Annual Report • Mar 7, 2011
Annual Report
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"Our customers and locations are central in everything we do."
| Introduction | 2010 in brief | 1 |
|---|---|---|
| This is Fabege | 2 | |
| Message from the CEO | 4 | |
| The business | Strategic focus | 6 |
| Opportunities and risks | 9 | |
| Financing | 10 | |
| The business | 12 | |
| Property portfolio | 20 | |
| Property valuation | 24 | |
| Market review | 26 | |
| Fabege markets | ||
| Stockholm inner city | 28 | |
| Solna Hammarby Sjöstad |
30 32 |
|
| List of properties | 34 | |
| Responsible enterprise | 40 | |
| Financial reports | The 2010 fi nancial year | 48 |
| Directors' report | 50 | |
| The Group | Profi t and loss accounts | 56 |
| Balance sheets | 57 | |
| Statement of changes in equity 58 | ||
| Cash fl ow statement | 59 | |
| The parent company | Profi t and loss accounts | 60 |
| Balance sheets | 60 | |
| Statement of changes in equity 61 | ||
| Cash fl ow statement | 61 | |
| Notes | 62 | |
| Corporate governance report | 74 | |
| Board of Directors | 80 | |
| Group management | 81 | |
| Signing of the Annual Report | 82 | |
| Audit report | 83 | |
| Other information | The Fabege share | 84 |
| Information to shareholders | 87 | |
| Five-year summary Defi nitions |
88 89 |
|
| History | 89 | |
The formal annual report, which has been audited, comprises pages 50–83.
During the year, Fabege sold 54 properties for SEK 4,350m. Accordingly, Fabege has concluded the streamlining of its portfolio to its prioritised submarkets. The concentration has resulted in 98 per cent of Fabege's properties now being located within fi ve kilometres of Stockholm's centre. The divestments have freed capital with which to increase project investments in the proprietary portfolio, and to acquire properties offering favourable growth potential.
Fabege's climate work began in 2002 with a project to replace old oil-fi red boilers with district heating. After that Fabege initiated a systematic effort to optimize the use of energy, and Fabege currently consumes 40 per cent less heat than the national average. Taken together, the various measures have cut annual carbon dioxide emissions from about 40,000 tonnes to 5,500 tonnes.
Read more on page 40.
| Key fi gures | 2010 | 2009 |
|---|---|---|
| Rental income, SEKm | 2,007 | 2,194 |
| Net operating income, SEKm | 1,348 | 1,465 |
| Profi t/loss for the year, SEKm | 1,697 | 425 |
| Return on equity, % | 16.0 | 4.3 |
| Surplus ratio, % | 67 | 67 |
| Equity/assets ratio, % | 39 | 32 |
| Interest coverage ratio, times | 3.0 | 2.6 |
| Earnings per share before and after dilution, SEK | 10.38 | 2.59 |
| Dividend per share, SEK | 3.001) | 2.00 |
1)Proposed cash dividend for 2010.
In September, the Swedish National Agency for Education signed a lease for about 9,000 sqm of offi ce premises in the Klamparen 10 property, which formerly housed the Stockholm District Court, on Fleminggatan 14/ Scheelegatan 36 in the Kungsholmen district of Stockholm. The property is undergoing an overall interior renovation featuring an exciting fl oor plan, new surface layers and modern technical installations.
More information about Fabege and our operations is available
Fabege is one of Sweden's leading property companies, focusing mainly on letting and managing office 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 sub-markets in the Stockholm region, as the inner city of Stockholm, Solna and Hammarby Sjöstad.
Fabege manages a well positioned property portfolio that is continually being developed through development projects, 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 clients and society in general. At year-end 2010, Fabege owned 103 properties with a total market value of SEK 27.0bn. Rental revenues in 2010 were SEK 2.0bn.
Fabege operates in three business areas; Property Management, Property Development and Transaction.
Finding the right premises for a customer's specifi c requirements and ensuring that the customer is content is the essence of what we do. Our approach is long-term and based on a close dialogue with the customer, which builds trust and loyalty on both sides.
Qualifi ed development activities that add value to Fabege's properties is the second cornerstone of our business. Th e company has a lot of expertise and long experience of running extensive property development 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 requirements.
Fabege's third cornerstone is Transaction development. Acquisitions and sales are an integral part of Fabege´s business model and makes a signifi cant contribution to consolidated progit. Th e company continuously analyses its portfolio to take advantage of opportunities to increase capital growth.
| Operational key fi gures | 2010 | 2009 |
|---|---|---|
| Property value, Management, SEKbn |
21.5 | 23.3 |
| Property value, development projects, SEKbn |
5.5 | 5.9 |
| Invested in the company property portfolio, SEKbn |
0.9 | 1.1 |
| Acquisitions, SEKbn | – | 0 |
| Sales, SEKbn | 4.4 | 1.2 |
www.fabege.se More information about Fabege and our operations is available on the Group's website.
Most of Fabege's inner city properties are located in the area around Kungsgatan and Drottninggatan, in the Norrtull area and in western and eastern Kungsholmen. The portfolio includes the DN building and Wenner-Gren Center, two wellknown Stockholm landmarks.
Read more on page 29.
| No. of properties | 42 |
|---|---|
| Lettable area, '000 sqm | 501 |
| Market value, SEKbn | 16,215 |
| Rental value, SEKbn | 1,167 |
| Financial occupancy rate, % | 90 |
Arenastaden and Solna Business Park are Fabege's main sub-markets in Solna. Fabege is one of the initiators and partowners of the new Arenastaden district, which will be home, not only to a large part of offi ce buildings, but also to the spectacular new Swedbank Arena, an extensive retail complex, hotels and residential buildings.
Read more on page 30.
| No. of properties | 34 |
|---|---|
| Lettable area, '000 sqm | 462 |
| Market value, SEKbn | 8,333 |
| Rental value, SEKbn | 0.685 |
| Financial occupancy rate, % | 86 |
Fabege owns the majority of commercial properties in Hammarby sjöstad, the largest being the Luma building. The district is one of Stockholm's most exciting development areas, and it has become a highly attractive residential and offi ce location area.
Read more on page 33.
| No. of properties | 12 |
|---|---|
| Lettable area, '000 sqm | 132 |
| Market value, SEKbn | 1,987 |
| Rental value, SEKbn | 0.175 |
| Financial occupancy rate, % | 82 |
The property market turned upwards during 2010, and Fabege's sub-markets strongly developed. Through the central locations of our properties, along with our market knowledge and hard work, we generated strong growth and highly favourable earnings in 2010. We increased the concentration of our property portfolio through a large number of property sales. With a strengthened balance sheet, our potential to increase the rate of project development and capitalise on acquisition opportunities is substantial.
Fabege reported stable property management earnings while earnings from transactions and the development portfolio also rose sharply. It is gratifying to report that all segments in our business model, aft er a two-year interruption during the fi nancial crisis, are once again generating signifi cant contributions to our total earnings. Our employees contributed their strong commitment to this favourable trend.
I am delighted with Fabege's business development during 2010. We comfortably met our goals, in terms of both increased business activities and yield on the property portfolio, thereby achieving a sharp increase in total earnings. Overall, improvements were noted in the most important key fi gures during the year.
Th e favourable earnings during the year were also refl ected in strong performance by the Fabege share. Th e share price rose sharply, up 74 per cent, while the property sector index (OMX Real Estate), in comparison, increased by 41 per cent and Nasdaq OMX Stockholm by 23 per cent.
During 2010, the market was characterised by a growing number of transactions. While 2010 was no record year, we now see a more normalised transaction market again. Th ere are many players on the Stockholm market, but only a few good properties for sale. Th e number of transactions continues to rise, however, and we have noted declining yield requirements in Fabege's sub-markets, not only in Stockholm inner city, but also in Solna Business Park and Arenastaden.
For several years, Fabege has worked to slimline and concentrate the property portfolio to a smaller
number of sub-markets characterised by high growth. Since the overall portfolio provides us with the best potential to create value, our own work eff orts have become critically important in order to reduce our risk exposure and sensitivity to economic trends. During 2010, 54 properties were sold, primarily in non-prioritised areas, for just over SEK 4bn. As a result, 98 per cent of Fabege's property portfolio is now concentrated in the three prioritised sub-markets comprising Stockholm inner city, Solna and Hammarby Sjöstad. In addition to this slimlining, the divestments contributed nearly SEK 400m in aft er-tax profi t.
In the rental market, we see a growing shortage of attractive premises in good locations and, as a result, rising rent levels. I sense that the demand for attractive premises rose sharply toward year-end 2010, and I see a clearly discernible trend of relocating to quality buildings. Many companies want to relocate to more modern offi ce premises, and the need to relocate is currently also being driven by companies undergoing expansion. In today's market, Fabege's portfolio of quality properties in attractive locations is extremely valuable and bodes well for the years ahead. With an ever stronger rental market, I now regard our vacancies as a future business potential.
New customers are important, but existing customers are defi nitely our principal asset. We need to continue our eff orts to encourage even more of existing customers to extend their leases. Accordingly, net lettings will remain in focus in order to reduce the vacancy ratio and, in turn, increase the surplus ratio and the property portfolio yield.
Fabege's goal is to contribute to sustainable social development. We take the sustainability aspect into consideration throughout the business process, and it is included as a natural and vital part of daily business activities and in dialogues with our customers. Lower
We delivered an exceptionally good property management result, and the earnings from transactions and the development portfolio also made a strong contribution.
energy consumption through systematic energyeffi ciency enhancements has been one of Fabege's key environmental objectives for many years. Fabege's heating consumption is now 40 per cent lower than the national average, and our total energy consumption continues to decline. I am proud of this trend. We will continue to work with energy effi ciency, environmental certifi cation, and the implementation of green rental contracts. Both Fabege and the tenants have a great deal to gain from these eff orts.
If today's positive economic forecasts come true, I am convinced that 2011 will be another year of favourable business growth and strong earnings for the company. With attractive properties in growth locations and a focus on projects and transactions, Fabege's opportunities to benefi t from current market trends are exceptionally good.
Our goals for 2011 call for continued substantial contributions to Fabege's total earnings from property management, property improvement and transaction activities. We have the strong potential to improve the letting ratio through increased net letting, thus increasing the yield and value of the portfolio. Our ongoing projects and project opportunities in attractive locations will also contribute to an increased cash fl ow and value growth, and today's market provides an excellent opportunity to raise our investment volume. We have an attractive project portfolio with great potential, and a strong balance sheet that creates room for investments in new value-creating projects, as well as new acquisitions, should suitable properties arise on the market.
Although a strong economy means higher interest rate costs, economic growth and infl ation are positive factors for property ownership. With the attractive locations and development opportunities represented by our portfolio, Fabege is among the companies with the best potential to capitalise fully on today's market conditions.
Stockholm, February 2011
CHRISTIAN HERMELIN CEO CHRISTIAN
Fabege owns and manages an extensive property portfolio in the Stockholm region, the most dynamic property and rental market in the Nordic countries. The company strives to create business opportunities and generate value through all stages of the business cycle. To achieve its operational objectives, Fabege has established clear strategies for business-critical areas.
Fabege's business concept focuses on commercial properties in the Stockholm region, with a particular emphasis on a limited number of fast-growing sub-markets. Fabege aims to create value by managing, improving and actively adjusting its property portfolio through sales and acquisitions. Accured values 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 clients and to society in general. The natural fi rst-choice provider.
Through constant skills development, Fabege will seek to understand customer requirements and exceed expectations while strengthening our profi le as a socially responsible company.
Th e core of Fabege's operations comprises commercial properties in the Stockholm inner city, Solna and Hammarby Sjöstad sub-markets. Since 2004, Fabege has implemented a goal-oriented restructuring and concentration of its property portfolio. Th e Group aims to concentrate its properties in management-effi cient units. Fabege intends to acquire properties off ering strong growth potential in prioritised areas. Th e aim is to continuously advance the property portfolio and add value through acquisitions, property development and sales.
Fabege is working to develop and realise the potential of the existing property portfolio.
New projects should generate a return on invested capital of at least 20 per cent and raise the status of the priority areas.
Fabege aims to develop strong customer relations. Th rough active property management by competent and customer-focued staff , Fabege seeks to nurture and develop its relations with existing customers.
Th e company strives to achieve a good portfolio mix by attracting stable and fi nancially robust customers representing a wide range of industries.
Th e Fabege brand should support the company's business, add value and
contribute to achieving the company's goals. Strengthening the brand is crucial to the company's continued success. Fabege works consistently to strengthen the company image among its priority stakeholders by raising awareness and providing knowledge about our activities.
Developing Fabege's intangible assets also involves building strong brands in the company's prioritised areas, such as Arenastaden in Solna, and for individual properties or concepts.
A key success factor for Fabege is its ability to attract and retain the right staff . Th e company works to ensure that its core values, SPEAK, colour the way we relate to other people, 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, delegation of responsibility and rewards for excellence. Fabege places a strong emphasis on caring for our co-workers and their wellbeing, and on creating a safe work environment.
To minimise risk exposure, Fabege's business activities should be limited and, as far as possible, controlled in terms of the choice of tenants and contract terms, business partners and business objects.
Th e company's funding arrangements should be stable, carefully evaluated and cost-eff ective. Fabege should also maintain a continued high cost effi ciency and strive for constant improvements.
Fabege's activities are goal-oriented at all levels of the organisation, and goals are defined from several different operational perspectives. The goals are broken down, developed and established in the different business areas and at co-worker level. Measuring and reviewing are performed regularly at all levels.
Fabege's overall goals are to use our size, strength and focus to create and realise values and provide our shareholders with the best overall return among property companies listed on the Stockholm Exchange.
Th e company's key fi nancial criteria adopted by the Board are profi tability, as measured by return on equity, equity/ assets ratio and interest coverage ratio. Fabege aims to be one of the most profi table listed property companies long-term. Th e target is to maintain 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.
Fabege aims to retain a high level of costeffi ciency and to be the leading player in comparison with other Swedish property companies. To improve its operational effi ciency and achieve its fi nancial goals, the company continuously implements various forms of process improvements. Th e goal is to create an atmosphere where ideas and initiatives to develop proFINANCIAL GOALS
Return on equity
Equity/assets ratio
cesses and procedures are harnessed and converted into action. In 2010, several process development projects were implemented in various parts of the organisation. Th is work will continue in 2011.
Another long-term goal is to improve the surplus ratio to 70 per cent. In 2010, Fabege's surplus ratio was 67 per cent (67).
Since 2002, an overriding environmental and effi ciency objective has been to reduce the company's year-on-year energy consumption by an average of 5 per cent. A future objective is to reduce energy consumption by 20 per cent from the 2009 level by 2014, which corresponds to an annual average reduction of 4 per cent. In 2010, the reduction was 3 per cent.
Fabege has about 1,500 leases in its commercial portfolio. To minimise its risks, Fabege aims to achieve a balanced mix of stable customers from various market segments. Th e company's 15 largest tenants in terms of value account for approximately 31 per cent of the total contracted lease value, and, in most cases, its leases have a duration that signifi cantly exceeds the average in the company's proprietary portfolio.
During the year, a new method to improve and intensify Fabege's customer relations was implemented. Based on last year's customer survey, a structured process was initiated with the aim of creating improved insight into the customers' perception of Fabege. Part of the process involves accompanying the customer into the long-term management relationship with Fabege, from the leasing process and customisation of premises to tenant needs, to assuming occupancy in the fi nished premises. Th e objective is to identify any development potential within Fabege in order to off er the customer an even better product and service, thus building stronger customer relations.
Fabege aims to be an attractive employer – where co-workers have a sense of commitment, participation, and are able to develop and grow. Th e boundaries and objectives for each employee's area of responsibility should be clearly defi ned and established. Our employees' activities are based on the company's core values, SPEAK.
Th e goal for 2009 was to achieve the same high scores in our employee survey as in 2007. Th e results showed a general improvement in the overall score 3.9 (3.7), against an average of 3.3 for the industry as a whole. During 2010, no employee survey was planned, the next survey is scheduled for 2011, when we will aim to further improve our excellent scores. Read more on page 44.
All business activities are associated with a certain measure of risk, which also generates opportunities. Fabege aims to limit its risk exposure and, to the extent possible, control it when it comes to choosing investment objects, tenants and contract terms, as well as financing terms and business partners. Described below are the principal areas of risk faced by Fabege in its business operations.
Th e risks and opportunities associated with cash fl ow primarily pertain to changes in rental income, property expenses and interest expenses. Th e sensitivity analysis on page 52 presents the fi nancial impact that changes in these items have on cash fl ow.
Growth in the Swedish economy is the primary engine driving demand for offi ce premises. Increased demand leads to lower vacancies and rising rents. Vacancies and rents are also impacted by new production.
Fabege's property portfolio is concentrated to sub-markets with favourable growth potential. Commercial premises, with an emphasis on offi ce space, account for 99 per cent of its operations. Accordingly, employment fi gures and developments in the Stockholm offi ce market are of considerable signifi cance for Fabege's operations.
Since commercial leases have a term of a certain number of years, changes in rents do not achieve full eff ect during a given year. Newly signed leases generally have a term of three to fi ve years, including a period of notice of nine months and an index clause related 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 renegotiated each year. Fabege's average remaining lease term for commercial leases was 3.5 years at year-end.
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 sectors and companies of diff erent sizes. Th e largest tenants in terms of value are all stable companies and comprise a limited portion of the total number of tenants. With the aim of limiting the credit risk, Fabege's credit policy governs the controls and assessments that are made of the customers' ability to pay. Th e tenants' ability to pay is strong and rent losses are negligible.
Fabege's portfolio of modern offi ce premises in central locations generates a stable cash fl ow from management operations. However, when we conduct project operations, buildings are vacated, which has an adverse impact on cash fl ow for a period of time.
Property expenses include regular operating and maintenance expenses, property tax, ground rent and administration and letting expenses. Regular operating expenses 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. Fabege also conducts regular contract 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 property portfolio is deemed to be high.
Th e interest rate risk refers to the risk that changes in market interest rates will impact Fabege's borrowing costs. Interest expenses are the Group's single largest expense item. Under the company's fi nance policy, the fi xed-rate period shall be based on the estimated interest trend, cash fl ow and capital structure. Th e strategic focus is primarily on a short fi xed-rate period. Fabege employs fi nancial instruments, mainly in the form of interest rate swaps, in order to limit the interest rate risk, and to fl exibly infl uence the average fi xed-rate period of the loan portfolio. Th e fi xed-rate period in the loan portfolio was about 23 months at year-end.
Properties are booked at fair value and the value changes are included in profi t or loss. Th e sensitivity analysis on page 52 presents the impact that changes in property values have on earnings, equity/ assets ratio and loan-to-value ratio. Th e value of the property is determined according to an established methodology. Fabege has the value of about 25 per cent of its portfolio appraised externally at the end of each quarter. Th e value of the remaining properties is appraised internally. Accordingly, the entire property portfolio is valued by an external appraiser at least once a year. Changes in rents, vacancies and yield requirements in the market have an impact on the value of the properties. Fabege's properties are concentrated to central Stockholm and its immediate surroundings. Stable customers and
modern premises in prime locations provide a strong foundation for maintaining property values, also during economic downturns. Th e continued advancement of Fabege's project and development properties creates value growth in the portfolio.
Fabege deploys fi xed-income derivatives to fl exibly impact the average fi xed-rate period of the loan portfolio. Derivatives are recognised at fair value. If the agreed interest rate deviates from the market 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 a strained market scenario. Fabege aims to strike
a balance between short and long-term borrowing divided among a number of fi nancing sources. Long-term credit facilities with predetermined terms and conditions, and revolving credit facilities have been signed with lenders. Th e average fi xed-term maturity period at year-end was 5.3 years. Also refer to the Financing section below.
Fabege recognises deferred tax liabilities attributable to the diff erence between market value and the taxable residual value of properties. However, sales are normally conducted through packaging, 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 exposure amounted to SEK
2,038m at year-end. Ongoing tax cases are described in further detail in the Administration Report on page 53.
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 unless a commercial business is able 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. In the event of any such risks arising, action and remediation plans for these are prepared.
Property ownership is highly capital intensive, and Fabege's property portfolio represents a significant value. Accordingly, 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 provide safe and flexible financial management.
Th e balance between shareholders' equity and borrowed capital is a key issue for the company. Fabege aims to have a strong fi nancial position. 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.
Fabege's fi nancial management, which is a central unit in the Parent Company, is responsible for the Group's borrowing, liquidity management and fi nancial risk exposure.
Fabege's fi nancing operations are governed by the company's fi nancial policy, which is established by its Board of Directors. Th e policy states the primary task of the fi nancial management is to ensure that the company always maintains stable, wellbalanced and cost-effi cient fi nancing. 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 and governs 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.
Shareholders' equity slightly exceeded SEK 11bn, which, in relation to the total assets of SEK 29bn, corresponded to an equity/assets ratio of 39 per cent at year-end. Th is is well above the company's target of 30 per cent.
Access to long-term and stable fi nancing is crucial to the pursuit of a longterm sustainable business. Fabege values long-term and trusting relations 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, margins that are to apply in the coming years. Th e Group's borrowing requirements and its access to credit lines are presented in the diagram above. Following the extension of a borrowing agreement valued at SEK 2bn and the termination of a borrowing agreement totalling SEK 1bn in January 2011, unutilised credit facilities amounted to SEK 5.2bn. Fabege's loan agreements at 31 January 2011 had an average remaining term of 6.1 years and are renegotiated continually well in advance of maturity.
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 outstanding commercial paper at any given time. At year-end, SEK 2.2bn of the programme had been utilised.
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 80 per cent, depending on the type of property and fi nancing.
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.
Fabege's fundamental view is that short fi xed-rate periods generate the lowest interest expenses over time. Accordingly, the company aims to maintain a fi nancial position strong enough to manage the natural variations in net interest expenses that a short fi xed-rate period entails. Th e fi xed-rate period that nevertheless can be traced back to the turbulent situation in the fi nancial market during the summer of 2008. At 31 December 2010, the fi xedrate period was 23 months. Read more about fi xed-income derivatives and the valuation thereof in Note 3 on page 64.
| Goal | Outcome | |
|---|---|---|
| Equity/assets ratio, % | 30 | 39 |
| Interest coverage ratio, times |
2.0 | 3.0 |
| Loan-to-value ratio, % | 60 | 62 |
| Credit agreements SEKmr |
Drawn SEKm |
|
|---|---|---|
| 5,000 | 2,249 | |
| 4,730 | 3,550 | |
| 1,000 | 1,000 | |
| 6,875 | 3,667 | |
| 0 | 0 | |
| 4,000 | 3,200 | |
| 4,980 | 2,980 | |
| 26,585 | 16,646 | |
| Amount SEKm |
Average interest rate % |
Share % |
|
|---|---|---|---|
| < 1 year | 9,096 | 3.09 | 55 |
| 1–2 years | 0 | 0.00 | 0 |
| 2–3 years | 4,550 | 3.84 | 27 |
| 3–4 years | 0 | 0.00 | 0 |
| 4–5 years | 0 | 0.00 | 0 |
| > 5 years | 3,000 | 3.97 | 18 |
| Total | 16,646 | 3.45 | 100 |
and vacancies are key factors determining the growth potential of a property. A fully let
The Fabege organisation supports the company's dynamic business model, which is designed to create value regardless of the economic climate. The emphasis of the business model varies over time in response to changing market conditions, and the organisation is, therefore, structured to be flexible and adaptable. Fabege's cornerstones are Property Management and Property Development, as well as Sales and Acquisitions.
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 Sales
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 defi ned in the EU GreenBuilding programme.
Property Development Read more on page 15
| SEKm | Jan–Dec 2010 |
Jan–Dec 2009 |
|
|---|---|---|---|
| Profi t Property Management | 768 | 779 | |
| Changes in value (portfolio of investment properties) |
579 | –327 | |
| Contribution Property Management | 1,347 | 452 | |
| Profi t Property Management | 14 | 59 | |
| Changes in value (profi t from prop erty development) |
264 | 17 | |
| Contribution Property Development | 278 | 76 | |
| Contribution Transactions (Realised changes in value) |
237 | 57 | |
| Changes in value, derivatives and | |||
| equities | 67 | 95 | |
| Profi t before tax | 1,929 | 680 |
divestment.
Finding the right premises for a customer's specific requirements and ensuring that the customer is content is the essence of what we do. Our approach is long-term and based on a close dialogue with the customer, which builds trust and loyalty on both sides. Active property management may also involve solving a large and complex move or helping a customer to find new premises in our portfolio of properties.
Th e business is divided into geographic areas where each sub-market is managed by a separate unit with a large degree of individual responsibility and the ability to react swift ly to changes and identify new business opportunities.
About 81 of Fabege's 126 employees work with property management. Th e property management team has built a robust platform for our activities with a high occupancy rate and stable tenants.
Responsibility for the operations and development as well as for contacts and relationship-building with its clients in the respective area rests with the area manager. Each area has operations managers, building maintenance technicians, and lettings specialists. Property Management also includes the Business Support department, which consists of a team with specialist expertise in the important area of environmental issues and energy consumption, as well as technology and purchasing.
In 2010, the property management team focused on developing the company's customer relationships even further, with the aim of encouraging customers to remain with Fabege. Intensive eff orts were made in lettings to ensure a continued
high occupancy rate, with a particular emphasis on our existing properties in the Arenastaden development area in Solna.
Th e primary aim in 2011 is to further focus on letting operations and improving the occupancy rate. We continue to strengthen our customer relations by raising our level of service and quality based on proactivity and commitment.
We will also focus on introducing stricter requirements for purchasing and optimise running costs in order to improve cost effi ciency, and to develop and streamline our internal processes.
Our customer Mama Mia, Scandinavia's largest private women and children's clinic, is located in cosy premises on Karlavägen in Stockholm, where it has been active since 2002. Marja Way is one of Mama Mia´s professionals offering specialist care for expecting mothers.
Everyone is discussing the importance of having satisfied customers. But how do we achieve this? And how can Fabege improve in order to attract new customers while retaining existing ones? We believe in simplicity.
We have decided to ask our customers a number of questions to fi gure out if we can somehow improve.
