Annual Report • Feb 25, 2013
Annual Report
Open in ViewerOpens in native device viewer
Our customers and our locations are central in everything we do.
| Introduction | 2012 in brief This is Fabege Message from the CEO |
2 |
|---|---|---|
| The business | Business model and strategic focus A goal-oriented business The business Property Management Property Development Transactions Market and property portfolio Market overview Fabege's markets Stockholm inner city Hammarby Sjöstad Solna Property portfolio Valuation of the property portfolio Property listing |
4 6 8 10 12 14 16 18 20 22 24 28 30 32 |
| Opportunities and risks Financing |
38 42 |
|
| Sustainability report |
Responsible enterprise Environmental work Employees Suppliers Business ethics Social involvement GRI Index |
44 46 50 52 53 54 56 |
| Financial reporting The Group |
The fi nancial year Directors' Report Statement of comprehensive income Statement of fi nancial position Statement of changes in equity 68 |
58 60 66 67 |
| The Parent Company |
Statement of cash fl ows Profi t and loss accounts Balance sheets Statement of changes in equity 71 Statement of cash fl ows Notes Corporate Governance Report Board of Directors and Auditor 90 Group Management Signing of the Annual Report Auditor's Report |
69 70 70 71 72 83 90 92 93 |
| Other information |
Share information Information to shareholders Five-year summary History Defi nitions |
95 98 99 100 100 |
The formal audited Annual Report comprises the information on pages 60–92. This document is in all respects a translation of the Swedish original Annual Report. In the event of any differences between this translation and the Swedish original, the latter shall prevail.
Fabege is one of Sweden's leading property com panies, focusing mainly on letting and managing offi ce premises as well as property development.
Fabege off ers attractive and effi cient premises, mainly offi ces but also retail and other premises. Th e company's operations are highly concentrated to a number of fast-growing submarkets in the Stockholm region, namely Stockholm inner city, Solna and Hammarby Sjöstad.
Fabege manages a well-located property portfolio that is continuously refi ned through development, sales and acquisitions. Th e concentration of properties to well-contained clusters brings the company closer to its customers, which, coupled with Fabege's extensive local expertise, creates a solid foundation for effi cient property management and high occupancy.
Fabege's vision is to be the most proactive, innovative and competent commercial property company in Stockholm as well as an important partner for its customers and society in general.
At the close of 2012, Fabege owned 95 properties with a combined market value of SEK 31.6 bn. Th e company's rental income for the year was SEK 1.9bn.
of the centre of Stockholm
Rental income and net operating income
Long-term and stable relationships with satisfi ed customers are a critical success factor for Fabege. In 2012, surveys were conducted of all customers. In view of the requests presented, Fabege's procedures were improved in a number of aspects, leading to even greater customer satisfaction.
In 2012, Fabege continued its efforts to minimise the company's environ mental impact and, in co-operation with customers, to contribute to sustainable urban development. The best examples are the successful energy-effi ciency enhancements that combine positive environmental effects with cost-savings for both tenants and Fabege. Heating consumption declined an additional 4 per cent in 2012, which is approximately 50 per cent lower than the average level for Stockholm County.
1,500 2,000 2,500 SEKm
In this vignette, we will present some of Fabege's projects and partnerships during 2012. Read about some of our conversion projects, tenant customisations and sustainability projects.
| Key fi gures | 2012 | 2011 |
|---|---|---|
| Rental income, SEKm | 1,869 | 1,804 |
| Net operating income, SEKm | 1,264 | 1,227 |
| Profi t for the year, SEKm | –88 | 1,141 |
| Return on equity, % | –0.8 | 9.9 |
| Surplus ratio, % | 68 | 68 |
| Equity/assets ratio, % | 34 | 39 |
| Interest coverage ratio, multiple | 2.3 | 2.2 |
| Earnings per share before and after dilution, SEK |
–0.54 | 7.01 |
| Dividend per share, SEK | 3.001) | 3.00 |
1) Proposed cash dividend for 2012.
Fabege operates in three business areas: Property Management, Property Development and Transactions.
Th e essence of what Fabege does is fi nding the right premises for a customer's specifi c requirements and ensuring that the customer is content. Fabege's approach is long-term and based on close dialogue with the customer, thus building mutual trust and loyalty.
Qualifi ed development activities that add value to Fabege's properties comprise the second cornerstone of the business. Th e company has long-standing expertise and long experience of extensive property development projects and strives to attract long-term tenants to properties that have not yet been fully developed and can be redesigned based on the customer's specifi c requirements.
Fabege's third cornerstone is Transactions. Acquisitions and sales are an integral part of Fabege's business model and make a signifi cant contribution to consolidated profi t. Th e company continuously analyses its portfolio to take advantage of opportunities to increase capital growth.
| Operational key fi gures | 2012 | 2011 |
|---|---|---|
| Property value, Property Management, SEKbn | 28.8 | 22.8 |
| Property value, Property Development, SEKbn | 2.8 | 6.4 |
| Invested in the proprietary property portfolio, SEKbn |
2.0 | 1.5 |
| Acquisitions, SEKbn | 0.3 | 0.5 |
| Sales, SEKbn | 1.3 | 0.9 |
www.fabege.se for more information about Fabege and its operations.
Several of Fabege's city properties are located in the quarters around Kungsgatan, Drottninggatan, at Norrtull and on east and west Kungs holmen. The property portfolio includes the two well-known profi le properties, DN-huset and the Wenner-Gren Center. Read more on page 32.
| No. of properties | 37 |
|---|---|
| Lettable area, '000 sqm | 475 |
| Market value, SEKm | 16,950 |
| Rental value, SEKm | 1,197 |
| Financial occupancy rate, % |
93 |
Arenastaden and Solna Business Park are Fabege's principal submarkets in Solna. Fabege is both an initiator and partner of the new and emerging Arenastaden district. The Friends Arena is located here, while the construction of the Mall of Scandinavia shopping complex, the Quality Hotel Friends, offi ce properties and residential units is under way. Read more on page 34.
| No. of properties | 37 | |
|---|---|---|
| Lettable area, '000 sqm | 503 | |
| Market value, SEKm | 11,904 | |
| Rental value, SEKm | 840 | |
| Financial occupancy rate, % |
90 | 37% |
Fabege owns most of the commercial properties in Hammarby Sjöstad, where the Luma property is the largest. This is one of the most interesting development areas in Stockholm and is currently highly attractive for housing and office premises. Read more on page 36.
| No. of properties | 13 | |
|---|---|---|
| Lettable area, '000 sqm | 126 | |
| Market value, SEKm | 2,515 | |
| Rental value, SEKm | 205 | |
| Financial occupancy rate, % |
88 | 9% |
It is crucial for Fabege to maintain close customer relations. As a result, we have worked intensely during the past two years to implement a structured customer process through which we increasingly ask customers about their requirements to identify how we can enhance our performance. The positive effects of this programme are clearly visible. The tenant retention rate – meaning how large a percentage of our tenants choose to extend their lease – rose substantially. Compared with previous levels, recent years have seen a 50 per cent reduction in the number of tenants wishing to relocate.
One factor underlying customer satisfaction is that we, via our local offi ces, consistently work close to our customers, making it easier to identify requests and changes in requirements. Also, thanks to owning a large number of properties in particular locations, we have excellent potential to meet new requirements. When tenants expand and need larger premises, or are faced with other changes in requirements, we can usually meet their needs within the particular location.
In addition to caring for existing customers, we naturally also seek to attract new customers. In this respect, I am convinced that our ability not only to develop individual properties but also entire locations, is of major signifi cance.
Th e concept of tomorrow's activity-based offi ce is a topical subject. In brief, it entails that the offi ce becomes a forum off ering more than the traditional features (work desk, conference room and dining area). Instead, the offi ce of the future will include a variety of environments designed to ensure people can work undisturbed, gain creative inspiration, meet colleagues and so forth. Th e individual will be able to sit wherever he/she needs. However, innovative thinking is frequently limited to the actual premises. I believe that tomorrow's offi ce will consist of fl exible, sustainable buildings and activity-based premises, as well as a surrounding environment off ering services such as stores, restaurants, dry-cleaning, hairdressers, gyms and so forth – services that make life easier for companies and help employees to cope with everyday tasks. Arenastaden is a good example. Our aim
with this project is to create the most attractive offi ce workplace location in Scandinavia. Similarly, we are developing and profi ling all locations in an environment in which offi ces are mixed with residential, retail and experience-based facilities.
Sustainability is another key component in making our properties and locations attractive. During the past year, we continued our eff orts to reduce our environmental impact and, in cooperation with customers, contribute to sustainable social development. Th is applies not least to the extensive energy effi ciency programmes, and the impressive results we have attained in this area. A key factor underlying the substantial improvements is that we, parallel with the environmental gains, also reduced costs for Fabege and our tenants alike.
Th e business trend was highly favourable, with fi ne contributions from Property Management, Property Development and Transactions. By retaining existing tenants and attracting new customers, our net lettings were again favourable in 2012. In other respects, the trend also remained positive with higher rental income, improved profi t from property management and signifi cant deve lopment gains in the project portfolio.
Due to the ruling of the Supreme Administrative Court in the precedential (but not Fabege-related) Cyprus case, Fabege
3
decided to post a provision of SEK 1.9bn to cover our ongoing tax cases. Th e processes are proceeding in the Administrative Court of Appeal and we expect the matter to be fi nalised during 2013.
Macroeconomic conditions are currently uncertain. Nevertheless, I see many reasons for being optimistic regarding Fabege's development. Stockholm is expanding faster than any other city in Sweden and the service sector is stable. We have a strong position, with modern properties in compact portfolios in attractive locations. Th e overall portfolio is well adapted to current and future demand. I also see substantial potential in our future project portfolio. During 2013, we plan to further strengthen relations with our tenants, and to develop our locations with considerable understanding of what our customers want. I am convinced that this will result in continuing high net letting and retention rates. We already know with great certainty that we will have rising income and stable costs during 2013. Th us, the conditions favour continuing robust earnings.
Another reason that I am not uneasy about the macroeconomic trend is that economic fl uctuations create opportunities in the property market. Our current position is so strong that we can be proactive when such opportunities arise.
Stockholm, February 2013
CHRISTIAN HERMELIN Chief Executive Officer
Fabege aims to be a more customer-oriented company. We are continuing our efforts to enhance customer relations to ensure tenants elect not to relocate. This will be our primary focus during the years ahead.
Fabege's business model aims to generate value through property management, development and transactions. The company owns and manages commercial properties concentrated in Stockholm inner city, Solna and Hammarby Sjöstad. Operations are to be characterised by active, customeroriented management. The property portfolio is continuously refined through property development, acquisitions and divestments.
Fabege's business concept focuses on commercial properties in the Stockholm region, with a particular emphasis on a limited number of fast-growing submarkets. 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.
To be the most proactive, innovative and competent commercial property company in Stockholm and an important partner to our customers and to society in general. Th e natural fi rst-choice provider.
Read more about the business model on pages 10–15
Th rough constant skills development, Fabege will seek to understand customer requirements and exceed expectations while strengthening our profi le as a socially responsible company.
| Property Management Read more on page 10 | Property Development Read more on page 12 |
|---|---|
| ------------------------------------------ | ------------------------------------------- |
Property management is Fabege's main business area. The properties are managed by an effi cient in-house organisation, which is divided into separate property management areas. Each area has a large degree of individual responsibility to ensure a high degree of commitment and proximity to the customer. The company's close-to-the-customer property management activities are designed to support a high occupancy rate and encourage customers to remain with Fabege. Satisfi ed customers help to improve our net operating income. Property Management Property Development
Fabege aims to acquire properties that offer better growth opportunities than existing investment properties in its portfolio. As a signifi cant player in a number of select sub-markets, Fabege has acquired in-depth experience and knowledge about the markets, plans for development, other players and individual properties. The company continuously monitors and analyses developments with a view to exploiting opportunities to add value to its property portfolio. Acquisitions
Transactions Read more on page 14
Sales
Property development in properties with growth potential is a key element of Fabege's business model, with the aim of adding value. In addition to developing and improving acquired properties, Fabege already has a number of development and project properties in its portfolio, and seeks to develop their potential as market conditions permit. The volume of projects is adapted to market demand. New builds and more extensive development projects are always based on the principles defi ned in the Environmental Building programme.
Fabege aims to sell properties that are located outside its concentrated property management units or have limited pro spects for further growth. Location, condition and vacancies are key factors determining the growth potential of a property. A fully let property with modern and effi cient premises that is deemed to have limited potential for rent increases and capital growth could thus become a candidate for divestment.
Fabege aims to be perceived as a customer-oriented company. Th rough active property management by competent and customer-focused staff , strong customer relations will be developed and nurtured.
Th e company strives to attract fi nancially robust companies active in a wide range of industries.
Th e core of Fabege's operations comprises commercial properties in Stockholm inner city, Solna and Hammarby Sjöstad. Fabege aims to strengthen its position in these market segments and concentrate its properties in management-effi cient units. Th e company intends to acquire properties off ering strong potential in prioritised areas. Th e property portfolio is to be continuously improved through acquisitions, property development and sales.
Fabege seeks to develop and realise the potential of its existing property portfolio. Development pertains not only to individual properties but also to entire locations and urban districts. Project investment is designed to raise the status in priority locations.
Th e Fabege brand should support the company's business, attract new customers, add value and contribute to achieving the company's goals. Strengthening the brand is crucial to the company's continued success. Fabege works continuously to enhance the company's image among its priority stakeholders by raising awareness and providing insight into its activities.
Developing Fabege's intangible assets also involves building strong brands in the company's prioritised areas, such as Hammarby Sjöstad, Solna Business Park and Arenastaden in Solna, as well as for individual properties or concepts.
A key success factor for Fabege is its ability to attract and retain the right employees. Fabege aims to be the best employer for the most competent employees. Th e
company works to ensure that its core values (see page 55) colour the way we behave, both internally and externally in relations with customers and other stakeholders.
Our employees should be able to work in an open environment that fosters commitment and individual initiative through clearly defi ned targets, delegated responsibility and rewards for excellence. Fabege places a strong emphasis on caring for its workforce and on creating a pleasant and safe work environment.
Risk exposure is to be limited and controlled as far as possible in terms of the choice of tenants, lease terms, business partners and business objects.
Th e company's funding arrangements must be stable, carefully evaluated and cost-eff ective.
Fabege should also maintain continued high cost effi ciency and seek continuous improvements.
5
Fabege's operations are governed by objectives at all levels of the organisation. The objectives are broken down, developed and established in the various operating areas and at the employee level. Measurement and performance monitoring are conducted regularly.
Fabege's overriding objective is to create and realise values and provide shareholders with the best overall return among property companies listed on the Stockholm Stock Exchnage. Th e total return on Fabege's share in 2012 was 28 per cent (calculated as the share price performance including reinvested dividends).
Th e company's key fi nancial objectives
adopted by the Board are profi tability (measured as the return on equity), equity/assets ratio and interest coverage ratio. Fabege is to sustainably be among the most profi table listed property companies. Th e aim for the equity/assets ratio is at least 30 per cent, with an interest coverage ratio of at least 2.0, including realised changes in value. At 31 December 2012, the return on equity was a negative 0.8 per cent, following a provision of SEK 1,900m for ongoing tax matters, while the equity/ assets ratio was 34 per cent and the interest coverage ratio was 2.3.
The negative return for 2012 was due to the provision of SEK 1.9bn posted for ongoing tax cases.
Although the equity/assets ratio declined by 5 percentage points during 2012 due to the decision to post a provision of SEK 1.9bn for ongoing tax cases, the ratio continued to comfortably exceed the target of 30 per cent.
Interest coverage ratio
The interest-coverage ratio improved and is well above the target of 2.0.
A key objective for Fabege is to generate strong net lettings. Retaining existing customers through a high retention rate is profi table. New lettings are signifi cant in reducing the vacancy rate and for enabling project investments in conversions and new builds. Net lettings amounted to SEK 141m in 2012.
Fabege aims to retain a high level of cost-effi ciency and to be the leading player compared with other Swedish property companies. To improve operational effi ciency and achieve its fi nancial targets, the company continuously implements various forms of process improvements. Fabege aims to create an atmosphere in which the initiative to develop processes and procedures is leveraged. Work on process improvements continued in 2012.
One long-term objective is to raise the surplus ratio to 70 per cent. For 2012, the surplus ratio was 68 per cent (68). Fabege believes that the target of 70 per cent will be attained during 2013.
Fabege aims to invest at least SEK 1,000–1,500m annually in the company's project portfolio. New projects
Surplus ratio 30 40 50 60 70 80 08 09 10 11 12 % Target: 70%
The surplus ratio has improved steadily and Fabege believes that the target of 70 per cent will be attained during 2013.
should generate a return of at least 20 per cent as a result of value growth. In 2012, SEK 2,034m was invested in the current portfolio. Th e return on invested capital was 39 per cent.
Fabege seeks to generate a high total return on its property portfolio through acquisitions, property development and sales. In 2012, the total return (net operating income and value changes in relation to the average property value) was 9.4 per cent.
Th e objective is to reduce energy consumption by 20 per cent from 2009 to 2014, corresponding to an annual reduction of 4 percentage points. Th e accumulated reduction as of 2012 was 14 per cent.
Fabege aims to be an attractive employer – where employees have a sense of commitment and participation, as well as being off ered the potential to develop in the company. Th e boundaries and objectives for each employee's area of responsibility should be clearly defi ned and established. Fabege's employees perform
During 2012, Fabege reduced its consumption of heat by a further 4 per cent.
on the basis of the company's core values. (See further on page 55.)
Fabege has some 1,500 leases in its portfolio. To minimise risks, Fabege aims to attain a balanced mix of stable customers from various market segments. In terms of value, the company's 15 largest tenants account for approximately 30 per cent of the total lease value, and, in most cases, these leases have a duration that signifi cantly exceeds the average in the company's portfolio.
Fabege aims to increase profi tability by having a more customer-oriented organisation. Th e target for 2013 is to attain a top ranking in the Fastighets barometern's customer satisfaction index (CSI) survey and be a natural choice for current and potential customers. During the year, the company conducted a customer survey that resulted in a number of activities aimed at better meeting customers' requests and requirements. Th e ultimate objective is to off er the customer an even superior product and service, thereby forging stronger customer relations.
Three customer satisfaction surveys have been implemented in the past two years. For 2013, the target will be adjusted upwards.
Fabege's active and customer-oriented property management operations are complemented by continuous property development and strategic acquisitions and sales.
THE BUSINESS AREAS' CONTRIBUTION TO EARNINGS IN 20121)
PROPERTY MANAGEMENT PROPERTY DEVELOPMENT TRANSACTION
54% 38% 8%
THE BUSINESS AREAS' RETURN IN 2012
| PROPERTY MANAGEMENT Surplus ratio |
PROPERTY DEVELOPMENT Return on project portfolio |
TRANSACTIONS Return on transactions |
|
|---|---|---|---|
| 68% | OUTCOME | 39% OUTCOME |
11% OUTCOME |
| TARGET 70% | TARGET 20% | TARGET 10% | |
Property management operations are hallmarked by high occupancy rates and favourable tenant relations. Fabege's aim is to combine high technical expertise with customer proximity and a service-focused approach. By these means, long-term stable relations are developed with satisfied customers, which is a crucial success factor.
Customers represent a core factor in Fabege's property management operations. Th e company seeks to act as the customer's partner and a co-player in the event of changes in customer operations. Th is is achieved though long-term work and a close customer dialog.
Property management is Fabege's largest operational area. Operations are divided into geographic areas in which each independent unit has considerable responsibility and the ability to take decisions promptly. Each submarket is responsible for the operation and development of properties, as well as for customer contacts. Each team includes an operations manager and property engineers with solid technical expertise. Fabege also off ers specialist expertise in environmental issues and energy consumption. A total of 81 of Fabege's 129 employees are active in Property Management.
Customer-orientation programmes continued during 2012. A key component of these eff orts was the focus on directing customer surveys at all customers. In response to the emerging requests, Fabege's procedures were improved in a number of respects.
One example was the introduction of a new fault-reporting system that, among other features, ensures a response to all fault reporting. In addition, the introduction commenced of the design of more extensive and standard communication of customer information concerning, for example, changes in properties or surroundings.
A more distinct system was introduced for the division of responsibility among Fabege's various units in terms of customer contact. Customers must be clearly aware of the identity of their contact person at Fabege and who is responsible for resolving any problems though all phases,
such as lease signing, customisation of premises, occupancy and management.
Th e result of the various measures was refl ected in increased customer satisfaction during the year.
Eff orts to extend and renegotiate leases with existing customers were successful. In 2012, a number of major leases for project properties were signed, primarily in Arenastaden. Overall, this meant that the occupancy rate rose from its already high level.
Th e aim in 2013 will be to further improve customer orientation. A key feature of these eff orts will be the strengthening of proactive programmes, aimed at ensuring better identifi cation of customer requests and at an earlier stage.
Brand-building programmes will also continue in a bid to retain and raise the attractiveness of Fabege in terms of individual premises and locations.
The central location of the former Luma industrial property makes it something of a "central town church" in Hammarby Sjöstad, Stockholm. This is a focal point for many of the features that make the area attractive for creative service companies, with appealing offi ces in previously industrial premises, close to the waterside and green spaces.
During the year, a conversion was completed that further raised the
2012 saw the completion of the conversion of the Apotekaren 22 property at the junction of Tulegatan/Rådmansgatan in central Stockholm. The property consists of a number of buildings dating from the 19th to the 21th century, contributing to its exciting and varying character. This was previously the location of a number of TV studios, and an electric turbine facility designed by Ferdinand Boberg for the Stockholm Electricity Supply Board. Several tenants moved in during the year, including Unibet, Företagarna, Landahl Advokatbyrå and Aveqia.
property's profi le in the area. An extension made the entrance more elegant and distinct. Inside the entrance, a previously unused space was replaced by a welcome lounge, café and reception, which promptly became a natural and lively rendezvous point. A new high-class restaurant was also opened. Several new tenants moved in during the year, including the Swedish Coast Guard.
1) In the rental value, time limited deductions (in terms of the current annual rental value at 31 December 2012) of approximately SEK 210m were not deducted.
By means of property development, Fabege seeks to reduce vacancies and raise rental levels in the property portfolio, thereby increasing cash flow and value growth. Operations encompass not only the development of individual properties but also the long-term development of districts.
Fabege has vast expertise and extensive experience from running development projects. One objective is to attract longterm tenants to not yet fully developed properties that can be customised to meet specifi c customer requirements.
Land and properties are acquired, developed and then transferred to the Group's investment portfolio or sold. Long-term planning is frequently undertaken in cooperation with the particular municipality, creating joint visions for optimal district planning. New builds and more extensive project development are undertaken in line with the principles of, for example, the Sweden Green Building Council (SGBC).
Responsibility for new builds and conversion projects, procurement and followup rests with the Projects Department, which comprises 13 employees and is divided into two groups: the Projects unit and Tenant Adaptations unit. Th e Projects Department is self-suffi cient in terms of project expertise, while construction services are procured externally. Th e Tenant Adaptations unit takes care of minor adjustments. Th is operation is extremely signifi cant for customer satisfaction, since the premises can be customised to match tenant requirements with a limited investment. Th e development of properties is expected to provide a substantial contribution to group earnings.
Total project investments in 2012 amounted to SEK 2,034m.
Over the course of 2012, a number of major conversion projects were completed,
During 2012, Fabege converted part of a property to form a 65-room hotel in Solna Business Park. The new facility – Hotel by Maude – is a complement to the existing Maude's Hotel, which offers 63 rooms and is a signifi cant component in the broader offering of corporate services in Solna Business Park.
The new hotel project is an example of how Fabege's size and endeavour to nurture long-term partnerships facilitate business expansion for customers. The new hotel opened in January 2013.
including the properties Klamparen 10 at Kungsholmen (Stockholm), Uarda 1 and Uarda 5 in Arenastaden and Apotekaren 22 and Bocken 39 in Stockholm city. Th e occupancy rate for these projects was generally high when they were transferred to Property Management. All of these projects were completed within the planned time schedule and cost framework.
| Property designation | Type of property | Location | Completion | Rental area, sqm |
Occupancy rate, % area1) |
Estimated rental value2) |
Carrying amount 31 Dec. 2012 |
Estimated investment, SEKm |
Of which accrued, SEKm |
|---|---|---|---|---|---|---|---|---|---|
| Nöten 4 | Offi ce | Solna Strand | Q1-2014 | 51,026 | 92 | 96 | 880 | 690 | 328 |
| Skeppshandeln 1 | Hotel | Hammarby Sjöstad | Q2-2014 | 13,710 | 83 | 41 | 154 | 549 | 103 |
| Uarda 1 3) | Offi ce | Arenastaden | Q4-2012 | 41,079 | 64 | 83 | 920 | 542 | 459 |
| Total | 105,815 | 87 | 220 | 1,954 | 1,781 | 926 | |||
| Other Land and Project Properties | 538 | ||||||||
| Other Development Properties | 302 | ||||||||
| Total Project, Land and Development properties | 2,794 |
1) Operational occupancy rate as of 31 December 2012.
2) For the largest on-going projects, annual rent can increase to SEK 220m (fully let) from SEK 55m in current annual rent as of 31 December 2012. 3) Information regarding area, rental value and carrying value pertain to the entire property. The investment pertains only to part of the property.
The possibility of creating long-term customer relations depends on such factors as Fabege's ability to offer new solutions that match the growth of customer operations or other changes. One example is Svea Ekonomi, which has been a long-term tenant in Fabege's premises near the Råsunda football stadium and in a number of premises in Solna. As a result of the expansion of operations, these prem-
ises proved insuffi cient, although the company wished to remain in the vicinity.
The solution was that Svea Ekonomi relocated to the Uarda 1 property in Arenastaden at year-end 2012, where the entire company – with some 350 employees – has 10,000 sqm at its disposal. The new premises were designed with employee satisfaction in mind, and feature a gym and a "living-room" that extends throughout the storey facing the inner courtyard.
Th e projects designated Nöten 4, Solna Strand and Skeppshandeln 1, Hammarby Sjöstad were initiated during the year and are planned for completion during 2014.
During 2012, a more distinct process for the handover of customer responsibility among the various Fabege units was introduced via various phases such as lease signing, premises customisation, occupancy and management.
Th e aim is to maintain project volumes at a high level. Th e focus is on Arenastaden, but major projects will also be conducted at Hammarby Sjöstad and Solna Business Park. New builds will account for a larger share of projects compared with recent years. Future new production will be designed to meet the requirements of the BRE Environmental Assessment Method (BREEAM).
Before a tenant moves into an existing property, adaptation of the premises is frequently conducted to suit tenant requirements. This may, for instance, involve moving walls, creating more conference rooms or opening up spaces to create open landscape offi ces. Minor adaptations are also undertaken in conjunction with the renegotiation of leases.
These types of conversions are undertaken by the Tenant Adaptations Group, which consists of experienced project
managers who are responsible for the building process up to the occupancy date. During a normal year, 80–90 adaptations are conducted in close cooperation with tenants and building contractors.
These activities are of major importance for customer satisfaction, since premises – at a limited investment – can frequently be made more appropriate to customer requirements.
Fabege's third cornerstone is Business Development, which encompasses transactions, analyses, valuations and portfolio and business development. Acquisitions and sales are a natural component of operations. The company continuously analyses its property portfolio to identify opportunities to create value growth.
Astutely analysed acquisitions and sales have created major value for Fabege over the years. A basic factor for the transactions business is the analysis of the potential for earnings growth from various properties. Location, condition, rent levels and vacancy rates are major factors underlying growth potential. Analyses lead to the acquisition of properties for which growth potential is deemed favourable, and to the sale of properties off ering limited potential for rent increases and value growth.
Fabege's extensive experience and indepth knowledge of urban districts, properties, urban development plans and the market's other players provide excellent conditions for sound assessments of growth potential. As a major market player, Fabege has good relations with public authorities and decision makers.
Th is department, which has ten em ployees, conducts transactions, analyses, valuations, and purchases as well as portfolio and business development.
Valuation of the property portfolio is undertaken by internal valuation experts, supported by independent valuation institutions.
Five properties were divested at a total value of SEK 1,448m. Th e remaining 50 per cent of an already partly owned property was acquired for SEK 150m, through an exchange transaction with the insurer, Gamla Livförsäkringsbolaget SEB Trygg Liv. A sizeable housing development right in Hammarby Sjöstad was divested. During the fourth quarter, the Klamparen 10 property in Kungsholmen, Stockholm, was divested.
Th e concentration of the property portfolio is essentially complete. Th e focus is now on consolidating the company's strong position in priority submarkets, namely, Stockholm inner city, Hammarby Sjöstad and Solna. Any potential acquisitions will be made in these markets.
| Property sales | |||
|---|---|---|---|
| Property name | Location | Category | Lettable area, sqm |
| Quarter 1 | |||
| No sales | |||
| Quarter 2 | |||
| Läraren 5 | Norrmalm | Offi ce | 4,300 |
| Båtturen 1 | Hammarby Sjöstad | Land | 0 |
| Linjefarten 1 | Hammarby Sjöstad | Land | 0 |
| Quarter 3 | |||
| No sales | |||
| Quarter 4 | |||
| Klamparen 10 | Kungsholmen | Offi ce | 22,530 |
| Berga 6:558 | Åkersberga | Land | 0 |
| Total property sales | 26,830 |
| Property acquisitions | |||
|---|---|---|---|
| Property name | Location | Category | Lettable area, sqm |
| Quarter 1 | |||
| No acquisitions | |||
| Quarter 2 | |||
| Islandet 3 | Norrmalm | Offi ce | 4,327 |
| Quarter 3 | |||
| No acquisitions | |||
| Quarter 4 | |||
| No acquisitions | |||
| Total property acquisitions | 4,327 |
In 2012, transaction activity in the Swedish property market increased, particularly towards year-end. Investors showed great interest, mainly in office and residential properties in good locations. Stockholm accounted for 44 per cent of the transaction volume, and the interest shown by foreign investors rose somewhat.
Transactions activity in the Swedish property market was high during the year. Th e volume amounted to SEK 106bn, the highest level since 2008. Activity was particularly high in December, resulting in a transaction volume of nearly SEK 42bn for the fourth quarter. For the full-year, Stockholm accounted for 44 per cent of the total Swedish transaction volume. In recent years, Stockholm's portion has remained relatively stable at about 50 per cent.
Transactions primarily pertained to offi ce and residential properties in good locations. Th e offi ce segment accounted for nearly 40 per cent of the total volume. Th is refl ected a renewed interest shown by investors in offi ce properties following a slackening in 2009–2010, when interest in residential properties with stable cash fl ows increased. Fabege's entire property
portfolio is focused on offi ce properties in good locations.
Th e market is dominated by institutions and pension funds, which accounted for more than 40 per cent of acquisitions, compared with 15–25 per cent in the years leading up to the fi nancial crisis. Th is investor group seeks stable returns through secure cash fl ows which, in 2012, led mainly to investments in housing in regional capitals, offi ce properties in prime locations in Stockholm City and properties with public-sector tenants on long-term leases.
Foreign interest increased slightly and international investors accounted for nearly 20 per cent of the transaction volume. Key players included the Carlyle Group, Citycon and the Canada Pension Plan Investment Board. Th e foreign investors' share of the transaction volume has
gradually increased in recent years but remained far lower in 2012 than the average levels of about 50 per cent that existed in 2002–2007.
Newsec has made the assessment that in a scenario where the global economy begins to recover in 2014, yield requirements in the most attractive property segments will have bottomed out in three to fi ve years' time. Th e best-earning segment will then be properties with stable cash fl ows in secondary locations.
| Yield requirements, % | 2012 | 2011 |
|---|---|---|
| Stockholms inner city | 4.25–5.00 | 4.40–4.90 |
| Stockholms inner city, outside city core |
4.75–5.25 | 4.90–5.50 |
| Solna Business Park | 5.50–6.00 | 5.50–6.00 |
| Arenastaden | 5.50–6.25 | 5.50–6.00 |
| Hammarby Sjöstad | 6.00–6.50 | 6.10–6.60 |
Source: Newsec
Fabege's property portfolio comprises commercial premises with a high concentration of properties in Stockholm inner city, Solna and Hammarby Sjöstad.
17
In 2012, the Stockholm office market remained robust despite an economic downturn resulting in slower economic growth in Sweden. Companies are demanding high quality, with modern, flexible offices in attractive locations.
Th e Greater Stockholm offi ce market comprises approximately 12.0 million sqm, of which 6.2 million sqm is located in the inner city. Th e global outlook in 2012 was marked by debt problems in Europe. From the peaks noted in 2010 and 2011 (6.6 and 3.7 per cent, respectively), economic growth in Sweden declined to 1.0 per cent. However, the Swedish economy remained stable compared with several other European countries. Interest rates continued to fall from already low levels.
Th e global uncertainty did not aff ect the Greater Stockholm offi ce market to any great extent. One explanation was the continued population growth. Between 2000 and 2010, the percentage rate of population growth in the region was nearly twice as high as in the rest of Sweden. Another explanation was that the main focus of the Greater Stockholm business community is on the services sector, which has been less sensitive to the economic downturn than industry. Th e largest segments in Stockholm's services sector are banking and fi nance, IT and other consulting activities. A stable labour market in these areas lays the foundation for continued stability in the offi ce market.
In 2012, almost 130,000 sqm of offi ce space was completed in Greater Stockholm. Historically, this is considered a normal level, but it entailed a signifi cant increase from new production in 2011, which totalled 40,000 sqm. Essentially all of the newly produced offi ce space had been leased by early 2013.
A number of major tenants have announced that they will be relocating from the city to an inner suburb. Between 2013 and 2016, Swedbank, Nordea, SEB and the Swedish Social Insurance Agency will relocate their offi ce premises. Th ese
four companies will vacate offi ce space totalling about 160,000 sqm, corresponding to nearly 10 per cent of the total offi ce space in the city. Th e empty properties will be converted and upgraded.
Several large companies have also relocated from offi ce properties in outer-lying suburbs to more established business parks in an inner suburb or the inner city. In pace with this trend, the number of conversion projects has grown. At the end of 2012, a number of such properties were in the planning or project phase, such as Vattenfall's former head offi ce in Råcksta,
and offi ce properties in Älvsjö and at Telefonplan, which were vacated by Ericsson.
Activity in Stockholm's offi ce rental market stagnated slightly in 2012, mainly due to an expected economic decline. Rents continued to rise, although not at the same pace as in 2011. Offi ce rents in the Central Business District (CBD) increased SEK 100/sqm and amounted to SEK 4,500/sqm at year-end. Th e vacancy rate in the CBD continued to fall from an already low level to 4.0 per cent (4.5). In
Source: Newsec
other parts of the inner city, the vacancy rate remained unchanged at 9.5 per cent.
Attractive premises in inner-city locations, primarily in the city centre, are still in short supply and are rapidly disappearing from the market. In less attractive submarkets and for outdated premises, rent deductions and/or conversions are being requested in renegotiations.
Modern and fl exible premises are in demand among tenants, which is impacting the older portfolio. Effi cient premises generate lower total workplace costs, providing opportunities for higher rent per square metre. Th e gap between modern and outdated premises is expected to continue widening in future, in terms of both vacancy rates and rents.
Th e strong offi ce market in the city, combined with a low injection of newly built offi ce space, is driving up offi ce rents in locations near the city. In the inner city area outside the CBD, market rent has risen SEK 400/sqm since 2009 and amounted to SEK 2,700/sqm at year-end 2012.
Newsec estimates that in 2013 the market rent for modern and space-effi cient offi ce properties in Stockholm City will decline by approximately SEK 150/sqm from the current level of SEK 4,500/sqm. Th is is mainly due to general economic instability and the eff ect of future vacancies. In other parts of the inner city, the level is expected to remain unchanged in 2013.
A large number of property companies, institutions and private property owners are focused on types of properties and geographic areas that, to varying degrees, overlap with Fabege's focus. Th e markets are thus subject to tough competition.
Fabege is a niche player in the property market, and supplements the institutional ownership in Stockholm. Fabege has expertise and experience in property development and management, and in identifying customers for its development projects. What many institutional property owners consider a risk can oft en pres-
Catena
ent an opportunity for Fabege by creating added value through development. Th is enables Fabege to sell fully developed properties with stable cash fl ows, and instead acquire properties with development potential.
In the rental market, the location and condition of properties are key competitive advantages. Customers are demanding modern, effi cient premises in attractive locations which, to a high degree, hallmark Fabege's property portfolio. A high geographic concentration and a focus on offi ces generate excellent knowledge of the submarkets on which the company focuses and enables development of entire areas.
Another key competitive advantage is the ability to satisfy customer demands by off ering a high degree of customisation of premises. Customer proximity is the key. Environmental issues are another, in creasingly signifi cant, competitive tool. Fabege has long had a strong focus on the environment and sustainability.
As a result of efforts in recent years to streamline and concentrate the property portfolio, Fabege is now one of the most specialised companies in the Swedish property market.
