Quarterly Report • Feb 4, 2016
Quarterly Report
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| 2015 | 2014 | 2015 | 2014 | |
|---|---|---|---|---|
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
| Rental income | 505 | 522 | 1,998 | 2,087 |
| Net operating income | 349 | 365 | 1,429 | 1,485 |
| Profit from property management | 172 | 174 | 688 | 682 |
| Profit before tax | 1,596 | 835 | 4,233 | 1,867 |
| Profit after tax | 1,178 | 910 | 3,232 | 1,738 |
| Surplus ratio,% | 69 | 70 | 72 | 71 |
| Equity ratio,% | - | - | 39 | 38 |
| EPRA NAV, SEK per share | - | - | 115 | 95 |
1 The comparison figures for income and expense items relate to values for the period January–December 2014 and for balance sheet items as at 31 December 2014.
Christian Hermelin, CEO
Target: 70 per cent New long-term target as of 2016: 75 per cent
Target: At least SEK 1,500m per year
Our uncertain business environment has kept interest rates at a low level for a long time. Combined with a strong Swedish economic climate, which benefitted both rent growth and property market yields, this also generated very favourable conditions for Swedish property companies. The strong growth in Stockholm was particularly favourable for Fabege with our geographic concentration and large proportion of project development.
Not only were the external conditions good. Fabege also had the capacity, expertise and drive to capitalise on the favourable conditions. Successively over the year, we renegotiated rents at increasingly higher levels and we signed leases with several new customers. The historically high proportion of existing customers who have chosen to remain with us is even more gratifying. In our view, the two relatively large lease terminations we received at the end of the year do not only represent a risk. We also view them as an opportunity because we currently have very few vacancies in the property management portfolio, particularly in the inner city. We have demonstrated that our value-adding business model works. I am also proud that our multi-year investment in the sustainable development of our operations has been recognised through a number of external acknowledgements. Sustainability work is now an integral feature of our operations and generates both pride and value. We have also continued to focus on enhancing the efficiency of operations and it is gratifying that the surplus ratio continues to increase and has now landed at 72 per cent.
If 2014 was a year of intense transactions, the focus in 2015 was on projects. The major lettings in the past two years enabled us to significantly increase the pace of project development. During the year, we invested some SEK 2bn in our major projects, yielding very healthy returns. We also implemented major investments in our investment properties in, for example, energy efficiency and tenant customisations, which contributed to the strong value growth of the property management portfolio. The transactions in 2015 have assured us of additional development rights for future projects in Solna.
Due to our strong trend during the year, we also decided to sharpen our objectives. With a loan-tovalue ratio that does not exceed 55 per cent, we will protect our strong balance sheet and reduce the financial risk. And with a target of 75 per cent for the surplus ratio to be achieved within five years, we will challenge the organisation to continue to strive for higher income and lower costs. This, combined with high sustainability targets, will generate the prerequisites for further value growth.
At the start of 2016, performance in both the property and the rental market in Stockholm is remaining very strong. At the same time as the unrest globally is continuing to keep interest rates at a low level, it appears that the Swedish market will remain strong in the year ahead too. This means that I see excellent potential to deliver strong results in 2016 as well. By completing projects, the rent volume will increase which, combined with continued operational efficiency and low interest expense, will generate better profit from property management. Fabege is well positioned, with the perfect line-up, to capitalise on the opportunities arising ahead. We foresee an exciting year with several interesting business opportunities.
During the year, rental income and net operating income increased in identical portfolios. The healthy trend in the property market, together with continued successful project development, formed a foundation for very strong value growth in the property portfolio.
Profit after tax for the year increased to SEK 3,232m (1,738), corresponding to earnings per share of SEK 19.54 (10.51). Profit for the year before tax rose to SEK 4,233m (1,867). Unrealised value changes in the property portfolio increased due to the strong trend in the rental and property market.
Rental income amounted to SEK 1,998m (2,087) and net operating income to SEK 1,429m (1,485). The decline was attributable in full to a smaller portfolio, resulting from the sales of properties in 2014. In an identical portfolio, rental income and net operating income rose about 3 per cent thanks to reduced rent discounts early in the year and improved rent levels. The surplus ratio rose by nearly half a percentage point to 72 per cent (71), after rounding off. A more modern portfolio with more efficient operations, together with a mild winter, contributed to lower running costs.
Realised changes in the value of properties amounted to SEK 21m (300), pertaining to the result of two minor property sales in the fourth quarter, and lags from previously implemented transactions. Unrealised changes in value amounted to SEK 3,252m (1,339). The SEK 2,603m (1,063) unrealised rise in the value of the property management portfolio resulted from properties with higher rent levels and a lower yield requirement in all Fabege submarkets. The average yield requirement declined to 4.9 per cent after rounding off (5.4). The project portfolio contributed to an unrealised change in value of SEK 649m (276), primarily due to development gains in the major project properties.
Share in profit of associated companies amounted to SEK -94m (-72), and pertained primarily to Arenabolaget i Solna KB.
Unrealised value changes in the derivative portfolio amounted to SEK 262m (-473) as a result of higher long-term interest rates. Changes in the value of shareholdings amounted to SEK 10m (19), and pertained primarily to the Catena holding, which was divested at the end of the year. Net interest expense declined to SEK 582m (expense: 664), due to lower market interest rates.
The Property Management segment generated net operating income of SEK 1,371m (1,427), corresponding to a surplus ratio of 73 per cent (72). The occupancy rate was 94 per cent (95). Profit from property management was SEK 705m (692). Unrealised changes in the value of properties amounted to SEK 2,603m (1,063).
The Property Development segment reported net operating income of SEK 58m (58), making a surplus ratio of 53 per cent (59). The result from property management was SEK -17m (-10). Unrealised changes in property values totalled SEK 649m (276).
The Transaction segment realised changes in value of SEK 21m (300), through the sale of two minor sites. Profit also includes income from previously implemented transactions.
Reclassifications during the year between the Property Management and Property Development segments are stated in the Note on Segment reporting on page 13.
