Quarterly Report • Oct 16, 2012
Quarterly Report
Open in ViewerOpens in native device viewer
2012 Interim Report January–September
| Summary, SEKm | 2012 July–Sep |
2011 July–Sep |
2012 Jan–Sep |
2011 Jan–Sep |
|---|---|---|---|---|
| Rental income | 469 | 452 | 1,389 | 1,346 |
| Running costs and central costs | –148 | –159 | –477 | –484 |
| Net financial items (excl. changes in value) | –167 | –160 | –476 | –459 |
| Profit from property management activities | 154 | 133 | 436 | 403 |
| Changes in value | 11 | –39 | 1,056 | 584 |
| Tax | –47 | –22 | –2,200 | –259 |
| Profit/loss after tax | 118 | 72 | –708 | 728 |
| Surplus ratio, % | 72 | 69 | 69 | 68 |
| Equity/assets ratio, % | – | – | 32 | 38 |
| Equity per share, SEK | – | – | 66 | 71 |
| Return on equity, % | – | – | –8.4 | 8.5 |
Fabege's rental income continues to rise, with a positive net inflow. The recent years' healthy net rentals and project completions are contributing to this trend. At the same time, we are continuing to streamline costs by reducing energy consumption and through more efficient purchasing. Fabege's largest cost item, interest expense, is also stable and is currently largely tied at low interest rates. Consequently, we can look forward to an increasing property management result in the future.
Projects are progressing as planned. In September, Vattenfall moved into its newly produced offices in Arenastaden. Our second largest project in Arenastaden, the Sjökvarteret block in Uarda 1 is being prepared to receive new tenants by the end of the year. The major City projects in the Apotekaren and Klamparen blocks are also in their final phase. All projects have progressed well; the cost parameters have been maintained; and, in many cases, the rents have been negotiated at higher levels than initially expected. Together, the projects have generated excellent value growth during the year. We have also started two new major projects in Solna
Strand and Hammarby Sjöstad, which will continue until mid-2014. The projects have an initial occupancy rate of 91 and 71 per cent, respectively. It is also gratifying to see the development of Arenastaden. Major investments are in progress, the city district is beginning to take shape and we foresee an increase in interest from companies that want to establish in Arenastaden.
Net rentals remain favourable, albeit not as strong as in the preceding quarter. We prematurely renegotiated the lease with our largest tenant, Coop, at Solna Business Park. The total leased space has been reduced, which had an impact on net rentals. However, we are very satisfied to have extended the agreement until 2020.
While the general growth rate in Sweden is low, Fabege continues its positive trend. Stockholm is expanding and the number of people employed in offices in Stockholm is rising, while the increase in new office space is limited. In the central business district, vacancies are currently very low and we see a continued decline in vacancies in prime suburban locations. Companies are demanding quality, com-
Fabege's business model
Acquisitions
bined with modern, flexible offices in locations with excellent transport links. Fabege's collective portfolio, with attractive central locations and modern properties, favourably matches future demand. Accordingly, I expect our portfolio to provide us with great potential to continue delivering excellent earnings from our property management, as well as our property development and transactions.
CHRISTIAN HERMELIN Chief Executive Officer
Close to the customer
Property management is Fabege's main business area. The properties are managed by an efficient 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 customer-facing property management activities are designed to support a high occupancy rate and encourage customers to remain with Fabege. Satisfied customers help to improve our net operating income. Property Management
Property development in properties with growth potential is a key element of Fabege's business model, helping to add 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 its 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 defined in the EU GreenBuilding programme. Property Development
property development
Concentrating the portfolio Fabege aims to sell properties that are located outside its concentrated property management units or portfolio.
Fabege aims to acquire properties that offer better growth opportunities than existing investment properties in its portfolio. As a significant 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 develop its property
have limited prospects for further growth. Location, condition and vacancies are key factors determining the growth potential of a property. A fully let property with modern and efficient premises that is deemed to have limited potential for rent increases and capital growth could thus become a candidate for divestment. Sales
The quarter in brief1)
During the first nine months of the year, property management made a significant contribution to Fabege's total profit, as did property development and transaction activities. Following the SAC's verdict in what is known as the Cyprus case, Fabege decided to make a provision of SEK 1,900m for ongoing tax matters, which was charged to the profit in the second quarter.
Profit for the period before tax amounted SEK 1,492m (987). Profit for the period after tax amounted SEK –708m (728) following a provision of SEK 1,900m for ongoing tax matters. An improvement in net operating income and positive value changes in the property portfolio contributed to a year-on-year improvement in profit before tax, despite an increase in the negative fair value of the derivative portfolio. Earnings per share after tax amounted to SEK –4.36 (4.47).
Despite a smaller portfolio, rental income rose to SEK 1,389m (1,346) and net operating income increased to SEK 953m (909). The increase in rental income was attributable to positive net lettings and completed project properties. The surplus ratio increased to 69 per cent (68). In a comparable portfolio, rental income and operating income increased with more than 5 per cent. Positive net lettings will continue to generate gradual growth in rental income in 2012 and early 2013.
