Annual Report • Feb 4, 2015
Annual Report
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| 2014 | 2013 | 2014 | 2013 | |
|---|---|---|---|---|
| Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec | |
| Rental income | 522 | 514 | 2,087 | 2,059 |
| Net operating income | 365 | 340 | 1,485 | 1,411 |
| Profit from property management | 174 | 152 | 682 | 614 |
| Profit before tax | 835 | 242 | 1,867 | 1,992 |
| Profit after tax | 910 | 79 | 1,738 | 1,530 |
| Surplus ratio,% | 70 | 66 | 71 | 69 |
| Equity ratio,% | - | - | 38 | 35 |
| Equity per share, SEK | - | - | 83 | 76 |
January – December 2014:
· Rental income amounted to SEK 2,087m (2,059). In an identical portfolio, income rose slightly more than 5 per cent.
Q4
2014
CREATING THE RIGHT CONDITIONS
Christian Hermelin, CEO
SURPLUS RATIO¹ 50 60 70 80 2010 2011 2012 2013 2014 %
Target: 70 per cent
Target: 20 per cent
The transaction market has returned to volumes that have not been seen since before the financial crisis. The large demand for properties in prime locations, combined with rising rents and low financing costs, is exerting pressure on the required yield.
Fabege's operations developed well during the year, particularly in Arenastaden. The large lettings enabled us to increase the pace of development of the project portfolio. Arenastaden is now growing rapidly and our vision of the vibrant city district is gradually becoming reality. I am extremely proud that we have been so successful in attracting a number of Sweden's largest companies to Arenastaden.
In Stockholm, growth remains favourable and the supply of new offices is low, thus additionally adding to market value. We have capitalised on the opportunities arising in the strong market by selling a number of properties in cases where the properties do not offer notable development potential for Fabege. This resulted in a high pace of transactions during the year, with 14 properties sold at a value of nearly SEK 4bn, while making a healthy contribution to Fabege's total profit. As a result of these transactions, we also strengthened the balance sheet in preparation for forthcoming valuegenerating investments in the years ahead.
The rate of business was high throughout the year, not only on the transaction side but also in property management and project operations. When we now sum up the year's lettings, they go down in Fabege's history as a record, with net lettings of SEK 243m. The activity in the rental market is somewhat seasonal. After a strong finish to the first six months of the year and reduced activity in the third quarter, lease negotiations and business deals regained momentum during the fourth quarter.
Our target of achieving a surplus ratio of 70 per cent was surpassed. To some extent, this was explained by a mild winter, although structured efforts to achieve cost-effectiveness and an improved occupancy rate also contributed to the excellent earnings.
I am also delighted that we continued to pursue our important sustainability efforts, which included energy-efficiency enhancements, more green leases and environmental certification of properties. These are factors that increasingly translate into competitive advantages in business negotiations. We received solid proof that our sustainability work maintains a high class when we reached Green Star level by GRESB and were approved as a responsible investment by the mutual funds of both Robur and Nordea.
Overall, I am very pleased by our fine performance during the year, whereby all parts of the company's business, in accordance with our strategy, made significant contributions to Fabege's total profit. I am also pleased on behalf of our shareholder, who have experienced new record levels of share price, now that the SEK 100 mark has been passed.
At the beginning of the new year, the rental and property markets in Stockholm have remained highly robust, with considerable demand from investors. Fabege's property portfolio favourably matches customer requirements for modern and sustainable offices in good locations. Both the Board of Directors and the employees display great drive and commitment with the aim of continuing to do good business. We are looking forward to continued healthy development, in which all parts of the operation contribute to an increase in total earnings.
During the year, net operating income improved and the surplus ratio rose to a record-high 71 per cent. Transaction gains and value growth in both the property management portfolio and the project portfolio continued to contribute to Fabege's total profit.
Profit after tax for the year increased to SEK 1,738m (1,530), corresponding to earnings per share of SEK 10.51 (9.26). Profit before tax for the year was SEK 1,867m (1,992). The decline was due in its entirety to negative value changes in the portfolio of derivative instruments. Net operating income increased nearly 5 per cent and profit from property management improved by some 11 per cent. Realised and unrealised value changes in the property portfolio were also higher than in the year-earlier period.
Rental income amounted to SEK 2,087m (2,059) and net operating income increased to SEK 1,485m (1,411). In an identical portfolio, rental income rose slightly more than 5 per cent and net operating income by about 9 per cent. The surplus ratio increased to 71 per cent (69), primarily as a result of the warm and snowless winter season, but also due to improved rent levels and cost-effectiveness.
Realised changes in the value of properties amounted to SEK 300m (135) and unrealised changes in value to SEK 1,339m (739). The SEK 1,063m (343) unrealised change in the value of the property management portfolio was attributable to properties with higher rent levels and a lower yield requirement, mainly in Stockholm inner city. The average yield requirement declined to 5.4 per cent after rounding off (5.6). The project portfolio contributed to an unrealised change in value of SEK 276m (396), primarily due to development gains in the major project properties.
The share in the results of associated companies was a loss of SEK 72m (loss: 30), mainly due to Tornet Fastighets AB (non-recurring effect of sale of properties) and Sweden Arena Management KB. The change of accounting policy regarding SFF to proportional consolidation led to a slight improvement in the share in results of associated companies, while administrative costs rose SEK 3m. Due to lower long-term interest rates, the deficit value of the derivative portfolio increased by SEK 473m (reduced deficit value of SEK 408m in 2013.) Changes in the value of shareholdings, mainly Catena, totalled SEK 19 m (96). In the second quarter, 850,000 Catena shares were sold. Net interest expense declined to SEK 664m (705). Higher borrowing was offset by lower market interest rates.
During the second half of the year, four properties were reclassified from investment properties to development or project properties. This pertained to Pyramiden 4, where existing buildings were demolished to make way for SEB's new offices at Arenastaden, and three properties on Västra Kungsholmen and in Hammarby sjöstad, which are to be further developed.
The Property Management segment generated net operating income of SEK 1,427m (1,327), corresponding to a surplus ratio of 72 per cent (69). The occupancy rate was 95 per cent (93). Profit from property management was SEK 692m (601). Unrealised changes in property values amounted to SEK 1,063m (343).
