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Castellum — Interim / Quarterly Report 2014
Jan 21, 2015
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Interim / Quarterly Report
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The picture shows a conceptual sketch of a new construction on the building right Lindholmen 30:5, Lindholmen Science Park in Gothenburg, which was acquired in December 2014.
Year-end report 2014
Year-end Report 2014
Castellum is one of the major listed real estate companies in Sweden. The fair value of the real estate portfolio amounts to SEK 38 billion, and comprises of commercial properties.
The real estate portfolio is owned and managed by six wholly owned subsidiaries with strong local roots in five growth regions: Greater Gothenburg (incl. Borås and Halmstad), the Öresund Region (Malmö, Lund, Helsingborg and Copenhagen), Greater Stockholm, Mälardalen (Örebro, Västerås and Uppsala) and Eastern Götaland (Jönköping and Linköping).
Castellum is listed on NASDAQ Stockholm Large Cap.
- Rental income for 2014 amounted to SEKm 3,318 (SEKm 3,249 previous year).
- Income from property management for 2014 amounted to SEKm 1,450 (1,346), corresponding to 8.84 SEK (8.21) per share, an increase of 8%.
- Changes in value on properties amounted to SEKm 344 (328) and on derivatives to SEKm –660 (429).
- Net income after tax amounted to SEKm 1,211 (1,707), corresponding to SEK 7.38 (10.41) per share.
- Net investments amounted to SEKm 529 (1,081) of which SEKm 1,378 (1,583) were new constructions, extensions and reconstructions, SEKm 1,147 (185) acquisitions and SEKm 3,054 (687) sales.
- The Board proposes a dividend of SEK 4.60 (4.25) per share, equivalent to an increase of 8%.
Key ratios
| 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Income from property management, SEK/share |
8.84 | 8.21 | 7.65 | 7.15 | 6.96 | 6.89 | 5.93 | 5.63 | 5.38 | 5.00 |
| Change previous year | +8% | +7% | +7% | +3% | +1% | +16% | +5% | +5% | +8% | +11% |
| Net income after tax, SEK/share | 7.38 | 10.41 | 8.98 | 4.34 | 11.98 | 0.98 | – 4.04 | 9.07 | 10.21 | 7.89 |
| Change previous year | –29% | +16% | +107% | –64% +1,122% | pos. | neg. | –11% | +29% | +41% | |
| Dividend, SEK/share (2013 proposed) | 4.60 | 4.25 | 3.95 | 3.70 | 3.60 | 3.50 | 3.15 | 3.00 | 2.85 | 2.62 |
| Change previous year | +8% | +8% | +7% | +3% | +3% | +11% | +5% | +5% | +9% | +11% |
| Properties fair value, SEKm | 37,599 | 37,752 | 36,328 | 33,867 | 31,768 | 29,267 | 29,165 | 27,717 | 24,238 | 21,270 |
| Net investments, SEKm | –529 | 1,081 | 2,545 | 1,908 | 1,279 | 1,129 | 2,710 | 2,559 | 1,823 | 889 |
| Loan to value | 49% | 52% | 53% | 51% | 50% | 52% | 50% | 45% | 45% | 45% |
| Interest coverage ratio | 318% | 292% | 284% | 278% | 299% | 309% | 255% | 287% | 343% | 315% |
For more detailed information see Castellum Annual Report.
Henrik Saxborn, CEO at Castellum Castellum stands stronger than ever
"Dare to make changes – even when successful", was the main heading for my CEO's comments of last year.
2014 also turned out to be a year when Castellum carried out the largest changes in our real estate portfolio in a very long time. We implemented major sales for close to SEK 3 billion in markets where we ascertained that future growth will not be so high. Furthermore, we invested SEK 2.5 billion in markets where we believe growth will be considerable. During such a comprehensive change process, it is not uncommon for individual years to have a lower investment rate than targeted, which occurred this year.
However, Castellum still managed to deliver a 8% growth in income from property management in 2014 – slightly better than for 2013. In addition, Castellum also strengthened its fi nancial position.
Due to the changes implemented, our good earnings capacity, low loan-to-value ratio and access to long-term credits, Castellum now has an investment capacity of SEK 6 billion.
The growth in income from property management can be explained by three main components: existing portfolio, investments and interest rate market. Our existing portfolio operates over several districts in a rental market with slightly lower vacancy rates and stable rents. Furthermore, rental income increased, due to leases being drawn up with an eye to protecting against a weaker macro-economic environment. Costs were reduced through effi ciency actions, plus the fact that 2014 was warmer than the previous year. Investments and completed projects and falling interest rates also contributed to cash fl ow growth.
In light of Castellum's earnings and fi nancial strength, the Board proposes raising the dividend to SEK 4.60, which corresponds to an increase of 8%. This means that we have enjoyed growth in property management income as well as increased dividends every year since the IPO in 1997, by an average of 12% per year.