Realised changes in the value of properties amounted to SEK 146m (83), and unrealised changes in value totalled SEK 1,064m (772). The SEK 447m unrealised change in the value of the portfolio of investment properties was primarily attributable to properties with potential for an increase in rent levels and a reduction in vacancy rates as well as a slightly lower required yield. The project portfolio contributed to an unrealised value change of SEK 617m, which was primarily attributable to contributions of profit from property development in the major ongoing project properties.
Share in profit of associated companies amounted to SEK 0m (1). Changes in the value of interest-rate derivatives and equities amounted to SEK –154m (–271), and net interest expense increased to SEK –476m (–460) mainly due to an increase in indebtedness.
Business model's contribution to earnings
| SEKm | Jan–Sep 2012 |
Jan–Sep 2011 |
|---|---|---|
| Profit from Property Management | 459 | 420 |
| Changes in value (portfolio of investment properties) |
447 | 572 |
| Contribution from Property Management |
906 | 992 |
| Profit from Property Management | –23 | –17 |
| Changes in value (profit from Property Development) |
617 | 200 |
| Contribution from Property Development |
594 | 183 |
| Contribution from Transactions (Realised changes in value) |
146 | 83 |
| Total contribution to the business | 1,646 | 1,258 |
The expenses for the period amounted to SEK –2,200m (–259), of which SEK -1,900m pertained to a provision for ongoing tax matters. Operating taxes are calculated at a rate of 26.3 per cent on taxable earnings. Property sales resulted in combined deferred tax revenue of SEK 50m.
Profit contributed SEK 598m (480) to liquidity. After a change of SEK –179m (1,169) in working capital, which varies primarily as a result of the impact of occupancy/final settlement for acquired, the liquidity of operating activities changed by SEK 419m (1,649). Acquisitions of and investments in properties exceeded sales by SEK 1,447m (1,262). Accordingly, the total change in liquidity resulting from operating activities was SEK –1,028m (387). A dividend payment of SEK 487m (489) was charged to cash flow during the period. After the increase in debt, consolidated cash and cash equivalents totalled SEK 101m (138).
Fabege employs long-term credit lines with fixed terms and conditions. At 30 September 2012, these had an average maturity of 5.3 years. The company's lenders are the major Nordic banks.
2) The comparison figures for income and expense items relate to values for the period January–September 2011 and for balance sheet items as at 31 December 2011.
Interest-bearing liabilities at the end of the period totalled SEK 18,296m (16,755) and the average interest rate was 3.65 per cent excluding and 3.76 per cent including commitment fees on the undrawn portion of committed credit facilities.
The average fixed-rate period was 3.5 years, taking the effect of derivative instruments into account, while the average fixedrate period for variable-rate loans was 53 days. In view of the continued low interestrate scenario, Fabege elected in August to hedge the interest rates on a further SEK 2,000m of the loan portfolio for periods over five and seven years, respectively. Accordingly, the derivative portfolio comprises interest-rate swaps totalling SEK 7,000m with terms of maturity extending through 2021 and carrying fixed interest at annual rates of between 1.87 and 2.73 per cent before margins. Fabege also holds cancellable swaps totalling SEK 7,550m at interest rates ranging from 2.87 to 3.98 per cent before margins that mature between 2013 and 2018. Accordingly, interest rates on 80 per cent of Fabege's loan portfolio have been fixed using fixed-income derivatives.
The derivatives portfolio is measured at market value and the change in value is recognised in the profit and loss account. At 30 September 2012, the recognised negative fair value adjustment of the portfolio amounted to SEK 797m (664). The derivatives portfolio is measured at the present value of future cash flows. The change in value is of an accounting nature and has no impact on the company's cash flow. At the due date, the market value of derivative instruments is always zero.
Fabege has a commercial paper programme in an amount of SEK 5,000m. At the end of the quarter, outstanding commercial paper amounted to SEK 2,400m, 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 30 September 2012, the company had unutilised committed lines of credit of SEK 3,413m. At 30 September 2012, Fabege had a total of SEK 750m in bonds outstanding within the framework of its bond program, which was launched in December 2011. The programme, which has a limit of SEK 5,000m, was introduced via the co-owned company Svensk Fastighetsfinansiering AB (SFFAB). The bonds are secured by collateral in property mortgage deeds. SFFAB is jointly owned by Fabege, Wihlborgs, Peab and Brinova. Fabege owns 30 per cent of the company. The aim is to expand the company's financing base with a new source of financing.
Net financial items included nonrecurring expenses totalling SEK 9m, primarily pertaining to mortgage deeds.
The total loan volume includes SEK 1,511m in loans for projects, on which interest of SEK 30m is capitalised.
Shareholders' equity amounted to SEK 10,695m (11,890) at the end of the period and the equity/assets ratio was 32 per cent (39). Shareholders' equity per share totalled SEK 66 (73). Excluding deferred tax on fair value adjustments of properties, net asset value per share was SEK 78 (84).
| Amount SEKm |
Average interest rate % |
Share % |
|
|---|---|---|---|
| < 1 year | 4,890 | 5.76* | 27 |
| 1–2 years | 1,500 | 2.58 | 8 |
| 2–3 years | 206 | 3.80 | 1 |
| 3–4 years | 2,100 | 2.53 | 11 |
| 4–5 years | 3,100 | 2.58 | 17 |
| > 5 years | 6,500 | 3.17 | 36 |
| Total | 18,296 | 3.65 | 100 |
* The average interest rate for the < 1 year period includes the margin for the entire debt portfolio because the Company's fixed-rate period is established using interest rate swaps, which
are traded without margins.
