Quarterly Report • Apr 24, 2018
Quarterly Report
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| 2018 Jan-Mar |
2017 Jan-Mar |
2017 Jan-Dec |
|
|---|---|---|---|
| Rental income | 614 | 546 | 2,280 |
| Net operating income | 439 | 379 | 1,680 |
| Profit from property management | 274 | 216 | 992 |
| Profit before tax | 3,097 | 1,135 | 7,351 |
| Profit after tax | 2,539 | 882 | 5,632 |
| Surplus ratio,% | 72 | 69 | 74 |
| Loan-to-value ratio, properties, % | 41 | 44 | 43 |
| EPRA NAV, SEK per share | 220 | 165 | 201 |
¹The comparison figures for income and expense items relate to values for January– March 2017 and for balance sheet items at 31 December 2017.
Christian Hermelin, CEO
Target 2018: 72% in Q1/74% full year Long-term target 2020: 75%
Target: At least SEK 1,500m per year
RETURN ON PROJECTS
Target: At least 20%, Q1 2018 178%
Target: At least SEK 80m per year.
The first quarter of 2018 indicates a persistently strong property market, with increased rent levels and lower yield requirements and thus rising property values.
Last year's strong performance on the property market looks set to continue. We are seeing daily evidence that rent levels have yet to reach their peak, and of considerable interest in investing in well located office properties in Stockholm. Values are still on the rise, both via higher rent levels and falling yield requirements. During the quarter, several transactions on Stockholm's office market have proved that deals are possible at new record levels. With modern properties in attractive locations, Fabege is able to report continued value growth not only in project operations but also in its investment property portfolio.
Fabege's cash flow growth is continuing via the completion of projects and rent increases, which are gradually boosting revenue. During the quarter, we achieved a surplus ratio of 72 per cent, which is consistent with our target. This is despite the wintry start to the year. Profit from property management increased by over 25 per cent compared with the previous year.
In March, we sold Uarda 6 in Arenastaden to the German company Union Investment. Uarda 6 is the third property that Union has acquired from Fabege, and the transaction was arranged at a new record-low yield. The property will remain on Fabege's balance sheet until handover at the end of May. We will then continue to manage the property on behalf of Union, thus retaining our relationships with the tenants. This allows us to continue operating as a strong, long-term owner and property manager in Arenastaden. Selling modern, fully developed properties frees up capital for value-generating project investments, which is entirely in line with Fabege's business model.
We have taken the next step in boosting our financial profile, with a focus on highlighting our exceptional quality and long-term approach to our investors. We are therefore delighted that in February we were awarded an investment grade rating by Moody's of Baa3, stable outlook. Our ambition is to increase the proportion of capital market financing primarily via our green bond programme. The credit rating from Moody's allows us greater scope for seeking financing on favourable terms, and we have already seen positive effects on pricing and the fact that we are now reaching more potential investors.
We are pleased to see that the uncertainty in the market regarding corporate taxation has now come to an end. It is also positive that the government decided not to pursue its original, more stringent proposal, but has instead presented a proposal that is more consistent with the EU directive. For Fabege, the proposal will mean higher taxable earnings and a subsequent faster pace of offsetting against loss carryforwards.
The year got off to a good start, and market conditions are consistently healthy. As long as the economic situation remains good, which it is expected to in 2018, I anticipate a persistently strong year with high net lettings, rising revenue and falling interest expenses. The major transaction of the quarter paves the way for continued investment in new, exciting projects. We have high ambitions and are continually striving to improve. Fabege is well positioned to capitalise on the business opportunities that lie ahead.
Christian Hermelin, CEO
The first quarter of the year indicated rising rental income, increased net operating income and higher earnings from property management. The quarter also reported continued changes in value attributable to both the investment property portfolio, as well as projects and transactions.
Profit after tax for the period was SEK 2,539m (882), corresponding to earnings per share of SEK 15.36 (5.33). Profit before tax for the period amounted to SEK 3,097m (1,135). Improved earnings from property management and continued substantial positive changes in value in the property portfolio meant that profit before tax rose in comparison with the previous year.
Rental income increased to SEK 614m (546) and net operating income increased to SEK 439m (379). In an identical portfolio, rental income grew by just over 13 per cent (8), of which almost half related to growth through tenants moving in to completed project properties. The remaining increase was primarily due to new lettings and renegotiated rent levels. Net operating income in an identical portfolio rose by approximately 17 per cent (11). The surplus ratio was 72 per cent (69).
Realised changes in value totalled SEK 83m (0) and concerned payment of an additional consideration relating to a sale concluded in 2010.
Uarda 6 was divested during the quarter, with transfer of ownership scheduled for May 2018. An agreement on the sale of Resedan 3 was signed in April. The agreed sales generated a total profit of SEK 132m compared with the year-end valuation, which is included in the recognised unrealised change in value for the quarter. Unrealised changes in value totalled SEK 2,700m (833). The unrealised change in the value of the investment property portfolio of SEK 1,430m (495) was approximately equal to the attributable to increased rental rates in new leases and renegotiations and reduced yield requirements. The average yield requirement declined to 4.24 per cent (4.36 at year-end). Furthermore, unrealized changes in value of SEK 132 m were reported for the two properties sold in February and April.The project portfolio contributed to an unrealised change in value of SEK 1,138m (338), mainly due to development gains in major project properties.
The share in profit of associated companies was SEK −21m (−11) and related to a capital contribution to Arenabolaget during the period.
Unrealised changes in value in the derivative portfolio totalled SEK 40m (89), primarily due to rising long-term interest rates. Net interest items declined to SEK −126m (−133). Increased borrowing was offset by lower average interest.
The Property Management segment generated net operating income of SEK 424m (371), representing a surplus ratio of 72 per cent (72). The occupancy rate was 95 per cent (94). Earnings from property management totalled SEK 284m (240). Unrealised changes in the value of properties amounted to SEK 1,430m (495).
The Property Development segment generated net operating income of SEK 15m (8), giving a surplus ratio of 58 per cent (28). Earnings from property management totalled SEK −10m (−24). Unrealised changes in the value of properties totalled SEK 1,138m (338), corresponding to a yield of 178 per cent on invested capital in the project portfolio. The high yield is largely due to an upward revision of the value of Pyramiden 4 in connection with the completion of the project.
Earnings from Transactions during the period included both realised and unrealised changes in value, and totalled SEK 215m (0). Realized changes in value of SEK 83 M related to the payment of an additional purchase price. Unrealized changes in value of SEK 132m related to changes in value compared with the previous quarter for the two properties sold in February and April respectively.
The Pyramiden 4 property was reclassified as an investment property at the end of the quarter. All reclassifications during the period between the Property Management and Property Development segments are stated in the note on Segment Reporting on page 15.
| 2018 | 2017 | |
|---|---|---|
| SEKm | Jan-Mar | Jan-Mar |
| Profit from Property Management activities | 284 | 240 |
| Changes in value (portfolio of investment | ||
| properties) | 1,430 | 495 |
| Contribution from Property | 1,714 | 735 |
| Management | ||
| Profit from Property Management activities | -10 | -24 |
| Changes in value (profit from Property | ||
| Development) | 1,138 | 338 |
| Contribution from Property | 1,128 | 314 |
| Development | ||
| Realised changes in value | 215 | 0 |
| Contribution from Transactions | 215 | 0 |
| Total contribution | ||
| from the operation | 3,057 | 1,049 |
178%
Fabege employs long-term credit facilities subject to fixed terms and conditions. The company's creditors mainly comprise the major Nordic banks and investors on the capital market. The company regards the capital market as an excellent complement to bank financing and at the end of the quarter, it amounted to 42 per cent of total debt, including commercial paper.
Interest-bearing liabilities at the end of the period totalled SEK 25,194m (24,841), with an average interest rate of 2.17 per cent excluding, and 2.27 per cent including commitment fees on the undrawn portion of committed credit facilities. Undrawn committed credit facilities amounted to SEK 3,102m.
In February, Fabege received an external credit rating from Moody's, which gave an investment grade rating of Baa3, stable outlook. Reactions have been extremely positive and produced an immediate price effect on the capital market. Moody's has also carried out an evaluation of one of the bonds in the green MTN programme, which obtained the highest rating of GB1 (excellent).