The Property Development segment generated net operating income of SEK 58m (84), making a surplus ratio of 59 per cent (60). Property management generated a loss of SEK 10m (profit: 13). Unrealised changes in property values were SEK 276m (396).
The Transaction segment sold 14 properties, realising changes in value of SEK 300m (135).
Shareholders' equity at year-end amounted to SEK 13,783m (12,551) and the equity/assets ratio was 38 per cent (35). Shareholders' equity per share totalled SEK 83 (76). Excluding deferred tax on fair value adjustments of properties, net asset value per share was SEK 97 (88). EPRA NAV was SEK 95 (84).
1) The comparison figures for income and expense items relate to values for the period January–December 2013 and for balance sheet items as at 31 December 2013.
| 2014 | 2013 | |
|---|---|---|
| SEKm | Jan-Dec | Jan-Dec |
| Profit from Property Managment activities | 692 | 601 |
| Changes in value (portfolio of investment | ||
| properties) | 1,063 | 343 |
| Contribution from Property | 1,755 | 944 |
| Management | ||
| Profit from Property Management activities | -10 | 13 |
| Changes in value (profit from Property | ||
| Development) | 276 | 396 |
| Contribution from Property | 266 | 409 |
| Development | ||
| Contribution from Transactions | ||
| Realised changes in value | 300 | 135 |
| Total contribution | ||
| from the operation | 2,321 | 1,488 |
During 2014, the target for the surplus ratio of 70 per cent was surpassed.
Fabege employs fixed rate long-term lines of credit, which at year-end had an average maturity of 3.7 years. The company's lenders are primarily the major Nordic banks.
Interest-bearing liabilities at year-end totalled SEK 19,551m (19,038), with an average interest rate of 3.09 per cent excluding and 3.21 per cent including commitment fees on the undrawn portion of committed credit facilities. Unutilised committed lines of credit amounted SEK 4,622m.
During the fourth quarter, a new three-year revolving line of credit of SEK 155m was raised. In addition, a new four-year credit facility of SEK 1,395m was raised for financing the building of SEB's new offices in the Pyramiden 4 property at Arenastaden.
The year-end loan-to-value ratio was 60 per cent. Adjusted for purchase considerations outstanding for sold properties, and for restricted amounts for loans paid off at the beginning of 2015, totalling SEK 1,422m, the loan-to-value ratio declines to 56 per cent.
Fabege has a commercial paper programme of SEK 5,000m. At year-end, outstanding commercial paper totalled SEK 2,889m (2,168). Fabege has available long-term credit facilities covering all outstanding commercial paper at any given time. Fabege also has a covered property bond of SEK 1,170m, which will mature in February 2016. At 31 December, Fabege also had outstanding bonds of SEK 690m within the framework of the co-owned company Svensk Fastighetsfinansiering AB. A newly formed finance company with a covered MTN programme of SEK 8,000m, Nya Svensk Fastighetsfinansiering AB, was launched in January 2015. The company is owned by Catena AB, Diös Fastigheter AB, Fabege AB, Platzer Fastigheter Holding AB and Wihlborgs Fastigheter AB, each owning 20 per cent, and will start its financing activities in February 2015.
The average fixed-rate term for Fabege's loan portfolio was 1.9 years, including the effects of derivative instruments. The average fixed-rate term for variable-interest loans was 66 days. Fabege's derivatives portfolio comprised interest-rate swaps totalling SEK 6,000m with terms of maturity extending through 2021 and carrying fixed interest at annual rates of between 1.87 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 maturity between 2016 and 2018. Interest rates on 60 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 2014, the recognised negative fair value adjustment of the portfolio was SEK 920m (447). 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. In January 2015, additional interest-rate swaps in a total amount of SEK 800m were agreed with maturities of eight to ten years.
Net financial items included other financial expenses of SEK 11m, mainly for opening charges for loan agreements and running costs for commercial paper programmes.
The total loan volume at the end of the quarter included SEK 656m (277) in loan amounts for projects, on which interest of SEK 13m was capitalised.
Tax expenses for the year totalled SEK 129m (462). Tax for the year was charged with SEK 60m for the tax cases that have now concluded. All tax related to Fabege's tax cases has been paid in full since August 2014. Operating taxes are calculated at a rate of 22 per cent on taxable earnings. Property sales led to deferred tax income totalling SEK 230m.
Cash flow from operating activities before changes in working capital was a negative SEK 893m (pos: 185). The paid income tax line comprises, in its entirety, paid tax totalling SEK 1,607m pertaining to ongoing tax cases. The change in working capital had a negative impact of SEK 1,021m (neg: 81) on cash flow. Investing activities had a positive impact of SEK 1,821m (neg: 835) on cash flow, while financing activities had a positive impact of SEK 18m (629) on cash flow. In investing activities, cash flow is affected by projects and in financing activities by loans raised to cover payments resulting from the rulings in the tax cases. Overall, cash and cash equivalents changed by a negative SEK 75m (neg: 102) during the year.
| Amount | Average interest |
||
|---|---|---|---|
| SEKm | rate,% | Share,% | |
| < 1 year | 7,551 | 3.36 | 39 |
| 1-2 years | 2,400 | 2.68 | 12 |
| 2-3 years | 3,100 | 2.58 | 16 |
| 3-4 years | 4,500 | 3.51 | 23 |
| 4-5 years | 1,000 | 2.13 | 5 |
| > 5 years | 1,000 | 2.68 | 5 |
| Total | 19,551 | 3.09 | 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 |
Drawn, SEKm |
|
|---|---|---|
| Commercial paper programme | 5,000 | 2,889 |
| < 1 year | 8,440 | 4,182 |
| 1-2 years | 9,286 | 7,867 |
| 2-3 years | 265 | 110 |
| 3-4 years | 1,395 | 190 |
| 4-5 years | 474 | 0 |
| > 5 years | 4,313 | 4,313 |
| Total | 29,173 | 19,551 |
Net lettings ended up at the highest level in Fabege's history after the signing of a number of major leases, primarily in Arenastaden. During the year, a total of 14 properties were sold, which contributed to the healthy earnings and to strengthening the balance sheet. Investments and a continued strong property market provided conditions for value growth in both the project and the property management portfolios.