Source: Leimdörfer
| Investment focus | Main geographic market | Owner | Market value, SEKm |
No. of properties |
'000 sqm | SEKm | Occupancy, % |
|---|---|---|---|---|---|---|---|
| Offi ce, retail | Stockholm | Listed | 31,636 | 95 | 1,130 | 1,869 | 92 |
| Offi ce, retail | Stockholm, Uppsala, Gothenburg, Malmö, Lund |
1–4 AP-fonden | 84,074 | 193 | 2,601 | 5,969 | 93 |
| Offi ce, retail, residential | Stockholm, Gothenburg, Malmö | Skandia Liv | 30,455 | 121 | 1,166 | 2,194 | 92 |
| Offi ce, retail | Stockholm, Gothenburg | Listed | 23,058 | n.a | 367 | 1,542 | 96 |
| Offi ce, retail, residential | Stockholm, Gothenburg | AMF Pension | 40,000 | 34 | 636 | 2,000 | n.a |
| Offi ce, retail | Stockholm | Länsförsäkringar | 9,690 | 42 | 284 | 583 | 91 |
| Lettable area, Rental income, |
1) Figures pertain to 2011.
Stockholm inner city is the largest office market in the Nordic region. Transport facilities is excellent and the service level high. The inner-city office market comprises a total surface area of approximately 6.2 million sqm.
For many companies, a central location for their offi ces is a high priority, as refl ected in the extremely strong demand for offi ces in Stockholm inner city. Tenants are predominantly fi nance companies, law fi rms and consultancies.
Fabege is the second-largest property owner in the area with 37 properties comprising a total fl oor space of approximately 475,000 sqm. Th e portfolio features modern offi ces and retail outlets in prime locations. Currently, offi ces account for 75 per cent of the premises and represent a market share of 6 per cent.
Fabege's portfolio is mainly concentrated in the area around Kungsgatan (fi ve properties) and Drottninggatan (eight properties). In the Norrtull/Norra station area, Fabege owns fi ve properties, of
which the Wenner-Gren Centre is best known. On Kungsholmen, Fabege's holding includes the DN tower block.
In 2012, conversion of the Bocken 39 property on Lästmakargatan was completed. Eff orts to revitalise Lästmakargatan, which has a very central location, have been under way for several years. Th e Apotekaren (Tulegatan/Rådmansgatan) project was also completed during the year.
Hallmarks of 2012 continued to be strong demand and low vacancy ratios. Th e rental value of the portfolio is SEK 1,197m, representing about 53 per cent of the Group's total rental value. At year-end 2012, the economic occupancy rate in the area was some 93 per cent.
| Key fi gures | 2012 |
|---|---|
| No. of properties | 37 |
| Market value, SEKm | 16,950 |
| Lettable area, '000 sqm | 475 |
| Financial occupancy rate, % | 93 |
| Remaining contract term, years | 3.2 |
| Rental value, SEKm | 1,197 |
| Largest tenants | sqm |
|---|---|
| Bonnier Dagstidningar AB | 28,000 |
| OMX AB | 28,000 |
| Lantbrukarnas Ekonomi AB | 12,000 |
| Carnegie Investment Bank AB | 10,000 |
| Praktikertjänst AB | 8,000 |
In 2012, offi ce rents rose to SEK 4,500/ sqm (4,400) in the central business district (CBD). In the inner city, not including the CBD, offi ce rents rose to SEK 2,700/sqm (2,650). At year-end 2012, the market rent for offi ces in the CBD ranged from SEK 3,800/sqm to SEK 5,300/sqm. In the inner city outside the CBD, rents were considerably lower and ranged from SEK 2,000/sqm to SEK 3,400/sqm.
In the CBD, the vacancy rate declined from an already low level of 4.5 per cent
to 4.0 per cent. In the inner city, not including the CBD, the estimated vacancy rate remained unchanged at 9.5 per cent.
Yield requirements for offi ce properties in the CBD were between 4.25 and 5.0 per cent. Yield requirements were slightly higher in other parts of the inner city, ranging from 4.75 to 5.25 per cent.
Newsec estimates that the market rent for modern and space-effi cient offi ce properties in the CBD will fall from a level of SEK 4,500/sqm to approximately SEK 150/sqm in 2013.
Th is is mainly due to general economic instability and the eff ect of future vacancies. In other parts of the inner city, market rent is expected to remain unchanged in 2013.
| Market rate, SEK/sqm |
Occupancy rate, % |
||
|---|---|---|---|
| Stockholm inner city | 3,800 – 5,300 | 96 | |
| Outside city | 2,000 – 3,400 | 93 |
Source: Newsec
Fabege's share of the office market in Hammarby Sjöstad
69 %
A unique waterside location and old industrial properties make Hammarby Sjöstad one of the most attractive areas in Greater Stockholm. The office market amounts to a surface area of approximately 120,000 sqm.
Th e waterside location, combined with excellent transport facilities and easy access to green areas and the inner city, makes Hammarby Sjöstad a very attractive area for both residential and commercial purposes. Offi ce premises in the area have largely been created by converting old industrial properties. Th e unique character of both the premises and the area serves as a magnet for creative services companies.
In 2012, eff orts to develop Hammarby Sjöstad into an attractive offi ce market continued. A key feature of this work was the development of an old, centrally
located light-bulb factory, the Luma property, with the aim of making it an even more signifi cant icon for the area. Th e attractiveness of Luma as a meeting place will considerably increase when the New Carnegie brewery moves into the property at the end of 2013, with an operation comprising a restaurant and beer school as well as the brewery.
A hotel is currently under construction in the Skeppshandeln area with occupancy scheduled for the fi rst half of 2014.
In 2012, long-term development work in the area could be detected from clearly growing interest from potential tenants.
Fabege is the largest commercial property owner in Hammarby Sjöstad, with 13 properties comprising 126,000 sqm of floor space.
Th e vacancy rate declined and rental levels rose.
Fabege owns 13 commercial properties in Hammarby Sjöstad, comprising a surface area of 126,000 sqm and is thus the largest holder of commercial premises in the area. Th e rental value is SEK 205m, representing 9 per cent of the company's total rental value. Offi ces account for 66 per cent of Fabege's premises, corresponding to 69 per cent of the offi ce market. At year-end 2012, the occupancy rate in the area was approximately 88 per cent.
Hammarby Sjöstad has been one of the largest development areas in Greater Stockholm over the past decade. Th e area is characterised by an offi ce market still under development. In recent years, high-quality offi ce space has emerged and driven the rental trend.
Th e vacancy rate in the area remains relatively high and was unchanged at 20 per cent in 2012 Newsec estimates that the vacancy rate will decline 2 percentage points, to 18 per cent, in 2013.
At year-end, market rents ranged from SEK 1,500/sqm to SEK 2,100/sqm. Rents are expected to rise slightly in 2013. At the end of 2012, yield requirements ranged from 6.0 to 6.5 per cent, which was slightly lower than in the preceding year.
| Market rents, SEK/sqm | 1,500 – 2,100 |
|---|---|
| Occupancy rate, % | 80 |
Source: Newsec
| Key fi gures | 2012 |
|---|---|
| No. of properties | 13 |
| Market value, SEKm | 2,515 |
| Lettable area, '000 sqm | 126 |
| Financial occupancy rate, % | 88 |
| Remaining contract term, years | 2.8 |
| Rental value, SEKm | 205 |
| Largest tenants | sqm |
|---|---|
| Riksbyggen Ekonomiska Förening | 4,000 |
| Point Transaction Systems AB | 4,000 |
| Upplands Motor AB | 4,000 |
| Nets Sweden AB | 3,000 |
| Rösjötorp Utbildning AB | 2,000 |
Solna is characterised by a positive business climate and strong population growth. One of Scandinavia's most exciting new districts is emerg ing in Arenastaden. The offi ce mar ket in Solna totals a surface area of approximately one million sqm.
Fabege is the largest owner of commercial properties in Solna. It owns 37 properties in Solna, comprising a total surface area of 503,000 sqm, with offi ces accounting for 74 per cent of the premises. Th is represents a market share of about 37 per cent of the offi ce market. Th e rental value is approximately SEK 840m, corresponding to 37 per cent of the company's total rental value.
Fabege owns almost 100 per cent of the offi ce space in Arenastaden and thus plays a central role in the development of an attractive mix of offi ces, retail stores, housing and green areas. Th e Friends Arena was inaugurated in October and the construction of Scandinavia's largest shopping centre, the Mall of Scandinavia, commenced during the year. Th e mall is scheduled for completion in autumn 2015. Th e largest tenants that moved into Arenastaden during the year included Vattenfall, Carlsberg Sweden and Svea Ekonomi. Th e area has excellent transport facilities as a result of the planned expansion of commuter trains, the light railway system and buses, which also provides proximity to Stockholm Arlanda Airport and the E4 motorway.
In pace with development of the area, levels of interest and rents are rising. In
early 2013, the occupancy rate was approximately 91 per cent.
Solna Business Park is an established business park where a number of major companies, including ICA, Evry and Coop, have their head offi ces. Since Fabege owns a large number of the properties, opportunities for tenants to expand in the area are favourable. As a major property owner, Fabege can also infl uence the development of properties and the area.
Th e range of transport facilities options is second best to Stockholm Central Station in the Stockholm region. When construction of the new Tvärbanan light rail service is completed in 2013, Solna Business Park will be served by inter-city trains, commuter trains, the underground, light rail and buses. Th e Mälarbanan commuter rail
Rental value by category
| Key fi gures | 2012 |
|---|---|
| No. of properties | 37 |
| Market value, SEKm | 11,904 |
| Lettable area, '000 sqm | 503 |
| Financial occupancy rate, % | 90 |
| Remaining contract term, years | 4.8 |
| Rental value, SEKm | 840 |
| Largest tenants | sqm |
|---|---|
| Vattenfall AB | 43,000 |
| Ica Fastigheter AB | 27,000 |
| Peab Sverige AB | 18,000 |
| Evry AB | 15,000 |
| COOP Sverige Fastigheter AB | 15,000 |
service provides easy access from Västerås and Enköping. Bromma airport is close by.
Th e area has a broad off ering of business services including cleaning, offi ce supplies, fruit baskets, plant services, security, catering, conference and hotel activities. A range of conveniences are also available that simplify the everyday lives of employees, such as a gym, pharmacy, restaurants, hairdressing salon, ATM and dry cleaning.
At the end of 2012, the occupancy rate in the area was approximately 93 per cent.
Fabege also owns a smaller number of properties in other parts of Solna. In 2013, work commenced on the conversion of Råsunda Football Stadium into an offi ce and residential area, where Fabege will have opportunities to develop 20,000 sqm of offi ce space.
Solna has an established business culture, an attractive offi ce market and excellent transport facilities. Th e most attractive sub-areas are Solna Business Park, Frösunda and Arenastaden. Th e development of Hagastaden and the New Karolinska Hospital will link Solna with Stockholm. In 2012, offi ce space was primarily added in Arenastaden.
At year-end, market rents ranged from SEK 1,800/sqm to SEK 2,000/sqm in Solna Business Park, and from SEK 1,600/sqm to SEK 2,200/sqm in Arenastaden.
In Solna Business Park, yield requirements ranged from 5.5 to 6.0 per cent at the end of 2012. Th e corresponding
fi gures in Arenastaden were between 5.5 and 6.25 per cent.
At the end of 2012, the vacancy rate was 10 per cent in Solna Business Park and 12 per cent in Arenastaden. Newsec estimates that the vacancy rate in Arenastaden will decline to 10 per cent in 2013.
| Market rate, SEK/sqm |
Occupancy rate, % |
|
|---|---|---|
| Arenastaden | 1,600 – 2,200 | 88 |
| Solna Business Park | 1,800 – 2,000 | 90 |
Source: Newsec
During 2012, a series of key steps were taken in the development of Arenastaden towards making it a complete city district, with attractive workplaces and a broad range of services. One such step was the opening of Friends Arena, which generated sharply increased public attention for the area.
During the year, the ground-breaking ceremony took place for the Mall of Scandinavia, which will open in 2015 and be Scandinavia's largest shopping mall. Furthermore, a number of major tenants moved in at Arenastaden, at the same time as local services in the area were improved. Overall, these developments led Fabege to note a clear increase in interest among potential tenants.
Fabege owns most of the existing commercial offi ce properties in Arenastaden, comprising about 166,000 sqm in investment properties and 12,000 sqm in current projects. As a result, Fabege off ers a broad off ering of premises to meet the requirements of various customers. In the years ahead, Fabege has the potential to build more than an additional 250,000 sqm of modern and eff ective offi ce space.
In future years, Arenastaden will be
developed to form a complete city district, with offi ce facilities, housing, squares, retail outlets, green areas, transport facilities and local services. Th e mix of housing, workplaces and visitors to the Mall of Scandinavia and Friends Arena entails that it will be a vibrant location throughout most of the day.
Arenastaden is strategically well positioned with good transport facilities that will be further improved in the near future. Solna Station is located in the area and when the Citybana commuter line is complete in 2017, the travel time to Stockholm Central Station will be a mere six minutes, at the same time as commuter train traffi c will become denser and integrated into the underground railway system. Th e Tvärbana light rail system will be connected to Solna Station. Th e area is also immediately adjacent to the E4 and
In September, Vattenfall (a major Swedish power producer) moved into its new headquarters in the Uarda 5 property in Arenastaden. The approximately 2,300 employees were previously dispersed among three locations in Stockholm.
The property consists of four buildings inspired by the four elements, and linked by a glazed atrium. The workplaces are located furthest out in the buildings, with open spaces with couches and tables close to the atrium. A pervading theme is to create conditions for communication and spontaneous meetings.
A number of the customer's basic requirements for the new headquarters were good transport links and an environmentally classifi ed building. During the year, the Uarda 5 property was presented with the international Green Building Award by the European Commission's Joint Research Center, as well as the Sweden Green Building Award and the Swedish SBGC Gold award.
E18 motorways, while Arlanda International Airport has already become more accessible as a result of two commuter trains per hour all the way to Uppsala.
Another benefi t of the location of Arenastaden is its proximity to expansive green spaces at Råstasjön and the Royal Haga Park.
In Arenastaden, Fabege is working to ensure that the development of this city district is undertaken in a sustainable manner. Among other endeavours, this involves systematic programmes to reduce energy consumption and environmental impact in each building. All Fabege's new builds in the area are conducted in accordance with the BRE Environmental Assessment Method (BREEAM).
spectators October 2012 saw the inauguration of Friends Arena, Scandinavia's largest arena, with, for instance, seating for 50,000 visitors for football and 65,000 for concerts. The Arena features a retractable roof and modern technology that offers a wide range of applications throughout the year. This will be the forum for various types of large-scale events and is expected to attract 1.5 million visitors annually. The commissioning of Friends Arena has considerably raised public attention and increased awareness of Arenastaden. The Arena is owned by a consortium in which Fabege has a 16.7 per cent holding.
The Quality Hotel Friends, which is scheduled to open in the autumn of 2103, is being built close to Friends Arena. The hotel will feature 400 rooms, a spa, a relaxation facility, sky bar and a congress facility for 1,800 people. Quality Hotel Friends will be a key feature in the mix of activities and services in Arenastaden, not least thanks to its potential for handling conferences and other events and the combination on offer by the hotel and Friends Arena. The hotel is owned by Nordic Choice Hotels.
At year-end 2012, Arenastaden had some 185,000 sqm of offi ce space. When fully developed, the area will offer some 450,000 sqm, corresponding to 30,000 workplaces. Arenastaden will offer companies an extensive variety of corporate services.
During the year, Vattenfall (a major Swedish power producer) moved its workforce of 2,300 employees into its new Arenastaden headquarters. The property is an example of Fabege's ambitious aim of creating sustainable
properties in economic and environmental terms. All Fabege's new builds in the area are conducted in accordance with the BREEAM Environmental Assessment Method.
Future projects include stage two and three of the Uarda 2 property, where such companies as Carlsberg Sweden and Svea Ekonomi moved into the stage one development during 2012. In addition, 40,000 sqm of offi ce space is planned to be built on top of the Mall of Scandinavia.
October 2012 saw the ground-breaking ceremony for Mall of Scandinavia, which will be the largest complete shopping mall in Scandinavia. Unibail Rodamco will own, build and operate the mall. With an area of about 101,000 sqm, on three storeys, the mall will house 250 stores and restaurants. The area is larger than such famous Stockholm stores as NK, Åhlens, Gallerian Mall, Sturegallerian Mall and Pub in combination.
Mall of Scandinavia will open in autumn 2015 and will make a considerable contribution to creating a vibrant city district in Arenastaden, partly due to its wide-ranging offering for those who live and work in the district, and to the large number of visitors to the mall.
When fully complete, Arenastaden will include approximately 3,000 new fl ats. The fi rst residential building is expected to be ready for occupancy in spring 2014. The fi rst stage consists of fi ve residential buildings, with the last of these planned for occupancy in 2018. These buildings will enjoy an attractive location between Friends Arena and the green belt around Råstasjön.
Fabege's properties are concentrated to three sub-markets: Stockholm inner city, Solna and Hammarby Sjöstad. A full 99 per cent of the property portfolio is located within a radius of five kilometres of the centre of Stockholm.
| 2012 | 2011 | 2010 | |
|---|---|---|---|
| No. of properties | 95 | 97 | 103 |
| Lettable area, '000 sqm | 1,130 | 1,107 | 1,138 |
| Financial occupancy rate, % |
92 | 90 | 88 |
| Rental value, SEKm | 2,260 | 2,098 | 2,061 |
| Surplus ratio, % | 68 | 68 | 67 |
Rental value by category, total SEK 2,260m
Th e property portfolio mainly comprises commercial premises. Offi ces account for 74 per cent of the total lettable area. In addition to offi ces, the portfolio includes retail, industrial/warehouse and residential space and hotel and garage space. Th e largest sub-market, Stockholm inner city accounts for 53 per cent of the total market value and 53 per cent of the rental value.
On 31 December 2012, Fabege's portfolio comprised 95 properties with a total lettable area of 1.1m sqm. Th e market value was SEK 31.6 bn and the rental value SEK 2.3bn.
During 2012, fi ve properties were divested and one property was acquired. Th e divested properties were Läraren 5, Båtturen 1, Linjefarten 1, Klamparen 10 and Berga 6:558. During the second quarter, the remaining 50 per cent of the previously half-owned property Islandet 3 (Centralbadet) was acquired. A further two properties in Hammarby Sjöstad – Skeppshandeln 1 och Luma 3 – were added through property regulations. See table on page 14.
Th e customer portfolio is well diversifi ed with a large number of tenants from a
Fabege's properties are concentrated to the Stockholm region and are subdivided into three prioritised sub-markets: Stockholm inner city, Solna and Hammarby Sjöstad. A full 99 per cent of the property portfolio is located within a radius of fi ve kilometres of the centre of Stockholm.
wide range of industries, representing a mix of private businesses and public sector organisations. On 31 December 2012, the 15 largest tenants by value accounted for 28 per cent of the total contracted rental value.
COOP
Praktikertjänst
On 31 December 2012, the 15 largest tenants by value represented a total contract value of SEK 632m, or 28 per cent of the total contractual rental value.
| '000 sqm | Offi ce | Retail | Industrial/ warehouse |
Hotel | Residential | Garage | Total |
|---|---|---|---|---|---|---|---|
| Stockholm inner city | 356 | 28 | 27 | 8 | 11 | 45 | 475 |
| Solna | 371 | 37 | 35 | 9 | 2 | 49 | 503 |
| Hammarby Sjöstad | 84 | 10 | 24 | 0 | 1 | 8 | 127 |
| Other markets | 20 | 1 | 4 | 0 | 0 | 0 | 25 |
| Total | 831 | 76 | 90 | 17 | 14 | 102 | 1,130 |
| Due, year |
No. of leases |
Area, sqm |
Contracted annual rent, SEKk |
Share, % |
|---|---|---|---|---|
| 2013 | 417 | 184,005 | 378,980 | 19 |
| 2014 | 324 | 142,485 | 324,751 | 16 |
| 2015 | 317 | 179,389 | 425,220 | 22 |
| 2016 | 145 | 97,131 | 227,230 | 12 |
| 2017+ | 106 | 258,381 | 621,680 | 31 |
| Total | 1,309 | 861,391 | 1,977,861 | 100 |
| Area | No. of properties |
No. of leases |
Lease term |
|---|---|---|---|
| Stockholm inner city | 37 | 643 | 3.2 |
| Solna | 37 | 365 | 4.8 |
| Hammarby Sjöstad | 13 | 289 | 2.8 |
| Other markets | 8 | 12 | 3.9 |
| Total/average | 95 | 1,309 | 3.8 |
| Property portfolio changes | Fair value, SEKm |
No. |
|---|---|---|
| Property portfolio, 1 Jan 2012 | 29,150 | 97 |
| + Acquisitions | 273 | 1 |
| + Property settlements | 0 | 2 |
| + New builds, extensions and conversions |
2,039 | – |
| – Sales | –1,235 | –5 |
| +/– Unrealised changes in value | 1,409 | – |
| Property portfolio, 31 Dec 2012 | 31,636 | 95 |
| Property portfolio | 31 December 2012 | 1 January – 31 December 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| No. of properties |
Lettable area, '000 sqm |
Market value, SEKm |
Yield, % | Rental value2), SEKm |
Financial occupancy rate, % |
Rental income, SEKm |
Property expenses, SEKm |
Net operating income, SEKm |
|
| Property holdings | |||||||||
| Investment properties1) | 74 | 1,018 | 28,842 | 5.62 | 2,152 | 93 | 1,956 | –484 | 1,472 |
| Development properties1) | 6 | 37 | 302 | 6.34 | 29 | 62 | 19 | –13 | 6 |
| Land and project properties1) | 15 | 75 | 2,492 | 6.28 | 79 | 65 | 34 | –12 | 22 |
| Total | 95 | 1,130 | 31,636 | 5.67 | 2,260 | 92 | 2,009 | –509 | 1,500 |
| Inner city | 37 | 475 | 16,950 | 5.32 | 1,197 | 93 | 1,089 | –277 | 812 |
| Solna | 37 | 503 | 11,904 | 6.03 | 840 | 90 | 736 | –170 | 566 |
| Hammarby Sjöstad | 13 | 126 | 2,515 | 6.27 | 205 | 88 | 168 | –55 | 113 |
| Other markets | 8 | 26 | 267 | 7.00 | 18 | 85 | 16 | –7 | 9 |
| Total | 95 | 1,130 | 31,636 | 5.67 | 2,260 | 92 | 2,009 | –509 | 1,500 |
| Expenses for lettings, project development and property administration | –115 | ||||||||
| Total net operating income after expenses for lettings, project development and property administration | 1,3853) |
1) See defi nitions on page 100. 2) In the rental value, time limited deductions (in terms of the current annual rental value at 31 December 2012) of SEK 210m were not deducted.
3) The table refers to Fabege's property portfolio on 31 December 2012. Income and expenses were recognised as if the properties were owned for the entire period. The difference between recognised net operating income above, SEK 1,385m, and net operating income in profi t or loss, SEK 1,264m, were explained by net operating income from divested properties being excluded, and acquired/ completed properties being adjusted upwards as if they were owned/completed during the period of January–December 2012.
The unrealized change in the value of Fabege's property portfolio amounted to SEK 1,409m during the year. The increase was the result of rising rent levels, reduced vacancy rates and development gains in project operations.
At 31 December 2012, the recognised value of the properties was SEK 31.6bn (29.2). Th e average discount rate for the portfolio was 7.8 per cent (7.9) and is based on the nominal interest rate on fi veyear government bonds plus a premium for general property-related risk general risk for properties and for object-specifi c premiums. Th e weighted required yield at the end of the calculation period was 5.7 per cent (5.7).
Unrealised changes in value during the year amounted to SEK 1,409m (1,093). Th e change in value corresponds to a value increase of approximately 4.8 per cent. Th e change in value was due to rising rent levels and a decrease in vacancies in the investment-property portfolio, as well as to development gains in project operations.
All properties are externally valued at least once a year by independent appraisers. Since 2000, property valuations have been conducted in accordance with the guidelines established by the Swedish Property Index. In 2012, the properties were valued by Newsec Analys AB. Th e properties are valued continuously throughout the year. Each quarter, internal valuations are also conducted of parts of the portfolio, as well as an internal overall value assessment of the entire portfolio. Th e internal valuation is performed using the same methodology as the external valuations.
Valued properties are divided into the following categories:
For Investment Properties and Project Properties, a cash-fl ow model is normally
used whereby net operating income less the remaining investment is present valued over a fi ve- or ten-year calculation period. Th e residual value at the end of the calculation period is also present valued.
All premises are subject to an individual market-based assessment of rents. For leased premises, an estimated market rent is used for the cash fl ow calculations aft er the expiration of the lease. Th e assessment of such factors as market rents, future running costs and investments is performed by external appraisers using information obtained from Fabege. Operating and maintenance expenses are based on historical results, and on budget fi gures and statistics pertaining to similar properties. Cash fl ow analyses with calculation periods exceeding fi ve years are applied if deemed motivated due to long leases.
Valuations of Other Project Properties are based on the prevailing planning conditions and listed price levels in connection with the sale of undeveloped land and development rights. Th e value of on-going new builds is generally deemed to correspond to the property's market value plus an amount for incurred project expenses.
Each property is valued separately without taking portfolio effects into account. External property valuations are based on the following valuation data:
| Property | Area | sqm |
|---|---|---|
| Apotekaren 22 | Norrmalm | 27,508 |
| Bocken 39 | Norrmalm | 19,909 |
| Bocken 35 & 46 | Norrmalm | 15,362 |
| Fräsaren 11 | Solna Business Park | 39,383 |
| Fräsaren 12 | Solna Business Park | 36,526 |
| Ladugårdsgärdet 1:48 |
Värtahamnen | 37,765 |
| Luma 1 | Hammarby Sjöstad | 39,270 |
| Smeden 1 | Solna Business Park | 45,804 |
| Trängkåren 7 | Marieberg | 76,711 |
| Uarda 5 | Arenastaden | 44,269 |
| Market value, 31 Dec 2012 , |
Yield, | ||
|---|---|---|---|
| Sub-market | (SEKm) | % | % |
| Stockholm inner city | 16,950 | 53 | 5.3 |
| Solna | 11,904 | 38 | 6.0 |
| Hammarby Sjöstad | 2,515 | 8 | 6.3 |
| Other Markets | 267 | 1 | 7.0 |
| Total | 31,636 | 100 | 5.7 |
The properties' expected future cash fl ow during the selected calculation period is measured as follows:
Stockholm inner city 31 December 2012
| Construction year Leasehold |
Offices, sqm | Retail, sqm | Industrial/ | warehouse, sqm | Residential, sqm Hotels, sqm |
Parking/ | Total lettable other, sqm |
Assessed value, | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Property name | Area | Street address | area, sqm SEK '000 |
|||||||||
| STOCKHOLM INNER CITY | ||||||||||||
| 1 Apotekaren 22 | Norrmalm | Döbelnsg 20, 24, Kungstensg 21–23, Rådmansg 40,42, Tuleg 7,11,13 |
1902/2002 | 24,962 | 680 | 1,832 | 0 | 0 | 35 | 27,509 | 535,000 | |
| 2 Barnhusväderkvarnen 36 | Norrmalm | Rådmansg 61–65, Drottningg 87–93, Tegnérg 32, Tegnérlunden 4 |
1963 | 13,889 | 1,253 | 1,536 | 0 | 0 | 8,965 | 25,643 | 437,000 | |
| 3 Bocken 35 | Norrmalm | Lästmakarg 22–24 | 1951 | 14,616 | 301 | 445 | 0 | 0 | 0 | 15,362 | 596,000 | |
| 4 Bocken 39 | Norrmalm | Lästmakarg 10,20, Kungsg 7–15, Norrlandsg 23 |
1931 | 14,944 | 3,094 | 1,651 | 0 | 0 | 220 | 19,909 | 656,000 | |
| 5 Bocken 46 | Norrmalm | Regeringsg 56, Lästmakarg 26 | 1977 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| 6 Bocken 47 | Norrmalm | Lästmakarg 8, Norrlandsg 23 | x | 1929 | 531 | 665 | 0 | 0 | 0 | 0 | 1,196 | 30,800 |
| 7 Bocken 52 | Norrmalm | Lästmakarg 14 | 145 | 0 | 0 | 2,226 | 0 | 0 | 2,371 | 41,800 | ||
| 8 Drabanten 3 | Kungsholmen | Kungsbroplan 3, Kungsbro Strand 29–33 |
1907 | 6,478 | 0 | 73 | 0 | 0 | 0 | 6,551 | 129,000 | |
| 9 Duvan 6 | Norrmalm | Klara Södra Kyrkog 1, Klara Västra Kyrkog 16 |
1975 | 9,579 | 0 | 85 | 0 | 0 | 211 | 9,875 | 308,000 | |
| 10 Fenix 11) | Norrmalm | Barnhusg 3 | x | 1929 | 3,368 | 48 | 255 | 0 | 0 | 0 | 3,671 | 84,000 |
| 11 Fiskaren Större 3 | Södermalm | Götg 21 | 1930 | 235 | 993 | 0 | 1,375 | 0 | 0 | 2,603 | 52,000 | |
| 12 Getingen 13 | Vasastan | Sveav 149–151, Ynglingag 6–8 |
x | 1963 | 10,735 | 610 | 2,585 | 0 | 0 | 2,415 | 16,345 | 213,000 |
| 13 Getingen 14 | Vasastan | Sveav 143–147, Ynglingag 2–4 |
x | 1953 | 11,177 | 0 | 315 | 0 | 0 | 1,231 | 12,723 | 166,000 |
| 14 Getingen 15 | Vasastan | Sveav 159, Ynglingag 14–16 | x | 1963 | 12,634 | 2,970 | 7,072 | 0 | 0 | 10 | 22,686 | 90,980 |
| 15 Glädjen 12 | Stadshagen | Franzéng 6, Hornsbergs Strand 17 |
x | 1949 | 12,337 | 0 | 0 | 0 | 0 | 0 | 12,337 | 255,000 |
| 16 Glädjen 132) | Stadshagen | x | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 53,000 | ||
| 17 Grönlandet Södra 13 | Norrmalm | Adolf Fredriks Kyrkog 8, Walling 1 |
1932 | 8,193 | 0 | 0 | 0 | 0 | 0 | 8,193 | 258,000 | |
| 18 Hägern Mindre 7 | Norrmalm | Drottningg 27–29, Brunke bergsfaret 20–22, Klara Östra Kyrkog 6, Vattug 6 |
x | 1971 | 8,931 | 1,675 | 529 | 0 | 0 | 2,167 | 13,302 | 357,000 |
| 19 Islandet 3 | Norrmalm | Holländarg 11–13 | x | 1904 | 8,397 | 0 | 0 | 0 | 0 | 255 | 8,652 | 199,000 |
| 20 Kolonnen 7 | Södermalm | Götg 95, Ölandsg 42 | 1965 | 2,161 | 116 | 67 | 1,082 | 0 | 345 | 3,771 | 72,000 | |
| 21 Ladugårdsgärdet 1:48 | Värtahamnen | Tullvaktsv 5–23 | 1930/49 | 37,877 | 0 | 0 | 0 | 0 | 0 | 37,877 | 574,532 | |
| 22 Lammet 17 | Norrmalm | Bryggarg 4, G:a Brog 13, Korgmakargr 2,4,6 |
x | 1982 | 5,326 | 418 | 738 | 0 | 0 | 479 | 6,961 | 230,000 |
| 23 Läraren 13 | Norrmalm | Torsg 4 | 1904/29 | 6,837 | 0 | 0 | 0 | 0 | 0 | 6,837 | 189,000 | |
| 24 Mimer 5 | Vasastan | Hagag 25 A–B, Vanadisv 9 | 1957 | 11,672 | 0 | 75 | 0 | 0 | 5 | 11,752 | ||
| 25 Murmästaren 7 | Kungsholmen | Kungsholmstorg 16, Hantverkarg 31 |
1898 | 2,519 | 472 | 79 | 0 | 0 | 0 | 3,070 | 64,800 | |
| 26 Norrtälje 24 | Norrmalm | Engelbrektsg 5–7, Rimbog 2–6 | 1881 | 6,354 | 0 | 173 | 0 | 0 | 526 | 7,053 | 232,000 | |
| 27 Ormträsket 10 28 Oxen Mindre 33 |
Vasastan Norrmalm |
Sveav 166–170, 186 Luntmakarg 18, |
1962/1967 1979 |
13,565 9,253 |
3,491 0 |
494 154 |
0 2,823 |
0 0 |
2,071 708 |
19,621 12,938 |
281,000 247,000 |
|
| Malmskillnadsg 47 | ||||||||||||
| 29 Pan 1 | Gamla Stan | St Nyg 40, L Nyg 23 | 1929 | 2,326 | 721 | 0 | 102 | 0 | 0 | 3,149 | 74,470 | |
| 30 Paradiset 23 | Stadshagen | Strandbergsg 53–57, Nordenfl ychtsv 66–68 |
1944 | 8,830 | 316 | 3,017 | 0 | 0 | 1,655 | 13,818 | 164,000 | |
| 31 Paradiset 27 | Stadshagen | Strandbergsg 59–65, Nordenfl ychtsv 70–74 |
1959 | 20,023 | 4,038 | 1,006 | 0 | 0 | 2,229 | 27,296 | 377,000 | |
| 32 Pilen 27 | Norrmalm | Bryggarg 12A | 1907 | 1,965 | 0 | 116 | 0 | 0 | 0 | 2,081 | 58,400 | |
| 33 Pilen 31 | Norrmalm | Gamla Brog 27–29, Vasag 38 | x | 1988 | 5,103 | 1,134 | 60 | 0 | 2,577 | 571 | 9,445 | 249,000 |
| 34 Resedan 3 35 Sparven 18 |
Vasastan Östermalm |
Dalag 13, Odeng 76 Birger Jarlsg 21–23, Kungsg 2, |
1929 1929 |
2,473 1,906 |
0 1,642 |
0 30 |
1,007 0 |
0 5,097 |
2 0 |
3,482 8,675 |
0 290,000 |
|
| 36 Trängkåren 7 | Marieberg | Norrlandsg 28–30 Gjörwellsg 30–34, Rålambsv |
1963 | 49,976 | 1,927 | 4,761 | 0 | 0 | 20,049 | 76,713 | 895,100 | |
| 37 Ynglingen 10 | Östermalm | 7–15, Wennerbergsg 9 Jungfrug 23, 27, Karlav 58–60, Sibylleg 30–34 |
1929 | 7,020 | 1,308 | 298 | 2,399 | 0 | 526 | 11,551 | 288,400 | |
| TOTAL STOCKHOLM INNER CITY | 356,337 | 27,872 | 27,445 | 11,014 | 7,674 | 44,675 | 475,016 8,748,282 |
The list of properties contains all properties owned by Fabege at 31 December 2012.
Unless otherwise stated, the property is classifi ed as an investment property, meaning a property under regular and active management.
1) Development property – Properties in which a conversion or extension is in progress or planned that has a signifi cant 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 development work.