In Q1, Fabege issued green bonds of SEK 1,000m with a maturity of five years. The company has since, at the beginning of April, issued a further SEK 900m with maturities of two and six years respectively. At the end of March, outstanding bonds totalled SEK 3,700m of the total framework of SEK 5,000m. The green MTN programme allows the company opportunities to issue non-covered green bonds. Interest on bond loans is calculated without a Stockholm Interbank Offered Rate (STIBOR) floor, which with the current negative STIBOR rate means the financing cost at present will be extremely advantageous compared with bank loans. In addition to the green bonds, Fabege also had outstanding covered bonds of SEK 2,811m on the capital market via the part owned company Svensk Fastighetsfinansiering SFF, of which SEK 2,386m related to green bonds.
The proportion of green financing totalled 50 per cent of outstanding loans at the end of the period. As the company's properties gain environmental certification, the objective is for financing to be sustainable as well, and Fabege welcomes and encourages the new responsible financing opportunities that are being established on the market. All Fabege's Swedish bank financiers are providing opportunities for green financing, as are the capital market and European Investment Bank.
Fabege also has a commercial paper programme of SEK 5,000m. At the end of the quarter, SEK 4,175m had been drawn. The company has available credit facilities covering all outstanding commercial paper at any given time.
At 31 March, the average maturity was 4.2 years and the loan-to-value ratio was 41 per cent (43). The level of capital tied up in certificate loans is calculated on the basis of underlying loan commitments.
The average fixed-interest term for Fabege's debt portfolio was 2.6 years, including the effects of derivative instruments. In the first quarter, new interest rate swaps were agreed totalling SEK 500m with maturities of seven and ten years. At 31 March, Fabege's derivatives portfolio then comprised interest rate swaps totalling SEK 14,000m with terms of maturity extending through 2028 and carrying fixed interest at annual rates of between 0.24 and 2.73 per cent before margins. Fabege also holds callable swaps totalling SEK 3,000m at interest rates of between 3.95 and 3.98 per cent before margins, maturing in June 2018. Interest rates on 56 per cent of Fabege's loan portfolio were fixed using fixed-income derivatives. The derivatives portfolio is measured at market value and the change in value is recognised in profit or loss. At 31 March, the recognised negative fair value adjustment of the portfolio was SEK 251m (291). The derivatives portfolio is measured at the present value of future cash flows. The change in value is of an accounting nature and has no impact on the company's cash flow. At the due date, the market value of derivative instruments is always zero.
Net financial items included other financial expenses of SEK 10m, mainly pertaining to accrued opening charges for credit agreements and costs relating to bond and commercial paper programmes. In the first quarter, interest totalling SEK 17m (19) relating to project properties was capitalised.
| Amount SEKm |
Average interest rate,% |
Share,% | |
|---|---|---|---|
| < 1 year | 14,924 | 2.77 | 59 |
| 1-2 years | 1,270 | 1.76 | 5 |
| 2-3 years | 0 | 0.00 | 0 |
| 3-4 years | 1,000 | 2.68 | 4 |
| 4-5 years | 1,800 | 1.07 | 7 |
| 5 -6years | 1,000 | 0.90 | 4 |
| 6-7 years | 1,300 | 0.97 | 5 |
| 7-8 years | 700 | 0.94 | 3 |
| 8-9 years | 1,300 | 1.05 | 5 |
| 9-10 years | 1,900 | 1.22 | 8 |
| Total | 25,194 | 2.17 | 100 |
The average interest rate for the < 1 year period includes the margin for the entire debt portfolio because the company's fixed-interest period is established using interest rate swaps, which are traded without margins.
| Credit agreement SEKm |
Drawn, SEKm |
|
|---|---|---|
| Commercial paper programme | 5,000 | 4,175 |
| < 1 year | 4,570 | 2,101 |
| 1-2 years | 4,171 | 3,463 |
| 2-3 years | 5,794 | 3,194 |
| 3-4 years | 2,300 | 800 |
| 4-5 years | 5,700 | 5,700 |
| 5-10 years | 4,508 | 4,508 |
| 10-15 years | 0 | 0 |
| 15-20 years | 0 | 0 |
| 20-25 years | 1,253 | 1,253 |
| Total | 33,296 | 25,194 |
Tax expense for the period amounted to SEK −558m (−253). The amount includes the resolution of deferred tax in the amount of SEK 105m (0) in connection with property sales. Tax was calculated at a rate of 22 per cent on taxable earnings.
In March, the Ministry of Finance announced an amended proposal on changes to corporate taxation. To summarise, the proposal involves limiting the deductibility of net interest expense to 30 per cent of EBITDA. Furthermore, the corporation tax rate will be reduced in two stages from the current level of 22 per cent, to 21.4 per cent as of 2019 and 20.6 per cent as of 2021. When calculating interest deductions, any offsetting against loss carryforwards must be taken into consideration. It is proposed that the changes apply from 1 January 2019. For Fabege, the proposal will mean taxable earnings will increase and that offsetting against loss carryforwards will happen at a faster pace. Calculated based on the outcome budgeted for the year, the change would have meant an increased deferred tax expense of around SEK 50m. However, rising market rates will increase the negative effect (assuming cash flow remains generally the same). Furthermore, there will be a positive non-recurring accounting effect when the deferred tax liability is measured at the new tax rate.
No new information has been communicated on this matter since the previously announced proposal on changes to taxation of property transactions, the 'packaging inquiry'. The proposed changes and impact on Fabege are entirely dependent on future property sales. There is a provision in the balance sheet for deferred tax on properties, which amounted to roughly SEK 6.1bn at year-end. Full application would increase the deferred tax liability by an additional SEK 1.3bn, based on the current tax rate of 22 per cent. However, in accounting terms this liability would not be activated until the properties to which it relates are divested. The proposal regarding changes to the charging of transaction tax (stamp duty) means that the deferred stamp duty of 2 per cent will most likely have a directly negative impact on property valuations. For Fabege, this effect corresponds to 2 per cent of the current property value, just over SEK 1.2bn. The consultation period for the proposal expired in September 2017.
Shareholders' equity amounted to SEK 30,551m (28,012) at the end of the period and the equity/assets ratio was 49 per cent (47). Equity per share attributable to Parent Company shareholders totalled SEK 185 (169). Excluding deferred tax on fair value adjustments of properties, net asset value per share was SEK 224 (169). EPRA NAV was SEK 220 per share (201).
Cash flow from operating activities before changes in working capital amounted to SEK 295m (188). Changes in working capital had an impact on cash flow of SEK −382m (1,687). Investing activities had an impact of SEK –615m (–2,779) on cash flow, while financing activities had a positive impact of SEK 353m (870) on cash flow. In investing activities, cash flow was driven by property transactions and projects. Overall, cash and cash equivalents changed by SEK –349m (–38) during the period.
EPRA NAV 31 March 2018
Fabege's Board of Directors has decided on the following financial targets for the business.
Baa3, stable outlook
Fabege has signed an agreement on the sale of the Uarda 6 property in Arenastaden to Union Investment's open property fund Unilmmo: Europe, which has also previously acquired two properties in Arenastaden from Fabege. Fabege will continue to manage the property on behalf of Union Investment, retain customer relationships and continue to pursue the development of Arenastaden.
The transaction will generate a profit of SEK 93m before taxes and SEK 176m after taxes. In accordance with new accounting rules, the profit will be recognised as an unrealised change in value in Q1. The property will be handed over on 31 May 2018.
The first quarter of the year exhibited persistently rising rent levels in renegotiations and new lettings, and net lettings of SEK 9m. The sale of Uarda 6 confirmed the sustained decline in yield requirements. The pace of investment remained high and contributed towards value growth.
Fabege's Property Management and Property Development activities are concentrated on a few selected submarkets in and around Stockholm: Stockholm inner city, Solna and Hammarby Sjöstad. At 31 March 2018, Fabege owned 90 properties with a total rental value of SEK 2.6bn, lettable floor space of 1.1m sqm and a book value of SEK 61.4bn, of which development and project properties accounted for SEK 10.5bn. The financial occupancy rate for the entire portfolio, including project properties, was 94 per cent (93). The occupancy rate in the investment property portfolio was 95 per cent (94).