Fabege's Property Management and Property Development activities are concentrated to a few selected submarkets in and around Stockholm. Stockholm's inner city, Solna and Hammarby Sjöstad are the company's principal markets. On 31 December 2014, Fabege owned 80 properties with a total rental value of SEK 2.2bn, lettable floor space of 1.0m sqm and a carrying amount of SEK 32.6bn, of which development and project properties accounted for SEK 3.9bn. The financial occupancy rate for the entire portfolio, including project properties, was 94 per cent (93). The occupancy rate in the property management portfolio was nearly 95 per cent (93). The positive trend was mainly attributable to successful lettings by property management and to the sale of two properties with significant vacancies towards the end of the year.
New lettings during the year totalled SEK 428m (211), while net lettings were SEK 243m (68). Lease terminations amounted to SEK 185m (143), with the largest relating to the vacation of the DN-huset building in connection with the expiration of the lease with Bonniers, as well as to Vectura, which terminated the lease on the Fräsaren 10 property, Solna Business Park, after being acquired by Sweco. Major lettings during the year included project lettings to TeliaSonera, SEB and Siemens, all in Arenastaden. In addition, a number of smaller leases were signed pertaining to management lettings. Activity was high in the fourth quarter, with 80 leases signed for a volume of SEK 77m.
Efforts to extend and renegotiate leases with existing customers were successful. A lease value of SEK 96m was renegotiated during the year. The rent levels from all renegotiated leases increased 11 per cent on average. The retention rate during the year was 64 per cent (75).
During the year, a total of 14 properties were divested following intense business activity during the fourth quarter. The transaction market was very strong during the year and Fabege accelerated its efforts to streamline the property portfolio, fully in line with the strategy of selling properties located outside prioritised market areas, or where an alternative yield is more attractive.
In total, properties were sold for SEK 3,889m. The transactions generated a profit of SEK 300m before taxes and SEK 530m after taxes. In several cases, on-going business discussions have resulted in a write-up of the property value, thus resulting in a higher unrealised gain and thereby a lower transaction gain.
The entire property portfolio is externally valued at least once annually. Approximately 33 per cent of the properties were externally valued at 31 December 2014 and the remainder were internally valued based on the most recent valuations. The combined market value was SEK 32.6bn (33.4).
Unrealised changes in value amounted to SEK 1,339m (739). The average yield requirement declined during the year, amounting to a rounded off figure of 5.4 per cent (5.6). The SEK 1,063m (343) increase in the value of the property management portfolio was primarily attributable to the lower yield requirement in the market as well as to rising rents and lower vacancies. The project portfolio contributed to a change in value of SEK 276m (396), primarily due to development gains in the major project properties.
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. The development of properties is a key feature of Fabege's business model and is intended to make a significant contribution to consolidated profit. The aim is to achieve a return of at least 20 per cent on invested capital.
In 2014, the ambition was to maintain a high rate of development in the project portfolio, with an investment volume of about SEK 1.6bn. The actual level was lower, due to a slight time lag pertaining to both implementation and invoicing from suppliers. Investments in existing properties and projects during the year totalled SEK 1,249m (1,410). The investments pertained to new builds, extensions and conversions. The return on capital invested in the project portfolio was 22 per cent. The capital invested in the property management portfolio contributed to the total growth in value. The investment rate is expected to rise during coming years as a result of the new project lettings.
During the second quarter of 2014, the new build of the Båtturen 2 property, Hammarby Sjöstad, was completed. The property was transferred to the property management portfolio as of the third quarter.
The project involving the new build of Nationalarenan 8 property (TeliaSonera's offices) is proceeding as planned. A turnkey contract has been signed with Peab concerning the entire project. The work currently under way pertains to the raising of structures and facade assembly, as well as certain initiated installation work. The investment, including acquisition of development rights, totals approximately SEK 1.3bn. The property is fully let to TeliaSonera, with occupancy scheduled for spring 2016.
The new build of the Winery Hotel on the Järvakrogen 3 property continues. Construction of the framework is currently under way. Veidekke/Arcona have been procured as turnkey contractors. The investment has increased, due to difficult ground conditions, and is now estimated at about SEK 300m. The property is fully let to The Winery Hotel, with occupancy scheduled for no later than the first quarter of 2016.
The Uarda 1 (building C) project at Arenastaden is also proceeding as planned. The investment amounts to about SEK 570m. Earthworks and foundation engineering have been completed and work on framework assembly is under way. A turnkey contract has been signed with Peab. The occupancy rate is 60 per cent, after a number of new leases were signed in the fourth quarter.
During the fourth quarter, an investment slightly exceeding SEK 500m was decided regarding construction of Building B at Uarda 1, after Siemens signed a lease. Project design work and earthworks are in progress. The occupancy rate is 58 per cent.
The project involving construction of SEB's offices in the Pyramiden 4 property in Arenastaden is proceeding. Earthworks are currently ongoing. The investment amounts to some SEK 2.3bn and the new office is scheduled for completion in two phases, spring 2017 and 2018, respectively. The property is fully let to SEB.