Solna 31 December 2012
| Construction year warehouse, sqm Residential, sqm Assessed value, Offices, sqm Total lettable Hotels, sqm Retail, sqm Industrial/ other, sqm area, sqm SEK '000 Parking/ Property name Area Street address SOLNA, ARENASTADEN 1 Farao 8 Arenastaden Dalv 12, Pyramidv 11 2001 5,211 250 0 0 0 0 5,461 68,915 2 Farao 141) Arenastaden Dalv 10, Pyramidv 9 1967 8,879 344 1,082 0 0 1,174 11,479 83,400 3 Farao 15 Arenastaden Dalv 6–8, Pyramidv 5 1981 6,427 708 1,016 0 0 1,020 9,171 83,496 4 Farao 16 Arenastaden Dalv 4, Pyramidv 3 1973 2,721 1,613 1,402 0 0 540 6,276 53,600 5 Farao 17 Arenastaden Dalv 2, Pyramidv 1 1975 4,652 0 509 0 0 560 5,721 39,600 6 Farao 192) Arenastaden 0 0 0 0 0 0 0 0 7 Farao 20 Arenastaden Pyramidv 7 1964 7,260 0 127 0 0 375 7,762 103,400 8 Kairo 1 Arenastaden Pyramidv 2 1983 10,741 0 0 0 0 0 10,741 117,600 9 Nationalarenan 82) Arenastaden 0 0 0 0 0 0 0 17,400 10 Pyramiden 32) Arenastaden Pyramidv 4–6, Magasinsv 4 0 0 0 0 0 0 0 5,800 11 Pyramiden 4 Arenastaden Pyramidv 2D 1960 2,999 0 70 0 0 10 3,079 43,000 12 Signalen 32) Arenastaden Kolonnv 22 0 0 0 0 0 0 0 37,168 13 Stigbygeln 2 Arenastaden Gårdsv 6, Rättarv 5 1955 8,898 0 0 0 0 0 8,898 102,000 14 Stigbygeln 3 Arenastaden Gårdsv 8 1960 4,814 0 998 0 0 0 5,812 63,400 15 Stigbygeln 5 Arenastaden Gårdsv 10 A, B 1963 6,806 0 50 0 0 570 7,426 83,800 16 Stigbygeln 6 Arenastaden Gårdsv 12–18 2001 9,113 581 332 0 0 6 10,032 174,800 17 Tygeln 3 Arenastaden Gårdsv 13–21 2001 4,397 0 0 0 0 5,100 9,497 74,073 18 Tömmen 2 Arenastaden Gårdsv 2 0 0 0 0 0 2,610 2,610 0 19 Uarda 12) Arenastaden Dalv 20, 22–30, Lokev 11–15, 1987 16,684 550 4,323 0 0 0 21,557 63,000 Evenemangsg 31A 20 Uarda 4 Arenastaden Dalv 14–16 1992 6,371 0 1,588 0 0 0 7,959 98,600 21 Uarda 5 Arenastaden Magasinsv 1, Evenemangsg 13 1978 42,989 1,280 0 0 0 0 44,269 339,000 TOTAL ARENASTADEN 148,962 5,326 11,497 0 0 11,965 177,750 1,652,052 SOLNA BUSINESS PARK 22 Fräsaren 10 Solna Business Park Svetsarv 24 1964 6,990 4,241 285 0 0 56 11,572 116,800 23 Fräsaren 11 Solna Business Park Englundav 2–4, Svetsarv 4–10 1962 33,118 0 1,815 0 1,840 2,610 39,383 418,000 24 Fräsaren 12 Solna Business Park Svetsarv 12–20, 20A 1964 19,404 10,109 173 0 0 6,840 36,526 446,000 25 Sliparen 11) Solna Business Park Ekensbergsv 115, Svetsarv 1–3 1963 1,559 0 3,204 0 0 0 4,763 17,151 26 Sliparen 2 Solna Business Park Ekensbergsv 113, Englundav 3–5 1964 17,238 0 2,205 0 0 3,315 22,758 210,000 27 Smeden 1 Solna Business Park Englundav 6–14, Smidesv 5–7, 1967 34,498 5,009 1,416 467 0 3,709 45,098 425,406 Svetsarv 5–17 28 Svetsaren 1 Solna Business Park Englundav 7-13, Smidesv 1-3 1964 29,660 329 3,564 0 0 6,090 39,643 345,000 29 Yrket 3 Solna Business Park Smidesv 2-8 1982 4,864 0 1,076 0 0 1,470 7,410 32,725 TOTAL SOLNA BUSINESS PARK 147,331 19,688 13,738 467 1,840 24,090 207,153 2,011,082 SOLNA, OTHER 30 Järvakrogen 32) Frösunda Enköpingsv 1, Mäster Simons v 2, 0 0 0 0 0 0 0 4,098 Regementsg 4 31 Nöten 42) Solna Strand Solna strandv 2–60 1971 38,796 728 8,368 0 0 5,826 53,718 440,000 32 Orgeln 7 Sundbyberg Järnvägsg 12–20, Lysgränd 1, 1966 23,013 3,887 166 0 0 2,399 29,465 301,000 Roseng 2,4 , Stureg 11–19 33 Planen 4 Råsunda Bollg 1–5, Solnav 102 A–C 1992 4,509 389 125 0 0 1,381 6,404 61,800 34 Rovan 1 Huvudsta Storg 66, 70A–C, 74A, 76A, 78 1972 1,825 5,981 58 0 0 2,852 10,716 84,400 35 Rovan 2 Huvudsta Storg 64 1972 0 0 0 1,227 7,645 0 8,872 114,000 36 Skogskarlen 1 Bergshamra Björnstigen 81–83, Pipersv 2A–B 1929/1971 7,064 814 689 0 0 195 8,762 104,800 37 Skogskarlen 3 Bergshamra Pipersv 2 C 0 0 0 0 0 0 0 1,857 TOTAL SOLNA, OTHER 75,207 11,799 9,406 1,227 7,645 12,653 117,937 1,111,955 TOTAL SOLNA 371,500 36,813 34,641 1,694 9,485 48,708 502,840 4,775,089 |
||||||
|---|---|---|---|---|---|---|
The list of properties contains all properties owned by Fabege at 31 December 2012.
Unless otherwise stated, the property is classifi ed as an investment property, meaning a property under regular and active management.
1) Development property – Properties in which a conversion or extension is in progress or planned that has a signifi cant 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 development work.
Hammarby Sjöstad 31 December 2012
| Property name | Area | Street address | Construction year Leasehold |
Offices, sqm | Retail, sqm | Industrial/ | warehouse, sqm | Residential, sqm Hotels, sqm |
Parking/ | Total lettable other, sqm |
Assessed value, area, sqm SEK '000 |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| HAMMARBY SJÖSTAD | ||||||||||||
| 1 Fartygstrafi ken 2 | Hammarby Sjöstad |
Hammarby Allé 91–95 | 1955 | 6,808 | 1,768 | 156 | 0 | 0 | 1 | 8,733 101,000 | ||
| 2 Godsfi nkan 1 | Hammarby Sjöstad |
Heliosg 22–26 | x | 1990 | 7,744 | 0 | 75 | 0 | 0 | 24 | 7,843 | 71,959 |
| 3 Hammarby Gård 7 | Hammarby Sjöstad |
Hammarby Allé 21, 25, Hammarby Kajv 2–8, 12–18 |
1937 | 8,403 | 586 | 296 | 0 | 0 | 1,230 | 10,515 162,200 | ||
| 4 Korphoppet 1 | Hammarby Sjöstad |
Hammarby Fabriksv 41–43, Virkesv 24–26 |
1949 | 4,757 | 754 | 7,840 | 0 | 0 | 750 | 14,101 | 35,372 | |
| 5 Korphoppet 51) | Hammarby Sjöstad |
Hammarby Fabriksv 37–39, Virkesv 20 |
x | 1968 | 0 | 1,127 | 1,771 | 0 | 0 | 65 | 2,963 | 7,433 |
| 6 Korphoppet 6 | Hammarby Sjöstad |
Hammarby Fabriksv 33 | x | 1988 | 0 | 428 | 4,254 | 0 | 0 | 0 | 4,682 | 28,800 |
| 7 Luma 1 | Hammarby Sjöstad |
Ljusslingan 1–36, Glödlampsgränd 1–6, Lumaparksv 2–21, Kölnag 3 |
1930 | 30,405 | 1,359 | 2,335 | 691 | 0 | 3,848 | 38,638 207,425 | ||
| 8 Luma 32) | Hammarby Sjöstad |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||
| 9 Skeppshandeln 12) | Hammarby Sjöstad |
0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||
| 10 Trikåfabriken 4 | Hammarby Sjöstad |
Hammarby Fabriksv 25, Virkesv 8–10 |
1991 | 5,395 | 3,464 | 763 | 0 | 0 | 976 | 10,598 | 80,800 | |
| 11 Trikåfabriken 8 | Hammarby Sjöstad |
Hammarby Fabriksv 29, Virkesv 12, Heliosg 1–3 |
1930 | 10,068 | 692 | 4,219 | 0 | 0 | 12 | 14,991 | 60,400 | |
| 12 Trikåfabriken 9 | Hammarby Sjöstad |
Hammarby Fabriksv 19–21, Virkesv 2–4 |
1928 | 9,705 | 267 | 1,623 | 0 | 0 | 816 | 12,411 | 43,249 | |
| 13 Trikåfabriken 121) | Hammarby Sjöstad |
Hammarby Fabriksv 27 | 1942 | 742 | 0 | 201 | 0 | 0 | 205 | 1,148 | 4,355 | |
| TOTAL HAMMARBY SJÖSTAD | 84,027 | 10,445 | 23,532 | 691 | 0 | 7,927 | 126,622 802,993 |
The list of properties contains all properties owned by Fabege at 31 December 2012.
Unless otherwise stated, the property is classifi ed as an investment property, meaning a property under regular and active management.
1) Development property – Properties in which a conversion or extension is in progress or planned that has a signifi cant 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 development work.
Other 31 December 2012
| Property name | Area | Street address | Leasehold | Construction year Offices, sqm |
Retail, sqm | Industrial/ | warehouse, sqm | Residential, sqm Hotels, sqm |
Parking/ | Total lettable other, sqm area, sqm |
Assessed value, SEK '000 |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| OTHER, NORTH STOCKHOLM | ||||||||||||
| Hammarby Smedby 1:4642) | Upplands Väsby | Johanneslundsv 3–5 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Hammarby Smedby 1:4722) | Upplands Väsby | Johanneslundsv 3–5 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 5,600 | ||
| Masugnen 7 | Bromma | Karlsbodav 18–20 | 1991 | 10,813 | 0 | 98 | 0 | 0 | 516 | 11,427 | 36,400 | |
| Tekniken 12) | Sollentuna | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 6,600 | |||
| Ulvsunda 1:1 | Bromma | Flygplansinfarten 27 | x | 2004 | 0 | 0 | 1,241 | 0 | 0 | 0 | 1,241 | 0 |
| Vallentuna Rickeby 1:3272) | Vallentuna | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 293 | |||
| TOTAL NORTH STOCKHOLM | 10,813 | 0 | 1,339 | 0 | 0 | 516 | 12,668 | 48,893 | ||||
| OTHER, SOUTH STOCKHOLM | ||||||||||||
| Pelaren 12) | Globen | Pastellv 2–6 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4,208 | ||
| Söderbymalm 3:4051) | Haninge | Nynäsv 65, Stores Gränd 20–22 | 1972 | 9,240 | 1,386 | 2,351 | 0 | 0 | 40 | 13,017 | 60,500 | |
| TOTAL SOUTH STOCKHOLM | 9,240 | 1,386 | 2,351 | 0 | 0 | 40 | 13,017 | 64,708 | ||||
| TOTAL OTHER | 20,053 | 1,386 | 3,690 | 0 | 0 | 556 | 25,685 | 113,601 |
The list of properties contains all properties owned by Fabege at 31 December 2012.
Unless otherwise stated, the property is classifi ed as an investment property, meaning a property under regular and active management.
1) Development property – Properties in which a conversion or extension is in progress or planned that has a signifi cant 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 development work.
All business activities are associated with a certain measure of risk, which also generates opportunities. Fabege has limited risk exposure and, to the extent possible, this is controlled when choosing investment objects, tenants, lease terms, financing terms and business partners.
1 INVESTMENT-PROPERTY PORTFOLIO Cash fl ow is primarily aff ected by changes in rental income and property expenses.
Employment fi gures and developments in the Stockholm offi ce market are of considerable signifi cance for Fabege's operations. Increased demand leads to lower vacancies and rising rents. Vacancies and rents are also impacted by new production.
Th e full impact of changes in rents is not felt in any single year. New leases normally have a term of three to fi ve years, are subject to nine months' notice and have an index clause linked to infl ation. Normally, about 20 per cent of the lease portfolio is renegotiated each year. Th e company's lease portfolio is currently deemed to be in line with market levels.
Fabege works closely with its customers and is receptive to their changing needs. Th e risk of increased vacancies in the investment-property portfolio is deemed minor considering the portfolio's central locations and stable customers. Th e lease portfolio is spread among many diff erent sectors and companies of diff ering sizes. Th e largest tenants are all stable companies and account for a limited portion of the total number of tenants. Fabege's credit policy governs the checks and assessments that are made of the customers' ability to pay with the aim of limiting the credit risk. Th e tenants are highly solvent and rent losses are negligible. Th is is partly due to favourable credit ratings and partly due to excellent procedures that quickly identify late payers.
Fabege's portfolio of modern offi ce premises in central locations generates a stable cash fl ow from management operations. Th e premises of development properties are kept vacant during the development period and while this practice negatively impacts cash fl ow during the period, the development simultaneously leads to increased value.
Property expenses include running and maintenance costs, property tax, ground rent and expenses for administration and lettings. Regular running costs largely comprise tariff -based expenses such as heating, electricity and water. Fabege is pursuing a successful eff ort to reduce its consumption of heating, electricity and water, with a target of achieving 20 per cent lower consumption over a fi ve-year period beginning in 2009. Th e company
also conducts regular lease negotiations and procurements aimed at reducing costs. A large portion of property expenses is paid for by tenants, thus reducing the company's exposure. Th e standard of the investment-property portfolio is deemed to be high.
In 2012, the rental market in Stockholm was strong and the key fi gures with the greatest impact on cash fl ow in the investment-property portfolio improved. Th e occupancy rate in the overall portfolio, including project properties, increased to 92 per cent (90). In the investment-property portfolio, the occupancy rate rose to
93 per cent (92). Th e rents in renegotiated leases increased 7 per cent on average. Net lettings amounted to SEK 141m, which will have a positive impact on rental income and key fi gures in 2013 and 2014. Customer bad debts totalled SEK 4m, corresponding to 0.2 per cent of rental income.
In 2012, the share of cancellable leases was 24 per cent, corresponding to annual rent of SEK 442m, of which SEK 294m was extended by existing tenants. At yearend, Fabege's average remaining term for commercial leases was 3.7 years. In 2013, only 19 per cent of leases, corresponding to a rental value of SEK 395m, fall due for either cancellation or re-negotiation. During 2013, the occupancy rate in the portfolio will increase through a positive net of occupancies/vacancies. With the exception of the previously announced termination of Praktikertjänst's lease, none of the ten largest customers are due for renegotiation or relocation in 2013.
In terms of costs, work continued on reducing energy consumption, which is the largest cost item. During 2012, energy consumption declined 4 per cent. Th e aim for 2013 is an additional 4 per cent reduction. Running, repair and maintenance costs per sqm were an average of SEK 263 (260).
Risks in the project portfolio primarily pertain to risks related to time schedules and the cost level in the procurement process for construction services. Project properties have a high occupancy rate, which reduces the risk of vacancies and the loss of cash fl ow when the properties are completed and transferred to property management.
Fabege annually conducts project-procurement processes involving signifi cant amounts. Fabege's Project Managers, who possess extensive experience and expertise, are responsible for these procurement processes, which are conducted with the support of framework programmes, framework agreements and agreement templates.
See the compiled sensitivity analysis on page 41.
In 2012, Fabege conducted fi ve major new builds and conversion projects, of which four were completed and transferred to the investment-property portfolio. All projects were within budget and completed on schedule. Two major new builds and conversion projects were started. Th e projects are expected to generate a direct yield of approximately 7–9 per cent on the total capital invested. Fabege's objective is for project investments to generate value growth of at least 20 per cent on invested capital. In 2012, Fabege invested SEK 2,034m in the project portfolio, which generated value growth of SEK 784m, corresponding to a yield of 39 per cent. Th e income potential of the three remaining major projects totals about SEK 165m, of which SEK 145m is backed by leases. Th e occupancy rate in the project portfolio was 87 per cent at year-end.
Th e market value of the project properties was SEK 2.8bn at 31 December 2012.
Properties are recognised at fair value and changes in value are recognised in profi t or loss. Th e property value is determined according to generally accepted methods. About 25 per cent of Fabege's portfolio has its value appraised externally at the end of each quarter. Th e value of the remaining properties is appraised internally based on the external valuations. Accordingly, the entire property portfolio is subject to external valuation at least once a year. Changes in rents, vacancies and yield requirements in the market have an impact on the value of the properties. Th e value of the property portfolio results in part from how Fabege develops its property portfolio through its leasing and customer structure and through property improvements, and in part from external factors that impact demand. Stable customers and modern premises in prime locations provide a strong foundation for maintaining property values, even during economic downturns. Th e continued advancement of project and development properties creates value growth in the portfolio. Th e market price is impacted by expected future net operating income and the potential buyer's yield requirements, as well as access to and the terms and conditions of fi nancing.
In 2012, the value of the property portfolio increased. A higher occupancy rate and improved cash fl ows, as well as declining direct yield requirements positively impacted the value trend of the properties. Unrealised value changes in the investment-property portfolio totalled SEK 625m. In parallel, the project portfolio contributed SEK 784m to value growth. Th e average yield requirement in the portfolio was 5.7 per cent (5.7) at year-end. Th e combined market value was SEK 31.6bn at year-end, corresponding to about SEK 28,000 per sqm. Th e portfolio includes wholly or jointly owned development rights (offi ces and housing) for about 525,000 sqm with an average carrying amount of between SEK 3,000 and 5,000 per sqm. In 2012, the direct yield on the properties was 4.2 per cent and the total yield was 9.4 per cent.
Property ownership is highly capital intensive and interest expenses comprise Fabege's single largest cost item.
Th e interest rate risk refers to the risk that changes in market interest rates will impact Fabege's borrowing costs. Th e fi xing of interest rates complies with the company's fi nance policy on the basis of the estimated interest rate trend, cash fl ow and capital structure. Fabege employs fi nancial derivatives, mainly in the form of interest rate swaps, to limit the interest rate risk and, to enable fl exibility, in infl uencing the loan portfolio's average fi xed-rate period.
Derivative instruments are recognised at fair value. If agreed interest rates deviate from the market interest rate, a theoretical surplus or defi cit value arises which is recognised in profi t or loss.
Th e property sector is capital intensive and requires a functioning capital market. Th e liquidity risk refers to the borrowing requirement that can be covered by refi nancing or new borrowing in stretched market conditions. Fabege aims to strike a balance between short and long-term borrowing divided among a number of sources of funding. Long-term credit facilities, with fi xed terms and conditions, and revolving credit facilities have been signed with lenders to reduce liquidity risk. Re-negotiations are always initiated well ahead of schedule. Any issues that may arise are identifi ed at an early stage through Fabege's long-term relations built on mutual trust with its fi nanciers.
At year-end, the fi xed-rate period of the loan portfolio was about 3.4 years. Th e average maturity period at year-end was 5.1 years and available unutilised credit facilities amounted to SEK 4.0bn. In 2013, SEK 7.8bn of Fabege's long-term facilities will be re-negotiated. Also refer to the Financing section on page 42. In 2012, Fabege increased the portion of its funding in the bond market.
Deferred tax and tax-loss carryforwards Fabege recognises deferred tax liabilities resulting from the diff erence between market value and the taxable residual value of properties. However, sales are normally conducted by packaging property into a limited liability company, thus resulting in a lower eff ective tax rate.
Fabege is pursuing several tax cases in the Administrative Court and the Administrative Court of Appeal related to property sales through limited partnerships. Th e combined year-end exposure amounted to SEK 2.7bn, for which a provision of SEK 1.9bn has been posted. On-going tax cases are described in further detail in the Directors' Report on page 60.
Under the Swedish Environmental Code, commercial businesses are responsible for any contamination or other environmental damages, and for the remediation thereof. Th e Swedish Environmental Code also stipulates that even if a commercial business is unable to pay for the remediation of a property, the party who owns the property is responsible. Accordingly, Fabege could be subject to such remediation requirements. However, Fabege deems this risk to be minor since its property portfolio primarily comprises commercial offi ce premises.
Fabege continuously investigates and identifi es potential environmental risks in its property portfolio. Action plans are prepared for such risks arising.
| FACTOR | CHANGE AND EFFECT | FABEGE'S ASSESSMENT |
|---|---|---|
| INVESTMENT-PROPERTY PORTFOLIO 1 |
• A 1-percentage point change in the occupancy rate generates an earnings eff ect of SEK 22.5m. • A 1-per cent change in the rental value generates an earnings eff ect of SEK 22.6m. • A 1-per cent change in property expenses generates an earnings eff ect of SEK 6.1m. |
With modern properties in prime locations there is a low risk of increased vacancies. Completed projects and positive net let tings will contribute to stronger cash fl ow and an improved occupancy rate in 2013. |
| PROJECT PORTFOLIO 2 |
• A 1-per cent change in the cost level of project investments generates an earnings eff ect of SEK 15m. • A 1-percentage point change in the return on capital invested generates an earnings eff ect of SEK 15m. |
Cost frames and schedules will be adhered to in the major projects. Fabege does not envisage any major risk of increasing con struction costs. Th e high occupancy rate in the projects means limited risk. |
| PROPERTY VALUES 3 |
• A 1-per cent change in the property value generates an earnings eff ect of SEK 316m, excluding deferred taxes, and SEK 247m including deferred taxes. • A 1-per cent change in the property value will result in a change in the equity/assets ratio of 0.4 per cent and of 0.6 per cent in the loan-to value ratio. • A change in rent per sqm of SEK 100 would theoretically generate a value change of about SEK 2.0bn. |
As a result of low initial values for project properties and development rights, sub stantial potential exists for creating value through project investments. Improved cash fl ows will contribute to stronger property values moving forward. Mean while, there is considerable uncertainty concerning the market's yield require ments. Fabege believes that property val ues in the company's submarkets will be stable in 2013. |
| FINANCING 4 |
• A 1-percentage point change in the market interest rate will generate an earnings eff ect of SEK 10m (refers to 2013). |
By interest-hedging about 80 per cent of the loan portfolio, interest-rate changes have a limited impact on Fabege's borrow ing costs. Fabege believes that its available facilities are suffi cient and that the exist ing agreements will be refi nanced. |
| OTHER 5 |
• If Fabege loses its tax cases, as described above, and is forced to pay the entire amount of the provision posted, its equity/assets ratio will remain at 34 per cent while the loan-to-value ratio will rise to 63 per cent. Fabege can man age this risk without contravening the cove nants in its loan agreement with banks and has the facilities available and the margins for managing any such payment. |
Th e ongoing processes in the Administra tive Court of Appeal are expected come to an end in the winter/spring of 2013. It is Fabege's assessment that a negative out come will not result in greater exposure than the provision already posted of SEK 1.9bn. |
Fabege's properties represent significant values. Accordingly, the loan-to-value ratio, the choice of capital structure and financing policy are of the utmost importance. Fabege's financing operations are governed by the company's financial policy, which is established by the Board of Directors. Long-term credit lines facilitate secure and flexible financial management and the fixed-rate period provides additional stability to cash flow.
Since Fabege aims to have a strong fi nancial position, the balance between shareholders' equity and borrowed capital is a key issue. Th e company's objective is to achieve an equity/assets ratio of at least 30 per cent and an interest coverage ratio of at least 2.0.
Th e treasury department, which is a central unit in the Parent Company, is responsible for the Group's borrowing, liquidity management and fi nancial risk exposure.
Financing operations are governed by the company's fi nance policy, which is established by the Board of Directors. Th e primary task of fi nancial management is to ensure that the company always maintains stable, well-balanced and cost-effi cient funding. Th e fi xed-rate period must take into account circumstances at any given time. Potential currency exposures must be minimised. Th e policy also states the counterparties that the company is permitted to deploy while governing the authority and delegation of responsibility for the organisation.
Fabege's supply of capital largely derives from three sources: shareholders' equity, interest-bearing liabilities and other liabilities.
At year-end, shareholders' equity amounted to slightly more than SEK 11bn, which, in relation to total assets of about SEK 34bn, corresponded to an
equity/assets ratio of 34 per cent. Th is far exceeds the company's target of 30 per cent.
Access to long-term and stable fi nancing is crucial to the pursuit of a sustainable business. Fabege values long-term relations based on mutual trust with its creditors. Th e company has decided to sign long credit agreements with some of the largest banks in the Nordic region. Th e largest lenders are Swedbank, Nordea, Handelsbanken, SEB, Nykredit, and Realkredit Danmark. Th e credit agreements enable the company to borrow funds as needed within a predetermined framework, and to govern the terms in the form of, for example, the margins that are to apply in the coming years. In a property company, liquidity varies signifi cantly over a year, since rent payments are made quarterly while running costs are relatively evenly allocated over time. Because the type of revolving credit facility primarily used by Fabege can be used as needed, it is extremely well adapted to our operations and enables the avoidance of surplus liquidity. During the year, a borrowing agreement totalling SEK 1.5bn was extended. New facilities of SEK 1.8bn
were raised, of which SEK 0.8bn through the bond market via the co-owned company Svensk Fastighetsfi nansiering AB (SFF). At 31 December, unutilised credit facilities amounted to SEK 4.0bn. Fabege's loan agreements at 31 December 2012 had an average remaining term of 5.1 years and are renegotiated continuously well in advance of maturity. During 2013, loan agreements of SEK 7.8bn will be renegotiated.
As a supplement to traditional bank fi nancing, Fabege is active in the Swedish commercial paper market, with commercial paper worth SEK 5bn. Th e company guarantees access to unutilised credit facilities to cover all commercial paper outstanding at any given time. At yearend, SEK 2.7bn of the programme had been utilised.
In December 2011, Fabege issued a bond programme with a total framework of SEK 5bn through the co-owned SFF as part of eff orts to further diversify sources of funding and be well placed with regard to any reduced possibilities for obtaining
Financing, 31 December 2012
Unutilised facilities SEK 4.0bn Bank financing SEK 14.3bn Bond loans SEK 1.0bn Commercial paper SEK 2.7bn
Fabege endeavours to achieve a strong fi nancial position combined with a healthy balance between equity and borrowed capital. Access to long-term, stable fi nancing is of vital importance to the operations. At the end of 2012, bank fi nancing accounted for 65 per cent of borrowing. Fabege had unutilised credit facilities of SEK 4bn. The average loan maturity was 5.1 years.
bank fi nancing at a reasonable cost. Th rough the programme, Fabege borrows SEK 1bn in the capital market. Th e bonds are secured by collateral in property mortgage deeds. SFF is jointly owned by Fabege, Wihlborgs and Peab. Fabege owns 33.3 per cent of the company.
In December 2012, Fabege issued, through the co-owned company Visio Exploatering AB, property bonds in a total amount of SEK 1.3bn via Svensk FastighetsFinansiering II AB (SFF II). Visio Exploatering AB is co-owned by Fabege and Peab and has the task of further developing Arenastaden.
Other liabilities mainly comprise noninterest-bearing liabilities, such as accounts payable, deferred tax liabilities and prepaid expenses and accrued income.
Fabege's obligations concerning covenants are similar in the various credit agreements and stipulate an equity/assets ratio of at least 25 per cent and an interest coverage ratio of at least 1.5. At property level, the loan-to-value ratio varies between 60 and 75 per cent, depending on the type of property and fi nancing.
are important parameters in Fabege's fi nance operation.
Fabege's borrowing is largely guaranteed by property mortgage deeds. Shares in property-owning subsidiaries are also deployed as collateral to a lesser extent. Some unsecured borrowing is also undertaken. Th e distribution of collateral is presented in the diagram to the right.
As part of eff orts to ensure a greater degree of stability in cash fl ow, Fabege increased the fi xed-rate period through additional swap agreements of SEK 2bn during the year. At 31 December 2012, 81 per cent of the portfolio was fi xed with an average fi xed-rate period of 3.4 years. Th e fi xed-rate period is set utilising interestrate swaps. Th e market value of these instruments is measured on an on-going basis and changes in value are recognised in profi t and loss. Th e change in value is of an accounting nature and has no impact on the cash fl ow. At the due date, the market value is always zero. Read more about interest-rate derivatives and the valuation thereof in Note 3 on page 75.
| Interest coverage ratio, | ||
|---|---|---|
| multiple | >2.0 | 2.3 |
| Loan-to-value ratio, % | <60 | 57 |
A high equity/assets ratio and low debt/equity ratio create security.
| 31 December 2012 | Credit agreements, SEKm |
Drawn, SEKm |
|---|---|---|
| Commercial paper | ||
| programme | 5,000 | 2,740 |
| < 1 year | 8,348 | 3,910 |
| 1–2 years | 710 | 710 |
| 2–3 years | 5,805 | 4,022 |
| 3–4 years | 2,041 | 2,041 |
| 4–5 years | 110 | 110 |
| > 5 years | 4,976 | 4,502 |
| Total | 26,990 | 18,035 |
Unutilised credit facilities totalled SEK 3,955m and the average maturity was 5.1 years.
Most borrowing is secured by mortgage deeds to properties.
| 31 December 2012 | Average | Share, % |
||
|---|---|---|---|---|
| Amount, SEKm |
interest rate, % |
|||
| < 1 year | 5,129 | 6.161) | 28 | |
| 1–2 years | 1,206 | 2.48 | 7 | |
| 2–3 years | 0 | 0.00 | 0 | |
| 3–4 years | 2,100 | 2.53 | 12 | |
| 4–5 years | 6,100 | 3.26 | 34 | |
| > 5 years | 3,500 | 2.48 | 19 | |
| Total | 18,035 | 3.80 | 100 |
1) The average interest rate for the < 1 year period includes the margin for the entire debt portfolio because the company's fi xed-rate period is established using interest rate swaps, which are traded without margins.
Pro-active environmental work is a success factor for Fabege. Fabege's principal environmental measures are linked directly to the company's core business.
Carbon dioxide emissions
since 2002
–90%
It was decided that as of 2013 new builds of offi ce buildings are to confi rm to the requirements of the BREEAM environmental system. ne
A more effi cient purchasing process led to enhanced control of suppliers in terms of sustainability.
Fabege was named winner of the Joint Research Centre's annual GreenBuilding Award in the new buildings category for Uarda 5 by the Director-General of the European Commission.
56 Green Leases were signed.
Heating consumption was
below the industry average 50%
95%
renewable energy
Th e company works proactively, together with our customers, to promote sustainable urban development. Two areas in which we have major opportunities to make a signifi cant impact are without doubt the energy consumption of existing properties and innovative solutions in projects. I am proud of our achievements in these areas. Th rough working with structured optimisation of operations over a ten-year period, we have succeeded in reducing energy consumption per sqm by approximately 4.5 per cent per year. Th is has been achieved in parallel with an increase in the use of cooling, which is highly energy intensive. I can still see major opportunities for us to become even more energy effi cient by, for example, encouraging behavioural changes and investments in new technology.
A key driving force behind these major improvements comprises the environmental gains that so clearly go hand-in-hand with cost savings for both Fabege and our customers. Th is also applies to Green Leases which, in partnership with our tenants, we use as a tool to place the focus on and to collaborate around environmental issues.
As part of furnishing our properties with a clear environmental profi le, we use various environmental classifi cation systems and certifi cation systems. For example, in 2012, we decided that from 2013, all new builds of offi ce buildings are to be constructed so that they conform to the requirements of the BREEAM environmental system, in parallel, the minimum requirements for major redevelopments are to comply with the GreenBuilding level and the Silver level of the Sweden Green Building Council. I would also like to mention that Vattenfall's new head offi ce in Arenastaden won several accolades for energy consumption.
During the year, we continued to develop our purchasing work. Th is resulted in a more effi cient procedure and enhanced control of suppliers. As part of the on-going eff orts to raise supply quality and to ensure that suppliers meet Fabege's new, raised requirements, about 20 suppliers were subjected to a detailed examination from a sustainability perspective. Th e examination showed that these suppliers are working actively with sustainability issues.
Our relationships with customers, employees, suppliers, contractors and the public must be characterised by responsibility and good business ethics. In 2011, as part of this strategy, Fabege joined the UN initiative Global Compact, whose policies continue to serve as guidelines for our behaviour with regard to human rights, labour rights, the environment and anti-corruption.
I am proud of the commitment to sustainability issues that exists in our organisation.
CHRISTIAN HERMELIN Chief Executive Officer
Fabege pursues goal-oriented, systematic and preventive environmental work. The clearest examples are the successful energy-efficiency enhancements that combine positive environmental effects with cost-savings for both tenants and Fabege.
Fabege's environmental work has generated extremely positive results. Since 2002, carbon dioxide emissions have been reduced by more than 90 per cent, from about 40,000 tonnes to about 3,300 tonnes (4,000). Th is was achieved through systematic energy optimisation, conversions from oil to district heating and conversions from proprietary cooling machines to district cooling. Th e transition to Green electricity and changes in the property portfolio have also contributed to this development. During the same period, energy consumption was reduced by more than 40 per cent.
Th e substantial decrease in energy consumption was achieved despite increased use of air conditioning and process cooling in offi ce premises in the past few years. Th e improvement was attributable to increased solar heat gain co-effi cients (SHGC) in
pace with the greater use of glass facades as well as increased tenant requirements regarding comfort. Fabege works together with its tenants to meet user needs, comfort requirements, architecture and a favourable energy performance.
During the year, Fabege reduced its heating consumption by an additional approximately 4 (11) per cent and is thus currently about 50 per cent below the average reported by the Swedish Energy Agency for the Stockholm County climate zone. Fabege's systematic eff orts mean that the company has already reached the EU's energy-effi ciency targets for heat: a decrease of 50 per cent by 2050.
In 2012, work to reduce total energy consumption continued as part of the eff orts to attain a 20 per cent decrease from 2009 to 2014. In line with the aim of reducing energy consumption, tenant dialogues were intensifi ed without making any compromises on comfort or wellbeing. One example was the advice provided concerning how the placement of furniture aff ects the fl ow of heat and cooling in a property and, accordingly, the perception of the indoor climate. During the year, the competence of Fabege's property-management organisation was raised in the area of obtaining a sustainable indoor climate.
Guidelines for environmental work are included in Fabege's environmental policy. For several years, procedures, inspections and test results have been gathered in a database that enables self-controls.
Fabege pursues the long-term development of attractive areas and city districts. Th e company's development projects are aimed at producing vibrant areas featuring a favourable mix of offi ces, stores and residential units, as well as excellent transport links and consideration for the environment. Fabege conducts its development projects in close cooperation with municipalities and other stakeholders. Th e company also participates in several networks for which the common aim is to reduce the environmental and climate impact caused by properties and city districts. Examples of these networks include BELOK, the Sweden Green Building Council and the Climate Pact. Fabege is also a member of the sector-specifi c Property Owners' reference group for green
To reduce energy consumption as much as possible is an important environmental goal for Fabege. Energy effi ciency offers the best opportunity to achieve this objective.
Fabege's aims are: A minimum reduction of 20 per cent by 31 December 2014, based on energy consumption levels in 2009, with unchanged indoor climate conditions. This amounts to an annual reduction of about 4 per cent. From 2002 to 2009, energy consumption was reduced by about 5 per cent annually. From 2010 to 2012, the annual reduction was 4 per cent. This means that Fabege is meeting the target in 2014. This positive trend is attributable to intensive work focused on operational optimisation and investments in energy-effi cient technology.
leases. Th ose environmental classifi cation systems that Fabege applies in its property development activities contribute to creating sustainable urban development.
Opportunities for tenants to infl uence personal travel requirements represent another key element. In addition to the close proximity of properties to public transport services, Fabege off ers pool bicycles to all tenants in the Solna Business Park and, in Arenastaden, electrical outlets for electric vehicles have been installed by the tenant Vattenfall. Fabege works continuously to reduce the environmental impact of transport, and all of the company's service vehicles are ecocars. In order to maintain the favourable trend, Fabege engages in active dialogue with various parties that work to promote sustainable travel.
Demand is rising for sustainable properties. When acquiring properties, Fabege has a routine of analysing the property's energy consumption and environmental impact. A building's energy performance and improvement potential are becoming increasingly important in assessing its market value.
For new builds and major refurbishments, Fabege off ers various systems of environmental classifi cation and certifi cation. For a number of years, classifi cation in accordance with the SGBC principles has been the minimum level. It was decided in 2012 that as of 2013 new builds of offi ce buildings are to be constructed so that they also conform to the requirements of the BREEAM environmental classifi cation system.
Council is a certifi cation system based on regulations from the Swedish construction industry and public agencies, as well as Swedish construction practices. Certifi cation provides a guarantee of a building's critical qualities in terms of energy, the indoor environment and materials.
i nitiative to promote reduced energy consumption. To gain certifi cation, the building must use 25 per cent less energy than previously, or compared with the requirements of the National Board of Housing, Building and Planning.
Method (BREEAM) is an environmental classifi cation system that originated in the UK. The system encompasses project management, the building's energy use, indoor climate conditions, water consumption and waste management, as well as land use and the building's impact on the surrounding area.
In April 2013, Apoteket's head offi ce will move into the Farao 8 property in Arenastaden. The property was acquired by Fabege at the end of 2011. In 2012, a redevelopment was completed that comprised a facade renovation and minor adaptations of the general layout, but which primarily focused on energy effi ciency. This included the installation of new ventilation and new control systems for heating/cooling. The aim is to halve energy consumption.
Heating in Fabege premises
Over time, Fabege's systematic efforts to optimise running costs have reduced energy use in our properties drastically. Fabege's heating consumption in 2012 averaged 66 kWh/sqm LOA (70) and 63 kWh/sqm Atemp temperature corrected (66), 50 per cent lower than the industry average. (SCB value for 2012 as yet unavailable.)
CO2 emissions have been reduced drastically as a result of energy optimisation, conversion from oil to district heating, the choice of renewable electricity and a changed property portfolio.
| Consumption statistics, total | 2012 | ||
|---|---|---|---|
| Total energy consumption, MWh | 150,874 | ||
| Purchased energy, MWh1) | 146,171 | ||
| Of which | |||
| District heating, uncorrected | 69,800 | ||
| Cooling | 21,348 | ||
| Electricity | 55,023 | ||
| Water consumption, cbm | 533,316 | ||
| Renewable energy, MWh (93%) | 140,699 | ||
| CO2 emissions, tonnes (heating, electricity, cooling) |
3,317 | ||
| District heating consumption |
63 kWh/sqm Atemp2) Temperature corrected |
||
| 62 kWh/sqm Atemp2) Uncorrected |
|||
| 66 kWh/sqm LOA3) Temperature corrected |
1) Figures based on identical portfolio
2012:76 properties, 1,055,025 sqm LOA. 2) Atemp district heating, identical portfolio
2012: 74 properties, 1,117,743 sqm. 3) LOA district heating, identical portfolio
2012: 74 properties, 1,040,598 sqm.
During the year, Fabege developed three major projects with SGBC as the system: the properties Uarda 1 (Gold), Uarda 5 (Gold) and Nöten 4 (Silver). Uarda 5 was completed during the year and the tenant Vattenfall moved in. To date, Fabege has classified five properties in accordance with GreenBuilding, the latest of which is Uarda 5. GreenBuilding focuses on energy efficiency and the certificate means that the building uses a minimum of 25 per cent less energy than required according to the Swedish National Board of Housing, Building and Planning's regulations.
