERFORMANCE MEASURES
Atrium Ljungberg applies the guidelines of the European Securities and Markets Authority (ESMA) on Alternative Performance Measures (APMs). According to these guidelines, an APM is a financial measure of historical or future profit performance, financial position, financial results or cash flows which are not defined or stated in applicable rules for financial reporting; IFRS and the Swedish Annual Accounts Act.
In 2019 Atrium Ljungberg chose to reverse the effect of IFRS 16 when calculating the alternative performance measures. As comparison figures are now available, the reversal will no longer be carried out,
except for the following key ratios: gearing ratio and interest coverage ratio. This is because there are financial goals linked to these key ratios.
Reconciliation of APMs is available on Atrium Ljungberg's website, www.al.se.
ROUNDING OFF
Due to the effects of rounding off, figures presented in this interim report may not exactly match the totals in certain cases, and percentages may differ from the exact percentages.
CHANGES OF RULES IN THE AREA OF TAX
The company tax rate for the 2019 tax year decreased to 21.4 per cent (22.0% in 2018). The reduction in the company tax rate is taking place in two stages from 2019. The next reduction will be in 2021, when the company tax rate will be 20.6 per cent.
The new rules for the mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (DAC 6) do not cover Atrium Ljungberg. Previous proposals also included national arrangements within the Group. However, this was removed from the act that will enter into force on 1 July 2020.
The ongoing coronavirus pandemic will affect tax legislation through temporary laws and changes to tax payments. It is difficult to predict what these changes will be at this moment in time.
According to the Treasury Department, the parcelling study continues to be subject to administration.
MARKET DEVELOPMENT, RISKS AND UNCERTAINTY FACTORS
Atrium Ljungberg's property portfolio, with office, retail and full-service environments, is primarily located in strong subsidiary markets in the expanding regions Stockholm, Gothenburg, Malmö and Uppsala. The primary prioritised risk management areas, in light of both their complexity and size of the amounts involved, are letting, property valuation, project activities and financing. The company has good procedures for managing these risks and also has a strong financial position with strong key ratios, such as a low gearing ratio and high interest coverage ratio.
The ongoing coronavirus pandemic has created more uncertainty than normal. This uncertainty is mostly due to the difficulty in assessing the duration and extent of the pandemic, and therefore its effects on the company's earnings and valuation. In the short term Atrium Ljungberg will be affected by some tenants probably not being able to pay their rental costs. In the long term rental levels and vacancy rates will be affected, and the extent of this is currently difficult to assess. The government has delivered several support packages for business, including a proposal to provide rent support to property companies that offer vulnerable tenants rent relief in the second quarter. This proposal involves the state providing support in arrears via the County Administrative Boards for half of the reduction in rent for landlords that halve the rent for their tenants. However, there are still many uncertainties about which tenants will be covered by this support and the proposal must also be approved by the EU Commission.
For further information on risks and uncertainty factors in general, please see Atrium Ljungberg's 2019 Annual Report and the section entitled "Risks and risk management" on pages 87–92.
CONT. OTHER INFORMATION
EVENTS AFTER THE CLOSING DAY
On April 9, the Swedish Competition Authority approved Atrium Ljungberg's transfer of Farsta Centrum to Stadsrum AB. Closing will take place on June 1.
At the time of publication of the report, Atrium Ljungberg is still awaiting notification of the design of the state aid package that will provide certain tenants with rental discounts.
ANNUAL GENERAL MEETING AND NOMINATION COMMITTEE
The Annual General Meeting (AGM) of the company, held on 25 March 2020, resolved that the Board of Directors will consist of six ordinary members. Johan Ljungberg, Simon de Château, Erik Langby, Conny Fogelström and Sara Laurell were re-elected for the period until the next AGM. Gunilla Berg was elected as a new Board member. Johan Ljungberg was elected as the Chairman of the Board.
It was further resolved that a new Nomination Committee would, ahead of the 2021 Annual General Meeting, comprise representatives of the company's five biggest shareholders on the last banking day of February 2020. The Nomination Committee therefore consists of Per-Erik Hasselberg, appointed by the Holmström family, Lars Ericson, appointed by the Stockholm Consumer Cooperative Society, Hans Hedström, appointed by Carnegie Fonder, Johan Ljungberg, appointed by the Ljungberg family and Ilkka Tomperi, appointed by the mutual occupational pension insurance company Varma.