| Lettable | |||
|---|---|---|---|
| Property name | Area | Category | area.sqm |
| Quarter 1 | |||
| Kolonnen 7 | Södermalm | Office | 3,771 |
| Luma 3 | Hammarby Sjöstad | Land | 0 |
| Quarter 2 | |||
| Duvan 6 | Norrmalm | Office | 9,867 |
| Lammet 17 | Norrmalm | Office | 6,869 |
| Skogskarlen 3 | Bergshamra | Office | 9,118 |
| Skogskarlen 1 | Bergshamra | Land | 0 |
| Quarter 3 | |||
| No divestments | |||
| Quarter 4 | |||
| Godsfinkan 1 | Hammarby Sjöstad | Office | 7,845 |
| Grönlandet Södra | |||
| 13 | Norrmalm | Office | 8,193 |
| Ladugårdsgärde | |||
| 1:48 | Värtahamnen | Office | 38,195 |
| Planen 4 | Råsunda | Office | 6,404 |
| Rovan 1 | Huvudsta | Retail | 10,689 |
| Rovan 2 | Huvudsta | Hotel | 8,872 |
| Hammarby-Smedby | |||
| 1:457 | Upplands-Väsby | Office | 16,700 |
| Hammarby-Smedby | |||
| 1:458 | Upplands-Väsby | Land | 0 |
| Total sales of | |||
| properties | 126,523 |
| Lettable | |||
|---|---|---|---|
| Property name | Area | Category | area, sqm |
| Quarter 1-3 | |||
| No acquisitions | |||
| Quarter 4 | |||
| Hammarby-Smedby | |||
| 1:457 | Upplands-Väsby | Office | 16,700 |
| Hammarby-Smedby | |||
| 1:458 | Upplands-Väsby | Land | 0 |
| Total purchases of | |||
| properties | 16,700 |
Fabege works actively for a sustainable urban environment that satisfies the needs of today without compromising the ability of future generations to meet their own needs. Reducing the carbon footprint and promoting a good working environment for the people who are present each day in the company's buildings are central to Fabege's sustainability effort.
| of which, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Property | Lettable | Occupancy rate, | Estimated rental | Carrying | Estimated | worked up. | |||
| Property listing | type | Area | Completed | area, sqm | area, %¹ | value, SEKm² | amount SEKm | investment, SEKm | SEKm |
| Järvakrogen 3 | Hotel | Solna | Q1-2016 | 7,460 | 100% | 24 | 146 | 300 | 97 |
| Nationalarenan 8 | Offices | Arenastaden | Q2-2016 | 42,000 | 100% | 109 | 611 | 1,311 | 502 |
| Uarda 1 (building B) | Offices | Arenastaden | Q4-2017 | 18,000 | 58% | 50 | 196 | 511 | 116 |
| Uarda 1 (building C) | Offices | Arenastaden | Q1-2016 | 17,641 | 60% | 52 | 388 | 570 | 208 |
| Pyramiden 4 | Offices | Arenastaden | Q2-2018 | 67,700 | 100% | 175 | 338 | 2,350 | 72 |
| Total | 152,801 | 90% | 410 | 1,679 | 5,042 | 995 | |||
| Other land and project properties | 1,207 | ||||||||
| Other development properties | 958 | ||||||||
| Total projects, land and development properties | 3,844 |
¹ Operational occupancy rate 31 December 2014.
² Rental value including additions. The annual rent for the largest projects in progress could increase to SEK 410m (fully let) from SEK 0m in annualised current rent as of 31 December 2014.
| 31 Dec 2014 | Jan - Dec 2014 | |||||||
|---|---|---|---|---|---|---|---|---|
| No. of | Lettable area, | Market | Rental | Financial | Rental | Property | Net operating | |
| properties | '000 sqm | value SEKm | value² | occupancy rate % | income⁴ SEKm | expenses SEKm | income SEKm | |
| Property holdings | ||||||||
| Investment properties ¹ | 60 | 936 | 28,715 | 2,028 | 95 | 1,830 | -390 | 1,440 |
| Development properties ¹ | 6 | 70 | 958 | 98 | 77 | 80 | -26 | 54 |
| Land and Project | ||||||||
| properties ¹ | 14 | 24 | 2,886 | 60 | 96 | 57 | -13 | 44 |
| Total | 80 | 1,030 | 32,559 | 2,186 | 94 | 1,967 | -429 | 1,538 |
| Of which, Inner city | 29 | 402 | 15,262 | 1,040 | 94 | 945 | -223 | 722 |
| Of which, Solna | 33 | 509 | 14,419 | 923 | 94 | 842 | -165 | 677 |
| Of which, Hammarby | ||||||||
| Sjöstad | 11 | 118 | 2,791 | 223 | 88 | 178 | -41 | 137 |
| Of which, Other | 7 | 1 | 87 | 0 | 100 | 2 | 0 | 2 |
| Total | 80 | 1,030 | 32,559 | 2,186 | 94 | 1,967 | -429 | 1,538 |
| Expenses for lettings, project development and property administration | -119 | |||||||
| Total net operating income after expenses for lettings, project development and property administration | 1,419 ³ |
¹ See definitions on page 15.
² In the rental value, time limited deductions of about SEK 90m (in rolling annual rental value at 31 December 2014) have not been deducted.
³ The table refers to Fabege's property portfolio on 31 December 2014. Income and expenses were recognised as if the properties were owned for the entire period. The difference between recognised net operating income above, SEK 1.419m, and net operating income in profit or loss, SEK 1,485m, 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 2014.
⁴ Rental income has been adjusted for a discount of SEK 33m that expired during the second quarter of 2014.
| 2014 Jan-Dec |
2014 Jan-Dec |
2014 Jan-Dec |
2014 Jan-Dec |
2013 Jan-Dec |
2013 Jan-Dec |
2013 Jan-Dec |
2013 Jan-Dec |
|
|---|---|---|---|---|---|---|---|---|
| Property | Property | Property | Property | |||||
| SEKm | Management | Development | Transaction | Total | Management | Development | Transaction | Total |
| Rental income | 1,988 | 99 | 2,087 | 1,918 | 141 | 2,059 | ||
| Property expenses | -561 | -41 | -602 | -591 | -57 | -648 | ||
| Net operating income | 1,427 | 58 | 0 | 1,485 | 1,327 | 84 | 0 | 1,411 |
| Surplus ratio, % | 72% | 59% | 0% | 71% | 69% | 60% | 0% | 69% |
| Central administration | -60 | -7 | -67 | -57 | -5 | -62 | ||
| Net interest expense | -606 | -58 | -664 | -641 | -64 | -705 | ||
| Share in profits of associated companies | -69 | -3 | -72 | -28 | -2 | -30 | ||
| Profit from property management activities | 692 | -10 | 0 | 682 | 601 | 13 | 0 | 614 |
| Realised changes in value of properties | 300 | 300 | 135 | 135 | ||||
| Unrealised changes in value of properties | 1,063 | 276 | 1,339 | 343 | 396 | 739 | ||
| Profit/loss before tax per segment | 1,755 | 266 | 300 | 2,321 | 944 | 409 | 135 | 1,488 |
| equities | -454 | 504 | ||||||
| Profit before tax | 1,867 | 1,992 | ||||||
| Properties, market value | 28,715 | 3,844 | 32,599 | 31,206 | 2,178 | 33,384 | ||
| Occupancy rate, % | 95% | 77% | 94% | 93% | 87% | 93% |
¹ See definitions on page 15
At year-end, 136 people (136) were employed in the Fabege Group.