The property management industry has an important mission of supporting the sustainability efforts of its tenants. Fabege's energy experts offer energy-saving information and all Fabege tenants are free to choose Green Electricity Contracts and Green Leases, which offer the customers renewable electricity at a competitive price, as well as energy advisory services intended to provide lower electricity costs. Fabege has noted increasing demand for Green Leases and intends to meet this need. In 2012, 56 Green Leases were signed.
Environmentally certified hydroelectric power from Vattenfall's Nordic plants accounts for all electricity supplied to Fabege's properties1).
Norrenergi supplies "Good Environmental Choice" district heating and district cooling to the properties in Solna and Sundbyberg.
In projects and developments, Fabege's overriding environmental programme is integrated into Fabege's framework programme to address factors such as the technical process, selection of material, waste management and the construction method. The aim is to express Fabege's environmental policy through environmental control of the building process. When a building is redeveloped or renovated, a demolition plan is drawn up. In all projects, a plan for the handling of waste products is prepared together with the building and waste management contractors. In new builds and
1) This does not apply to vacated premises (vacant premises), which are automatically supplied with electricity by Fortum. redevelopment projects, requirements are in place that only permit building materials and products with limited environmental impact to be used.
Fabege offers effective waste management in its properties. In connection with acquisitions or tenant adaptations, Fabege explores the existence of space for sorting
Fabege was named the winner of the Joint Research Centre's annual GreenBuilding Award in the new buildings category for Uarda 5 by the Director-General of the European Commission in spring 2012. Fabege was very pleased and proud to accept the award and considers it external recognition of our ability to deliver on our ambitions and promises.
The Sweden Green Building Awards are given to green construction projects in the various certification systems: SGBC, Green Building, BREEAM and LEED. For the first time, the prize was given for the Green Building new buildings category and was awarded to Fabege for Uarda 5.
Uarda 5 is a building that through the use of innovative and well-conceived building materials, construction methods and operating solutions has succeeded in reducing energy consumption to 64 per cent below the level specified in the National Board of Housing, Building and Planning's building regulations. One example of our environmental and energy adaptations in Uarda 5 is a perimeter climate system that satisfies the criteria for passive buildings, which includes: sedum roofs, electricitygenerating solar cells, solar water-heating panels, free cooling and energy-efficient lifts and light sources.
at source in order to optimise waste management in relation to fl ows of materials, transportation, fl oor plans and other factors. An average of fi ve types of waste are sorted for recycling in Fabege's properties and the company strives to recycle and recover when and wherever possible. For the past four years, Fabege has worked with a waste management contractor that maintains direct contact with the tenants for more customised tenant service.
Transport needs have also been reduced by working with only a few contractors. Th is work has resulted in reduced volumes of waste, a reduction in carbon dioxide emissions and reduced costs.
Responsibility for Fabege's environmental policy rests with the CEO and Group management. Th e operational activities
are supported by environment and energy experts. Th e Environment & Energy Department works as a resource and skills pool for the company's Property Management, Projects, Business Development and Communications departments. Th e department leads and participates in training and investigations, drives competence development and contributes with energy adaptations for property management and major projects.
Employee competency and commitment are crucial in building long-term relations with satisfied customers. Fabege endeavours to make all employees feel like they are participating in the company's development.
Fabege aims to combine high technical competency with service-mindedness, thereby creating favourable customers relations. Such relations are created primarily in the tenants' daily contact with property engineers and others involved in running the property. Consequently, Fabege attaches considerable importance to making all employees feel they are participating in creating Fabege's customer off ering and have a role to play in customer relations. During the year, all employees actively worked with customer understanding and customer service. Th ese eff orts is continuing during 2013.
With its fl at organisational structure and short decision-making paths, Fabege has empowered its employees to act quickly and independently. Th e company is characterised by an entrepreneurial spirit that encourages personal initiative and innovative thinking. Fabege off ers the same resources as major corporations, but maintains the small company's close proximity and personal relations to its customers.
Fabege aims to attract, develop and retain talented employees. Our employees should be able to develop and grow professionally through new or diversifi ed work areas and assignments. Working in project groups creates opportunities for both knowledge exchange and development.
Internal recruitment is one way of stimulating skills development and the progress of employees and the organisation. Fabege's employees have considerable opportunities to transfer among various functions within the organisation. Individual job performance and interests determine the development of each employee.
Individual career development plans form the basis of every employee's professional development. In conjunction with performance appraisal reviews, employees and their manager jointly defi ne a set of personal targets and monitor previous plans. Operational goals and the employee's role form the basis for setting objectives.
Personal initiative and personal responsibility characterise Fabege employees, who are expected to develop their potential for further development, thereby making an optimal contribution to operations. Fabege endeavours to make all employees feel they have the opportunity to realise a concept.
To safeguard future recruitment requirements, Fabege is committed to building relations with students. During 2012, Fabege participated in labour market days and worked to strengthen the company's
brand as an attractive employer. Th e company continuously off ers traineeships and thesis projects to give young people an insight into working life and the property industry. Fabege is actively involved in the Swedish Property Sector's Market Council, a forward-looking initiative to raise awareness among today's youth of the property sector's potential. Among other projects, the Council is striving to develop a professional training curriculum for property engineers, since the market foresees a forthcoming shortage in this fi eld due to the large number of future retirements.
To create an attractive and inspiring workplace, Fabege encourages employees to engage in active and open dialogue. Leadership is crucial in defi ning how well Fabege manages to create this corporate culture.
Fabege regularly conducts an extensive survey to gauge how employees view the
Almost half of the Fabege's workforce took part in the 2012 Stockholm Triathlon Sprint, with many others attending to lend their support. This campaign started when an employee was diagnosed with cancer in the summer of 2011, which was followed by a long journey and battle to overcome the illness. When the much-longed-for medical opinion was received in spring 2012 – namely that all of the symptoms had been cured – the employee decided to challenge all Fabege employees to participate in the Stockholm Triathlon. Company Management decided to treat the employees to the starting fee and to donate an equal sum to the Swedish Cancer Society, making a grand total of SEK 30,000.
It is crucial for the company's future success to be able to attract and retain the right employees. Fabege aims to be the best employer for employees with the best competencies. The company's core values (SPEAK) should hallmark the working approach both internally and in relation to customers and other stakeholders.
Employees should work in an open environment that encourages commitment and initiative by means of defi ned targets, delegation of responsibility and performance rewards. Fabege is to focus on employee care, well-being and a safe work environment.
Read more about SPEAK on page 55.
Fabege provides a safe and healthy work environment. Th e company's occupational health and safety committee, which includes managers and employees from various occupational areas, is responsible for ensuring the continuous development of the work environment. Fabege works proactively on physical and mental well-being at work. Procedures are reviewed continuously, with documentation available for all employees.
SAFE WORK ENVIRONMENT
HEALTH, FITNESS AND BALANCE
being an attractive employer.
fi ve years aft er allocation.
PROFIT-SHARING
INCREASED PARTICIPATION THROUGH
Fabege runs a profi t-sharing scheme as part of eff orts to increase the employees' involvement in the business and underscore their signifi cance to the company's earnings. Allocations are made in the form of Fabege shares based on the company's profi tability and return on equity. Shares are tied up for
Over a number of years, Fabege has worked with target-oriented health and fi tness programmes, and encourages staff to exercise and stay fi t. In 2012, all employees were off ered the opportunity of exercising with colleagues during work hours. Fabege has a group health insurance policy, which ensures that all employees gain prompt access to professional care in case of illness. Off ering a sound balance between work and leisure is a key aspect in Fabege's aim of
company. Th e response rate in the latest survey was 99 per cent. Th e survey uses a method that measures how the prevailing working conditions aff ect employees in terms of a performance. Th e performance rating in 2012 was 3.9, an improvement compared with previous surveys. Th e performance rating for the industry as a whole was 3.4.
Fabege also has an innovation group with representatives from the various parts of the business who meet regularly to raise new ideas, questions and discuss future solutions.
Fabege seeks to promote an equal gender balance, and give women and men the same opportunities for recruitment to various positions in the company. An even balance is important to the supply of skills and for ensuring that Fabege is viewed as an attractive employer. Although the property industry has traditionally been viewed as male dominated, a growing number of women are currently being attracted to the industry. However, in certain job categories, such as property engineers, recruitment remains dominated by men. Fabege is working proactively with various industry organisations to increase interest in the industry generally. At year-end, one out of fi ve members of Fabege's Group Management team was a woman, or 20 per cent (20). Th e total proportion of women working at Fabege was 35 per cent (35).
| Total | Age | 20–29 | 30–39 | 40–49 | 50–59 | 60–69 | |
|---|---|---|---|---|---|---|---|
| Women | 35% | 11% | 40% | 27% | 16% | 6% | |
| Men | 65% | 7% | 31% | 38% | 20% | 4% | |
| Total | 100% | 8% | 34% | 34% | 19% | 5% |
No. of employees, average
At year-end 2012, Fabege had 129 (122) employees, of whom 63 (62) per cent were engaged in property management, 19 (17) per cent in business/project development and 18 (21) per cent in administration/management. All employees are covered by collective agreements.
Gender distribution in executive positions
During 2012, Fabege continued to develop its purchasing procedures. This resulted in a more efficient process and improved control from a sustainability viewpoint.
Th e purchasing process is based on high business ethics, consideration for human rights, entrepreneurship, competition, objectivity and equal treatment. Fabege's purchasing policy clarifi es its position for suppliers, its employees and other stakeholders. Fabege has adopted the UN Global Compact and has thus voluntarily pledged to comply with and promote its ten principles.
Fabege's supplier base comprises about 1,500 suppliers who are monitored by a credit rating company. Th e objective is to promptly identify any fi nancial divergences that could indirectly impact on delivery. To gain better supervision and superior control, a programme is in progress to reduce the supplier base to about 1,200 suppliers.
During 2012, 35 supplier agreements were renegotiated. Th e objective was to enhance quality control and ensure that suppliers meet Fabege's new, higher requirements in such areas as insurance
cover, environmental programmes and code of conduct. During recent years, the number of suppliers has been reduced from about 4,500 to approximately 1,500. As a result, Fabege has become a larger and more signifi cant customer among the remaining suppliers, while both control and cooperation have improved.
Quarterly quality surveys are conducted for selected suppliers as part of eff orts to check that the supply level matches agreements. Th e results are used in a dialogue with the supplier and represent a key feature in the creation of longterm relations.
An external inspector was commissioned to conduct a detailed analysis of 20 selected suppliers active in building, security, lift s, snow removal, land maintenance, roof cleaning, maintenance of premises and waste management. Th e analysis included quality plans, environmental policy, work environment and collective agreement affi liation, as well as health and safety. Th e aim was to contribute to the development of the supplier's sustainability programmes. Th e analysis confi rmed that the selected suppliers work actively with sustainability issues.
Construction sites are risk-fi lled environments and Fabege focuses keenly on health and safety issues in a bid to reduce workplace incidents and accidents. At all construction sites, applicable legislation must be complied with and safety procedures observed. Continuous audits are conducted during the course of all projects. Fabege procures construction contractors from suppliers that meet the company's stringent risk-management requirements. Cooperation with contractors is assessed regularly. No serious accidents occurred at construction sites during 2012.
By means of distinct requirements and better controls, Fabege spreads rings on the water in respect of the suppliers' sustainability efforts.
Fabege has a sustainability team that is to support business sustainability by identifying relevant sustainability issues and ensuring that Fabege manages them appropriately, as well as providing the direction for eff orts, facilitating the exchange of knowhow and raising awareness. Th e group includes representatives from Group Management, Communications, Environment, Purchasing, Business Administration, HR and Property Management.
During the year, Fabege decided to initiate a more focused dialogue with stakeholders, in addition to everyday activities. Th e dialogue was pursued during the autumn of 2012 with the objective of gaining better understanding of how Fabege's sustainability programmes are perceived by its stakeholders. Fabege can confi rm that the company's sustainability programmes are appreciated by those who are aware of them, but that information regarding Fabege's sustainability programmes does not reach all stakeholders. Th us, in addition to pursuing its daily systematic eff orts, Fabege aims to further develop its sustainability communications.
Business ethics is a signifi cant issue for construction and property industries. Fabege's core values and code of conduct represent the basis for all employee behaviour. In 2011, Fabege affi liated to the UN Global Compact and thus adopted a new Code of Conduct. Fabege has identifi ed Project Development as the company's business area that entails the greatest risk in relation to the company's undertaking to the UN Global Compact. As a result, Project Development has formulated more detailed and operationally appropriate guidelines for Fabege's Code of Conduct.
Fabege also has a fraud policy and a whistleblower function to facilitate the reporting of unethical behaviour or improprieties at the workplace. It is the responsibility of each department manager to anchor support for the Code of Conduct.
Discussions in the company have been pursued concerning business ethics issues. From this starting point, Fabege seeks to
gain a shared view of business ethics throughout the company.
Eff orts to establish sound business ethics rest with each individual employee. Fabege's Business Ethics Council supports everyday operations in this respect. Th e Council is charged with supervising work, monitoring relevant industry issues and providing guidance on specifi c issues. Th e Council comprises representatives from Business Development, Property Management, Projects, HR, Communications and Business Administration.
A programme has been in progress since 2011 to increase the organisation's knowledge of business ethics and anti-corruption. Examples of such activities have been that all employees have been invited to lectures and group seminars involving corruption legislation. Employees are also provided with on-going information regarding issues that are discussed in the Sustainability Group and Business Ethics Council.
Since 2011, the Chairman of the Fabege Board has been involved in a legal process concerning a project in which Fabege is one of the part owners. Th e initial proceedings resulted in an acquittal, but the prosecutor elected to appeal the verdict and the case will be tried during 2013.
Fabege's objective includes maintaining long-term relations with the company's stakeholders, providing a healthy work environment for employees and maintaining high business ethics in its operations. Th e Code of Conduct illuminates in Fabege's
During the year and in cooperation with Solna City, Fabege began to organise breakfast seminars for tenants in Solna Business Park. The initial seminars dealt with energy consumption and the recycling of food waste. Seminars on the traffi c situation in Solna and social responsibility are planned for the spring of 2013.
position in matters involving human rights, employment condition, environment, business ethics and communication.
A given ground for the Code of Conduct is that Fabege must respect all applicable laws and other regulations as well as generally accepted business practices, and comply with international standards on human rights, labour and the environment in accordance with the UN Global Compact's ten principles.
Th e Code of Conduct encompasses all Fabege employees regardless of position. Th e Board of Directors and Group Management have a special responsibility for ensuring application of the Code of Conduct. Its content is revised and monitored annually by Group Management. All managers with personnel responsibility are responsible for ensuring that the Code of Conduct is understood and complied with in their particular department/ sphere of responsibility. All employees have access to all of Fabege's policy documents via the company's intranet.
Th e Code of Conduct in its entirety is available on the fabege.se website.
Bee Urban – a project designed to stimulate pollination – provides 50,000 new tenants to Hammarby Sjöstad. They will live in a bee hive on the roof of the Luma property.
Did you know that about one-third of what we eat is pollinated by a honeybee? The demise of bees would mean that we would not have access to fruit or vegetables. Reports worldwide in recent years indicate that bees are increasingly diminishing or dying out to a greater extent than usual.
On 6 August, and with the assistance of Bee Urban, 50,000 new tenants moved into Luma. The aim is to contribute to biological diversity and the pollination effect, thereby helping to put in place a remedy for bee deaths.
Fabege is involved in various ways in the local communities in which the company has its properties, as well as in projects that change the conditions for people in more remote places.
In Hammarby Sjöstad, Fabege supports Retoy, a project focused on sustainability and human rights. Using various games, the project aims to teach children and parents about the Children's Convention, sustainable consumption and global ramifi cations. Retoy is active through the Play for Sustainability Collection Foundation, which also includes the cooperation of the Stockholm City Library, UNICEF and the Museum of Science and Technology.
Fabege has fi nanced the construction of a family house in the Cibitoke SOS Children's Village in Burundi, Africa, and the company continues to assume responsibility for current costs for the house and its family, which consists of an SOS mother and ten children ranging in age from 2 to 10. Overall, the village provides approximately 150 children with a new home, a new family, education and a chance for a dignifi ed life. It also includes schools and a medical clinic accessible to children living in the village and the surrounding area.
Clowns Without Borders off ers "laughter where it is most needed". Th e organisation, which is international and non-profi t making, aims to create hope and joy among exposed children. In the case of children in war-stricken areas, for instance, it is crucial to be able to laugh and forget everyday events. Using culture as a peace-making tool and by means of acrobatics and performances, the group works on strengthening the child's selfesteem and identity. During the past year, Fabege commenced cooperation with Clowns Without Borders.
Anthony Cooks, operational manager at Fabege, is a member of Clowns Without Borders and participated in the performance at Fabege's spring event.
We build trust and long-term customer relationships by arriving in time, doing our homework and providing the best possible service based on the customer's requirements.
We get to know customers, employees and suppliers through an open, attentive and personal approach.
We set and gain acceptance for clear goals and we actively follow them up.
We act with competence and look for win-win solutions.
We make sure we use all accessible resources, be it within knowledge, skills or tools.
We are effi cient, we prioritise fast decisions, provide prompt feedback and offer simple solutions.
We act with clarity, we make things happen, and make sure deadlines are met.
SPEAK Our core values
We show respect by being open and attentive to our colleagues, customers and suppliers.
We are more important than I. We are team players and strive to work together and ensure cohesion in the team.
We are humble and show courage by daring to ask for help and sharing our knowledge with others.
We see opportunities and do not get hindered by problems.
We are creative, encourage new ideas and dare to try unconventional solutions.
We show our commitment by ensuring that adopted decisions are implemented.
This is Fabege's second sustainability report according to the GRI guidelines for voluntary reporting of sustainability information. Fabege reports on its sustainability work annually and the sustainability report is included as part of Fabege's 2012 Annual Report, which pertains to the 2012 financial year. Fabege reports in accordance with level C, GRI version 3.0. The information in the sustainability report has been reviewed by a third party, who confirms that it fulfils GRI's information requirements for application level C.
has been selected on the basis of Fabege's most significant issues, given its operations and their impact relationship on the environment and society. Fabege's sustainability team, with representatives from various parts of the organisation, has identified the significant issues. In addition, views presented during the year's stakeholder dialogue have also been taken into account. Fabege aims for the sustainability report and the 2012 Annual Report to satisfy its stakeholders' information requirements and to provide a comprehensive overview of Fabege's economic, environmental and
social work and results.
Unless otherwise indicated, the information pertains to the entire Fabege Group. In other cases, clarifying comments are provided in the GRI Index for each indicator.
This Index includes the standard information that is mandatory for application level C, additional standard information that Fabege has decided to report on and all core indicators in GRI's protocol 3.0, as well as the indicators from the Construction and Real Estate Sector Supplement (CRESS) upon which Fabege reports.
The content of the sustainability report
to the index are available in the Sustainability report at www.fabege.se.
Reference www/GRI Index = complete GRI Index on Fabege's website.
| Fully reported | Not reported | ||
|---|---|---|---|
| -- | -- | ---------------- | -------------- |
Partly reported Not relevant to Fabege's operations
| Standard information/indicators | Reference | |
|---|---|---|
| 1 | STRATEGY AND ANALYSIS |
| 1.1 | Comments by the CEO | 45 | |
|---|---|---|---|
| 1.2 | Risks and opportunities | 2, 44–49, 52–53 | |
| 2 | ORGANISATION | ||
| 2.1 | Name of the organization | 60 | |
| 2.2 | Primary brands, products and/or services | Cover–1, 8–17 | |
| 2.3 | Operational structure | Cover, 53 | |
| 2.4 | Location of headquarters | 83 | |
| 2.5 | Countries where the Group operates | Cover, 1 | |
| 2.6 | Nature of ownership | 95–96 | |
| 2.6 | Markets served | Cover, 1 | |
| 2.8 | Scale of the reporting organization | Cover–1 | |
| 2.9 | Significant changes during the reporting period | www/GRI Index | |
| 2.10 | Awards received during the reporting period | 48 |
| Report profile | |||
|---|---|---|---|
| 3.1 | Reporting period | 56 | |
| 3.2 | Date of most recent report | www/GRI Index | |
| 3.3 | Reporting cycle | 56 | |
| 3.4 | Contact persons | 98 | |
| Scope and boundary of report | |||
| 3.5 | Process for defining report content | 56 | |
| 3.6 | Boundary of the report | 56 | |
| 3.7 | Specific limitations on the scope or boundary of the report |
56 | |
| 3.8 | Basis for reporting on joint ventures | 56, 72–73 | |
| 3.10 | Explanation of the reasons for and effect of any restatements of information |
www/GRI Index | |
| 3.11 | Significant changes in the scope, boundary or measurement methods compared with reports in prior years |
www/GRI Index | |
| Standard information/indicators | Reference | |
|---|---|---|
| Assurance | ||
| 3.12 | GRI Index | www/GRI Index |
| 3.13 | Policy and current practice regarding external verification |
56 |
| 4 | GOVERNANCE, COMMITMENTS AND STAKEHOLDER RELATIONSHIPS | |
| Governance | ||
| 4.1 | Governance structure of the organization | 83–91 |
| 4.2 | Chairman's position | 86, 90–91 |
| 4.3 | Number of independent, non-executive Board members |
86, 90–91 |
| 4.4 | Mechanisms for shareholders and employees to provide recommendations or directions to the Board or management |
50, 53, 81 |
| 4.8 | Internally prepared policies and guidelines | 46, 48, 51–53, 84 |
| 4.12 | Externally charters, principles or other initiatives | 45–48, 52–53 |
| 4.13 | Memberships in associations | 50 |
| Stakeholder engagement | ||
| 4.14 | List of stakeholder groups | 50–53, 56 |
| 4.15 | Basis for identification and selection of stakeholders 53, 56 | |
| 4.16 | Approach for the stakeholder dialogue | 50, 52–53, 56 |
| 4.17 | Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to these |
52–53 |
| ECONOMIC PERFORMANCE INDICATORS | |||
|---|---|---|---|
| EC1 | Direct economic value generated and distributed | 70 | |
| EC2 | Financial implications and other risks and opportunities due to climate change |
2, 45–49 | |
| EC3 | Coverage of the organization's defined-benefit plan obligations |
70, 76 | |
| EC4 | Significant financial assistance received from government |
www/GRI Index | |
| EC6 | Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation |
||
| EC7 | Procedures for local hiring of employees and senior management team |
www/GRI Index | |
| EC8 | Development and impact of infrastructure investments and services provided primarily for public benefit |
48 | |
| ENVIRONMENTAL PERFORMANCE INDICATORS | |||
EN1 Materials used by weight or volume
| EN2 | Percentage of materials used that are recycled | |
|---|---|---|
| input materials |
| Standard information/indicators | Reference | |||
|---|---|---|---|---|
| Energy | ||||
| EN3 | Direct energy consumption by primary energy source | |||
| EN4 | Indirect energy consumption by primary energy source |
44, 46, 48 | ||
| EN5 | Energy saved due to conservation and effi ciency improvements |
44–48 | ||
| EN6 | Intiatives to provide energy effi cient or renewable energy based products and services |
2, 45–48 | ||
| EN7 | Initiatives to reduce indirect energy consumption and reductions achieved |
45–48 | ||
| EN8 | Total water withdrawal by source | 48 | ||
| Biodiversity | ||||
| EN11 Location and size of land owned, leased, mana ged in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas |
||||
| EN12 Description of signifi cant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas |
||||
| Emissions, Effl uents and Waste | ||||
| EN16 Total direct and indirect greenhouse-gas emissions | 48 | |||
| by weight EN17 Other relevant indirect greenhouse-gas emissions by weight |
||||
| EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved |
2, 44–49 | |||
| EN19 Emissions of ozone-depleting substances by weight | ||||
| EN20 NO, SO, and other signifi cant air emissions by type and weight |
www/GRI Index | |||
| EN21 Total water discharge by quality and destination | www/GRI Index | |||
| EN22 Total weight of waste by type and disposal method 48–49 | ||||
| EN23 Total number and volume of signifi cant spills | www/GRI Index | |||
| Products and Services | ||||
| EN26 Initiatives to mitigate environmental impacts of pro ducts and services, and extent of impact mitigation |
42–47 | |||
| EN27 Percentage of products sold and their packaging materials that are reclaimed by category |
||||
| Other | ||||
| EN28 Monetary value of signifi cant fi nes and total number of non-monetary sanctions for noncompliance with environmental laws and regulations |
www/GRI Index | |||
| EN29 Signifi cant environmental impacts of transportation www/GRI Index | ||||
| SOCIAL INDICATORS | ||||
| Labour practices and decent work | ||||
| LA1 | Total workforce by employment type, employment | 51 | ||
| contract, and region | ||||
| LA2 | Total number and rate of new employee hires and employee turnover by age group, gender, and region |
51, www/GRI Index | ||
| Relation between employees and management | ||||
| LA4 | Percentage of employees covered by collective bargaining agreements |
51 | ||
| LA5 | Minimum notice period(s) regarding signifi cant operational changes |
www/GRI Index | ||
| Occupational health and safety | ||||
| LA6 | Percentage of workforce represented in formal work-environment committees Work environment – Health and safety |
50 | ||
| LA7 | Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related |
51 | ||
| fatalities by region and by gender | ||||
| LA8 | Education, training, counselling, prevention and risk–control programmes in place to assist workforce members, their families, or community members regarding serious disease |
www/GRI Index |
| Standard information/indicators | Reference | ||
|---|---|---|---|
| Education | |||
| LA10 Average hours of training per year per employee by gender, and by employee category |
|||
| LA12 Percentage of employees receiving regular career development reviews |
50, www/GRI Index | ||
| Diversity and equal opportunity | |||
| LA13 Composition of governance bodies and break down of employees per employee category by indicators of diversity |
51, 76, 90–91 | ||
| LA14 Ratio of basic salary of men to women by employee category |
|||
| Human rights | |||
| HR1 | Percentage and total number of signifi cant investment agreements that have undergone human-rights screening |
||
| HR2 | Percentage of signifi cant suppliers that have under gone human-rights screening, and actions taken |
www/GRI Index | |
| Non-discrimination | |||
| HR4 | Total number of incidents of discrimination and corrective actions taken |
www/GRI Index | |
| Freedom of association and collective bargaining | |||
| HR5 | Operations identifi ed in which the right to exercise freedom of association and collective bargaining may be at signifi cant risk and actions taken |
45, 52, www/GRI Index |
|
| HR6 | Operations identifi ed as having signifi cant risk for incidents of child labour and actions taken |
45, 52, www/GRI Index |
|
| HR7 | Operations identifi ed as having signifi cant risk for incidents of forced labour and actions taken |
45, 52, www/GRI Index |
|
| Society | |||
| SO1 | Design and scope of programmes and practices that assess and manage the impacts of operations on society/communities |
46–47, www/GRI Index |
|
| SO2 | Percentage and total number of business units analysed for risks related to corruption |
www/GRI Index | |
| Corruption | |||
| SO3 | Percentage of employees trained in anti-corruption policies and procedures |
53, www/GRI Index | |
| SO4 Politics |
Actions taken in response to incidents of corruption www/GRI Index | ||
| SO5 | Public policy positions and participation in lobbying |
www/GRI Index | |
| Anti-competitive behaviour | |||
| SO7 | Legal actions for anti-competitive behaviour, anti-trust and monopoly practices |
53 | |
| Compliance | |||
| SO8 | Monetary value of fi nes and number of sanctions for noncompliance with laws and regulations |
53, www/GRI Index | |
| Customer health and safety | |||
| PR1 | Life-cycle stages in which health and safety impacts of products and services are assessed and the percentage of products and services subject to such procedures |
46–49 | |
| Product and service labelling | |||
| PR3 | Type of product and service information required by procedures, and percentage of products and services subject to such information requirements |
47 | |
| Product development | |||
| PR5 | Practices related to customer satisfaction, including results of surveys |
7, 16 | |
| Market communications | |||
| PR6 | Programs for adherence to laws, standards, and voluntary codes related to marketing communica tions, including advertising, PR and sponsorship |
53 | |
| CRESS | |||
| CRE 8 Type and number of sustainability certifi cation, rating and labelling schemes for new construction, management, occupation and redevelopment. |
44–48 |
| Contents | Page | |
|---|---|---|
| Directors' report | 60 | |
| Consolidated, Statement of comprehensive income | 66 | |
| Consolidated, Statement of fi nancial position | 67 | |
| Consolidated, Statement of changes in equity | 68 | |
| Consolidated, Cash fl ow statement | 69 | |
| Parent Company, Profi t and loss acccounts | 70 | |
| Parent Company, Balance sheets | 70 | |
| Parent Company, Statement of changes in equity | ||
| Parent Company, Cash fl ow statement | ||
| Notes | ||
| Note 1 General information |
72 | |
| Note 2 Accounting policies |
72 | |
| Note 3 Financial instruments and fi nancial risk management |
75 | |
| Note 4 Signifi cant estimates and assessments |
||
| for accounting purposes | 75 |
| Note 5 | Reporting by segment | 76 |
|---|---|---|
| Note 6 | Employees and salary expenses, etc. | 76 |
| Note 7 | Rental income | 77 |
| Note 8 | Property expenses | 77 |
| Note 9 | Central administration and marketing | 77 |
| Note 10 | Realised and unrealised changes in value, | |
| investment properties | 77 | |
| Note 11 | Profi t/loss from other securities and receivables | |
| that are fi xed assets | 77 | |
| Note 12 | Interest income and interest expenses | 78 |
| Note 13 | Changes in value, shares | 78 |
| Note 14 | Tax on profi t for the year | 78 |
| Note 15 | Investment properties | 78 |
| Note 16 | Equipment | 79 |
| Note 17 | Interests in associated companies | 79 |
| Note 18 | Receivables from associated companies | 79 |
| Note 19 | Other long-term securities holdings | 79 |
| Note 20 | Other long-term receivables | 80 |
| Note 21 | Trade receivables | 80 |
|---|---|---|
| Note 22 | Other receivables | 80 |
| Note 23 | Shareholders' equity | 80 |
| Note 24 | Overdraft facility | 80 |
| Note 25 | Liabilities by maturity date | 80 |
| Note 26 | Derivatives | 80 |
| Note 27 | Deferred tax liability/asset | 81 |
| Note 28 | Provisions | 81 |
| Note 29 | Other liabilities | 81 |
| Note 30 | Accrued expenses and deferred income | 81 |
| Note 31 | Assets pledged as security and contingent liabilities | 81 |
| Note 32 | Interest paid | 81 |
| Note 33 | Changes in working capital | 81 |
| Note 34 | Cash and cash equivalents | 81 |
| Note 35 | Related-party transactions | 82 |
| Note 36 | Dividend per share | 82 |
| Note 37 | Adoption of the Annual Report | 82 |
| Note 38 | Net turnover | 82 |
|---|---|---|
| Note 39 | Operating expenses | 82 |
| Note 40 | Profi t/loss from shares and interests in | 82 |
| Note 41 | Shares and interests in Group companies | 82 |
| Note 42 | Fees and compensation to auditors | 82 |
| Note 43 | Events after the balance sheet date | 82 |
| Corporate Governance Report | 83 | |
| The Board of Directors and Auditor | 90 | |
| Goup Management | 90 | |
| Signing of the Annual Report | 92 | |
| Auditor's Report | 93 | |
The Board of Directors and Chief Executive Officer of Fabege AB (publ), company registration number 556049–1523, hereby present their 2012 Annual Report for the Group and the Parent Company.
Fabege is one of Sweden's leading property companies focusing on commercial premises. Th e business is concentrated to a small number of fast-growing priority sub-markets in the Stockholm region. Fabege manages and improves its existing properties while continuously developing its portfolio through sales and acquisitions. Realising value is an integral and key part of the business.
Th e transactions and investments made in 2012 continued to refl ect the focus on property holdings in the submarkets of Stockholm inner city, Solna and Hammarby Sjöstad. On 31 December 2012, Fabege owned 95 properties with a total rental value of SEK 2.3bn, lettable fl oor space of 1.1m sqm and a carrying amount of SEK 31.6bn, of which project properties accounted for SEK 2.8bn.
Commercial premises, primarily offi ces, represented 99 per cent of the rental value. Th e fi nancial occupancy rate for the portfolio as a whole was 92 per cent (90). Th e fi nancial occupancy rate for Fabege's total portfolio of investment properties was 93 per cent (92). New lettings totalled SEK 289m (241), while net lettings were SEK 141m (130).
Th e rents in renegotiated leases increased 7 per cent on average. During the year, several major leases were signed for project properties, the largest of which pertained to the Swedish Tax Agency (SEK 88m), Gant AB (SEK 15m) and Apoteket AB (SEK 10m). Several key negotiations and extensions of existing leases were conducted, including ones with Coop Sverige and Profi l Events.
Profi t for the year amounted SEK 2,032m (1,417). Aft er-tax profi t for the year was a loss of SEK 88m (profi t: 1,141) following a provision of SEK 1,900m posted for on going tax cases. An improvement in net operating income and positive value changes in the property portfolio contributed to profi t before tax improving compared with the preceding year. Earnings per share aft er tax amounted to a loss of SEK 0.54 (earnings: 7.01).
Rental income rose to SEK 1,869m (1,804) and the operating surplus rose to SEK 1,264m (1,227). Th e increase in rental income was attributable to positive net lettings and completed project properties. Th e surplus ratio remained unchanged at 68 per cent (68). In a comparable portfolio, rental income increased 3.5 per cent while operating income increased approximately 2.2 per cent. Positive net lettings will continue to generate
gradual growth in rental income in 2013 and 2014.
Realised changes in the value of properties amounted to SEK 167m (173), and unrealised changes in value totalled SEK 1,409m (1,093). Th e SEK 625m (675) unrealised change in the value of the portfolio of investment properties was primarily attributable to properties with increased rent levels and to a reduction in vacancy rates, as well as a marginally lower yield requirement. Th e project portfolio contributed to an unrealised change in value of SEK 784m (418), primarily due to development gains in major project properties.
Profi t from participations in associated companies was SEK 137m (9), most of which concerned items of a nonrecurring nature. Changes in the value of interestrate derivatives and equities amounted to SEK –237m (–413), and net interest expense increased to an expense of SEK 644m (expense: 609), due to greater indebtedness and somewhat rising average interest rates.
Th e tax expense for the year amounted to SEK 2,120m (expense: 276), of which SEK 1,900m was related to the provision for ongoing tax cases. Operating taxes are cal-
| 2012 | 2011 | 2010 | |
|---|---|---|---|
| No. of properties | 95 | 97 | 103 |
| Lettable area, '000 sqm | 1,130 | 1,107 | 1,138 |
| Financial occupancy rate, % | 92 | 90 | 88 |
| Rental value, SEKm | 2,260 | 2,098 | 2,061 |
| Surplus ratio, % | 68 | 68 | 67 |
| SEKm | Jan– Dec 2012 |
Jan–Dec 2011 |
Jan–Dec 2010 |
|---|---|---|---|
| Profi t from Property Management | 605 | 581 | 768 |
| Changes in value (portfolio of investment properties) | 625 | 675 | 579 |
| Contribution from Property Management | 1,230 | 1,256 | 1,347 |
| Profi t from Property Management | 88 | –17 | 14 |
| Changes in value (profi t from Property Development) | 784 | 418 | 264 |
| Contribution from Property Development | 872 | 401 | 278 |
| Contribution from Transactions (Realised changes in value) |
167 | 173 | 237 |
| Total contributions from operations | 2,269 | 1,830 | 1,862 |
culated at a rate of 26.3 per cent on taxable earnings. Property sales resulted in combined deferred tax income of SEK 70m. Th e adjustment of the corporate tax rate to 22 per cent resulted in deferred tax income of SEK 134m, which was recognised in the fourth quarter.
Profi t contributed SEK 752m (748) to liquidity. Aft er a decline of SEK 247m (increase: 1,198) in working capital, which varies primarily due to the impact of occupancy/fi nal settlement for acquired and divested properties, the liquidity of operating activities changed by SEK 505m (1,946). Acquisitions of and investments in properties exceeded property sales by SEK 1,261m (1,527). Accordingly, the total change in liquidity resulting from operating activities was a negative SEK 756m (419). Cash fl ow during the fullyear was charged with SEK 487m (489) for the payment of dividends. Aft er the increase in debt, consolidated cash and cash equivalents totalled SEK 200m (74).
Fabege employs long-term credit lines subject to fi xed terms and conditions. At 31 December 2012, these had an average maturity of 5.1 years. Th e company's lenders are the major Nordic banks.
Interest-bearing liabilities at year-end totalled SEK 18,035m (16,755) and the average interest rate was 3.80 per cent excluding and 3.93 per cent including commitment fees on the undrawn portion of committed credit facilities. Th e average fi xed interest term was 3.4 years, including the eff ects of derivative instruments.
Th e average fi xed interest term for variable-interest loans was 64 days. Following interest-rate fi xing in the third quarter, Fabege's derivatives portfolio comprises interest-rate swaps totalling SEK 7,000m with terms of maturity extending through 2021 and carrying fi xed interest at annual rates of between 1.87 and 2.73 per cent before margins, as well as cancellable swaps totalling SEK 7,550m at rates of between 2.87 and 3.98 per cent before margins and maturity between 2013 and 2018. Interest rates on 81 per cent of Fabege's loan portfolio were fi xed using fi xed-income derivatives.