A dividend payment of SEK 5.00 per share (SEK 4.85/share) was approved.
The AGM resolved to authorise the Board of Directors to decide on an issue in kind on one or more occasions during the period until the next AGM totalling a maximum of SEK 13.3 million class B shares (corresponding to a dilution of approximately 10.0 per cent of the capital and 7.9 per cent of the votes).
The AGM also unanimously resolved to authorise the Board of Directors to make a decision to acquire on one or more occasions during the period until the next AGM as many class B shares to ensure that the company's holdings do not exceed 10 per cent of all the shares in the company at any given time.
In addition the AGM unanimously resolved to authorise the Board of Directors to make a decision to transfer its own class B shares on one or more occasions during the period until the next AGM. The maximum number of class B shares that may be transferred is the total number of the company's own class B shares that it has at any given time.
The AGM also resolved that the second paragraph of Section 9 of the Articles of Association will have the following wording "To participate in the general meeting shareholders must register with the company no later than the date stated in the notice of the meeting".
Full minutes are available on Atrium Ljungberg's website at www.al.se.
The Interim Report has not been subject to review by the company's auditors.
Nacka, 16 April 2020
Annica Ånäs CEO
ATRIUM LJUNGBERG IN BRIEF
Atrium Ljungberg is one of Sweden's biggest listed property companies. We own, develop and manage properties in growth markets in Stockholm, Gothenburg, Malmö and Uppsala. Our focus is on developing attractive urban environments for offices and retail, supplemented with residentials, culture, service and education. Deciding to build attractive spaces for the future is every bit as obvious to us as deciding to create long-term value – for us, our customers and for society.
Atrium Ljungberg has been listed on the NASDAQ Stockholm Exchange since 1994.
BUSINESS CONCEPT
Our long-term approach to ownership, development and management enables us to offer our customers attractive urban environments for offices, retail and residential units in strong subsidiary markets. Our in-house expertise and holistic perspective enable us to generate added value for our customers and partners and to create value growth within the company.
BUSINESS MODEL
Atrium Ljungberg's business model creates profitability and value growth, mostly through long-term property ownership, management and improvement, as well as through our project development of properties. Our construction business also contributes to profitability, as do our property acquisitions and sales.
PROJECT DEVELOPMENT Our project development comprises both new build and reconstruction and extension properties, and is conducted in attractive locations in large urban regions, generally in connection with existing property holdings. Our projects are run by our own personnel – from the concept phase to moving in. Project yields will provide better profitability than acquiring properties with an existing cash flow. Consequently, projects contribute both to net operating growth and value growth.
MANAGEMENT We also have our own management organisation that works closely with tenants to satisfy their needs in the best way possible, while staying open to new business opportunities.
ACQUISITIONS AND SALES We develop and manage with the aim of long-term ownership. We acquire new properties and land if we can achieve strategic benefits and generate a good operating net surplus, or generate a good yield through project development.
STRATEGIES
- › We will focus on developing attractive urban environments for offices and retail, supplemented with residentials, culture, service and education.
- › Develop and improve properties and development rights.
- › Operate in strong subsidiary markets in large urban regions.
- › be a significant player with large and unified units in each subsidiary market.
- › Focus on our customers in everything we do. Collaboration with customers, suppliers, municipalities and other stakeholders should be close, long-term, stable and committed.
- › Conduct and manage the entire business process in-house using our in-house expertise.
- › Sustainability work is integrated in the business strategy and constitutes an important component of our offering. We improve our own and our customers' resource efficiency.
- › To have committed employees who are passionate about what we do and who have well-established core values.
GOALS
Atrium Ljungberg's operations focus on value growth with a stable capital structure. Our goals are divided into three areas:
PROFITABILITY AND GROWTH
Return on equity will be 10per cent over time, we will invest SEK 2 billion each year in in-house projects, and the return on new build and extension projects will be 20per cent. The dividend is to correspond to a minimum of 50 per cent of the profit before changes in value, after nominal tax.
LONG-TERM STABILITY
A gearing ratio of a maximum of 45 per cent and a minimum interest coverage ratio of 2.0.
CORPORATE SOCIAL RESPONSIBILITY
100 per cent of our properties will be environmentally certified by 2021. Energy consumption per m2 is to decrease by 30 per cent between 2014 and 2021. By 2021, the proportion of green leasing contracts is to be 50 per cent of the contracted annual rent. We aim to be one of Sweden's best workplaces.