Sales during the year amounted to SEK 130m (122) and profit before appropriations and tax was SEK 773m (2,238). Net financial items include dividends of SEK 1,700m (1,800) from subsidiaries.
Net investments in property, equipment and shares totalled SEK 0m (0).
The 2014 Annual General Meeting (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.
Net lettings during the year were the highest ever reported in the history of Fabege.
As previously announced, the Swedish Tax Agency has decided to increase taxation on the Fabege Group concerning a number of property sales through limited partnerships (also refer to Fabege's Annual Report for 2013, pages 61–62).
The total tax demand, including miscellaneous charges and fees, amounted to SEK 2,075m and has been paid in full since August 2014.
Cases corresponding to about SEK 400m are being pursued further in the Administrative Court of Appeal with the aim of recovering part of the paid amount.
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 2013 Annual Report (pages 39–41). The effect of the changes on consolidated profit is shown in the risk analysis and in the sensitivity analysis in the 2013 Directors' Report (page 58–63).
Properties are recognised at fair value and changes in value are recognised 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 2013 annual report. Financial risk, defined as the risk of insufficient access to longterm funding through loans, and Fabege's management of this risk are described in the 2013 annual report (pages 40-41 and 73-74).
No material changes in the company's assessment of risks have arisen following publication of the 2013 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).
| Change Effect, SEKm | ||
|---|---|---|
| Rental income, total | 1% | 20.9 |
| Rent level, commercial income | 1% | 19.4 |
| Financial occupancy rate | 1 percentage point | 21.9 |
| Property expenses | 1% | 6.0 |
| Interest expense, rolling 12 months | 1 percentage point | 66.0 |
| Interest expenses, longer term perspective | 1 percentage point | 195.5 |
| Impact on | Loan-to | ||
|---|---|---|---|
| after-tax | Equity/as | value | |
| Change in value, % | profit, SEKm | sets ratio, % | ratio, % |
| +1 | 254 | 38.6% | 59.5% |
| 0 | 0 | 38.3% | 60.0% |
| -1 | -254 | 37.9% | 60.7% |
The sensitivity analysis shows the effects on the Group's cash flow and profit after financial items on an annualised basis after taking account of the full effect of each parameter. Earnings are also affected by realised and unrealised changes in the value of properties and derivatives.
Nya Svensk FastighetsFinansiering AB, a newly formed finance company with a covered MTN programme of SEK 8,000m, was launched in January 2015. The company is owned by Catena AB, Diös Fastigheter AB, Fabege AB, Platzer Fastigheter Holding AB and Wihlborgs Fastigheter AB, each of which owns 20 per cent, and will commence its financing activities in February 2015.
In January 2015, additional interest-rate swaps in a total amount of SEK 800m were agreed with maturities of eight to ten years.
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 the first quarter, 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 during the second and fourth quarters, entailing that net lettings during these quarters are usually higher.
At the beginning of the new year, the rental market and property market in Stockholm have remained highly robust, with considerable demand from investors. Fabege's property portfolio favourably matches customer requirements for modern and sustainable offices in good locations. We are looking forward to a continued healthy development, in which all parts of the operation contribute to an increase in total
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, with the exception of the updated IFRS 11 and IFRIC 21 Levies.
The Parent Company prepares its financial statements according to 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.
As of 2014, Fabege applies IFRIC 21 Levies and the amended IFRS 11. IFRIC 21 Levies specifies that state fees, for Fabege property tax, have to be recognised entirely as a debt when the obligation arises.
Due to the introduction of IFRS 11, one of the Group's joint arrangements constitutes a joint venture. In respect of the holding in this joint venture, the Group's assets, liabilities, income and costs include its share of all assets, liabilities, income and costs on recognition in the accounts. Previously, the holding was recognised by applying the equity method. The effect of the change of accounting policy is that the Group's promissory note receivables and liabilities with the joint arrangement as a counterparty are no longer recognised in the consolidated condensed statement of financial position As opposed to the past, however, the Group recognises its share of the joint venture's short-term investments. Otherwise, IFRS 11 has not had any material impact on Fabege's profit and loss or financial position.
Stockholm, 4 February 2015
CHRISTIAN HERMELIN Chief Executive Officer
This year-end report has not been examined by the company's auditors.
Fräsaren 11, Solna Business Park
Fabege's 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 | 25 051 150 | 15,1 | 15,1 |
| BlackRock Inc. | 8 938 454 | 5,4 | 5,4 |
| Länsförsäkringar fond management | 7 896 983 | 4,8 | 4,8 |
| Öresund Investment AB | 5 500 736 | 3,3 | 3,3 |
| SHB funds | 4 310 739 | 2,6 | 2,6 |
| Mats Qviberg with family | 3 714 244 | 2,2 | 2,2 |
| Norges Bank Investment Management | 3 678 029 | 2,2 | 2,2 |
| SEB funds | 3 208 470 | 1,9 | 1,9 |
| ENA City AB | 2 734 000 | 1,7 | 1,7 |
| Nordea funds | 2 663 874 | 1,6 | 1,6 |
| SHB pension fund | 2 420 000 | 1,5 | 1,5 |
| Blue Sky Group Stichting | 2 130 671 | 1,3 | 1,3 |
| Principal funds | 2 049 758 | 1,2 | 1,2 |
| Fourth AP-fund | 1 604 512 | 1,0 | 1,0 |
| TR Property Investment Trust | 1 290 558 | 0,8 | 0,8 |
| Total 15 largest shareholders | 77 192 178 | 46,6 | 46,6 |
| Other foreign shareholders | 44 422 536 | 26,9 | 26,9 |
| Other Swedish shareholders | 43 776 858 | 26,5 | 26,5 |
| 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: SIS Ägarservice AB, according to data from Euroclear Sweden AB at 31 December 2014.