30 September 2012
| Credit agreement SEKm |
Drawn SEKm |
|
|---|---|---|
| Certificate programme | 5,000 | 2,400 |
| < 1 year | 4,034 | 3,213 |
| 1–2 years | 4,328 | 710 |
| 2–3 years | 6,180 | 5,280 |
| 3–4 years | 2,040 | 2,040 |
| 4–5 years | 151 | 151 |
| > 5 years | 4,976 | 4,502 |
| Total | 26,709 | 18,296 |
| Jan–Sep 2012 | Lettable | |
|---|---|---|
| Area | Category | area, sqm |
| Norrmalm | Office | 4,300 |
| Hammarby Sjöstad |
Land | 0 |
| Hammarby Sjöstad |
Land | 0 |
| Total property sales | 4,300 | |
| Jan–Sep 2012 | Lettable | ||
|---|---|---|---|
| Properties | Area | Category | area, sqm |
| Quarter 2 | |||
| Islandet 3 | Norrmalm | Office | 4,327 |
| Jan–Sep 2012 | Total property acquisitions | 4,327 |
The rental market in Stockholm performed well during the period, hallmarked by declining vacancies and rising rents for modern properties in prime locations. Fabege reported continued strong net lettings in both management and project properties. The rate of investment was high and the property portfolio continued to show value growth.
Fabege's activities in Property Management and Property Development are concentrated to a few selected submarkets in and around Stockholm. Stockholm's inner city, Solna and Hammarby Sjöstad are the company's principal markets. At 30 September 2012, Fabege owned 97 properties with a total rental value of SEK 2,3bn, a lettable floor area of 1,2m sqm and a carrying amount of SEK 31.6bn, including development and project properties totalling SEK 6.6bn. The financial occupancy rate for the entire property portfolio, including project properties, was 91 per cent (90). The occupancy rate in the portfolio of investment properties was 93 per cent (92).
New lettings during the period totalled SEK 233m (161), while net lettings amounted to SEK 146m (111). Rents in negotiated contracts increased an average
of 4 per cent. Efforts to extend and renegotiate leases with existing customers were successful. During the period, several large leases were signed for premises in our project properties, the largest of which pertained to Skatteverket (net SEK 60m). Several major leases were signed during the third quarter, including ones with Apoteket and Jones Lang Lasalle. Several minor leases were also signed in the portfolio of investment properties. The lease with Coop was renegotiated prematurely. The new lease extends over eight years and gives rise to a slight increase in the rent level, at the same time as Coop vacates floor space corresponding to SEK 10m annually, which is included in net letting.
During the second quarter, an exchange transaction was completed with Gamla Livförsäkringsbolaget SEB Trygg Liv and the previously resolved divestment of land in Hammarby Sjöstad to Oscar Properties was finalised. No transactions were carried out in the third quarter. A total of three properties was divested for SEK 476m and the remaining 50 per cent of an already coowned property was acquired for SEK 150m. The transactions generated a profit of SEK 146m before taxes and SEK 196 after taxes.
The entire property portfolio is externally valued at least once a year. A total of 30 per cent of Fabege's properties were externally valued at 30 September 2012 and the remaining properties were internally valued based on the latest valuations. The total market value at 30 September 2012 was SEK 31.6bn (29.2).
Unrealised changes in the value of properties amounted to SEK 1,064m (772). The average required yield has declined slightly since the year-end, although amounted to an unchanged 5.7 per cent (5.8 per 30 September 2011) when rounded off.
The SEK 447m (572) change in the value of the portfolio of investment properties was primarily attributable to rising rents and properties for which the risk of vacancies has declined. The project portfolio contributed to a value increase of SEK 617m (200) which was primarily attributable to earnings from property development in the major ongoing project properties.
Fabege's project investments are designed to reduce vacancy rates and increase rents in the property portfolio, thereby improving cash flows and adding value. The development of properties is a key feature of Fabege's business model and should make a significant contribution to consolidated profit. The aim is to achieve a return of at least 20 per cent on invested capital.
In 2012, the ambition is to increase the rate of development in the project portfolio. Investments in existing properties and projects during the period totalled SEK 1,389m (915). The investments involved new builds, extensions and conversions.
During the first quarter 2012 the project in the property Bocken 39 (Lästmakargatan) was completed. The property has been transferred to the portfolio of investment properties.
The project in the Uarda 5 property, Arenastaden, involving the construction of Vattenfall's new head office, underwent final inspection and Vattenfall moved into its new premises in September. The property will be transferred to the investment property portfolio in the fourth quarter.
The project in the Klamparen 10 property on Fleminggatan 12 has entered the final phase with adaptations being made for the remaining office tenants The property will be transferred to the investment property portfolio in the fourth quarter. The occupancy rate is 91 per cent.
The project in the Apotekaren 22 property at Tulegatan/Rådmansgatan is also in the final phase and will be transferred to the investment property portfolio in the fourth quarter. Following signing of additional leases, the occupancy rate in the project is now 88 per cent.