Th e derivatives portfolio is measured at market value and the change in value is recognised in profi t or loss. At 31 December 2012, the recognised negative fair value of the portfolio was SEK 854m (664). Th e derivatives portfolio was measured at the present value of future cash fl ows. Th e change in value is of an accounting nature and has no impact on the company's cash fl ow. At the due date, the market value of derivative instruments is always zero.
Fabege has a commercial paper programme in an amount of SEK 5,000m. At the end of the year, outstanding commercial paper amounted to SEK 2,740m, compared with SEK 1,719m at the beginning of the year. Fabege has available long-term credit facilities covering all outstanding commercial paper at any given time. At 31 December 2012, the company had unutilised committed lines of credit of SEK 3,955m. At year-end, Fabege also had a total of SEK 1,045m in bonds outstanding within the framework of its bond programme, which was launched in Decem-
% 50 55 60 65 70 75 80 03 04 05 06 07 08 09 10 11 12 Results Target: 70% Surplus ratio
The surplus ratio has improved steadily and Fabege believes that the target of 70 per cent will be attained during 2013.
ber 2011. Th e programme, which has a limit of SEK 5,000m, was introduced via the co-owned company Svensk Fastighetsfi nansiering AB (SFF). Th e bonds are secured by collateral in property mortgage deeds. SFF is jointly owned by Fabege, Wihlborgs and Peab. Fabege owns 33.3 per cent of the company. Th e aim is to expand the company's fi nancing base with a new source of fi nancing.
In December, Fabege's co-owned company, Visio Exploatering AB, issued a covered bond in the amount of SEK 1,250m via Swedish Fastighetsfi nansiering II AB.
Net fi nancial items included nonrecurring expenses totalling SEK 15m, primarily pertaining to new mortgage deeds.
Th e total loan volume at year-end included SEK 765m in loans for projects. Th e loan volume for projects averaged SEK 1,142m during the year, of which interest of SEK 35m has been capitalised
Shareholders' equity amounted to SEK 11,404m (11,890) at year-end and the equity/assets ratio was 34 per cent (39). Shareholders' equity per share totalled SEK 70 (73). Excluding deferred tax on fair value adjustments of properties, net asset value per share was SEK 80 (84).
During the second quarter, an exchange transaction was completed with Gamla Livförsäkringsbolaget, SEB Trygg Liv whereby the previously resolved divestment of land in Hammarby Sjöstad to Oscar Properties was fi nalised. During the fourth quarter, the property on Klamparen 10, Kungsholmen, was sold to KLP.
Equity/assets ratio
Although the equity/assets ratio declined by 5 percentage points during 2012 due to the decision to post a provision of SEK 1.9bn for ongoing tax cases, the ratio continued to comfortably exceed the target of 30 per cent.
Rental income increased in 2012 as a result of positive net lettings and completion of project properties.
An additional minor land site in Åkersberga was divested. A total of fi ve properties were divested for SEK 1,448m during the year and the remaining 50 per cent of an already co-owned property was acquired for SEK 150m. Th e transactions generated profi t of SEK 167m (173) before taxes and SEK 237m (166) aft er taxes.
During 2012, decisions were made on major project investments for SEK 2,379m (1,818). Investments of SEK 2,023m (1,457) during the year in existing properties and projects pertained to land, new builds, extensions and conversions.
In 2012, the following major property projects were completed: Bocken 39 (Lästmakargatan), Uarda 5 (Arenastaden), Apotekaren 22 (Norrmalm) and Klamparen 10 (Kungsholmen). Th e approved investments in the projects Nöten 4 (Solna Strand) and Skeppshandeln 1 (Hammarby Sjöstad) are proceeding according to plan.
Sales during the year amounted to SEK 100m (102) and profi t before appropriations and tax was SEK 357m (1,389). Net fi nancial items included dividends from subsidiaries of SEK 800m (2,000). Net
investments in property, equipment and shares totalled a cost of SEK 336m (income: 5).
Fabege's share capital at year-end was SEK 5,097m (5,097), represented by 165,391,572 shares (165,391,572). All shares carry the same voting rights and entitle the holder to the same share of the company's capital. Th e quotient value was SEK 30.82 per share.
Th e following indirect or direct shareholdings in the company represent one tenth or more of the votes for all shares in the company:
| Shareholding 31 Dec 2012 | Share of votes, % |
|---|---|
| Brinova Inter AB | 15.1 |
Th rough Fabege's profi t-sharing fund and the Wihlborgs & Fabege profi t-sharing fund, the employees of Fabege own a total of 434,879 shares, representing a stake of 0.26 per cent in the company.
Th e 2012 AGM passed a resolution empowering the Board, no later 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 repurchased during the year. Following a decision by the Board, 1,330,374 treasury shares were divested at year-end on the Stockholm Stock Exchange. At 31 December 2012, the company held 1,836,114 treasury shares, representing 1.1 per cent of the total number of registered shares. Following yearend, all treasury shares were divested.
Fabege's asset management activities are designed to generate the best return for shareholders among property companies listed on the Stockholm Stock Exchange. Th e company seeks to optimise its equity/ debt ratio to ensure that its capital base is suffi cient in relation to the nature, scope and risks of the business. Under its adopted targets for capital structure, the company aims 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).
Current key fi gures are shown in the fi ve-year summary on page 99.
Th e main task of Fabege's debt-management activities is to ensure that the com-
Risks and uncertainties relating to cash fl ow from operations are primarily attributable to changes in rents, vacancies and interest rates. Another source of uncertainty is changes in the value of the property portfolio. A detailed description of the impact of these changes on consolidated cash fl ow and the company's key fi gures is given in the sensitivity analyses.
Financial risk, defi ned as the risk of insuffi cient access to long-term funding through loans, and Fabege's management of this risk are described in Note 3.
Th e sensitivity analysis refers to Fabege's property holdings and balance sheet on 31 December 2012. It shows the eff ects on the Group's cash fl ow and profi t aft er fi nancial items on an annualised
basis aft er taking account of the full eff ect of each parameter. Earnings are also aff ected by realised and unrealised changes in the value of properties and derivatives.
| Change Effect, SEKm | ||
|---|---|---|
| Rental income, total | 1% | 18.7 |
| Rental level, commercial income |
1% | 19.8 |
| Financial occupancy rate, % | 1%-point | 22.5 |
| Property expenses | 1% | 6.1 |
| Interest expenses 20131) | 1%-point | 10.0 |
| Interest expenses, longer-term perspective2) |
1%-point | 180.0 |
1) The effect of the change in interest expenses in 2013 presupposes a 1 per cent change in the interest-rate curve and an unchanged loan volume and period of fi xed interest, with impact as of 1 January 2013.
2) Change of 1 per cent in total outstanding loan volume.
Fabege's property portfolio is highly concentrated to sub-markets with good growth prospects in Stockholm inner city, Solna and Hammarby Sjöstad. Since commercial premises with an emphasis on offi ce space account for the entire business, employment and the offi ce market trend in Stockholm are of considerable signifi cance to Fabege. Because the commercial leases have a term of several years, the full impact of changes in rents will not be felt in any single year.
New leases normally have a term of three to fi ve years and are subject to nine months' notice with an index clause linked to infl ation. Rents for the company's lease portfolio are currently deemed to be in line with market levels. Normally, about 20 per cent of the lease portfolio is
pany has a stable, well-balanced and costeffi cient fi nancial structure at all times through borrowing in the bank and capital markets. Th e company's fi nancial policy, which is described in greater detail in Note 3, defi nes how fi nancial risks should be managed.
Under its dividend policy, Fabege aims to pay a dividend to its shareholders comprising the part of the company's profi t that is not required for the consolidation or development of the business. In current market conditions, this means that the dividend will comprise at least 50 per cent of profi t from property management activities and realised gains from the sale of properties aft er tax.
Tax-loss carryforwards, which are expected to reduce tax expenses in future years, are estimated at SEK 4.6bn (4.4). Payment of income tax can also be delayed through tax depreciation of the properties. In case of a direct sale of property, profi t for tax purposes, defi ned as the diff erence between the selling price and the tax residual value of the property, is realised. If the sale is made in the form of
a company, this eff ect can be reduced. It is generally expected that current tax will remain low over the next few years.
On 31 December 2012, the diff erence between the book and tax residual values of Fabege's property portfolio was approximately SEK 12.8bn (11.2).
Adjustment of the corporate tax rate to 22 per cent gave rise to deferred tax revenue of SEK 134m, which was recognised in the fourth quarter.
On 31 December 2012, net deferred tax liabilities were SEK 588m (390), as shown in the following specifi cation, see table.
| Deferred tax attributable to | SEKm |
|---|---|
| – tax-loss carryforwards | –1,020 |
| – difference between book and tax values in respect of properties |
1,799 |
| – defi cit, derivatives | –189 |
| – other | –2 |
| Net debt, deferred tax | 588 |
Th e Tax Agency has in several decisions announced that companies in the Fabege Group will have their taxable incomes increased in respect of a number of property sales made through limited partnerships. Th e transactions derive from Tornet, the old Fabege and Wihlborgs during the years 2003–2005.
At 31 December 2012, the total increase in taxable income remained unchanged at SEK 8,368m (8,368). Th e decisions have resulted in a combined tax demand, including miscellaneous charges and fees, of SEK 2,704m (2,681).
On 30 May 2012, the Supreme Administrative Court (SAC) announced a verdict in what is known as the Cyprus case. Th e SAC's ruling entails that the Swedish Tax Evasion Act was deemed applicable in the Cyprus case and that the transaction has to be taxed. In view of the verdict by the SAC and the uncertain legal position that has arisen, Fabege has decided to post a provision of SEK 1,900m. Th is assessment is based on a review and evaluation of each individual case. Th e diff erence in relation to the demand made by the Swedish Tax Agency (STA) is based on matters that are evidently unrelated to SAC's verdict and what Fabege deems to be erroneous reasoning in the STA's argumentation. Th e remaining amount pursuant to the STA's total requirements, i.e. approximately SEK 800m, will be recognised as a contingent liability, as in previous fi nancial statements.
In summary, Fabege strongly contests the tax demands resulting from the Tax Agency's and Administrative Court's decisions and has appealed the decisions.
renegotiated each year. At year-end, Fabege's average remaining term for commercial leases was 3.8 years.
Property expenses include running and maintenance expenses, property tax, ground rent and expenses for administration and lettings. Running costs largely consist of tariff -based expenses such as heating, electricity and water. Fabege is pursuing a structured eff ort to reduce its consumption of heating, electricity and water, with a target of achieving 20 per cent lower consumption over a fi ve-year period as of 2010. Fabege also conducts lease negotiations and works continuously to optimise running costs. A large share of the Group's expenses is passed on to the
tenants, which reduces exposure. Th e standard of the property management portfolio is deemed to be high.
Th e strategic focus is to ensure stable, well-balanced and cost-eff ective fi nancing. Fabege employs fi nancial instruments, mainly in the form of interest-rate swaps, to limit the interest-rate risk and fl exibly adjust the average fi xed-rate term of the loan portfolio. At year-end, the fi xed-rate term of the loan portfolio was about 3.4 years. Changes in the value of derivatives are recognised in profi t or loss.
Properties are recognised at fair value and changes in value are recognised in profi t
or loss. Fabege's properties are concentrated to central Stockholm and near-by areas. As a result of stable customers and modern premises in good locations, Fabege's prospects for maintaining property values even in a weaker economic climate are good. Continued development of project properties generates capital growth in the portfolio. Th e table below shows the eff ect on earnings, equity/assets ratio and loan-to-value ratio of a 1 per cent change in the value of a property.
| Change in value before tax, % |
Impact on earnings, SEKm |
Equity/ assets ratio, % |
Loan-to value ratio properties, % |
|---|---|---|---|
| +1 | 247 | 34.2 | 56.4 |
| 0 | 0 | 33.8 | 57.0 |
| –1 | –247 | 33.4 | 57.6 |
Fabege is adhering to its view that the sales were accounted for and declared in compliance with applicable rules. Fabege believes that the Swedish Tax Agency and the Swedish Administrative Court have disregarded several key aspects and that the verdicts are thereby incorrect.
Fabege also contends that SAC's verdict in the Cyprus case is not immediately applicable to Fabege's cases, since there are both organisational and commercial reasons for why the transactions under review were implemented in this manner. Th is belief is shared by external legal experts and tax advisors who have analysed the divestments, the STA's argumentation and the verdicts concerned.
Th e various partners of the limited partnerships reported and declared their share of the proceeds in full compliance with applicable tax rules. Th e sales resulted in low income tax, but it should be pointed out that in the Tax Agency's own opinion it is perfectly permissible and acceptable to sell commercial properties tax-free in packaged form; meaning that the small amount of tax resulting from the sales was neither unexpected nor controversial. Th e manner in which the properties were sold was chosen exclusively for business reasons, and not to reduce the amount of tax payable. Th e most immediate alternative, which was to sell the properties through limited liability companies, would not have resulted in a higher tax charge for any company in the Group. Th e type of property transaction, through a trading/limited partnership, on which the Tax Agency has based its tax rulings has been common practice in the industry.
Th e processes have now been passed on to the Swedish Administrative Court of Appeal and Fabege has been granted a respite for the payment of taxes until the Swedish Administrative Court of Appeal has issued a verdict. A verdict is expected in the fi rst half of 2013. Backed by a strong balance sheet and available facilities, Fabege is capable of coping with potential forthcoming payments.
All of the transactions completed by the Fabege Group on the basis of the socalled Holland solution are now subject to review. Since Fabege does not believe that
the Tax Agency will make further claims, it believes that the above fi gures concerning increased taxes and tax demands will not rise. Any changes in current assessments and any court rulings will be announced through separate press releases. Th e status of ongoing cases is always reported in interim reports.
A separate description of the work of the Board of Directors is given in the Corporate Governance Report on page 83.
Fabege does not conduct activities that are subject to permit and notifi cation requirements under Chapter 9, Section 6 of the Environmental Code. Of Fabege's tenants, only a few conduct such activities. More information about Fabege's environmental work is given in the Sustainability Report on page 44.
Th e average number of employees in the Group during the year was 119 (124), including 39 (44) women and 80 (80) men. A total of 30 people were employed in the Parent Company (32). At year-end, the number of employees was 129 (122), including 45 (43) women. See also page 76, Note 6. Th e retirement age is 65. Pension benefi ts should be equivalent to the ITP supplementary pension plan for salaried employees in industry and commerce or be contribution-based with a maximum contribution of 35 per cent of the pensionable salary. Termination salary and severance pay must not exceed 24 months in total.
Company management is defi ned as the Chief Executive Offi cer and other senior executives in Group Management. All Directors, with the exception of the CEO, are responsible for preparing a draft statement of principles governing remuneration and other terms of employment for company management, and for preparing decisions on the CEO's remuneration and other terms of employment.
Th e 2012 AGM resolved to adopt the following guidelines for compensation and other terms of employment for management:
Remuneration is to be market aligned and competitive. Responsibility and performances that coincide with shareholders' interests are to be refl ected in the remuneration. Th e fi xed salary is to be reevaluated annually. In addition to fi xed salary, remuneration may be paid for target-related performance. Such remuneration is to depend on the extent to which pre-defi ned targets have been achieved within the framework of the company's activities. Th e targets comprise fi nancial and non-fi nancial criteria. Remuneration in addition to fi xed salary is to be subject to a ceiling and tied to the fi xed salary. Variable remuneration is limited to a maximum of three (3) monthly salaries.
Variable remuneration paid to company management must not exceed a maximum total annual cost for the company of SEK 2.1m (excluding social security fees), calculated on the basis of the number of persons who currently constitute senior executives. Other benefi ts, where applicable, may only constitute a limited portion of the remuneration.
Th e company has a profi t-sharing fund covering all employees of the company. Allocations to the profi t-sharing fund are to be based on the achieved return on equity and be subject to a ceiling of one (1) base amount per year per employee.
Th e retirement age is 65. Pension benefi ts should be equivalent to the ITP supplementary pension plan for salaried employees in industry and commerce or be of the defi ned-contribution type with a maximum contribution of 35 per cent of pensionable salary. Termination salary and severance pay must not exceed 24 months in total.
Information about remuneration paid to senior executives in 2012 is provided in Note 6.
Th e Board proposes unchanged principles governing variable remuneration ahead of the 2013 Annual General Meeting. A complete version of the Board's proposal will be included in the AGM documents, which are published on Fabege's website.
Both the rental market and transaction market strengthened during 2012. Th e development of the portfolio and the favourable net lettings trend enable Fabege to continue to generate and deliver contribution to profi t from all parts of its business model, meaning Property Management, Property Development and Transactions. Fabege is well equipped with a strong balance sheet and a well-situated property portfolio with healthy development potential. Despite weaker economic conditions and greater global uncertainty, we look forward to continued strong results in 2013, including:
Shareholders at the Annual General Meeting are asked to decide on the appropriation of:
| SEK | |
|---|---|
| Retained earnings | 1,721,058,046 |
| Profi t for the year | 335,735,891 |
| Total | 2,056,793,937 |
Th e Board of Directors and the Chief Executive Offi cer propose that the amount be allocated as follows:
| SEK |
|---|
| 496,174,716 |
| 1,560,619,221 |
| 2,056,793,937 |
Th e dividend amount is based on the total number of shares outstanding on 20 February 2013, i.e. 165,391,572 shares, and is subject to alteration up to and including the record date, depending on the buybacks of treasury shares.
Grounds
Th e Group's equity has been calculated in compliance with IFRS standards, as adopted by the EU, the interpretations of these (IFRIC) and Swedish law through the application of Recommendation RFR 1 Supplementary Accounting Rules for Corporate Groups of the Swedish Financial Reporting Board. Th e Parent Company's equity has been calculated in accordance with Swedish law, applying recommendation RFR 2 Accounting for Legal Entities of the Swedish Financial Reporting Board. Th e Board of Directors has established that the company will have full coverage for its restricted equity aft er the proposed dividend. Th e Board considers
that the proposed dividend is defensible based on the criteria contained in the second and third paragraphs of Section 3 of Chapter 17 of the Swedish Companies Act (nature, scope and risks of the business, consolidation requirements, liquidity and other fi nancial circumstances). Th e Board would like to make the following comments pertaining thereto:
Th e Board estimates that the company's and the Group's equity aft er the proposed dividend will be suffi cient in view of the nature and scope of the business and the associated risks. In this context, the Board has taken account of the company's equity/assets ratio, historical and budgeted performance, investment plans and the general economic environment.
Th e Board has made a general assessment of the company's and the Group's fi nancial position and its ability to meet its obligations. Th e proposed dividend constitutes 4.8 per cent of the company's equity and 4.3 per cent of consolidated equity. Th e stated target for the Group's capital structure – a minimum equity/assets ratio of 30 per cent and an interest coverage ratio of at least 2.0 – will be achieved even aft er the proposed dividend. In view of the current situation on the property market, the equity/assets ratio of the company and the Group is favourable. Against this background, the Board considers that the company and the Group are in a good position to take advantage of future business opportunities and withstand any losses that may be incurred. Planned investments have been taken into account in the proposed dividend payment. Nor will the dividend have any signifi cant impact on the company's or the Group's ability to make further commercially motivated investments in accordance with the adopted plans. In the Parent Company, some assets and liabilities have been measured at fair value in accordance with Chapter 4, Section 14 of the Swedish Annual Accounts Act.
Th e impact of this valuation, which reduced equity in the Parent Company by SEK 148m (reduction: 289), has been taken into account.
Th e proposed dividend will not aff ect the company's and the Group's ability to meet its payment obligations in a timely manner. Th e company and the Group have good access to liquidity reserves in the form of short and long-term credit. Agreed credit lines can be drawn at short notice, which means that the company and the Group are well prepared to manage variations in liquidity as well as any unexpected events.
Other financial circumstances Th e Board of Directors has assessed all other known circumstances that could be signifi cant to the company's and the Group's fi nancial position and that have not been addressed in the above. No circumstance has been discovered in the course of the assessment that would cast doubt on the defensibility of the proposed dividend.
Stockholm, 25 February 2013
Board of Directors
| SEK millions | Note | 2012 | 2011 |
|---|---|---|---|
| Rental income | 5, 7 | 1,869 | 1,804 |
| Property expenses | 8 | –605 | –577 |
| Net operating income | 1,264 | 1,227 | |
| Central administration and marketing | 9 | –64 | –63 |
| Profi t from other securities and receivables that are fi xed assets | 11 | 23 | 13 |
| Interest income | 12 | 1 | 1 |
| Share in profi t/loss of associated companies | 17 | 137 | 9 |
| Interest expenses | 12 | –668 | –623 |
| Operating profi t | 1–6, 16, 18, 42 | 693 | 564 |
| Realised changes in value, investment properties | 10, 15 | 167 | 173 |
| Unrealised changes in value, investment properties | 10, 15 | 1,409 | 1,093 |
| Changes in value, fi xed income derivatives | 26 | –190 | –397 |
| Changes in value, equities | 13 | –47 | –16 |
| Profi t before tax | 2,032 | 1,417 | |
| Tax on profi t for the year | 14 | –2,120 | –276 |
| Total profi t/loss for the year | –88 | 1,141 | |
| Comprehensive income/loss attributable to Parent Company shareholders | –88 | 1,141 | |
| Earnings per share before dilution, SEK | –0.54 | 7.01 | |
| Earnings per share after dilution, SEK | –0.54 | 7.01 | |
| No. of shares at end of period before dilution, millions | 163.6 | 162.2 | |
| No. of shares at end of period after dilution, millions | 163.6 | 162.2 | |
| Average no. of shares before dilution, millions | 162.4 | 162.7 | |
| Average no. of shares after dilution, millions | 162.4 | 162.7 |
| SEK millions | Note | 2012 | 2011 |
|---|---|---|---|
| ASSETS | |||
| Investment properties | 15 | 31,636 | 29,150 |
| Equipment | 16 | 1 | 1 |
| Interests in associated companies | 17 | 810 | 591 |
| Receivables from associated companies | 18 | 248 | 261 |
| Other long-term securities holdings | 19 | 183 | 165 |
| Other long-term receivables | 20 | 157 | 107 |
| Total fi xed assets | 33,035 | 30,275 | |
| Trade receivables | 21 | 30 | 15 |
| Other receivables | 22 | 395 | 299 |
| Prepaid expenses and accrued income | 49 | 48 | |
| Cash and cash equivalents | 34 | 200 | 74 |
| Total current assets | 674 | 436 | |
| TOTAL ASSETS | 33,709 | 30,711 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 5,097 | 5,097 | |
| Other contributed capital | 3,017 | 3,017 | |
| Retained earnings incl. profi t/loss for the year | 3,290 | 3,776 | |
| Total shareholders' equity | 23 | 11,404 | 11,890 |
| Liabilities to credit institutions | 25 | 11,385 | 13,521 |
| Derivatives | 26 | 854 | 664 |
| Deferred tax liabilities | 27 | 588 | 390 |
| Provisions | 28 | 120 | 148 |
| Total long-term liabilities | 12,947 | 14,723 | |
| Liabilities to credit institutions | 24, 25 | 6,650 | 3,234 |
| Trade payables | 176 | 151 | |
| Provisions | 28 | 23 | 47 |
| Tax liabilities | 14 | 1,909 | 17 |
| Other liabilities | 29 | 107 | 181 |
| Accrued expenses and deferred income | 30 | 493 | 468 |
| Total current liabilities | 9,358 | 4,098 | |
| TOTAL EQUITY AND LIABILITIES | 33,709 | 30,711 | |
| Assets pledged as security | 31 | 15,436 | 14,416 |
| Contingent liabilities | 31 | 2,124 | 3,376 |
| Attributable to Parent Company shareholders | Minority interest | Total equity | ||||
|---|---|---|---|---|---|---|
| SEK millions | Share capital | Other contributed capital |
Retained earnings incl. profi t/loss for the year |
Total | ||
| Opening balance, 1 January 2011 | 5,097 | 3,017 | 3,162 | 11,276 | – | 11,276 |
| Total profi t for the year | 1,141 | 1,141 | – | 1,141 | ||
| Total income and expenses for the period | 1,141 | 1,141 | – | 1,141 | ||
| Cash dividend | –489 | –489 | – | –489 | ||
| Share buybacks | –38 | –38 | – | –38 | ||
| Closing balance, 31 December 2011 | 5,097 | 3,017 | 3,776 | 11,890 | – | 11,890 |
| Opening balance, 1 January 2012 | 5,097 | 3,017 | 3,776 | 11,890 | – | 11,890 |
| Total profi t for the year | –88 | –88 | – | –88 | ||
| Total income and expenses for the period | –88 | –88 | – | –88 | ||
| Cash dividend | –487 | –487 | – | –487 | ||
| Divestment of treasury shares | 89 | 89 | – | 89 | ||
| Closing balance, 31 December 2012 | 5,097 | 3,017 | 3,290 | 11,404 | – | 11,404 |
| SEK millions | Note | 2012 | 2011 |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Net operating income and realised changes in the value of existing properties excluding depreciation | 1,431 | 1,407 | |
| Central administration | –64 | –63 | |
| Interest received and dividend | 29 | 14 | |
| Interest paid | 32 | –644 | –610 |
| Income tax paid/received | 0 | 0 | |
| Cash fl ow before change in working capital | 752 | 748 | |
| CHANGE IN WORKING CAPITAL | |||
| Current receivables | –112 | 1,142 | |
| Current liabilities | –135 | 56 | |
| Total change in working capital | 33 | –247 | 1,198 |
| Cash fl ow from operating activities | 505 | 1,946 | |
| INVESTING ACTIVITIES | |||
| Investments and acquisition of properties | –2,191 | –1,986 | |
| Sale of properties, carrying amount at beginning of year | 15 | 1,236 | 756 |
| Acquisition of interests in associated companies | 17 | –266 | –37 |
| Acquisition of interests in other companies | 19 | – | –29 |
| Sale of interests in associated companies | 17 | 63 | – |
| Other tangible fi xed assets | – | –1 | |
| Other fi nancial fi xed assets | –103 | –230 | |
| Cash fl ow from investing activities | –1,261 | –1,527 | |
| FINANCING ACTIVITIES | |||
| Dividends | –487 | –489 | |
| Share buybacks/divestment of treasury shares | 89 | –38 | |
| Loans received/repayment of loans | 1,280 | 109 | |
| Cash fl ow from fi nancing activities | 882 | –418 | |
| Change in cash and cash equivalents | 126 | 1 | |
| Cash and cash equivalents at beginning of period | 34 | 74 | 73 |
| Cash and cash equivalents at end of period | 34 | 200 | 74 |
| SEK millions | Note | 2012 | 2011 |
|---|---|---|---|
| Net turnover | 38 | 100 | 102 |
| Operating costs | 39 | –180 | –193 |
| Operating loss | 1–3, 6, 16, 42 | –80 | –91 |
| Profi t from shares and interests in Group companies |
40 | 802 | 2,065 |
| Profi t from other securities and receivables that are fi xed assets |
11, 13 | 494 | 455 |
| Changes in value, fi xed income derivatives |
26 | –190 | –397 |
| Interest income | 12 | 5 | 1 |
| Interest expenses | 12 | –674 | –644 |
| Profi t before tax | 357 | 1,389 | |
| Tax on profi t for the year | 14 | –21 | 158 |
| Profi t for the year | 336 | 1,547 |
No statement of comprehensive income has been prepared because the Parent Company has no transactions that should be included in other comprehensive income.
| SEK millions | Note | 2012 | 2011 |
|---|---|---|---|
| ASSETS | |||
| FIXED ASSETS | |||
| Tangible fi xed assets | |||
| Equipment | 16 | 1 | 1 |
| Total tangible fi xed assets | 1 | 1 | |
| Financial fi xed assets | |||
| Shares and interests in Group companies | 41 | 12,992 | 13,328 |
| Interests in associated companies | 17 | 243 | – |
| Receivables from associated companies | 18 | 258 | – |
| Receivables from Group companies | 41,311 | 38,815 | |
| Other long-term securities holdings | 19 | 8 | 9 |
| Deferred tax asset | 27 | 240 | 261 |
| Other long-term receivables | 20 | 0 | 4 |
| Total fi nancial fi xed assets | 55,052 | 52,417 | |
| TOTAL FIXED ASSETS | 55,053 | 52,418 | |
| CURRENT ASSETS | |||
| Current receivables | |||
| Trade receivables | 0 | 0 | |
| Other receivables | 34 | 136 | |
| Prepaid expenses and accrued income | 24 | 25 | |
| Total current receivables | 58 | 161 | |
| Cash and cash equivalents | 34 | 199 | 69 |
| TOTAL CURRENT ASSETS | 257 | 230 | |
| TOTAL ASSETS | 55,310 | 52,648 | |
| EQUITY AND LIABILITIES | |||
| Shareholders' equity | 23 | ||
| Restricted equity | |||
| Share capital | 5,097 | 5,097 | |
| Reserve fund/Share premium account | 3,166 | 3,166 | |
| Unrestricted equity | |||
| Retained earnings | 1,721 | 572 | |
| Profi t/loss for the year | 336 | 1,547 | |
| Total shareholders' equity | 10,320 | 10,382 | |
| Provisions | |||
| Provisions for pensions | 28 | 67 | 68 |
| Total provisions | 67 | 68 | |
| Long-term liabilities | |||
| Liabilities to credit institutions | 25 | 10,219 | 13,072 |
| Derivatives | 26 | 854 | 664 |
| Liabilities to subsidiaries | 27,126 | 25,156 | |
| Total long-term liabilities | 38,199 | 38,892 | |
| Current liabilities | |||
| Liabilities to credit institutions | 25 | 6,610 | 3,219 |
| Trade payables | 5 | 2 | |
| Other liabilities | 3 | 4 | |
| Accrued expenses and deferred income | 30 | 106 | 81 |
| Total current liabilities | 6,724 | 3,306 | |
| TOTAL EQUITY AND LIABILITIES | 55,310 | 52,648 | |
| Assets pledged as security | 31 | 15,334 | 13,107 |
| Contingent liabilities | 31 | 4,864 | 3,683 |
| SEK millions | Note | Share capital |
Reserve fund |
Un restricted equity |
Total equity |
|---|---|---|---|---|---|
| 23 | |||||
| Equity on 31 December 2010 | 5,097 | 3,166 | 1,099 | 9,362 | |
| Profi t for the year | 1,547 | 1,547 | |||
| Total income and expenses for the period |
1,547 | 1,547 | |||
| Cash dividend | –489 | –489 | |||
| Share buybacks | –38 | –38 | |||
| Equity on 31 December 2011 | 5,097 | 3,166 | 2,119 | 10,382 | |
| Profi t for the year | 336 | 336 | |||
| Total income and expenses for the period |
336 | 336 | |||
| Cash dividend | –487 | –487 | |||
| Divestment of treasury shares | 89 | 89 | |||
| Equity on 31 December 2012 | 5,097 | 3,166 | 2,057 | 10,320 |
| SEK millions | Note | 2012 | 2011 |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Operating loss excl. depreciation | –80 | –91 | |
| Interest received | 499 | 457 | |
| Interest paid | 32 | –645 | –629 |
| Income tax paid | – | – | |
| Cash fl ow before change in working capital | –226 | –263 | |
| Change in working capital | |||
| Current receivables | 103 | –136 | |
| Current liabilities | –2 | 7 | |
| Total change in working capital | 33 | 101 | –129 |
| Cash fl ow from operating activities | –125 | –392 | |
| INVESTING ACTIVITIES | |||
| Acquisition of interests in associated companies | –243 | – | |
| Acquisition and sale of interests in other companies |
1 | –4 | |
| Other tangible fi xed assets | 0 | 0 | |
| Other fi nancial fi xed assets | –1,950 | 738 | |
| Cash fl ow from investing activities | –2,192 | 734 | |
| FINANCING ACTIVITIES | |||
| Dividends paid | –487 | –489 | |
| Group contributions received and made | 336 | 65 | |
| Share buybacks | 89 | –38 | |
| Loans received/repayment of loans | 2,509 | 125 | |
| Cash fl ow from fi nancing activities | 2,447 | –337 | |
| Change in cash and cash equivalents | 130 | 5 | |
| Cash and cash equivalents | |||
| at beginning of period | 34 | 69 | 64 |
| Cash and cash equivalents at end of period |
34 | 199 | 69 |
Fabege AB (publ), company registration number 556049-1523, with registered offi ce in Stockholm, is the Parent Company of a corporate group with subsidiary companies, as stated in Note 41. The company is registered in Sweden and the address of the company's head offi ce in Stockholm is: Fabege AB, Box 730, 169 27 Solna. Visiting address: Pyramidvägen 7.
Fabege is one of Sweden's leading properties companies, with a business that is concentrated to the Stockholm region. The company operates through subsidiaries and its property portfolio consists primarily of commercial premises.
The consolidated fi nancial statements have been prepared in accordance with the Swedish Annual Accounts Act, the International Financial Reporting Standards (IFRS), as adopted by the EU, and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), at 31 December 2012. The Group also applies Recommendation RFR 1 (Supplementary Accounting Rules for Corporate Groups) of the Swedish Financial Reporting Board, which specifi es the supplementary rules that are required in addition to IFRS under provisions contained in the Swedish Annual Accounts Act. The annual accounts of the Parent Company have been prepared in accordance with the Annual Accounts Act, Recommendation RFR 2 Accounting for Legal Entities of the Swedish Financial Reporting Board and statements issued by the Swedish Financial Reporting Board. The Parent Company's accounts comply with the Group's principles, except in respect of what is stated below in the section entitled Differences between the accounting policies of the Group and the Parent Company. Items included in the annual accounts have been stated at cost, except in respect of revaluations of investment properties and in respect of fi nancial instruments. The following is a description of signifi cant accounting policies that have been applied.
Subsidiaries are those companies in which the Group directly or indirectly holds more than 50 per cent of the votes or in other ways exercises a controlling infl uence. Controlling infl uence means that the Group has the right to draw up fi nancial and operational strategies. The existence and effect of potential voting rights that can currently be used or converted is taken into account in assessing whether the Group exercises a controlling infl uence. Subsidiaries are included in the consolidated fi nancial statements as of the time when the controlling infl uence is transferred to the Group and are excluded from the consolidated fi nancial statements as of the time when the controlling infl uence ceases. The acquisition of a subsidiary is recognised in accordance with the purchase method. The purchase consideration for the business combination is measured at fair value at the acquisition date, which is calculated as the total of the fair values at the acquisition date for the assets acquired, assumed or acquired liabilities, as well as equity shares issued in exchange for control of the acquired business. Acquisition-related costs are recognised in profi t or loss as incurred. For business combinations in which the sum of the purchase consideration, any non-controlling interests and fair value at the acquisition date of prior share holdings exceeds the fair value at the acquisition date of identifi able acquired net assets, the difference is recognised as goodwill in the statement of fi nancial position. If the difference is negative, it is recognised as profi t on a bargain purchase directly in profi t or loss following retesting of the difference.
A company is recognised as an associated company if Fabege holds at least 20 per cent and no more than 50 per cent of the votes or otherwise exercises a signifi cant infl uence on the company's operational and fi nancial control. In the consolidated fi nancial statements associated companies are recognised in accordance with the equity method. Interests in associated companies are recognised in the balance sheet at cost after adjusting for changes in the Group's share of the associated company's net assets, less any decrease in the fair value of individual interests. In transactions among Group companies and associated companies that part of unrealised gains and losses which represents the Group's share of the associated company is eliminated, except as regards unrealised losses that are due to impairment of an assigned asset.
For each business combination, the non-controlling interest in the acquired company is either measured at fair value or at the value of the proportional share of the non-controlling interest of the acquired company's identifi able net assets.
All investment properties are let to tenants under operating leases. Rental income from the company's property management activities is recognised in the period to which it refers. Gains or losses from the sale of properties are recognised at the
date of contract unless the purchase contract contains specifi c provisions which prohibit this. Rental income from investment properties is recognised on a straightline basis in accordance with the terms and conditions of the applicable leases. In cases where a lease provides for a discounted rent during a certain period that is offset by a higher rent at other times, the resulting defi cit or surplus is distributed over the term of the lease.
Interest income is distributed over the term of the contract. Dividends on shares are recognised when the shareholder's right to receive payment is deemed to be secure.
Leasing agreements in which the risks and benefi ts associated with ownership of the assets are in all material respects borne by the lessor are classifi ed as operating leases. All of the Group's leases are classifi ed as operating leases. Lease payments are recognised as an expense in profi t or loss and distributed over the term of the lease on a straight-line basis.
All properties in the Group are classifi ed as investment properties, as they are held for the purpose of earning rental income or for capital gains or a combination of the two.
The concept of investment property includes buildings, land and land improvements, new builds, extensions or conversions in progress and property fi xtures.
Investment properties are recognised at fair value at the balance sheet date. Gains and losses attributable to changes in the fair value of investment properties are recognised in the period in which they arise in the income and expense item "Unrealised changes in value, investment properties".
Gains or losses from the sale or disposal of investment properties consist of the difference between the selling price and carrying amount based on the most recent revaluation to fair value. Gains or losses from sales or disposals are recognised in the income and expense item Realised changes in value, investment properties. Projects involving conversion/maintenance and adaptations for tenants are recognised as an asset to the extent that the work being undertaken adds value in relation to the latest valuation. Other expenses are charged to expense immediately. Sales and acquisitions of properties are recognised at the time when the risks and benefi ts associated with ownership are transferred to the buyer or seller, which is normally on the contract date.