During the period, 32 new leases were signed at a total rental value of SEK 55m (68), of which 98 per cent pertained to green leases. Lease terminations totalled SEK 46m (47), while net lettings amounted to SEK 9m (21). Rental contracts totalling SEK 30m were renegotiated, with an average rise in rental value of 20 per cent, reflecting the persistently strong trend on the rental market during the year. The retention rate during the perid was 79 per cent (79).
In 2010, Fabege divested a property portfolio to Profi Fastigheter. The parties agreed on an additional consideration, which was established once the detailed plan for the property in question had become legally binding. The additional purchase price of SEK 211m was paid at the beginning of the year, of which just over SEK 80m was reported as an realized change in value during the period.
Q1 saw the divestment of the Uarda 6 property in Arenastaden. Compared with the year-end valuation, the sale generated a realised profit of SEK 93m. Due to IFRS rules, the property will remain on Fabege's balance sheet until ownership is transferred, which will be in Q2. However, the profit will be recognised as an unrealised change in value in Q1. Resedan 3 was divested in April. The price exceeded the most recent valuation by SEK 39m and also this profit was reported as an unrealized change in value in the first quarter. Overall the transactions generated a total realised change in value of SEK 83m (0) and an unrealised change in value of SEK 132m (0).
The entire property portfolio is externally valued at least once annually. Approximately 36 per cent of the properties were externally valued in the first quarter and the remainder were internally valued based on the most recent external valuations. The total market value at the end of the period was SEK 61.4bn (57.9).
Unrealised changes in value totalled SEK 2,700m (833). The average yield requirement saw a slight decline to 4.24 per cent (4.36 at year-end). The change in value in the investment property portfolio of SEK 1,562m (495) was principally due to higher rent levels and somewhat lower yield requirements. The project portfolio contributed to a change in value of SEK 1,138m (338), mainly due to development gains in major project properties.
Fabege's objective is for the company's entire property portfolio to be certified in accordance with BREEAM-SE/BREEAM In-Use. At the end of the period, a total of 61 per cent of the combined area of Fabege's existing portfolio was certified.
¹The comparison figures for income and expense items relate to values for January–March 2017 and for balance sheet items at 31 December 2017.
The purpose of Fabege's project investments is to reduce vacancy rates and increase rents in the property portfolio, thereby improving cash flows and adding value. Property development is a key feature of Fabege's business model and should make a significant contribution to consolidated profit. The aim is to achieve a return on invested capital of at least 20 per cent. Another aim is to have all new builds certified under BREEAM-SE.
During the period, investments in existing properties and projects totalled SEK 786m (843), of which investments in projects and development properties accounted for SEK 638m (697). The return on capital invested in the project portfolio was 178 per cent. The high return is largely due to an upward revision of the value of Pyramiden 4 in connection with the completion of the project.
The capital invested in the investment property portfolio, which amounted to SEK 148m (145) and encompassed energy investments and tenant customisations, also contributed to the total growth in value.
March saw the completion of the new construction of Pyramiden 4, Arenastaden. SEB will be moving in during the final stage in April. The property was transferred to the investment property portfolio at the end of the quarter.
The office project relating to Hörnan 1, Råsunda, is progressing according to plan, with an investment volume of SEK 530m. The production has entered its final phase in preparation for Telenor Sverige taking up occupancy in summer 2018. The occupancy rate is 85 per cent.
The office project at the Signalen 3 property in Arenastaden is also progressing according to plan, with work starting on the interior. The investment is expected to total SEK 1,130m and ICA has signed leases corresponding to 81 per cent of the lettable area, with occupancy scheduled for December 2018.
The new construction project relating to Pelaren 1, Globen, is progressing with work starting on the interior. The investment is estimated at SEK 780m. The occupancy rate is 99 per cent. The office will be ready for occupancy in summer and autumn 2018.
The conversion and extension of the Orgeln 7 property in Sundbyberg is also progressing as planned. Work is currently under way on the interior to complete the office space by June and December 2018. The estimated investment totals SEK 1,070m. The occupancy rate is 94 per cent. The remaining vacancies relate exclusively to storage and retail space on the ground floor.
Work is continuing on constructing the frame on the project relating to the conversion and extension of Trikåfabriken 9, Hammarby Sjöstad, with assembly of the wood frame and additional work on the frame. The investment is estimated at SEK 450m. The occupancy rate is 50 per cent. The property is expected to be ready for occupancy during the spring of 2019.
Planning work has begun regarding the construction of the office building at Båtturen 2, Hammarby Sjöstad. The investment is estimated at SEK 170m. The property is fully let to Goodbye Kansas.
The project at Lagern 4 regarding construction of a school, preschool and supported housing is continuing as planned. The property will be completed by the start of school in autumn 2018 and is fully let to the City of Solna. The investment totals SEK 140m.
Work has recently begun on the investment concerning Bilia's new facility at the Stora Frösunda 2 property in Solna. The investment is expected to amount to roughly SEK 1.1bn and the facility will be ready by the first quarter of 2021.
A decision was made on an investment to convert and upgrade Paradiset 23, Västra Kungsholmen. The investment is estimated at SEK 200m. The property is currently vacant.
In the fourth quarter, a decision was made regarding an investment relating to the forthcoming redevelopment of Fräsaren 12 in Solna Business Park for tenant customisation for Skolverket, with occupancy scheduled for Q4 2019. The investment is estimated at SEK 170m. Work will start on the project once ICA has vacated the premises in December 2018.
Via co-owned Selfoss Invest AB, Fabege and Svenska Hyreshus AB are leading a housing development project in Kista. The total investment is estimated to be SEK 450m excluding purchase of the land. The project is currently in the planning stage. Selfoss Invest will not be consolidated but will instead be reported as an associated company.
| Changes in property value | 2018 |
|---|---|
| Opening fair value 2018-01-01 | 57,889 |
| Property acquisitions | 0 |
| Investments in new builds, extensions and conversions | 786 |
| Changes in value | 2,700 |
| Sales and disposals | 0 |
| Closing fair value 2018-03-31 | 61,375 |
| Property name | Area | Cat egory |
Lettable area.sqm |
|---|---|---|---|
| Quarter 1 | |||
| Uarda 6 | Arenastaden | Office | 17,139 |
| Quarter 2 | |||
| Resedan 3 | Vasastan | Office | 3,480 |
| Quarter 3 | |||
| Quarter 4 | |||
Total sales of properties 20,619 ¹ The property Uarda 1 and Resedan 3 will be vacated during Q2-20
| Property name | Area | Category | Lettable area, sqm |
|---|---|---|---|
| Quarter 1 | |||
| Quarter 2 | |||
| Quarter 3 | |||
| Quarter 4 | |||
| Total acquisitions of properties | 0 |
| Lettable | Occupancy rate, | Estimated rental | Carrying | Estimated | of which, worked up. |
||||
|---|---|---|---|---|---|---|---|---|---|
| Property listing | Property type Area | Completed | area, sqm | area, %¹ | value, SEKm² | amount SEKm | investment, SEKm | SEKm | |
| Hörnan 1 | Offices | Solna | Q2-2018 | 16,300 | 85% | 51 | 859 | 530 | 473 |
| Lagern 4 | School | Solna | Q3-2018 | 5,100 | 100% | 14 | 162 | 140 | 65 |
| Orgeln 7 | Offices/retail Sundbyberg | Q4-2018 | 38,500 | 94% | 120 | 1,683 | 1,070 | 774 | |
| Pelaren 1 | Offices | Globen | Q4-2018 | 21,300 | 99% | 69 | 854 | 780 | 559 |
| Signalen 3 | Offices | Arenastaden | Q4-2018 | 31,100 | 81% | 92 | 1,212 | 1,130 | 661 |
| Trikåfabriken 9 | Offices | Hammarby Sjöstad | Q2-2019 | 16,700 | 50% | 54 | 420 | 450 | 156 |
| Båtturen 2 (part of) | Offices | Hammarby Sjöstad | Q2-2019 | 5,200 | 100% | 18 | 99 | 170 | 34 |
| Paradiset 23 (part of) | Offices | Stadshagen | Q4-2019 | 6,900 | 0% | 24 | 167 | 200 | 12 |
| Stora Frösunda 2 (part of)³ | Offices | Arenastaden | Q1-2021 | 44,400 | 100% | 60 | 22 | 1,100 | 15 |
| Total | 185,500 | 86% | 502 | 5,478 | 5,570 | 2,749 | |||
| Other land and project properties | 932 | ||||||||
| Other development properties | 4,060 | ||||||||
| Total projects, land and development properties | 10,470 |
¹ Operational occupancy rate 31 March 2017.