1 The comparison figures for income and expense items relate to values for the period January– December 2014 and for balance sheet items as at 31 December 2014.
| 2015 | 2014 | |
|---|---|---|
| SEKm | Jan-Dec | Jan-Dec |
| Profit from Property Management activities | 705 | 692 |
| Changes in value (portfolio of investment | ||
| properties) | 2,603 | 1,063 |
| Contribution from Property | 3,308 | 1,755 |
| Management | ||
| Profit from Property Management activities | -17 | -10 |
| Changes in value (profit from Property | ||
| Development) | 649 | 276 |
| Contribution from Property | 632 | 266 |
| Development | ||
| Realised changes in value | 21 | 300 |
| Contribution from Transactions | 21 | 300 |
| Total contribution | ||
| from the operation | 3,961 | 2,321 |
Fabege employs long-term credit facilities subject to fixed terms and conditions. The company's lenders mainly comprise the major Nordic banks.
Interest-bearing liabilities at year-end totalled SEK 21,068m (19,551), with an average interest rate of 2.58 per cent excluding and 2.67 per cent including commitment fees on the undrawn portion of committed credit facilities. Unutilised committed lines of credit amounted to SEK 1,739m.
During the fourth quarter, existing credit agreements totalling SEK 2,000m were extended. During the year, existing credit agreements totalling SEK 11,400m were refinanced at maturities of between one and three years.
During the quarter, Fabege increased its green funding by issuing a covered green property bond in the framework of the co-owned company, Nya Svensk FastighetsFinansiering AB (Nya SFF). Thereafter, on 31 December, Fabege had outstanding bonds of SEK 1,273m via Nya SFF. The covered property bond of SEK 1,170m, with scheduled maturity in February 2016, was also repaid in advance.
Fabege has a commercial paper programme of SEK 5,000m. At 31 December, outstanding commercial paper totalled SEK 3,805m (2,889). Fabege has available credit facilities covering all outstanding commercial paper at any given time.
At 31 December, the loan-to-value ratio was 52 per cent and the average maturity 4.1 years.
The average fixed-rate period for Fabege's loan portfolio was 2.5 years, including the effects of derivative instruments. The average fixed interest term for variable-interest loans was 89 days. During the fourth quarter, additional interest-rate swaps were signed totalling SEK 1,000m, with maturities of between seven and nine years. Fabege's derivatives portfolio then comprised interest-rate swaps totalling SEK 9,000m with terms of maturity extending through 2025 and carrying fixed interest at annual rates of between 0.85 and 2.73 per cent before margins. Fabege also holds callable swaps totalling SEK 5,700m at interest rates of between 2.87 and 3.98 per cent before margins and with maturity between 2016 and 2018. Interest rates on 70 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 December 2015, the recognised deficit value of the portfolio was SEK 658m (920). 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 24m, mainly pertaining to accrued opening charges for borrowing agreements and bond programmes. The total loan volume per quarter included SEK 2,592m (656) in loans for projects, on which interest of SEK 46m (13) had been capitalised.
Tax expenses for the year amounted to SEK -1,001m (-129). Operating taxes are calculated at a rate of 22 per cent on taxable earnings.
Shareholders' equity amounted to SEK 16,479m (13,783) at year-end and the equity/assets ratio was 39 per cent (38). Shareholders' equity per share was SEK 100 (83). Excluding deferred tax on fair value adjustments of properties, net asset value per share was SEK 118 (97). EPRA NAV was SEK 115 (95).
Cash flow from operating activities before changes in working capital were SEK 700m (-893). Changes in working capital affected cash flow by SEK 1,661m (-1,021). The positive cash flow from working capital resulted from purchase considerations received for previously sold properties and restricted amounts for loans that were settled during the second quarter. Investing activities affected cash flow by SEK -2,711m (+1,821), while affecting cash flow from financing activities by SEK 978m (18). In the investing activities, cash flow was driven by property acquisitions and by projects. Cash and cash equivalents changed by a total of SEK 9m (-75) during the year.
| Amount SEKm |
Average interest rate,% |
Share,% | |
|---|---|---|---|
| < 1 year | 8,033 | 2.79 | 38 |
| 1-2 years | 3,285 | 2.46 | 16 |
| 2-3 years | 4,750 | 3.37 | 22 |
| 3-4 years | 1,000 | 2.13 | 5 |
| 4-5 years | - | - | - |
| 5 -6years | 1,000 | 2.68 | 5 |
| 6-7 years | 800 | 0.99 | 4 |
| 7-8 years | 700 | 1.00 | 3 |
| 8-9 years | 700 | 1.04 | 3 |
| 9-10 years | 800 | 1.01 | 4 |
| Total | 21,068 | 2.58 | 100 |
The average interest rate for the < 1 year period includes the margin for the entire debt portfolio because the company's fixed-rate period is established using interest rate swaps, which are traded without margins.
| Credit agreement SEKm |
Draw n, SEKm |
|
|---|---|---|
| Commercial paper programme | 5,000 | 3,805 |
| < 1 year | 6,138 | 3,254 |
| 1-2 years | 4,346 | 3,441 |
| 2-3 years | 6,652 | 4,897 |
| 3-4 years | - | - |
| 4-5 years | 425 | 425 |
| 5-10 years | 3,993 | 3,993 |
| 10-15 years | - | - |
| 15-20 years | - | - |
| 20-25 years | 1,253 | 1,253 |
| Total | 27,807 | 21,068 |
In October, Fabege issued a green bond of SEK 406m via Nya SFF. The bonds are secured by collateral in a BREEAM-SE certified property.
The year was characterised by a very strong property market with rising property values and higher rent levels. The occupancy rate, which declined early in the year, increased again in the fourth quarter. Good net lettings, successful renegotiations and completed projects bode well for a stronger future cash flow.
Fabege's Property Management and Property Development activities are concentrated to a few selected submarkets in and around Stockholm, Stockholm inner city, Solna and Hammarby Sjöstad. On 31 December 2015, Fabege owned 83 properties with a total rental value of SEK 2.3bn, lettable floor space of 1.1m sqm and a carrying amount of SEK 40.3bn, of which development and project properties accounted for SEK 7.7bn. The financial occupancy rate for the entire portfolio, including project properties, was 93 per cent (94). The occupancy rate in the property management portfolio was 94 per cent (95).