Equipment is recognised at cost less accumulated depreciation and any impairment. Depreciation of equipment is expensed by writing off the value of the asset on a straight-line basis over its estimated period of use.
In case of an indication of a decrease in the value of an asset (excluding investment properties and fi nancial instruments, which are measured at fair value), the recoverable amount of the asset is determined. If the carrying amount of the asset exceeds the recoverable amount the asset is written down to this value. Recoverable amount is defi ned as the higher of market value and value in use. Value in use is defi ned as the present value of estimated future payments generated by the asset.
In the consolidated fi nancial statements loan expenses have been recognised in profi t or loss in the year to which they refer, except to the extent that they have been included in the cost of a building project. Fabege capitalises borrowing costs attributable to the purchase, construction or production of an assets that takes a considerable amount of time to complete for its intended use or sale. The interest rate used to calculate the capitalised borrowing cost is the average interest rate of the loan portfolio. In the accounts of individual companies the main principle – that all loan expenses should be charged to expense in the year to which they refer – has been applied.
The income and expense item "Tax on profi t for the year" includes current and deferred income tax for Swedish and foreign Group units. The current tax liability is based on the taxable profi t for the year. Taxable profi t for the year differs from recognised profi t for the year in that it has been adjusted for non-taxable and non-deductible items. The Group's current tax liability is calculated on the basis of tax rates that have been prescribed or announced at the balance sheet date.
Deferred tax refers to tax on temporary differences that arise between the carrying amount of assets and the tax value used in calculating the taxable profi t. Deferred tax is recognised in accordance with the balance sheet liability method. Deferred tax liabilities are recognised for practically all taxable temporary differences, and deferred tax assets are recognised when it is likely that the amounts can be used to offset future taxable profi ts. The carrying amount of deferred tax assets is tested for impairment at the end of each fi nancial year and an impairment loss is recognised to the extent that it is no longer probable that suffi cient taxable profi ts will be available against which the deferred tax asset can be fully or partially offset. Deferred tax is recognised at the nominal current tax rate with no discount. Deferred tax is recognised as an income or expense in profi t or loss, except in those cases where it refers to transactions or events that have been rec-
ognised directly in equity. In such cases the deferred tax is also recognised directly in equity. Current deferred tax assets and tax liabilities are offset against one another when they refer to income tax payable to the same tax authority and when the Group intends to settle the tax by paying the net amount.
Transactions in foreign currencies are translated, upon inclusion in the accounts, to the functional currency at the exchange rates applying on the transaction date. Monetary assets and liabilities in foreign currencies are translated at the balance sheet date at the exchange rates applying on the balance sheet date. Any resulting foreign exchange differences are recognised in profi t or loss for the period.
In preparing the consolidated fi nancial statements, the balance sheets of the Group's foreign operations are translated from their functional currencies into Swedish kronor based on the exchange rates applying at the balance sheet date. Income and expense items are translated at the average exchange rate for the period. Any resulting translation differences are recognised in equity and transferred to the Group's translation reserve. The accumulated translation difference is transferred and recognised as part of a capital gain or loss in cases where the foreign operation is divested.
Fabege reports cash fl ows from the company's main sources of income: net operating income from the property management business and gains or losses from sales of properties in the company's day-to-day activities.
Provisions are recognised when the company has a commitment and it is likely that an outfl ow of resources will be required and the amount can be reliably estimated. Contingent liabilities are recognised if there exists a possible commitment that is confi rmed only by several uncertain future events and it is not likely that an outfl ow of resources will be required or that the size of the commitment can be calculated with suffi cient accuracy.
Buybacks of treasury shares are recognised as a deductible item, net after any transaction costs and tax on retained earnings, until the shares are divested or cancelled. If these common shares are subsequently divested, the amount received (net after any transaction costs and tax effects) is recognised in retained earnings.
A fi nancial asset or fi nancial liability is recognised in the balance sheet when the company becomes a party to the commercial terms and conditions of the instrument. A fi nancial asset is removed from the balance sheet when the rights inherent in the agreement are realised or expire or if the company loses control over them. A fi nancial liability is removed from the balance sheet when the obligation arising from the agreement has been met or is extinguished for other reasons.
Transaction date accounting is used for derivatives while settlement date accounting is used for spot purchases and sales of fi nancial assets.
In connection with each fi nancial report the company assesses whether there are objective indications of impairment of fi nancial assets or groups of fi nancial assets. Financial instruments are recognised at amortised cost or fair value, depend-
ing on the initial categorisation under IAS 39. IFRS 7 entails requirements concerning disclosure of classes of fi nancial instruments, which are to be presented to enable reconciliation against the balance sheet. A maturity analysis of fi nancial liabilities is to be presented, which is to contain contractual payment commitments, which means it has to include interest at nominal amounts.
Fair value of derivatives and loan liabilities is determined by discounting future cash fl ows by the quoted market interest rate for each maturity. Future cash fl ows in the derivatives portfolio are calculated as the difference between the fi xed contractual interest under each derivatives contract and the implied Stockholm Interbank Offered Rate (STIBOR) for the period concerned. The present value of future interest fl ows arising there from is calculated using the implied STIBOR curve. For the callable swaps included in the portfolio the option component has not been assigned a value, as the swaps can only be called at par value and thus do not have an impact on earnings. Decisions to call swaps are made by the banks.
Shareholdings have been categorised as "Financial assets held for trading". These are measured at fair value and changes in value are recognised in profi t or loss. Quoted market prices are used in determining the fair value of shareholdings. Where no such prices are available fair value is determined using the company's own valuation technique.
For all fi nancial assets and liabilities, unless otherwise stated in the Notes, the carrying amount is considered to be a good approximation of fair value.
Financial assets and liabilities are offset against each other and the net amount is recognised in the balance sheet when there is a legal right of set-off and there is an intention to settle the items by a net amount or to simultaneously realise the asset and settle the liability.
Cash and cash equivalents consist of cash assets held at fi nancial institutions. Cash and cash equivalents also includes short-term investments with maturities of less than three months from the date of acquisition that are exposed to insignifi cant risk of fl uctuations in value. Cash and cash equivalents are recognised at their nominal amounts.
Trade receivables are categorised as "Loans and receivables", which means that the item is recognised at amortised cost. Fabege's trade receivables are recognised at the amount that is expected to be received after deducting for uncertain receivables, which are assessed individually. The expected maturity of a trade receivable is short, and the value is therefore recognised at the nominal amount with no discount. Impairment of trade receivables is recognised in operating expenses.
Long-term receivables and other (current) receivables primarily consist of promissory note receivables relating to sales proceeds for properties that have been sold but not yet vacated. These items are categorised as "Loans and receivables", which means that the items are recognised at amortised cost. Receivables are recognised at the amount that is expected to be received after deducting for uncertain receivables, which are assessed individually. Receivables with short maturities are recognised at nominal amounts without discounting.
Fabege does not apply hedge accounting of derivatives and therefore categorises derivatives as "Financial assets or fi nancial liabilities held for trading purposes". Assets and liabilities in these categories are stated at fair value and changes in value are recognised in profi t or loss.
Trade payables are categorised as "Other liabilities", which means that the item is recognised at amortised cost. The expected maturity of a trade payable is short, and the liability is therefore recognised at the nominal amount with no discount.
Fabege's liabilities to credit institutions and holders of Fabege commercial paper and other liabilities are categorised as "Other liabilities" and measured at amortised cost. Long-term liabilities have an expected maturity of more than one year while current liabilities have a maturity of less than one year.
Remuneration to employees in the form of salaries, holiday pay, paid sick leave, etc. as well as pensions are recognised as it is earned. Pensions and other compensation paid after termination of employment are classifi ed as defi ned contribution or defi ned benefi t pension plans. The Group has both defi ned contribution and defi ned benefi t pension plans. Pension costs for defi ned contribution plans are charged to expense as they are incurred. For defi ned benefi t plans the present value of the pension liability is calculated using an actuarial method known as the projected unit credit method. Actuarial gains and losses are recognised in profi t or loss insofar as they exceed the higher of 10 per cent of the Group's pension assets and pension liabilities at the beginning of the reporting period. Amounts outside this band are recognised in profi t or loss during the employees' estimated average remaining period of service. Employees in the former Fabege have defi ned benefi t pension plans. As of 2005, no further accrual of this pension liability has been made. For Fabege, the new IAS 19 and the abolition of the corridor method entail that the recognised pension liability, including payroll tax, increases by SEK 23m as of 1 January 2013 (SEK 17m of 1 January 2012).
Segment information is presented from the perspective of management and that operating segments are identifi ed based on the internal reports submitted to the company's chief operating decision maker. The Group has identifi ed the CEO as the chief operating decision maker, which means that the internal reports used by the CEO for monitoring the business and making decisions on the allocation of resources have been used as a basis for the presented segment information. Based on the company's internal reporting, two operating segments have been identifi ed: Property Management and Property Development. 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 fi nancial 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). This also applies to tax that is not directly attributable to earnings from property management activities or sales. Property assets are attributed to each segment pursuant to the classifi cation on the balance sheet date.
The fi nancial statements of the Parent Company have been prepared in accordance with the Annual Accounts Act, Recommendation RFR 2 Accounting for Legal Entities of the Swedish Financial Reporting Board and statements issued by the Swedish Financial Reporting Board. Tax laws in Sweden allow companies to defer tax payments by making allocations to untaxed reserves in the balance sheet via the income and expense item appropriations. In the consolidated balance sheet these are treated as temporary differences, i.e. a breakdown is made between deferred tax liability and equity. Changes in untaxed reserves are recognised in the consolidated profi t and loss account and broken down into deferred tax and profi t for the year. Interest during the period of construction that is included in the cost of the building is only recognised in the consolidated fi nancial statements.
A Group contribution received by the Parent Company from a subsidiary is recognised under the same policies as traditional dividends from subsidiaries, i.e. as fi nancial income. Group contributions paid from the Parent Company to a subsidiary are recognised as a fi nancial expense in profi t or loss. The amendment to RFR 2 concerning Group contributions requires the company to now recognise Group contributions as fi nancial income/fi nancial expense.
Defi ned benefi t and defi ned contribution pension plans are recognised in accordance with hitherto applicable Swedish accounting standards, which are based on the provisions of the Swedish Pension Obligations Vesting Act ("Tryggandelagen").
The following new and amended standards and interpretations have come into effect and apply for the 2012 fi nancial year:
Amendments to IFRS 7 Financial instruments: Disclosures (Disclosures related to transfers of fi nancial assets) Amendment to IAS 12 Income taxes (Deferred Tax: Recovery of Underlying Assets). The amendments to IFRS 7 Financial instruments: Disclosures increase the disclosure requirements arising from transfers of fi nancial assets.
There are no new interpretations that came into effect for the 2012 fi nancial year. Company management does not believe that the new and amended standards will have any impact on the Group's 2012 fi nancial statements.
| Standards | To be applied to the fi nan cial year commencing: |
|---|---|
| Amendments to IAS 1 | |
| Presentation of Financial Statements | |
| (Presentation of items in other comprehensive income) | 1 July 2012 or later |
| Amendments to IAS 19 Employee Benefi ts | 1 January 2013 or later |
| IFRS 13 Fair Value Measurement | 1 January 2013 or later |
| Improvements to IFRSs 2009–2011 cycle* | 1 January 2013 or later |
| Amendments to IFRS 7 Financial instruments: Disclosures | |
| (Offsetting of fi nancial assets and fi nancial liabilities) | 1 January 2013 or later |
| Amendments to IAS 32 Financial instruments: Classifi cation | |
| (Offsetting of fi nancial assets and fi nancial liabilities) | 1 January 2014 or later |
| IFRS 10 Consolidated Financial Statements | 1 January 2014 or later |
| IFRS 11 Joint Arrangements | 1 January 2014 or later |
| IFRS 12 Disclosures of Interests in Other Entities | 1 January 2014 or later |
| Amendments to IFRS 10, IFRS 11 and IFRS 12 | |
| (transitional rules)** | 1 January 2014 or later |
| Amendments to IAS 27 Separate Financial Statements | 1 January 2014 or later |
| Amendments to IAS 28 Investments in Associates | |
| and Joint Ventures | 1 January 2014 or later |
| Investment Entities (amendments to IFRS 10, IFRS 12 | |
| and IAS 27)* | 1 January 2014 or later |
| IFRS 9 Financial Instruments and subsequent amendments | |
| to IFRS 9 and IFRS 7* | 1 January 2015 or later |
* Not yet approved for application within the EU.
** Not yet approved for application within the EU. IFRS 10, IFRS 11, IFRS 12, IAS 27 and IAS 28 will, according to the IASB, come into force in fi nancial years beginning 1 January 2013, but within the EU they will come not come into force until fi nancial years beginning on 1 January 2014 or later.
| Interpretations | To be applied to fi nancial years commencing: |
|---|---|
| IFRIC 20 | |
| Stripping Costs in the Production Phase of a Surface Mine | 1 January 2013 or later |
The aforementioned new and amended standards and interpretations have yet to be applied by the Group.
Amendments to IAS 19 change the recognition of defi ned-benefi t pension plans and severance pay. The most signifi cant amendments pertain to the recognition of defi ned-benefi t obligations and plan assets. The amendments require actuarial gains and losses to immediately be recognised in other comprehensive income, which entails the elimination of the corridor method. Furthermore, the interest expense and expected return on plan assets are replaced by a "net interest expense," which is to be calculated by using the discount rate on net defi nedbenefi t pension liabilities or assets. When the Group begins to apply the amendments to IAS 19, it will no longer apply UFR 4 Accounting for special employer's contribution and tax on returns, which has been rescinded by the Swedish Financial Reporting Board. The Group will instead recognise a special payroll tax according to the rules stipulated in IAS 19, which will require the actuarial assumptions that are to be made during the calculation of defi ned-benefi t pension plans to also include taxes that accrue to pension benefi ts. Company management believes that the change concerning a special payroll tax and tax on returns could impact the recognised amounts in the fi nancial statements.
Improvements to IFRSs 2009–2011 cycle comprise a change package featuring improvements to various standards and interpretations. The amendments that will come into effect for fi nancial years beginning on January 1, 2013 or later are:
– IAS 1 Presentation of Financial Statements (Clarifi cation of requirements regarding comparative information)
– IAS 16 Property Plant and Equipment (Classifi cation of servicing equipment) – IAS 32 Financial Instruments: Presentation (Tax effects of equity distributions to owners)
– IAS 34 Interim Financial Reporting (Interim reporting and segment information for total assets and liabilities). These amendments will not have any material effect on the Group's reporting.
In May 2011, the IASB published a package of fi ve standards for consolidated fi nancial statements, joint arrangements, associated companies and disclosures; three new standards: IFRS 10, IFRS 11, IFRS 12 and amendments to two existing standards: IAS 27 and IAS 28. The main requirements of these fi ve standards are described below:
IFRS 10 Consolidated Financial Statements replaces sections of IAS 27 Consolidated and Separate Financial Statements that address when and how an owner company is to prepare consolidated fi nancial statements.
IFRS 11 Joint Arrangements replaces IAS 31 Interests in Joint Ventures and SIC-13 Transfers of non-monetary assets from a joint owner to a jointly controlled entity. IFRS 11 classifi es joint arrangements as either joint operations or joint ventures. A joint operation or a joint venture is the parties' contractual rights and obligations. Under IFRS 11, the equity method is to be used for investments in joint ventures. Accordingly, the proportionate consolidation method is no longer permissible for joint ventures.
IFRS 12 Disclosure of Interest in Other Entities is to be applied to companies that hold participations in subsidiaries, joint arrangements, associated companies or structured entities that are not consolidated.
IFRS 13 Fair Value Measurement establishes a framework for measurement at fair value when so required by other standards. The standard is applicable when measuring fi nancial and non-fi nancial items at fair value. Fair value is defi ned as the price that would be received in the event of a sale of an asset or the compensation that would be received to transfer a liability in a normal transaction between market players at the time of measurement, known as the exit price. IFRS 13 requires several quantitative and qualitative disclosures concerning measurement at fair value.
The amendment to IFRS 9 Financial instruments that was issued in December 2011 requires IFRS 9 to be applied to fi nancial years commencing 1 January 2015 or later. The most signifi cant impact of IFRS 9 in terms of the classifi cation and measurement of fi nancial liabilities relates to changes in fair value that arise from changes in the credit risk of a fi nancial liability (identifi ed at fair value in profi t or loss). Under IFRS 9, for fi nancial liabilities that are classifi ed at fair value in profi t or loss, the amount of the change in fair value that results from the change in credit risk for the liability must be presented in other comprehensive income.
Company management's assessment is that the application of IFRS 9 and IFRS 13 could affect the recognised amounts in the fi nancial statements in terms of the Group's fi nancial assets and liabilities. The executive management has yet to conduct a detailed analysis of the impact of the application of IFRS 9 and IFRS 13 and is thus presently unable to quantify their impact.
The amendments to RFR 2 Accounting for Legal Entities that have come into effect had no material effect on the Parent Company's fi nancial statements. Amendments to RFR 2 that have not yet come into effect.
The Swedish Financial Reporting Board has issued an amendment to RFR 2 regarding the recognition of Group contributions which will come into effect for fi nancial years beginning on January 1, 2013 or later. This amendment means that companies can choose to recognise Group contributions in accordance with the main rule of the recommendation or an alternative rule. Under the main rule, the Parent Company is to recognise Group contributions received from subsidiaries as fi nancial income and Group contributions paid to subsidiaries as an
(Note 2 cont.)
increase in participations in Group companies. The alternative rule entails that Group contributions that the Parent Company receives from or pays to subsidiaries are recognised as appropriations.
The company applies the main rule in its reporting.
As a net borrower, Fabege is exposed to fi nancial risks. In particular, Fabege is exposed to fi nancing risk, interest risk, currency risk and credit risk. Operational responsibility for the Group's borrowing, liquidity management and fi nancial risk exposure rests with the fi nance function, which is a central unit in the Parent Company. Fabege's fi nancial policy, as adopted by the Board of Directors, specifi es how fi nancial risks should be managed and defi nes the limits for the activities of the company's fi nance function. Fabege aims to limit its risk exposure and, as far as possible, control the exposure with regard to choice of investments, tenants and contract terms, fi nancing terms and business partners.
Financing and liquidity risk is defi ned as the borrowing requirement that can be covered in a tight market. The borrowing requirement can refer to refi nancing of existing loans or new borrowing.
Fabege strives to ensure a balance between short-term and long-term borrowing, distributed among a number of different sources of funding. Fabege's fi nancial policy states that unused credit facilities must be available to ensure good liquidity. Agreements on committed long-term credit lines with defi ned terms and conditions and revolving credit facilities have been concluded with a number of major lenders. Fabege's main credit providers are the Nordic commercial banks.
The Group's borrowing is secured mainly by mortgages on properties. Since autumn 2004 the Group has been active in the Swedish commercial paper market with a commercial paper programme of SEK 5,000m. The company is aiming to become a signifi cant player in this market. At year-end 2012, Fabege had unused credit facilities of SEK 3,955m excluding the commercial paper programme.
| Year, maturity | Committed amount, SEKm | Utilised amount, SEKm |
|---|---|---|
| Commercial paper | ||
| programme | 5,000 | 2,740 |
| < 1 year | 8,348 | 3,910 |
| 1–2 year | 710 | 710 |
| 2–3 year | 5,805 | 4,022 |
| 3–4 year | 2,041 | 2,041 |
| 4–5 year | 110 | 110 |
| > 5 year | 4,976 | 4,502 |
| Total | 26,990 | 18,035 |
Interest risk refers to the risk that changes in interest rates will affect the Group's borrowing expense. Interest expenses constitute the Group's single largest expense item. Under its adopted fi nancial policy, the company aims to fi x interest rates based on forecast interest rates, cash fl ows and capital structure. Fabege employs fi nancial instruments, primarily interest rate swaps, to limit interest risk and as a fl exible means of adjusting the average fi xed-rate term of its loan portfolio. The sensitivity analysis in the Directors' Report shows how the Group's shortterm and long-term earnings are affected by a change in interest rates. Interestbearing liabilities at 31 December were SEK 18,035m (16,755) with an average interest rate of 3.80 per cent (3.72) excluding the cost of committed lines of credit, or 3.93 per cent (3.80) including this cost. Of total liabilities, SEK 2,740m (1,719) referred to outstanding commercial paper. The total loan volume at 31 December includes loans for works in progress of SEK 76m. The loan volume for projects during the year averaged SEK 1,142m, upon which interest payment of SEK 35m was capitalised.
The average fi xed-rate term of the loans, including the effects of exercised derivatives, was 41 months (44) at 31 December. The average maturity was 5.1 years (5.9). Average leverage at year-end was 57 per cent (57). The derivatives portfolio is measured at fair value in accordance with IAS 39. The value of the portfolio is SEK –854m (–664). Realised changes in value in profi t for the year were SEK 0m (0) and unrealised changes in value SEK –190m (–397). Changes in market value occur as a result of changes in market interest rates and volatility, since the company holds structured derivative products in its portfolio. A market valuation of the loan portfolio (excl. derivatives products) shows a surplus value of SEK 2m (5). For all other fi nancial assets and liabilities, unless otherwise stated in the Notes, the carrying amount is considered a solid approximation of fair value.
At year-end, Fabege had outstanding bonds of SEK 1,045m within the framework of the bond programme launched in December 2011. The programme, which has a limit of SEK 5,000m, was introduced via the co-owned company Svensk Fastighetsfi nansiering AB (SFF). The bonds are secured by collateral in
property mortgage deeds. SFF is jointly owned by Fabege, Wihlborgs and Peab. Fabege owns 33.3 per cent of the company. The aim is to expand the company's fi nancing base with a new source of fi nancing.
Net interest expense includes SEK 15m in nonrecurring costs, due mainly to the take-out of new mortgage deeds.
Interest expenses linked to the liabilities are incurred over the course of the remaining maturities. Trade payables and other current liabilities mature within 365 days of the balance sheet date. Fabege's obligations arising from these fi nancial liabilities are largely met by rent payments from tenants, most of which are payable on a quarterly basis.
| Year, maturity | SEKm | Average interest rate, % |
Share, % |
|---|---|---|---|
| < 1 year | 5,129 | 6.16* | 28 |
| 1–2 year | 1,206 | 2.48 | 7 |
| 2–3 year | 0 | 0.00 | 0 |
| 3–4 year | 2,100 | 2.53 | 12 |
| 4–5 year | 6,100 | 3.26 | 34 |
| > 5 year | 3,500 | 2.48 | 19 |
| Total | 18,035 | 3.80 | 100 |
* The average interest rate for the < 1 year period includes the margin for the entire debt portfolio because the Company's fi xed-rate period is established using interest rate swaps, which are traded without margins.
Currency risk refers to the risk that Fabege's profi t and loss account and balance sheet will be negatively affected by a change in exchange rates. Under Fabege's policy, property holdings are to be fi nanced in the local currency.
Credit risk is the risk of loss as a result of the failure of a counterparty to fulfi l its obligations. The risk is limited by the requirement, contained in the company's fi nancial policy, that only creditworthy counterparties be accepted in fi nancial transactions. Credit risk arising from fi nancial counterparties is limited through netting/ISDA agreements and was deemed to be non-existent at year-end. As regards trade receivables, the policy states that customary credit assessments must be made before a new tenant is accepted. The company also assesses creditworthiness in respect of any promissory note receivables arising from the sale of properties and businesses, as well as concerning loans to associated companies. The maximum credit exposure in respect of trade receivables and promissory note receivables is the carrying amount.
Responsibility for the Group's external borrowing normally rests with the Parent Company. The company uses the funds raised to fi nance the subsidiaries on market terms.
The valuation at fair value of the company's investment properties involves the use of estimates and assessments that are to be regarded as signifi cant for accounting purposes (see also Note 15). The estimates and assessments made in connection with the sale of investment properties, primarily with respect to rental guarantees and promissory note receivables, are also deemed signifi cant. For rental guarantees, an assessment is made of the probability of payment and of any investment costs for preparing the premises for lets during the remaining term of the guarantee. Rental guarantees etc. are included in the balance sheet item "Provisions." When property transactions are performed, an assessment of risk transfer is made, which serves a guideline when the transaction is to be recognised. As for promissory note claims, an assessment is made that shows which amount can be expected to fl ow in.
Upon acquisition of a company, the company makes an assessment of whether the acquisition is to be regarded as an asset acquisition or a business combination. The acquisition of a company that only contains properties and has no property management organisation/administration is normally classifi ed as an asset acquisition.
In measuring loss carryforwards, the company makes an assessment of the probability that the loss can be used to offset future taxable profi t. Confi rmed tax losses are used as a basis for calculating deferred tax assets if it is highly likely that they can be used to offset future profi t.
For such fi nancial assets as interests in associated companies, promissory note receivables from associated companies and other companies, an assessment of the market value of each interest is performed and for promissory note receivables an assessment is made of the amounts expected to be received. As regards Fabege's tax cases, the assessment has been made that no additional provision other than the reserve of SEK 1.9bn is required. For more information, also refer to the description of tax cases on page 63 of the Directors' Report.
| SEKm | Property Management Jan–Dec 2012 |
Development Projects Jan-Dec 2012 |
Total Jan–Dec 2012 |
Property Management Jan–Dec 2011 |
Development Projects Jan-Dec 2011 |
Total Jan–Dec 2011 |
|---|---|---|---|---|---|---|
| Rental income | 1,698 | 171 | 1,869 | 1,618 | 186 | 1,804 |
| Property expenses | –537 | –68 | –605 | –507 | –70 | –577 |
| Net operating income | 1,161 | 103 | 1,264 | 1,111 | 116 | 1,227 |
| Surplus ratio, % | 68 | 60 | 68 | 69 | 62 | 68 |
| Central administration and marketing | –53 | –11 | –64 | –51 | –12 | –63 |
| Net interest expense | –526 | –118 | –644 | –486 | –123 | –609 |
| Share in profi t/loss of associated companies | 23 | 114 | 137 | 7 | 2 | 9 |
| Operating profi t/loss | 605 | 88 | 693 | 581 | –17 | 564 |
| Realised changes in value, properties | 53 | 114 | 167 | 88 | 85 | 173 |
| Unrealised changes in value, properties | 625 | 784 | 1,409 | 675 | 418 | 1,093 |
| Profi t before tax per segment | 1,283 | 986 | 2,269 | 1,344 | 486 | 1,830 |
| Change in value, fi xed income derivatives and equities |
–237 | –413 | ||||
| Profi t before tax | 2,032 | 1,417 | ||||
| Properties, market value | 28,842 | 2,794 | 31,636 | 22,773 | 6,377 | 29,150 |
| Occupancy rate, % | 93 | 68 | 92 | 92 | 75 | 90 |
Segments are recognised from the point of view of management, divided into two segments: Property Management and Development Projects. 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 either segment based on the period of time that the property belonged to the segment. Central administration and items in net fi nancial 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 attributed directly to the respective segments in accordance with the classifi cation at the balance sheet date.
| Average no. of | Of which, | Of which, | ||
|---|---|---|---|---|
| employees | 2012 | men | 2011 | men |
| Parent Company | 30 | 12 | 32 | 12 |
| Subsidiaries | 89 | 68 | 92 | 68 |
| Group, total | 119 | 80 | 124 | 80 |
| Salaries and other compensa tion 2012 |
Social security contribu tions 2012 |
Salaries and other compensa tion 2011 |
Social security contribu tions 2011 |
|
|---|---|---|---|---|
| Parent Company | 24 | 17 | 25 | 26 |
| – of which, pension expenses |
7 | 12 | ||
| Subsidiaries | 46 | 23 | 42 | 21 |
| – of which, pension expenses |
5 | 5 | ||
| Group, total | 70 | 40 | 67 | 47 |
| – of which, total pension expenses |
12 | 17 |
| Board 2012 |
Board 2011 |
Senior executives 2012 |
Senior executives 2011 |
|
|---|---|---|---|---|
| Men | 6 | 7 | 4 | 4 |
| Women | 2 | 2 | 1 | 1 |
| Total | 8 | 9 | 5 | 5 |
During the year, four major projects were completed. The properties Bocken 39, Apotekaren 22 and Uarda 5 were transferred from Property Development to Property Management. The property Klamparen 10 was completed and sold during the fourth quarter. Two properties (Nöten 4, Solna Strand and Fenix 1, Norr malm) were transferred from Property Management to Property Development following decisions concerning major investments and refurbishment. In the third quarter, the property Luma 1 (Hammarby Sjöstad), which over a number of years had undergone gradual development, was transferred to Property Management. During the fourth quarter, an additional two properties that had undergone gradual development were transferred from Property Development to Property Management.
The term Other senior executives refers to the four persons who together with the Chief Executive Offi cer made up executive management in 2012. As of 1 April 2011, the executive management team consists of the Chief Financial Offi cer (CEO), Executive Vice President and Chief Financial Offi cer (CFO), Director of Business Development, Director of Properties and Director of Projects. The compensation paid to senior executives is based on market terms in accordance with the guidelines adopted by the AGM. For the current composition of executive management, see page 87.
Fabege has a profi t-sharing fund covering all employees of the company. Allocations to the profi t-sharing fund are based on the achieved return on equity and are subject to a ceiling of one base amount per year per employee. For 2012, provisions of about SEK 6.6m, which is equivalent to 100 per cent of one base amount per employee including payroll tax, have been made. Other benefi ts refer to company cars, household-related services and health insurance.
Pension Pension expenses refer to the expense recognised in profi t or loss for the year. The retirement age for the Chief Executive Offi cer is 65 years. A pension premium of 35 per cent of the CEO's pensionable salary is paid during the term of employment. For other senior executives the ITP supplementary pension plan for salaried employees in industry and commerce or an equivalent plan applies and the retirement age is 65 years.
The contract between the company and the CEO is subject to six months' notice by either party. In case of termination by the company the CEO is entitled to 18 months' severance pay. The employment contracts of other senior executives are terminable on three to six months' notice and provide for severance pay of up to 18 months. Severance pay is only paid in case of termination by the company and is offset by other income. This applies to all persons in senior positions.
The Board of Directors with the exception of the CEO is responsible for preparing a proposal for compensation and other terms of employment for the CEO and a set of principles for compensation and other terms of employment for other senior executives.
The Directors are paid Directors' fees in accordance with the decisions of the Annual General Meeting. In 2012, total Directors' fees of SEK 2,555,000 (2,755,000) were paid. Out of this amount, the Chairman of the Board received SEK 400,000 (400,000) plus a separate fee of SEK 835,000 (835,000) for project work, and other Directors, excluding the CEO, received a total of SEK 1,320,000 (1,520,000). No other fees or benefi ts were paid to the Board.
(Note 6 cont.)
| Group management 2012 | Salary/Fee | Other benefi ts |
Pension | Total |
|---|---|---|---|---|
| Chief Executive Offi cer | 3,850 | 160 | 962 | 4,972 |
| Executive Vice President | 1,933 | 112 | 547 | 2,592 |
| Other senior executives | 4,411 | 219 | 1,059 | 5,689 |
In 2012, extra compensation/bonuses totalling SEK 806,000 (1,154,000) in total were paid to other senior executives. No other variable or share pricerelated compensation was paid to executive management.
| Group management 2011 | Salary/Fee | Other benefi ts |
Pension | Total |
|---|---|---|---|---|
| Chief Executive Offi cer | 2,719 | 152 | 946 | 3,817 |
| Executive Vice President | 1,550 | 89 | 490 | 2,129 |
| Other senior executives | 5,020 | 294 | 1,022 | 6,336 |
| 2012 | 2011 | |||||
|---|---|---|---|---|---|---|
| The Board of Directors |
Fee, Board Director |
Fee, Audit Committee |
Total | Fee, Board Director |
Fee, Audit Committee |
Total |
| Erik Paulsson (Chairman) |
1,235 | – | 1,235 | 1,235 | – | 1,235 |
| Göte Dahlin | – | – | – | 200 | 30 | 230 |
| Oscar Engelbert | 200 | – | 200 | 200 | – | 200 |
| Eva Eriksson | 200 | 30 | 230 | 200 | – | 200 |
| Märta Josefsson | 200 | 60 | 260 | 200 | 60 | 260 |
| Pär Nuder | 200 | 30 | 230 | 200 | 30 | 230 |
| Svante Paulsson | 200 | – | 200 | 200 | – | 200 |
| Mats Qviberg | 200 | – | 200 | 200 | – | 200 |
| Total | 2,435 | 120 | 2,555 | 2,635 | 120 | 2,755 |
All investment properties are let to tenants under operating leases and generate rental income. A breakdown by remaining maturity of future rental income attributable to non-cancellable operating leases is shown in the following table:
| Group | ||
|---|---|---|
| 2012 | 2011 | |
| Maturity: | ||
| Within 1 year | 378 | 232 |
| 1 to 5 years | 1,171 | 1,219 |
| Later than 5 years | 428 | 352 |
| Residential, garage/parking | 93 | 77 |
| Total | 2,071 | 1,880 |
The difference between total rents at 31 December 2012 and income, as stated in profi t or loss for 2012, is due to bought/sold properties, renegotiations and changes in occupancy rates in 2012. Leases relating to residential premises and garage/parking spaces remain in force until further notice.
| Group | |||
|---|---|---|---|
| 2012 | 2011 | ||
| Operating expenses, maintenance and tenant adaptations | –310 | –301 | |
| Property tax | –139 | –129 | |
| Ground rent | –28 | –29 | |
| VAT expense | –13 | –13 | |
| Property/project adm. and lettings | –115 | –105 | |
| Total | –605 | –577 |
Refers to executive management expenses, expenses attributable to the public nature of the company and other expenses connected to the company type. Property- and property management-related administration expenses are not included, as these are treated as property expenses.
| Group | |||
|---|---|---|---|
| 2012 | 2011 | ||
| Realised changes in value: | |||
| Sale proceeds | 1,448 | 936 | |
| Carrying amount and expenses | –1,281 | –763 | |
| 167 | 173 | ||
| Unrealised changes in value: | |||
| Changes in value relating to properties owned at 31 Dec 2012 |
1,289 | 1,088 | |
| Changes in value relating to properties divested during the year |
120 | 5 | |
| 1,409 | 1,093 | ||
| Total realised and unrealised changes in value | 1,576 | 1,266 |
Fair value and the resulting unrealised changes in value are determined quarterly based on valuations. If a property is sold in the second to fourth quarters, the sale will give rise, in addition to the unrealised change in value, to a realised change in value based on the selling price in relation to confi rmed fair value for the last quarter.
In measuring the results for the full year, the following breakdown is instead obtained, irrespective of revaluations during the year:
| Group | ||
|---|---|---|
| 2012 | 2011 | |
| Gain from property sales, full year: | ||
| Sale proceeds | 1,448 | 936 |
| Carrying amount and expenditure (based on value at begin ning of year) excl. changes in the value of sold properties |
–1,161 | –758 |
| 287 | 178 | |
| Unrealised changes in value: | ||
| Changes in value relating to existing properties | 1,289 | 1,088 |
| 1,289 | 1,088 | |
| Total realised and unrealised changes in value | 1,576 | 1,266 |
| Breakdown between positive and negative results | ||
| Positive | 1,697 | 1,466 |
| Negative | –121 | –200 |
| Total | 1,576 | 1,266 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Interest income, Group companies | – | – | 494 | 455 |
| Interest income, promissory notes | 23 | 13 | 5 | 1 |
| Total | 23 | 13 | 499 | 456 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Interest income | 1 | 1 | 5 | 1 |
| Total | 1 | 1 | 5 | 1 |
| Interest expenses | –668 | –623 | –674 | –644 |
| Total | –668 | –623 | –674 | –644 |
All interest income is attributable to fi nancial assets measured at amortised cost. Interest expenses are mainly attributable to fi nancial liabilities measured at amortised cost.
The loss of SEK 47m (loss:16) pertained to unrealised losses of SEK 1m (0) on AIK Fotboll AB and a loss of SEK 57m (loss:16) and profi t of SEK 1m (0), respectively, on shares in Swedish Arena Management AB and Arenabolaget i Solna, as well as realised profi t of SEK 9m (0) and SEK 1m (0), respectively, on shares in Danvikstulls P-däck and Sveland.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Current tax | – | –1 | – | – |
| Current tax attributable to tax cases | –1,900* | – | – | – |
| Total current tax | –1,900 | –1 | – | – |
| Deferred tax | –220 | –275 | –21 | 158 |
| Total tax | –2,120 | –276 | –21 | 158 |
| Nominal tax (26.3%) on profi t after fi nancial items |
–534 | –373 | –94 | –365 |
| Tax effects of adjustment items | ||||
| – Adjustment for defi cits and temporary differences from previous years |
67 | 62 | – | – |
| – Dividends from subsidiaries | – | – | 210 | 526 |
| – Impairment loss on interests in subsidiaries |
– | – | –88 | – |
| – Tax-exempt profi t from sales of Group companies/properties |
114 | 39 | – | – |
| – Current tax attributable to tax cases |
–1,900 | – | – | – |
| – Revaluation of deferred tax, 22% | 134 | – | –47 | – |
| – Other | –1 | –4 | –2 | –3 |
| Total tax | –2,120 | –276 | –21 | 158 |
* Of the SEK 1,900m, SEK 1,623m pertains to tax and SEK 277m to interest.