² Rental value including additions. The annual rent for the largest projects in progress could increase to SEK 600m (fully let) from SEK 125m in annualised current rent as of 31 March 2018.
³In leaseable area for the property Stora Frösunda 2 (part of) there are approximately 28,800 sqm garage space
| Lettable area, '000 | Market | Rental | Financial | |||
|---|---|---|---|---|---|---|
| No. of properties | sqm | value SEKm | value² | occupancy rate % | ||
| Investment properties ¹ | 62 | 1,015 | 50,905 | 2,521 | 95 | |
| Development properties ¹ | 9 | 105 | 4,082 | 118 | 89 | |
| Land and Project properties ¹ | 19 | 11 | 6,388 | 2 | 0 | |
| Total | 90 | 1,131 | 61,375 | 2,641 | 94 | |
| Of which, Inner city | 29 | 394 | 25,400 | 1,144 | 95 | |
| Of which, Solna | 47 | 632 | 30,195 | 1,261 | 94 | |
| Of which, Hammarby Sjöstad | 11 | 105 | 4,893 | 236 | 94 | |
| Of which, Other | 3 | 0 | 887 | 0 | 0 | |
| Total | 90 | 1,131 | 61,375 | 2,641 | 94 |
¹ See definitions on page 17.
² In the rental value, time limited deductions of about SEK 61m (in rolling annual rental value at 31 December) have not been deducted.
| 2018 | 2018 | 2018 | 2018 | 2017 | 2017 | 2017 | 2017 | |
|---|---|---|---|---|---|---|---|---|
| Jan-Mar Property |
Jan-Mar Property |
Jan-Mar | Jan-Mar | Jan-Mar Property |
Jan-Mar Property |
Jan-Mar | Jan-Mar | |
| SEKm | Management | Development | Transaction | Total | Management | Development | Transaction | Total |
| Rental income | 588 | 26 | 614 | 517 | 29 | 546 | ||
| Property expenses | -164 | -11 | -175 | -146 | -21 | -167 | ||
| Net operating income | 424 | 15 | 0 | 439 | 371 | 8 | 0 | 379 |
| Surplus ratio, % | 72% | 58% | 71% | 72% | 28% | 69% | ||
| Central administration | -15 | -3 | -18 | -15 | -4 | -19 | ||
| Net interest expense | -105 | -21 | -126 | -105 | -28 | -133 | ||
| Share in profits of associated companies | -20 | -1 | -21 | -11 | 0 | -11 | ||
| Profit from property management activitie | 284 | -10 | 0 | 274 | 240 | -24 | 0 | 216 |
| Realised changes in value of properties | 0 | 0 | 83 | 83 | 0 | 0 | 0 | 0 |
| Unrealised changes in value of properties | 1,430 | 1,138 | 132 | 2,700 | 495 | 338 | 833 | |
| Profit/loss before tax per segment | 1,714 | 1,128 | 215 | 3,057 | 735 | 314 | 0 | 1,049 |
| Changes in value, fixed income derivatives and | ||||||||
| equities | 40 | 86 | ||||||
| Profit before tax | 3,097 | 1,135 | ||||||
| Properties, market value | 50,905 | 10,470 | 61,375 | 40,001 | 10,831 | 50,832 | ||
| Occupancy rate, % | 95% | 89% | 94% | 94% | 82% | 93% |
¹ See definitions on page 17
| Change in value, % | Impact on after-tax profit, SEKm |
Equity/as sets ratio, % |
Loan-to value ratio, % |
|---|---|---|---|
| +1 | 479 | 49.0% | 40.6% |
| 0 | 0 | 48.8% | 41.0% |
| -1 | -479 | 48.5% | 41.5% |
Earnings and key ratios are affected by realised and unrealised changes in the value of properties. The table shows the effect of a 1 percentage point change in value after deferred tax deduction.
| Effect, | ||
|---|---|---|
| Change | SEKm | |
| Rental income, total | 1% | 24.6 |
| Rent level, commercial income | 1% | 23.5 |
| Financial occupancy rate | 1 percentage point | 26.2 |
| Property expenses | 1% | 6.3 |
| Interest expense, rolling 12 months ¹ | +/-1 percentage point | 75 / 44 |
Interest expenses, longer term perspective 1 percentage point 251.9
The sensitivity analysis shows the effects on the Group's cash flow and earnings on an annualisedbasis after taking account of the full effect of each parameter.
In the short term, interest expenses increase regardless of whether the short-term rate rises or falls. Due to interest rate floors in loan agreements, Fabege is not able to fully utilise negative interest rates, whereby a negative outcome arises even when interest rates are reduced.
The graph above shows the development of contracted rental income, including occupancies and vacations that are known about and renegotiations, but excluding letting targets. The graph therefore does not constitute a forecast, but rather aims to demonstrate the rental trend in the existing contract portfolio on the balance sheet date.
At the end of the year, 167 people (162) were employed by the Fabege Group.
Sales during the period amounted to SEK 72m (61) and earnings before appropriations and tax amounted to SEK –88m (59).
Net investments in property, equipment and shares totalled SEK 0m (0).
The 2018 AGM renewed the authorisation of the Board to buy back and transfer shares in the company for the period extending up until the next AGM. Share buybacks are subject to a limit of 10 per cent of the total number of outstanding shares at any time. No shares were bought back during the period.
On 9 April, in accordance with the Board's proposal, the AGM resolved on a dividend of SEK 4.50 per share, totalling SEK 744m. The dividend was paid on 16 April 2018. In addition, the AGM resolved to carry out a 2:1 split of the company's share.
Resedan 3 was divested in April. The price exceeded the most recent valuation by SEK 39m and the profit was recognised as an unrealised change in value in Q1.
Risks and uncertainties relating to cash flow from operations relate primarily to changes in rents, vacancies and interest rates. The effect of the changes on consolidated profit, including a sensitivity analysis and a more detailed description of risks and opportunities, are presented in the section on Risks and opportunities in the 2017 Annual Report (pages 57–61).
Properties are recognised at fair value and changes in value are recognised in profit or loss. Effects of changes in value on consolidated profit, the equity/assets ratio and the loan-to-value ratio are also presented in the section on Risks and opportunities and the sensitivity analysis in the 2017 Annual Report. Financial risk, defined as the risk of insufficient access to long-term funding through loans, and Fabege's management of this risk are also described in the Risks and opportunities section of the 2017 Annual Report (pages 57–61).
No material changes in the company's assessment of risks have arisen following publication of the 2017 Annual Report. Fabege's aims for the capital structure are to have an equity/assets ratio of at least 35 per cent and an interest coverage ratio of at least 2.2. The target for the loan-to-value ratio is a maximum of 50 per cent. The long-term debt ratio will amount to a maximum of 13.
Expenses for the running and maintenance of properties are subject to seasonal variations. For example, cold and snowy winters give rise to higher costs for heating and snow clearance, while hot summers result in higher cooling costs. Activity in the rental market is seasonal. Normally, more business transactions are completed in the second and fourth quarters, whereby net lettings in these quarters are often higher.
Both the property and rental markets remain strong. Given prevailing market conditions and Fabege's attractive property and project portfolio, circumstances are favourable for a continued positive trend in 2018. More completed projects will increase rental volumes which, combined with sustained operational efficiency and low interest expense, is expected to boost profit from property management, while project operations continue to generate value. Fabege is well positioned to capitalise on the business opportunities that lie ahead.
Fabege prepares its consolidated financial statements according to International Financial Reporting Standards (IFRS). This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act.
Disclosures in accordance with IAS 34 Interim Financial Reporting are submitted both in the notes and in other sections of the interim report.
The Group applies the same accounting policies and valuation methods as in the latest annual report. New or revised IFRS standards or other IFRIC interpretations that came into effect after 1 January 2018 have not had any material impact on consolidated financial statements. The Parent Company prepares its financial statements according to RFR 2 Accounting for Legal Entities and the Swedish Annual Accounts Act, and applies the same accounting policies and valuation methods as in the latest annual report.
The transition to IFRS 15 will be applied from 2018 and relates to recognition of revenue from contracts with customers, with revenue being separated into rental income (including on-charging of property tax) and service income, such as on-charging of heating, electricity, etc. Fabege's income largely comprises rental income and the change is not expected to have any material impact on Fabege's financial reporting.