Our customers have needs and expectations. To determine what these are, we must listen to what our customers say and turn their responses into action.
If it turns out that our customers feel that we should improve in certain areas, we will work on this to enhance our service.
Selling is one thing, building relationships another. Once we have signed an agreement with a customer, we must honour our promises. Although quality is subjective, customers' expectations must generally be exceeded if a sense of favourable service is to be perceived. In addition to prime premises, this also requires qualities among our co-workers such as perceptiveness, commitment and the right attitude. Th is is something we work hard to achieve.
Naturally, our goal is to make our customers want to remain Fabege tenants in the long term. Accordingly, we are conducting surveys to identify ways to meet customer expectations and become an even better landlord.
During 2010, Egmont Tidskrifter med Nordisk Film, a successful and exciting media company, signed a lease for 4,500 sqm in Arenastaden, Solna. Egmont's new offi ces are located at the top of the building, above Fabege's own head offi ce. Right next to the sky.
Qualified development activities that add value to Fabege's properties is the second cornerstone of our business. For Fabege, sustainable urban development entails the development of not only individual properties, but also areas and districts that will remain attractive long term. Our development projects create a well-proportioned balance between economic, social, ecological and cultural development. This results in vibrant areas featuring a favourable mix of offices, stores and residential units, as well as excellent transport opportunities and environmental consideration.
Th e company has vast expertise and extensive experience from running property development projects, and strives to attract long-term tenants for properties that have not yet been fully developed and can be redesigned based on the customer's requirements.
Fabege's project investments are forward-looking and designed to improve the environmental characteristics of the properties and reduce vacancy rates, thereby improving cash fl ows and capital growth.
Th e company's properties are developed and improved in response to changing demand. Project plans are developed for new constructions, while properties with development potential are acquired, developed to add value, and then either transferred to the Group's investment portfolio or sold. New constructions and more extensive development projects are always based on the principles of the EU GreenBuilding programme.
Projects aimed at adding value to land and buildings run over a longer period, oft en 10–15 years. In many cases, the planning work is initiated in partnership with the local authority in the area where the property or land is located. Together, we create visions for how to develop the area in the best way for the residents, for society as a whole and for Fabege.
Responsibility for new constructions and development projects, procurement and follow-up rests with the Projects
department. Th e department is selfsuffi cient in terms of project expertise. Construction services are, however, procured externally. During the year, the department expanded due to an increased need for proprietary resources.
In 2010, the Projects department focused on adding value to Fabege's existing properties in about ten major property development projects in the Stockholm region, and in particular, Vattenfall's new head offi ce in Arenastaden. Some SEK 0.9bn was invested in existing properties. Th e department also worked with assuring internal processes to improve effi ciency and quality.
Project volumes are expected to rise in the coming years and the activities will be focusing on developing the new Arenastaden district in Solna, and three major development projects in Stockholm inner city: Apotekaren 22, Klamparen 10, and Bocken 39.
In the Bocken property block on Lästmakargatan, in the Norrmalm district of Stockholm, work has been underway on a major development project for a few years. The aim is to reinvigorate a centrally located backstreet by creating a vibrant street environment with attractive offi ce premises, stores and residential units. This will become an attractive area in the very centre of the city.
Construction is being conducted in various phases and comprises four different buildings. The fi rst phase has already been completed with offi ce premises for Carnegie and Max Matthiessen.
The development of new offi ce space and the construction of residential buildings for tenant-owner apartments are currently under way.
Next to Solna station, the new Arenastaden is emerging; a living neighbourhood with a carefully balanced mix of residential buildings, offices and retail space, events and excellent transport connections, where environmental considerations have been integrated into all aspects of the development. Work is in full swing, creating new opportunities for new and existing tenants.
Th ere's really no equivalent to Arenastaden anywhere else in Scandinavia. Currently under construction, it will house ultramodern offi ce solutions and safe housing developments, the Swedbank Arena, Sweden's new national football arena, and a place for many other unique events. Plans are also drawn up for a compherensive retail centre, as well as one of the tallest hotels in the Stockholm region. Arenastaden will become a vibrant neighbourhood with a city environment that will reverberate into the future.
Geographically, the area is exceptionally well placed. Arenastaden is strategically located next to Solna railway station, which will also be the end stop for the coming Tvärbanan light rail line. Th ere are many bus connections and the area is located right next to the E4 and E18 motorways, providing speedy access to Arlanda and Bromma airports. In the longer term, the underground will be closer connected to the commuter trains through an integrated traffi c system.
Arenastaden will become an exciting and dynamic place to work. Co-workers on lunch breaks will have a wide range of restaurants to choose from and, if they have a moment to spare, perhaps one of the many stores in the retail centre can off er some diversion. Almost like working in Stockholm city, only a little bit better.
Being a significant player on the Solna property market, Fabege has a strong commitment to the development of the locality. As part of this commitment, Fabege is a joint owner of the company which runs the Arenastaden project, along with Solna Municipality, Jernhusen and Peab.
Fabege already owns the majority of the existing commercial property in Arenastaden, approximately 135,000 sqm in property management and 50,000 sqm in projects in progress, and can off er a wide selection of offi ce premises of all sizes and layouts for small and large businesses. Th e company has a strong commitment to the development of the district and has already begun to raise the standard of the existing buildings and their surroundings.
In coming years, Fabege will have the opportunity to build more than 130,000 sqm of ultramodern energy-effi cient offi ce space in its proprietary portfolio. Th e goal is to create a modern, stylish and attractive area for tenants looking for modern, energy-effi cient offi ce solutions. All new buildings developed by Fabege will meet or exceed the GreenBuilding standards, and, in some cases, even more stringent environmental standards.
| Total | 315,000 |
|---|---|
| Development rights | 130,000 |
| Projects in progress | 50,000 |
| Existing commercial space | 135,000 |
Vattenfall's new head office is currently one of Fabege's most exciting projects in the emerging Arenastaden district. Construction is fully underway and the office will, upon completion in late 2012, be a modern and environment-friendly building comprising 43,000 sqm of office space and 2,000 flexible workplaces.
Global warming is central to the project and the building will be environmentally labelled with the ultimate GOLD standard under the Sweden Green Building Council's Environmentally Classifi ed Building classifi cation system.
Vattenfall has ambitious environmental and energy aims, and so does Fabege. Th e building will feature innovations such as solar cells, sedum roofi ng with vegetation that absorbs water and melted snow, and possible wind turbines on the roofs. Th is will be a unique building with a high level of environmental compatibility and low energy consumption.
Swedbank Arena will welcome the Swedish national football team, famous artists and unique shows, all year round. Famous celebrities from the worlds of sport and music will come here to compete for medals and the cheers from the audience. When completed in 2012, Solna and the Stockholm region will be proud to offer Scandinavia's largest and most modern, multifunctional arena.
The distinguishing feature of the arena is fl exibility. The surface can be changed from grass to ice or gravel and the roof is retractable, allowing the arena to be used year round for all types of event. It will have several restaurants and bars. For sports, the capacity will be 50,000 spectators, and for concerts up to some 65,000.
In December 2010, Fabege sold 16 properties for SEK 1,350m, thus freeing up resources to invest in properties in Fabege's prioritised areas. As a result of the transaction, Fabege has essentially concentrated its portfolio to the sub-markets of Stockholm inner city, Solna Business Park and Arenastaden in Solna and Hammarby Sjöstad.
Fabege's third cornerstone is Business Development which focuses on transactions, analyses, valuations and portfolio and business development. Acquisitions and sales are a natural part of what we do. The company continuously analyses its portfolio to take advantage of opportunities to increase capital growth. Fabege aims to acquire properties with good growth potential, located within the company's sub-markets. We plan to sell the properties at the right time to realise accrued values.
Location, condition and vacancies are key factors determining the growth potential of a property. A fully let property with modern and effi cient premises but deemed to have limited potential for rent increases and capital growth could thus become a candidate for divestment, unless it forms a strategic part of a property cluster, for instance.
As a major player in a signifi cant market, Fabege has built good relationships with local authorities and policy-makers as well as extensive experience and knowledge about local markets, properties, development plans and other players.
Th is department consists of nine people. Valuations of the properties are made by internal valuation experts as well as independent external valuation agencies.
In 2010, the goal-oriented eff orts of concentrating the portfolio continued and were essentially completed. Some 54 properties were divested for a total value of SEK 4,350m. Refer to the compilation of the sold properties on page 23. Th e properties that remain outside the prioritised sub-markets are individual properties and land.
In 2011, eff orts will focus on the acquisition opportunities for properties with development potential. Additional focus will also be placed on optimising value and visualising opportunities in the portfolio.
Stockholm has the most attractive and liquid transaction market in Sweden, accounting for more than half of the Swedish transaction volume in recent years.
In 2010, transaction volumes 1) in the Swedish property market amounted to SEK 98bn (37), of which Stockholm accounted for SEK 42bn (16.3) representing almost 43 per cent of the total Swedish transaction volume. Th e total transaction volume shows a distinct recovery following last year's decline, although volume has not reached the peak levels of 2006 to 2007, with few exceptions.
Quality and secure cash fl ows are generally the key factors for investors, thus making most of Fabege's portfolio, featuring properties in prime locations and of solid quality, among the most sought-aft er investment objects.
Th e direct yield requirements for modern offi ce properties in central Stockholm are currently between 4.75 and 5.0 per cent. In other inner city locations outside the city centre, direct yield requirements range from 5.25 to 5.75 per cent.
Fabege estimates that yield requirements throughout Stockholm inner city have the potential to decline somewhat, due to expected rental growth.
1) Transactions larger than/equal to SEK 100m, Source: Newsec.
In Solna Business Park, one of Solna's most attractive offi ce sub-markets, yield requirements are between 5.75 and 6.0 per cent. Fabege sees an increased demand on offi ce space in these areas, which creates a positive eff ect on rental levels and thereby also on value development.
In Hammarby Sjöstad, an offi ce market that remains in the development phase, yield requirements are range from 6.25 to 6.75 per cent. Fabege sees an increased demand in good products, which creates a positive eff ect on rental levels.
Strong growth and high employment levels, a normalised fi nance market and only marginally rising interest rates, lead Fabege to expect a positive trend in rents, and thereby somewhat sinking yield requirements during 2011–2012.
| Yield requirements, % | 2010 | 2009 |
|---|---|---|
| Stockholm inner city | 4.75–5.00 | 5.25–5.50 |
| Stockholm inner city, outside city core |
5.25–5.75 | 5.75–6.25 |
| Solna Business Park | 5.75–6.25 | 6.25–7.00 |
| Arenastaden | 5.75–6.25 | 6.50–7.00 |
| Hammarby Sjöstad | 6.25–6.75 | 6.50–7.50 |
Source: Newsec Source: Newsec
On 31 December 2010, Fabege's portfolio comprised 103 properties with a total lettable area of 1.1m sqm. The market value was SEK 27.0bn and the rental value totalled SEK 2,1bn. The financial occupancy rate was 88 per cent. Rental income was SEK 2,007m and Net operating income totalled SEK 1,348m.
Fabege's properties are concentrated to the Stockholm region and divided into three priority sub-markets: Stockholm inner city, Solna, Hammarby Sjö-stad. Some 98 per cent of the property portfolio is located within a radius of 5 km of the centre of Stockholm. Th e inner city sub-market accounts for 60 per cent of the total market value and 57 per cent of the rental value.On 31 December 2010,
the total lettable area in Fabege's portfolio was 1.1m sqm. Th e portfolio mainly comprises commercial premises, mostly offi ces, which account for 823,000 sqm of space and 72 per cent of the total lettable area. In addition to offi ces, the portfolio also includes retail, industrial/warehouse and residential space and a small amount of hotel and garage space.
| '000 sqm | Offi ce | Retail | Industry/ Warehouser |
Hotel | Residential | Garage | Other | Total |
|---|---|---|---|---|---|---|---|---|
| Stockholm inner city | 382,322 | 27,446 | 26,412 | 7,674 | 10,548 | 43,687 | 3,405 | 501,493 |
| Solna | 337,252 | 30,972 | 34,151 | 9,570 | 1,574 | 47,519 | 472 | 461,509 |
| Hammarby Sjöstad | 79,086 | 12,014 | 32,445 | 0 | 691 | 7,688 | 209 | 132,132 |
| Other Markets | 24,237 | 2,026 | 15,864 | 0 | 0 | 525 | 448 | 43,100 |
| Total | 822,897 | 72,458 | 108,871 | 17,244 | 12,813 | 99,419 | 4,534 1,138,234 |
| Property portfolio | 31 December 2010 | 1 January – 31 December 2010 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| No. of properties |
Lettable area, '000 sqm |
Market value, SEKm |
Yield require ments, % |
Rental value, SEKm |
Financial occupancy rate, % |
Rental income, SEKm |
Property expenses, SEKm |
Net operating income, SEKm |
|
| Property holdings | |||||||||
| Investment properties1) | 69 | 917 | 21,453 | 5.9 | 1,759 | 91 | 1,569 | –404 | 1,165 |
| Developmentt properties1) | 9 | 149 | 3,325 | 5.7 | 233 | 76 | 193 | –59 | 134 |
| Land and project properties1) | 25 | 72 | 2,191 | 6.2 | 69 | 44 | 34 | –23 | 11 |
| Total | 103 | 1,138 | 26,969 | 5.9 | 2,061 | 88 | 1,796 | –486 | 1,310 |
| Stockholm inner city | 42 | 502 | 16,215 | 5.5 | 1,167 | 90 | 1,069 | –281 | 788 |
| Solna | 34 | 461 | 8,333 | 6.3 | 685 | 86 | 556 | –138 | 418 |
| Hammarby Sjöstad | 12 | 132 | 1,987 | 6.6 | 175 | 82 | 140 | –54 | 86 |
| Other markets | 15 | 43 | 434 | 7.1 | 34 | 61 | 31 | –13 | 18 |
| Total | 103 | 1,138 | 26,969 | 5.9 | 2,061 | 88 | 1,796 | –486 | 1,310 |
| Expenses for lettings, project development and property administration | –98 | ||||||||
| Total net operating income after expenses for lettings, project development and property administration | 1,212 2) |
1) See defi nitions on page 89.
2) The table refers to Fabege's property portfolio on 31 December 2010. Income and expenses are reported as if the properties were owned for the entire period. The difference between reported net operating income above, SEK 1,212m, and net operating income in the profi t and loss account, SEK 1,348m, is explained by the fact that net operating income from divested properties has been excluded, and acquired/completed properties have been adjusted upwards as if they were owned/completed during the period of January–December 2010.
In 2010, Fabege divested 54 properties. Most of the sales were aimed at slimlining the property portfolio to focus on prioritised sub-markets, a concentration of the portfolio that has now essentially been completed. In addition, some of the investment properties in prioritised areas were sold in accordance with the business model's objective of divesting fully developed properties at the right time in order to realise accrued value. No properties were acquired during 2010.
Total investments in existing properties and projects in 2010 were SEK 907m (1,082). Th e investments referred to new builds, extensions and conversions.
During the fi rst quarter of the year, the projects in the Päronet 8 property at Solna strand (let to the Swedish Tax Agency) and in the Tygeln 3 property in Arenastaden (let to Adidas) were completed, and subsequently transferred to the investment-property portfolio.
Th e project in the Bocken 39 property on Lästmakargatan 14 is proceeding as planned. During the fourth quarter, a property division was undertaken, under which the residential project was transferred to the Bocken 51 property (divested in January 2011) and part of the property with existing rental rights was partitioned
off to form a separate property, Bocken 52.
Th e project at Farao 20, Arenastaden, is also developing according to plan. Egmont moved in at year-end and Nordisk Film assumed occupancy in February. Th e property is fully let and will be transferred to Property Management during the fi rst quarter of 2011.
| Fair value, SEKm |
No. | |
|---|---|---|
| Property portfolio, 1 Jan 2010 | 29,193 | 148 |
| + Acquisitions | – | – |
| + Property settlements | – | 9 |
| + New builds, extensions and conversions |
940 | – |
| – Sales | –4,007 | –54 |
| +/– Unrealised changes in value | 843 | – |
| Property portfolio, 31 Dec 2010 | 26,969 | 103 |
| Projects in progress >50 SEKm, 31 December 2010 | Lettable | Occupancy rate, % |
Estimated | Book value | Estimated | Of which, accrued |
|||
|---|---|---|---|---|---|---|---|---|---|
| Property name | Property type | Area | Completed | area, sqm | Floor area1) | rental value2) | 31 Dec 2010 | investment | 31 Dec 2010 |
| Bocken 39 3) | Offi ce/Residence | Östermalm | Q4-2011 | 19,800 | 74 | 69 | 980 | 147 | 84 |
| Farao 20 | Offi ce | Arenastaden | Q1-2011 | 8,400 | 100 | 16 | 203 | 110 | 99 |
| Fräsaren 10 | Offi ce | Solna | Q1-2011 | 11,470 | 88 | 21 | 240 | 155 | 117 |
| Klamparen 10 3) | Offi ce | Kungsholmen | Q4-2011 | 22,530 | 46 | 60 | 533 | 160 | 6 |
| Uarda 5 (former Uarda 2) | Offi ce | Arenastaden | Q3-2012 | 44,500 | 97 | 103 | 390 | 1,050 | 218 |
| Total | 106,700 | 81 | 269 | 2,346 | 1,622 | 524 | |||
| Other Land and Project Properties | 875 | ||||||||
| Other Development Properties | 2,295 | ||||||||
| Total Projects, Land and Development Properties | 5,516 |
1) Operational occupancy rate at 31 December 2010.
2) The annual rent for the largest projects in progress could increase to SEK 269m (fully let) from SEK 65m in annualised current rent as of 31 December 2010. 3) Information regarding area, rental value and booked value pertains to the entire property. The investment amount pertains to only a portion of the property.
Th e project in the Fräsaren 10 property in Solna Business Park was completed in conjunction with Vectura's occupancy in early 2011. Th e property was transferred to Management in the fi rst quarter of 2011.
In the Klamparen 10 property, on Fleminggatan 12, work gained momentum during January 2011 on behalf of Skolverket. Meanwhile, detailed planning work is in progress to enable the building of an extension.
Th e project in the Uarda 5 property in Arenastaden, pertaining to the construction of Vattenfall's new head offi ce, is proceeding as planned.
During the fourth quarter of 2010, decision was made to invest in Apotekaren 22 and Bocken 52. Th ese investments amount to approximately SEK 145m and the projects will be starting up in the spring of 2011.
Fabege has many large, stable companies as customers. Th e customer portfolio is well diversifi ed with a large number of tenants from a wide range of industries, respresenting a mix of private businesses and public sector organisations.
On 31 December 2010, the contracted rent was SEK 1,811m (2,167), of which 94 per cent referred to offi ce premises. On the same date, the 15 largest tenants by value represented a total contract value of SEK 565m, or 31 per cent of the total contracted rental value.
On 31 December 2010, the portfolio included 1,458 signed leases at a contract value of SEK 1,811m. On the same date, the average remaining contract term was 3.5 years (3.6). In 2010, new leases were signed for 98,000 sqm (145,000) of space with a total annual rental value of SEK 211m (299).
Fabege also renegotiated and extended existing leases with a total annual rental value of SEK 113m (75). Th e shorter average contract term is primarily due to sales of properties with long leases.
Th e fi nancial occupancy rate was 88 per cent (90). Th e decline was primarily due to vacancies in prospective project properties (Th e Swedish National Courts Administration in Klamparen 10, and the Swedish Educational Broadcasting Company in Apotekaren 22), and to the divestment of properties with a high occupancy rate.
| Area | No. of properties |
No. of leasesl |
Lease term |
|---|---|---|---|
| Stockholm inner city | 42 | 700 | 3.3 |
| Solna | 34 | 389 | 4.0 |
| Hammarby Sjöstad | 12 | 307 | 2.4 |
| Other markets | 15 | 62 | 3.5 |
| Total/average | 103 | 1,458 | 3.5 |
| Due, year |
No. of | leases Area, sqm | Contracted annual rent |
Share, % |
|---|---|---|---|---|
| 2011 | 438 | 177,258 | 289,572 | 17 |
| 2012 | 419 | 146,021 | 280,963 | 16 |
| 2013 | 317 | 184,170 | 424,958 | 25 |
| 2014 | 129 | 105,498 | 257,881 | 15 |
| >2015 | 155 | 215,585 | 478,499 | 27 |
| Total | 1,458 | 828,532 1,731,874 | 100 |
| 2010 | 2009 | 2008 | |
|---|---|---|---|
| No. of properties | 103 | 148 | 157 |
| Lettable area, '000 sqm | 1,138 | 1,429 | 1,454 |
| Financial occupancy rate, % |
88 | 90 | 93 |
| Rental value, SEKm | 2,061 | 2,194 | 2,214 |
| Surplus ratio, % | 67 | 67 | 65 |
On 31 December 2010, the 15 largest tenants by value represented a total contract value of SEK 565m, or 31 per cent of the total contracted rental value.
January–December 2010
| Property name | Area | Category | Lettable area, sqm |
Property name | Area | Category | Lettable area, sqm |
|---|---|---|---|---|---|---|---|
| Quarter 1 | Quarter 3 | ||||||
| Paradiset 29 (50%) | Stadshagen | Offi ce/Retail | 17,749 | Ferdinand 9 | Bromsten | Industry/Warehouse | 4,643 |
| Harpan 51 | Östermalm | Offi ce/ Residential | 4,661 | Offi ce/Industry/ | |||
| Gjutaren 27 | Vasastan | Residential | 1,616 | Påsen 10 | Hammarbyhamnen | Warehouse | 9,839 |
| Fotkvarnen 1 | Rinkeby | Residential | 9,312 | Rovan 3, 4, 5 | Huvudsta | Land | 0 |
| Fotkvarnen 2 | Rinkeby | Land | 0 | Sicklaön 145:17 | Nacka | Retail | 5,087 |
| Handkvarnen 3 | Rinkeby | Residential | 10,463 | Vallentuna Rickeby 1:327 |
|||
| Hjulkvarnen 1 | Rinkeby | Residential | 5,818 | (part of) | Vallentuna | Land | 0 |
| Hjulkvarnen 2 | Rinkeby | Residential | 6,039 | Vallentuna Rickeby 1:477 |
Vallentuna | Land | 1,167 |
| Hjulkvarnen 3 | Rinkeby | Land | 0 | ||||
| Rinkeby 2:1 | Rinkeby | Land | 0 | Quarter 4 | |||
| Rinkeby 2:13 | Rinkeby | Land | 0 | Bordduken 7 1) | Brommaplan | Offi ce/Retail | 8,173 |
| Rinkeby 2:14 | Rinkeby | Land | 0 | Brandsprutan 2 1) | Näsbypark | Offi ce | 13,270 |
| Skvaltkvarnen 1 | Rinkeby | Residential | 8,804 | Domnarvet 18 1) | Lunda | Offi ce | 5,624 |
| Skvaltkvarnen 2 | Rinkeby | Residential | 4,542 | Domnarvet 36 1) | Lunda | Offi ce | 3,790 |
| Skvaltkvarnen 3 | Rinkeby | Land | 0 | Elementet 1 1) | Ulvsunda | Offi ce/Retail/ Industry | 9,519 |
| Hyppinge 1 | Tensta | Land | 0 | Grammet 1 | Brommaplan | Offi ce/Retail | 7,060 |
| Kullinge 1 | Tensta | Residential | 13,724 | Guldfi sken 18 | Östermalm | Offi ce | 5,092 |
| Risinge 1 | Tensta | Residential | 13,938 | Hammarby Smedby 1:471 |
Upplands Väsby | Land | 0 |
| Vättinge 1 | Tensta | Residential | 7,223 | Jollen 4 1) | Näsbypark | Offi ce | 8,302 |
| Vättinge 2 | Tensta | Residential | 5,358 | Karlsro 1 1) | Järva | Industry/Warehouse | 12,970 |
| Vättinge 3 | Tensta | Residential | 9,490 | Lillsätra 3 1) | Sätra | Industry/Warehouse | 8,519 |
| Linneduken 5 1) | Brommaplan | Offi ce | 2,608 | ||||
| Öninge 1 | Tensta | Land | 0 | Täby Näsbypark | |||
| Quarter 2 | Offi ce/ | 73:5 1) | Näsbypark | Land | 0 | ||
| Induktorn 28 | Bromma | Retail/Industry | 5,388 | Sicklaön 145:2 1) | Nacka | Retail | 2,100 |
| Hallen 6 | Solna | Hotel | 4,600 | Sicklaön 145:19 1) | Nacka | Offi ce | 17,026 |
| Orgelpipan 4 | Norrmalm | Offi ce/Retail | 6,858 | Sjukhuset 9 and 10 1) | Danderyd | Industry/Warehouse | 1,410 |
| Päronet 8 | Solna | Offi ce | 20,216 | Styckjunkaren 3 1) | Huvudsta | Offi ce | 12,911 |
| Vallentuna Rickeby 1:480 |
Vallentuna | Land | 0 | Veddesta 2:68 1) | Veddesta | Offi ce/Industry/ Warehouse |
2,777 |
| Vävnaden | Brommaplan | Retail | 299 |
Total property sales 297,985
1) Sold as of 5 December 2010, occupancy on 12 January 2011.
In December 2010, Fabege sold 16 properties, located outside its prioritised areas, to Profi Fastigheter II AB, including Linneduken 5 at Brommaplan.