During the year, 207 new agreements were signed at a total rental value of SEK 278m (428), of which SEK 241m pertained to Green leases. Lease terminations totalled SEK 204m (185), while net lettings were SEK 74m (243). The net lettings in 2014 included large project lettings such as SEB and TeliaSonera. Large lettings during 2015 pertained to Telenor Sweden in Lagern 2, Råsunda, ICA in Signalen 3 and KPMG in Uarda 7, Arenastaden, as well as SBAB in Fräsaren 10, Solna Business Park. A number of smaller leases were also signed pertaining to management lettings. Large lease terminations pertained to ICA in the Fräsaren 11 property in Solna Business Park and Peab in the Stigbygeln 6 property in Arenastaden. However, Peab will remain a tenant until mid-2018.
Work to extend and renegotiate existing customer leases was successful. A lease value of just over SEK 280m was renegotiated in 2015, with an average rise in rental value of 12 per cent. The retention rate during 2015 was 73 per cent (64).
During the second quarter, three properties were acquired in two transactions. The Stora Frösunda 2 and Hagalund 2:2 properties were acquired from Catena and transferred on 23 June. An agreement was also signed for the acquisition of the Fräsaren 9 property in Solna Business Park with transfer in the first quarter of 2016. The Grönlandet Södra 13 property, which was sold in late 2014, was vacated in June. In December, the Lagern 2 property, including commercial development rights from the coowned Visio, was acquired when Fabege and Peab divided up ownership of the former Råsunda Stadium. Two smaller sites in Upplands Väsby were also sold. The transactions generated a realised profit of SEK 21m before tax including income from previously implemented transactions.
The entire property portfolio is externally valued at least once annually. Approximately 23 per cent of the properties were externally valued in the fourth quarter and the remainder were internally valued based on the most recent external valuations. The total market value was SEK 40.3bn (32.6).
Unrealised changes in value totalled SEK 3,252m (1,339). The average yield requirement declined during 2015 to a rounded off figure of 4.9 per cent (5.4). The SEK 2,603m (1.063) change in the value of the property management portfolio primarily resulted from the lower yield requirement in the market, and to properties with rising rent levels. The project portfolio contributed to a change in value of SEK 649m (276), mainly due to development gains in major project properties.
1 The comparison figures for income and expense items relate to values for the period January– December 2014 and for balance sheet items as at 31 December 2014.
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 of at least 20 per cent on invested capital. Another aim is to have all new builds certified under BREEAM-SE.
During the year, investments in existing properties and projects totalled SEK 2,879m (1,249), of which investments in projects and development properties accounted for SEK 2,269m. The return on capital invested in the project portfolio was 29 per cent. The capital invested in the property management portfolio, which amounted to SEK 610m and encompassed energy investments and tenant customisations, contributed to the total growth in value.
In December, The Winery Hotel on the Järvakrogen 3 property was completed. The final inspection was conducted in November. The property is fully let to The Winery Hotel, with occupancy starting in January 2016. In conjunction with the completion, the property was transferred from projects to property management.
The new build of Nationalarenan 8 will be completed on time. The total investment is some SEK 1.3bn. The property is fully let to TeliaSonera, with occupancy scheduled for the second quarter of 2016.
The Uarda 7 project at Arenastaden is also proceeding as planned. The investment totals some SEK 570m and final inspection was performed in December. Occupancy will start in January and continue in February-July 2016. After the latest lettings, such as to KPMG, the occupancy rate is 89 per cent. The property will be transferred to the property management portfolio in the second quarter of 2016.
The erection of the office building on the Uarda 6 property is continuing. Construction of the framework has been completed and work on the facade is in progress. All installation contracts have been procured. The investment totals about SEK 500m. The property is let to H&M and Siemens with occupancy in April and November 2017, respectively. The occupancy rate is 70 per cent.
The construction of SEB's offices in the Pyramiden 4 property in Arenastaden is proceeding. Work on the framework is currently ongoing, as is internal work. To date, the procurements implemented are within the budget framework. Through a supplementary agreement with SEB, the office space was expanded to about 72,200 sqm, with a total rental value of SEK 182m per year. The investment amounts to some SEK 2.3bn and the office is scheduled for completion in two phases, spring 2017 and 2018, respectively. The property is fully let to SEB.
In August, a decision was made to build an office building on the Signalen 3 property in Arenastaden. The investment totals about SEK 1,080m. ICA has signed a lease on about 75 per cent of the lettable space. Construction will commence in 2016, with scheduled completion in the third quarter of 2018.
In December, the Lagern 2 property was acquired in its entirety. A new office building is to be constructed on the property. The investment totals about SEK 500m pertaining to an office building of about 16,000 sqm. Foundation work started in January 2016. The property is partly let to Telenor Sweden, with occupancy starting in the third quarter of 2018. The occupancy rate is 63 per cent.
Fabege has decided to participate in the Swedish initiative Citylab Action. The initiative is driven by Sweden GreenBuilding Council and various national development projects are involved in the effort aimed at providing support for sustainable urban development. Neighbourhood environments and public areas were the focus in 2015. Actions were also taken to make the area greener and create areas to encourage outdoor activities. The aim is for the companies' employees to experience Solna Business Park as a modern, safe and green city district, where it is easy to make everyday life work.