DEFINITIONS
FINANCIAL DEFINITIONS
The effect of the implementation of IFRS 16
Atrium Ljungberg has applied IFRS 16 Leases since 1 January 2019. In 2019 Atrium Ljungberg chose to reverse the effect of IFRS 16 when calculating the alternative performance measures in order to increase comparability. As comparison figures are now available, the reversal will no longer be carried out, except for the following key ratios: gearing ratio and interest coverage ratio. This is because there are financial goals linked to these key ratios.
Adjusted gearing ratio, %
Interest-bearing liabilities, excluding the liability for financial leasing for leaseholds, as a percentage of the sum of the properties' fair values at the end of the period, less properties acquired but not possessed and plus properties sold but not vacated.
The adjusted gearing ratio is used to illustrate Atrium Ljungberg's financial risk.
Average fixed interest, years
Average remaining term until interest settlement date of all credits in the liabilities portfolio.
The average fixed interest is used to illustrate Atrium Ljungberg's financial risk.
Average interest rate for interest-bearing liabilities, %
Weighted average contracted interest for all credits in the liabilities portfolio excluding unutilised credit facilities.
The average interest is used to illustrate Atrium Ljungberg's financial risk.
Average maturity date, years
Average remaining term until final maturity of all credits in the liabilities portfolio. The average maturity date is used to illustrate Atrium Ljungberg's financial risk.
Average number of outstanding shares
Weighted average number of outstanding shares calculated in accordance with IAS 33.
Cash flow per share, SEK
Cash flow from operating activities divided by the average number of outstanding shares.
Cash flow per share, SEK is used to illustrate Atrium Ljungberg's cash flow, and particularly its dividend capacity.
Dividend pay-out ratio, %
Dividend per share as a percentage of the profit/loss per share before changes in value, less applicable nominal tax.
Dividend pay-out ratio is used to illustrate what proportion of the earnings is shifted out to the Group's owners and reinvested in the operations respectively.
Earnings per share, SEK
Net profit/loss for the period divided by the average number of outstanding shares.
EPRA
The European Public Real Estate Association is a trade organisation for publicly listed property companies and investors in Europe which sets standards for the financial reporting.
EPRA NAV per share, SEK
Reported equity with a reversal of goodwill, derivatives and deferred tax, divided by the number of outstanding shares at the end of the period.
Long-term net worth (EPRA NAV) per share is used to provide stakeholders information on Atrium Ljungberg's long term net worth per share calculated in a uniform manner for publicly listed property companies.
EPRA NNNAV per share, SEK
Reported equity with a reversal of goodwill and adjusted with estimated actual deferred tax, divided by the number of outstanding shares at the end of the period.
EPRA NNNAV per share is used to provide stakeholders with information on Atrium Ljungberg's current net worth per share calculated in a uniform manner for publicly listed property companies.
Equity/assets ratio, %
Recognised equity at the end of the period as a percentage of the balance sheet total.
The equity/assets ratio is used to illustrate Atrium Ljungberg's interest rate sensitivity and financial stability.
Equity per share, SEK
Reported equity divided by the number of outstanding shares at the end of the period.
Equity per share is used to illustrate the owners' share of the company's total assets per share.
Gearing ratio, %
Interest-bearing liabilities, excluding the liability for finance leasing for leaseholds, as a percentage of the sum of the properties' fair value at the end of the period.
The gearing ratio is used to illustrate Atrium Ljungberg's financial risk.
Gross profit/loss project and construction work
Net sales, project and construction work minus project and construction costs.
Gross profit/loss property management
Rental income less property management costs.
Interest coverage ratio, multiple
Profit/loss before changes in value, plus interest expenses divided by interest expenses, excluding leasehold fees, which, according to IFRS 16, have been reclassified as an interest expense.
The interest coverage ratio is used to illustrate how sensitive the company's results are to interest rate changes.
Management result less nominal tax (EPRA EPS) per share, SEK
Profit/loss before changes in value, less calculated current tax excluding loss carry-forwards, divided by the average number of outstanding shares. The deducted tax has been calculated by taking into account tax deductible depreciation and investments.
Management earnings less nominal tax (EPRA EPS) is used to provide stakeholders information on Atrium Ljungberg's management result per share calculated in a uniform manner for publicly listed property companies.