The office project in Uarda 1 (Sjökvarteret) in Arenastaden is also proceeding as planned. Installation work and tenant customisations are under way, and the property will be ready for occupancy by the end of 2012 and early 2013. Several new leases were signed during the quarter and the occupancy rate in the project is now 89 per cent.
The project in the Nöten 4 property, Solna Strand, concerning customisations on behalf of the Swedish Tax Agency, is proceeding as planned. Occupancy will take place in the first quarter of 2014.
In addition, the project involving the construction of the Skeppshandeln 1 property at Hammarby Sjöstad has commenced. The investment totals SEK 547m and includes a hotel, retail premises and offices. The property will be completed during second quarter 2014. The occupancy rate is 71 per cent.
During the first quarter, the now completed Bocken 39 property was transferred from Property Development to Property Management. Two properties (Nöten 4, Solna strand and Fenix 1, Norrmalm) were transferred from Property Management to Property Development following decisions concerning major investments and conversions.
In the third quarter, the Luma 1 property at Hammarby Sjöstad, which has
undergone successive development over a period of several years, was transferred to Property Management.
The segment Property Management generated net operating income of SEK 864m (824), corresponding to a surplus ratio of 70 per cent (68). The occupancy rate was 93 per cent (92). Profit from Property Management amounted to SEK 459m (420). Realised and unrealised changes in value totalled SEK 481m (614).
The segment Property Development generated net operating income of SEK 89m (85), corresponding to a surplus ratio of 61 per cent (61). Profit from Property Management totalled SEK –23m (–17). Realised and unrealised changes in value amounted to SEK 729m (241).
30 September 2012
| Property name | Property type | Area | Completed | Lettable area, sqm |
Occupancy rate, area, %1) |
Estimated rental value, SEKm2) |
Carrying amount, SEKm |
Estimated investment, SEKm |
Of which, accrued, SEKm |
|---|---|---|---|---|---|---|---|---|---|
| Apotekaren 223) | Office | Norrmalm | Q4-2012 | 31,599 | 91 | 90 | 1,267 | 260 | 209 |
| Klamparen 10 | Office | Kungsholmen | Q4-2012 | 22,530 | 91 | 66 | 910 | 245 | 215 |
| Nöten 4 | Office | Solna strand | Q1-2014 | 51,026 | 91 | 96 | 762 | 690 | 215 |
| Skeppshandeln 1 | Hotel | Hammarby Sjöstad | Q2-2014 | 13,683 | 71 | 40 | 87 | 545 | 27 |
| Uarda 13) | Office | Arenastaden | Q4-2012 | 41,079 | 73 | 78 | 738 | 535 | 359 |
| Uarda 5 | Office | Arenastaden | Q4-2012 | 44,500 | 100 | 106 | 1,575 | 1,050 | 931 |
| Total | 204,417 | 87 | 476 | 5,339 | 3,325 | 1,956 | |||
| Other Land and Project properties | 529 | ||||||||
| Other Development properties | 684 | ||||||||
| Total Project, Land and Development properties |
6,552 |
1) Operational occupancy rate at 30 September 2012.
2) The annual rent for the largest projects in progress could increase to SEK 476m (fully let) from SEK 262m in annualised current rent as of 30 September 2012. 3) Information regarding area, rental value and carrying amount pertains to the entire property. The investment amount pertains to only a portion of the property.
30 September 2012
| 30 September 2012 | 1 January – 30 September 2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| No. of properties |
Lettable area, '000 sqm |
Market value, SEKm |
Rental value2), SEKm |
Financial occupancy rate, % |
Rental income, SEKm |
Property expenses, SEKm |
Net operating income, SEKm |
|
| Property holdings | ||||||||
| Investment properties1) | 70 | 934 | 25,019 | 1,921 | 93 | 1,278 | –314 | 964 |
| Development properties1) | 8 | 66 | 1,950 | 142 | 69 | 66 | –23 | 43 |
| Land and Project properties1) | 19 | 151 | 4,602 | 240 | 84 | 149 | –32 | 117 |
| Total | 97 | 1,151 | 31,571 | 2,303 | 91 | 1,493 | –369 | 1,124 |
| of which, inner city | 38 | 497 | 17,698 | 1,257 | 92 | 827 | –207 | 620 |
| of which, Solna | 37 | 499 | 11,240 | 825 | 90 | 540 | –118 | 422 |
| of which, Hammarby Sjöstad | 13 | 129 | 2,362 | 201 | 83 | 115 | –39 | 76 |
| of which, Other | 9 | 26 | 271 | 20 | 86 | 11 | –5 | 6 |
| Total | 97 | 1,151 | 31,571 | 2,303 | 91 | 1,493 | –369 | 1,124 |
| Expenses for lettings, project development and property administration | –79 | |||||||
| Total net operating income after expenses for lettings, project development and property administration | 1,0453) |
1) See definitions on page 9.
2) Time-limited deductions of approximately SEK 191m (in rolling annual rental value at 30 September 2012) have not been recognised in the rental value. The amount includes a considerable time-limited discount that applies until the end of the year.