| Changes in property value | 2015 |
|---|---|
| Opening fair value 2015-01-01 | 32,559 |
| Property acquisitions | 1,600 |
| conversions | 2,879 |
| Changes in value | 3,252 |
| Sales and disposals | -11 |
| Closing fair value 2015-12-31 | 40,279 |
| Lettable | |||
|---|---|---|---|
| Property name | Area | Category | area.sqm |
| Quarter 1 | |||
| No divestments | |||
| Quarter 2 | |||
| No divestments | |||
| Quarter 3 | |||
| No divestments | |||
| Quarter 4 | |||
| Hammarby-Smedby | |||
| 1:464 | Upplands-Väsby | Mark | 0 |
| Hammarby-Smedby | |||
| 1:473 | Upplands-Väsby | Mark | 0 |
| Total sales of | |||
| properties | 0 | ||
| Lettable | |||
|---|---|---|---|
| Property name | Area | Category | area, sqm |
| Quarter 1 | |||
| No acquisitions | |||
| Quarter 2 | |||
| Stora Frösunda 2 | Solna | Industri/ kontor | 40,723 |
| Hagalund 2:2 | Solna | Mark | - |
| Quarter 3 | |||
| No acquisitions | |||
| Quarter 4 | |||
| Lagern 2 | Solna | Kontor | 12,617 |
| Total acquisitions of | |||
| properties | 53,340 |
| of w hich, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Property | Lettable | Occupancy rate, | Estimated rental | Carrying | Estimated | w orked up. | |||
| Property listing | type | Area | Completed | area, sqm | area, %¹ | value, SEKm² | amount SEKm | investment, SEKm | SEKm |
| Hörnan (del av Lagern 2) | Offices | Solna | Q2-2018 | 15,930 | 63% | 44 | 116 | 503 | 6 |
| Nationalarenan 8 | Offices | Arenastaden | Q2-2016 | 42,000 | 100% | 109 | 1,684 | 1,311 | 1,228 |
| Pyramiden 4 | Offices | Arenastaden | Q2-2018 | 72,200 | 100% | 182 | 1,139 | 2,350 | 852 |
| Signalen 3 | Offices | Arenastaden | Q3-2018 | 30,500 | 75% | 87 | 235 | 1,080 | 9 |
| Uarda 6 | Offices | Arenastaden | Q4-2017 | 18,000 | 70% | 50 | 432 | 511 | 284 |
| Uarda 7 | Offices | Arenastaden | Q1-2016 | 17,641 | 89% | 52 | 777 | 570 | 525 |
| Total | 196,271 | 88% | 524 | 4,383 | 6,325 | 2,904 | |||
| Other land and project properties | 269 | ||||||||
| Other development properties | 3,001 | ||||||||
| Total projects, land and development properties 7,653 |
|||||||||
¹ Operational occupancy rate 31 December 2015.
² Rental value including additions. The annual rent for the largest projects in progress could increase to SEK 524m (fully let) from SEK 0m in annualised current rent as of 31 December 2015.
| Dec 31 2015 | Jan-Dec 2015 | |||||||
|---|---|---|---|---|---|---|---|---|
| No. of properties |
Lettable area, '000 sqm |
Market value SEKm |
Rental value² |
Financial occupancy rate % |
Rental income SEKm |
Property ex penses SEKm |
Net operating income SEKm |
|
| Property holdings | ||||||||
| Investment properties ¹ | 61 | 946 | 32,626 | 2,131 | 94 | 1,903 | -397 | 1,506 |
| Development properties ¹ | 6 | 110 | 3,001 | 111 | 80 | 97 | -27 | 70 |
| Land and Project | ||||||||
| properties ¹ | 16 | 36 | 4,652 | 58 | 78 | 43 | -18 | 25 |
| Total | 83 | 1,092 | 40,279 | 2,300 | 93 | 2,043 | -442 | 1,601 |
| Of which, Inner city | 29 | 403 | 17,064 | 1,048 | 94 | 950 | -224 | 726 |
| Of which, Solna | 38 | 570 | 19,918 | 1,022 | 93 | 909 | -180 | 729 |
| Of which, Hammarby | ||||||||
| Sjöstad | 11 | 118 | 3,200 | 229 | 85 | 182 | -38 | 144 |
| Of which, Other | 5 | 1 | 97 | 1 | 100 | 2 | 0 | 2 |
| Total | 83 | 1,092 | 40,279 | 2,300 | 93 | 2,043 | -442 | 1,601 |
| Expenses for lettings, project development and property administration | -127 | |||||||
| Total net operating income after ex penses for lettings, project development and property administration | 1,474 ³ |
¹ See definitions on page 15.
² In the rental value, time limited deductions of about SEK 109m (in rolling annual rental value at 31 December 2015) have not been deducted.
³ The table refers to Fabege's property portfolio on 31 December 2015. Income and expenses were recognised as if the properties were owned for the entire period. The difference between recognised net operating income above, SEK1.474m, and net operating income in profit or loss, SEK 1.429m, is due to net operating income from divested properties being excluded, and acquired properties being adjusted upwards as if they had been owned/ completed during the period of January–December 2015. Intercompany rentals have been included in the table.
| 2015 Jan-Dec |
2015 Jan-Dec |
2015 Jan-Dec |
2015 Jan-Dec |
2014 Jan-Dec |
2014 Jan-Dec |
2014 Jan-Dec |
2014 Jan-Dec |
|
|---|---|---|---|---|---|---|---|---|
| Property | Property | Property | Property | |||||
| SEKm | Management | Development | Transaction | Total | Management | Development | Transaction | Total |
| Rental income | 1,888 | 110 | 1,998 | 1,988 | 99 | 2,087 | ||
| Property expenses | -517 | -52 | -569 | -561 | -41 | -602 | ||
| N et operating income | 1,371 | 58 | 0 | 1,429 | 1,427 | 58 | 0 | 1,485 |
| Surplus ratio, % | 73% | 53% | 0% | 72% | 72% | 59% | 0% | 71% |
| Central administration | -57 | -8 | -65 | -60 | -7 | -67 | ||
| Net interest expense | -515 | -67 | -582 | -606 | -58 | -664 | ||
| Share in profits of associated companies | -94 | -94 | -69 | -3 | -72 | |||
| Profit from property management activities | 705 | -17 | 0 | 688 | 692 | -10 | 0 | 682 |
| Realised changes in value of properties | 21 | 21 | 300 | 300 | ||||
| Unrealised changes in value of properties | 2,603 | 649 | 3,252 | 1,063 | 276 | 1,339 | ||
| Profit/ loss before tax per segment | 3,308 | 632 | 21 | 3,961 | 1,755 | 266 | 300 | 2,321 |
| Changes in value, fixed income derivatives and equities | 272 | -454 | ||||||
| Profit before tax | 4,233 | 1,867 | ||||||
| Properties, market value | 32,626 | 7,653 | 40,279 | 28,715 | 3,844 | 32,559 | ||
| Occupancy rate, % | 94% | 79% | 93% | 95% | 77% | 94% | ||
¹ See definitions on page 15
At the end of the quarter, 148 people (136) were employed in the Fabege Group.