After a couple of years of declining values, the market has now recovered. Successful property development and declining yield requirements enabled Fabege to report positive unrealised value changes of SEK 843m in 2010. Realised value changes amounted to SEK 237m.
| Property | Area | sqm |
|---|---|---|
| Trängkåren 7 | Marieberg | 76,463 |
| Ladugårdsgärdet 1:48 Värtahamnen 37,765 | ||
| Fräsaren 11 | Solna | 39,330 |
| Bocken 39 | Norrmalm | 14,779 |
| Apotekaren 22 | Norrmalm | 31,422 |
| Smeden 1 | Solna | 45,694 |
| Fräsaren 12 | Solna | 36,526 |
| Bocken 35 | Norrmalm | 15,362 |
| Barnhusväder kvarnen 36 |
Norrmalm | 25,642 |
| Luma 1 | Hammarby Sjöstad |
38,077 |
| Sub-market | Market value, 31 Dec 2010, (SEKm) |
% | Yield % |
|---|---|---|---|
| Stockholm inner city | 16,215 | 60 | 5.5 |
| Solna | 8,333 | 31 | 6.4 |
| Hammarby Sjöstad | 1,987 | 7 | 6.6 |
| Other Markets | 434 | 2 | 7.1 |
| Total | 26,969 | 100 | 5.9 |
At 31 December 2010, the portfolio had an estimated market value of SEK 27.0bn (29.2). Th e average discount rate for the portfolio was 7.9 per cent (7.9%) and is based on the nominal interest rate on fi veyear government bonds plus a premium for property-related risk. Th e weighted required yield at the end of the calculation period was 5.9 per cent (6.0).
Unrealised changes in the value of Fabege's properties in 2010 totalled SEK 843m (–310). Th e write-up/increase corresponds to a value increase of about 3 per cent during the year. Compared with the preceding year-end, the average yield
requirement in the property portfolio declined about 0.1 per cent. Th e decline in yield requirements in the city centre more or less equals that of the outer and inner suburbs. Th e net eff ect of the value changes further increased as a result of improved cash fl ows from the properties and positive results from projects. Investments in the portfolio will ultimately lead to reduced vacancies and higher rents and thus, increased cash fl ows and value growth.
All properties in Fabege's portfolio are externally valued at least once a year by independent valuers. Since 2000, the valuations have been performed in ac-
Each property is valued separately without taking portfolio effects into account. Property valuations are based on the following valuation data:
Current assessments of trends in rents, vacancies and required yields for relevant geographic and character-defi ned markets as well as normalised running and maintenance costs.
Information from public sources concerning the land area of the properties, leaseholds and detailed development plans for undeveloped land and developable properties.
cordance with the Valuation Guidelines of the Swedish Property Index. In 2010, the properties were valued by Newsec Analys AB, whose appraisers are authorised by ASPECT, the Association for Chartered Surveying, Property Evaluation and Transactions. Valuations were regularly performed during the year. Each quarter, internal valuations are also conducted
The properties expected future cash fl ow during the selected calculation period is measured as follows:
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 a cash fl ow model is used in which the present value of net operating income less reinvested investments over a fi ve- or ten-year period is calculated. Th e present value of the residual value at the end of the period is also calculated. 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 was performed by external appraisers using information from Fabege's organisation. Operating and maintenance expenses were 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 sales of undeveloped land and building rights.
With 11.9 million sqm of office space, the Greater Stockholm office market is considered the largest and most liquid office market in the Nordic region. The region is the country's economic engine with a rapidly rising population, well-educated labour force and competitive companies. The service sector, which is the single largest industry in the region, contributed to a stable trend during the recession, a strong recovery and solid future growth potential.
Swedish economy reported very strong fi gures during of 2010 and GDP grew 7.3 per cent during the fourth quarter compared to the same quarter 2009. In the past year, the economy has been in recovery, and economic indicators refl ect a climate that is clearly above average. Export demand and household consumption increased during the year, although the recovery largely derived from temporary stockpiling in the industrial sector. Th e fi nancial market has recovered in part, while bank margins declined noticeably in 2009–2010. Th e margins, which are approaching levels that are more sustainably normal, are higher than before the fi nancial crisis. However, the spread in the margins between various investors is expected to remain considerable, depending on factors such as the bank's assessment of risk levels in diff erent portfolios. Sweden's GDP growth is expected to be 3.5 per cent in 2011 and 2.5 per cent in 2012.
Th e Stockholm region is the engine of the Swedish economy. Over the past three decades, the population has increased by one-third and is expected to rise by an additional approximately 1 per cent annually (about 21,000 people) until 2040, compared with nationwide growth of around 0.4 per cent. Two of the most expansive municipalities in the region are Stockholm and Solna, whose populations are expected to grow by 1.3–2.3 per cent annually through 2019.
Th e service sector is the single largest industry and, as a result of its strong trend, eff ects of the recession were mild and recovery strong. In the fourth quarter
of 2010, employment in the region grew 2.1 per cent compared with 2009, and the region is expected to experience stronger growth than the rest of the country in the years ahead. Th e population growth, combined with the positive net infl ux of people, generates economic growth, which is expected to increase the demand for infrastructure, housing and commercial premises in the years to come.
Stockholm's offi ce market comprises approximately 11.9 million sqm of fl oor space. Just over one million people are employed in the region, corresponding to a demand for some 500,000 offi ce workplaces.
Since the early 2000s, new production combined with an increasingly effi cient use of premises has created a supply surplus in the offi ce market. However, since the demand for offi ce space is now increasing faster than the supply, this supply surplus is expected to turn into a demand surplus in the coming years, resulting in fewer vacancies and increased rents. In 2010, about 140,000 sqm of offi ce space
was completed. Th is year, new production is expected to decline to 40,000 sqm, to subsequently rise to 120,000 sqm in 2012. Th e largest share of the newly produced space is also expected to remain pre-let.
Stockholm's offi ce market has become increasingly divided in recent years, with an increasing rent and vacancy discrepancy between premises of high and low space effi ciency. Th e effi ciency of premise use has increased and, despite employment having grown by more than 100,000 jobs in the 2000s, the amount of offi ce space in use has remained stable at about 10.5 million sqm. Th is has resulted in vacancies increasing from about 500,000 sqm to 1,500,000 sqm, with a large share of the vacancy increase having occurred in the older element of the portfolio. Th e eff ect of the divided market has been benefi cial and is expected to continue to benefi t effi cient offi ce space in prime locations.
Th e inner city has been, and is estimated to continue to be, the most attractive sub-market in Stockholm. Th is is due to increasing commuting, which creates greater demand for offi ce space located within a relatively short journey from the Central station. Th e area comprises 6.2 million sqm, of which some 1.9 million sqm are found in the CBD (Central Business Dirstrict). Strong development in the service sector resulted in a sharp increase in demand for modern offi ces in the CBD in 2010. In recent years, a number of major offi ce projects have been completed, particularly in the western areas by Stockholm Central Station, and the standard
of Fabege's available offi ce space is high. In 2011, essentially no new offi ce space is expected to become available, while just over 10,000 sqm of space is expected to be completed in 2012. Vacancies for high-quality offi ce space are low and rents increased in the past year from about SEK 3,700/sqm to SEK 3,900/sqm, with peak rents at about SEK 5,000 sqm. Rents are expected to continue rising in 2011.
Effi cient offi ce premises in other inner city areas are also expected to show favourable development in the years to come. Th ere has been a signifi cant amount of new production of offi ce space in recent years, particularly in Västra Kungsholmen. Th e sub-markets that the City of Stockholm is primarily focusing on and that will be developed ahead are Västra Kungsholmen, Norra Stationsområdet and Värtahamnen. A total of nearly 90,000 sqm of offi ce space is expected to become available in the market in 2011 to 2013. Rents increased in 2010, market rents are about SEK 2,500/sqm, and are expected to continue rising in 2011.
Located close to Stockholm inner city, Solna is an established offi ce market with a total of about one million sqm of space. Solna Business Park and Frösunda currently have the most effi cient offi ce portfolio. However, about 200,000 sqm of new offi ce space is planned in Arenastaden (Solna Station) in the coming years, which will raise the sub-market's standards and attractiveness. Th e development of Norra Station/New Karolinska Hospital is also key to the municipality's future, since the project will connect Stockholm and Solna, and a world-leading Science Park
| Owner | Floor area (sqm) |
|---|---|
| Vasakronan Holding AB | 1,727,204 |
| Stockholms Kommun | 1,471,479 |
| Fabege AB | 891,343 |
| AMF Pensionsförsäkring AB | 457,341 |
| Atrium Ljungberg AB | 449,959 |
| Rodamco Northern Europe AB | 393,676 |
| Försäkringsaktiebolaget Skandia | 359,878 |
| L E Lundbergföretagen AB | 332,782 |
| AFA Sjukförsäkringsaktiebolag | 319,917 |
| Boultbee (Holding) AB | 294,440 |
Source: Newsec
will be created, featuring unique life science expertise. In 2011 to 2013, 145,000 sqm of offi ce space is expected to become available in Solna, most of which in Arenastaden, Frösunda and Huvudsta. Market rents for modern offi ces in Arenastaden and Solna Business Park increased somewhat in 2010, to SEK 1,900/sqm, and are expected to continue to increase in 2011.
Hammarby Sjöstad has been one of Greater Stockholm's largest development areas in the past decade. A combination of relatively low offi ce rents and proximity to the inner city makes the area attractive among tenants. Th e offi ce market totals nearly 100,000 sqm and almost 10,000 sqm of offi ce space is expected to become available in the market in 2011 to 2013. Despite a high vacancy rate of around 18 per cent, activity in the letting market rose in 2010. Market rents are about SEK 1,600/sqm, although they can reach SEK 2,000/sqm in the most modern parts of the portfolio. Rents are expected to increase somewhat in 2011.
Fabege is the second largest commercial property owner in the inner city of Stockholm, with 42 properties comprising 502,000 sqm.
Fabege's market share of the office market in Stockholm inner city.
The inner city of Stockholm is the largest office market in the Nordic region. With approximately 6.2m sqm of space, the sub-market accounts for over 50 per cent of all office space in Greater Stockholm. The inner city is attractive to tenants thanks to the central location, prestigious addresses, excellent transport connections and a high service level.
Fabege is the second largest property owner in the inner city, with 42 properties comprising 502,000 sqm. Th e portfolio is dominated by modern offi ces and retail outlets in prime locations. Currently, offi ces account for 76 per cent of the portfolio, which represents a market share of 6 per cent of the offi ce market.
Th e rental value of Fabege's inner city properties is SEK 1,167m, which represents 57 per cent of the Group's total rental value. At year-end 2010, the occupancy rate in the area was about 90 per cent.
For many sectors, a central location is a high priority and price sensitivity is low, which is refl ected in high rents. Tenants in the city centre mainly comprise fi nance companies, law fi rms, management consultants and other consultancies.
Th e main concentration of properties in the portfolio is in the area around Kungsgatan and Drottninggatan. Fabege's holdings around Drottninggatan comprise twelve properties. In the Kungsgatan– Norrlandsgatan–Lästmakargatan area,
close to Stureplan, Fabege owns a well contained cluster of eight properties. In these property blocks, Fabege is conducting an extensive project aimed at reinvigorating a central backstreet, thus creating an attractive location in the very heart of the city.
Another priority area for Fabege is Norrtull/Norra Stationsområdet, where the company now owns fi ve properties, including the Wenner-Gren Center landmark property. In the Kungsholmen district of Stockholm, Fabege owns buildings such as the DN Tower and the adjacent low-rise buildings.
Fabege's rents were stable during the year. In 2011, we expect a stronger rental market with lower vacancies and higher rents.
| Market rate, | SEK/sqm Vacancy rate, % | |
|---|---|---|
| Stockholm inner city | 3,400–3,900 | 7.0 |
| Outside city | 1,800–2,500 | 9.5 |
Rental value by category
| Key fi gures | 2010 |
|---|---|
| No. of properties | 42 |
| Market value, SEKm | 16,215 |
| Lettable area, '000 sqm | 501 |
| Financial occupancy rate, % | 90 |
| Remaining contract term, years | 3.3 |
| Rental value, SEKm | 1,167 |
| Largest tenants | sqm |
|---|---|
| Nasdaq OMX | 34,000 |
| Bonnier Dagstidningar AB | 28,000 |
| Lantbrukarnas Ekonomi AB | 12,000 |
| Carnegie Investment Bank AB | 10,000 |
| Praktikertjänst AB | 9,000 |
Source: Newsec
In 2010, Solna was named Sweden's most business-friendly municipality for the fi fth year in a row by the Confederation of Swedish Enterprise. Solna has a dynamic business sector with a large share of service-sector and knowledge-intensive companies. About 35,000 people commute daily to Solna. The total offi ce market is about 1 million sqm.
Lettable area by category
| Key fi gures | 2010 |
|---|---|
| No. of properties | 34 |
| Market value, SEKm | 8,333 |
| Lettable area, '000 sqm | 462 |
| Financial occupancy rate, % | 86 |
| Remaining contract term, years | 4.0 |
| Rental value, SEKm | 685 |
| Largest tenants | sqm |
|---|---|
| ICA | 27,000 |
| Peab Sverige AB | 17,000 |
| Skatteverket | 16,000 |
| COOP | 13,000 |
| EDB Business Partner Sverige AB | 13,000 |
| Market rent, SEK/sqm |
Vacancy rate, % |
|
|---|---|---|
| Solna Business Park | 1,700–1,900 | 9 |
| Arenastaden | 1,400–1,900 | 18 |
Source: Newsec
As Solna's largest commercial property owner, Fabege is in a unique position to take part in the renewal of entire districts.
Fabege owns 34 properties with a total fl oor space of 462,000 sqm in Solna. Today, 73 per cent of Fabege's premises in the area are offi ces. Th e rental value is about SEK 685m, representing 33 per cent of the company's total rental value.
Today, Solna Business Park is virtually a fully developed district that constitutes an established business park with attractive tenants like ICA, EDB and Coop, having located their head offi ces here. Th e area has good communications with the metro, buses and the forthcoming light-rail service.
Many tenants in Solna Business Park are stable customers with long leases. Th e lettings ratio in the area was about 93 per cent at year-end 2010.
An entirely new district is emerging around Solna Station, Arenastaden. Here, Fabege sees a big potential to create a living neighbourhood with offi ce, retail and residential properties in an attractive environment. Th e area has good transport connections, with commuter trains serving a centrally located station, and many local bus services.
Our ambition is to create an area with head offi ces for companies that, due to their size, have chosen not to establish themselves in central Stockholm. In Arenastaden, which is still in the early stages of development, Fabege's rents are somewhat lower than in Solna Business Park. At year end 2010, the occupancy rate was 80 per cent.
Fabege also owns about ten properties in other areas of Solna.
Fabege is the largest commercial property owner in Solna with 34 properties comprising 462,000 sqm of space.
Fabege's market share of the office market in Solna.
33%
Fabege's market share of the office market in Hammarby Sjöstad.
78%
Fabege is the largest commercial property owner in Hammarby Sjöstad, with 12 properties comprising 132,000 sqm of space.
In the last decade, Hammarby Sjöstad has been one of the most interesting development areas in Greater Stockholm. An attractive new city district has been developed on former industrial grounds. It has quickly become a popular residential area, which is also becoming increasingly attractive for office premises. The total amount of offi ce space in Hammarby Sjöstad is about 100,000 sqm.
Fabege is the largest owner of commercial premises in Hammarby Sjöstad. Th e company owns 12 commercial properties with a total fl oor space of 132,000 sqm in the area. Th e rental value is about SEK 175m, representing 8 per cent of the company's total rental value. Offi ces account for 60 per cent of Fabege's premises, representing 78 per cent of the offi ce market in Hammarby Sjöstad. At year-end 2010, the occupancy rate in the area was about 82 per cent.
Hammarby Sjöstad has evolved to a highly attractive area, with mainly residential space, but also a signifi cant share of commercial premises. Th e area is well connected through the Tvärbanan light rail line, ferries and local bus services. In the coming years, Fabege will focus on further establishing Hammarby Sjöstad as an attractive offi ce market.
As the single largest owner and man-
ager of offi ce properties in Hammarby sjöstad, Fabege has the opportunity to infl uence the character of the area. Th e character of the company's commercial premises in the area is gradually shift ing, from light industry to services. Th e portfolio is mainly made up of a large number of small customers.
Rents have increased over the past few years, and are expected to continue to rise. Th e proximity to the inner city, good transport links and the exclusive waterfront location all create a special character that is attracting creative service-sector companies such as architectural fi rms, advertising agencies and TV production companies.
| Market rate, SEK/sqm | 1,400–1,600 |
|---|---|
| Vacancy rate, % | 18 |
Source: Newsec
| Key fi gures | 2010 |
|---|---|
| No. of properties | 12 |
| Market value, SEKm | 1,987 |
| Lettable area, '000 sqm | 132 |
| Financial occupancy rate, % | 82 |
| Remaining contract term, years | 2.4 |
| Rental value, SEKm | 175 |
| Largest tenants | sqm | |||
|---|---|---|---|---|
| Point Transaction Systems AB | 4,000 | |||
| WSP Sverige AB | 3,000 | |||
| Phonera Networks AB | 3,000 | |||
| Rösjötorp Utbildning AB | 2,000 | |||
| Strängbetong AB | 2,000 |
| Construction year | Ratable value, sqm Total lettable area, |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Property name | Area | Street | Leasehold | Offices, sqm | Retail, sqm | Industrial/ | Warehouse, sqm | Residential, sqm Hotels, sqm |
Parking/ | Other, sqm sqm |
||
| INNER CITY | ||||||||||||
| 1 Apotekaren 221) | Norrmalm | Döbelnsg 20, 24, Kungstensg 21–23, Rådmansg 40, 42, Tuleg 7 A–B 13 |
1902/2002 | 27,547 | 0 | 875 | 0 | 0 | 3,000 | 31,422 | 0 | |
| 2 Barnhusväderkvarnen 36 | Norrmalm | Rådmansg 61–65 | 1963 | 13,889 | 1,270 | 1,518 | 0 | 0 | 8,965 | 25,642 | 437,000 | |
| 3 Bocken 35 | Norrmalm | Lästmakarg 22–24 | 1951 | 14,616 | 301 | 445 | 0 | 0 | 0 | 15,362 | 596,000 | |
| 4 Bocken 391) | Norrmalm | Lästmakarg 14, Kungsg 7–15 | 1931 | 11,423 | 2,454 | 682 | 0 | 0 | 220 | 14,779 | 609,200 | |
| 5 Bocken 46 | Norrmalm | Regeringsgatan 56 | 1977 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| 6 Bocken 47 | Norrmalm | Lästmakarg 8 | T | 1929 | 526 | 665 | 0 | 0 | 0 | 0 | 1,191 | 30,800 |
| 7 Bocken 512) | Norrmalm | Lästmakarg 18 | 1931 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
| 8 Bocken 521) | Norrmalm | Lästmakarg 14–16 | 548 | 0 | 0 | 1,182 | 0 | 0 | 1,730 | 0 | ||
| 9 Drabanten 3 | Kungsholmen | Kungsbroplan 3 m fl | 1907 | 6,478 | 0 | 73 | 0 | 0 | 0 | 6,551 | 129,000 | |
| 10 Duvan 6 | Norrmalm | Klara Södra Kyrkogata 1 | 1975 | 9,565 | 0 | 84 | 0 | 0 | 211 | 9,861 | 308,000 | |
| 11 Fenix 1 | Norrmalm | Barnhusgatan 3 | T | 1929 | 3,385 | 48 | 238 | 0 | 0 | 0 | 3,671 | 84,000 |
| 12 Fiskaren Större 3 | Södermalm | Götgatan 2 | 1930 | 235 | 993 | 0 | 1,375 | 0 | 0 | 2,603 | 52,000 | |
| 13 Getingen 13 | Vasastan | Sveavägen 149 | T | 1963 | 10,719 | 610 | 2,856 | 0 | 0 | 2,415 | 16,600 | 213,000 |
| 14 Getingen 14 | ||||||||||||
| 15 Getingen 15 | Vasastan | Sveavägen 143–147 | T | 1953 | 10,847 | 0 | 315 | 0 | 0 | 1,231 | 12,393 | 166,000 |
| Vasastan | Sveavägen 159 Franzéng 6, |
T | 1963 | 12,847 | 2,688 | 7,295 | 0 | 0 | 0 | 22,830 | 90,980 | |
| 16 Glädjen 12 | Stadshagen | Hornsbergs Strand 17 | T | 1949 | 12,337 | 0 | 0 | 0 | 0 | 0 | 12,337 | 255,000 |
| 17 Glädjen 131) | Stadshagen | T | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 86,000 | ||
| 18 Grönlandet Södra 13 | Norrmalm | Adolf Fredriks Kyrkogata 8 | 1932 | 8,193 | 0 | 0 | 0 | 0 | 0 | 8,193 | 258,000 | |
| 19 Hägern Mindre 7 | Norrmalm | Drottninggatan 27–29 | T | 1971 | 8,385 | 1,675 | 1,014 | 0 | 0 | 2,167 | 13,241 | 357,000 |
| 20 Islandet 3 (50%) | Norrmalm | Holländargatan 11–13 | T | 1904 | 4,189 | 10 | 0 | 0 | 0 | 128 | 4,327 | 199,000 |
| 21 Klamparen 102) | Kungsholmen | Fleminggatan 12 | 1986 | 22,381 | 0 | 149 | 0 | 0 | 0 | 22,530 | 332,000 | |
| 22 Kolonnen 7 | Södermalm | Götgatan 95, m fl | 1965 | 2,161 | 116 | 67 | 1,082 | 0 | 345 | 3,771 | 72,000 | |
| 23 Kåkenhusen 38 | Östermalm | Brunnsgatan 3, Norrlandsgatan 31–33 |
1932 | 5,581 | 1,096 | 0 | 0 | 0 | 4 | 6,681 | 272,000 | |
| 24 Ladugårdsgärdet 1:48 | Värtahamnen | Tullvaktsvägen 9 | 1930/49 | 37,765 | 0 | 0 | 0 | 0 | 0 | 37,765 | 574,532 | |
| 25 Lammet 17 | Norrmalm | Bryggarg 4, G:a Brog 13A, Korgmakargr 4 |
T | 1982 | 5,326 | 137 | 578 | 0 | 0 | 639 | 6,859 | 0 |
| 26 Läraren 51) | Norrmalm | Torsgatan 2 | 1904/29 | 3,649 | 0 | 68 | 578 | 0 | 1 | 4,296 | 86,400 | |
| 27 Läraren 13 | Norrmalm | Torsgatan 4 | 1904/29 | 6,837 | 0 | 0 | 0 | 0 | 0 | 6,837 | 189,000 | |
| Hagagatan 25 A–C, | ||||||||||||
| 28 Mimer 5 | Vasastan | Vanadisvägen 9 | 1957 | 11,672 | 0 | 75 | 0 | 0 | 5 | 11,752 | 0 | |
| 29 Murmästaren 7 | Kungsholmen | Kungsholmstorg 16 | 1898 | 2,519 | 472 | 79 | 0 | 0 | 0 | 3,070 | 34,800 | |
| 30 Norrtälje 24 | Norrmalm | Engelbrektsgatan 5–7 | 1881 | 6,432 | 0 | 90 | 0 | 0 | 1 | 6,523 | 232,000 | |
| 31 Ormträsket 10 | Vasastan | Sveavägen 166–170, 186 | 1962/1967 | 13,439 | 3,706 | 500 | 0 | 0 | 2,071 | 19,716 | 281,000 | |
| 32 Oxen Mindre 33 | Norrmalm | Luntmakarg 18, Malmskillnadsg 47 A, B |
1979 | 9,337 | 0 | 154 | 2,823 | 0 | 708 | 13,022 | 247,000 | |
| 33 Pan 1 | Gamla Stan | S Nygatan 40–42, L Nygatan 23 |
1929 | 2,326 | 721 | 0 | 102 | 0 | 0 | 3,149 | 74,470 | |
| 34 Paradiset 23 | Stadshagen | Strandbergsg 53–57 | 1944 | 8,837 | 316 | 3,002 | 0 | 0 | 1,655 | 13,810 | 164,000 | |
| 35 Paradiset 27 | Stadshagen | Strandbergsg 59–65 | 1959 | 20,029 | 3,977 | 1,061 | 0 | 0 | 2,179 | 27,246 | 377,000 | |
| 36 Pilen 27 | Norrmalm | Bryggarg 12A | 1907 | 1,965 | 0 | 116 | 0 | 0 | 0 | 2,081 | 58,400 | |
| 37 Pilen 31 | Norrmalm | Gamla Brog 27–29, Vasag 38 | T | 1988 | 5,148 | 1,134 | 60 | 0 | 2,577 | 571 | 9,490 | 249,000 |
| 38 Resedan 3 | Vasastan | Dalagatan 13 | 1929 | 2,473 | 0 | 0 | 1,007 | 0 | 2 | 3,482 | 0 | |
| 39 Sparven 18 | Östermalm | Birger Jarlsg 21–23, Kungsg 2 | 1929 | 1,936 | 1,642 | 0 | 0 | 5,097 | 0 | 8,675 | 290,000 | |
| 40 Stralsund 1 (50%)2) | Värtahamnen | Fjärde Bassängvägen 10 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| 41 Trängkåren 7 | Marieberg | Gjörwellsg 30–34, Rålambsv 7–15 |
1963 | 49,705 | 1,927 | 4,782 | 0 | 0 | 20,049 | 76,463 | 895,100 | |
| 42 Ynglingen 10 | Östermalm | Jungfrug 23, 27, Karlav 58–60 | 1929 | 7,075 | 1,308 | 236 | 2,399 | 0 | 526 | 11,544 | 288,400 | |
| TOTAL INNER CITY | 382,322 | 27,446 | 26,412 | 10,548 | 7,674 | 47,092 | 501,493 8,618,082 |
The list of properties contains all properties owned by Fabege at 31 December 2010. 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.