3) The table refers to Fabege's property portfolio at 30 September 2012. Income and expenses are recognised as if the properties had been held during the entire period. The difference between recognised net operating income, SEK 1,045m, and net operating income in the profit and loss account, SEK 953m, is attributable to net operating income from divested properties being excluded and acquired/completed properties being adjusted upwards as if they had been owned/completed throughout the January–September 2012 period. The large difference is due to a considerable time-limited discount that applies until the end of the year and that has reduced rental income in the actual outcome.
| SEKm | Management properties Jan–Sep 2012 |
Development properties Jan–Sep 2012 |
Total Jan–Sep 2012 |
Management properties Jan–Sep 2011 |
Development properties Jan–Sep 2011 |
Total Jan–Sep 2011 |
|---|---|---|---|---|---|---|
| Rental income | 1,243 | 146 | 1,389 | 1,207 | 139 | 1,346 |
| Property expenses | –379 | –57 | –436 | –383 | –54 | –437 |
| Net operating income | 864 | 89 | 953 | 824 | 85 | 909 |
| Surplus ratio, % | 70% | 61% | 69% | 68% | 61% | 68% |
| Central administration and marketing | –32 | –9 | –41 | –38 | –9 | –47 |
| Net interest expense | –373 | –103 | –476 | –367 | –93 | –460 |
| Share in profit/loss of associated companies | 0 | 0 | 0 | 1 | 0 | 1 |
| Operating profit/loss | 459 | –23 | 436 | 420 | –17 | 403 |
| Realised changes in value, properties | 34 | 112 | 146 | 42 | 41 | 83 |
| Unrealised changes in value, properties | 447 | 617 | 1,064 | 572 | 200 | 772 |
| Profit/loss before tax per segment | 940 | 706 | 1,646 | 1,034 | 224 | 1,258 |
| Changes in value, fixed income derivatives and equities | –154 | –271 | ||||
| Profit/loss before tax | 1,492 | 987 | ||||
| Properties, market value | 25,019 | 6,552 | 31,571 | 22,956 | 5,783 | 28,739 |
| Occupancy rate, % | 93% | 78% | 91% | 92% | 70% | 90% |
1) See definitions on page 9.
At the end of the period, the Fabege Group had 127 employees (121).
Sales during the period amounted to SEK 70m (69) and the result before appropriations and tax was SEK –373m (–473). Net investments in property, equipment and shares totalled SEK 0m (–4).
The 2012 Annual General Meeting (AGM) passed a resolution authorising the Board, not longer than up to the next AGM, to buy back and transfer shares in the company. Share buybacks are subject to a limit of 10 per cent of the total number of outstanding shares at any time. During the period, no shares were bought back. At 30 September 2012, the company held 3,166,488 treasury shares, representing 1.9 per cent of the total number of registered shares.
In accordance with the resolutions passed at Fabege's 2012 AGM, the following Nominating Committee has been formed, based on the ownership at 31 August 2012 and known changes thereafter: Bo Forsén(Brinova Fastigheter AB), Mats Qviberg (Investment AB Öresund), Eva Gottfridsdotter-Nilsson (Länsförsäkringar fondförvaltning) and Gustaf Colliander (Cohen & Steers). The Nominating Committee jointly represents about 28 per cent
of the votes in Fabege. The AGM will be held in Stockholm on 21 March 2013.
As previously announced, the Swedish Tax Agency has decided to increase taxation on the Fabege Group concerning a number of property sales through limited partnerships (see Fabege Annual Report 2011, page 61). The transactions derive from Tornet, the old Fabege and Wihlborgs during the years 2003–2005. The combined increase taxation amounts unchanged to SEK 8,368m. The decisions have resulted in total tax demands including penalty and fees of SEK 2,698m.
On 30 May, the Supreme Administrative Court (SAC) announced a verdict in what is known as the Cyprus case. SAC's ruling entails that the Swedish Tax Evasion Act was deemed applicable in the Cyprus case and that the transaction will be taxed. In view of the verdict by the Supreme Administrative Court (SAC) and the uncertain legal position that has arisen, Fabege has decided to post a provision of SEK 1,900m. This assessment is based on a review and evaluation of each individual case. The difference between the demands made by the Swedish Tax Agency (STA) is based on matters that are evidently unrelated to SAC's verdict and erroneous reasoning in the STA's argumentation. The remaining amount pursuant to the STA's total requirements, i.e. approximately SEK 800m, will be recognised as a contingent liability, as in previous financial statements.
In conclusion, Fabege strongly contests the tax demand decided on by the Swedish Tax Agency and the Swedish Administrative Court and the decisions have been appealed. Fabege's belief remains unchanged that the divestments were recognized and declared in accordance with the prevailing regulatory framework. Fabege believes that the Swedish Tax Agency and the Swedish Administrative Court have disregarded several key aspects and that the verdicts are therefore 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 the transactions under review. This belief is shared by external legal experts and tax advisors who have analysed the divestments, the STA's argumentation and the relevant verdicts.
The processes are now being advanced in the Administrative Court of Appeal. A verdict is expected in first half of 2013. Backed by a strong balance sheet and available credit facilities, Fabege is capable of coping with potential forthcoming tax payments.