The Fabege share is traded on Nasdaq Stockholm, BATS Chi-X and London Stock Exchange.
Number of shareholders at 31 December 2014: 40,162
Smeden 1, Solna Business Park
| 2014 | 2013 | 2014 | 2013 | |
|---|---|---|---|---|
| SEKm | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec |
| Rental income | 522 | 514 | 2,087 | 2,059 |
| Property expenses | -157 | -174 | -602 | -648 |
| Net operating income | 365 | 340 | 1,485 | 1,411 |
| Surplus ratio, % | 70% | 66% | 71% | 69% |
| Central administration | -21 | -16 | -67 | -62 |
| Net interest/expense | -155 | -174 | -664 | -705 |
| Share in profits of associated companies | -15 | 2 | -72 | -30 |
| Profit/loss from property management | 174 | 152 | 682 | 614 |
| Realised changes in value of properties | 165 | 10 | 300 | 135 |
| Unrealised changes in value of properties | 570 | 147 | 1,339 | 739 |
| Unrealised changes in value, fixed income derivatives | -96 | -55 | -473 | 408 |
| Changes in value of shares | 22 | -12 | 19 | 96 |
| Profit/loss before tax | 835 | 242 | 1,867 | 1,992 |
| Current tax | 0 | -118 | -61 | -116 |
| Deferred tax | 75 | -45 | -68 | -346 |
| Profit/loss for period/year | 910 | 79 | 1,738 | 1,530 |
| Items that will not be restated in profit or loss | ||||
| Revaluation of defined-benefit pensions | -10 | 13 | -10 | 13 |
| Comprahensive income for the period/year | 900 | 92 | 1,728 | 1,543 |
| Earnings per share, SEK | 5:51 | 0:48 | 10:51 | 9:26 |
| Total earnings per share, SEK | 5:44 | 0:56 | 10:45 | 9:34 |
| No. of shares at period end, millions | 165.4 | 165.4 | 165.4 | 165.4 |
| Average no. of shares, million | 165.4 | 165.1 | 165.4 | 165.1 |
| 2014 | 2013 | |
|---|---|---|
| SEKm | 31 Dec | 31 Dec |
| Assets | ||
| Properties | 32,559 | 33,384 |
| Other tangible fixed assets | 1 | 0 |
| Financial fixed assets | 1,542 | 1,584 |
| Current assets | 1,859 | 365 |
| Short-term investments | 34 | - |
| Cash and cash equivalents | 23 | 98 |
| Total assets | 36,018 | 35,431 |
| Equity and liabilities | ||
| Shareholder's equity | 13,783 | 12,551 |
| Provisions | 1,084 | 1,083 |
| Interest-bearing liabilities¹ | 19,551 | 19,038 |
| Derivative instrument | 920 | 447 |
| Non-interest-bearing liabilities | 680 | 2,312 |
| Total equity and liabilities | 36,018 | 35,431 |
| Equity/assets ratio, % | 38 | 35 |
| Contingent liabilities | 1,058 | 1,252 |
¹ Of which short-term SEK 7,071m (2,208)
| Of which, | ||
|---|---|---|
| attributable to | ||
| Shareholders' | Parent Company | |
| SEKm | equity | shareholders |
| Shareholders' equity, 1 January 2013, according to adopted Statement of financial position | 11,382 | 11,382 |
| Divestment of treasury shares | 122 | 122 |
| Cash dividend | -496 | -496 |
| Profit for the period | 1,530 | 1,530 |
| Other comprehensive income | 13 | 13 |
| Shareholders' equity, 31 December 2013 | 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 |
| 2014 | 2013 | |
|---|---|---|
| SEKm | Jan-Dec | Jan-Dec |
| Operations | ||
| Net operating income | 1,485 | 1,411 |
| Central administration | -67 | -62 |
| Reversal of depreciation | 1 | 1 |
| Interest received | 19 | 39 |
| Interest paid | -724 | -739 |
| Income tax paid ² | -1,607 | -465 |
| Cash flow before changes in working capital | -893 | 185 |
| Change in working capital | ||
| Change in current receivables | -919 | -62 |
| Change in current liabilities | -102 | -19 |
| Total change in working capital | -1,021 | -81 |
| Cash flow from operating activities | -1,914 | 104 |
| Investing activities | ||
| Investments in new-builds, extensions and conversions | -1,233 | -1,738 |
| Acquisition of properties | -105 | -298 |
| Divestment of properties | 3,259 | 1,332 |
| Acquisition of shares in associated companies | - | -7 |
| Other tangible fixed assets | -100 | -124 |
| Cash flow from investing activities | 1,821 | -835 |
| Financing activities | ||
| Dividend to shareholders | -496 | -496 |
| Transfer of treasury shares | - | 122 |
| Change in interest bearing liabilities | 514 | 1,003 |
| Cash flow from investing activities | 18 | 629 |
| Cash flow for the period | -75 | -102 |
| Cash and cash equivalents at beginning of period | 98 | 200 |
| Cash and cash equivalents at end of period | 23 | 98 |
¹ To better reflect the Group's operations the format of the cash flow statement has been changed from 1 January 2014, the comparative figures have also been changed.
² The amount of SEK -1 607m income tax paid is composed entirely of tax payments as a result of convictions in the ongoing tax matters relating to previous real estate transactions. The corresponding figures for the full year 2013 amounts to SEK -465m.