Number of outstanding shares
Number of registered shares at the end of the period less bought-back shares, which do not provide entitlement to dividend or voting rights.
Profit/loss before changes in value per share, SEK
Profit/loss before changes in value, less current tax, divided by the average number of outstanding shares.
Profit/loss before changes in value per share is used to illustrate the ongoing management operations.
Property costs
Total property management costs, which exclude central administration.
Return on equity, %
Interest-bearing liabilities divided by reported equity.
Return on shareholders' equity is used to illustrate Atrium Ljungberg's capacity to generate profit on the owners' capital in the Group.
Return on equity, excluding changes in value, %
Profit/loss for the period before changes in value, divided by average adjusted equity.
Return on equity excluding changes in value is used to illustrate Atrium Ljungberg's capacity to generate current cash flow on the owners' capital in the Group.
Return on total assets, %
Profit/loss before tax plus interest expenses as a percentage of the average balance sheet total.
Return on total assets is used to illustrate Atrium Ljungberg's capacity to generate profit on the Group's assets uninfluenced by the Group's financing.
Return on total assets excluding changes in value %
Profit/loss before changes in value plus interest expenses as a percentage of the average balance sheet total.
Return on total assets excluding changes in value is used to illustrate Atrium Ljungberg's capacity to generate current cash flow on the Group's assets uninfluenced by the Group's financing.
Share dividend yield, %
The proposed or distributed share dividend as a percentage of the share price at the end of the financial year.
The share's dividend yield is used to illustrate which current yield shareholders are expected to receive.
Share's total yield, %
The year's change in the share price plus the distributed dividend during the year as a percentage of the share price at the end of the financial year.
The share's total yield is used to illustrate the shareholders' total yield on their ownership in Atrium Ljungberg.
PROPERTY-RELATED DEFINITIONS
Development properties
Development properties are properties that are built or unbuilt that the Group owns in order to develop and sell them as tenant-owned dwellings. These properties are recognised as current assets, even though some of the properties are managed and generate rental income while they are waiting to be developed.
They are recognised at the lower of their accumulated cost and their net realisable value.
EPRA Vacancy rate, %
The rental value of unlet premises divided by the rental value of the entire property portfolio. Project properties are excluded.
The EPRA Vacancy rate is recognised in accordance with the EPRA's definition of vacancy rate, which enables comparison between different companies.
GFA, m²
GFA (Gross Floor Area) refers to the building's total area, including outer walls.
Leasehold fees
The fee paid for the utilisation of leaseholds. Regarded according to IFRS 16 as an interest expense in the income statement.
Leaseholds
The right of use for building plots. In compliance with IFRS 16, leaseholds are recognised as a right-of-use asset in the balance sheet
Letting area, m²
Total area available for letting. Garage is included in letting area but excluded when calculating the rental value per m2 and fair value per m2 .
Letting rate, %
Contracted annual rents as a percentage of the rental value in conjunction with full letting. Reported figures are based on the immediately subsequent quarter.
The letting rate is used to illustrate the Group's efficiency in the use of its investment properties.
Like-for-like portfolio
Comparable portfolio refers to the properties which were not classified as project properties and were owned throughout the period and entire comparison period.
Comparable portfolio is used to illustrate the trend of rental income excluding non-recurrent effects for premature vacating of premises and property costs uninfluenced by project properties as well as acquired and sold properties.
Net letting
Total contracted annual rent for new lets with deductions for annual rents due to terminated contracts for the period.
Net letting is used to illustrate the letting situation.
Operating surplus
Refers to rental income less property management costs.
Operating surplus margin, %
Gross profit/loss from property management as a percentage of the recognised rental income.
Operating surplus margin is used to illustrate what proportion of the Group's rental income remains after property costs.
Premises type
The operations managed in the individual premises determine the premises type: offices, retail, residential, other or garage. Other includes education, culture, service enterprises and storage.
The letting rate and yield requirement are reported per premises type.
Project property
An individual property or a clearly delimited part of a property that has been or is about to be vacated in order to permit the renovation and upgrading of the property. The term, project property, also refers to buildings under construction and to undeveloped land and development rights.
Reclassification from project property to completed property occurs on 1 January of the year after completion.
Project return, %
Market value after completed project minus total investment as a percentage of total investment.
Project return is used to illustrate value creation in the project operations.