Risks and uncertainties relating to cash flow from operating activities are primarily attributable to changes in rents, vacancies and interest rates. A more detailed description is presented in the risk section of the 2011 Annual Report (pages 9–11), and a description of the effect of these changes on consolidated earnings is presented in the
Arenastaden offers a unique blend of several constituent parts that when combined form an equally unique totality. Ultramodern office solutions are being built in the area as well as attractive housing and Friends Arena, a place for many unique events. A large new shopping centre, the Mall of Scandinavia, and one of the tallest hotels in the Stockholm region are under construction in Arenastaden... all of this is creating a city pulse in a location with excellent transport links.
risk analysis and in the sensitivity analysis in the 2011 Annual Report (page 60).
Properties are recognised at fair value and changes in value are recognised in profit and loss. The effects of changes in value on consolidated earnings, the equity/ assets ratio and the loan-to-value ratio are also shown in the sensitivity analysis in the 2011 Annual Report.
A description of financial risk, which is the risk that the company will have insufficient access to long-term loan funding, and Fabege's management of this risk is presented in the 2011 Annual Report (pages 12–13 and 73).
Except for the decision to make a provision for ongoing tax matters as described
We have reviewed the interim report for the period 1 January 2012 – 30 September 2012 for Fabege AB (publ). The board of directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements SÖG 2410 Review of Interim Financial Information Performed by
above, no material changes in the company's assessment of risks have been made after publication of the 2011 Annual Report. Under its adopted targets for capital structure, Fabege aims to have an equity/assets ratio of at least 30 per cent and an interest coverage ratio of at least 2 (including realised changes in value).
Fabege prepares its consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. The Group has applied the same accounting policies and
Company's Auditors. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.
valuation methods as in the most recent annual report. The parent company prepares its accounts in accordance with RFR 2 Accounting for Legal Entities and the Swedish Annual Accounts Act and has applied the same accounting policies and valuation methods as in the most recent annual report.
Stockholm, 16 October 2012
Christian Hermelin Chief Executive Officer
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.
Stockholm, 16 October 2012 Deloitte AB
Svante Forsberg Authorised Public Accountant
You are most welcome to visit Fabege's website, which is one of our main information channels. The aim is to continuously provide you with relevant, up-to-date information.
The website provides information on the company and its operations and strategies. You can also find financial information, share data, details about our properties and ongoing projects and much more. Visitors to the website can also search for vacant premises, and our tenants are able to easily find contact details or other information related to the property in which they are located.
Year-end report for 2012 .................................................................. 4 February 2013 Annual report for 2012 .................................................................... 28 February 2013 Annual General Meeting 2013 ........................................................... 21 March 2013
Shareholder No. of shares Share of capital, % Share of votes, % Brinova Inter AB 24,691,092 14.9 15.2 BlackRock funds (USA) 8,938,454 5.4 5.6 SEB Funds 7,125,321 4.3 4.4 Öresund Investment AB 7,000,736 4.2 4.3 Länsförsäkringar fondförvaltn. 6,007,194 3.6 3.7 Cohen & Steers 5,990,817 3.6 3.7 Government of Norway 4,415,420 2.7 2.7 Mats Qviberg and family 3,576,596 2.2 2.2 SHB funds 2,910,702 1.8 1.8 Ena City AB 2,750,000 1.7 1.7 Swedbank Robur funds 2,699,983 1.7 1.7 Fourth AP-fund 2,327,789 1.4 1.4 Second AP-fund 1,864,693 1.1 1.1 Principal funds 1,578,115 1.0 1.0 Nordea funds 1,236,725 0.7 0.8 Other foreign shareholders 36,912,696 22.3 22.7 Other Swedish shareholders 42,198,751 25.5 26.0 Total 162,225,084 98.1 100.0 Treasury shares 3,166,488 1.9 0.0 Total no. of registered shares 165,391,572 100.0 100.0
1) Certain shareholders may, through custodial accounts, have had different holdings than are apparent from the shareholder's register.
Source: SIS Ägarservice AB, data derived from Euroclear Sweden AB, as of September 30, 2012.
OMX Stockholm Real Estate
Profit before tax plus depreciation-, plus/minus unrealised changes in value less current tax, divided by average number of shares.
Total assets less non-interest bearing liabilities and provisions.
Stated as an annual value. Index-adjusted basic rent under the rental agreement plus rent supplements.
Interest-bearing liabilities divided by shareholders' equity.
Properties in which a conversion or extension is in progress or planned that has a significant impact on the property's net operating income. Net operating income is affected either directly by the project or by limitations on lettings prior to impending development work.
Dividend for the year divided by the share price at year-end.
Shareholders' equity (including minority share) divided by total assets.
Parent company shareholders' share of equity according to the balance sheet divided by the number of shares at the end of the period.
Contract value divided by rental value at the end of the period.
Profit after financial items plus financial expenses and plus/minus unrealised changes in value, divided by financial expenses.
Properties that are being actively managed on an ongoing basis.
Land and developable properties and properties in which a new build/complete redevelopment is in progress.
Interest-bearing liabilities divided by the carrying amount of the properties at the end of the period.
New lettings during the period less terminations to vacate.
Parent company shareholders' share of profit after tax for the period divided by average number of outstanding shares during the period.
Contract value plus estimated annual rent for vacant premises after a reasonable general renovation.
Profit before tax plus interest expenses-, divided by average capital employed. In interim reports, the return is converted to its annualised value without taking account of seasonal variations
Profit for the period/year divided by average shareholders' equity. In interim reports the return is converted to its annualised value without taking account of seasonal variations.