All properties in Fabege's portfolio are externally valued at least once a year by independent external appraisers with recognised qualifi cations. The properties are valued at fair value, i.e. at their estimated market values. The property appraiser in 2012 was Newsec Analys AB. Fabege provides information about existing and future rental agreements, operations and maintenance expenses and estimated investments based on maintenance plans and estimated future vacancies to the appraisers. On-site inspections were carried out in all properties on at least one occasion during the period 2010–2012. The properties have also been inspected on site in connection with major investments or other changes that affect the value of a property.
The property valuation is based on cash fl ow statements, in which the present value of net operating incomes during a fi ve-year calculation period and the residual value of the property at the end of the period are calculated. Long-term vacancies are estimated on the basis of the property's location and condition. The appraisers' assessments of outgoing payments for running costs and regular maintenance are based on experience of comparable properties and information on historical costs provided by Fabege. Expenses are expected to increase in line with the assumed infl ation rate. Ground rents are calculated on the basis of agreements or, alternatively, in reference to market grounds rents if the ground rent period expires during the calculation period. Property tax is estimated on the basis of the general property taxation for the most recent taxation year.
The discount rate used is a nominal required return on total capital before tax. The required rate of return is based on previous experiences from assessments of the market's required returns for similar properties. The discount rate for Fabege's property portfolio is 7.8 per cent (7.9) and is based on the nominal yield on fi ve-year government bonds plus a premium for property-related risk. The risk premium is set individually based on the stability of the tenant and the length of the lease. The residual value is the market value of the leasehold/property at the end of the period of calculation, which is estimated on the basis of forecast net operating income for the fi rst year after the calculation period. The weighted required yield at the end of the calculation period is 5.7 per cent (5.7).
The market assessments were performed in accordance with guidelines issued by the Swedish Property Index.
| 2.0 |
|---|
| 7.8 |
| 5.7 |
| 4.6 |
| 310 |
| 2012 | Weighted yield, % |
Change in value, % |
|
|---|---|---|---|
| Stockholm inner city | 16,950 | 5.3 | 2.9 |
| Solna | 11,904 | 6.0 | 7.7 |
| Hammarby Sjöstad | 2,515 | 6.3 | 7.7 |
| Other markets | 267 | 7.0 | 0.1 |
| Total | 31,636 | 5.7 | 4.8 |
| Group | |||
|---|---|---|---|
| 2012 | 2011 | ||
| Opening fair value | 29,150 | 26,969 | |
| Property acquisitions | 273 | 518 | |
| Investments in new builds, extensions and conversions | 2,040 | 1,468 | |
| Changes in value, existing property portfolio | 1,289 | 1,088 | |
| Changes in value relating to properties divested during the year |
120 | 5 | |
| Sales and disposals | –1,236 | –898 | |
| Closing fair value | 31,636 | 29,150 |
The carrying amount/fair value and the resulting unrealised changes in value are determined quarterly based on valuations. If a property is sold in the second to the fourth quarter, the sale will give rise, in addition to the unrealised change in value, to a realised change in value that is based on the selling price in relation to confi rmed fair value for the most recent quarter.
Fabege has mortgaged certain properties, see also Note 31 "Assets pledged as security and contingent liabilities".
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Cost at beginning of year | 20 | 21 | 6 | 7 |
| Investments | 0 | 0 | 0 | 0 |
| Sales and disposals | 0 | –1 | 0 | –1 |
| Cost at end of year | 20 | 20 | 6 | 6 |
| Opening depreciation | –19 | –18 | –5 | –4 |
| Sales and disposals | 0 | 0 | 0 | 0 |
| Depreciation charge for the year | 0 | –1 | 0 | –1 |
| Closing accumulated depreciation | –19 | –19 | –5 | –5 |
| Carrying amount | 1 | 1 | 1 | 1 |
The Group has operating leases to a small extent for cars and other technical equipment. All agreements are subject to standard market terms and conditions.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Cost at beginning of year | 591 | 443 | – | – |
| Acquisition/contribution/loss | 219 | 148 | 243 | – |
| Cost at end of year | 810 | 591 | 243 | – |
| Carrying amount | 810 | 591 | 243 | – |
| Name/Org.no. | Regd. offi ce | Capital share, % 2) |
Book value |
|
| Järla Sjö Exploatering AB 556615-3952 |
Stockholm | 33.3 | 0 | |
| Råsta Administration AB 556702-8682 |
Stockholm | 20.0 | 0 | |
| Projektbolaget Oscarsborg AB 556786-3419 |
Stockholm | 50.0 | 2 | |
| TCL Sarl 199824012273) | Luxembourg | 45.0 | 361 | |
| Värtan Fastigheter KB 969601-0793 | Stockholm | 50.0 | 5 | |
| Global Crossing Conference Ltd 33307863594) |
Stockholm | 50.0 | 136 | |
| Catena AB (publ) 556294-1715 | Stockholm | 29.9 | 243 | |
| Nyckeln 0328 SE 517100-00695) | Stockholm | 33.3 | 63 | |
| 810 |
1) Read more about associated companies in Note 35.
2) Applies also to the share of votes for the total number of shares.
3) Fabege's holding in Fastighets AB Tornet is indirectly owned through TCL Sarl. 4) Fabege's holding in Visio is indirectly owned through Global Crossing Conference Ltd.
5) Fabege conducts fi nancial operations in an associated company. The operation comprises fi nancing activities conducted through the raising of loans in the capital market and lending operations through the issuance of cash loans. Svensk Fastighetsfi nansiering AB (SFF) is co/ owned by Fabege, Wihlborgs and Peab. Fabege owns 33.33 per cent. The aim is to expand the company's fi nancing base with a new source of fi nancing. In December 2011, SFF launched a bond loan with a total limit of SEK 5bn. Via the bond loan, Fabege is borrowing SEK 1,045m in the capital market. The bonds are secured by collateral in property mortgage deeds.
Summary of profi t and loss account and balance sheet for associated companies, SEKm (100%)
| Group | |||
|---|---|---|---|
| 2012 | 2011 | ||
| Profi t and loss account | |||
| Rental income | 235 | 203 | |
| Net operating income | 125 | 80 | |
| Profi t for the year | 668 | 415 | |
| Balance sheet | |||
| Fixed assets | 16,703 | 11,517 | |
| Current assets | 1,055 | 987 | |
| Total assets | 17,758 | 12,504 | |
| Shareholders' equity | 9,581 | 9,297 | |
| Minorities | 47 | – | |
| Allocations | 319 | – | |
| Other liabilities | 7,811 | 3,207 | |
| Total equity and liabilities | 17,758 | 12,504 |
Receivables from associated companies pertain to receivables for Visio Exploaterings AB of SEK 176m (0) and from Nyckeln of SEK 72m (0). For 2011, the receivables applied to Projekbolaget Oscarsborg AB in an amount of SEK 87m and for Råsta Holding AB of SEK 159m. Receivables are subject to interest rates at market terms and conditions.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Cost at beginning of year | 165 | 152 | 9 | 6 |
| Acquisitions/Investments | – | 29 | – | 4 |
| Changes in value | 18 | –16 | –1 | –1 |
| Sales | – | – | – | – |
| Cost at end of year | 183 | 165 | 8 | 9 |
| Carrying amount | 183 | 165 | 8 | 9 |
| Shareholding | Carrying amount | |||
| Parent Company | ||||
| AIK Fotboll AB – Fabege's capital share is 18.5 per cent and the number of shares 4,042,649 |
6 | |||
| AIK Hockey AB under formation – Fabege's capital share is 2 per cent and the number of shares 41,000 |
1 | |||
| Interests in tenant-owner's associations | 0 | |||
| Subsidiaries | ||||
| Arenabolaget i Solna AB – Fabege's capital share is 16.7 per cent and the number of shares 167 |
176 | |||
| Swedish Arena Management AB – Fabege's capital share is 16.7 per cent and the number of shares 167 |
0 | |||
| Total | 183 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Maturity: | ||||
| 1 to 5 years after balance sheet date |
157 | 107 | – | 4 |
| later than 5 years from balance sheet date |
– | – | – | – |
| Total | 157 | 107 | – | 4 |
Group
Other long-term receivables from other co-owned companies refer to promissory note receivables.
| Group | ||
|---|---|---|
| Age structure of overdue trade receivables | 2012 | 2011 |
| 0 – 30 days | 23 | 10 |
| 31 – 60 days | 1 | 2 |
| 61 – 90 days | 2 | 4 |
| > 90 days | 14 | 7 |
| Of which, provisions | –10 | –8 |
| Total | 30 | 15 |
The consolidated fi nancial statements include a current receivable from the associated company Oscarsborg of SEK 137m (0) and promissory notes that mature within one year of SEK 75m (0).
| Outstanding shares | Registered shares | |
|---|---|---|
| No. of shares at beginning of year | 162,225,084 | 165,391,572 |
| Cancellation of repurchased shares | – | – |
| Divestment of treasury shares | 1,330,374 | – |
| Total | 163,555,458 | 165,391,572 |
All shares carry equal voting rights, one vote per share.
The quotient value of a share is SEK 30.82.
Proposed dividend per share: SEK 3.00.
For other changes in shareholders' equity, see the consolidated and Parent Company statements of changes in equity.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Available credit limit | 120 | 120 | 120 | 120 |
| Unused share | –120 | –120 | –120 | –120 |
| Used share | 0 | 0 | 0 | 0 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Interest-bearing liabilities | 2012 | 2011 | 2012 | 2011 | |
| Maturity up to 1 year from balance-sheet date |
6,650 | 3,234 | 6,610 | 3,219 | |
| Maturity 1 to 5 years from balance sheet date |
6,883 | 9,545 | 5,717 | 9,096 | |
| Maturity later than 5 years from balance sheet date |
4,502 | 3,976 | 4,502 | 3,976 | |
| Total | 18,035 | 16,755 | 16,829 | 16,291 |
Non-interest-bearing liabilities are expected to become due for payment within one year. For the interest rate maturity structure, see Note 3.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Short-term excess value | – | – | – | – |
| Long-term excess value | – | – | – | – |
| Total excess value | – | – | – | – |
| Short-term defi cit | –33 | – | –33 | – |
| Long-term defi cit | –821 | –664 | –821 | –664 |
| Total defi cit | –854 | –664 | –854 | –664 |
| Total | –854 | –664 | –854 | –664 |
The Group does not apply hedge accounting, see "Financial instruments" in Note 2 Accounting policies. Derivatives are classifi ed as interest-bearing liabilities in the balance sheet and measured at fair value in compliance with level 2, IFRS 7, Section 27a, with the exception of the closable swaps and performance swaps, measured in accordance with level 3, IFRS 7. See also Note 2. Changes in value are recognised in profi t or loss under a separate item, Changes in value, fi xed income derivatives. IAS 39 has been applied also in the Parent Company since 2006.
| Group | Parent Company | |||
|---|---|---|---|---|
| IFRS, level 3 | 2012 | 2011 | 2012 | 2011 |
| Acquisition value at beginning of year |
–532 | –250 | –532 | –250 |
| Acquisitions/Investments | –77 | –56 | –77 | –56 |
| Changes in value | –233 | –282 | –233 | –282 |
| Matured | – | 56 | – | 56 |
| Acquisition value at end of year | –842 | –532 | –842 | –532 |
| Carrying amount | –842 | –532 | –842 | –532 |
The change in value of SEK –233m (–282) was attributable in its entirety to derivative instruments held by the company at the end of the year as shown in the statement of comprehensive income.
| Group | Parent Company | |||
|---|---|---|---|---|
| Interest-bearing liabilities | 2012 | 2011 | 2012 | 2011 |
| Deferred tax has been calculated on the basis of: |
||||
| – Tax losses | –1,020 | –1,148 | –52 | –86 |
| – Difference between the carrying amounts and |
||||
| tax bases of properties | 1,799 | 1,708 | – | – |
| – Derivatives | –189 | –175 | –188 | –175 |
| – Other | –2 | 5 | – | – |
| Net deferred tax asset/liability | 588 | 390 | –240 | –261 |
Total recognised tax-loss carryforwards in the Group, which have been taken into account in calculating deferred tax, are approximately SEK 4.6bn (4.4). See also the section on tax in the Directors' Report, page 63.
Out of total provisions of SEK 143m (195), SEK 23m (78) refers to obligations relating to rental guarantees for divested properties. Other amounts refer to stamp duties on properties that are payable upon the sale of a property, SEK 36m (34).
| Rental guarantees |
Other provisions |
Provisions for pensions |
Total | |
|---|---|---|---|---|
| At 1 Jan 2012 | 78 | 34 | 83 | 195 |
| Provisions for the year | – | 2 | 1 | 3 |
| Used/paid during the year | –55 | – | – | –55 |
| At 31 Dec 2012 | 23 | 36 | 84 | 143 |
| Provisions comprise | ||||
| Long-term component | 0 | 36 | 84 | 120 |
| Short-term component | 23 | – | – | 23 |
| Total | 23 | 36 | 84 | 143 |
Rental guarantees
The rental guarantees have remaining maturities of up to one year. The criteria for assessing the size of provisions are described in Note 4.
Obligations relating to defi ned contribution pension plans are met through payments to the government agencies or companies administering the plans. A number of Fabege employees have defi ned benefi t pensions under the ITP supplementary pension plan for salaried employees in industry and commerce for which regular payments are made to Alecta. These are classifi ed as defi ned-benefi t pension plans covering several employers. As there is not suffi cient information to report these as defi ned benefi t plans, they have been recognised as defi ned contribution plans. It is unclear how a surplus or defi cit in the plan would affect the size of future contributions from each participating company and for the plan as a whole. Alecta is a mutual insurance company that is governed by the Swedish Insurance Business Act as well as by agreements between employers and unions.
Fees for pension insurance policies provided by Alecta in 2012 are approximately SEK 3m (3). Alecta's surplus can be distributed to the policy owners and/or insured parties. At year-end 2012 Alecta's surplus, as expressed by the "collective funding ratio", was 129 per cent (113). The collective funding ratio is defi ned as the market value of Alecta's assets as a percentage of its commitments to policyholders calculated using Alecta's actuarial assumptions, which do not comply with IAS 19.
Fabege has a PRI (Pensionsregistreringsinstitutet) liability, which is a defi nedbenefi t pension plan. However, no new payments are being made to PRI. Defi nedbenefi t pension obligations recognised in the balance sheet comprise the present value of defi ned-benefi t pension obligations. Any actuarial gains/ losses are recognised through profi t or loss to the extent that they are outside the band. As of 2013, Fabege will apply the amended IAS 19, whereby the principal change for Fabege is the elimination of the corridor rule. This entails that all actuarial gains and losses will be recognized in other comprehensive income as they are incurred. Another change is that a single interest rate will be applied and calculated on the basis of the net of the pension liability and plan assets, instead of different interest rates for the liability and the assets. For Fabege, abolition of the corridor will result in the recognised pension liability, including payroll tax, rising by SEK 23m as at 1 January 2013 (SEK 17m as at 1 Jan 2012).
Negative amounts above refer to deferred tax assets.
In 2012, the item primarily included liabilities related to the acquisition of a property for SEK 7m (67).
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Advance payment of rents | 280 | 279 | – | – |
| Accrued interest expenses | 81 | 53 | 82 | 52 |
| Other provisions | 132 | 136 | 24 | 29 |
| Total | 493 | 468 | 106 | 81 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Assets pledged as security | 2012 | 2011 | 2012 | 2011 |
| Property mortgages | 13,182 | 12,439 | – | – |
| Shares in subsidiaries | 2,253 | 1,977 | – | – |
| Promissory notes | – | – | 15,334 | 13,107 |
| Total | 15,435 | 14,416 | 15,334 | 13,107 |
| Contingent liabilities | ||||
| Guarantees on behalf of subsidiaries |
– | – | 3,523 | 2,967 |
| Ongoing tax cases | 804 | 2,680 | – | – |
| Guarantees and undertakings for the benefi t of associated companies |
1,175 | 472 | 1,175 | 472 |
| Other provisions | 145 | 224 | 166 | 244 |
| Total | 2,124 | 3,376 | 4,864 | 3,683 |
The Group has pension commitments of SEK 32m (34), which are secured through a pension fund. The solvency ratio for the pension fund is 125 per cent (126). No provision has been made, as the pension commitment is fully covered by the assets of the fund.
For more information about ongoing tax cases, see the section on tax in the Directors' Report, page 63.
Interest paid during the year in the Group was SEK 680m (636), of which SEK 35m (27) has been capitalised in the investment business. No capitalisation of interest has been made in the Parent Company.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Change acc. to balance sheet | –218 | 1,210 | 130 | –120 |
| Change in assets and liabilities in respect of interest income, dividends and interest expenses |
–29 | –12 | –29 | –9 |
| Total | –247 | 1,198 | 101 | –129 |
Cash and cash equivalents comprise cash assets and bank balances. The Group has unused overdraft facilities, which are not included in cash and cash equivalents, of SEK 120m (120).
The Parent Company's pension provision refers to a PRI liability.
Erik Paulsson, with his family and companies, holds controlling infl uence in Hansan AB. In 2012, consulting services totalling SEK 3m (3) were procured. Hansan paid SEK 0m (1) in rent for premises to Fabege.
Receivables from Projektbolaget Oscarsborg AB totalled SEK 137m (87) at 31 December 2012. In 2012, the sale was completed of part of the Hammarby Gård 7 property to Oscar Properties, which is represented by Fabege Director Oscar Engelbert. The purchase consideration was SEK 265m with an expected profi t of SEK 112m.
Svensk Fastighetsfi nansiering AB (SFF) is jointly owned by Fabege, Wihlborgs and Peab. Fabege owns 33.3 per cent of the company. The intention is to expand the Fabege's fi nancing base with a new source of fi nancing. In December 2011, SFF launched a bond programme with a total limit of SEK 5bn. Through the bond programme, Fabege is borrowing SEK 1,045m and Visio is borrowing SEK 1,205m in the capital market. The bonds are secured by property mortgage deeds. Fabege has promissory notes of SEK 75m (0) issued to SFF.
Promissory notes of SEK 176m are issued to the associated company Visio. Fabege has a promissory note receivable of SEK 128m from Arenabolaget i Solna KB. Fabege also has a promissory note receivable of SEK 101m (22) from Swedish Arena Management KB.
The dividends that were adopted at Annual General Meetings and paid out in 2012 and 2011 were SEK 3.00 per share and SEK 3.00 per share, respectively. At the AGM on 21 March 2013 the Board will propose a dividend for 2012 of SEK 3.00 per share, resulting in a total dividend payment of SEK 496,174,716. The dividend amount is based on the total number of outstanding shares at 20 February 2013, i.e. 165,391,572 shares, and is subject to alteration up to and including the record date, depending on share buybacks.
The Annual Report was adopted by the Board of Directors and approved for publication on 25 February 2013.
The Annual General Meeting will be held on 21 March 2013.
The Parent Company's income consists primarily of intra-Group invoicing.
| Parent Company | |||
|---|---|---|---|
| 2012 | 2011 | ||
| Employee expenses | –50 | –61 | |
| Administration and running costs | –129 | –131 | |
| Depreciation of equipment | –1 | –1 | |
| Total | –180 | –193 |
| Parent Company | ||
|---|---|---|
| 2012 | 2011 | |
| Impairment of shares in subsidiaries | –336 | – |
| Group contributions | 338 | 65 |
| Anticipated dividends on shares | 800 | 2,000 |
| Total | 802 | 2,065 |
| Parent Company | |||
|---|---|---|---|
| 2012 | 2011 | ||
| Cost at beginning of year | 14,319 | 14,319 | |
| Acquisitions and additions | 0 | – | |
| Sales | – | – | |
| Cost at end of year | 14,319 | 14,319 | |
| Opening depreciation | –991 | –991 | |
| Impairment | –336 | – | |
| Carrying amount | –1,327 | –991 | |
| Closing accumulated depreciation | 12,992 | 13,328 |
| Name/Corporate identity no. | Regd. offi ce | Capital share, % 1) |
Carrying amount |
|---|---|---|---|
| Hilab Holding Stockholm AB 556670-7120 | Stockholm | 100 | 10,126 |
| LRT Holding Company AB 556647-7294 | Stockholm | 100 | 2,790 |
| Fabege Holding Solna 556721-5289 | Stockholm | 100 | 0 |
| Fabege V48 556834-3437 | Stockholm | 100 | 0 |
| Fabege V12 AB 556747-0561 | Stockholm | 100 | 76 |
| Total | 12,992 |
1) Applies also to the share of votes for the total number of shares.
The stated capital share includes shares from other Group companies. The Group comprises 194 (184) companies.
The following fees have been paid to the company's auditors:
| Group | Parent Company | |||
|---|---|---|---|---|
| 2012 | 2011 | 2012 | 2011 | |
| Deloitte | ||||
| audit assignments1) | 2,934 | 3,183 | 2,934 | 3,183 |
| other auditing activities | 374 | 245 | 374 | 245 |
| tax advisory services | 153 | 531 | 153 | 531 |
| other services | 39 | 17 | 39 | 17 |
| Total | 3,500 | 3,976 | 3,500 | 3,976 |
1) Auditing assignments pertain to the auditing of the Annual Report and fi nancial statements, as well as the administration of the Board and the CEO, other tasks required by the company's auditors and advisory services and representation brought on by observations during such audits or such other tasks.
Following year-end, a total of 1,836,114 treasury shares were divested. Thereafter, the company has no shares remaining in treasury.
In January, Jernhusen exercised its option to sell its holdings in Arenabolaget i Solna KB and Swedish Arena Management KB to Fabege. Exercise of the option means that Fabege will increase its ownership interest in the two companies by 6.1 per cent. Takeover will occur in April 2013. Following the acquisition, Fabege's ownership interest in the aforementioned companies is 22.8 per cent.
On 5 February 2013, Fabege AB issued a bond loan of SEK 1,170m backed by collateral in the property Solna Uarda 5 in Arenastaden. The issuance took the form of a three-year bond totalling SEK 1,170m, of which SEK 300m carried fi xed interest at a rate of 3.70 per cent and SEK 870m carried variable interest at a rate of STIBOR 3m + 2.15 per cent. Fabege AB will apply for a listing of the bonds on Nasdaq OMX Stockholm.
Fabege is a Swedish public limited-liability company with registered office in Stockholm. The company's corporate governance is based on its Articles of Association, the Swedish Companies Act and other applicable laws and regulations. Fabege applies the Swedish Corporate Governance Code (the "Code"), whose main purpose is to improve standards of governance among Swedish businesses.
Responsibility for the governance, management and control of Fabege's activities is shared among the shareholders at the Annual General Meeting, the Board of Directors and the Chief Executive Offi cer. Fabege works continuously to achieve a more effi cient and appropriate governance of the company.
Fabege's shares are listed on Nasdaq OMX Stockholm. Th e company's share capital is SEK 5,097m, represented by 165,391,572 shares. Of these, 1,836,114 are treasury shares, representing 1.1 per cent of the total number of shares. In Fabege all shares carry the same voting rights, which means that opportunities to exercise infl uence as an owner are consistent with each shareholder's capital share in the company. Th e following shareholders, directly or indirectly hold shares that represent one tenth or more of the votes for all shares in the company:
| Shareholding 31 Dec 2012 | Share of votes, % |
|---|---|
| Brinova Inter AB | 15.1 |
Fabege's ownership structure is described on page 96.
Fabege's Articles of Association state that the company shall seek to acquire, manage, add value to and divest properties. Th e Board of Directors has its registered offi ce in Stockholm. In other respects, the Articles of Association contain provisions on the number of shares, the number of Directors and auditors, and the Annual
General Meeting (AGM). Th e full text of Fabege's Articles of Association is available at www.fabege.se.
Th e AGM is the company's highest decision-making body. Shareholders who would like to participate in the business of the AGM must be registered in the transcript of the entire share register pertaining to the conditions prevailing fi ve working days prior to the AGM and notify the company of their intention, and that of no more than two advisors, to attend the Meeting no later than 4:00 pm on the day stipulated in the notice convening the AGM.
Th e Nominating Committee is the AGM's body for preparing decisions relating to appointments. Th e Committee's task is to draw up proposals for the appointment of
CORPORATE GOVERNANCE STRUCTURE
the AGM chairman, Chairman of the Board and Directors, Directors' fees, the appointment of auditors, auditors' fees and any amendments to the principles governing the election of the Nominating Committee.
Th e proposal for Directors' fees must specify a breakdown between the Chairman, other Directors and committee work.
Under the Swedish Companies Act, the Board of Directors is responsible for the company's organisation and the administration of the company's aff airs. Th e Board is required to continuously assess the fi nancial situation of the company and Group. Its main task is to manage the company's activities on behalf of the owners in a way that secures the owners' interest in a strong long-term return on capital. Fabege's Board is to comprise eight directors.
Each year, the Board of Directors of Fabege adopts a set of rules of procedure, including instructions on division of labour and reporting, to supplement the provisions of the Companies Act, Fabege's Articles of Association and the Code.
In addition to the general provisions of the Companies Act, the Rules of Procedure regulate the following:
Th e year-end report is addressed by the Board at a Board meeting held on the same date on which the report is published in the market. Other interim reports are delegated to the CEO and addressed at the immediate following Board meeting. However, Board members are always given the opportunity to read, submit opinions on and approve all reports before they are published.
Fabege's Board has no special remuneration committee. All members of the Board except the CEO perform the tasks incumbent on a remuneration committee and thus participate in the process of draft ing and making decisions on remuneration issues.
Under the Swedish Companies Act, the company's auditor is required to examine the company's Annual Report and accounts as well as the management performed by the Board of Directors and
Chief Executive Offi cer. Aft er the end of each fi nancial year, the auditor is required to submit an audit report to the Annual General Meeting. Th e appointment and remuneration of auditors is based on the AGM's resolutions on proposals submitted by the Nominating Committee.
At the 2009 AGM, the auditing fi rm, Deloitte, was appointed as the company's auditors with the authorised public accountant Svante Forsberg as chief auditor for the period up to the 2013 AGM. In addition to Fabege, Svante Forsberg has audit assignment for the following major companies: Alliance Oil, Anticimex, Black Earth Farming, Cinnober, Diligentia, Lannebo Fonder, Skandia Liv and Swedbank. He has no other assignments for companies that are closely related to Fabege's major owners or the CEO. In addition to its assignment as Fabege's appointed auditors, Deloitte has performed audit-related assignments relating primarily to tax and accounting issues.
Th e Board has appointed an Audit Committee from among its own members. Th e Audit Committee acts as an extension of the Board for the monitoring of issues relating to accounting, auditing and fi nancial reporting. Its remit includes addressing issues relating to operational risks and risk management, internal control (environment, design and implementation), accounting policies and fi nancial follow-up and reporting, and the performance of
audits. Th e Committee regularly meets with senior executives to discuss and form an opinion of the state of the company's essential pro cesses from an internal control perspective. Board members review all interim reports. Th e year-end report, the corporate governance report and the administration report are discussed specifi cally at the Committee's meeting early each year. Th e Committee meets regularly with the company's auditor to obtain information on the focus, scope and results of audit activities. It operates according to separate rules of procedure, which are reviewed and adopted annually by the Board. Fabege's Audit Committee meets the Code's requirements on composition and its members possess skills and experience on accounting and other issues within the Committee's area of responsibility.
Th e Chief Executive Offi cer is responsible for operational governance and for the day-to-day management and leadership of the business, in accordance with the guidelines, instructions and decisions adopted by the Board of Directors.
In addition to the general provisions relating to division of responsibility contained in the Swedish Companies Act, the rules of procedure governing the work of the CEO specify:
• the CEO's duty and obligation to ensure that the Board of Directors receives
Fabege's objective includes maintaining long-term relations with the company's stakeholders, providing a healthy work environment for employees and maintaining high business ethics in its operations. The Code of Conduct illuminates in Fabege's position in matters involving human rights, employment condition, environment, business ethics and communication.
A given ground for the Code of Conduct is that Fabege must respect all applicable laws and other regulations as well as generally accepted business practices, and comply with international standards on human rights, labour and the environment in accordance with the UN Global Compact's ten principles.
The Code of Conduct encompasses all Fabege employees regardless of position. The Board of Directors and Group Management have a special responsibility for ensuring application of the Code of Conduct. Its content is revised and monitored annually by Group Management. All managers with personnel responsibility are responsible for ensuring that the Code of Conduct is understood and complied with in their particular department/sphere of responsibility. All employees have access to all of Fabege's policy documents via the company's intranet. The Code of Conduct in its entirety is available on the fabege.se website.
information and the necessary documentation on which to base decisions.
Th e rules of procedure also contain a separate reporting instruction, which governs the content and timing of reporting to the Board.
Th e CEO directs the work of Group management and reaches decisions in consultation with the other members of management. Group management jointly conducts the operational control and manages the business and engages in daily management in accordance with the Board's guidelines, instructions and resolutions.
Th e key to success is having motivated employees. With the aim of creating the best conditions for this, Fabege's Group management has to establish a clear framework and objectives for the operation. Group management must create the conditions for employees to achieve the established objectives by:
• Regularly reviewing and providing feedback on the established objectives. Operational Group management meetings are held on a weekly basis. Once a month, minuted decision-making meetings are held, during which strategic and operational matters such as property transactions, letting, market trends, organisation and monthly and quarterly reviews are addressed. Th e CEO's assistant also participates in these meetings.
Fabege's business operations are conducted
in three areas: Property Management, Property Development and Transactions. Th e heads of all of the operating areas are members of Group Management. Responsibility for operational control and follow-up rests with the particular head of the oper ating area. Fabege's operations are managed by objectives at all levels. Th e objectives are broken down, developed and anchored in the particular operating area and then down to the individual co-worker. Measurement and follow-up occur regularly.
Th e application of the Code is based on the principle of 'comply or explain', which means that a company is not obliged to follow all rules without exception and that deviations from one or several individual rules do not constitute a breach of the Code if there are reasons for this and explanations are provided for such deviations.
All members of the Board of Directors have met with the company's auditors, but not without the presence of the Chief Executive Offi cer or another member of the management team. Aft er consulting with the auditors, the Board has not found it necessary to arrange such a meeting, partly because the auditors have, on several occasions, presented reports to the Audit Committee without the presence of the CEO.
Th e 2012 AGM was held in Stockholm on 29 March 2012. Erik Paulsson was elected to chair the meeting. Th e AGM was attended by shareholders holding a total of 77.9m shares, representing 48.0 per cent of the votes.
A full set of minutes from the AGM is available on Fabege's website, www.fabege.se. Th e following are the principal resolutions adopted at the AGM:
Th e AGM resolved that the Board should consist of eight Directors and approved the re-election of Oscar Engelbert, Eva Eriksson, Christian Hermelin, Märtha Josefsson, Pär Nuder, Mats Qviberg, Erik Paulsson and Svante Paulsson to the Board. Erik Paulsson was elected Chairman. Th e AGM resolved that a total of SEK 2,555,000 (2,775,000) be paid in Directors' fees in 2012.
Cash dividend (proposed by the Board) Th e dividend was fi xed at SEK 3.00 and the record date was set at 3 April 2012.
Th e AGM adopted a set of principles for the appointment of the Nominating Committee and the proposals that the Nominating Committee is required to prepare. Th e Nominating Committee will consist of representatives for the four largest owners.
Th e AGM resolved on unchanged guidelines for the remuneration of management. See further on page 86.
Th e AGM decided to authorise the Board, for a period ending no later than the next AGM, to acquire and transfer shares. Share buybacks are subject to a limit of 10 per cent of the total number of outstanding shares at any time. All the treasury shares held by the company may be transferred.
Th e auditors reported their observations and simultaneously presented their views on the quality of internal controls in Fabege at the Board meeting in February 2013. Th e auditors have participated in and presented reports at all meetings of the Audit Committee (four in 2012). Reports were also presented to management in 2012.
Fees paid to the company's auditors are described in Note 42 on page 82.
In accordance with the AGM's decision, the four largest shareholders have been off ered one seat each on Fabege's Nominating Committee, and on 21 September 2012 a Nominating Committee was announced. Following the ownership change, information on the new Nominating Committee was disclosed on 26 October 2012. Th e Nominating Committee consists of the following members: Bo Forsén (Brinova Fastigheter AB), Mats Qviberg (Investment AB Öresund), Eva Gottfridsdotter-Nilsson (Länsförsäkringar Fondförvaltning) and Anders Rydin (SEB Fonder). Th e Nominating Committee represents about 30.0 per cent of the votes in Fabege on 31 January 2013.
Th e Nominating Committee held two minuted meetings and remained in contact during the intervening periods. As a basis for its work, the Committee has met with the Board Chairman and listened to his views on the work of the Board. Th e Committee has also contacted the other Directors, the Audit Committee and the company's auditors to obtain a clear idea of the work of the Board. Th e Nominating Committee has discussed the size and composition of the Board of Directors in respect of industry experience, expertise, and the need for continuity and renewal of the work of the Board. Th e Committee has also discussed and taken account of issues relating to the independence of Directors (see below for a description of the Board).
Th e Nominating Committee proposes reelecting Eva Eriksson, Christian Hermelin, Märtha Josefsson, Pär Nuder, Erik Paulsson, Svante Paulsson and Mats Qviberg, and the new election of Gustaf Hermelin, thus proposing eight Directors. Gustaf Hermelin is to be considered independent in relation to the company and dependent in relation to company management and major shareholders. Th e dependence of the Directors proposed for re-election is shown in the table below. In total, the proposed Board of Directors satisfi es the Code's regulations concerning the independence of Directors. Th e Nominating Committee also proposes election of Deloitte as auditor, with Kent Åkerlund auditor-in-charge.
Th e Nominating Committee's report on how its work has been conducted and its proposals ahead of the 2013 AGM are presented on the company's website. Th e Nominating Committee's proposals are
also presented in the offi cial notifi cation of the 2013 Annual General Meeting.
Eight Directors were elected to the Board at the 2012 AGM, thus reducing the Board by one Director. Th e AGM elected Erik Paulsson as Chairman of the Board. Fabege's Chief Financial Offi cer, Åsa Bergström, acts as the Board's secretary.
Fabege's Board of Directors includes members that have skills and experience of great signifi cance for the support, monitoring and control of the operations of a leading property company in Sweden. Th e Board aims to retain members with expertise in areas such as properties, the property market, funding and business development. A number of members of the Board have signifi cant direct or indirect personal shareholdings in Fabege. Fabege's Board meets the requirements on independent Directors provided for in the Code.
In 2012, the Board held six scheduled meetings of a total of twelve meetings, comprising six scheduled meetings, one statutory meeting, and fi ve telephone meetings. Th ere are a number of standing agenda items: fi nancial and operational reporting, decisions on acquisitions, investments and sales, current market issues, HR issues and reporting by the Audit Committee. In addition to these, the Board has addressed a number of specifi c issues (see illustration on page 87).
In 2012, the Board made decisions on several major transactions and investments in the company's existing property portfolio. In 2012, Fabege sold fi ve properties for SEK 1,448m. Th e remaining 50 per cent of
an already owned jointly owned property was acquired for SEK 150m. Decisions were made on investments of about SEK 2.4bn relating to the development and improvement of properties in the company's existing portfolio. In addition, a decision was made concerning the acquisition of 29.9 per cent of the shares of Catena AB. At the end of the year, an assessment was made of the Board, which showed that the Board was operating in a highly satisfactory manner. Profi t was discussed at the Board meeting in February 2013.
Th e Directors are paid Directors' fees in accordance with the resolutions of the Annual General Meeting. For 2012, total fees of SEK 2,555,000 were paid, of which the Chairman received SEK 400,000 plus extra remuneration of SEK 835,000 for project work. Th e other Directors, except CEO, received SEK 200,000 and SEK 120,000 for work on the Board's Audit Committee, of which the chairman received SEK 60,000 and the other members SEK 30,000.
Th e Board of Directors decided, in accordance with the resolution passed by the AGM concerning principles for remuneration and other employment terms and conditions for company management, on the remuneration to be paid to the CEO and other terms of employment conditions. During the year, the Board implemented a review of compliance with the principles for remuneration of senior executives.
Remuneration is to be market aligned and competitive. Responsibility and performances that coincide with shareholders' interests are to be refl ected in the
| Independent in | Independent | Attendance | ||||
|---|---|---|---|---|---|---|
| The Board 2012 | Elected | relation to the com pany and executive management |
in relation to major shareholders |
Directors' fee, SEK '000 |
Board | Audit Committee |
| Erik Paulsson, Chairman | 1998 | NO | NO | 1,235 | 11 | |
| Göte Dahlin, Director1) | 2000 | YES | YES | – | 3 | 1 |
| Oscar Engelbert, Director | 2010 | NO | YES | 200 | 11 | |
| Eva Eriksson, Director2) | 2011 | YES | YES | 230 | 12 | 3 |
| Christian Hermelin, Director 2007 | NO | YES | – | 12 | ||
| Märtha Josefsson, Director | 2005 | YES | YES | 260 | 12 | 4 |
| Pär Nuder, Director | 2010 | YES | YES | 230 | 9 | 4 |
| Svante Paulsson, Director | 2007 | YES | NO | 200 | 11 | |
| Mats Qviberg, Deputy Chairman |
2001 | YES | YES | 200 | 12 |
1) Stepped down at the 2012 AGM.