Sales during 2015 amounted to SEK 146m (130) and profit before appropriations and tax to SEK 370m (773).
Net financial items include dividends of SEK 800m (1,700) to the Parent Company. Net investments in property, equipment and shares were SEK 0m (0).
The 2015 AGM renewed the authorisation of the Board, not longer than up to the next AGM, to buy back and transfer shares in the company. 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 year.
The Board of Directors will propose to the AGM on 11 April 2016 to resolve on the following:
Risks and uncertainties relating to cash flow from operations are primarily attributable to changes in rents, vacancies and interest rates. A more detailed description is presented in the risk section of the 2014 Annual Report (pages 38–41). The effect of the changes on consolidated profit is shown in the risk analysis and in the sensitivity analysis in the 2014 Directors' Report (page 62–67).
Properties are recognised at fair value and changes in value in profit or loss. The effects of changes in value on consolidated profit, the equity/assets ratio and the loan-to-value ratio are also presented in the risk analysis and the sensitivity analysis in the 2014 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 described in the 2014 annual report (pages 39–40 and 78-79).
No material changes in the company's assessment of risks have arisen following publication of the 2014 annual report. Fabege's aims for the capital structure are to have an equity/assets ratio of at least 30 per cent and an interest coverage ratio of at least 2.0 (including realised changes in value). The aim for the loan-to-value ratio is a maximum of 55 per cent.
| Change Effect, SEKm | |||||
|---|---|---|---|---|---|
| Rental income, total | 1% | 20.0 | |||
| Rent level, commercial income | 1% | 19.8 | |||
| Financial occupancy rate | 1 percentage point | 22.9 | |||
| Property expenses | 1% | 5.7 | |||
| Interest expense, rolling 12 months ¹ | / -1 percentage point | -18/ -69 | |||
| Interest expenses, longer term perspective | 1 percentage point | 210.7 | |||
| The sensitivity analysis shows the effects on the Group's cash flow and profit on an annualised basis after taking account of the full effect of each parameter. |
¹ 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.
| Change in value, % | Impact on after-tax profit, SEKm |
Equity/ as sets ratio, % |
Loan-to value ratio, % |
|---|---|---|---|
| +1 | 314 | 39.8% | 51.8% |
| 0 | 0 | 39.5% | 52.3% |
| -1 | -314 | 39.1% | 52.8% |
Profit and key figures are affected by realized and unrealized changes in the value of properties on properties. The table shows the effect of a 1 percentage point of change in value after deferred tax deduction.
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. During both the first and fourth quarters, the warm and snowless winter season contributed to lower running costs and a strong surplus ratio. 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 usually higher.
In early 2016, performance in both the property and rental markets remains very strong. Given the prevailing market conditions and Fabege's attractive property and project portfolio, the prerequisites are favourable for strong earnings in 2016 as well. By completing projects, the rent volume will increase which, combined with continued operational efficiency and low interest expense, will generate better profit from property management. Fabege is well positioned to capitalise on the exciting opportunities ahead.
Fabege prepares its consolidated financial statements according to International Financial Reporting Standards (IFRS). The year-end
report has been prepared in accordance with IAS 34 Interim Financial Reporting.
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 2015 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.
Stockholm, 4 February 2016
CHRISTIAN HERMELIN Chief Executive Officer
This year-end report has not been examined by the company's auditors.
The Fabege share is listed on the Nasdaq Stockholm Nordic Exchange and included in the Large-Cap segment.
| Number of | Proportion | Proportion | |
|---|---|---|---|
| shares | of equity, % | of votes,% | |
| Erik Paulsson with family, privately and company | 25,455,013 | 15.4 | 15.4 |
| BlackRock Inc. ² | 8,924,247 | 5.4 | 5.4 |
| Investment AB Öresund | 5,500,000 | 3.3 | 3.3 |
| FIM Funds | 4,913,748 | 3.0 | 3.0 |
| Länsförsäkringar Funds | 4,076,506 | 2.5 | 2.5 |
| Qviberg Mats with family | 3,747,868 | 2.3 | 2.3 |
| Norges Bank Investment Management | 3,421,546 | 2.1 | 2.1 |
| SHB Funds | 3,362,398 | 2.0 | 2.0 |
| Stichting Pensioenfonds ABP | 2,889,063 | 1.7 | 1.7 |
| ENA City AB | 2,735,300 | 1.7 | 1.7 |
| ING Funds | 2,640,000 | 1.6 | 1.6 |
| SHB pension fund | 2,484,255 | 1.5 | 1.5 |
| Principal Funds | 2,420,000 | 1.4 | 1.4 |
| Fourth AP-Fund | 1,910,292 | 1.1 | 1.1 |
| Blue Sky Group Pensioenfonds | 1,814,797 | 1.1 | 1.1 |
| Total 15 largest shareholders | 76,295,033 | 46.1 | 46.1 |
| Other foreign shareholders | 42,786,899 | 25.9 | 25.9 |
| Other Swedish shareholders | 46,309,640 | 28.0 | 28.0 |
| 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 |
¹The shareholdings of certain shareholders whose shares are managed by trustees may differ from what is stated in the share register.
Source: Modular Finance AB, according to data from Euroclear Sweden AB.
2 The shares are wholly or partly owned by trustee-managed accounts. Ownership has been confirmed via a disclosure press release to the Swedish Financial Supervisory Authority and amounted to 5-10 per cent of the share capital/votes as per 31 December 2015.
The Fabege share is traded on Nasdaq Stockholm, BOAT, BATS Chi-X and the London Stock Exchange.