As a rule, IFRS 15 states that property transactions should be recognised on the date that ownership is transferred. This is different to the procedure under current accounting policies, in which such transactions are normally recognised on the contract date.
IFRS 9 replaces IAS 39 on 1 January 2018. The standard introduces new principles for the classification of financial assets, for hedge accounting and for credit reserves. The single largest item within the framework of IFRS 9 concerns derivatives that continue to be recognised at fair value through profit or loss. IFRS 9 also means that the principles for credit loss provisioning should be based on an estimation of expected losses. Since the credit losses are minimal, the transition have not had any material impact on Fabege's financial reporting.
This standard replaces IAS 17 and is applied from 2018, and it means among other things that lessees must record leases in the balance sheet. Given Fabege's status as a landlord and lessor, the change is not expected to affect the company's statements. The standard also covers reporting of leaseholds, which will involve a change to Fabege's accounts, however, it is not expected to have any material impact on financial reporting.
Stockholm, 24 April 2018
CHRISTIAN HERMELIN Chief Executive Officer.
This interim-report has not been examined by the company's auditors.
On 31 March 2018, Fabege had a total of 38,469 known shareholders. The 15 largest owners controlled 45.9 per cent of the total number of shares and votes.
| Number of | Proportion | Proportion | |
|---|---|---|---|
| 2018-03-31 | shares* | of equity, % | of votes,% |
| Erik Paulsson with family, | |||
| privately and company | 25,310,825 | 15.3 | 15.3 |
| Fourth AP-fund | 7,258,949 | 4.4 | 4.4 |
| BlackRock | 6,397,201 | 3.9 | 3.9 |
| Investment AB Öresund | 5,760,196 | 3.5 | 3.5 |
| Länsfötrsäkringar Funds | 4,669,710 | 2.8 | 2.8 |
| Vanguard | 4,164,806 | 2.5 | 2.5 |
| Mats Qviberg with family | 3,747,868 | 2.3 | 2.3 |
| E.N.A City AB | 3,050,000 | 1.8 | 1.8 |
| Handelsbanken Funds | 2,674,981 | 1.6 | 1.6 |
| Principal Global Investors | 2,509,852 | 1.5 | 1.5 |
| Swedbank Robur Funds | 2,403,537 | 1.5 | 1.5 |
| TR Property Investment Trust | 2,133,221 | 1.3 | 1.3 |
| AFA Försäkringar | 2,014,822 | 1.2 | 1.2 |
| Pensionskassan SHB Försäkringsförening | 1,920,000 | 1.2 | 1.2 |
| Stichting Pensioenfonds ABP | 1,825,699 | 1.1 | 1.1 |
| Total 15 largest shareholders | 75,841,667 | 45.9 | 45.9 |
| Other | 89,549,905 | 54.1 | 54.1 |
| Total no. of | |||
| shares outstanding | 165,391,572 | 100.0 | 100.0 |
| Treasury shares | 0 | 0 | 0 |
| Total no. of registrated shares | 165,391,572 | 100.0 | 100.0 |
*The verification date may vary for foreign shareholders.
| Turnover and trading, Jan-Mars | Nasdaq Stockholm |
|
|---|---|---|
| 2018 | Fabege | (average) |
| Lowest price, SEK | 158 | - |
| Highest price, SEK | 184.70 | - |
| VWAP, SEK | 174.84 | - |
| Average daily turnover, SEK | 77,147,321 | 97,055,206 |
| Number of traded shares, no | 27,795,049 | - |
| Number of transactions, no | 441,191 | - |
| Average transactions per day, no | 1,931 | 2,614 |
| Average value per transcation, SEK | 39,952 | 37,129 |
| Daily turnover relative to market capitalization | 0.27 | 0.27 |
Large Cap
Source of share statistics: Holdings av Modular Finance AB. Compiled and processed data from various sources, including Euroclear, Morningstar and the Swedish Financial Supervisory Authority (Finansinspektionen).
| 2018 | 2017 | 2017 Rolling 12 m | ||
|---|---|---|---|---|
| SEKm | Jan-Mar | Jan-Mar | Jan-Dec | apr -mars |
| Rental income ¹ | 614 | 546 | 2,280 | 2,348 |
| Property expenses | -175 | -167 | -600 | -608 |
| Net operating income | 439 | 379 | 1,680 | 1,740 |
| Surplus ratio, % | 72% | 69% | 74% | 74% |
| Central administration | -18 | -19 | -74 | -73 |
| Net interest/expense | -126 | -133 | -509 | -502 |
| Share in profits of associated companies | -21 | -11 | -105 | -115 |
| Profit/loss from property management | 274 | 216 | 992 | 1,050 |
| Realised changes in value of properties | 83 | 0 | 0 | 83 |
| Unrealised changes in value of properties | 2,700 | 833 | 6,095 | 7,962 |
| Unrealised changes in value, fixed income derivatives | 40 | 89 | 268 | 219 |
| Changes in value of shares | 0 | -3 | -4 | -1 |
| Profit/loss before tax | 3,097 | 1,135 | 7,351 | 9,319 |
| Current tax | - | - | -1 | -1 |
| Deferred tax | -558 | -253 | -1,718 | -2,023 |
| Profit/loss for period/year | 2,539 | 882 | 5,632 | 7,289 |
| Items that will not be restated in profit or loss | ||||
| Revaluation of defined-benefit pensions | - | - | -15 | -15 |
| Comprehensive income for the period/year | 2,539 | 882 | 5,617 | 7,274 |
| Total comprehensive income attributable to: | ||||
| Parent company shareholders | 2,539 | 882 | 5,617 | 7,274 |
| Non-controlling interest | - | 0 | - | - |
| Earnings per share, SEK | 15:36 | 5:33 | 34:05 | 44:08 |
| Total earnings per share, SEK | 15:36 | 5:33 | 33:96 | 43:99 |
| No. of shares at period end, millions | 165,392 | 165,392 | 165,392 | 165,392 |
| Average no. of shares, thousands | 165,392 | 165,392 | 165,392 | 165,392 |
| 2018 | 2017 | 2017 | |
|---|---|---|---|
| SEKm | Mar 31 | Mar 31 | Dec 31 |
| Assets | |||
| Properties | 61,375 | 50,832 | 57,889 |
| Other tangible fixed assets | 3 | 2 | 4 |
| Financial fixed assets | 400 | 360 | 342 |
| Current assets | 728 | 647 | 647 |
| Short-term investments | 153 | 142 | 153 |
| Cash and cash equivalents | 0 | 24 | 349 |
| Total assets | 62,659 | 52,007 | 59,384 |
| Equity and liabilities | |||
| Shareholder's equity | 30,551 | 23,277 | 28,012 |
| Deferred tax | 5,546 | 3,521 | 4,988 |
| Other provisions | 235 | 218 | 233 |
| Interest-bearing liabilities¹ | 25,194 | 22,548 | 24,841 |
| Derivative instrument | 251 | 470 | 291 |
| Non-interest-bearing liabilities | 882 | 1,973 | 1,019 |
| Total equity and liabilities | 62,659 | 52,007 | 59,384 |
¹ Of which short-term SEK 6,276m (7,817)
| Of which, | |||
|---|---|---|---|
| attributable to | Of which | ||
| Shareholders' | Parent Company | attributable to non | |
| SEKm | equity | shareholders | controlling interest |
| Shareholders' equity, 1 January 2016, according to adopted Statement of financial position | 23,002 | 23,002 | - |
| Cash dividend | -662 | -662 | - |
| Acquired minority interest | 55 | 55 | |
| Profit for the period | 5,632 | 5,632 | - |
| Other comprehensive income | -15 | -15 | - |
| Shareholders' equity, 31 December 2016 | 28,012 | 27,957 | 55 |
| Cash dividend | - | - | - |
| Acquired minority interest | - | ||
| Profit for the period | 2,539 | 2,539 | - |
| Other comprehensive income | - | - | - |
| Shareholders' equity, 31 Dec 2017 | 30,551 | 30,496 | 55 |
| 2018 | 2017 | 2017 | |
|---|---|---|---|
| SEKm | Jan-Mar | Jan-Mar | Jan-Dec |
| Operations | |||
| Net operating income | 439 | 379 | 1,680 |
| Central administration | -18 | -19 | -74 |