Property type
The premises type which comprises the predominant share of the rental value of a register property or profit area determines the property type.
The market value and development of rental income in like-for-like portfolios recognised per property type.
Rental value
Contracted annual rents including rent surcharges (e.g. for property tax, heating and electricity) and estimated market rents for vacant space in existing condition.
Rental value is used to illustrate the Group's income potential.
SUSTAINABILITY-RELATED DEFINITIONS
Accident rate (LTIR)
The number of work-related accidents per million worked hours, which leads to absence of at least one contracted work day.
BREEAM
Is an environmental certification system developed in Europe for built environments. BREEAM takes a big picture approach to environmental performance. There are two types of BREEAM certification; BREEAM that relates to new production and BREEAM In-Use, which relates to existing properties.
The areas addressed by BREEAM are energy and water consumption, health, transport, materials, waste, land usage, emissions, ecology and management.
Directly generated and distributed economic value
Generated value: Atrium Ljungberg's net sales and changes in value. Distributed value: Atrium Ljungberg's payments to suppliers, salaries and remuneration to employees, fees and remuneration to the Board of Directors, the CEO and senior executives, net payments to financiers, taxes and fees to society, and the dividend to the shareholders.
Payments to suppliers: Operative costs for purchases of materials, products, premises and services from suppliers.
Salaries and compensation to employees: The period's total salary and pension costs, including benefits. Employees do not include consultants or other temporary staff.
Fees and compensation to the Board, CEO and senior executives: Composed of compensation to Board members, as well as fixed salary, other compensation and pension costs for the CEO and other senior executives.
Net payments to financiers: The period's recognised interest expenses with a supplement for the consolidated capitalised interest and describes Atrium Ljungberg's total remuneration to lenders.
Tax and fees to society: The total payment to the state during the period in the form of leasehold fees, as well as total taxes and charges to the Swedish state. Deferred tax is not included.
Dividends to shareholders: The period's paid dividends.
Economic value – remaining in the company: Generated value minus distributed value.
Energy intensity, kWh per m2
Total energy consumption from heating, cooling, tenant electricity and property electricity divided by the average estimated total letting area that is heated, excluding garages.
Environmental building
Environmental building is a certification system for buildings which are based on Swedish construction practice and covers energy, the indoor environment and material.
Green lease contracts, %
Contracted annual rent for commercial premises excluding the garage and storage for lease contracts with green rent supplement in per cent of contracted annual rent for commercial premises excluding the garage and storage. Green rent supplement is a supplement to the agreement from the Swedish Property Federation in which the tenant and landlord jointly undertake to reduce the environmental impact and covers, for example, energy, waste and transport. Reported figures are based on the immediately subsequent quarter.
Lost working hours as a result of a work-related accident or illness (lost day rate)
The number of lost work days due to work-related accident or illness, per total number of contracted work days during the year.
INFORMATION FROM ATRIUM LJUNGBERG
THE INFORMATION we release to the market concerning Atrium Ljungberg's operations must be transparent, clear and correct in order to build market confidence in our company and our brand.
AS A LISTED COMPANY Atrium Ljungberg is subject to the rules of the listing agreement with the Nasdaq Stockholm exchange. Significant events, interim reports and preliminary financial statements are published immediately via press releases and the information is also available on the company's website: www.al.se.
REGULAR MEETINGS WITH analysts, investors, shareholders and financiers, and with our customers and partners, enable us to provide ongoing information on our company, current events and operational changes.
THE ANNUAL REPORT and interim reports are published on our website. The annual report is also distributed in printed format by post to shareholders who have actively requested it. Interim reports and preliminary financial statements are translated into English and all language versions are published simultaneously on our website. The annual reports are translated into English shortly after the publication of the Swedish language version.
INTERESTED PARTIES can subscribe to both financial reports and press releases via our website: www.al.se. The site also provides updated information on our operations, our properties and projects, financial key ratios, the share, and much more besides. The information on the website is also available in English.
PUBLICATION OF FINANCIAL INFORMATION
Interim report Jan–Jun 2020 7 July 2020 Interim report Jan–Sep 2020 15 October 2020 Year-end report 2020 February 2021 2020 Annual Report March 2021
Box 4200, SE-131 04 Nacka. Street address: Smedjegatan 2 C Tel: 08-615 89 00, [email protected] Registered office: Nacka, Corporate ID no.: 556175-7047 www.al.se
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