| Property name | Area | Street | Construction year Leasehold |
Offices, sqm | Retail, sqm | Industrial/ | Warehouse, sqm | Residential, sqm Hotels, sqm |
Parking/ | Other, sqm sqm |
Ratable value, sqm Total lettable area, |
|---|---|---|---|---|---|---|---|---|---|---|---|
| SOLNA, ARENASTADEN | |||||||||||
| 1 Farao 141) | Solna Station | Dalvägen 10, Pyramidvägen 7, 9 | 1967 | 9,095 | 406 | 1,970 | 0 | 0 | 224 | 11,695 | 83,400 |
| 2 Farao 15 | Solna Station | Dalvägen 8, Pyramidvägen 5 | 1981 | 6,427 | 708 | 1,016 | 0 | 0 | 1,020 | 9,171 | 83,496 |
| 3 Farao 16 | Solna Station | Dalvägen 4–6, Pyramidvägen 3 | 1973 | 2,861 | 1,409 | 1,442 | 0 | 0 | 540 | 6,252 | 53,600 |
| 4 Farao 17 | Solna Station | Dalvägen 2, Pyramidvägen | 1975 | 5,017 | 0 | 509 | 0 | 0 | 195 | 5,721 | 39,600 |
| 5 Farao 202) | Solna Station | Pyramidvägen 7 | 1964 | 7,260 | 0 | 127 | 0 | 0 | 375 | 7,762 | 28,200 |
| 6 Kairo 1 | Solna Station | Pyramidvägen 2 | 1983 | 10,741 | 0 | 0 | 0 | 0 | 0 | 10,741 | 117,600 |
| 7 Pyramiden 4 | Solna Station | Pyramidvägen 20 | 1960 | 3,014 | 0 | 75 | 0 | 0 | 10 | 3,099 | 43,000 |
| 8 Stigbygeln 2 | Solna Station | Gårdsvägen 6 | 1955 | 8,898 | 0 | 0 | 0 | 0 | 0 | 8,898 | 102,000 |
| 9 Stigbygeln 3 | Solna Station | Gårdsvägen 8 | 1960 | 4,824 | 0 | 988 | 0 | 0 | 0 | 5,812 | 63,400 |
| 10 Stigbygeln 5 | Solna Station | Gårdsvägen 10 A, B | 1963 | 6,820 | 0 | 0 | 0 | 0 | 570 | 7,390 | 83,800 |
| 11 Stigbygeln 6 | Solna Station | Gårdsvägen 12–18 | 2001 | 9,131 | 581 | 253 | 0 | 0 | 6 | 9,971 | 174,800 |
| 12 Tygeln 3 | Solna Station | Gårdsvägen 13–21 | 2001 | 4,436 | 0 | 0 | 0 | 0 | 5,100 | 9,536 | 74,073 |
| 13 Tömmen 2 | Solna Station | Solna Station | 0 | 0 | 0 | 0 | 0 | 2,610 | 2,610 | 0 | |
| 14 Uarda 11) | Solna Station | Dalvägen 22A–C, 22–30 | 1987 | 21,426 | 980 | 5,632 | 0 | 0 | 645 | 28,683 | 99,600 |
| 15 Uarda 22) | Solna Station | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| 16 Uarda 4 | Solna Station | Dalvägen 14–16 | 1992 | 6,381 | 0 | 1,558 | 0 | 0 | 0 | 7,939 | 98,600 |
| 17 Uarda 52) | Solna Station | Dalvägen 18, Magasinvägen 1 | 1978 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4,988 |
| TOTAL SOLNA, ARENASTADEN | 106,331 | 4,084 | 13,570 | 0 | 0 | 11,295 135,280 1,150,157 | |||||
| SOLNA BUSINESS PARK | |||||||||||
| 18 Fräsaren 10 2) | Solna | Svetsarvägen 24 | 1964 | 11,220 | 0 | 202 | 0 | 0 | 56 | 11,478 | 33,200 |
| 19 Fräsaren 11 | Solna | Englundavägen 2–4, Svetsarvägen 4–10 |
1962 | 33,065 | 0 | 1,815 | 0 | 1,840 | 2,610 | 39,330 | 418,000 |
| 20 Fräsaren 12 | Solna | Svetsarvägen 12–18, 20, 20A | 1964 | 19,404 | 10,109 | 173 | 0 | 0 | 6,840 | 36,526 | 446,000 |
| 21 Sliparen 11) | Solna | Ekensbergsv 115, Svetsarv 1–3 | 1963 | 3,659 | 0 | 1,106 | 0 | 0 | 0 | 4,765 | 17,151 |
| 22 Sliparen 2 | Solna | Ekensbergsv 113, Svetsarv 3–5 | 1964 | 16,827 | 0 | 2,616 | 0 | 0 | 3,315 | 22,758 | 210,000 |
| Englundav 6–14, Smidesv 5–7, | |||||||||||
| 23 Smeden 1 | Solna | Svetsarv 5–17 | 1967 | 35,784 | 4,894 | 876 | 432 | 0 | 3,709 | 45,694 | 425,406 |
| 24 Svetsaren 1 | Solna | Englundavägen 7–13 | 1964 | 30,161 | 329 | 3,041 | 0 | 0 | 6,090 | 39,621 | 345,000 |
| 25 Yrket 3 | Solna Station | Smidesvägen 2–8 | 1982 | 5,373 | 0 | 1,045 | 0 | 0 | 1,470 | 7,888 | 32,725 |
| TOTAL SOLNA BUSINESS PARK | 155,493 | 15,332 | 10,873 | 432 | 1,840 | 24,090 208,059 1,927,482 | |||||
| SOLNA, OTHER | |||||||||||
| 26 Järvakrogen 3 2) | Frösunda | Enköpingsvägen 1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 2,328 | |
| 27 Nöten 4 | Solna Strand | Solna strandväg 2–60 | 1971 | 38,796 | 670 | 8,452 | 0 | 0 | 5,779 | 53,697 | 440,00 |
| Järnvägsg 12–20, Lysgränd 1, | |||||||||||
| 28 Orgeln 7 | Sundbyberg | Roseng2,4, Stureg 11–19 | 1966 | 23,206 | 3,694 | 166 | 0 | 0 | 2,399 | 29,465 | 301,00 |
| 29 Planen 4 | Råsunda | Bollgatan 1–5, Solnavägen 102 A–C |
1992 | 4,509 | 389 | 125 | 0 | 0 | 1,381 | 6,404 | 61,800 |
| 30 Rovan 1 | Huvudsta | Storgatan 60–68 | 1972 | 1,853 | 5,989 | 30 | 0 | 0 | 2,852 | 10,724 | 157,400 |
| 31 Rovan 2 | Huvudsta | Storgatan 64 | 1972 | 0 | 0 | 0 | 1,142 | 7,730 | 0 | 8,872 | 0 |
| 32 Skogskarlen 1 | Bergshamra | Björnstigen 81, Pipers väg 2 | 1929/1971 | 7,064 | 814 | 935 | 0 | 0 | 195 | 9,008 | 104,800 |
| 33 Skogskarlen 3 | Bergshamra | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1,857 | ||
| 34 Styckjunkaren 4 2) | Huvudsta | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| TOTAL SOLNA, OTHER | 75,428 | 11,556 | 9,708 | 1,142 | 7,730 | 12,606 118,170 1,070,955 | |||||
| TOTAL SOLNA | 337,252 | 30,972 | 34,151 | 1,574 | 9,570 | 47,991 | 461,509 4,148,594 |
The list of properties contains all properties owned by Fabege at 31 December 2010. 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.
| Construction year | Offices, sqm | Industrial/ | Warehouse, sqm | Residential, sqm | Parking/ | Total lettable area, Ratable value, sqm |
||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Property name | Area | Street | Leasehold | Retail, sqm | Hotels, sqm | Other, sqm sqm |
||||||
| HAMMARBY SJÖSTAD | ||||||||||||
| 1 Fartygstrafi ken 2 | Hammarby hamnen |
Hammarby Allé 91–95 | 1955 | 6,803 | 1,764 | 136 | 0 | 0 | 1 | 8,704 101,000 | ||
| 2 Godsfi nkan 1 | Hammarby hamnen |
Heliosgatan 1 | T | 1990 | 7,758 | 0 | 75 | 0 | 0 | 24 | 7,857 | 71,959 |
| 3 Hammarby Gård 72) | Hammarby hamnen |
Hammarby Allé 21, 25, Hammarby Kajv 2–8,12–18 |
1937 | 9,342 | 586 | 2,198 | 0 | 0 | 1,230 | 13,356 205,600 | ||
| 4 Korphoppet 11) | Hammarby hamnen |
Hammarby Fabriksväg 41–43 | 1949 | 3,587 | 916 | 8,817 | 0 | 0 | 750 | 14,070 | 35,372 | |
| 5 Korphoppet 52) | Hammarby hamnen |
Hammarby Fabriksväg 37–39 | T | 1968 | 604 | 1,486 | 1,412 | 0 | 0 | 65 | 3,567 | 11,321 |
| 6 Korphoppet 6 | Hammarby hamnen |
Hammarby Fabriksväg 33 | T | 1988 | 0 | 428 | 4,254 | 0 | 0 | 40 | 4,722 | 28,800 |
| 7 Luma 11) | Hammarby hamnen |
Ljusslingan 1–17, 2–36, Glödlampsgränd 1–6, Lumaparksv 2–18, 5–21, Kölnag 3 |
1930 | 25,308 | 2,411 | 5,889 | 691 | 0 | 3,778 | 38,077 207,425 | ||
| 8 Påsen 8 | Hammarby hamnen |
Virkesvägen 5 | T | 1974 | 0 | 0 | 3,096 | 0 | 0 | 0 | 3,096 | 13,096 |
| 9 Trikåfabriken 4 | Hammarby hamnen |
Hammarby Fabriksväg 25 | 1991 | 5,295 | 3,464 | 853 | 0 | 0 | 976 | 10,588 | 80,800 | |
| 10 Trikåfabriken 8 | Hammarby hamnen |
Hammarby Fabriksväg 29–31 | 1930 | 9,988 | 692 | 4,051 | 0 | 0 | 12 | 14,743 | 60,400 | |
| 11 Trikåfabriken 9 | Hammarby hamnen |
Hammarby Fabriksväg 19–21 | 1928 | 9,520 | 267 | 1,602 | 0 | 0 | 816 | 12,205 | 43,249 | |
| 12 Trikåfabriken 122) | Hammarby hamnen |
Hammarby Fabriksväg 27 | 1942 | 881 | 0 | 62 | 0 | 0 | 205 | 1,148 | 4,355 | |
| TOTAL HAMMARBY SJÖSTAD | 79,086 | 12,014 | 32,445 | 691 | 0 | 7,897 | 132,132 | 863,377 |
The list of properties contains all properties owned by Fabege at 31 December 2010. 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.
| Leasehold | Construction year | Offices, sqm | Retail, sqm | Industrial/ | Warehouse, sqm | Residential, sqm Hotels, sqm |
Parking/ | Total lettable area, Other, sqm sqm |
Ratable value, sqm | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Property name | Area | Street | ||||||||||
| OTHER, NORTH STOCKHOLM | ||||||||||||
| Berga 6:558 2) | Åkersberga | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||
| Hammarby Smedby 1:464 2) | Upplands Väsby | Johanneslundsvägen 3–5 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Hammarby Smedby 1:472 2) | Upplands Väsby | Johanneslundsvägen 3–5 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Induktorn 33 | Bromma | Ranhammarsvägen 16–18 | 1943 | 4,116 | 640 | 12,272 | 0 | 0 | 387 | 17,415 | 59,456 | |
| Masugnen 7 | Bromma | Karlsbodavägen 18–20 | 1991 | 10,881 | 0 | 0 | 0 | 0 | 546 | 11,427 | 36,400 | |
| Märsta 15:5 2) | Märsta | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 570 | |||
| Racketen 11 2) | Alvik | Gustavslundsvägen | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 8,128 | ||
| Tekniken 1 2) | Sollentuna | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 6,600 | |||
| Ulvsunda 1:1 | Bromma fl ygplats | Flygplansinfarten 27 | A | 2004 | 0 | 0 | 1,241 | 0 | 0 | 0 | 1,241 | 0 |
| Vallentuna Rickeby 1:327 2) | Vallentuna | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 178 | |||
| TOTAL, NORTH STOCKHOLM | 14,997 | 640 | 13,513 | 0 | 0 | 933 | 30,083 | 111,332 | ||||
| OTHER, SOUTH STOCKHOLM | ||||||||||||
| Näsby 4:1472 2) | Tyresö | Studiovägen 1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 124 | ||
| Pelaren 1 2) | Globen | Pastellvägen 2–6 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 4,208 | ||
| Sicklaön 392:1 2) | Danvikstull | Kvarnholmsvägen 12 | 1986 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3,121 | |
| Söderbymalm 3:405 2) | Haninge | Nynäsvägen 65, Stores Gränd 20–22 |
1972 | 9,240 | 1,386 | 2,351 | 0 | 0 | 40 | 13,017 | 68,500 | |
| TOTAL, SOUTH STOCKHOLM | 9,240 | 1,386 | 2,351 | 0 | 0 | 40 | 13,017 | 75,953 | ||||
| OTHER, OUTSIDE STOCKHOLM | ||||||||||||
| Grimbergen 2) | Belgien | St Annastraat | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| TOTAL, OUTSIDE STOCKHOLM | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||
| TOTAL, OTHER | 24,237 | 2,026 | 15,864 | 0 | 0 | 973 | 43,100 | 187,285 |
The list of properties contains all properties owned by Fabege at 31 December 2010. 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.
Fabege strives to be a responsible and environmentally aware company. Through extensive efforts to cut energy use as well as other measures, the company works to reduce its environmental impact. Fabege takes responsibility for its co-workers and strives to be attentive to their needs. The company has also chosen to take a social responsibility by committing to various projects for children and young people. These initiatives highlight Fabege's profile as a socially responsible company.
Th e property sector currently accounts for about 40 per cent of total energy use and emits signifi cant amounts of carbon dioxide. Th erefore, it is crucial for all property companies to assume responsibility for the environment and to work on energy issues in a focused and structured manner. Fabege has been working systematically on environmental issues since 2002 and we are currently running a number of systematic environmental projects with clearly defi ned goals aimed at reducing and preventing negative impacts on the environment. Guidelines for this work are outlined in Fabege's environmental policy.
In addition to complying with Swedish labour laws, Fabege also takes responsibility for developing our co-workers' skills and off er opportunities to take individual responsibility and make a diff erence.
Fabege has resolved to promote the UN Global Compact initiative in terms of the company's actions concerning human rights, labour rights, environmental standards and anti-corruption measures. Fabege's ethical guidelines have thus been replaced by a Code of Conduct, whose format better matches the initiative's ten fundamental principles.
Th e Global Compact is based on the UN Declaration of Human Rights, the UN Convention against Corruption, the International Labour Organisation's (ILO) Declaration on Fundamental Principles and Rights at Work, the OECD's Guidelines for Multinational Enterprises and the Rio Declaration on Environment and Development. Th e objective is to promote responsible enterprise worldwide and to give greater responsibility to the business community for the challenges of globalisation. By supporting the Global Compact, Fabege undertakes to realise and integrate the ten principles into its operations.
Electricity supplied to Fabege's properties is certified, hydro-generated electricity from Vattenfall's facilities in the Nordic region.
Fabege's environmental activities are goaloriented, systematic and preventive, with a view to continually reduce and prevent negative impacts on the environment. Key focus areas include climate change factors, indoor environment, waste management and the choice of building materials.
Th e company's environmental policy states that environmental activities should be a natural and integral part of what we do. Fabege's environmental activities are long-term and fully integrated in our day-to-day activities in property management, project development and transactions. In property management, we take a systematic approach to improve environmental standards based on the ISO 14001 environmental management system. For a number of years, the company has been Environmental responsibility compiling procedures, inspection results and control data in a self-assessment database. A property's energy use and improvement potential are also becoming increasingly important factors in acquisitions. As part of the acquisition process, Fabege's energy and environmental specialists analyse the property's energy use and environmental risks when assessing their value.
All new construction is performed in accordance with the GreenBuilding principles as minimum standards.
Reducing energy use through systematic energy optimisation has been a key environmental goal for Fabege for a number of years. Since 2002, Fabege has cut its energy use by about 5 per cent each year. In 2010, consumption fell by another 3 per cent. This success is partly the result of dedicated efforts to optimise running costs, and partly due to investments in energy-effi cient technology.
Fabege seeks to create value for the company's shareholders, and concern for the environment should be a natural and integral part of our activities in property management, project development and property transactions. Fabege aims to offer attractive properties with a low environmental impact and high level of user comfort. To achieve this, Fabege seeks to:
Heating in Fabege premises
Over time, Fabege's systematic effrorts to optimise running costs have reduced energy use in our properties by more than 35 per cent. Fabege's heating consumption in 2010 averaged 79 kWh/sqm LOA and 74 kWh/ sqm Atemp.
| Consumption statistics, total | 2010 |
|---|---|
| Water, sqm | 306,361 |
| Energy, MWh1) | 190,366 |
| Of which | |
| Heating | 89,900 |
| Cooling | 24,669 |
| Electricity | 75,797 |
| Renewable energy, MWh | 180,848 |
| CO2-emission, tonnes (heating, cooling, electricity) |
5,500 |
1) Figures based on identical portfolio 2010, 92 properties,1,144,882 sqm.
Carbon dioxide emissions have been cut drastically thanks to our efforts to optimise energy use by switching from oil to district heating, use electricity that comes with an environmental product declaration, and adjust the composition of our property portfolio.
Responsibility for Fabege's environmental policy rests with the CEO and group management. Th e operational activities are supported by the equivalent of three fulltime employees in the areas of environment and energy. Th e environment and energy department serves as a resource and skills pool for the company's Property Management, Projects, Business Development and Communications departments. It provides support to the company's activities and leads and participates in evaluations that contribute to Fabege's development.
Being able to off er customers premises with strong environmental and energy credentials improves a company's competitiveness in an increasingly environmentally aware market. To meet these demands, Fabege is running a number of development projects designed to contribute to sustainable urban development.
Customers and other stakeholders demand an ever higher standard of energy effi ciency. Th erefore, Fabege has set a target that all new production takes place in acccordance with the principals for GreenBuilding. So far, Fabege has certifi ed two GreenBuilding properties: the Lindhagen project in the Paradiset 29 property on Kungsholmen, and Päronet 8 in Solna. Fabege has also joined the Climate Pact, a partnership between the City of Stockholm and local business. Th e Pact is a platform for partnership on climate issues, aimed at cutting emissions of greenhouse gases. Th e company is involved in a similar partnership with the Municipality of Solna, called "Hållbart resande" (Sustainable Travelling).
Fabege's systematic eff orts to optimise energy use by switching from oil to district heating and from cooling machines to district cooling systems with superior environmental performance, using electricity that comes with an environmental product declaration, and adjusting the composition of its property portfolio have proved very successful.
In 2010, Fabege continued cutting energy use by another 3 per cent from an already low level.
Th e company has also reduced its heating by approximatley 35 per cent since 2002 (approximately 5 per cent/year). Th is was achieved primarily through energy optimisation but also partly through investments in energy-effi cient technology. Fabege's heating consumption per sqm is estimated using LOA and Atemp respectivley. LOA is defi ned as premises aimed for other purposes that residential, such as space for maintenance of buildings and general communication. Atemp is used in energy declarations and comprises areas that are supposed to be heated no less than 10°C.
Carbon emissions have been reduced sharply through the company's systematic eff orts to optimise energy use. In total, emissions have been reduced from about 40,000 tonnes in 2002 to about 5,500 tonnes in 2010 (5,000). Due to a modifi ed emissions mix from our energy suppliers, Fabege's carbon emissions increased slightly in 2010, despite a 3 per cent reduction in energy consumption. Th is was primarily caused by the suppliers' additional use of fossil fuels as a result of the cold winter.
Energy type in electricity production: Hydroelectric power 100%
Total share of renewable energy 95%
E Another aspect of environmental responsibility concerns the use of electricity produced in an environmentally-friendly manner. All electricity delivered to Fabege's properties is certifi ed hydrogenerated electricity from Vattenfall's power plants in the Nordic region. Our properties in Solna and Sundbyberg use district heating provided by Norrenergi, which holds the Bra Miljöval (Good Environmental Choice) ecolabel of the Swedish Society for Nature Conservation. Fabege has also converted its last oil-fi red boilers to district heating.
When making an acquisition or adapting premises for tenants, Fabege explores which areas can be used for sorting of waste for recycling, both centrally and in the premises of each tenant. We also look at where the areas are located within the property in relation to goods fl ows, transports, fl oor plans, etc. An average of nine types of waste are sorted for recycling in Fabege's properties.
N New construction and major redevelopments are being conducted using the GreenBuilding principles as the minimum requirements. In projects and developments, Fabege's overriding environmental programme is integrated into Fabege's framework programme concerning factors such as the selection of material, waste management and the construction method. Th e aim is to give concrete expression to Fabege's environmental policy through environmental control of the building process. When a building is converted or renovated, a demolition plan is drawn up. In all projects, a plan for handling of waste products is prepared together with the building and waste management contractors. In new builds and redevelopment projects, only building materials and products with limited environmental impact may be used.
Purchasing activities and suppliers' environmental performance constitute a cornerstone of Fabege's environmental work. Our purchasing and supplier agreements secure strong commercial terms and prices as well as a high quality and delivery reliability, and should be inspired by concern for people and the environment. Th e general principle is that suppliers shall comply with applicable employment laws and other applicable laws, rules and regulations. Suppliers are also required to permit Fabege to verify such compliance. Fabege supports the United Nations Convention on the Rights of the Child, Article 32:1.
To clarify the company's position to suppliers, co-workers and other stakeholders, Fabege has defi ned a procurement policy, which is available on the company's website, www.fabege.se, under Corporate Governance/Corporate responsibility/Purchasing and procurement.
P
RESPONSIBLE ENTERPRISE
G
Being an attractive employer involves taking responsibility for staff and being attentive to their needs. Recognising that the skills and commitment of our co-workers are crucial to our future development, Fabege seeks to promote employee satisfaction by offering good opportunities for development. Committed and satisfi ed co-workers are essential to ensuring customer satisfaction, which, in turn, has a direct impact on our business objectives.
At year-end 2010, Fabege had 126 employees. Leadership development and the theme of responsibility and communication were a point of focus in Fabege's human resources activities during the year. In addition, all building maintenance technicians underwent a four-day training course in energy-effi ciency enhancements.
Th anks to its fl at organisation and short decision-making paths, Fabege enables its co-workers to take rapid and independent action. Th e company is inspired by an entrepreneurial spirit, and rewards individual initiative. Our employees have a lot of freedom and are encouraged to innovate. Fabege and its co-workers aim to combine the resources available to a big company with the client proximity and personal relationships offered by a small company.
A shared value foundation and a strong corporate culture are among the distinguishing factors for successful companies. Accordingly, Fabege continuously strives to strengthen its employees' awareness of the company's value foundations: speed, informality, entrepreneurship, business orientation and client proximity.
Fabege's ambition is to develop and retain staff . Our aim is to ensure that our employees are able to develop and grow professionally through new or varied duties and responsibilities.
Internal recruitment is a natural part of Fabege's company culture and vacancies are oft en fi lled through internal recruitment. In the course of their careers, Fabege
I apply my specialist expertise as an advisor, promoter and controller. I work with management, project planning, external communications and business development. It is incredibly exciting to have a job with such width and depth.
Mia Östman Environment/Operational support manager
I began working as a property technician at 22, and now at 30 I am an operations manager. This says a lot about Fabege as an employer. I was young and given considerable responsibility, which I enjoyed and which made me stay.
Anthony Cooks Operator
employees commonly perform a variety of duties and work in diff erent places within the organisation.
It is the performance and dedication of each employee that determine how they will develop and progress in their career. Fabege strives to foster a work climate that encourages employees to develop their skills and exchange information throughout the organisation.
Individual career development plans support every co-worker's professional development. Based on the company's goals, each co-worker and their manager jointly defi ne a set of personal targets for the co-worker's development at regular appraisal interviews. Fabege's co-workers are expected to show dedication and initiative, and independently take advantage of opportunities to develop so that they may contribute to Fabege's business in the best possible manner.
Fabege provides a safe and healthy work environment. Th e company's occupational health and safety committee, which includes managers and co-workers from
various work areas, is working on ensuring continuous progress on work environment issues. Th is helps promote interest in issues relating to physical and mental well-being at work. Fire safety and other safety procedures have been improved, and all measures are documented in a support system, to which all employees have access.
Fabege is committed to promoting health and fi tness, and encourages staff to exercise and stay fi t. All co-workers are off ered a membership to a fi tness chain. Employees can also obtain health and fi tness checks, to be used at several diff erent fi tness facilities.
Fabege has a group health insurance policy, which ensures that all employees gain fast access to professional care in case of illness.
Off ering a sound balance between work and leisure is a key element in Fabege's ambition to be an attractive
Projects/
Management/ Administration 14%
Business Development 21%
Property Management 65%
Staff in respective areas
Absence due to illness 2010, %
| % | Total | Ages | 20–29 | 30–39 | 40–49 | 50–59 | 60–69 |
|---|---|---|---|---|---|---|---|
| Women | 37.3 | 10.6 | 36.3 | 31.9 | 10.6 | 10.6 | |
| Men | 62.7 | 4.1 | 43.8 | 31.5 | 13.8 | 6.8 | |
| Total | 100.0 | 6.3 | 38.9 | 34.2 | 12.7 | 7.9 |
Fabege works to ensure a safe work environment in order to
Fabege offers a positive working environment characterised by a good working relationship between experienced colleagues and young talents. Everyone gladly shares their knowledge and experience, which makes it easy to become acquainted with the work. Daniel Jirhäll Marketing area manager
employer. Th e company encourages both women and men to take parental leave.
Fabege strives to ensure that all co-workers feel that they have a say in the company's development, and in order to create an attractive and inspiring workplace, the company encourages employees to engage in an active and open dialogue with their managers.
On a regular basis, Fabege conducts an extensive employee survey to measure how the company is viewed as an employer. Th e response rate in the 2009 survey was 93 per cent, which is considered a high value. For the second year in a row, the survey employed a method which shows how working conditions aff ect employees' performance, as measured by a performance index. Measured against the property business category in the reference database, Fabege is well above average with a performance index score of 3.9 (3.7), against 3.3 for the industry as a whole. Th e next employee survey is scheduled for the spring of 2011, the objective of which is to further improve the strong earnings.
Property has traditionally been seen as a male-dominated industry but in recent years, the industry has been attracting a growing number of women. Fabege wants to promote a more even gender balance,
and give women and men the same opportunities for recruitment to various positions in the company. At yearend, two out of seven members of Fabege's senior management team were women, or about 28 per cent (28).