| Reversal of depreciation | 0 | 0 | 1 |
| Interest received | 3 | 2 | 9 |
| Interest paid | -129 | -145 | -624 |
| Income tax paid | 0 | -29 | 0 |
| Cash flow before changes in working capital | 295 | 188 | 992 |
| Change in working capital | |||
| Change in current receivables | -210 | 898 | 40 |
| Change in current liabilities | -172 | 789 | -249 |
| Total change in working capital | -382 | 1,687 | -209 |
| Cash flow from operating activities | -87 | 1,874 | 783 |
| Investing activities | |||
| Investments in new-builds, extensions and conversions | -769 | -2,131 | -2,676 |
| Acquisition of properties | 0 | -345 | -1,314 |
| Divestment of properties | 211 | - | 1,439 |
| Other tangible fixed assets | -57 | -306 | -146 |
| Cash flow from investing activities | -615 | 2,782 | -2,697 |
| Financing activities | |||
| Dividend to shareholders | - | - | -622 |
| Change in interest bearing liabilities | 353 | 870 | 2,863 |
| Cash flow from investing activities | 353 | 870 | 2,201 |
| Cash flow for the period | -349 | -38 | 287 |
| Cash and cash equivalents at beginning of period | 349 | 62 | 62 |
| Cash and cash equivalents at end of period | 0 | 24 | 349 |
| Jan-Mar Financial ² Return on capital employed, % 23.6 Return on equity, % 34.7 |
Jan-Mar 11.7 15.2 2.7 |
Jan-Dec 21.1 22.1 |
|---|---|---|
| Interest coverage ratio, multiple 3.3 |
3.2 | |
| Equity 49 |
45 | 47 |
| Loan-to-value ratio, properties, % 41 |
44 | 43 |
| Debt ratio, multiple 15.1 |
15.5 | 15.5 |
| Debt/equity ratio, multiple 0.8 |
1.0 | 0.9 |
| Share related ¹ ² | ||
| Earnings per share, SEK ³ 15:36 |
5:33 | 34:05 |
| Total earnings per share, SEK 15:36 |
5:33 | 33:96 |
| Equity per share, SEK 185 |
141 | 169 |
| Cash flow from operating activities per share, SEK 0:53 |
11:33 | 4:73 |
| EPRA NAV, SEK per share 220 |
165 | 201 |
| EPRA, EPS 1:47 |
1:22 | 5:45 |
| Average no. of shares, thousands 165,392 |
165,392 | 165,392 |
| No. of outstanding shares at end of period, thousands 165,392 |
165,392 | 165,392 |
| Property-related | ||
| No. of properties 90 |
88 | 90 |
| Carrying amount, Properties, SEKm 61,375 |
50,832 | 57,889 |
| Lettable area, sqm 1,131,000 |
1,084,000 | 1,136,000 |
| Financial occupancy rate, % 94 |
93 | 94 |
| Total return on properties, % 5.5 |
2.5 | 15.0 |
| Surplus ratio, % 72 |
69 | 74 |
¹ No dilution is possible because no potential dilution shares (such as convertible debentures) exist.
³ Unless otherwise stated, the key figure is not defined under IFRS. Please see page 17 for definitions
⁴ Definitions according to IFRS
Derivatives are measured continuously at fair value in compliance with level 2, with the exception of the callable swaps measured in accordance with level 3. Changes in value are recognised in profit or loss. IAS 39 has been applied in the Parent Company as well since 2006. No changes have been made to the measurement model.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| IFRS, level 3, SEKm | Mar 31 | Dec 31 | Mar 31 | Dec 31 |
| Opening value | -66 | -218 | -66 | -218 |
| Acquisitions/Investments | 0 | 0 | 0 | 0 |
| Changes in value | 34 | 117 | 34 | 117 |
| Matured | 0 | 35 | 0 | 35 |
| Closing value | -32 | -66 | -32 | -66 |
| Carrying amount | -32 | -66 | -32 | -66 |
¹ Is attributable in its entirety to derivative instruments held by the company at the end of the quarter and shown in the statement of comprehensive income.
| 2018 | 2017 | 2017 | |
|---|---|---|---|
| Defered tax attributable to: | Mar 31 | Mar 31 | Dec 31 |
| - tax loss carryforwards, SEKm | -978 | -1,079 | -1,066 |
| - difference between book value and tax value in respect of properties, SEKm | 6,602 | 4,699 | 6,124 |
| - derivatives, SEKm | -73 | -103 | -64 |
| - other, SEKm | -5 | 4 | -6 |
| Net debt, deferred tax, SEKm | 5,546 | 3,521 | 4,988 |
Details are provided below regarding reconciliation of the financial key ratios that Fabege continually monitors and for which established financial targets are in place. The following financial
targets have been adopted by the Board:
| 2018 | 2017 | 2017 | |
|---|---|---|---|
| Equity/assets ratio | Mar 31 | Mar 31 | Dec 31 |
| Equity, SEKm | 30,551 | 23,277 | 28,012 |
| Total assets, SEKm | 62,659 | 52,007 | 59,384 |
| Equity/assets ratio | 49% | 45% | 47% |
| 2018 | 2017 | 2017 | |
| Loan-to-value ratio, properties | Mar 31 | Mar 31 | Dec 31 |
| Interst-bearing liabilities, SEKm | 25,194 | 22,548 | 24,841 |
Booked value properties, SEKm 61,375 50,832 57,889 Loan-to-value ratio, properties 41% 44% 43%
| 2018 | 2017 | 2017 | |
|---|---|---|---|
| Debt ratio | Mar 31 | Mar 31 | Dec 31 |
| Operating surplus, SEKm | 1,740 | 1,531 | 1,680 |
| Central administration, SEKm | -73 | -73 | -74 |
| Total, SEKm | 1,667 | 1,458 | 1,606 |
| Interest-bearing liabilities, SEKm | 25,194 | 22,548 | 24,841 |
| Debt ratio, multiple | 15.1 | 15.5 | 15.5 |
| 2018 | 2017 | 2017 | |
|---|---|---|---|
| Interst coverage ratio, multiple | Mar 31 | Mar 31 | Dec 31 |
| Net operating income, SEKm | 439 | 379 | 1,680 |
| Central administration, SEKm | -18 | -19 | -74 |
| Total, SEKm | 421 | 360 | 1,606 |
| Net intrest/expense, SEKm | -126 | -133 | -509 |
| Interst coverage ratio, multiple | 3.3 | 2.7 | 3.2 |
| EPRA EPS | 2018 Jan-Mar |
2017 Jan-Mar |
2017 Jan-Dec |
|---|---|---|---|
| Profit from property management, SEKm | 274 | 216 | 992 |
| Tax-deductable depreciation, SEKm | -137 | -148 | -580 |
| Sum, SEKm | 137 | 69 | 412 |
| Nominal tax (22%), SEKm | -31 | -15 | -91 |
| EPRA earnings in total, (Profit from property management minus nominal tax) SEKm | 243 | 201 | 901 |
| Number of shares, millions | 165.4 | 165.4 | 165.4 |
| EPRA EPS, SEK per share | 1:47 | 1:22 | 5:45 |
| 2018 | 2017 | 2017 | |
|---|---|---|---|
| EPRA NAV | Jan-Mar | Jan-Mar | Jan-Dec |
| Shareholders' equity, SEKm | 30,551 | 23,222 | 28,012 |
| Reversal of fixed-income derivatives, SEKm | 251 | 470 | 291 |
| Reversal of deferred tax according to the balance sheet, SEKm | 5,546 | 3,521 | 4,988 |
| Sum, SEKm | 36,348 | 27,213 | 33,291 |
| Number of shares, millions | 165.4 | 165.4 | 165.4 |
| EPRA NAV, SEK per share | 220 | 165 | 201 |
| 2018 | 2017 | 2017 | |
|---|---|---|---|
| Return on equity | Jan-Mar | Jan-Mar | Jan-Dec |
| Profit for the period, SEKm | 2,539 | 882 | 5,632 |
| Average shareholders' equity, SEKm | 29,281 | 23,140 | 25,507 |
| Return on equity | 34.7% | 15.2% | 22.1% |
| 2018 | 2017 | 2017 | |
| Total return on properties | Jan-Mar | Jan-Mar | Jan-Dec |
| Net operating income, SEKm | 439 | 379 | 1,680 |
| Unrealized and realized value changes properties, SEKm | 2,783 | 833 | 6,095 |
| Market value including captal investment during the period, SEKm | 58,675 | 48,684 | 51,794 |
| Total return on properties, % | 5.5% | 2.5% | 15.0% |
Contingent liabilities comprise the balance sheet date guarantees and commitments in favour of associated companies of SEK 337m (340) and other 0 (0).