No. of shareholders as of 31 December 2015: 39,435
Through the co-owned company Visio, Fabege and Peab jointly owned the development rights on the former Råsunda Stadium. The original property comprised some 16,000 sqm of existing office buildings, about 19,000 sqm of commercial development rights and about 70,000 sqm of housing development rights. Fabege and Peab have now divided up the ownership whereby, in December, Fabege acquired the commercial portion, comprising the existing office buildings and commercial development rights. Peab acquired all the housing development rights. As previously announced, Fabege will use its commercial development rights to construct an office building for such companies as Telenor Sweden.
| 2015 | 2014 | 2015 | 2014 | |
|---|---|---|---|---|
| SEKm | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec |
| Rental income | 505 | 522 | 1,998 | 2,087 |
| Property expenses | -156 | -157 | -569 | -602 |
| N et operating income | 349 | 365 | 1,429 | 1,485 |
| Surplus ratio, % | 69 | 70 | 72 | 71 |
| Central administration | -17 | -21 | -65 | -67 |
| Net interest/ expense | -146 | -155 | -582 | -664 |
| Share in profits of associated companies | -14 | -15 | -94 | -72 |
| Profit/ loss from property management | 172 | 174 | 688 | 682 |
| Realised changes in value of properties | 17 | 165 | 21 | 300 |
| Unrealised changes in value of properties | 1,282 | 570 | 3,252 | 1,339 |
| Unrealised changes in value, fixed income derivatives | 151 | -96 | 262 | -473 |
| Changes in value of shares | -26 | 22 | 10 | 19 |
| Profit/ loss before tax | 1,596 | 835 | 4,233 | 1,867 |
| Current tax | -2 | 0 | -2 | -61 |
| Deferred tax | -416 | 75 | -999 | -68 |
| Profit/ loss for period/ year | 1,178 | 910 | 3,232 | 1,738 |
| Items that will not be restated in profit or loss | ||||
| Revaluation of defined-benefit pensions | 2 | -10 | 2 | -10 |
| Comprehensive income for the period/ year | 1,180 | 900 | 3,234 | 1,728 |
| Earnings per share, SEK | 7:12 | 5:51 | 19:54 | 10:51 |
| Total earnings per share, SEK | 7:13 | 5:44 | 19:55 | 10:45 |
| No. of shares at period end, millions | 165.4 | 165.4 | 165.4 | 165.4 |
| Average no. of shares, million | 165.4 | 165.4 | 165.4 | 165.4 |
| 2015 | 2014 | |
|---|---|---|
| SEKm | Dec 31 | Dec 31 |
| Assets | ||
| Properties | 40,279 | 32,559 |
| Other tangible fixed assets | 1 | 1 |
| Financial fixed assets | 923 | 1,542 |
| Current assets | 446 | 1,859 |
| Short-term investments | 70 | 34 |
| Cash and cash equivalents | 32 | 23 |
| Total assets | 41,751 | 36,018 |
| Equity and liabilities | ||
| Shareholder's equity | 16,479 | 13,783 |
| Provisions | 1,936 | 1,084 |
| Interest-bearing liabilities¹ | 21,068 | 19,551 |
| Other long-term liabilities | 619 | - |
| Derivative instrument | 658 | 920 |
| Non-interest-bearing liabilities | 991 | 680 |
| Total equity and liabilities | 41,751 | 36,018 |
| Equity/ assets ratio, % | 39 | 38 |
| Contingent liabilities | 433 | 1,058 |
¹ Of which short-term SEK 7,058m (7,071)
| Of w hich, | ||
|---|---|---|
| attributable to | ||
| Shareholders' | Parent Company | |
| SEKm | equity | shareholders |
| Shareholders' equity, 1 January 2014, according to adopted Statement of financial position | 12,551 | 12,551 |
| Cash dividend | -496 | -496 |
| Profit for the period | 1,738 | 1,738 |
| Other comprehensive income | -10 | -10 |
| Shareholders' equity, 31 December 2014 | 13,783 | 13,783 |
| Cash dividend | -538 | -538 |
| Profit for the period | 3,232 | 3,232 |
| Other comprehensive income | 2 | 2 |
| Shareholders' equity, 31 December 2015 | 16,479 | 16,479 |
| 2015 | 2014 | |
|---|---|---|
| SEKm | Jan-Dec | Jan-Dec |
| Operations | ||
| Net operating income | 1,429 | 1,485 |
| Central administration | -65 | -67 |
| Reversal of depreciation | 0 | 1 |
| Interest received | 25 | 19 |
| Interest paid | -689 | -724 |
| Income tax paid ¹ | 0 | -1,607 |
| Cash flow before changes in w orking capital | 700 | -893 |
| Change in w orking capital | ||
| Change in current receivables | 831 | -919 |
| Change in current liabilities | 211 | -102 |
| Total change in w orking capital | 1,042 | -1,021 |
| Cash flow from operating activities | 1,742 | -1,914 |
| Investing activities | ||
| Investments in new-builds, extensions and conversions | -2,770 | -1,233 |
| Acquisition of properties | -985 | -105 |
| Divestment of properties | 604 | 3,259 |
| Other tangible fixed assets | 440 | -100 |
| Cash flow from investing activities | -2,711 | 1,821 |
| Financing activities | ||
| Dividend to shareholders | -538 | -496 |
| Change in interest bearing liabilities | 1,516 | 514 |
| Cash flow from investing activities | 978 | 18 |
| Cash flow for the period | 9 | -75 |
| Cash and cash equivalents at beginning of period | 23 | 98 |
| Cash and cash equivalents at end of period | 32 | 23 |
¹ The amount of SEK -1 607m for the full year 2014 income tax paid is composed entirely of tax payments as a result of convictions in the tax matters relating to previous real estate transactions.
| 2015 | 2014 | |
|---|---|---|
| Financial | Jan-Dec | Jan-Dec |
| Return on capital employed, % | 13.2 | 7.6 |
| Return on equity, % | 21.4 | 13.2 |
| Interest coverage ratio, multiple | 2.1 | 2.4 |
| Equity | 39 | 38 |
| Loan-to-value ratio, properties, % | 52 | 60 |
| Debt/ equity ratio, multiple | 1.3 | 1.4 |
| Share related¹ | ||
| Earnings per share, SEK | 19:54 | 10:51 |
| Total earnings per share, SEK | 19:55 | 10:45 |
| Equity per share, SEK | 100 | 83 |
| Cash flow from operating activities per share, SEK² | 14:27 | -11.58 |
| EPRA NAV, SEK per share | 115 | 95 |
| EPRA, EPS | 3.94 | 4.09 |
| No. of outstanding shares at end of period, thousands | 165,392 | 165,392 |
| Average number of shares, thousands | 165,392 | 165,392 |
| Property-related | ||
| No. of properties | 83 | 80 |
| Carrying amount, Properties, SEKm | 40,279 | 32,559 |
| Lettable area, sqm | 1,092,000 | 1,030,000 |
| Financial occupancy rate, % | 93 | 94 |
| Surplus ratio, % | 72 | 71 |
¹ No dilution is possible because no potential dilution shares (such as convertible debentures) exist.