In order to safeguard future recruitment needs, Fabege is engaged in various relations-creating activities with students. During the year, Fabege participated in Stockholm Career Days, and worked to strengthen the company's image as an attractive employer. Th e company continuously off ers traineeships and thesis projects to give young people an insight into working life. Another activity in which Fabege has participated is an initiative called Framtidståget where school children in the 9th grade learn about relationships between diff erent courses at upper secondary level and the labour market. At these events, motivational speakers representing diff erent industries and businesses talk about their work and what they believe the future holds for various professions. Fabege is also actively involved in Fastighetsbranschens Marknadsråd (the Property Sector's Market Council), a forward-looking initiative to raise awareness about the property sector's potential among today's youth.
In order to give its co-workers a greater stake in the company, Fabege has been running a profi t-sharing scheme since 2000. 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 fi ve years aft er allocation.
The goal of Fabege's social commitment is to contribute to building a sustainable society. Fabege takes an active part in the development of local communities and in projects that change and infl uence the world we live in a wider sense. Below are but a few examples of the social responsibility that Fabege has chosen to embrace.
Fabege has resolved to promote the UN's Global Compact initiative in the company's actions involving human rights, labour rights, environmental standards and anti-corruption measures. By supporting the Global Compact, Fabege undertakes to realise and integrate the ten principles into its operations.
Th ere are many ways to care about the world you live in. At Fabege, we have chosen to take a particular interest in the fates of abandoned orphans in Burundi. In 2008, Fabege fi nanced the construction of an SOS Children's Village family house in Burundi, Africa. In 2011, Fabege will continue to run the family house.
Th e SOS Children's Village in Cibitoke, in Burundi, will eventually provide a home, a family, education and a chance to live a dignifi ed life to some 150 children. Schools and a medical clinic that children from the village and from the surrounding area will have access to, are being built. We have funded the building of a family house for one family consisting of an SOS mother and nine children. Th is is our way of contributing to making the world a better place.
For a number of years, Fabege has been sponsoring various local sports clubs. Th e main purpose is to support initiatives important to children and young people locally. For example, Fabege has supported AIK, Solna Vikings, Stockholms Fotbollsförbund, Brommapojkarna and Sollentuna Hockey Club. Two of Fabege's major commitments are described below.
Fabege helps abandoned orphans in Burundi, Africa. Through our partnership with SOS Children's Villages, we are funding a family house that will provide a home to a family with nine children.
Fabege is the lead sponsor of the Stockholm Ice Hockey Association and its "Fair Play and Respect" initiative in 2009–2011. Th e initiative is aimed at young ice-hockey players aged 8–15, who are taught how to act in a sportsmanlike manner, how to behave in the stand, and show respect for the referee and for other players. Th e Association also works to promote fair play and prevent cheating, violence, bullying, racism, foul language, doping, alcohol and drug abuse. Th e initiative helps young players develop both inside and outside the rink.
Since 2009, Fabege is also a sponsor for the Stockholm Football Association's Zero Tolerance project. Th e project is aimed at preventing violence and unacceptable language between referees, players, leaders and parents. Th e project covers 4,000 players aged 8–19 who receive coaching using literature provided by Sila Snacket (Mind Your Language). Team leaders and parents' groups receive the same coaching.
| Director's report | 50 | |
|---|---|---|
| Consolidated, Statement of comprehensive income | 56 | |
| Consolidated, Statement of fi nancial position | 57 | |
| Consolidated, Statement of changes in equity | 58 | |
| Consolidated, Cash fl ow statement | 59 | |
| Parent Company, Profi t and loss acccounts | 60 | |
| Parent Company, Balance sheets | 60 | |
| Parent Company, Statement of changes in equity | 61 | |
| Parent Company, Cash fl ow statement | 61 | |
| Notes | ||
| Note 1 | General information | 62 |
| Note 2 | Accounting principles | 62 |
| Note 3 | Financial instruments and fi nancial risk management | 64 |
| Note 4 | Signifi cant estimates and assessments for accounting | 65 |
| principlesl | ||
| Note 5 | Reporting by segment | 65 |
| Note 6 | Employees and salary expenses, etc. | 66 |
| Note 7 | Rental income | 66 |
| Note 8 | Property expenses | 67 |
| Note 9 | Central administration and marketing | 67 |
| Note 10 Realised and unrealised changes in value, investment | 67 | |
| properties | ||
| Note 11 Profi t/loss from other securities and receivables that | 67 | |
| are fi xed assets | ||
| Note 12 Interest income and interest expenses | 67 | |
| Note 13 Changes in value, shares | 67 | |
| Note 14 Tax on profi t for the year | 67 | |
| Note 15 Investment properties | 68 | |
| Note 16 Equipment | 68 | |
| Note 17 Interests in associated companies | 69 | |
| Note 18 Receivables from associated companies | 69 | |
| Note 19 Joint ventures | 69 | |
| Note 20 Other long-term securities holdings | 70 | |
| Note 21 Other long-term recievables | 70 | |
| Note 22 Trade recievables | 70 | |
| Note 23 Other receivables | 70 | |
| Note 24 Shareholder's equity | 70 | |
| Note 25 Overdraft facility | 70 | |
| Note 26 Liabilities by maturity date | 70 | |
| Note 27 Derivatives | 71 | |
| Note 28 Deferred tax liability/asset | 71 | |
| Note 29 Provisions | 71 | |
| Note 30 Other liabilities | 71 | |
| Note 31 Accrued expenses and deferred income | 72 | |
| Note 32 Assets pledged as security and contingent liabilities | 72 | |
| Note 33 Interest paid | 72 | |
| Note 34 Changes in working capital | 72 | |
| Note 35 Cash and cash equivalents | 72 | |
| Note 36 Related-party transactions | 72 | |
| Note 37 Dividend per share | 72 | |
| Note 38 Adoption of the annual report | 72 | |
| Note 39 Net turnover | 72 | |
| Note 40 Operating expenses | 72 | |
| Note 41 Profi t/loss from shares and interests in Group com | 73 | |
| panies | ||
| Note 42 Shares and interests in Group companies | 73 | |
| Note 43 Fees and compensation to auditors | 73 | |
| Note 44 Events after the balance sheet date | 73 | |
| Corporate Governance Report | 74 | |
| The Board of Directors and Auditors | 80 | |
| Goup Management | 81 | |
| Signing of the Annual Report | 82 | |
| Auditor's Report | 83 | |
The Board of Directors and Chief Executive Officer of Fabege AB (publ), company registration number 556049-1523, hereby present their 2010 report for the Group and 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 deals and investments made in 2010 continued the process of concentrating the Group's property holdings to the inner city of Stockholm, Solna and Hammarby Sjöstad. On 31 December 2010, Fabege owned 103 properties with a total rental value of SEK 2.1bn, a lettable fl oor area of 1.1m sqm and a book value of SEK 27.0bn, of which SEK 5.5bn refers to project properties.
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 88 per cent (90). Th e occupancy rate in Fabege's portfolio of investment properties was 91 per cent (92). New lettings in 2010 totalled SEK 211m (299) while net lettings were SEK 27m (112). Th e letting to Vattenfall in Arenastaden in Solna had a signifi cant impact on net lettings previous year. Rents in renegotiated contracts increased by 1 per cent on average.
Profi t for the period improved by SEK 1,272m from SEK 425m to SEK 1,697m. Before tax, Property Management generated earnings of SEK 1,562m (488) and Property Development earnings of SEK 300m (97), making a total of SEK 1,862m (585). Earnings per share aft er tax amounted to SEK 10.38 (2.59).
Rental income totalled SEK 2,007m (2,194) and net operating income SEK 1,348m (1,465). Th e decline in rental income was due to net sales of properties combined with a decrease in rental guarantees and a negative index adjustment for the existing portfolio. To this was added net vacating of properties, although this was off set by increased rental revenue from completed property projects. Continued effi ciency enhancements in the Property Management operations enabled the surplus ratio to stay unchanged at 67 per cent (67), despite increased snow clearance costs during the fi rst quarter. In a comparable portfolio, rental income decreased by approximately 1 per cent and net operating income by about 2 per cent.
Realised changes in the value of properties amounted to SEK 237m (57). Th e entire portfolio has been externally appraised at least once during the year and unrealised changes in value totalled SEK 843m (–310). Th e SEK 579m (-327) increase in the value of the portfolio of investment properties was attributable to properties for which the risk of vacancies and declining rent levels decreased and to declining yield requirements. Th e project portfolio contributed to an unrealised value change of SEK 264m (17), which comfortably surpassed Fabege's return requirement of 20 per cent on invested capital. Share in profi t of associated companies rose to SEK 18m (–5) and were primarily attributable to the shareholding in Fastighets AB Tornet. Changes in the value of interestrate derivatives and equities amounted to SEK 67m (95), and net interest expense declined to SEK–522m (–560) as a result of a reduction in borrowing (refer to the Financing section).
| SEKm | Jan–Dec 2010 |
Jan–Dec 2009 |
|---|---|---|
| Profi t from Property Management |
768 | 779 |
| Changes in value (portfolio of investment properties) |
579 | –327 |
| Contribution from Property Management |
1,347 | 452 |
| Profi t from Property Management |
14 | 59 |
| Changes in value (profi t from Property Development) |
264 | 17 |
| Contribution from Property Development |
278 | 76 |
| Contribution from Transactions (Realised changes in value) |
237 | 57 |
| Changes in value, derivatives and equities |
67 | 95 |
| Profi t before tax | 1,929 | 680 |
Th e tax expense for the year amounted to SEK –232m (–255), corresponding to 26.3 per cent tax on continuous taxable earnings. Sales of properties resulted in a total reversal of deferred tax of SEK 156m.
Profi t contributed SEK 1,015m (789) to liquidity. Aft er an increase of SEK 1,099m (288) in working capital, which varies primarily as a result of the impact of occupancy/fi nal settlement for acquired and divested properties, the liquidity of operating activities increased by SEK –84m (501). Sales exceeded acquisitions of and investments in properties by SEK 2,837m (–259). Accordingly, the total change in liquidity resulting from operating activities was SEK 2,753m (242). Cash fl ow during the year was charged with SEK 329m (329) for dividend payment. Share buybacks amounted to SEK 61m (0). Aft er the reduction in debt, consolidated cash and cash equivalents totalled SEK 73m (173).
Fabege employs long-term credit lines with fi xed terms and conditions. On 31 December 2010, these had an average maturity of 5.3 years. Th e company's lenders are the major Nordic banks.
Interest-bearing liabilities at the end of the period totalled SEK 16,646m (19,109) and the average interest rate was 3.45 per cent excluding and 3.57 per cent including commitment fees on the undrawn portion of committed credit facilities. In line with rising market interest rates, Fabege's average interest during the year rose by 1 per cent compared with the beginning of the year, when the interest rate was 2.57 per cent.
Interest rates on 47 per cent of Fabege's loan portfolio were fi xed using fi xed income derivatives. Th e average fi xed-rate period was 23 months, taking the eff ect of derivative instruments into account, while the average fi xed-rate period for variablerate loans was 39 days.
Fabege has callable swaps totalling SEK 7,550m with interest rates ranging from 3.33 to 3.98 per cent. In addition, the company holds performance swaps amounting to SEK 300m with maturities up to May 2011.
In compliance with the accounting rules contained in IAS 39, the derivatives portfolio has been measured at market value and the change in value is recognised in the profi t and loss account. On 31 December 2010, the recognised negative fair value adjustment of the portfolio amounted to SEK 267m (373). Th e derivatives portfolio has been 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.
During the fourth quarter, Fabege extended a credit limit of SEK 1bn to 2012. Following year-end, an additional SEK 2bn were extended until 2016, while credit facilities totalling SEK 1bn were terminated. On 31 December 2010, the company had unused committed lines of credit of SEK 4,939m.
Fabege has a commercial paper programme to the amount of SEK 5bn. On 31 December 2010, commercial paper worth SEK 2,249m was outstanding. Fabege has available long-term credit facilities covering all outstanding commercial paper at any given time.
Th e total loan volume includes SEK 698m in loans for projects, on which interest of SEK 13m has been capitalised.
Shareholders' equity amounted to SEK 11,276m (9,969) at the end of the period and the equity/assets ratio was 39 per cent (32). Shareholders' equity per share totalled SEK 69 (61). Excluding deferred tax on fair value adjustments of properties, net asset value per share was SEK 77 (67).
Investments in 2010 totalled SEK 940m (1,138), of which SEK 0m (56) refers to property acquisitions and SEK 907m (1,082) to investments in existing properties and projects. No property was acquired and 54 properties were sold for SEK 4,350m. Th e sales resulted in a profi t of SEK 237m (57) before tax, or SEK 393m (91) aft er tax.
Of the property sales, SEK 677m pertained to the residential portfolio sold to part-owned Fastighets AB Tornet. In the fourth quarter, a portfolio of 16 properties outside Fabege's priority submarkets was sold to Profi for SEK 1,350m. Other major property transactions included the sale of Päronet 8, in Solna strand, and Paradiset 29, in Stadshagen. Th ese sales were part of eff orts to streamline Fabege's property portfolio, which is now 98 per cent focused on the three priority sub-markets.
During 2010, decisions were made on major project investments for SEK 613m (1,230). Investments of SEK 907m (1,082) in existing properties and projects referred to land, new builds, extensions and conversions. Major investments in 2010 included Uarda 5 in Arenastaden, Bocken 39 at Lästmakargatan, Farao 20 in Arena staden and Fräsaren 10 in Solna Business Park. Th e projects in the properties Päronet 8, Solna Strand (let to the Swedish Tax Agency), and Tygeln 3, Arenastaden (let to Adidas), were completed during the fi rst quarter. Th e properties have been transferred to the portfolio of investment properties.
Sales during the period amounted to SEK 102m (89) and the result before appropriations and tax was SEK –150m (–437). Net investments in property, equipment and shares totalled SEK –30m (1,659). Th e company's cash and cash equivalents declined to SEK 64m (161). See profi t/loss accounts and balance sheets on page 60.
Fabege's share capital at year-end was SEK 5,097m (5,096), represented by 165,391,572 shares (169,320,972). All shares carry the same voting rights and entitle the holder to the same share of the company's capital.
Th e following indirect or direct shareholdings in the company as of 31 December 2010 represent one tenth or more of the votes for all shares in the company:
| Shareholding | Share of votes, % |
|---|---|
| Brinova | 14.3 |
Th rough Fabege's profi t-sharing fund and the Wihlborgs & Fabege profi tsharing fund, the employees of Fabege own a total of 363,171 shares, representing a stake of 0.2 per cent in the company.
Th e 2010 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, 1,411,488 shares were bought back (average price: SEK 43.04 per share). At 31 December 2010, the company held 2,411,488 treasury shares, representing 1.5 per cent of the total number of registered shares. Th e quotient value is SEK 30.82.
Risks and uncertainties relating to cash fl ow from operations are primarily atributable 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 2010. 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 derivates.
| Change | Effect, SEKm |
|
|---|---|---|
| Rent level, residential | 1% | 18.1 |
| Financial occupancy rate, % | 1%-point | 20.6 |
| Property expenses | 1% | 6.6 |
| Interest expenses 20111) | 1%-point | 98.0 |
| Interest expenses, longer-term perspective2) |
1%-point | 166.5 |
1) The effect of the change on interest expenses in 2011 is based on the assumption of a change in the yield curve of 1%, an unchanged loan volume and fi xedrate term, with effect from 1 January 2011.
2) Change of 1% in total outstanding loan volume.
Fabege's business in property management and project development is highly concentrated to sub-markets with good growth prospects in Stockholm, Solna and Hammarby Sjöstad. Since commercial premises with an emphasis on offi ce space account for 99 per cent of the business, employment and the offi ce market trend in Stockholm are of considerable signifi cance to Fabege. As the company's commercial leases run over a period of several years, the full impact of changes in rents will not be felt in any single year. New contracts ormally run for 3–5 years and are subject to 9 months' notice with an index clause linked to infl ation. Th e contract portfolio is currently deemed to be in line with market levels. Normally, about 20 per cent of the contract portfolio is renegotiated each year. At year-end, Fabege's average remaining term for commercial agreements was 3.5 years.
Property expenses include operations 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 from and including 2010. Fabege also conducts contract negotiations and works continuously to minimise running costs. A large share of the Group's expenses is passed on to the tenants, which reduces the exposure. Th e standard of the property management portfolio is deemed to be high.
Th e strategic focus is primarily on a short fi xed-rate period. Fabege employs fi nancial instruments, mainly in the form of interest-rate swaps, to limit interest 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 23 months. Changes in the value of derivatives are reported in the profi t and loss account.
Properties are reported at fair value and changes in value are recognised in the profi t and loss account. Fabege's properties are concentrated to central Stockholm and neighbouring areas. Th anks to its 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 of a 1 per cent change in the value of a property on earnings, equity/assets ratio and leverage.
| Change in value before tax % |
Impact on earnings, SEKm |
Equity/ assets ratio, % |
Leverage properties % |
|---|---|---|---|
| +1 | 199 | 38.9 | 61.1 |
| 0 | – | 38.5 | 61.7 |
| –1 | –199 | 38.1 | 62.3 |
mary on page 88.
Th e main task of Fabege's debt management ctivities is to ensure that the company maintains at all times a stable, well balanced and cost-effi cient fi nancial structure through borrowing in the bank and capital markets. Th e company's fi nancial policy defi nes how fi nancial risks should be managed, which is described in greater detail in Note 3.
Under its dividend policy, Fabege aims to pay a dividend to its shareholders comprising that part of the company's profi t which is not required for the consolidation or development of the business. In the 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.
Unused tax losses, which are expected to reduce the tax expense in future years, are estimated at SEK 4.2bn (4.3). Payment of income tax can also be delayed through tax depreciation of the properties. In case of a direct sale of property a tax profi t 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 2010, the diff erence between the book and tax residual values of Fabege's property portfolio was approximately SEK 9.4bn (8.7). Under IFRS rules on deferred tax, diff erences between carrying amounts and tax bases should be recognised at the nominal tax rate (26.3%) with no discount. However, exceptions
exist for business combinations, which can be classifi ed as asset acquisitions. See also the section entitled "Accounting principles" on page 62 and Note 28 on page 71 in respect of deferred tax.
On 31 December 2010, net deferred tax liabilities were SEK 152bn (-99), as shown in the following specifi cation, see table.
| Deferred tax attributable to | SEKm |
|---|---|
| – tax losses | –1,104 |
| – difference between book and tax values in respect of properties |
1,321 |
| – defi cit, derivatives | –70 |
| – other | 5 |
| Net asset, deferred tax | 152 |
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.
On 31 December 2010, the total increase in taxable incomes is SEK 7,098m (4,854). Th e decisions have resulted in a total tax demand of SEK 1,874m (1,359) plus a tax penalty of SEK 164m (182), i.e. a total demand including penalties of SEK 2,038m (1,541) excluding interest.
Fabege strongly contests the tax demands resulting from the Tax Agency's and Administrative Court's decisions and has appealed the decisions.
Th e 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 a 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, i.e. the small amount of tax resulting from the sales was neither unexpected nor controversial. Th e way 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 that the Tax Agency has made a tax decision on has been common practice in the industry.
During 2010, the Administrative Court issued verdicts concerning several of Fabege's tax cases, whereby the Administrative Court approved the Tax Agency's decisions to increase Fabege's taxable income. Th e decisions have been appealed to the Administrative Court of Appeal and Fabege has been granted a respite for paying the tax until the Administrative Court of Appeal has issued its verdict. In December 2010, the Administrative Court of Appeal announced that the tax matters would be subject to a stay of proceedings pending the advance ruling of the Council for Advance Tax Rulings in respect of the "Cyprus case."
Fabege considers that the Tax Agency and the Administrative Court has disregarded a number of important aspects and that the verdicts are therefore incorrect – an assessment shared by Fabege's advisors on the matters. Fabege is of the opinion that it is highly probable that the Administrative Court of Appeal will amend the Administrative Court's rulings to the benefi t of Fabege.
Th e Administrative Court's verdicts pertain to cases for which the matter of reallocation of earnings has been tried. Th ey do no encompass ther cases in which only the matter of tax avoidance is to be tried. For the cases remaining to be considered by the Administrative Court, correspondence pertaining to the parties' submissions is continuing.
Fabege is adhering to its view that the sales were accounted for and declared in compliance with applicable rules. Th is assessment is shared by external legal
experts and tax advisors that have analysed the sales and the Tax Agency's reasoning. No provision has been made in Fabege's balance sheet. However, until further notice, the amount is instead being recognised as a contingent liability, as in previous fi nancial statements.
For companies in the Fabege Group, the Tax Agency's decision relates to the single largest transactions and, to the best of our knowledge, a signifi cant share of the total potential amount. Information about any further decisions made by the Tax Agency and the reasoning behind the decisions will be presented in Fabege's interim reports. Any changes in current assessments and any court rulings will be announced through press releases.
A separate description of the work of the Board of Directors is given in the Corporate Governance Report on page 74.
Fabege does not conduct activities that are subject to permit and notifi cation requirements under Chapter 9, Section 6 of the Environmental Code. Out of Fabege's tenants, only a few conduct such activities. More information about Fabege's environmental work is given in the section "Responsible enterprise" on page 40.
Th e average number of employees in the Group during the year was 125 (139), of which 47 (56) were women and 78 (83) were men. 31 people were employed in the parent company (28). At year-end the number of employees was 126, of which 47 were women. See also page 66, Note 6.
Th e term "management" refers to the Chief Executive Offi cer and other members of senior management. Th e entire
Board of Directors (except the CEO) is responsible for drawing up a draft statement of principles governing remuneration and other terms of employment for management and for preparing decisions on the CEO's remuneration and other terms of employment.
Th e 2010 AGM resolved to adopt the following guidelines for compensation and other terms of employment for management:
Remuneration should be market-based and competitive, and should refl ect responsibilities and performance that are in the interest of the shareholders. Fixed salaries should be reviewed each year. Such remuneration could depend on the extent to which predetermined objectives are met within the framework of the company's operations. Th e objectives encompass fi nancial and non-fi nancial criteria. Remuneration in addition to fi xed salary should be subject to a ceiling and tied to the fi xed salary. Variable remuneration may not exceed three (3) months' salary. Variable remuneration to company management must not exceed a maximum total annual cost for the company of SEK 2.5m (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 remunerations.
Fabege has a profi t-sharing fund covering all employees of the company. Allocations to the fund should be based on the achieved return on equity and are subject to a ceiling of one 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 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.
Information about remuneration paid to senior executives in 2010 is provided in Note 6.
Th e Board proposes unchanged principles governing variable remuneration ahead of the 2011 Annual General Meeting. A complete version of the Board's proposal will be included in the AGM documents, which will be published on Fabege's website.
In January, Fabege extended a credit limit of SEK 2bn by fi ve years to 2016, while credit facilities totalling SEK 1bn were terminated.
Eff ective 4 January, the Bocken 51 property at Lästmakargatan was sold to the Lästmakarpalatset Tenant Owners Association. Since the selling price of SEK 139m corresponded to the latest market valuation as of 31 December 2010, the transaction did not give rise to a capital gain.
Following the sale of the Bocken 51 property and the settlement on 12 January of the outstanding sales consideration for the Profi transaction, the equity ratio rose to 40 per cent and the loan-to-value ratio declined to 57 per cent.
Both the rental market and transaction market strengthened during 2010. Th e positive market trend facilitates Fabege's eff orts to continue to create and add to earnings from all components of the business model, meaning management, development and transactions. Th e streamlined property portfolio – with modern properties in prime locations in Stockholm inner city, Solna and Hammarby Sjöstad – facilitates a continuing favourable trend for Fabege's operations and earnings during 2011.
Th e shareholders are asked to decide on the appropriation of:
| Total | 1,099,099,824 |
|---|---|
| Loss for the year | –121,445,660 |
| Retained earnings | 1,220,545,484 |
| SEK |
Th e Board of Directors and Chief Executive Offi cer propose that the amount be allocated as follows:
| Total | 1,099,099,824 |
|---|---|
| Carried forward | 610,159,572 |
| Dividend to the share holders SEK 3.00 per share |
488,940,252 |
| SEK |
Th e dividend amount is based on the total number of outstanding shares on 31 Dedcember 2011, i.e. 162,980,084 shares, and is subject to alteration up to and including the record date, depending on share buy-backs.
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 2:1 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 2:2 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 of Directors 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 drawing up its proposal, the Board has taken account of the company's equity/assets ratio, historical and budgeted performance, investment plans and the general economic environment.
Consolidation requirements Th e Board of Directors 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 5.2 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 is a minimum equity/assets ratio of 30 per cent, and it is estimated that the Group will be able to maintain an interest coverage ratio of at least 2.0 also aft er the proposed dividend. In view of the current situation on the property market, the company and the Group have a good equity/assets ratio. 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 ride out 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 valued at fair value in accordance with Chapter 4, Section 14 of the Swedish Annual Accounts Act. Th e impact of this valuation, which increased equity in the parent company by SEK 77m (95), 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 and any unexpected events.