| 2014 | 2013 | |
|---|---|---|
| Financial | Jan-Dec | Jan-Dec |
| Return on capital employed, % | 7,6 | 8,7 |
| Return on equity, % | 13,2 | 12,8 |
| Interest coverage ratio, multiple | 2,4 | 2,0 |
| Equity/assets ratio | 38 | 35 |
| Equity ratio,% after adjustment ³ | 40 | - |
| Loan-to-value ratio, properties | 60 | 57 |
| Equity ratio, properties, % after adjustment ³ | 56 | - |
| Debt/equity ratio, multiple | 1,4 | 1,5 |
| Share related¹ | ||
| Earnings per share, SEK | 10:51 | 9:26 |
| Total earnings per share, SEK | 10:45 | 9:34 |
| Equity per share, SEK | 83 | 76 |
| Cash flow per share, SEK² | -11,58 | 3,89 |
| Cash flow per share, SEK adjusted² ³ | -5,77 | - |
| EPRA NAV, SEK per share | 95 | 84 |
| EPRA, EPS | 4,09 | 3,48 |
| No. of outstanding shares at end of period, thousands | 165 392 | 165 392 |
| Average number of shares, thousands | 165 392 | 165 162 |
| Property-related | ||
| No. of properties | 80 | 92 |
| Carrying amount, Properties, SEKm | 32 559 | 33 384 |
| Lettable area, sqm | 1 030 000 | 1 142 000 |
| Financial occupancy rate, % | 94 | 93 |
| Surplus ratio, % | 71 | 69 |
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 and fourth quarter of 2013, about SEK -465m as a result of convictions in the ongoing tax matters relating to previous real estate transactions.
³ Key figures adjusted for non-received purchase prices for properties sold and restricted funds for loans to be paid off at the beginning of 2015.
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 | |||||
|---|---|---|---|---|---|---|
| 2014 | 2013 | 2014 | 2013 | |||
| IFRS, level 3 | 31 Dec | 31 Dec | 31 Dec | 31 Dec | ||
| Opening value | -358 | -577 | -358 | -577 | ||
| Acquisitions/Investments | 0 | 0 | 0 | 0 | ||
| Changes in value | -163 | 219 | -163 | 219 | ||
| Matured | 0 | 0 | 0 | 0 | ||
| Closing value | -521 | -358 | -521 | -358 | ||
| Carrying amount | -521 | -358 | -521 | -358 |
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.
| 2014 | 2013 | |
|---|---|---|
| SEKm | Jan-Dec | Jan-Dec |
| Income | 130 | 122 |
| Expenses | -212 | -194 |
| Net financial items | 1,309 | 1,856 |
| Share in profits of associated companies | 0 | 4 |
| Changes in value, fixed-income derivatives | -473 | 408 |
| Changes in value, equities | 19 | 42 |
| Profit before tax | 773 | 2,238 |
| Current Tax | - | -103 |
| Deferred | 193 | -90 |
| Profit for the period/year | 966 | 2,045 |
| 2014 | 2013 | |
|---|---|---|
| SEKm | 31 Dec | 31 Dec |
| Participation in Group companies | 12,992 | 12,992 |
| Other fixed assets | 39,888 | 40,721 |
| of which, receivables from Group companies | 39,003 | 39,967 |
| Current assets | 1,090 | 83 |
| Cash and cash equivalents | 21 | 98 |
| Total assets | 53,991 | 53,894 |
| Shareholders' equity | 12,461 | 11,991 |
| Provisions | 68 | 67 |
| Long-term liabilities | 34,708 | 39,462 |
| of which, liabilities to Group companies | 21,658 | 23,426 |
| Current liabilities | 6,754 | 2,374 |
| Total equity and liabilities | 53,991 | 53,894 |
| 2014 | 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | |
| Rental income | 522 | 526 | 526 | 513 | 514 | 513 | 519 | 513 |
| Property expenses | -157 | -144 | -137 | -164 | -174 | -146 | -145 | -183 |
| Net operating income | 365 | 382 | 389 | 349 | 340 | 367 | 374 | 330 |
| Surplus ratio, % | 70% | 73% | 74% | 68% | 66% | 72% | 72% | 64% |
| Central administration | -21 | -16 | -15 | -15 | -16 | -16 | -16 | -14 |
| Net interest expence | -155 | -158 | -180 | -171 | -174 | -178 | -176 | -177 |
| Share in profits of associated companies | -15 | -17 | -27 | -13 | 2 | -11 | -17 | -4 |
| Profit/loss from property management | 174 | 191 | 167 | 150 | 152 | 162 | 165 | 135 |
| Realised changes in value of properties | 165 | - | 52 | 83 | 10 | 30 | 15 | 80 |
| Unrealised value of properties | 570 258 299 212 147 |
162 | 211 | 219 | ||||
| Unrealised changes in value, fixed-income derivatives | -96 | -90 | -146 | -141 | -55 | 46 | 229 | 188 |
| Changes in value, equities | 22 | -13 | -16 | 26 | -12 | 111 | -1 | -2 |
| Profit for the period/year | 835 | 346 | 356 | 330 | 242 | 511 | 619 | 620 |
| Current tax | - | -3 | 16 | -74 | -118 | 2 | - | - |
| Deferred tax | 75 | -78 | -49 | -16 | -45 | -93 | -104 | -104 |
| Comprehensive income for the period/year | 910 | 265 | 323 | 240 | 79 | 420 | 515 | 516 |
| 2014 | 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | |
| Assets | ||||||||
| Properties | 32,559 | 33,868 | 33,257 | 33,640 | 33,384 | 32,773 | 32,172 | 32,098 |
| Other tangible fixed assets | 1 | 1 | 1 | 1 | 0 | 0 | 1 | 1 |
| Financial fixed assets | 1,542 | 1,475 | 1,492 | 1,610 | 1,584 | 1,567 | 1,434 | 1,372 |
| Current assets | 1,859 | 318 | 856 | 744 | 365 | 954 | 988 | 682 |
| 34 | - | - | - | - | - | - | - | |
| Cash and cash equivalents | 23 | 198 | 263 | 148 | 98 | 29 | 13 | 124 |
| Total assets | 36,018 | 35,860 | 35,869 | 36,143 | 35,431 | 35,323 | 34,608 | 34,277 |
| Equitites and liabilities | ||||||||
| Shareholders' equity | 13,783 | 12,883 | 12,618 | 12,295 | 12,551 | 12,459 | 12,039 | 11,524 |
| Provisions | 1,084 | 1,218 | 1,142 | 1,097 | 1,083 | 1,051 | 959 | 847 |
| Interest-bearing liabilities | 19,551 | 20,136 | 20,402 | 20,073 | 19,038 | 18,780 | 18,631 | 18,021 |
| Derivative instruments | 920 | 824 | 734 | 588 | 447 | 392 | 438 | 667 |
| Non-interest bearing liabilitis | 680 | 799 | 973 | 2,090 | 2,312 | 2,641 | 2,541 | 3,218 |
| Total equity and liabilities | 36,018 | 35,860 | 35,869 | 36,143 | 35,431 | 35,323 | 34,608 | 34,277 |
| 2014 | 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | |
| Financial | ||||||||
| Return on capital employed, % | 11,7 | 6,1 | 6,4 | 6,2 | 5,3 | 8,9 | 10,4 | 10,5 |
| Return on equtiy, % | 27,3 | 8,3 | 10,3 | 7,7 | 2,5 | 13,7 | 17,6 | 18,0 |
| Interest coverage ratio, multiple | 3,1 | 2,1 | 2,2 | 2,3 | 1,9 | 2,1 | 2,0 | 2,2 |