The Pyramiden 4 property was reclassified as an investment property at the end of the first quarter.
| 2018 | 2017 | |
|---|---|---|
| SEKm | Jan-Mar | Jan-Mar |
| Income | 72 | 61 |
| Expenses | -163 | -70 |
| Net financial items | -37 | -18 |
| Changes in value, fixed-income derivatives | 40 | 89 |
| Changes in value, equities | 0 | -3 |
| Group Contribution | - | - |
| Profit before tax | -88 | 59 |
| Current tax | - | - |
| Deferred tax | -9 | -20 |
| Profit for the period | -97 | 39 |
| 2018 | 2017 | |
|---|---|---|
| SEKm | Mar 31 | Mar 31 |
| Participation in Group companies | 12,516 | 12,516 |
| Other fixed assets | 41,495 | 42,888 |
| of which, receivables from Group companies | 41,120 | 42,541 |
| Current assets | 357 | 86 |
| Cash and cash equivalents | 0 | 24 |
| Total assets | 54,368 | 55,514 |
| Shareholders' equity | 10,032 | 10,059 |
| Provisions | 69 | -35 |
| Long-term liabilities | 38,937 | 36,558 |
| of which, liabilities to Group companies | 21,337 | 24,510 |
| Current liabilities | 5,330 | 8,932 |
| Total equity and liabilities | 54,368 | 55,514 |
| 2018 | 2017 | 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| SEKm | Quarter 1 | Quarter 4 Quarter 3 Quarter 2 |
Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | |||
| Rental income | 614 | 592 | 580 | 562 | 546 | 532 | 534 | 520 | |
| Property expenses | -175 | -142 | -145 | -146 | -167 | -150 | -133 | -151 | |
| Net operating income | 439 | 450 | 435 | 416 | 379 | 382 | 401 | 369 | |
| Surplus ratio | 72% | 76% | 75% | 74% | 69% | 72% | 75% | 71% | |
| Central administration | -18 | -21 | -17 | -17 | -19 | -17 | -17 | -20 | |
| Net interest expence | -126 | -126 | -127 | -123 | -133 | -129 | -139 | -142 | |
| Share in profits of associated companies | -21 | -24 | -27 | -43 | -11 | -402 | -16 | 6 | |
| Profit/loss from property management | 274 | 279 | 264 | 233 | 216 | -166 | 229 | 213 | |
| Realised changes in value of properties | 83 | 0 | 0 | 0 | 0 | 309 | 20 | 2 | |
| Unrealised value of properties | 2,700 | 1,643 | 2,463 | 1,156 | 833 | 3,136 | 1,760 | 1,199 | |
| Unrealised changes in value, fixed-income derivatives | 40 | 41 | 71 | 67 | 89 | 230 | 42 | -55 | |
| Changes in value, equities | 0 | -1 | 0 | 0 | -3 | 5 | 0 | 0 | |
| Profit for the period/year | 3,097 | 1,962 | 2,798 | 1,456 | 1,135 | 3,514 | 2,051 | 1,359 | |
| Current tax | - | 0 | -1 | 0 | - | -89 | 2 | 0 | |
| Deferred tax | -558 | -532 | -596 | -337 | -253 | -664 | -437 | -294 | |
| Comprehensive income for the period | 2,539 | 1,430 | 2,201 | 1,119 | 882 | 2,761 | 1,616 | 1,065 |
| 2018 | 2017 | 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| SEKm | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | |
| Assets | |||||||||
| Properties | 61,375 | 57,889 | 55,509 | 52,464 | 50,832 | 47,842 | 44,659 | 42,418 | |
| Other tangible fixed assets | 3 | 4 | 3 | 2 | 2 | 2 | 2 | 2 | |
| Financial fixed assets | 400 | 342 | 495 | 497 | 360 | 516 | 916 | 886 | |
| Current assets | 728 | 647 | 586 | 636 | 647 | 1,687 | 500 | 529 | |
| Short-term investments | 153 | 153 | 152 | 142 | 142 | 114 | 89 | 64 | |
| Cash and cash equivalents | 0 | 349 | 161 | 19 | 24 | 62 | 36 | 195 | |
| Total assets | 62,659 | 59,384 | 56,906 | 53,760 | 52,007 | 50,223 | 46,202 | 44,094 | |
| Equitites and liabilities | |||||||||
| Shareholders' equity | 30,551 | 28,012 | 26,597 | 24,396 | 23,277 | 23,002 | 20,246 | 18,630 | |
| Deferred tax | 5,546 | 4,988 | 4,455 | 3,859 | 3,521 | 3,271 | 2,648 | 2,211 | |
| Other provisions | 235 | 233 | 216 | 216 | 218 | 215 | 142 | 154 | |
| Interest-bearing liabilities | 25,194 | 24,841 | 24,436 | 23,886 | 22,548 | 21,978 | 20,818 | 20,574 | |
| Other long-term liabilities | - | - | - | - | - | - | 625 | 623 | |
| Derivative instruments | 251 | 291 | 332 | 402 | 470 | 559 | 789 | 831 | |
| Non-interest bearing liabilitis | 882 | 1,019 | 870 | 1,001 | 1,973 | 1,198 | 934 | 1,071 | |
| Total equity and liabilities | 62,659 | 59,384 | 56,906 | 53,760 | 52,007 | 50,223 | 46,202 | 44,094 |
| 2018 | 2017 | 2016 | ||||||
|---|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | |
| Financial² | ||||||||
| Return on capital employed, % | 23.6 | 16.1 | 23.4 | 13.4 | 11.7 | 33.2 | 21.2 | 15.2 |
| Return on equtiy, % | 8.7 | 5.2 | 8.5 | 4.7 | 3.7 | 12.8 | 8.3 | 5.6 |
| Interest coverage ratio, multiple² | 3.3 | 3.4 | 3.3 | 3.2 | 2.7 | 2.8 | 2.8 | 2.5 |
| Equity/assets ratio, % | 49 | 47 | 47 | 45 | 45 | 46 | 44 | 42 |
| Loan-to-value ratio, properties, % | 41 | 43 | 44 | 46 | 44 | 46 | 47 | 49 |
| Debt ratio, multiple | 15.1 | 15.5 | 14.6 | 16.1 | 15.5 | 15.3 | 14.8 | 15.0 |
| Debt/equity raio, multiple | 0.8 | 0.9 | 0.9 | 1.0 | 1.0 | 1.0 | 1.0 | 1.1 |
| Share-related¹ ² | ||||||||
| Earnings per share, SEK³ | 15:36 | 9:18 | 13:30 | 6:77 | 5:33 | 16:70 | 9:77 | 6:44 |
| Total earnings per share, SEK | 185 | 169 | 161 | 147 | 141 | 139 | 122 | 113 |
| Cash flow from operating activities per share, SEK | 0:53 | 0:91 | -7:76 | 0:25 | 11:33 | 1:75 | 0:52 | 0:52 |
| EPRA NAV, SEK per share | 220 | 201 | 190 | 173 | 165 | 163 | 144 | 131 |
| EPRA EPS | 1:47 | 1:50 | 1:44 | 1:29 | 1:22 | -0:52 | 1:26 | 1:18 |
| No. of shares outstanding at the end of the period, thousands | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 |
| Average no. of shares, thousands | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 |
| Property-related | ||||||||
| Financial occupancy rate, % | 94 | 94 | 94 | 94 | 93 | 94 | 94 | 93 |
| Total return on properties, % | 5.5 | 3.7 | 5.5 | 3.1 | 2.5 | 8.6 | 5.1 | 3.8 |
| Surplus ratio, % | 72 | 76 | 75 | 74 | 69 | 72 | 75 | 71 |
¹ The interest coverage ratio definition has been changed from 1 January 2016. The comparative figures have been restated according to the new definition.
² Unless otherwise stated, the key figure is not defined under IFRS. Please see page 17 for definitions
³ Definitionen according to IFRS.