Other financial circumstances Th e Board of Directors has assessed all other known circumstances that may be signifi cant for 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 2011
Th e Board of Directors
| SEK millions | Note | 2010 | 2009 |
|---|---|---|---|
| Rental income | 5, 7 | 2,007 | 2,194 |
| Property expenses | 8 | –659 | –729 |
| Net operating income | 1,348 | 1,465 | |
| Central administration and marketing | 9 | –62 | –62 |
| Profi t from other securities and receivables that are fi xed assets | 11 | 5 | 6 |
| Interest income | 12 | 2 | 4 |
| Share in profi t/loss of associated companies | 17 | 18 | –5 |
| Interest expenses | 12 | –529 | –570 |
| Operating profi t/loss | 1–6, 16, 19, 43 | 782 | 838 |
| Realised changes in value, investment properties | 10, 15 | 237 | 57 |
| Unrealised changes in value, investment properties | 10, 15 | 843 | –310 |
| Changes in value, fi xed income derivatives | 27 | 106 | 98 |
| Changes in value, equities | 13 | –39 | –3 |
| Profi t/loss before tax | 1,929 | 680 | |
| Tax on profi t for the year | 14 | –232 | –255 |
| Total profi t/loss for the year | 1,697 | 425 | |
| Comprehensive income attributable to parent company shareholders | 1,697 | 425 | |
| Earnings per share before dilution, SEK | 10:38 | 2:59 | |
| Earnings per share after dilution, SEK | 10:38 | 2:59 | |
| No. of shares at end of period before dilution, millions | 163.0 | 164.4 | |
| No. of shares at end of period after dilution, millions | 163.0 | 164.4 | |
| Average no. of shares before dilution, millions | 163.5 | 164.4 | |
| Average no. of shares after dilution, millions | 163.5 | 165.1 |
| SEK millions | Note | 2010 | 2009 |
|---|---|---|---|
| ASSETS | |||
| Investment properties | 15 | 26,969 | 29,193 |
| Equipment | 16 | 3 | 2 |
| Interests in associated companies | 17 | 443 | 307 |
| Receivables from associated companies | 18 | 81 | – |
| Other long-term securities holdings | 20 | 152 | 122 |
| Deferred tax | 28 | – | 99 |
| Other long-term receivables | 21 | 38 | 92 |
| Total fi xed assets | 27,686 | 29,815 | |
| Trade receivables | 22 | 18 | 19 |
| Other receivables | 23 | 1,437 | 627 |
| Prepaid expenses and accrued income | 49 | 58 | |
| Cash and cash equivalents | 35 | 73 | 173 |
| Total current assets | 1,577 | 877 | |
| TOTAL ASSETS | 29,263 | 30,692 | |
| EQUITY AND LIABILITIES | |||
| Share capital | 5,097 | 5,096 | |
| Other contributed capital | 3,017 | 3,017 | |
| Retained earnings incl. profi t/loss for the year | 3,162 | 1,856 | |
| Total shareholders' equity | 24 | 11,276 | 9,969 |
| Liabilities to credit institutions | 26 | 10,828 | 16,254 |
| Derivatives | 27 | 267 | 373 |
| Deferred tax liabilities | 28 | 152 | – |
| Provisions | 29 | 191 | 356 |
| Total long-term liabilities | 11,438 | 16,983 | |
| Liabilities to credit institutions | 25, 26 | 5,818 | 2,855 |
| Trade payables | 82 | 89 | |
| Provisions | 29 | 80 | 83 |
| Tax liabilities | 6 | 10 | |
| Other liabilities | 30 | 97 | 245 |
| Accrued expenses and deferred income | 31 | 466 | 458 |
| Total current liabilities | 6,549 | 3,740 | |
| TOTAL EQUITY AND LIABILITIES | 29,263 | 30,692 | |
| Assets pledged as security | 32 | 15,131 | 16,234 |
| Contingent liabilities | 32 | 2,520 | 2,172 |
| Attributable to parent company shareholders | Total equity |
|||||
|---|---|---|---|---|---|---|
| SEK millions | Share capital | Other contributed capital |
Retained earnings incl. profi t/loss for the year |
Total | ||
| Opening balance, 1 January 2009 | 5,096 | 3,017 | 1,760 | 9,873 | – | 9,873 |
| Total loss for the year | 425 | 425 | 425 | |||
| Total income and expenses for the period | 425 | 425 | – | 425 | ||
| Cash dividend | –329 | –329 | –329 | |||
| New shares, conversion of debt instruments | 0 | 0 | 0 | 0 | ||
| Closing balance, 31 December 2009 | 5,096 | 3,017 | 1,856 | 9,969 | – | 9,969 |
| Opening balance, 1 January 2010 | 5,096 | 3,017 | 1,856 | 9,969 | – | 9,969 |
| Total profi t for the year | 1,697 | 1,697 | 1,697 | |||
| Total income and expenses for the period | 1,697 | 1,697 | – | 1,697 | ||
| Cash dividend | –329 | –329 | –329 | |||
| Share buybacks | –61 | –61 | –61 | |||
| Withdrawal of treasury shares | –118 | 118 | ||||
| Bonus issue | 119 | –119 | ||||
| Closing balance, 31 December 2010 | 5,097 | 3,017 | 3,162 | 11,276 | – | 11,276 |
| SEK millions | Note | 2010 | 2009 |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Net operating income and realised changes in the value of existing properties excluding depreciation | 1,600 | 1,510 | |
| Central administration | –62 | –62 | |
| Interest received and dividend 10 37 | 7 | 10 | |
| Interest paid | 33 | –527 | –569 |
| Income tax paid/received | –3 | –100 | |
| Cash fl ow before change in working capital | 1,015 | 789 | |
| CHANGE IN WORKING CAPITAL | |||
| Current receivables | –800 | –232 | |
| Current liabilities | –299 | –56 | |
| Total change in working capital | 34 | –1,099 | –288 |
| Cash fl ow from operating activities | –84 | 501 | |
| INVESTING ACTIVITIES | |||
| Investments and acquisition of properties | –940 | –1,138 | |
| Sale of properties, book value at beginning of year | 15 | 3,978 | 1,160 |
| Acquisition of interests in associated companies | 17 | –103 | –286 |
| Acquisition of interests in other companies | 20 | –77 | –65 |
| Sale of interests in other companies | 7 | 17 | |
| Other tangible fi xed assets | –2 | 0 | |
| Other fi nancial fi xed assets | –26 | 53 | |
| Cash fl ow from investing activities | 2,837 | –259 | |
| FINANCING ACTIVITIES | |||
| Dividends | –329 | –329 | |
| Share buybacks | –61 | – | |
| Loans received/repayment of loans | –2,463 | 206 | |
| Cash fl ow from fi nancing activities | –2,853 | –123 | |
| Change in cash and cash equivalents | –100 | 119 | |
| Cash and cash equivalents at beginning of period | 35 | 173 | 54 |
| Cash and cash equivalents at end of period | 35 | 73 | 173 |
| SEK millions | Note | 2010 | 2009 |
|---|---|---|---|
| Net turnover | 39 | 102 | 89 |
| Operating costs | 40 | –190 | –174 |
| Operating loss | 1–3, 6, 16, 43 | –88 | –85 |
| Profi t/loss from shares and interests in Group companies |
41 | – | –291 |
| Profi t from other securities and receivables that are fi xed assets |
11, 13 | 368 | 402 |
| Changes in value, fi xed income derivatives |
27 | 106 | 98 |
| Interest income | 12 | 1 | 2 |
| Interest expenses | 12 | –537 | –563 |
| Loss before tax | –150 | –437 | |
| Tax on profi t for the year | 14 | 29 | 28 |
| Profi t/loss for the year | –121 | –409 |
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 | 2010 | 2009 |
|---|---|---|---|
| ASSETS | |||
| FIXED ASSETS | |||
| Tangible fi xed assets | |||
| Equipment | 16 | 3 | – |
| Total tangible fi xed assets | 3 | – | |
| Financial fi xed assets | |||
| Shares and interests in Group companies | 42 | 13,328 | 13,328 |
| Receivables from Group companies | 37,524 | 37,099 | |
| Other long-term securities holdings | 20 | 6 | 39 |
| Deferred tax asset | 28 | 103 | 131 |
| Other long-term receivables | 21 | 33 | 188 |
| Total fi nancial fi xed assets | 50,994 | 50,785 | |
| TOTAL FIXED ASSETS | 50,997 | 50,785 | |
| CURRENT ASSETS | |||
| Current receivables | |||
| Trade receivables | 0 | 1 | |
| Other receivables | 5 | 60 | |
| Prepaid expenses and accrued income | 20 | 2 | |
| Total current receivables | 25 | 63 | |
| Cash and cash equivalents | 35 | 64 | 161 |
| TOTAL CURRENT ASSETS | 89 | 224 | |
| TOTAL ASSETS | 51,086 | 51,009 | |
| EQUITY AND LIABILITIES | |||
| Shareholders' equity | 24 | ||
| Restricted equity | |||
| Share capital | 5,097 | 5,096 | |
| Reserve fund/Share premium account | 3,166 | 3,166 | |
| Unrestricted equity | |||
| Retained earnings | 1,221 | 1,861 | |
| Profi t/loss for the year | –121 | –409 | |
| Total shareholders' equity | 9,363 | 9,714 | |
| Provisions | |||
| Provisions for pensions | 29 | 63 | 63 |
| Total provisions | 63 | 63 | |
| Long-term liabilities | |||
| Liabilities to credit institutions | 26 | 10,828 | 15,998 |
| Derivatives | 27 | 267 | 373 |
| Liabilities to subsidiaries | 24,676 | 21,931 | |
| Total long-term liabilities | 35,771 | 38,302 | |
| Current liabilities | |||
| Liabilities to credit institutions | 26 | 5,818 | 2,855 |
| Trade payables | 4 | 3 | |
| Other liabilities | 7 | 9 | |
| Accrued expenses and deferred income | 31 | 60 | 63 |
| Total current liabilities | 5,889 | 2,930 | |
| TOTAL EQUITY AND LIABILITIES | 51,086 | 51,009 | |
| Assets pledged as security | 32 | 12,627 | 13,317 |
| Contingent liabilities | 32 | 3,452 | 621 |
| SEK millions | Note | Share capital |
Reserve fund |
Un restricted equity |
Total equity |
|---|---|---|---|---|---|
| 24 | |||||
| Equity, 31 December 2008 | 5,096 | 3,166 | 2,020 10,282 | ||
| Profi t for the year | –409 | –409 | |||
| Total income and expenses for the period |
–409 | –409 | |||
| Cash dividend | –329 | –329 | |||
| New shares, conversion of debt instruments |
0 | 0 | 0 | ||
| Net Group contributions received |
170 | 170 | |||
| Equity on 31 December 2009 | 5,096 | 3,166 | 1,452 | 9,714 | |
| Loss for the year | –121 | –121 | |||
| Total income and expenses for the period |
–121 | –121 | |||
| Cash dividend | –329 | –329 | |||
| Share buybacks | –61 | –61 | |||
| Withdrawal of treasury shares | –118 | 118 | |||
| Bonus issue | 119 | –119 | |||
| Net Group contributions received |
160 | 160 | |||
| Equity on 31 December 2010 | 5,097 | 3,166 | 1,100 | 9,363 |
| SEK millions | Note | 2010 | 2009 |
|---|---|---|---|
| OPERATING ACTIVITIES | |||
| Operating loss excl. depreciation | –87 | –84 | |
| Interest received | 398 | 407 | |
| Interest paid | 33 | –535 | –562 |
| Income tax paid | – | – | |
| Cash fl ow before change in working capital | –224 | –239 | |
| Change in working capital | |||
| Current receivables | 38 | –24 | |
| Current liabilities | –6 | 14 | |
| Total change in working capital | 34 | 32 | –10 |
| Cash fl ow from operating activities | –192 | –249 | |
| INVESTING ACTIVITIES | |||
| Acquisition of interests in Group companies | – | –17 | |
| Sale of interests in Group companies | – | 747 | |
| Acquisition and sale of interests in other companies |
4 | 17 | |
| Other tangible fi xed assets | –4 | – | |
| Other fi nancial fi xed assets | –270 | –24,799 | |
| Cash fl ow from investing activities | –270 | –24,052 | |
| FINANCING ACTIVITIES | |||
| Dividends paid | –329 | –329 | |
| Group contributions received and made | 217 | 231 | |
| Dividends received | – | 700 | |
| Share buybacks | –61 | – | |
| Loans received/repayment of loans | 538 | 23,817 | |
| Cash fl ow from fi nancing activities | 365 | 24,419 | |
| Change in cash and cash equivalents | –97 | 118 | |
| Cash and cash equivalents at beginning of period |
35 | 161 | 43 |
| Cash and cash equivalents at end of period | 35 | 64 | 161 |
(SEK million, unless otherwise specifi ed)
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 44. 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 2010. The Group also applies Recommendation RFR 2:1 (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 2:2 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 principles 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 principles 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. Subsidiaries are reported in accordance with the purchase method. Acquired identifi able assets, liabilities and contingent liabilities are carried at fair value at the date of acquisition. The surplus, defi ned as the difference between cost and fair value of the acquired interests and the sum of fair value of acquired identifi able assets and liabilities, is recognised as goodwill. If the historical cost is less than the fair value of the acquired subsidiary's net assets, the difference is recognised directly in the profi t and loss account. All inter-company transactions and balances within the Group have been eliminated in preparing the consolidated fi nancial statements. In case of the acquisition of a group of assets or net assets that do not constitute an operation, the costs for the Group are instead allocated to the individually identifi able assets and liabilities in the group based on their relative fair values at the time of acquisition.
A company is reported 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 reported in accordance with the equity method. Interests in associated companies are reported 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 companies that are 50 per cent owned in which Fabege exercises a joint controlling infl uence together with another party, the company's assets, liabilities, income and expenses have been included in the consolidated fi nancial statements in proportion to Fabege's ownership share (proportionate consolidation). In transactions between the Group and a joint venture that part of unrealised gains and losses which represents the Group's share of the jointly controlled company is eliminated.
Minority interest consists of the market value of minority interests in net assets for subsidiaries included in the consolidated fi nancial statements at the time of the original acquisition and the minority owners' share of changes in equity after the acquisition.
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 straight-line 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 reported as an expense in the profi t and loss account and distributed over the term of the agreement 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 valued 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 the profi t and loss account 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 reported profi t for the year in that it has been adjusted for nontaxable 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 reported 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 the profi t and loss account, except in those cases where it refers to transactions or events that have been recognised directly in equity. In such cases the deferred tax is also recognised directly in equity.
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 the profi t and loss account 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 reported 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.
For information about the company's transactions with related parties, see Note 6 in respect of compensation to senior executives and Note 36 for other related-party transactions.
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.
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 ceased 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, depending on the initial categorisation under IAS 39.
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 therefrom 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 valued at fair value and changes in value are recognised in the profi t and loss account. 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 with no discount.
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 the profi t and loss account.
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 valued at amortised cost. Long-term liabilities have an expected maturity of more than 1 year while current liabilities have a maturity of less than 1 year.
Compensation 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 the profi t and loss account to the extent that 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 the profi t and loss account 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.
The application of the new standard IFRS 8 Operating segments has resulted in the Group's segment information being 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 Improvement 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 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 2:2 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.
Group contributions and shareholder contributions are reported in accordance with Statement UFR 2 of the Swedish Financial Reporting Board. This means that Group contributions and shareholder contributions are recognised based on their economic signifi cance. The contributions are reported as a capital transfer, i.e. as a decrease or increase of unrestricted equity. The consequence of this accounting principle is that only tax that is attributable to income and expense items is recognised in the profi t and loss account.
Defi ned benefi t and defi ned contribution pension plans are reported in accordance with hitherto applicable Swedish accounting standards, which are based on the provisions of the Swedish Pension Obligations Vesting Act ("Tryggandelagen").
In the Parent Company, adjustments were made to the comparative fi gures for the items Receivables from Group companies and Liabilities to Group companies, because the items, which should rightly have been recognised in their net amount on 31 December 2009, were previously recognised gross.
The revised IAS 27 and IFRS 3 apply to acquisitions (business combinations) as of the 2010 fi nancial year. In the revised standard, the defi nition of business combination has changed, which could affect the classifi cation of indirect acquisition of properties as asset acquisitions or business combinations. Acquisition-related costs may no longer be included in the cost, but should instead be recognised as an expense in profi t and loss. For Fabege, the change entails that certain expenses resulting from property acquisitions classifi ed as business combinations will be expensed.
A number of minor amendments to existing IFRS standards have become effective and apply to the 2010 fi nancial year. The amendments pertain to such factors as IAS Classifi cation of expenditures on unrecognised assets and IFRS 8 Operating segments. The improvements to IFRS in 2009 had no impact on the Group's fi nancial statements in 2010; nor did other new and amended standards and interpretations have any impact on the Group's fi nancial statements in 2010.
New and amended standards and interpretations that have not become effective New and amended standards pertain to the amended disclosure requirements in IFRS 1, IFRS 7 and IAS 24. A new standard, IFRS 9 Financial instruments, becomes effective as of 2013. The impact of this standard cannot be determined as yet. In the opinion of management, other new and amended standards and interpretations will not have any signifi cant impact on the Group's fi nancial statements in the period during which they are initially applied.
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. The company is aiming to become a signifi cant player in this market. At year-end 2010 Fabege had unused credit facilities of SEK 4,939m excluding the commercial paper programme.
| Year, maturity | Used amount, SEKm |
Committed amount, SEKm |
|---|---|---|
| Commercial paper programme | 5,000 | 2,249 |
| < 1 year | 4,730 | 3,550 |
| 1–2 years | 1,000 | 1,000 |
| 2–3 years | 6,875 | 3,667 |
| 3–4 years | 0 | 0 |
| 4–5 years | 4,000 | 3,200 |
| > 5 years | 4,980 | 2,980 |
| Total | 26,585 | 16,646 |
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 short-term and long-term earnings are affected by a change in interest rates. Interest-bearing liabilities at 31 December were SEK 16,646m (19,109) with an average interest rate of 3.45 per cent (2.48) excluding the cost of committed lines of credit, or 3.57 per cent (2.57) including this cost. Of total liabilities, SEK 2,249m (2,855) referred to outstanding commercial paper. The total loan volume at 31 December includes loans for works in progress of SEK 698m, on which interest of SEK 13m has been capitalised. The average fi xed-rate term of the loans, including the effects of exercised derivatives, was 23 months (24) at 31 December. The average maturity was 5.3 years (5.6). Average leverage at year-end was 62 per cent (65). The derivatives portfolio is valued at fair value in accordance with IAS 39. The value of the portfolio is SEK –267m (–373). Realised changes in value in profi t for the year is SEK 0m (0) and unrealised changes in value SEK 106m (98). Changes in market value occur as a result of changes in market interest rates. A market valuation of the loan portfolio (excl. derivatives products) shows a defi cit of SEK 0m (0). For all other fi nancial assets and liabilities, unless otherwise stated in the Notes, the carrying amount is considered a good approximation of fair value.
Interest expenses linked to the liabilities are incurred over the course of the remaining maturities and cash fl ows from the derivatives are synchronised with the loan cash fl ows. 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.
(Note 3 cont.)
| Year, maturity | SEKm | Average interest rate, % |
Share, % |
|---|---|---|---|
| < 1 year | 9,096 | 3.09 | 55 |
| 1–2 years | 0 | 0.00 | 0 |
| 2–3 years | 4,550 | 3.84 | 27 |
| 3–4 years | 0 | 0.00 | 0 |
| 4–5 years | 0 | 0.00 | 0 |
| > 5 years | 3,000 | 3.97 | 18 |
| Total | 16,646 | 3.45 | 100 |
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. At year-end, Fabege owned one land property in Belgium. Under Fabege's policy, property holdings are to be fi nanced in the local currency. To avoid currency risks, the value of the Belgian property was hedged using EUR loans. Accordingly, exchange-rate fl uctuations only impacted net profi t for the property. The aforementioned property was sold in January 2011, whereupon the EUR loan was also repaid.
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. 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 realisation 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 Other provisions. When performing property transactions an assessment of risk transfer is made. This serves a quideline when the transaction is to be booked. As for promisorry note claims an assessment shows which amount can be expected to come 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 valuing tax losses, the company makes an assessment of the probability that the loss can be used to offset future taxable profi ts. 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 ts.
As regards Fabege's ongoing tax cases, the company has taken the view that no provision is required. For more information, see the description of tax cases on page 53 of the Directors' Report.
| SEKm | Property Management Jan–Dec 2010 |
Improvement Projects 2010 |
Total Jan–Dec 2010 |
Property Management Jan–Dec 2009 |
Improvement Projects Jan–Dec 2009 |
Total Jan–Dec 2009 |
|---|---|---|---|---|---|---|
| Rental income | 1,806 | 201 | 2,007 | 1,852 | 342 | 2,194 |
| Property expenses | –573 | –86 | –659 | –578 | –151 | –729 |
| Net operating income | 1,233 | 115 | 1,348 | 1,274 | 191 | 1,465 |
| Surplus ratio, % | 68 | 57 | 67 | 69 | 56 | 67 |
| Central administration and marketing | –50 | –12 | –62 | –50 | –12 | –62 |
| Net interest expense | –432 | –90 | –522 | –444 | –116 | –560 |
| Share in profi t/loss of associated companies |
17 | 1 | 18 | –1 | –4 | –5 |
| Operating profi t/loss | 768 | 14 | 782 | 779 | 59 | 838 |
| Realised changes in value, properties | 215 | 22 | 237 | 36 | 21 | 57 |
| Unrealised changes in value, properties | 579 | 264 | 843 | –327 | 17 | –310 |
| Profi t/loss before tax per segment | 1,562 | 300 | 1,862 | 488 | 97 | 585 |
| Change in value, fi xed income derivatives and equities |
67 | 95 | ||||
| Profi t/loss before tax | 1,929 | 680 | ||||
| Properties, market value | 21,453 | 5,516 | 26,969 | 23,266 | 5,927 | 29,193 |
| Occupancy rate, % | 91 | 69 | 88 | 92 | 79 | 90 |
Segments are reported 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. During the fi rst quarter, two major project properties (Päronet 8 and Tygeln 3) were transferred from Improvement Projects to Property Management. During the year, eight former development properties, where renovations and lettings are now creating the conditions for stable cash fl ow, were reclassifi ed as Investment properties, including one in the third quarter. Three properties have been transferred from Property Management to Improvement Projects, including one in the fourth quarter.
| Average no. of employees | 2010 | Of which, men |
2009 | Of which, men |
|---|---|---|---|---|
| Parent company | 31 | 11 | 28 | 10 |
| Subsidiaries | 94 | 67 | 111 | 73 |
| Group, total | 125 | 78 | 139 | 83 |
| Salaries and other compensa tion 2010 |
Social security contribu tions 2010 |
Salaries and other compensa tion 2009 |
Social security contribu tions 2009 |
|
| Parent company | 24 | 20 | 23 | 17 |
| – of which, pension expenses |
9 | 9 | ||
| Subsidiaries | 47 | 21 | 48 | 24 |
| – of which, pension expenses |
5 | 7 | ||
| Group, total | 71 | 41 | 71 | 41 |
| – of which, total pension expenses |
14 | 16 | ||
| Sick leave January–December | 2010 |
| Total sick leave as a percentage of total ordinary working time |
1.8 |
|---|---|
| of which, share of long-term sick leave (continuous leave of 60 days or more) |
13.8 |
| Sick leave, women | 1.6 |
| Sick leave, men | 1.9 |
| Sick leave, employees < 30 years | 2.1 |
| Sick leave, employees aged 30–49 | 1.8 |
| Sick leave, employees > 49 years | 1.7 |
| Board 2010 |
Board 2009 |
Senior executives 2010 |
Senior executives 2009 |
|
|---|---|---|---|---|
| Men | 6 | 6 | 5 | 6 |
| Women | 1 | 1 | 2 | 2 |
| Total | 7 | 7 | 7 | 8 |
Senior executives refers to six persons who together with the Chief Executive Offi cer made up senior management in 2010. From 2009 the senior management team consists of the Chief Financial Offi cer (CEO), Executive Vice President and Chief Financial Offi cer (CFO), Director of Communications, Director of Business Development, Director of Properties, Director of Projects and Director of Transactions. 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 senior management, see page 81.
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 2010 provisions of about SEK 6m, which is equivalent to 50 per cent of one base amount per employee, have been made. Other benefi ts refer to company cars, household-related services and health insurance.
Pension expenses refers to the expense recognised in the profi t and loss account 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 for 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 2010 total Directors' fees of SEK 2,420,000 (2,235,000) were paid. Out of this amount, the Chairman of the Board received SEK 375,000 plus a separate fee of SEK 835,000 for assisting the management team on two projects, and the other Directors, excluding the CEO, received a total of SEK 1,210,000 (1,025,000). No other fees or benefi ts were paid to the Board.
| Senior management | Salary/Fee | Other benefi ts |
Pension | Total |
|---|---|---|---|---|
| Chief Executive Offi cer | 2,324 | 151 | 854 | 3,329 |
| Executive Vice President | 1,595 | 88 | 520 | 2,203 |
| Other senior executives | 5,806 | 404 | 1,540 | 7,750 |
In 2010 extra compensation/bonuses of SEK 1,067,000 in total were paid to other senior executives. No other variable or share price-related compensation was paid to senior management.
| The Board of Directors | Fee, Board Director |
Fee, Audit Committee |
Total |
|---|---|---|---|
| Erik Paulsson (Chairman)) | 1,210 | – | 1,210 |
| Göte Dahlin | 185 | 25 | 210 |
| Oscar Engelbert | 185 | – | 185 |
| Märta Josefsson | 185 | 50 | 235 |
| Pär Nuder | 185 | 25 | 210 |
| Svante Paulsson | 185 | – | 185 |
| Mats Qviberg | 185 | – | 185 |
| Total | 2,320 | 100 | 2,420 |
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 | ||||
|---|---|---|---|---|
| 2010 | 2009 | |||
| Maturity: | ||||
| Within 1 year | 290 | 403 | ||
| 1 to 5 years | 1,139 | 1,125 | ||
| Later than 5 years | 304 | 467 | ||
| Residential, garage/parking | 79 | 172 | ||
| Total | 1,811 | 2,167 |
The difference between total rents at 31 December 2010 and income, as stated in the profi t and loss account for 2010, is due to bought/sold properties, renegotiations and changes in occupancy rates in 2010. Contracts relating toresidential premises and garage/parking spaces remain in force until further notice.
| Group | ||
|---|---|---|
| 2010 | 2009 | |
| Operating expenses, maintenance and tenant adaptations | –374 | –435 |
| Property tax | –138 | –130 |
| Ground rent | –34 | –37 |
| VAT expense | –15 | –22 |
| Property/project adm. and lettings | –98 | –105 |
| Total | –659 | –729 |
Note 9 Central administration and marketing
Refers to senior 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 | ||
|---|---|---|
| 2010 | 2009 | |
| Realised changes in value: | ||
| Sale proceeds | 4,350 | 1,234 |
| Book value and expenses | –4,113 | –1,177 |
| 237 | 57 | |
| Unrealised changes in value: | ||
| Changes in value relating to properties owned at 31 Dec 2010 |
829 | –297 |
| Changes in value relating to properties divested during the year |
14 | –13 |
| 843 | –310 | |
| Total realised and unrealised changes in value | 1,080 | –253 |
Fair value and the resulting unrealised changes in value are determined quarterly based on valuations. If a property is sold in quarters 2–4, 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 | |||
|---|---|---|---|
| 2010 | 2009 | ||
| Gain from property sales, full year: | |||
| Sale proceeds | 4,350 | 1,233 | |
| Book value and expenditure (based on value at beginning of year) |
–4,099 | –1,189 | |
| 251 | 44 | ||
| Unrealised changes in value: | |||
| Changes in value relating to existing properties | 829 | –297 | |
| 829 | –297 | ||
| Total realised and unrealised changes in value | 1,080 | –253 | |
| Breakdown between positive and negative results | |||
| Positive | 1,471 | 360 | |
| Negative | –391 | –613 | |
| Total | 1,080 | –253 |
| Group | Parent company | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Dividends | 0 | 0 | 0 | 0 |
| Interest income, Group companies |
– | – | 394 | 404 |
| Interest income, promissory notes | 5 | 6 | 3 | 1 |
| Total | 5 | 6 | 397 | 405 |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | ||
| Interest income | 2 | 4 | 1 | 2 | |
| Total | 2 | 4 | 1 | 2 | |
| Interest expenses | –529 | –570 | –537 | –563 | |
| Total | –529 | –570 | –537 | –563 |
All interest income is attributable to fi nancial assets valued at amortised cost. Interest expenses are mainly attributable to fi nancial liabilities valued at amortised cost.