| Equity/assets ratio, % | 38 | 36 | 35 | 34 | 35 | 35 | 35 | 34 |
| equity ratio,% after adjustment | 40 | - | - | - | - | - | - | - |
| Loan-to-value ratio, properties, % | 60 | 59 | 61 | 60 | 57 | 57 | 58 | 56 |
| Equity ratio, properties, % after adjustment ² | 56 | - | - | - | - | - | - | - |
| Debt/equity raio, multiple | 1,4 | 1,6 | 1,6 | 1,6 | 1,5 | 1,5 | 1,5 | 1,6 |
| Share-related | ||||||||
| Earnings per share, SEK | 5:50 | 1:60 | 1:95 | 1:45 | 0:48 | 2:54 | 3:11 | 3:14 |
| Total earnings per share, SEK | 83 | 78 | 76 | 74 | 76 | 75 | 73 | 70 |
| Cash flow from operating activities per share, SEK ¹ | -5:27 | 0:26 | -2:07 | -4:50 | -1:84 | 2:04 | 0:07 | 0:36 |
| Cash flow from operating activities per share, SEK adjusted ¹&² | 0,54 | - | - | - | - | - | - | - |
| EPRA NAV | 95 | 89 | 87 | 84 | 84 | 83 | 80 | 78 |
| EPRA EPS | 1,04 | 1,12 | 1,01 | 0,93 | 0,86 | 0,91 | 0,92 | 0,79 |
| 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 nuber of shares, thousands | 165 392 | 165 392 | 165 392 | 165 392 | 165 162 | 165 086 | 164 933 | 164 474 |
| Property-related | ||||||||
| Financial occupancy rate, % | 94 | 92 | 92 | 92 | 93 | 92 | 93 | 92 |
| Surplus ratio, % | 70 | 73 | 74 | 68 | 66 | 72 | 72 | 64 |
| 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 ongoing tax matters relating to previous real estate transactions. |
² The key figure is adjusted for purchase considerations outstanding for sold properties and for restricted amounts for loans to be paid off at the beginning of 2015.
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.
LOAN-TO-VALUE RATIO, PROPERTIES 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 nominal tax due 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 taxdeductible depreciation and redevelopment.
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 ACTIV-ITIES PER SHARE
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.
EQUITY/ASSETS RATIO 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.
RETENTION RATE Proportion of leases that are extended in relation to the proportion of cancellable leases.
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 brings the company closer to its customers, which, coupled with Fabege's extensive local expertise, creates a solid foundation for efficient property management and high occupancy. As of 31 December 2014, Fabege owned 80 properties with a total market value of SEK 32.6bn. The rental value was SEK 2.2bn.
Fabege's business concept focuses on commercial properties in the Stockholm region, with a particular emphasis on a limited number of fast-growing sub-markets. Fabege aims to create value by managing, improving and actively adjusting its property portfolio through sales and acquisitions. Accrued value should be realised at the right time.
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.
Fabege's operations are impacted by a number of external factors, which together with the transaction volume and the trend in the office market in Stockholm, represent the prerequisites for the company's success.
The Stockholm region is one of the five metropolitan areas in Western Europe where the population is increasing the most. According to forecasts, Stockholm County will have half a million inhabitants more than today by 2030. The largest growth will also occur among people in the active labour force, 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 increasingly requested, as is environmental certification.
The trend for both the Swedish and global economy has an impact on the property market. Low vacancy rates in Stockholm's inner city and a strengthened economic climate have historically meant rising rents.
Sustainability issues are becoming increasingly important, with respect to both individual properties and the entire area. Environmental considerations involving choices of material and energy-saving measures are 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 based on close dialogue with the customer, thus building mutual trust and loyalty. PROPERTY DEVELOPMENT
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 consolidated profit. The company continuously analyses its property portfolio to take advantage of opportunities to increase value growth, through both acquisitions and divestments.
| Annual Report 2014 March 2015 | ||
|---|---|---|
| Annual General Meeting 2014 26 March 2015 | ||
| Interim report January–March 2015 23 April 2015 | ||
| Interim report January–June 2015 6 July 2015 | ||
| Interim report January-September 2015 20 October 2015 |
| 2014-12-12 Fabege strengthens its cash position by nearly SEK 2bn |
|---|
| 2014-12-08 Lagardère Unlimited to take over operation of Friends Arena |
| 2014-11-27 Fabege sells Planen 4, Solna |
| 2014-11-12 Fabege divests Huvudsta Centrum |
| 2014-10-16 Siemens' Swedish head office moves to Arenastaden |
| 2014-10-10 Fabege sells leasehold in Hammarby Sjöstad |
| För visa kynngåder | Industrials | On Fabrus ٠ |
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|---|---|---|---|
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| Hilto de factolar | Vivälkomnar | ||
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| O Hankington | $O$ in the line | ||
| Hugin & Munin-pris | TelaSonera | Q2 2014 | Fobege |
Visit the Group's website for more information about Fabege and its operations. There will also be a web presentation on 4 February 2015, 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 Chief Financial Officer/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 2015.
Fabege AB (publ) Box 730, SE-169 27 Solna Visitors: Pyramidvägen 7, SE-169 56 Solna Phone: +46 (0)8-555 148 00 E-mail: [email protected] Internet: www.fabege.se Corporate identity number 556049-1523 Registered office of the Board of Directors: Stockholm
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