2) Member of the Audit Committee since the 2012 AGM.
remuneration. Th e fi xed salary is to be reevaluated annually. In addition to fi xed salary, remuneration may be paid for target-related performance. Such remuneration is to depend on the extent to which pre-defi ned targets have been achieved within the framework of the company's
activities. Th e targets comprise fi nancial and non-fi nancial criteria. Remuneration in addition to fi xed salary is to be subject to a ceiling and tied to the fi xed salary. Variable remuneration is limited to a maximum of three (3) monthly salaries. Variable remuneration paid to company
management must not exceed a maximum total annual cost for the company of SEK 2.1m (excluding social security fees), calculated on the basis of the number of persons who currently constitute senior executives. Other benefi ts, where applicable, may only constitute a limited portion of the remuneration.
Remuneration paid to the CEO and to other members of company management, as well as other benefi ts and employment terms and conditions, are presented in Note 6 on page 76. Th e principles for remuneration and employment terms and conditions will also be presented at the 2013 AGM.
Th e Board has appointed an Audit Committee from among its own members consisting in 2012 of Märtha Josefsson (Chairman), Eva Eriksson and Pär Nuder. In 2012, four meetings of the Audit Committee were held. During the year, considerable emphasis continued to be placed on the company's internal control system. During the year, the Audit Committee addressed areas such as processes for the procurement of major projects, valuation of properties, property transactions, the fi nance function and project follow-up. Th e Committee also addressed the company's investments in Arenastaden. Special emphasis was placed on following up the company's ongoing tax cases. Year-end accounts and valuation matters were addressed, as were operational and auditing risks. At each meeting, the company's auditors submitted a report of their review during the year. Th e minutes from the Audit Committee's meetings were shared with all Board members, and the Committee's Chairman submitted regular reports to the Board.
During the year, Group Management comprised the following executives:
Internal control is a process that is infl uenced by the Board of Directors, management and the company's employees and that has been designed to provide a reasonable assurance that the company's goals are achieved in the follow categories:
Th e company applies the established COSO (Internal Control – Integrated Framework) framework in its work.
Fabege has a geographically well contained organisation and homogenous operational activities but its legal structure is complex. Th e business is capitalintensive and is characterised by large monetary fl ows, including rental income, expenses for project activities, acquisitions/sales of properties and fi nancial expenses.
Overall responsibility for ensuring good internal control and effi cient risk management rests with the Board of Directors. To be able to perform its work in an appropriate and effi cient manner, the Board has adopted a set of rules of procedure. Th e Board's rules of procedure are aimed at ensuring a clear division of responsibility between the Board of Directors (and its committees) and the Chief Executive Offi cer (and his management team) with a view to achieving effi cient risk management in the company's operations and in fi nancial reporting. Th e rules of procedure are updated annually. In 2012, the Board performed its annual review and adopted rules of procedure for the Board, rules of procedure for the Audit Committee and the company's Code of Conduct.
Th e management team is responsible for designing and documenting and for maintaining and testing the systems/processes and internal controls that are required to manage signifi cant risks in the accounts and the company's day-to-day activities. Operational responsibility for internal control rests with the company's management and with those individuals who by virtue of their roles in the company are in charge of each defi ned critical process, function or area.
Th e company's fi nancial reporting is governed by a set of policies and guidelines. Th e company has defi ned policies for matters such as funding, environmental issues, equal opportunities and disclosure, accounting policies and instructions for the closing of the accounts and authorisation of payments. In 2012, Fabege implemented a comprehensive overhaul and update of its policies. All policies were discussed and decided on by Group management. Information concerning resolved policies was also disseminated throughout the organisation. In addition, more detailed guidelines and instructions are reviewed and updated regularly. In May, Fabege formulated its fi rst "communication on progress" on the UN's Global Compact. Work on developing the company's sustainability reporting is continuously under way. Sustainability reporting constitutes part of the company's annual report and, as of 2012, will be examined by Fabege's auditors.
Risks and critical processes, functions and areas are defi ned on the basis of the control environment, signifi cant results and balance sheet items as well as signifi cant business processes. Th e following processes, functions and areas have been defi ned as critical for Fabege:
New lettings and renegotiations
Projects
Fabege conducts annual reviews and evaluations of risk areas for the purpose of identifying and managing risks in consultation the Board and the Audit Committee for review by the auditors.
Critical processes, functions and areas are described and documented in respect of division of responsibility, risks and controls. Th e necessary instructions, procedures and manuals are produced, updated and communicated to the relevant staff to ensure that they have up-todate knowledge and adequate tools. Th e measures are aimed at integrating risk management in the company's day-to-day procedures. Compliance with policies, guidelines and instructions is monitored on an ongoing basis. Employees are given frequent training to ensure that they have required expertise. In 2012, all of the company's critical processes were reviewed. Supplementing the external audit performed in 2012, the company also performed an internal assessment of compliance and controls in critical processes.
A central controller function supports work on the follow up the operating units – Property Management and Property Development. Th e control department is in charge of operational reporting. Th e operating units, Property Management and Projects, have a separate controller function which supplements the central controller function at Group level. Operational reports are prepared monthly and quarterly based on a standardised reporting package and submitted for comments/ approval to executives with operational responsibility. Reviews and updates with executives with operational responsibility are made throughout the year. Performance is assessed against budgets and forecasts, which are updated twice a year. Since 2009, the company has been producing rolling 12-month forecasts.
A central function prepares consolidated fi nancial statements and other fi nancial reports in close collaboration with the controller function/operating units and the fi nance function. Th is work includes integrated control activities in the form of reconciliation with standalone systems/specifi cations of outcomes for income and expense items and balance sheet items. Th e company's operational reporting is developed and improved continuously in terms of content and system support, as well as availability to managers of the various operations.
Management is responsible for informing the staff concerned about their responsibility to maintain good internal control. Th e company Intranet and briefi ng sessions are used to ensure that employees are kept up-to-date on the company's governing policies and guidelines.
Responsibility for external information rests with the Communications department. Th e company's Investor Relations activities are based on principles for regular and accurate information in accordance with Nasdaq OMX Stockholm's Rule Book for Issuers. Th e aim is to improve knowledge of and build confi dence in the company among investors, analysts and other stakeholders. In 2012, work to improve information and access to information on the external website continued. Th e communication of information to the market has been improved and clarifi ed. An important development eff ort was also implemented in respect of the company's intranet, featuring improvements of both availability and the information content. Particularly emphasis was also placed on improving communication with the company's customers.
Th e internal control system also needs to change over time. Th e aim is to ensure that this is monitored and addressed on an ongoing basis through management activities at various levels of the company, both through monitoring of the individuals responsible for each defi ned critical process, function and area and through ongoing evaluations of the internal control system.
In addition to fi nancial reporting to the Board, more detailed reports are prepared, at more frequent intervals, in support of the company's internal governance and control activities. Monthly reports are presented and discussed at meetings of Group management.
Th e company's management reports regularly to the Board based on the adopted instructions for fi nancial reporting, which are designed to ensure that the information provided is relevant, adequate, up-to-date and appropriate.
Th e Audit Committee also reports to the Board. It acts as the extended arm of the Board in monitoring the formulation and reliability of fi nancial reports. In addition to familiarising itself the content of and methods used in preparing fi nancial reports, the Audit Committee has studied the way in which the more detailed and frequent internal reporting is used in evaluating and managing diff erent areas of activity, which provides an indication of the quality of the control environment. Th e Committee also performs regular reviews and evaluations of internal controls in respect of critical processes and regularly studies the results of the
external auditors' examinations of the company's accounts and internal controls.
Th e auditors examine the company's fi nancial reporting in respect of the full year fi nancial statements and review all quarterly interim reports.
Th e Board regularly evaluates the information submitted by management and the Audit Committee. Of particular signifi cance is the Audit Committee's task of monitoring management's work on developing the internal controls and of ensuring that measures are taken to address the proposals and any problems that have been identifi ed in the course of examinations by the Board, Audit Committee or auditors.
Th e Board of Directors has informed itself through its members and through the Audit Committee on risk areas, risk management, fi nancial reporting and internal control and has discussed risks for errors in fi nancial reporting with the external auditors.
In the course of its work on examining and evaluating internal control in respect of critical processes in 2012, the Audit Committee found no reason to alert the Board's to any signifi cant issues in respect of internal control or fi nancial reporting.
To supplement the external auditing activities, Fabege is working to facilitate internal evaluations of critical processes. As a result of this work, and in view of the homogenous and geographically limited nature of the company's activities and its simple organisational structure, the Board has not found reason to set up a separate internal audit unit. Th e Board believes the monitoring and examination described above, coupled with the external audits, are suffi cient to ensure that eff ective internal control in respect of fi nancial reporting is maintained.
Erik Paulsson Born 1942. Chairman of the board since 2007 and Director since 1998. Other directorships:
Chairman of the Board of Backahill AB, Brinova Fastigheter AB, SkiStar AB and Wihlborgs Fastigheter AB. Director of Nolato AB and Platzer Fastigheter AB. Education: Lower secondary school. Business manager since 1959. Shareholding: 91,080
and via Brinova.
Oscar Engelbert Born 1976. Director since 2010. Other directorships: CEO of Oscar Properties AB. Director of Bonniers konsthall. Education: Boston University and Economics for Entrepreneurs. Shareholding: 0.
Eva Eriksson Born 1959. Director since 2011. Other directorships: Chairman of BWG Homes ASA and Strategisk Arki tektur AB. Director of Bygg Partner AB, DnB NOR Eiendomsfond I ASA, Naeringsbygg Holding III AS, Global Eiendom Utbetaling 2007 AS and Global Eiendom Utbetaling 2008 AS. Education: M.Sc. in Engineering. Shareholding: 0.
Christian Hermelin Born 1964. Director since 2007. CEO of Fabege AB. Education: Bachelor's degree in Administration. Shareholding: 191,917.
Märtha Josefsson Born 1947. Director since 2005. Other directorships: Director of Luxonen S.A, Cityhold Property, Skandia Fonder AB and the World Wildlife Fund. Education: Bachelor's degree in economics.
Shareholding: 78,000.
AS.
Studies.
Director of Business
Previous employment: Managing Director of Stockholm Modecenter, MD and founder of Brubaker
Education: Diploma in Specialized Business
Shareholding: 40,517.
Chief Executive Offi cer. Born 1964. Employed since 1998, in current position since 2007.
Project Manager, Fastighets AB Storheden. Education: Bachelor's degree in Administration. Shareholding: 191,917.
Development. Born 1953. Employed since 2006, in current position since 2009. Deputy CEO, Chief Financial Offi cer. Born 1964. Emloyed since 2007, in current position since 2008.
Previous employment: Senior Manager at KPMG, CFO positions at property companies, including Granit & Betong and Oskarsborg. Education: M.Sc. in Economics and Business. Shareholding: 51,117.
Director of Projects and Development. Born 1970. Employed since 2001, in current position since 2010. Previous employment: Platzer Bygg, Peab and JM. Education: Engineer. Shareholding: 19,517.
Director of Properties. Born 1962. Employed since 1991, in current position since 2007. Previous employment: Construction and Project Manager at JCC AB, Arsenalen AB and MacGruppen AB, Property Manager at BPA Fastigheter AB and various executive positions at Bergaliden AB, Storheden AB and Wihlborgs Fastigheter AB. Education: M.Sc. in Engineering. Shareholding: 52,017.
Shareholding at 31 December 2012.
Pär Nuder Born 1963. Director since 2010. Other directorships: Chairman of Third AP Fund, Sundbybergs Stadshus AB and Öbergs färghus. Director of SkiStar AB, Nyx Security AB, Swedegas AB and Cleanergy. Senior Director Albright Stonebridge Group. Education: LL.M. Shareholding: 10,007.
Svante Paulsson Born 1972. Director since 2007. Other directorships: Responsible for strategy and projects in Backahill AB. Deputy Chairman of the Board of Backahill AB. Director of Bilia AB, Peab AB and AB Cernelle. Education: High school in the US. Shareholding: 168,318.
Mats Qviberg Born 1953. Deputy Chairman 2012, Director since 2001. Other directorships: Chairman of the Board of Bilia AB and Investment AB
Öresund. Director of Skistar AB. Education: Bachelor's
degree in Business Administration. Shareholding: 3,111,558. For information on independence/ dependence, fees, etc. refer to page 86. Shareholding at 31 December 2012.
AUDITOR Svante Forsberg Authorised Public Accountant, Deloitte. Born 1952. Auditor at Fabege since 2005.
Other assignments:
Auditing assignments in the following major companies: Alliance Oil, Anticimex, Black Earth Farming, Cinnober, Diligentia, Lannebo Fonder, Skandia Liv and Swedbank.
Christian Klaus Åsa Klas Urban
Th e Board of Directors and Chief Executive Offi cer hereby certify that:
Th e Board of Directors and Chief Executive Offi cer furthermore certify that:
Stockholm, 25 February 2013
Erik Paulsson Chairman
Oscar Engelbert Director
Eva Eriksson Director
Märtha Josefsson Director
Pär Nuder Director
Svante Paulsson Director
Mats Qviberg Deputy Chairman
Christian Hermelin Director Chief Executive Offi cer
We presented our audit report on 25 February 2013 Deloitte AB
Svante Forsberg Authorised Public Accountant
To the annual meeting of the shareholders of Fabege AB (publ) Corporate identity number 556049-1523
We have audited the annual accounts and consolidated accounts of Fabege AB (publ) for the fi nancial year 1 January 2012 – 31 December 2012 with the exception of the corporate governance statement on pages 83–91. Th e annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 60–92.
Th e Board of Directors and the Managing Director are responsible for the preparation and fair presentation of these annual accounts and consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the Managing Director determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Th ose standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. Th e procedures selected depend on the auditor's judgement, including the assessment of the risks of
material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the eff ectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Managing Director, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the fi nancial position of the parent company as of 31 December 2012 and of its fi nancial performance and its cash fl ows for the year then ended in accordance with the Annual Accounts Act. Th e consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the fi nancial position of the group as of 31 December 2012 and of their fi nancial performance and cash fl ows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 83–91. Th e statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company's profi t or loss and the administration of the Board of Directors and the Managing Director of Fabege AB (publ) for the fi nancial year 1 January 2012 – 31 December 2012. We have also conducted a statutory examination of the corporate governance statement.
Th e Board of Directors is responsible for the proposal for appropriations of the company's profi t or loss, and the Board of Directors and the Managing Director are responsible for administration under the Companies Act and that the corporate governance statement on pages 83–91 has been prepared in accordance with the Annual Accounts Act.
Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profi t or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.
As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profi t or loss, we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act. As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined signifi cant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the Managing Director is liable to the company. We also examined whether any member of the Board of Directors or the Managing Director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our opinions.
Furthermore, we have read the corporate governance statement and based on that reading and our knowledge of the company and the group we believe that we have a suffi cient basis for our opinions. Th is means that our statutory examination of the corporate governance statement is diff erent and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden.
We recommend to the annual meeting of shareholders that the profi t be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the fi nancial year.
A corporate governance statement has been prepared, and its statutory content is consistent with the other parts of the annual accounts and consolidated accounts.
Stockholm, 25 February 2013 Deloitte AB
Svante Forsberg Authorised Public Accountant
Fabege's share is listed on the Nasdaq OMX Stockholm Nordic Exchange and included in the Large-Cap list under the Real Estate sector. At year-end 2012, the company had market capitalisation of SEK 10.8bn and net asset value of approximately SEK 11.4bn.
Th e property sector performed somewhat better than the stock market as a whole during 2012. Th e property index rose by 14 per cent while Nasdaq OMX Stockholm was rose 12 per cent. Th e Fabege share outperformed both the stock market and the property index, rising by 22 per cent from SEK 53.90 to SEK 65.75.
Since the introduction of the EU's MiFiD directive, which allows shares to be traded in marketplaces other than the markets where they are listed, a growing percentage of Swedish shares are being traded outside the Stockholm Stock Exchange. Th is trend is particularly noticeable for the most actively traded shares of the companies on the Large Cap list, for which other marketplaces usually account for more than 50 per cent of trading in these shares.
Trading in the Fabege share also refl ects a trend toward more fragmented trading, with sales in a growing number of marketplaces; during 2012, the shares were traded in more than 10 marketplaces. In 2012, the share of turnover in marketplaces beyond the Stockholm Stock Exchange rose to 53 per cent of the total trade in shares. Th e rising trend of recent years thus continued; the Nasdaq OMX Stockholm Nordic Exchange accounted for 50 per cent of all trading in Fabege shares during 2011, compared with 38 per cent in 2010 and 16 per cent in 2009.
During the year, a total of 183 million (296) Fabege shares were traded, of which 86 million (149) were traded on the Nasdaq OMX Stockholm Exchange. Th e total value of the traded shares was SEK 10.8bn (18.1), of which SEK 5.1bn (9.1) was traded in Stockholm. On an average trading day, approximately 732,000 Fabege shares (1,168,000) were traded in 1,189 transactions.
Th e average turnover rate for Fabege shares, calculated on the basis of total share turnover, fell during 2012 to 112 per cent (182). Th e average turnover rate for all companies on the Nasdaq OMX Stockholm Nordic Exchange was 74 per cent (95), while the average turnover on the Large Cap list fell to 77 per cent (101).
Th e total return on Fabege's shares, i.e. the share price performance including reinvested dividends of SEK 3.00 per share, was 28 per cent. At year-end, the company had market capitalisation of about SEK 10.8bn. Th e lowest price paid in 2012 was SEK 49.81, on 14 June, and the highest price paid was SEK 68.45, on 30 November.
Fabege's share capital is SEK 5,097m (5,097), represented by 165,391,572 shares (165,391,572). All shares carry the same voting rights and entitle the holder to the same share of the company's capital.
Th e 2012 AGM resolved to authorise the Board of Directors to buy back shares during the period leading up to the 2013 AGM. Acquisitions may be made by means of purchases on Nasdaq OMX Stockholm and are subject to the provision that the company's share of the total number of outstanding shares not exceed 10 per cent. During the year, 1,330,374 shares (repurchase 755,000) were divested at an
| Distribution by size of shareholding, 31 December 2012 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| -- | -- | -- | -- | -------------------------------------------------------- | -- | -- | -- | -- | -- | -- |
| Size of shareholding | No. of shareholders | Share of no. of shareholders, % |
No. of shares | Share of capital and votes, % |
|---|---|---|---|---|
| 0–500 | 32,410 | 74.0 | 4,397,552 | 2.7 |
| 501–1 000 | 5,061 | 11.6 | 3,907,219 | 2.4 |
| 1001–5 000 | 5,041 | 11.5 | 10,781,169 | 6.5 |
| 5001–10 000 | 617 | 1.4 | 4,441,865 | 2.7 |
| 10 001–100 000 | 496 | 1.2 | 14,117,585 | 8.5 |
| 100 001–1 000 000 | 125 | 0.2 | 39,962,099 | 24.2 |
| 1 000 001– | 27 | 0.1 | 87,784,083 | 53.0 |
| Total | 43,777 | 100 | 165,391,572 | 100 |
Breakdown of ownership by category
| Country | 2012 | 2011 | 2010 |
|---|---|---|---|
| Sweden | 64.8 | 65.7 | 67.6 |
| USA | 18.2 | 15.8 | 17.3 |
| UK | 5.0 | 5.0 | 2.3 |
| Other countries | 12.0 | 13.5 | 12.8 |
| No. of shares capital, % |
Share of votes, % |
||
|---|---|---|---|
| Brinova Inter AB | 24,691,092 | 14.9 | 15.1 |
| BlackRock funds | 8,938,454 | 5.4 | 5.5 |
| SEB funds | 8,509,637 | 5.1 | 5.2 |
| Öresund Investment AB | 7,000,736 | 4.2 | 4.3 |
| Länsförsäkringar funds | 6,006,827 | 3.6 | 3.6 |
| Bank Investment Manage ment of Norway |
4,568,958 | 2.8 | 2.8 |
| SHB funds | 3,788,355 | 2.3 | 2.3 |
| Mats Qviberg and family | 3,576,596 | 2.2 | 2.2 |
| ENA City AB | 2,710,000 | 1.6 | 1.6 |
| Swedbank Robur funds | 2,600,738 | 1.6 | 1.6 |
| Henderson funds | 2,430,000 | 1.5 | 1.5 |
| Fourth AP-fund | 2,257,342 | 1.4 | 1.4 |
| Second AP-fund | 1,780,994 | 1.1 | 1.1 |
| Principal funds | 1,560,654 | 0.9 | 1.0 |
| Nordea funds | 1,434,872 | 0.9 | 0.9 |
| Other foreign shareholders | 40,691,554 | 24.6 | 24.9 |
| Other Swedish shareholders |
41,008,649 | 24.8 | 25.0 |
| Total no. of outstanding shares |
163,555,458 | 98.9 | 100.0 |
| Treasury shares2) | 1,836,114 | 1.1 | 0.0 |
| Total no. of shares | 165,391,572 | 100.0 | 100.0 |
1) Certain shareholders may havehad a different shareholding in the nominee registration than that stated in the share ledger.
2) Following year-end, all treasury shares were divested.
Source: SIS Ägarservice AB, according to data from Euroclear Sweden AB at 31 December 2012.
| Analysts covering Fabege | |
|---|---|
| ABG Sundal Collier: | Fredric Cyon |
| ABN Amro Bank N.V.: | Jan Willem van Kranenburg |
| Carnegie Investment Bank: | Tobias Kaj |
| Danske Bank: | Peter Trigarszky |
| DnB NOR: | Siemen R Mortensen |
| Goldman Sachs International: | Julian Livingston Booth |
| Handelsbanken Capital Markets: Albin Sandberg | |
| Kempen: | Robert Woerdeman |
| Morgan Stanley: | Bart Gysens |
| Nordea Bank: | Jonas Andersson |
| Pareto Öhman: | Johan Edberg |
| SEB Enskilda: | Bengt Claesson |
| Swedbank: | Andreas Daag |
| UBS Investment Bank: | Howard Lesser |
| Key fi gures | 2012 | 2011 |
|---|---|---|
| Financial | ||
| Return on capital employed, % | 9.0 | 7.2 |
| Return on equity, % | –0.8 | 9.9 |
| Interest coverage ratio, multiple | 2.3 | 2.2 |
| Equity/assets ratio, % | 34 | 39 |
| Leverage properties, % | 57 | 57 |
| Debt/equity ratio, multiple | 1.6 | 1.4 |
| Per share data | ||
| Earnings per share for the year, SEK | –0.54 | 7.01 |
| Equity per share, SEK | 70 | 73 |
| Cash fl ow per share, SEK | 4.52 | 4.49 |
| No. of outstanding shares at end of period, '000 | 163,555 | 162,225 |
| Average no. of shares, '000 | 162,391 | 162,719 |
| Dividend, SEK | 3.001) | 3.00 |
| Yield, % | 4.6 | 5.6 |
1) Proposed dividend 2012.
average price of SEK 66.86 (51.03). At 31 December 2012, Fabege's total holding of treasury shares was 1,836,114, or 1.1 per cent of the total number of registered shares. Following year-end, all treasury shares were divested.
At 31 December 2012 Fabege had 43,777 shareholders (32,156). Th e largest shareholder was Brinova, which held 15.1 per cent of the total number of outstanding shares, followed by BlackRock funds which held 5.4 per cent and SEB funds which held 5.2 per cent. Th e 15 largest owners jointly controlled 50.0 per cent of the total number of outstanding shares.
Foreign owners held 35.2 per cent of the share capital. Of the portion held by Swedish investors, amounting to 64.8 per cent, institutional owners held 28.4 per cent, equity funds 14.3 per cent and Swedish private investors 22.1 per cent of the share capital.
Equity per share at 31 December 2012 was SEK 70 (73). Net asset value per share excluding deferred tax on fair value adjustments to properties was SEK 80 (84). At year-end, the share price thus represented approximately 82 per cent of net asset value. A margin of error in property valuations of +/– 1 per cent has an impact
on net asset value of +/– SEK 247m, or SEK 1.49 per share. See the sensitivity analysis on property value on page 41.
According to its dividend policy, Fabege aims to pay a dividend to its shareholders comprising the part of the company's profi t not required for the consolidation or development of the business. Under current market conditions, this means that the dividend will comprise at least 50 per cent of the profi t from property management activities and realised gains from the sale of properties aft er tax.
In drawing up its dividend proposal, the Board assesses whether the company's and Group's equity aft er the proposed dividend will be suffi cient in view of the nature and scope of the business and the associated risks. Th e Board takes account of the company's equity/assets ratio, historical and budgeted performance, investment plans and the general economic environment.
Th e Board proposes that a dividend of SEK 3.00 per share (3.00) be paid to the shareholders. Th e dividend represents 53 per cent of distributable earnings in accordance with the dividend policy.
Th e proposed record date for the right to receive a dividend is 26 March 2013. If the AGM adopts the proposed decision, it is expected that the dividend will be paid through Euroclear Sweden AB (formerly VPC AB) on 2 April 2013.
Share price performance 2008–2012
Fabege publishes its annual report and interim reports in Swedish and English. The annual report is printed, and all publications are available, as PDF fi les on the company's website, fabege.se.
All shareholders of Fabege have received an off er to receive fi nancial information from the company. Fabege sends the annual report by post to shareholders that have requested this. All fi nancial reports and press releases are available in Swedish and English on the company's website. Fabege also provides information via a subscription service on its website, through which anyone with an interest in the company can access press releases, interim reports, annual reports and other information.
Th e company's website also provides information about Fabege's share price. Fabege provides quarterly presentations in connection with each interim report.
The Internet is one of our main information channels. The aim for our website is to continuously provide shareholders, investors and other capital market players with relevant, up-to-date information on the Group's operations and activities. The website provides information on the company and its operations and strategies. Here you can also fi nd fi nancial information, share data and information about the AGM as well as a great deal of additional data.
The Annual General Meeting of Fabege AB (publ) will be held at 3 pm CET on Thursday 21 March 2013 at Wenner-Gren Center, Norrtull, Stockholm, Sweden. Registration for the AGM begins at 2:15 pm CET.
The notice of the AGM has been published in Post- och Inrikes Tidningar and Svenska Dagbladet and on the company's website. Shareholders wishing to participate in the AGM must:
Notice of attendance at the AGM may be made in one of the following ways:
The Board proposes that a dividend of SEK 3.00 per share be paid to the shareholders. The proposed record date for the right to receive a dividend is 26 March 2013. If the AGM adopts the proposed resolution, it is expected that the dividend will be paid through Euroclear Sweden AB (formerly VPC AB) on 2 April 2013.
Director of Communications as of 15 March, 2013. +46 (0)8-555 148 20 [email protected]
Gunilla Möller IR Coordinator +46 (0)8-555 148 45 [email protected]
| Interim report Jan–March 23 April 2013 | |
|---|---|
| Interim report Jan–June 5 July 2013 | |
| Interim report Jan–Sept 16 Oct 2013 | |
| Year-end report 2013 6 Feb 2014 | |
| Annual Report 2013 March 2014 |
| 2012 | 2011 | 2010 | 2009 | 2008 | |
|---|---|---|---|---|---|
| Profi t and loss accounts, SEKm | |||||
| Rental income | 1,869 | 1,804 | 2,007 | 2,194 | 2,214 |
| Net operating income | 1,264 | 1,227 | 1,348 | 1,465 | 1,438 |
| Realised changes in value/Gain from property sales | 167 | 173 | 237 | 57 | 143 |
| Unrealised changes in value, properties | 1,409 | 1,093 | 843 | –310 | –1,545 |
| Profi t/loss from property management | 693 | 564 | 782 | 838 | 568 |
| Profi t/loss before tax | 2,032 | 1,417 | 1,929 | 680 | –1,340 |
| Profi t/loss after tax | –88 | 1,141 | 1,697 | 425 | –511 |
| Balance sheets, SEKm | |||||
| Investment properties | 31,636 | 29,150 | 26,969 | 29,193 | 29,511 |
| Other tangible fi xed assets | 1 | 1 | 3 | 2 | 3 |
| Financial fi xed assets | 1,398 | 1,124 | 714 | 620 | 586 |
| Current assets | 474 | 362 | 1,504 | 704 | 388 |
| Cash and cash equivalents | 200 | 74 | 73 | 173 | 54 |
| Equity | 11,404 | 11,890 | 11,276 | 9,969 | 9,873 |
| of which minority share of equity 2) | – | – | – | – | – |
| Minorities | – | – | – | – | – |
| Provisions | 731 | 585 | 423 | 439 | 624 |
| Interest-bearing liabilities | 18,035 | 16,755 | 16,646 | 19,109 | 18,902 |
| Derivatives | 854 | 664 | 267 | 373 | 471 |
| Non-interest-bearing liabilities | 2,685 | 817 | 651 | 802 | 672 |
| Total assets | 33,709 | 30,711 | 29,263 | 30,692 | 30,542 |
| Key ratios 3) | |||||
| Surplus ratio, % | 68 | 68 | 67 | 67 | 65 |
| Interest coverage ratio, multiple | 2.3 | 2.2 | 3.0 | 2.6 | 1.9 |
| Capital employed, SEKm | 30,293 | 29,309 | 28,189 | 29,451 | 29,246 |
| Equity/assets ratio, % | 33.8 | 38.7 | 39 | 32 | 32 |
| Debt/equity ratio, multiple | 1.6 | 1.4 | 1.5 | 1.9 | 1.9 |
| Leverage, properties, % | 57.0 | 57.5 | 62 | 65 | 64 |
| Return on equity, % | –0.8 | 9.9 | 16.0 | 4.3 | –4.8 |
| Return on capital employed, % | 9.0 | 7.2 | 8.7 | 4.2 | –1.7 |
| Average interest rate on interest-bearing liabilities, % | 3.8 | 3.72 | 3.45 | 2.48 | 3.27 |
| Property acquisitions and investments in existing properties, SEKm | 2,191 | 1,986 | 907 | 1,138 | 2,164 |
| Property sales, selling price, SEKm | 1,448 | 936 | 4,350 | 1,234 | 2,095 |
| Average no. of employees | 119 | 124 | 125 | 139 | 149 |
| Data per share, SEK 3) | |||||
| Earnings | –0.54 | 7.01 | 10.38 | 2.59 | –3.07 |
| Equity | 70 | 73 | 69 | 61 | 60 |
| Dividend | 3.00 4) | 3.00 | 3.00 | 2.00 | 2.00 |
| Yield, % | 4.6 | 5.6 | 3.8 | 4.4 | 6.7 |
| Share price at year-end 5) | 65.75 | 53.90 | 78:55 | 45:20 | 30:00 |
| No. of shares at year-end before dilution, millions | 164 | 162 | 163 | 164 | 164 |
| Average no. of shares after dilution, millions | 162 | 163 | 163 | 164 | 168 |
1) The years 2008–2012 have been prepared and, where appropriate, remeasured in accordance with IFRS.
2) Under IFRS, minority shares are to be recognised as part of shareholders' equity. Under previous Swedish rules, shareholders' equity was recognised excluding minority shares, which were recognised separately as minority interest instead.
3) Key ratios based on the average number of shares, shareholders' equity, capital employed, and interest-bearing liabilities have been calculated on a weighted average basis. For 2008, the dilution effects of convertible debentures outstanding have been taken into account when calculating key data per share.
4) Cash dividend 2012 as proposed.
5) Last paid.
When the current Fabege was created in spring 2005, it was the third property company to bear the name. The company name, Fabege, originates in a company created by Birger Gustavsson, one of the leading property players in the 1970s and 1980s. Originally, Fabege was short for Fastighetsaktiebolaget Birger Gustavsson. The then Fabege was acquired by Näckebro, which in turn was bought by Drott, which was later split into two companies, one of which was given the name Fabege. This company was then acquired by Wihlborgs Fastigheter in 2004, and the following year, they changed their name to Fabege.
1998 At the beginning of the year, Wihlborgs completes the acquisition of Klövern Fastigheter AB. On 13 April 1998, Wihlborgs puts in an offer for Fastighets AB Storheden. The merger is carried out in late summer the same year.
High voting A shares are converted into B shares High voting A shares are converted into B shares.
Wihlborgs sells 60 properties in non-priority locations to Adcore, which is reorganised into a property company under the name of Klövern AB. In June, Wihlborgs effects a 1:5 reverse split.
Wihlborgs completes its acquisition of Fabege AB after a public offer to other shareholders of the company, adding about 150 commercial properties to its portfolio. In December, the company announces its proposal to spin off its Öresund properties to the shareholders and concentrate the business to the Stockholm region.
Fabege acquires Fastighets AB Tornet along with its portfolio of 104 properties. Other acquisitions include Solna Business Park. Fabege's property holdings in Kista and Täby are sold to Klövern.
2010
Fabege increases the tempo of projects where existing properties are processed and developed in order to increase cash fl ow and value growth.
Fabege essentially completes the concentration of its property portfolio. The property portfolio is now concentrated to Stockholm inner city, Solna and Hammarby Sjöstad.
Continued value generation through project development and a centrally located property portfolio. Part of Råsunda football stadium and part of Catena AB acquired.
Wihlborgs' B shares are listed on the O List of the Stockholm Stock Exchange.
1990
Bergaliden becomes the new main owner of Wihlborgs.
In the spring, Wihlborgs completes the acquisition of M2 Fastigheter. In September the Board of Wihlborgs submits a public offer to acquire Klövern Fastigheter AB.
2000
2005
The main owner, Bergaliden, sells its entire shareholding of 30.2 per cent in Wihlborgs. Wihlborgs acquires Postfastigheter along with its portfolio of 73 properties. In December, Wihlborgs' shares are listed on the O List of the Stockholm Stock Exchange. 2002
Wihlborgs acquires shares in Drott AB (later divided into Bostads AB Drott and Fabege AB), and becomes the company's largest shareholder during the year.
The Öresund business is distributed to the shareholders and listed on the O List of the Stockholm Stock Exchange under the name of Wihlborgs Fastigheter AB. "Old" Wihlborgs is thus concentrated to the Stockholm region and changes its name to Fabege AB.
Fabege continues to concentrate its business to its main markets, Stockholm Inner City, Solna and Hammarby Sjöstad. In June, the company effects a 2:1 share split, doubling the number of shares. 2008
Fabege continues to concentrate its property portfolio. Towards the end of the year, work is initiated in the new district, Arenastaden, in Solna.
The concentration of the property portfolio continues and Fabege continues to focus on the development of projects. The new Arenastaden city district is growing and developing, with the Mall of Scandinavia and Friends Arena as major landmarks.
CASH FLOW PER SHARE. Profi t before tax plus depreciation, plus/minus unrealised changes in value less current tax, divided by average number of shares.
CAPITAL EMPLOYED. Total assets less non-interest bearing liabilities and provisions.
CONTRACT VALUE. Stated as an annual value. Index-adjusted basic rent under the rental agreement plus rent supplements.
DEBT/EQUITY RATIO. Interest-bearing liabilities divided by shareholders' equity.
DEVELOPMENT PROPERTIES. Properties in which a conversion or extension is in progress or planned that has a signifi cant 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.
EQUITY/ASSETS RATIO. Shareholders' equity (including minority share) divided by total assets.
EQUITY PER SHARE. Parent Company shareholders' share of equity according to the balance sheet, divided by the number of shares at the end of the period.
FINANCIAL OCCUPANCY RATE. Contract value divided by rental value at the end of the period.
INTEREST COVERAGE RATIO. Profi t/loss before tax plus fi nancial expenses and plus/minus unrealised changes in value, divided by fi nancial expenses.
INVESTMENT PROPERTIES. Properties that are being actively managed on an ongoing basis.
LAND & PROJECT PROPERTIES. Land and developable properties and properties in which a new build/ complete redevelopment is in progress.
LEVERAGE, PROPERTIES. Interest-bearing liabilities divided by the carrying amount of the properties at the end of the period.
NET LETTINGS. New lettings during the period less terminations to vacate.
PROFIT/EARNINGS PER SHARE. Parent Company shareholders' share of profi t after tax for the period divided by average number of outstanding shares during the period.
RENTAL VALUE. Contract value plus estimated annual rent for vacant premises after a reasonable general renovation.
RETURN ON CAPITAL EMPLOYED. Profi t before tax plus interest expenses, divided by average capital employed. In interim statements the return is converted to its annualised value without taking account of seasonal variations.
RETURN ON EQUITY. Profi t for the period/year divided by average shareholders' equity. In interim statements the return is converted to its annualized value without taking account of seasonal variations.
SURPLUS RATIO. Net operating income divided by rental income.
YIELD, SHARE. Dividend for the year divided by the share price at year-end.
Production Fabege in cooperation with Hallvarsson & Halvarsson AB Translation The Bugli Company Photographers Per-Erik Adamsson, Erik Lefvander, Magnus Fond, Conny Ekström, Peter Knutson, Tenjin Visual, Pix Provider, Aix Arkitekter, SOS Arkiv, BAU, Thorbjörnsson&Edgren Arkitekter, White Arkitekter, Friends Arena, Retoy, Johnér, Unibail Rodamco, Megaron Arkitekter
Printing åtta45, Solna
FABEGE AB (PUBL) BOX 730, 169 27 SOLNA, SWEDEN VISITING ADDRESS: PYRAMIDVÄGEN 7, 169 56 SOLNA, SWEDEN TELEPHONE: +46 (0)8-555 148 00 FAX: +46 (0)8-555 148 01 E-MAIL: [email protected] INTERNET: WWW.FABEGE.SE CORPORATE REGISTRATION NUMBER: 556049-1523 BOARD REGISTERED OFFICE: STOCKHOLM
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.