The company presents certain financial performance measures in the interim report that are not defined according to IFRS. The company considers that these measures provide valuable supplementary information for investors and company management, as they enable an assessment and benchmarking of the company's presentation. Since not all companies calculate financial performance measures in the same way, these are not always comparable to measures used by other companies. These financial performance measures should not therefore be regarded as substitutes for measures defined according to IFRS. The following key ratios are not defined according to IFRS, unless otherwise stated.
Interest-bearing liabilities divided by shareholders' equity.
Interest-bearing liabilities divided by rolling twelve-month net operating income less central administration.
Total assets less non-interest-bearing liabilities, provisions and deferred tax.
Cash flow from operating activities (after changes in working capital), divided by the average number of outstanding shares.
Properties in which a conversion or extension is in progress or planned that has a significant impact on the property's net operating income. Net operating income is affected either directly by the project or by limitations on lettings prior to impending improvement work.
Profit from property management less tax at a nominal rate attributable to profit from property management, divided by average number of shares. Taxable profit from property management is defined as profit from property management less such amounts as tax-deductible depreciation and remodelling.
Shareholders' equity per share following the reversal of fixed-income derivatives and deferred tax according to the balance sheet.
Equity, including non-controlling interests, divided by balance sheet total.
Parent Company shareholders' share of equity according to the balance sheet, divided by the number of shares at the end of the period.
Lease value divided by rental value at the end of the period.
Net operating income less central administration in relation to net interest items (interest expenses less interest income)
Properties that are being actively managed on an ongoing basis.
Lease value plus estimated annual rent for vacant premises after a reasonable general renovation.
Land and development properties and properties in which a new build/complete redevelopment is in progress.
Stated as an annual value. Index-adjusted basic rent under the rental agreement plus rent supplements.
Interest-bearing liabilities divided by the carrying amount of the properties at the end of the period.
New lettings during the period less terminations to vacate.
Parent Company shareholders' share of earnings after tax for the period, divided by average number of outstanding shares during the period. Definition according to IFRS.
Lease value plus estimated annual rent for vacant premises after a reasonable general renovation.
Proportion of leases that are extended in relation to the proportion of cancellable leases.
Profit before tax plus interest expenses, divided by average capital employed. In interim reports, the return is converted into its annualised value without taking account of seasonal variations.
Profit for the period/year divided by average shareholders' equity including non-controlling interest. In interim reports, the return is converted into its annualised value without taking account of seasonal variations.
Dividend for the year divided by the share price at year-end.
in accordance with IFRS 8, segments are presented from the point of view of management, divided into the following segments: Property Management, Property Development and Transactions. Rental income and property expenses, as well as realised and unrealised changes in value including tax, are directly attributable to properties in each segment (direct income and expenses). In cases where a property changes character during the year, earnings attributable to the property are allocated to each segment based on the period of time that the property belonged to each segment. Central administration and items in net financial expense have been allocated to the segments in a standardised manner based on each segment's share of the total property value (indirect income and expenses). Property assets are directly attributed to each segment and recognised on the balance sheet date.
Net operating income divided by rental income.
Net operating income for the period plus unrealised and realised changes in the value of properties, divided by market value at start of period plus investments for the period.
*This key ratio is operational and is not regarded as an alternative performance measure according to ESMA's guidelines.
Fabege is one of Sweden's leading property companies, focusing mainly on letting and managing office premises as well as city district development. The company offers modern premises in prime locations in fastgrowing submarkets in the Stockholm region: Stockholm inner city, Solna and Hammarby Sjöstad.
Fabege offers attractive and efficient premises, mainly offices but also retail and other premises. The concentration of properties to wellcontained clusters leads to greater customer proximity and, coupled with Fabege's extensive local expertise, creates a solid foundation for efficient property management and high occupancy.
At 31 March 2018, Fabege owned 90 properties with a total market value of SEK 61.4bn. The rental value was SEK 2.6bn.
Fabege works with sustainable city district development, with a primary focus on commercial properties within a limited number of well located submarkets in the Stockholm area.
Fabege aims to create value by managing, improving and actively adjusting its property portfolio through sales and acquisitions.
Fabege's operational activities are conducted in three business areas: Property Management, Property Development and Transactions.
Fabege's strategy is to create value by managing and developing the property portfolio and through transactions, acquiring and divesting properties with the aim of increasing potential in the property portfolio. Fabege's properties are located in the most liquid market in Sweden.
Attractive locations lead to a low vacancy rate in the investment property portfolio. Modern properties permit flexible solutions and attract customers. With its concentrated portfolio and high-profile local presence, investments aimed at enhancing the attractiveness of an area benefit many of Fabege's customers.
A number of external factors affect Fabege's operations and these, together with the transaction volume and the office market trend in Stockholm, represent the prerequisites for the company's success.
Stockholm is one of the five metropolitan areas in Western Europe where the population is rising the most. According to forecasts, Stockholm County will have half a million inhabitants more than today by 2030. People in the active labour force account for the largest growth, which is boosting demand for office premises.
New technology and new working methods are fuelling demand for flexible and space-efficient premises in prime locations. Excellent peripheral service and good communication links in the form of public transport services are in increasing demand, as are environmentally certified offices and green leases.
The trend for both the Swedish and global economy impacts the property market. Lower vacancy rates in Stockholm's inner city and a stronger economic climate have historically meant rising rents.
Sustainability issues are becoming increasingly important, in terms of both individual properties and entire areas. Interest in environmental considerations involving choice of material and energy-saving measures is on the rise. Demand is increasing for premises in areas with a favourable mix of offices, retail, service and residential units, as well as excellent transport links and environmental commitment.
The essence of Fabege's operations is finding the right premises for a customer's specific requirements and ensuring that the customer is content. This is accomplished through longterm work and based on close dialogue with the customer, thus building mutual trust and loyalty.
High-quality property development is the second key cornerstone of our business. Fabege has long-standing expertise in pursuing extensive property development projects, with the aim of attracting long-term tenants to properties that have not yet been fully developed and can be redesigned based on the customer's specific requirements.
Property transactions are an integral part of Fabege's business model and make a significant contribution to the company's earnings. The company continuously analyses its property portfolio to utilise opportunities to increase capital growth, through both acquisitions and divestments.
Interim report Jan–June 2018 6 July 2018, 8:00 am CET Interim report Jan–Sep 2018 Year-end report 2018
Interim report Jan–March 2018 24 April 2018, 8:00 am CET 18 October 2018, 8:00 am CET 5 February 2019, 12:00 noon CET
| 31 Jan 2018 | Moody's gives the highest score to Fabege's green bond |
|---|---|
| 5 Feb 2018 | Year-end report 2017 |
| 9 Feb 2018 | Nominating Committee's proposal concerning Board of |
| Directors and Chair of Fabege AB (publ) | |
| 16 Feb 2018 | Fabege assigned investment grade rating by Moody's |
| (Baa3, stable outlook) | |
| 7 Mar 2018 | Notice of Annual General Meeting in Fabege AB (publ) |
| 8 Mar 2018 | Fabege leases 3,800 sqm to North Alliance in Stockholm |
| city centre | |
| 9 Mar 2018 | Fabege selling Uarda 6, Arenastaden |
FOLLOW US ONLINE: WWW.FABEGE.SE
Visit the Group's website for further information about Fabege and its operations. There will also be a web presen-tation at which Christian Hermelin, CEO and Åsa Bergström, CFOwill present the interim-report on 24 April 2018.
*Including regulatory and non-regulatory press releases during the period.
CHRISTIAN HERMELIN Chief Executive Officer Tel: +46 (0)8 555 148 25, +46 (0)733–87 18 25
ÅSA BERGSTRÖM Vice President and CFO Tel: +46 (0)8 555 148 29, +46 (0)706 66 13 80
This information is of the type that Fabege AB is required to disclose under the EU Market Abuse Regulation and the Swedish Securities Market Act. This information was released, through the provision of the above-mentioned contact person, for publication on 24 April 2018, at 8:00 am CET.
Fabege AB (publ) Box 730, SE 169 27 Solna, Sweden Visitors: Pyramidvägen 7, 169 56 Solna, Sweden Telephone: +46 (0)8-555 148 00 Email: [email protected] www.fabege.se Corporate registration number: 556049–1523 Registered office of the Board of Directors: Stockholm
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