² The key figure changed from 1 January 2014. Performance measure is affected during 2014 of tax payments of SSEK -1 607m as a result of convictions in the tax matters relating to
previous real estate transactions.
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 also in the Parent Company since 2006. No changes in the measurement model have occurred.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | ||
| IFRS, level 3 | Dec 31 | Dec 31 | Dec 31 | Dec 31 | |
| Opening value | -521 | -358 | -521 | -358 | |
| Acquisitions/ Investments | - | - | - | - | |
| Changes in value | 125 | -163 | 125 | -163 | |
| Matured | - | - | - | - | |
| Closing value | -396 | -521 | -396 | -521 | |
| Carrying amount | -396 | -521 | -396 | -521 | |
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.
Through re-allotment, the Uarda 1 property has been partitioned into three properties. In the first quarter, the Uarda 1 property was reclassified from a project property to an investment property. Following the property re-allotment, Uarda 6 and Uarda 7 were formed. The latter two remain as project properties. The newly acquired properties Stora Frösunda 2, Hagalund 2:2, Solna and Lagern 2, Råsunda, are all reclassified as project properties and included in the Property Development segment. The Järvakrogen 3 property was transferred to the property management segment on completion. Another property was reclassified from property management to development in the fourth quarter.
| 2015 | 2014 | |
|---|---|---|
| SEKm | Jan-Dec | Jan-Dec |
| Income | 146 | 130 |
| Expenses | -226 | -212 |
| Net financial items | 152 | 1,309 |
| Income from other financial assets | 0 | 0 |
| Changes in value, fixed-income derivatives | 262 | -473 |
| Changes in value, equities | 36 | 19 |
| Profit before tax | 370 | 773 |
| Current Tax | - | - |
| Deferred | 8 | 193 |
| Profit for the period/ year | 378 | 996 |
| 2015 | 2014 | |
|---|---|---|
| SEKm | Dec 31 | Dec 31 |
| Participation in Group companies | 12,592 | 12,992 |
| Other fixed assets | 41,892 | 39,888 |
| of which, receivables from Group companies | 41,103 | 39,003 |
| Current assets | 129 | 1,090 |
| Cash and cash equivalents | 30 | 21 |
| Total assets | 54,643 | 53,991 |
| Shareholders' equity | 12,301 | 12,461 |
| Provisions | 68 | 68 |
| Long-term liabilities | 35,118 | 34,708 |
| of which, liabilities to Group companies | 21,724 | 21,658 |
| Current liabilities | 7,156 | 6,754 |
| Total equity and liabilities | 54,643 | 53,991 |
| 2015 | 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||
| Rental income | 505 | 495 | 496 | 502 | 522 | 526 | 526 | 513 | |
| Property expenses | -156 | -130 | -131 | -152 | -157 | -144 | -137 | -164 | |
| N et operating income | 349 | 365 | 365 | 350 | 365 | 382 | 389 | 349 | |
| Surplus ratio, % | 69% | 74% | 74% | 70% | 70% | 73% | 74% | 68% | |
| Central administration | -17 | -16 | -16 | -16 | -21 | -16 | -15 | -15 | |
| Net interest expence | -146 | -143 | -140 | -153 | -155 | -158 | -180 | -171 | |
| Share in profits of associated companies | -14 | -59 | -8 | -13 | -15 | -17 | -27 | -13 | |
| Profit/ loss from property management | 172 | 147 | 201 | 168 | 174 | 191 | 167 | 150 | |
| Realised changes in value of properties | 17 | 3 | 0 | 1 | 165 | - | 52 | 83 | |
| Unrealised value of properties | 1282 | 590 | 673 | 707 | 570 | 258 | 299 | 212 | |
| Unrealised changes in value, fixed-income derivatives | 151 | -26 | 194 | -57 | -96 | -90 | -146 | -141 | |
| Changes in value, equities | -26 | -28 | -3 | 67 | 22 | -13 | -16 | 26 | |
| Profit for the period/ year | 1596 | 686 | 1065 | 886 | 835 | 346 | 356 | 330 | |
| Current tax | -2 | 0 | 0 | 0 | - | -3 | 16 | -74 | |
| Deferred tax | -416 | -167 | -235 | -181 | 75 | -78 | -49 | -16 | |
| Comprehensive income for the period/ year | 1178 | 519 | 830 | 705 | 910 | 265 | 323 | 240 |
| 2015 | 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| Quarter 4 | Quarter 3 | Quarter 2 Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||
| Assets | ||||||||
| Properties | 40,279 | 37,630 | 36,361 | 33,763 | 32,559 | 33,868 | 33,257 | 33,640 |
| Other tangible fixed assets | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
| Financial fixed assets | 923 | 1,562 | 1,644 | 1,634 | 1,542 | 1,475 | 1,492 | 1,610 |
| Current assets | 446 | 438 | 506 | 1,933 | 1,859 | 318 | 856 | 744 |
| Short-term investments | 70 | 50 | 48 | 38 | 34 | - | - | - |
| Cash and cash equivalents | 32 | 37 | 411 | 62 | 23 | 198 | 263 | 148 |
| Total assets | 41,751 | 39,718 | 38,971 | 37,431 | 36,018 | 35,860 | 35,869 | 36,143 |
| Equitites and liabilities | ||||||||
| Shareholders' equity | 16,479 | 15,299 | 14,780 | 13,951 | 13,783 | 12,883 | 12,618 | 12,295 |
| Provisions | 1,936 | 1,661 | 1,494 | 1,265 | 1,084 | 1,218 | 1,142 | 1,097 |
| Interest-bearing liabilities | 21,068 | 20,513 | 20,436 | 19,733 | 19,551 | 20,136 | 20,402 | 20,073 |
| Other long-term liabilities | 619 | 617 | 615 | - | - | - | - | - |
| Derivative instruments | 658 | 809 | 783 | 977 | 920 | 824 | 734 | 588 |
| Non-interest bearing liabilitis | 991 | 819 | 863 | 1,505 | 680 | 799 | 973 | 2,090 |
| Total equity and liabilities | 41,751 | 39,718 | 38,971 | 37,431 | 36,018 | 35,860 | 35,869 | 36,143 |
| 2015 | 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| Quarter 4 | Quarter 3 | Quarter 2 Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | ||
| Financial | ||||||||
| Return on capital employed, % | 18.4 | 9.2 | 13.7 | 12.2 | 11.7 | 6.1 | 6.4 | 6.2 |
| Return on equtiy, % | 29.7 | 13.8 | 23.2 | 20.3 | 27.3 | 8.3 | 10.3 | 7.7 |
| Interest coverage ratio, multiple | 2.0 | 1.9 | 2.3 | 2.0 | 3.1 | 2.1 | 2.2 | 2.3 |
| Equity/ assets ratio, % | 39 | 39 | 38 | 37 | 38 | 36 | 35 | 34 |
| Loan-to-value ratio, properties, % | 52 | 55 | 56 | 58 | 60 | 59 | 61 | 60 |
| Debt/ equity raio, multiple | 1.3 | 1.3 | 1.4 | 1.4 | 1.4 | 1.6 | 1.6 | 1.6 |
| Share-related | ||||||||
| Earnings per share, SEK | 7:12 | 3:14 | 5:02 | 4:26 | 5:50 | 1:60 | 1:95 | 1:45 |