The loss of SEK 39m (loss: 3) derived from unrealised losses of SEK 6m (profi t: 3) and SEK 10 (0), respectively, on shares in AIK Fotboll AB and Swedish Arena Management AB as well as a realised loss of SEK 23m (loss: 11) on shares in Sveland Sakförsäkringar AB.
| Group | Parent company | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Current tax on profi t for the year | –3 | –100 | – | – |
| Adjustment for current tax from previous years |
– | – | – | – |
| Total current tax | –3 | –100 | – | – |
| Deferred tax | –229 | –155 | 29 | 28 |
| Total tax | –232 | –255 | 29 | 28 |
| Nominal tax (26.3%) on profi t after fi nancial items |
–507 | –179 | 39 | 115 |
| Tax effects of adjustment items | ||||
| – Adjustment for defi cits and temporary differences from previous years |
32 | 11 | –1 | –2 |
| – Dividends from subsidiaries | – | – | – | 184 |
| – Tax-exempt profi t from sale of Group companies/properties |
217 | 49 | – | – |
| – Impairment of shares in subsidiaries |
– | – | – | –261 |
| – Deferred tax attributable to Fabege Storstockholm AB, 1) |
– | –98 | – | – |
| – Defi cit acquired companies | 15 | – | – | – |
| – Other | 11 | –38 | -9 | –8 |
| Total tax | –232 | –255 | 29 | 28 |
1) Tax attributable to the ruling of the Supreme Administrative Court in a case involving Fabege Storstockholm AB 2009.
All properties in Fabege's portfolio are externally valued at least once a year by independent external valuers with recognised qualifi cations. The properties are valued at fair value, i.e. at their estimated market values. The property valuer in 2010 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 valuers. On-site inspections were carried out in all properties on at least one occasion during the period 2008–2010. 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 valuers' 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 2010.
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 8.0 per cent (8.1) and is based on the nominal yield on 5-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 5.9 per cent (6.0).
The market assessments were performed in accordance with guidelines issued by the Swedish Property Index.
| 2.0 |
|---|
| 8.0 |
| 5.9 |
| 4.5 |
| Operations and maintenance | |
|---|---|
| Commercial, SEK/m2 | 338 |
| 2010 | Weighted yield, % |
Change in value after deducting for investments, % |
|
|---|---|---|---|
| Stockholm inner city | 16,215 | 5.5 | 3.4 |
| Solna | 8,333 | 6.3 | 3.1 |
| Hammarby Sjöstad | 1,987 | 6.6 | 4.3 |
| Other markets | 434 | 7.1 | –1.4 |
| 26,969 | 5.9 | 3.3 |
| Group | ||
|---|---|---|
| 2010 | 2009 | |
| Opening fair value | 29,193 | 29,511 |
| Property acquisitions | – | 56 |
| Investments in new builds, extensions and conversions | 940 | 1,082 |
| Changes in value, existing property portfolio | 829 | –297 |
| Changes in value relating to properties divested during the year |
14 | –13 |
| Sales and disposals | –4,007 | –1,146 |
| Closing fair value | 26,969 | 29,193 |
Book/fair value and the resulting unrealised changes in value are determined quarterly based on valuations. If a property is sold in quarters 2–4, 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 last quarter.
| Assessed value of Swedish properties | 13,817 | 14,401 |
|---|---|---|
Fabege has mortgaged certain properties, see also Note 32 Assets pledged as security and contingent liabilities.
| Group | Parent company | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Cost at beginning of year | 19 | 19 | 4 | 4 |
| Investments | 4 | 0 | 5 | 0 |
| Sales and disposals | –2 | 0 | –2 | 0 |
| Cost at end of year | 21 | 19 | 7 | 4 |
| Opening depreciation | –17 | –16 | –4 | –3 |
| Sales and disposals | 0 | 0 | 0 | 0 |
| Depreciation charge for the year | –1 | –1 | 0 | –1 |
| Closing accumulated depreciation |
–18 | –17 | –4 | –4 |
| Book value | 3 | 2 | 3 | 0 |
The Group has operating leases to a small extent for cars and other technical equipment. All agreements are subject to normal market terms.
| Group | Parent company | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Cost at beginning of year | 307 | 21 | – | – |
| Acquisition/contribution/loss | 136 | 286 | – | – |
| Sales | – | 0 | – | – |
| Cost at end of year | 443 | 307 | – | – |
| Book value | 443 | 307 | – | – |
| Name/Org.no. | Regd. offi ce | Capital share, % 1) |
Book value |
|---|---|---|---|
| Järla Sjö Exploatering AB | |||
| 556615-3952 | Stockholm | 33.3 | –2 |
| Råsta Holding AB 556742-6761 | Stockholm | 25.0 | 46 |
| Råsta Administration AB 556702-8682 |
Stockholm | 20.0 | 0 |
| Projektbolaget Oscarsborg AB2) 556786-3419 |
Stockholm | 50.0 | 0 |
| TCL Sarl 199824012273) | Luxemburg | 45.0 | 315 |
| Nyckeln 0328 SE 517100-00694) | Stockholm | 30.0 | 84 |
| 443 |
1) Applies also to the share of votes for the total number of shares.
2) The project company Oscarsborg AB is newly formed in 2010 and was established by Fabege and Oscar Properties Invest AB for the purpose of acquiring existing properties for new construction or conversion into fl ats and then to transfer them to tenant-owner associations. During 2010, Fabege transferred two project properties to the Oscarsborg AB project company. The holding in Oscarsborg is long-term for Fabege, but is considered a fi nancial investment rather than a long-term holding in properties since the purpose of the company's operations is to sell projects to tenantowner associations. Since the investment is considered a fi nancial investment, Fabege has chosen to recognise the holding in accordance with the equity method.
3) Fabege's holding in Fastighets AB Tornet is indirectly owned through TCL Sarl.
4) Fabege conducts fi nancial operations in an associated company. The operations comprise funding services conducted by means of borrowing in capital markets and lending services through the provision of cash loans. During 2010, the fi nance market improved signifi cantly and the company intensifi ed work on its borrowing operations. Accordingly, the Board decided to raise so-called MTN loans on the bond market during 2011. The terms and conditions are currently being formulated.
| Group | ||
|---|---|---|
| 2010 | 2009 | |
| 160 | – | |
| –54 | – | |
| 327 | –1 | |
| 11,039 | 1,812 | |
| 541 | 400 | |
| 11,580 | 2,212 | |
| 9,084 | 1,531 | |
| – | 89 | |
| 2,496 | 592 | |
| 11,580 | 2,212 | |
Receivables from associated companies pertain in their entirety to receivables from Projektbolaget Oscarsborg AB on which interest is accrued in line with market terms.
Joint venture refers to a company in which Fabege exercises a controlling infl uence together with another party.
| Owned by subsidiaries: | Regd. offi ce | Capital share, % 1) |
|---|---|---|
| Centralbadet HB 916609-6017 | Stockholm | 50 |
| Värtan Fastigheter KB 969601-0793 | Stockholm | 50 |
1) Applies also to the share of votes for the total number of shares.
Through companies Fabege owns properties that are run as joint ventures. In these companies Fabege controls its share of future earnings through its share of the assets and liabilities of the jointly owned company. The net asset value is best expressed by recognising Fabege's share of the assets, liabilities, income and expenses of the company in the consolidated fi nancial statements item by item. In the consolidated fi nancial statements proportionate consolidation (item by item) is therefore used for these joint ventures.
Islandet 3 Stralsund 1
The following table shows the impact of these joint ventures on the Fabege Group.
| Group | |||
|---|---|---|---|
| 2010 | 2009 | ||
| Profi t and loss account | |||
| Rental income | 15 | 20 | |
| Net operating income | 8 | 9 | |
| Profi t for the year | 12 | 5 | |
| Balance sheet | |||
| Fixed assets | 122 | 501 | |
| Current assets | 2 | 7 | |
| Total assets | 124 | 508 | |
| Shareholders' equity | 94 | 214 | |
| Other liabilities | 30 | 294 | |
| Total equity and liabilities | 124 | 508 | |
| Average no. of employees | – | – |
During the year, Fabege divested its 50-per cent participation in the company Zeolit Exploaterings AB.
| Group | Parent company | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Cost at beginning of year | 122 | 82 | 39 | 63 |
| Acquisitions/Investments | 77 | 65 | 4 | 0 |
| Changes in value | –16 | –8 | –6 | –8 |
| Sales | –31 | –17 | –31 | –16 |
| Cost at end of year | 152 | 122 | 6 | 39 |
| Book value | 152 | 122 | 6 | 39 |
| Shareholding | Book value |
|---|---|
| Parent company | |
| AIK Fotboll AB – Fabege's capital share is 18.5 per cent and the number of shares 1,554,865 |
4 |
| AIK Hockey AB – Fabege's capital share is 2 per cent and the number of shares 41,000 |
0 |
| Interests in tenant-owner's associations | 1 |
| Subsidiaries | |
| Arenabolaget i Solna AB – Fabege's capital share is 16.7 per cent and the number of shares 167 |
148 |
| Swedish Arena Management AB – Fabege's capital share is 16.7 per cent and the number of shares 167 |
–1 |
| 152 |
During the year, Fabege divested its shares in Svelands Sakförsäkring AB; also refer to Note 13.
| Group | Parent company | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Maturity: | ||||
| 1 to 5 years after balance sheet date |
38 | 92 | 33 | 188 |
| later than 5 years from balance sheet date |
– | – | – | – |
| Total | 38 | 92 | 33 | 188 |
Group
Other long-term receivables refers to promissory note receivables arising from the sale of properties. During the year a provision of SEK 63m (22) was recognised.
Parent company
In the parent company long-term receivables from the Group's joint ventures have been included as associated companies. No impairment losses have been recognised.
| Group | |||
|---|---|---|---|
| Age structure of overdue trade receivables | 2010 | 2009 | |
| 0 – 30 days | 15 | 13 | |
| 31 – 60 days | 0 | 2 | |
| 61 – 90 days | 1 | 0 | |
| > 90 days | 12 | 21 | |
| Of which, provisions | –10 | –17 | |
| Total | 18 | 19 |
In the consolidated fi nancial statements the item includes sale proceeds of SEK 1,360m (479) for properties that have been sold but not yet vacated and promissory notes maturing within one year of SEK 12m (12). Promissory notes have been written down by SEK 0m (15). Sales proceeds were settled in January 2011.
| Outstanding shares |
Registered shares | |
|---|---|---|
| No. of shares at beginning of year | 164,391,572 | 169,320,972 |
| Cancellation of repurchased shares | –3,929,400 | |
| Repurchase of treasury shares | –1,411,488 | |
| Total | 162,980,084 | 165,391,572 |
All shares carry equal voting rights, one vote per share. The quota 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 | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Available credit limit | 120 | 120 | 120 | 120 |
| Unused share | –69 | –120 | –69 | –120 |
| Unused share | 51 | 0 | 51 | 0 |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| Interest-bearing liabilities | 2010 | 2009 | 2010 | 2009 | |
| Maturity up to 1 year from balance-sheet date |
5,799 | 2,855 | 5,799 | 2,855 | |
| Maturity 1 to 5 years from balance sheet date |
7,867 | 12,019 | 7,867 | 13,458 | |
| Maturity later than 5 years from balance sheet date |
2,980 | 4,235 | 2,980 | 2,540 | |
| Total | 16,646 | 19,109 | 16,646 | 18,853 |
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 | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Short-term excess value | – | 1 | – | 1 |
| Long-term excess value | – | – | – | – |
| Total excess value | – | 1 | – | 1 |
| Short-term defi cit | –3 | – | –3 | – |
| Long-term defi cit | –264 | –374 | –264 | –374 |
| Total defi cit | –267 | –374 | –267 | –374 |
| Total | –267 | –373 | –267 | –373 |
The Group does not apply hedge accounting, see "Financial instruments" in Note 2 Accounting principles. Derivatives are classifi ed as interest-bearing liabilities in the balance sheet and valued at fair value in compliance with level 2, IFRS 7, Section 27a. With the exception of the closable swaps and performance swaps, valued in accordance with level 3, IFRS 7. See also Note 2, page 62. Changes in value are recognised in the profi t and loss account under a separate item, Changes in value, fi xed income derivatives. As of 2006 IAS 39 has been applied also in the parent company.
| Group | Parent company | |||
|---|---|---|---|---|
| IFRS 7, level 3 | 2010 | 2009 | 2010 | 2009 |
| Acquisition value at beginning of year |
–374 | –466 | –374 | –466 |
| Acquisitions/Investments | – | – | – | – |
| Changes in value | 107 | 92 | 107 | 92 |
| Matured | – | – | – | – |
| Acquisition value at end of year | –267 | –374 | –267 | –374 |
| Book value | –267 | –374 | –267 | –374 |
The change in value of SEK 107m (92) was attributable in 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 | 2010 | 2009 | 2010 | 2009 |
| Deferred tax has been calculated on the basis of: |
||||
| – Tax losses | –1,104 | –1,131 | –33 | –33 |
| – Difference between the carrying amounts and tax bases of properties |
1,321 | 1,126 | – | – |
| – Derivatives | –70 | –98 | –70 | –98 |
| – Other | 5 | 4 | – | – |
| Net deferred tax asset/liability | 152 | –99 | –103 | –131 |
Negative amounts above refer to deferred tax assets.
Total valued tax losses in the Group, which have been taken into account in calculating deferred tax, are approximately SEK 4.2bn (4.3). See also the section on tax in the Directors' Report, page 50.
Out of total provisions of SEK 271m (439), SEK 146m (221) refers to obligations relating to rental guarantees for divested properties. Other amounts refers to stamp duties on properties that are payable upon the sale of a property, SEK 43m (41).
| Rental guarantees |
Other provisions |
Provisions for pensions |
Total | |
|---|---|---|---|---|
| At 1 Jan 2010 | 221 | 137 | 81 | 439 |
| Provisions for the year | 12 | 2 | 1 | 15 |
| Used/paid during the year | –87 | –96 | – | –183 |
| At 31 Dec 2010 | 146 | 43 | 82 | 271 |
| 146 | 43 | 82 | 271 | |
|---|---|---|---|---|
| Short-term component | 80 | – | – | 80 |
| Long-term component | 66 | 43 | 82 | 191 |
| Provisions comprise |
The rental guarantees have remaining maturities of up to 3 years. 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 reported 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 2010 are approximately SEK 3m (3). Alecta's surplus can be distributed to the policy owners and/or insured parties. At year-end 2009 Alecta's surplus, as expressed by the "collective funding ratio", was 143 per cent (141). 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 ned benefi t pension plan. However, no new payments are being made to PRI. Defi ned benefi 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 the profi t and loss account to the extent that they are outside the band.
The parent company's pension provision refers to a PRI liability.
In 2009 the item referred primarily to a SEK 135m liability to associated companies.
| Group | Parent company | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Advance payment of rents | 280 | 307 | – | – |
| Accrued interest expenses | 39 | 45 | 39 | 37 |
| Other provisions | 147 | 106 | 21 | 26 |
| Total | 466 | 458 | 60 | 63 |
| Group | Parent company | |||
|---|---|---|---|---|
| Assets pledged as security | 2010 | 2009 | 2010 | 2009 |
| Property mortgages | 13,404 | 14,649 | – | – |
| Shares in subsidiaries | 1,727 | 1,585 | – | – |
| Promissory notes | – | – | 12,627 | 13,317 |
| Total | 15,131 | 16,234 | 12,627 | 13,317 |
| Contingent liabilities | ||||
| Guarantees on behalf of subsidiaries |
– | – | 3,019 | 300 |
| Ongoing tax cases | 2,038 | 1,541 | – | – |
| Guarantees and undertakings for the benefi t of associated companies |
294 | 398 | 225 | 256 |
| Other provisions | 188 | 233 | 208 | 65 |
| Total | 2,520 | 2,172 | 3,452 | 621 |
The Group has pension commitments of SEK 41m (42), which are secured through a pension fund. The collective funding ratio (see the defi nition in Note 29) for the pension fund is 128 per cent (125). 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 53.
Interest paid during the year in the Group was SEK 542m (590), of which SEK 13m (20) has been capitalised in the investment business. No capitalisation of interest has been made in the parent company.
| Group | Parent company | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Change acc. to balance sheet | –1,097 | –287 | 34 | –9 |
| Change in assets and liabilities in respect of interest income, dividends and interest expenses |
–2 | –1 | –2 | –1 |
| Total | –1,099 | –288 | 32 | –10 |
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 69m (120).
Erik Paulsson, with his family and companies, holds controlling infl uence in Hansan AB. In 2010, consulting services totalling SEK 3m (1) were procured.
In 2010, Fabege earned income of SEK 0.7m (1.0) from joint ventures. In February 2010, Fabege transferred most of its residential-property portfolio to the property company Tornet. The portfolio comprises about 96,000 sqm of residential space worth approximately SEK 680m. The transaction was conducted at market value and entailed no capital gains.
In autumn 2010, Fabege also transferred two properties to Projektbolaget Oscarsborg AB at a value of SEK 315m. The transactions were conducted at market value and entailed no capital gains. Receivables with Projektbolaget Oscarsborg AB totalled SEK 81m (0) at year-end.
The dividends that were adopted at Annual General Meetings and paid out in 2010 and 2009 were SEK 2.00 per share and SEK 2.00 per share, respectively. At the AGM on 30 March 2011 the Board will propose a dividend for 2010 of SEK 3.00 per share, resulting in a total dividend payment of SEK 488,940,252. The dividend amount is based on the total number of outstanding shares at 31 December 2010, i.e. 162,980,084 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 2011.
The Annual General Meeting will be held on 30 March 2011.
The parent company's income consists primarily of inter-company invoicing.
| The following fees have been paid to the company's auditors: | ||
|---|---|---|
| -------------------------------------------------------------- | -- | -- |
Fees and expenses, SEK '000
| Parent company | ||
|---|---|---|
| 2010 | 2009 | |
| Employee expenses | –50 | –48 |
| Administration and running costs | –139 | –125 |
| Depreciation of equipment | –1 | –1 |
| Total | –190 | –174 |
| Parent company | ||
|---|---|---|
| 2010 | 2009 | |
| Impairment of shares in subsidiaries | – | –991 |
| Anticipated dividends on shares and interests | – | 700 |
| Total | – | –291 |
| Parent company | |||
|---|---|---|---|
| 2010 | 2009 | ||
| Cost at beginning of year | 14,319 | 14,987 | |
| Acquisitions and additions | – | 79 | |
| Sales | – | –747 | |
| Cost at end of year | 14,319 | 14,319 | |
| Opening depreciation | –991 | 0 | |
| Impairment | – | –991 | |
| Book value | –991 | –991 | |
| Closing accumulated depreciation | 13,328 | 13,328 |
| Name/Corporate identity no. | Regd. offi ce |
Capital share, % 1) |
Book value |
|---|---|---|---|
| Hilab Holding Stockholm AB 556670-7120 | Stockholm | 100 10,126 | |
| LRT Holding Company AB 556647-7294 | Stockholm | 100 | 3,126 |
| Fabege Holding Solna 556721-5289 | Stockholm | 100 | 0 |
| Fabege V12 AB 556747-0561 | Stockholm | 100 | 76 |
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 223 (253) companies.
13,328
| Group | Parent company | |||
|---|---|---|---|---|
| 2010 | 2009 | 2010 | 2009 | |
| Deloitte | ||||
| audit assignments | 3,355 | 3,432 | 3,355 | 3,432 |
| other auditing activities | 379 | 332 | 379 | 332 |
| tax advisory services | 770 | 510 | 770 | 510 |
| other services | 78 | 173 | 78 | 173 |
| 4,582 | 4,447 | 4,582 | 4,447 |
In January, Fabege extended a credit limit of SEK 2bn by fi ve years to 2016, while credit facilities totalling SEK 1bn were terminated.
Effective 4 January, the Bocken 51 property at Lästmakargatan was sold to the Lästmakarpalatset Tenant Owners Association. Since the selling price of SEK 139m corresponded to the latest market valuation as of 31 December 2010, the transaction did not give rise to a capital gain.
Following the sale of the Bocken 51 property and the settlement on 12 January of the outstanding sales consideration for the Profi transaction, the equity ratio rose to 40 per cent and the loan-to-value ratio declined to 57 per cent.
Fabege is a Swedish public limitedliability 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. The Code is based on the principle of "comply or explain". The reasons for Fabege's departures from the Code are explained in greater detail at the end of this report.
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, 2,411,488 are treasury shares, representing 1.5 per cent of the total number of shares. In Fabege all shares carry the same voting rights at the AGM, 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 indirect or direct shareholdings in the company as of 31 December 2010 represent one tenth or more of the votes for all shares in the company:
| Shareholding | Share of votes % |
|---|---|
| Brinova | 14,3 |
Fabege's ownership structure is described on page 85.
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. Th e full text of Fabege's Articles of Association is available at www.fabege.se.
Th e Annual General Meeting is the company's highest decision-making body. Shareholders who would like to participate in the business of the Annual General Meeting must be registered in the transcript of the entire share register pertaining to the conditions prevailing fi ve days prior to the Annual General Meeting 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 Annual General Meeting.
Th e 2010 Annual General Meeting was held in Stockholm on 24 March 2010. Erik Paulsson was elected to chair the meeting. Th e AGM was attended by shareholders holding a total of 59.0m shares, representing 35.9 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 Göte Dahlin, Christian Hermelin, Sven-Åke Johansson, Märtha Josefsson, Mats Qviberg, Erik Paulsson and Svante Paulsson to the Board. Oscar
ORGANISATION
Engelbert and Pär Nuder were elected to the Board as new Directors. Erik Paulsson was elected Chairman. Th e AGM resolved that Directors' remuneration should remain unchanged in 2010.
Cash dividend (proposal of the Board) Th e dividend was fi xed at SEK 2.00 and the record date was set at 29 March 2010.
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.
Guidelines were resolved on for compensation to management. Th ese guidelines are presented in their entirely on page 66.
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.
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 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.
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 30 September 2010 a Nominating Committee was announced that represents about 30.7 per cent of the votes in Fabege. Th e Nominating Committee consists of the following members: Anders Silverbåge (Brinova Fastigheter AB), Erik Törnberg (Investment AB Öresund), Gustaf Colliander (Cohen & Steers) and Th omas Ehlin (Nordea fonder).
Th e Nominating Committee has held four 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. It has also studied the company's strategy, risk management and control functions. 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's report on its activities and proposals to the 2011 AGM are available on the company's website. Th e Committee's proposals are also described in the notice for the 2011 AGM.
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.
Eight Directors were elected to the Board at the 2010 AGM. Th e AGM also elected Erik Paulsson as Chairman of the Board. Sven-Åke Johansson was appointed Deputy Chairman at the constituent Board meeting. Fabege's Chief Financial Offi cer, Åsa Bergström, acts as the Board's secretary. Up to the 2010 Annual General Meeting, the Board of Directors comprised seven members, since Arne Berggren, who was elected at the 2009 Annual General Meeting, stepped down from his seat in April 2009.
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. Collectively, the members of the Board have signifi cant personal shareholdings in Fabege, directly or indirectly. Fabege's Board meets the requirements on independent Directors provided for in the Code.
Th e Nominating Committee proposes reelecting Göta Dahlin, Oscar Engelbert, Christian Hermelin, Märtha Josefsson, Pär Nuder, Erik Paulsson, Svante Paulsson and Mats Qviberg, and electing Eva Eriksson to the Board. Accordingly, the Nomination Committee proposes that the number of Board members be increased by one to a maximum of nine members. Out of the proposed Directors, Erik Paulsson is to be regarded as dependent in relation to the company, the Group management and in relation to major shareholders, Svante Paulsson as dependent in relation to major shareholders, Oscar Engelbert as dependant in relation to the company, and the CEO, Christian Hermelin, as dependent in relation to the company and the Group management. Th e other proposed Directors are, according to the defi nitions contained in the Code, independent in relation to the company, the Group management and major shareholders.
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:
In 2010, the Board held six ordinary meetings and a total of twelve meetings, including one constituent meeting, one extra meeting and four per capsulam 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, as follows:
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 addressed at the immediate following Board meeting. However, Board members are always given the opportunity to read and submit opinions on all reports before they are published. In 2010, the Board made decisions on several major transactions and investments in the company's existing property portfolio. In 2010 Fabege sold 54 properties for SEK 4,350m. Decisions were made on investments of SEK 600m relating to the development and improvement of properties in the company's existing portfolio. 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 2011.