In accordance with IFRS 8, segments are reported as viewed by management, i.e. broken down into two segments: Investment Properties and Development Properties.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 will be allocated to either segment based on the period of time that the property belonged to the segment. Central administration and items in net financial items 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).
The property asset is directly attributable to each segment and is recognised as of the closing date.
Net operating income divided by rental income.
| SEKm | 2012 Jul–Sep |
2011 Jul–Sep |
2012 Jan–Sep |
2011 Jan–Sep |
2011 Jan–Dec |
Rolling 12 m Oct 11–Sep 12 |
|---|---|---|---|---|---|---|
| Rental income | 469 | 452 | 1,389 | 1,346 | 1,804 | 1,847 |
| Property expenses | –133 | –142 | –436 | –437 | –577 | –576 |
| Net operating income | 336 | 310 | 953 | 909 | 1,227 | 1,271 |
| Surplus ratio, % | 72% | 69% | 69% | 68% | 68% | 69% |
| Central administration and marketing | –15 | –17 | –41 | –47 | –63 | –57 |
| Net interest expense | –168 | –162 | –476 | –460 | –609 | –625 |
| Share in profit/loss of associated companies | 1 | 2 | 0 | 1 | 9 | 8 |
| Profit/loss from property management activities | 154 | 133 | 436 | 403 | 564 | 597 |
| Realised changes in value of properties | 0 | 33 | 146 | 83 | 173 | 236 |
| Unrealised changes in value of properties | 255 | 231 | 1,064 | 772 | 1,093 | 1,385 |
| Unrealised change in value of fixed income derivatives | –233 | –301 | –133 | –263 | –397 | –267 |
| Change in value of equities | –11 | –2 | –21 | –8 | –16 | –29 |
| Profit/loss before tax | 165 | 94 | 1,492 | 987 | 1,417 | 1,922 |
| Current tax | 0 | 0 | –1,900 | 0 | –1 | –1,901 |
| Deferred tax | –47 | –22 | –300 | –259 | –275 | –316 |
| Profit/loss for period/year | 118 | 72 | –708 | 728 | 1,141 | –295 |
| Comprehensive income attributable to parent company shareholders | 118 | 72 | –708 | 728 | 1,141 | –295 |
| Earnings per share, SEK | 0.73 | 0.44 | –4.36 | 4.47 | 7.01 | –1.82 |
| No. of shares at end of period, millions | 162.2 | 162.3 | 162.2 | 162.3 | 162.2 | 162.2 |
| Average no. of shares, millions | 162.2 | 162.6 | 162.2 | 162.9 | 162.7 | 162.2 |
| SEKm | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 |
|---|---|---|---|
| Assets | |||
| Properties | 31,571 | 28,739 | 29,150 |
| Other tangible fixed assets | 1 | 2 | 1 |
| Financial fixed assets | 1,192 | 969 | 1,124 |
| Current assets | 350 | 367 | 362 |
| Cash and cash equivalents | 101 | 138 | 74 |
| Total assets | 33,215 | 30,215 | 30,711 |
| Equity and liabilities | |||
| Equity | 10,695 | 11,482 | 11,890 |
| Provisions | 827 | 641 | 585 |
| Interest-bearing liabilities1) | 18,296 | 16,846 | 16,755 |
| Derivatives | 797 | 530 | 664 |
| Non-interest-bearing liabilities | 2,600 | 716 | 817 |
| Total equity and liabilities | 33,215 | 30,215 | 30,711 |
| Equity/assets ratio, % | 32 | 38 | 39 |
| Contingent liabilities | 1,626 | 2,704 | 3,376 |
| SEKm | Equity | Of which, attributable to parent company sharholders |
Of which, attributable to minority |
|---|---|---|---|
| Equity, 1 Jan 2011 | 11,276 | 11,276 | – |
| Share buybacks | –33 | –33 | – |
| Cash dividend | –489 | –489 | – |
| Profit/loss for the period | 728 | 728 | – |
| Equity, 30 Sep 2011 | 11,482 | 11,482 | – |
| Share buybacks | –5 | –5 | – |
| Profit/loss for the period | 413 | 413 | – |
| Equity, 31 Dec 2011 | 11,890 | 11,890 | – |
| Cash dividend | –487 | –487 | – |
| Profit/loss for the period | –708 | –708 | – |
| Equity, 30 Sep 2012 | 10,695 | 10,695 | – |
1) Of which short-term SEK 5,614m (2,947).