| Total earnings per share, SEK | 100 | 93 | 89 | 84 | 83 | 78 | 76 | 74 |
| Cash flow from operating activities per share, SEK ¹ | 4:82 | 1:10 | 6:99 | 1:36 | -5:27 | 0:26 | -2:07 | -4:50 |
| EPRA NAV, SEK per share | 115 | 107 | 102 | 97 | 95 | 89 | 87 | 84 |
| EPRA EPS | 0:99 | 0.91 | 1.17 | 1.01 | 1.04 | 1.12 | 1.01 | 0.93 |
| 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 number of shares, thousands | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 |
| Property-related | ||||||||
| Financial occupancy rate, % | 93 | 92 | 92 | 93 | 94 | 92 | 92 | 92 |
| Surplus ratio, % | 69 | 74 | 74 | 70 | 70 | 73 | 74 | 68 |
¹ The key figure is affected during 2014 of tax payments of SEK -1 607m and fourth quarter of 2013, about SEK -465 m as a result of convictions in the tax matters relating to previous real estate transactions.
Profit for the period/year divided by average shareholders' equity. In interim reports, the return is converted to its annualised value without taking account of seasonal variations.
Profit before tax plus interest expenses, divided by average capital employed. In interim reports, the return is converted to its annualised value without taking account of seasonal variations.
Interest-bearing liabilities divided by the carrying amount of the properties at the end of the period.
Dividend for the year divided by the share price at year-end.
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.
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.
Properties that are being actively managed on an on-going basis.
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.
Lease value plus estimated annual rent for vacant premises after a reasonable general renovation.
Cash flow from operating activities (after changes in working capital) divided by the average number of outstanding shares.
Stated as an annual value. Index-adjusted basic rent under the rental agreement plus rent supplements.
Land and development properties and properties in which a new build/complete redevelopment is in progress.
New lettings during the period less terminations to vacate.
Parent Company shareholders' share of profit after tax for the period divided by average number of outstanding shares during the period.
Profit/loss before tax plus financial expenses and plus/minus unrealised changes in value, divided by financial expenses.
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 Transaction. 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.
Interest-bearing liabilities divided by shareholders' equity.
Shareholders' equity divided by total assets.
Total assets less non-interest bearing liabilities and provisions.
Net operating income for the period plus unrealised and realised changes in the value of properties divided by market value at period end.
Proportion of leases that are extended in relation to the proportion of cancellable leases.
Net operating income divided by rental income.
Fabege is one of Sweden's leading property companies focusing mainly on letting and managing office premises as well as property development. The company offers modern premises in prime locations in fastgrowing submarkets in the Stockholm region, such as 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.
As at 31 December 2015, Fabege owned 83 properties with a total market value of SEK 40.3bn. The rental value was SEK 2.3bn.
Fabege is to focus on city-district development with a particular emphasis on commercial properties in 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 Transaction.
Fabege's strategy is to create value by managing and developing the property portfolio and – via transactions – acquiring properties with favourable growth potential while divesting properties located outside the company's prioritised areas. Fabege's properties are located in the most liquid market in Sweden.
Attractive locations lead to a low vacancy rate in the property management portfolio. Modern properties permit flexible solutions and attract customers. With its concentrated portfolio and high-profile local presence, investments aimed at raising 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 will account for the largest growth, thus resulting in higher demand for office premises.
New technology and new work methods contribute to boosting 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. Low 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 the entire area. Environmental considerations involving choices of material and energy-saving measures are on the rise. Demand is rising 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.
Property transactions are an integral part of Fabege's business model and contribute significantly to the company's profit. The company continuously analyses its property portfolio to capitalise on opportunities to increase capital growth, through both acquisitions and divestments.
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..
Annual General Meeting 11 April 2016 Interim report Jan-Mar 26 April 2016 Interim report Jan–Jun 8 July 2016 Interim report Jan-Sep 20 October 2016
Visit the Group's website for more information about Fabege and its operations. There will also be a web presentation on 4 February 2016, at which Christian Hermelin and Åsa Bergström will present the year-end report.
CHRISTIAN HERMELIN Chief Executive Officer Phone: +46 (0)8-555 148 25 +46 (0)733-87 18 25
ÅSA BERGSTRÖM CFO/Executive Vice President Phone: +46 (0)8-555 148 29, +46 (0)706 66 13 80
The information in this report is of the type that Fabege is required to disclose according to the Securities Market Act. The information was released for publication on 4 February 2016.
Fabege AB (publ) Box 730, 169 27 Solna Besök: Pyramidvägen 7, 169 56 Solna Telefon: 08-555 148 00 E-post: [email protected] Internet: www.fabege.se Organisationsnummer: 556049-1523 Styrelsens säte: Stockholm
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