Th e Directors are paid Directors' fees in accordance with the resolutions of the Annual General Meeting. For 2010, total fees of SEK 2,235,000 were paid, of which the Chairman received SEK 375,000 plus extra remuneration of SEK 835,000 for project work. Th e other Directors received SEK 185,000 and SEK 100,000 for work on the Board's Audit Committee, of which the chairman received SEK 50,000 and the other members SEK 25,000.
Information on Directors' attendance at meetings is provided in the table below. Th e table also shows which Directors are members of the Audit Committee.
During the period twelve Board meetings and four meetings of the Audit Committee were held.
| Board Directors |
Audit Committee |
|
|---|---|---|
| Erik Paulsson, Chairman | 12 | |
| Göte Dahlin, Director | 12 | 4 |
| Oscar Engelbert 2) | 10 | |
| Christian Hermelin, Director | 12 | |
| Sven-Åke Johansson 1) | 2 | 1 |
| Märtha Josefsson, Director | 11 | 4 |
| Pär Nuder 2) | 9 | 3 |
| Svante Paulsson,Director | 12 | |
| Mats Qviberg, Director | 12 |
1) Stepped down at the 2010 AGM.
2) Assumed seat on the Board at the 2010 AGM.
Audit Committee from among its own members consisting of Märta Josefsson (Chairman), Göte Dahlin and Pär Nuder. Sven-Åke Johansson, who was formerly the Committee's Chairman, stepped down in conjunction with the 2010 Annual General Meeting. 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 principles 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 processes 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.
In 2010, four meetings of the Audit Committee were held. During the year a lot of emphasis continued to be placed on the company's internal control system. During the year, the Audit Committee addressed areas such as the Group's ongoing tax cases, a review of the derivative portfolio, review of segment reporting and Fabege's commitment to the development of Arenastaden. 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.
In accordance with the principles of compensation and other terms of employment for management adopted by the AGM, the Board has adopted a decision on remuneration and other terms of employment for the Chief Executive Offi cer. 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. During the year the Board reviewed compliance with the principles of remuneration for senior executives.
Remuneration and other benefi ts and terms of employment for the CEO and
management are described in Note 6 on page 66. Th e company's principles of remuneration and terms of employment will also be presented at the 2011 AGM.
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:
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:
In 2010, the Group management consisted of six persons, in addition to the CEO: Chief Financial Offi cer Director of Communications Director of Properties Director of Projects & Development Director of Business Development Director of Transactions
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.
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 capital-intensive 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 2010, the Board performed its annual review and adopted rules of procedure for the Board, rules of procedure for the Audit Committee and a set of ethical guidelines governing conduct at the company.
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 principles and instructions for the closing of the accounts and authorisation of payments. In 2010, Fabege implemented a comprehensive review 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. At year-end, the company initiated an eff ort to review the company's Code of Conduct and ethical guidelines aimed at having Fabege join the UN Global Compact.
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:
Fabege conducts annual reviews and evaluations of risk areas for the purpose of identifying and managing risks in consultation between management, the Audit Committee, the company's auditors and other parties.
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-to-date 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 2010, all of the company's critical processes were subject to an internal review. In addition to the external audit performed in 2010, the company also performed an internal assessment of compliance and controls in critical processes.
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.
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 Issuerss. Th e ambition is to improve knowledge of and build confi dence in the company among investors, analysts and other stakeholders. In 2010, a comprehensive eff ort was implemented to improve information and access to information on the external website.
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 the senior management team.
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.
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 examining the content of and methods used in preparing fi nancial reports, the Audit Committee has studied the way in which the more detailed and Corporate Governance Report 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, when required, 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 any problems and proposals 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 2010, the Audit Committee has not found 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, work began in 2009 on internally evaluating critical processes in the company. 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.
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: Anticimex, Black Earth Farming, Connecta, Diligentia, o2 Vind, and Skandia Liv. 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 auditors reported their observations and simultaneously presented their views on the quality of internal controls in Fabege at the Board meeting in February 2011. Th e auditors have participated in and presented reports at all meetings of the Audit Committee (4 in 2010). Reports were also presented to management in 2010. Fees paid to the company's auditors are described in Note 43 on page 73.
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.
Stockholm, 25 February 2011
Th e Board of Directors
AUDITOR Svante Forsberg Authorised Public accountant, Deloitte. Born 1952. Auditor at Fabege since 2005. Other audit assignments: Alliance Oil, Anticimex, Black Earth Farming, Connecta, Diligentia, Skandia Liv and Swedbank.
Born 1942. Chairman of the board since 2007 och Director since 1998. Other directorships: Chairman of the Board in Backahill AB, Diös Fastigheter AB, SkiStar AB and Wihlborgs Fastigheter AB. Director of Brinova Fastigheter AB and Nolato AB.
Education: Lower secondary school. Business manager since 1959. Shareholding: 66,596 and via Brinova.
Pär Nuder 1) Born 1963. Director since 2010. Other directorships: Chairman of Sundbybergs Stadshus AB. Director of Orrefors Kosta Boda AB and Swedegas AB. Senior Director Albright Stonebridge Group. Education: LL.M.
Shareholding: 0.
Märtha Josefsson 1) Born 1947. Director since 2005. Other directorships: Chairman of the Board of Svenska Lärarfonder AB. Director of Luxonen S.A, Investment AB Öresund, Opus Prodox AB, Second AP-fonden and Skandia Fonder AB. Education: Bachelor's degree in Economics. Shareholding: 70,000.
Göte Dahlin 1) Born 1941. Director since 2000.
Science.
Other directorships: Deputy Chairman of RBS Nordisk Renting AB, Director of Rezidor Hotel Group AB and Svensk Inredning Viking AB. Education: B.Sc. in Natural
Shareholding: 15,000 through personal endowment policy.
Christian Hermelin 3) Born 1964. Director since 2007. CEO of Fabege AB. Employed since: 1998 and in current position since 2007. Education: Bachelor's degree in Administration. Shareholding: 71,400.
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, AB Cernelle and Ängelholms Näringsliv AB. Education: Lower secondary school, High School in the US. Shareholding: 162,318.
Oscar Engelbert 2) Born 1976. Director since 2010. Other directorships: CEO of Oscar Properties AB. Director of Bonniers konsthall. Education: Secondary School, Boston University and Economics for Entrepreneurs. Shareholding: 0.
Mats Qviberg 1) Born 1953. Director since 2001. Other directorships: Chairman of the Board of Bilia AB. Deputy Chairman of the Board of Investment AB Öresund. Director of SkiStar AB. Education: Bachelor's degree in Business Administration. Shareholding: 2,890,036.
1) In accordance with the Swedish Corporate Governance Code, independent in relation to the company, the Group management and major shareholders.
Shareholdings on 31 December 2010.
Svante Forsberg, Authorised Public accountant, Deloitte. See page 79.
Christian Hermelin Chief Executive Offi cer. Born 1964. Employed since 1998, in current position since 2007. Previous employment: Project Manager, Fastighets AB Storheden. Education: Bachelor's degree in Administration. Shareholding: 71,400.
Åsa Bergström Deputy CEO, Chief Financial
Offi cer. Born 1964. Employed 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..
Director of Communications. Born 1963. Employed since 2009. Previous employment: Director of Internal & Corporate Relations,
Shareholding: 21,800.
Annette Kaunitz
Swedish Match AB. Education: B.Sc. and DIHM. Shareholding: 0.
Klaus Hansen Vikström Director of Business Development. Born 1953. Employed since 2006, in current position since 2009. Previous employment: Managing Director of Stockholm Modecenter, own business in clothing industry, Managing Director and founder of Brubaker AS. Education: Diploma in Specialized
Shareholding: 20,000.
Business Studies.
Project Manager. Born 1970. Employed since 2001, in current position since 2010. Previous employment: Platzer Bygg, Peab och JM Education: Engineer. Shareholding: 0.
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: 30,000.
Business Development. Born 1961. Employed since 2004, in current position since 2007. Previous employment: Director of Project Development at Drott, Stockholm Director at Centralkonsult, Works Manager at Reinhold Bygg AB. Education: M.Sc. in Engineering. Shareholding: 20,450.
Shareholdings on 31 December 2010.
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 2011
Erik Paulsson Chairman
Göte Dahlin Oscar Engelbert Märtha Josefsson
Pär Nuder Svante Paulsson Mats Qviberg
Christian Hermelin Chief Executive Offi cer
We presented our audit report on 25 February 2011 Deloitte AB
Svante Forsberg Authorised Public Accountant
To the Annual General Meeting of Fabege AB (publ) Company Registration Number 556049-1523
We have audited the Annual Report and the consolidated fi nancial statements – with the exception of the Corporate Governance Report on pages 74–79 – the accounts and the administration of the Board of Directors and the CEO of Fabege AB for the fi nancial year from 1 January 2010 to 31 December 2010. Th e Company's Annual Report and consolidated fi nancial statements are included in the printed version of this document on pages 50–83. Th e Board of Directors and the CEO are responsible for these accounts and the administration of the Company, and for ensuring that the Annual Accounts Act is applied when compiling the Annual Report, and that the International Financial Reporting Standards (IFRS) as adopted by the EU and the Annual Accounts Act are applied for compiling the consolidated fi nancial statements. Our responsibility is to express an opinion on the Annual Report, the consolidated fi nancial statements and the administration based on our audit.
We conducted our audit in accordance with Generally Accepted Auditing Standards in Sweden. Th ose standards require that we plan and perform the audit to obtain reasonable, but not absolute assurance that the Annual Report and the consolidated fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting policies used and their application by the Board of Directors and the CEO, evaluating the material estimations made by the Board of Directors and CEO when compiling the Annual Report and the consolidated fi nancial statements, and evaluating the overall presentation of information in the Annual Report and the consolidated fi nancial statements. We examined signifi cant decisions, actions taken and circumstances of the Company in order to be able to determine the possible liability to the Company of any Board member or the CEO or whether they have in some other way acted in contravention of the Companies Act, the Annual Accounts Act
or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below.
Th e Annual Report has been prepared in accordance with the Annual Accounts Act and provides a true and fair picture of the Company's earnings and fi nancial position in accordance with Generally Accepted Accounting Standards in Sweden. Th e consolidated fi nancial statements have been compiled in compliance with the International Financial Reporting Standards (IFRS) as adopted by the EU and the Annual Accounts Act and provide an accurate impression of the Group's earnings and fi nancial position. Our statement does not encompass the Corporate Governance Report on pages 74–79. Th e Administration Report is compatible with the other parts of the Annual Report and consolidated fi nancial statements.
We recommend that the Annual General Meeting adopt the income statements and balance sheets of the Parent Company and the Group, that the profi t in the Parent Company be dealt with in accordance with the proposal in the Report of the Board of Directors and that the members of the Board and the CEO be discharged from liability for the fi nancial year.
Th e Board of Directors and CEO are responsible for the Corporate Governance Report on pages 74–79 and for ensuring that it has been prepared in accordance with the Annual Accounts Act.
As the basis for our statement on whether the Corporate Governance Report was prepared in accordance and complies with the other elements of the Annual Accounts Act, we have read the Corporate Governance Report and assessed its statutory content based on our knowledge of the company.
A Corporate Governance Report has been prepared pursuant to and its statutory information is compliant with the Annual Accounts Act and the other elements of the consolidated fi nancial statements.
Stockholm, 25 February 2011
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. The company had a market capitalisation at year-end of SEK 12.9bn and a net asset value of approximately SEK 11.3bn.
Dividend per share and direct yield
Total yield 2006–2010
In 2010, the property sector outperformed the stock market as a whole. Th e Fabege share rose 74 per cent from SEK 45.20 to SEK 78.55, while the property index (SX Real Estate) was up 41 per cent and the Nasdaq OMX Stockholm increased 23 per cent.
As a result of the EU's MiFiD directive, shares may be traded in marketplaces other than that in which they are listed. Th e trend is that an increasingly greater portion of Swedish shares are being traded outside Stockholm. Th is is particularly noticeable for the most traded shares of the companies on the Large-Cap list.
In 2010, Fabege's shares were traded in more than ten market places. However, trading on the Nasdaq OMX Stockholm Nordic Exchange still accounted for most of the trading of the Fabege share, and in 2010, 62 per cent (84) of the total share turnover took place there.
During the year, a total of 297,000,000 (374,000,000) Fabege shares were traded, of which 185,000,000 (293,000,000) were traded on the Nasdaq OMX Stockholm
The largest listed property companies
Nordic Exchange. Th e total value of the traded shares was SEK 15.6bn (13.5), of which SEK 9.7bn (10.9) was traded in Stockholm. Th e average turnover rate for Fabege shares was 182 per cent (227). Th e average turnover rate on the Nasdaq OMX Stockholm Nordic Exchange declined for the second consecutive year, amounting to 95 per cent (119). On an average trading day, 1,173,000
Fabege shares (1,489,000) were traded in 1,134 transactions (866).
Th e total return on Fabege's shares, including reinvested dividends of SEK 2.00 per share, was 81 per cent. At year-end, the company had a market capitalisation of about SEK 12.9bn. Th e lowest price paid in 2010 was SEK 41.00, on 8 June, and the highest price paid was SEK 78.55, on 30 December.
Fabege's share capital is SEK 5,097m, represented by 165,391,572 shares (169,320,972). All shares carry the same voting rights and entitle the holder to the same share of the company's capital.
Th e 2010 AGM decided to authorise the Board of Directors to buy back shares during the period leading up to the 2011 AGM. Acquisitions may be made by
purchase 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, 1,411,488 shares (0) were repurchased at an average price of SEK 43.04. Aft er the cancellation of 3,929,400 shares in April 2010, Fabege's total holding of treasury shares was 2,411,488, or 1.5 per cent of the total number of registered shares.
On 31 December 2010 Fabege had 33,792 shareholders (35,530). Th e largest shareholder was Brinova which held 14.3 per cent of the total number of outstanding shares, followed by Investment AB Öresund which held 6.6 per cent and Black-Rock funds which held 5.5 per cent. Th e 15 largest owners controlled 55.5 per cent of the total number of outstanding shares.
| Size of shareholding | No. of share holders |
Share of no. of shareholders, % |
No. of shares | Share of capital and votes, % |
|---|---|---|---|---|
| 0–500 | 22,455 | 66.4 | 4,329,493 | 2.7 |
| 501–1,000 | 5,273 | 15.6 | 4,109,609 | 2.5 |
| 1,001–5,000 | 4,817 | 14.3 | 10,501,437 | 6.5 |
| 5,001–10,000 | 615 | 1.8 | 4,434,733 | 2.7 |
| 10,001–100,000 | 484 | 1.4 | 13,900,561 | 8.5 |
| 100,001–1,000,000 | 116 | 0.3 | 40,630,826 | 24.9 |
| 1,000,001– | 32 | 0.2 | 87,484,913 | 52.2 |
| Total | 33,792 | 100.0 | 165,391,572 | 100.0 |
| Country | 2010 | 2009 | 2008 |
|---|---|---|---|
| Sweden | 67.6 | 70.2 | 69.9 |
| USA | 17.3 | 5.7 | 10.4 |
| UK | 2.3 | 9.9 | 5.6 |
| Other countries | 12.8 | 14.2 | 14.1 |
| Largest shareholders, 31 Dec 2010 |
No. of shares |
Shares of capital and votes, % |
|---|---|---|
| Brinova AB | 23,291,092 | 14.3 |
| Investment AB Öresund | 10,746,597 | 6.6 |
| BlackRock funds | 8,938,454 | 5.5 |
| Cohen & Steers funds | 8,377,466 | 5.1 |
| SEB funds | 5,694,059 | 3.5 |
| Nordea funds | 5,634,243 | 3.5 |
| Länsförsäkringar funds | 5,510,248 | 3.4 |
| Carnegie funds | 4,390,100 | 2.7 |
| Swedbank Robur funds | 4,334,381 | 2.6 |
| Qviberg, Mats and family | 2,890,036 | 1.8 |
| SHB funds | 2,572,209 | 1.6 |
| Government of Norway | 2,514,557 | 1.5 |
| Second AP fund | 1,910,679 | 1.2 |
| ENA City AB | 1,880,000 | 1.2 |
| AMF Försäkring & Fonder | 1,630,000 | 1.0 |
| Other foreign shareholders | 28,695,564 | 17.6 |
| Other shareholders | 43,970,399 | 26.9 |
| Total no. of outstanding shares |
162,980,084 | 100.0 |
| Treasury shares | 2,411,488 | |
| Total no. of shares | 165,391,572 | |
Source: SIS Ägarservice
Foreign owners held 29.3 per cent of the share capital. Of the portion held by Swedish investors, 70.7 per cent of the share capital, institutional owners held 32.1 per cent, equity funds 17.9 per cent and Swedish private investors 20.7 per cent.
Equity per share at 31 December 2010, was SEK 69 (61). Net asset value per share excluding deferred tax on fair value adjustments to properties was SEK 77 (67). At year-end, the share price thus represented 101 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 199m, or SEK 1.22 per share. See Sensitivity analysis, property value on page 52.
Under its dividend policy, Fabege aims to pay a dividend to its shareholders comprising that part of the company's profi t which is 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 (2.00) be paid to the shareholders. Th e dividend represents 29 per cent of earnings per share and slightly more than 50 per cent of distributable earnings in accordance with the dividend policy.
Th e proposed record date for the right to receive a dividend is 4 April 2011. If the AGM adopts the proposed decision it is expected that the dividend will be paid through Euroclear Sweden AB (formerly VPC AB) on 7 April 2011.
| ABG Sundal Collier: | Fredric Cyon | Kempen: | Robert Woerdeman |
|---|---|---|---|
| ABN Amro Bank N.V.: | Jan Willem van Kranenburg | Morgan Stanley: | Bart Gysens |
| Cheuvreux Nordic: | Andreas Dahl | Nordea Bank: | Jonas Andersson |
| Carnegie Investment Bank: | Tobias Kaj | Swedbank: | Andreas Daag |
| Danske Bank: | Peter Trigarszky | SEB Enskilda: | Bengt Claesson |
| DnB NOR: | Simen R Mortensen | UBS Investment Bank: | Howard Lesser |
| Goldman Sachs International: | Nick Webb | Ålandsbanken Sweden: | Erik Nyman |
| Handelsbanken Capital Markets: | Albin Sandberg | Öhmans: | David Zaudy |
| Key figures | 2010 | 2009 |
|---|---|---|
| Financial | ||
| Return on capital employed, % | 8.7 | 4.2 |
| Return on equity, % | 16.0 | 4.3 |
| Interest coverage ratio, times | 3.0 | 2.6 |
| Equity/assets ratio, % | 39 | 32 |
| Leverage properties, % | 62 | 65 |
| Debt/equity ratio, times | 1.5 | 1.9 |
| Per share data | ||
| Earnings per share for the year, SEK | 10.38 | 2.59 |
| Equity per share, SEK | 69 | 61 |
| Cash fl ow per share, SEK | 6.13 | 4.87 |
| No. of outstanding shares at end of period before dilution, '000 | 162,980 | 164,392 |
| No. of outstanding shares at end of period after dilution, '000 | 162,980 | 164,392 |
| Average no. of shares before dilution, '000 | 163,504 | 164,386 |
| Average no. of shares after dilution, '000 | 163,504 | 165,052 |
| Dividend, SEK | 3.001) | 2.00 |
| Yield, % | 3.8 | 4.4 |
1) Proposed dividend 2010.
Fabege publishes its annual report and interim reports in Swedish and English. In addition to the printed versions, all publications are available as pdf files 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 interim reports and 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.
Th e Internet is one of our main information channels. Th e 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.
Th e 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.
Annette Kaunitz Director of Communications +46(0)8-555 148 20 [email protected]
Gunilla Möller IR Coordinator +46(0)8-555 148 45 [email protected]
The Annual General Meeting of Fabege AB (publ) will be held at 4 pm CET on Wednesday 30 March 2011 at Norra Latin, Drottninggatan 71B, Stockholm, Sweden. Registration for the AGM begins at 3 pm CET.
The notice of 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 4 April 2011. If the AGM adopts the proposed decision, it is expected that the dividend will be paid through Euroclear Sweden AB (formerly VPC AB) on 7 April 2011.
| Interim report Jan–March: 3 May 2011 |
|---|
| Interim report Jan–June: 7 July 2011 |
| Interim report Jan–Sep: 26 October 2011 |
| Year-end report 2011 2 February 2012 |
| Annual report for 2011 March 2012 |
| Profi t and loss accounts, SEKm Rental income 2,007 2,194 2,214 2,066 2,343 Net operating income 1,348 1,465 1,438 1,312 1,401 Realised changes in value/Gain from property sales 237 57 143 446 61 Unrealised changes in value, properties 843 –310 –1,545 893 911 Operating profi t/loss 782 838 568 703 646 Profi t before tax 1,929 680 –1,340 2,066 1,863 Profi t after tax 1,697 425 –511 1,812 2,266 Balance sheets, SEKm Investment properties 26,969 29,193 29,511 30,829 27,188 Other tangible fi xed assets 3 2 3 6 11 Financial fi xed assets 714 620 586 387 1,889 Current assets 1,504 704 388 458 757 Cash and cash equivalents 73 173 54 75 164 Equity 11,276 9,969 9,873 11,415 12,177 of which minority share of equity 1) – – – – 21 Provisions 271 439 624 1,393 1,001 Interest-bearing liabilities 16,646 19,109 18,902 17,210 14,999 Derivatives 267 373 471 – – Non-interest-bearing liabilities 651 802 672 1,737 1,832 Total assets 29,263 30,692 30,542 31,755 30,009 Key ratios 2) Surplus ratio, % 67 67 65 64 60 Interest coverage ratio, times 3.0 2.6 1.9 2.8 2.1 Capital employed, SEKm 28,189 29,451 29,246 28,625 27,176 Equity/assets ratio, % 39 32 32 36 40 Debt/equity ratio, times 1.5 1.9 1.9 1.5 1.2 Leverage, properties, % 62 65 64 56 55 Return on equity, % 16.0 4.3 –4.8 15.4 19.8 Return on capital employed, % 8.7 4.2 –1.7 9.9 9.0 Average interest rate on interest-bearing liabilities, % 3.45 2.48 3.27 4.28 3.72 Property acquisitions and investments in existing properties, SEKm 907 1,138 2,164 4,984 17,045 Property sales, selling price, SEKm 4,350 1,234 2,095 2,919 12,064 Average no. of employees 125 139 149 146 194 Data per share, SEK 2) Earnings 10.38 2.59 –3.07 9.98 11.74 Equity 69 61 60 67 64 Dividend 3.003) 2.00 2.00 4.00 4.00 Yield, % 3.8 4.4 6.7 6.0 4.4 Share price at year-end 4) 78.55 45.20 30.00 66.25 91.75 No. of shares at year-end before dilution, millions 163 164 164 171 190 Average no. of shares after dilution, millions 163 164 168 182 192 |
2010 | 2009 | 2008 | 2007 | 2006 |
|---|---|---|---|---|---|
1) Under IFRS, minority shares are reported as part of shareholders' equity. Under previous Swedish rules, shareholders' equity was reported excluding minority shares, which were reported separately as minority interest instead.
2) Key ratios based on the average number of shares, sharholders' equity, capital employed, and interest-bearing liabilities have been calculated based on weighted average. For 2006–2008, dilution effects of outstanding convertible debentures have been taken into account in the calculation of key fi gures per share. For the years 2006, key ratios have been recalculated to be comparable with ratios for 2007–2010, in the light of the Fabege share having been split (2:1).
3) Cash dividend 2010 as proposed.
4) Last paid.
For defi nitions see page 89.
CAPITAL EMPLOYED. Total assets less non-interest bearing liabilities and provisions.
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.
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 book value 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.
Fabege in cooperation with Hallvarsson & Halvarsson AB
Photographers Per-Erik Adamsson, Erik Lefvander, Magnus Fond, Conny Ekström, Archus, SOS Children's Villages Archives
Printing åtta45, Solna Translation
The Bugli Company AB, Stockholm 35,17(' 0\$77(5
When the current Fabege was created in 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, and the following year, they changed their name to Fabege.
1990 Wihlborgs' B shares are listed on the O List of the Stockholm Stock Exchange.
1993 Bergaliden becomes the new main owner of Wihlborgs.
1996 In December, Wihlborgs' B shares are listed on the A List of the Stockholm Stock Exchange.
1997 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.
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.
2000 High voting A shares are converted into B shares.
2001 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 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.
2003 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. At the end of the year, Wihlborgs sells Klara Zenit for SEK 2,950m, generating a profi t of SEK 400m.
2004 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.
2005 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. In December, the company concludes an agreement to acquire 82.4 per cent of the shares of Fastighets AB Tornet.
2006 Fabege acquires Fastighets AB Tornet along with its portfolio of 104 properties. Other acquisitions include the WennerGren Center and Solna Business Park. Fabege's property holdings in Kista and Täby are sold to Klövern.
2007 Fabege continues to concentrate its business to its main markets, Stockholm Inner City, Solna and Hammarby Sjöstad. 17 properties are sold and 8 are acquired. In June, the company effects a 2:1 share split, doubling the number of shares.
2008 Fabege increases the tempo of projects where existing properties are processed and developed in order to increase cash fl ow and value growth.
2009 Fabege continues to concentrate its property portfolio, some 92 per cent of which is found in a 5 km radius of downtown Stockholm. Towards the end of the year, work is initiated in the new district, Arenastaden, in Solna.
2010 Fabege essentially completes the concentration of its property portfolio. The property portfolio is now concentrated to Stockholm inner city, Solna and Hammarby Sjöstad. Continued focus on development of the new Arenastaden district.
PO BOX 730, SE-169 27 SOLNA, SWEDEN VISIT: PYRAMIDVÄGEN 7, SE-169 56 SOLNA TELEPHONE: +46 (0)8-555 148 00 FAX: +46 (0)8-555 148 01 EMAIL: [email protected] INTERNET: WWW.FABEGE.SE COMPANY REGISTRATION NO: 556049-1523 BOARD REGISTERED OFFICE: STOCKHOLM
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