| SEKm | 2012 Jan–Sep |
2011 Jan–Sep |
2011 Jan–Dec |
|---|---|---|---|
| Net operating income and realised changes in the value of existing property portfolio excluding depreciation |
1,100 | 994 | 1,407 |
| Central administration | –41 | –47 | –63 |
| Net financial items paid | –461 | –467 | –595 |
| Income tax paid | 0 | 0 | –1 |
| Change in other working capital | –179 | 1,169 | 1,198 |
| Cash flow from operations | 419 | 1,649 | 1,946 |
| Investments and acquisition of properties | –1,541 | –1,251 | –1,986 |
| Sale of properties, carrying amount of divested properties |
306 | 253 | 756 |
| Other investments (net) | –212 | –264 | –297 |
| Cash flow from investing activities | –1,447 | –1,262 | –1,527 |
| Dividend to shareholders | –487 | –489 | –489 |
| Share buybacks | – | –33 | –38 |
| Change in interest-bearing liabilities | 1,542 | 200 | 109 |
| Cash flow from financing activities | 1,055 | –322 | –418 |
| Change in cash and cash equivalents | 27 | 65 | 1 |
| Cash and cash equivalents at beginning of period |
74 | 73 | 73 |
| Cash and cash equivalents at end of period | 101 | 138 | 74 |
| SEKm | 2012 Jan–Sep |
2011 Jan–Sep |
2011 Jan–Dec |
|---|---|---|---|
| Financial | |||
| Return on capital employed, % | 8.9 | 6.9 | 7.2 |
| Return on equity, % | –8.4 | 8.5 | 9.9 |
| Interest coverage ratio, times | 2.2 | 2.1 | 2.2 |
| Equity/assets ratio, % | 32 | 38 | 39 |
| Loan-to-value ratio, properties, % | 58 | 59 | 57 |
| Debt/equity ratio, times | 1.7 | 1.5 | 1.4 |
| Share-related1) | |||
| Earnings per share for the period, SEK | –4.36 | 4.47 | 7.01 |
| Equity per share, SEK | 66 | 71 | 73 |
| Cash flow per share, SEK | 3.60 | 2.99 | 4.49 |
| No. of outstanding shares at end of period, '000 |
162,225 | 162,315 | 162,225 |
| Average no. of shares, '000 | 162,225 | 162,869 | 162,719 |
| Property-related | |||
| No. of properties | 97 | 100 | 97 |
| Carrying amount, properties, SEKm | 31,571 | 28,739 | 29,150 |
| Lettable area, sqm | 1,151,000 | 1,117,000 | 1,107,000 |
| Financial occupancy rate, % | 91 | 90 | 90 |
| Surplus ratio, % | 69 | 68 | 68 |
1) No dilution effect arises, since there are no potential shares (such as convertibles).
| SEKm | 2012 Jan–Sep |
2011 Jan–Sep |
2011 Jan–Dec |
|---|---|---|---|
| Income | 70 | 69 | 102 |
| Expenses | –124 | –136 | –193 |
| Net financial items | –189 | –144 | 1,877 |
| Change in value, fixed income derivatives | –133 | –263 | –397 |
| Change in value, equities | 3 | 1 | 0 |
| Profit/loss before tax | –373 | –473 | 1,389 |
| Tax | 96 | 123 | 158 |
| Profit/loss for period/year | –277 | –350 | 1,547 |
| SEKm | 30 Sep 2012 | 30 Sep 2011 | 31 Dec 2011 |
|---|---|---|---|
| Interests in Group companies | 13,328 | 13,328 | 13,328 |
| Other fixed assets | 41,049 | 37,992 | 39,090 |
| of which, receivables from Group companies | 40,422 | 37,752 | 38,815 |
| Other current assets | 11 | 24 | 161 |
| Cash and cash equivalents | 99 | 135 | 69 |
| Total assets | 54,487 | 51,479 | 52,648 |
| Equity | 9,620 | 8,490 | 10,382 |
| Provisions | 67 | 67 | 68 |
| Long-term liabilities | 39,100 | 39,914 | 38,892 |
| of which, liabilities to Group companies | 26,531 | 25,659 | 25,156 |
| Short-term liabilities | 5,700 | 3,008 | 3,306 |
| Total equity and liabilities | 54,487 | 51,479 | 52,648 |
Fabege, which is one of the leading property companies in Sweden, conducts opera tions that are primarily focused on letting office premises and property development.
The company's portfolio is highly concentrated to three sub-markets offering robust growth in the Stockholm area; Stockholm's inner city, Solna and Hammarby Sjöstad. Fabege offers attractive and efficient premises, principally for offices but also for retail and other operations.
Fabege manages a well-located property portfolio, which is developed continu ously through improvements, sales and acquisitions. By collecting properties in clus ters, increased customer proximity is achieved which, combined with comprehensive market knowledge, creates conditions for efficient management and a high occu pancy rate.
At 30 September 2012, Fabege owned 97 properties with a combined market value of SEK 31.6bn. The rental income amounted to SEK 2.3bn.
Christian Hermelin Chief Executive Officer Phone: +46 (0)8-555 148 25, +46 (0)733-87 18 25
Åsa Bergström Deputy CEO and Chief Financial Officer Phone: +46 (0)8-555 148 29, +46 (0)706-66 13 80
More information about Fabege and its operations is available on the Group's website. The website also includes a webcast presentation from 16 October 2012, in which Christian Hermelin and Åsa Bergström present earnings for the quarter.
The information contained in this report is such that Fabege is legally obliged to disclose under the Securities Market Act and/or the Financial Instruments Trading Act. The information was released for publication on 16 October 2012.
Fabege AB (publ) Box 730, SE-169 27 Solna, Visit address: Pyramidvägen 7, SE-169 56 Solna, Sweden Phone: +46 (0)8-555 148 00 Fax: +46 (0)8-555 148 01 E-mail: [email protected] Internet: www.fabege.se Company registration no: 556049-1523 Registered office of the Board: Stockholm
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.