In 2014, the real estate market was driven by strong demand and growth expectations, which increased turnover and slightly decreased required yield – especially in big-city regions. Turnover in the Swedish real estate market was the highest since 2008.
Castellum will continue to participate in the building of tomorrow's workplaces in our regions, and our project activity is high. At year-end, Semcon moved to its new headquarter of 9,000 sq.m. at Lindholmen, Gothenburg, and we are currently planning for new environmentally classifi ed offi ce premises of just over 9,000 sq.m. in the same area. In Jönköping, the development of two new city blocks is almost completed, and we continue the construction of a fl exible offi ce building of more than 2,100 sq.m. In central Uppsala, we have completed the city's most modern offi ce and are currently planning for another 7,000 - 8,000 sq.m. in
close proximity to the Travel Centre. When it comes to logistics facilities, we have constructed Puma's Nordic, fully automated distribution centre of 9,600 sq.m. in Helsingborg. We're also currently preparing for participation in the construction of a logistics centre
on Hisingen, Gothenburg, over the next few years. When completed, this major project will enable continued expansion of the port of Gothenburg where Castellum plans new facilities of approx. 75,000 sq.m. in total.
I'm convinced that profi cient and committed employees generate satisfi ed customers, and we're happy to say that in 2014, our NKI (Satisfi ed Customer Index) rose to a level well above the sector benchmark.
Castellum also continued the important sustainability activities, which is a condition for the company's development and long-term economic growth. I am proud that we have offered apprentices, holiday workers, interns and trainees a chance to gain hands-on work experience. Castellum has the lead when it comes to environmentally classifi ed buildings: For example, our portfolio includes 30% of all Swedish Green Building certifi ed properties.
Castellum, currently one of the largest real estate companies in Sweden, has never had the goal of becoming the largest player, but has managed - in accordance with our ambitious cash-fl ow goals - to achieve continuous growth. The company continues to operate with lower fi nancial risk than the industry average. It is pleasing to note that the Board once again proposes an increase in dividend, and that the long-term net asset value after dividend, increased by 7% in 2014.
I look forward to 2015 - a year with continued, if cautious, growth in Sweden. To achieve our growth objective in such an economy and against the background of Castellum's strategic sales during last autumn, it is important that we continue the high activity, focus on effi cient and sustainable management as well as on investments.
I would like to take this opportunity to once again sincerely thank all our shareholders and stakeholders for your trust during 2014.
Henrik Saxborn CEO
Business Concept
Castellum's business concept is to develop and add value to its real estate portfolio, focusing on the best possible earnings and asset growth, by offering customised commercial properties, through a strong and clear presence in fi ve Swedish growth regions.
Strategy for the property portfolio and its management
Development of commercial properties in growth regions
Geography and category
Castellum's real estate portfolio is located in the fi ve growth regions Greater Gothenburg, Öresund Region, Greater Stockholm, Mälardalen and Eastern Götaland. This together with rational property management and a strong presence in the market, provide for good business opportunities.
The real estate portfolio shall consist of commercial properties with general and fl exible premises for offi ce, retail, warehouse, logistics and industry purposes.
Property portfolio
The real estate portfolio shall be continuously enhanced and developed in order to improve cash fl ow. Castellum shall continue to grow with customers' demand, mainly through new constructions, extensions and reconstructions but also through acquisitions.
All investments shall contribute to the objective of growth in income from property management within 1-2 years and have a potential asset growth of at least 10%. Sales of properties will take place when justifi ed from a business standpoint.
Customer focus through local organizations
Customers
Castellum shall be perceived as a customer focused company. This is achieved by developing long-term relations and supplying premises and service meeting customer demands.
Organization and employees
Service and property management shall be delivered by a decentralized organization with wholly owned subsidiaries with strong local presence. Property management shall be carried out mainly by own personnel.
Castellum shall have skilled and committed employees, which is achieved by being an attractive workplace with good development possibilities.
The business shall contribute to a sustainable development, in view of ecological, social and economic aspects.
Strategy for funding
Strong balance sheet with low financial and operational risk
Capital structure
Castellum shall have low fi nancial risk. The choosen risk key ratios are loan to value and interest coverage ratio. Purchase or transfer of own shares shall be available as a method for adjusting the company's capital structure to the company's capital need and as payment or funding of real estate investments. Company owned shares may not be traded for short term purpose of capital gain.
The stock and credit markets
Castellum will work for a competitive total return on the company's share relative to risk and also strive for high liquidity.
All actions will be made from a long-term perspective and the company will hold frequent, open and fair reports to shareholders, the capital and credit markets and the media, without disclosing any individual business relationship.
Low operational risk
Castellum's real estate portfolio has a geographical distribution to fi ve Swedish growth regions and shall consist of different types of commercial premises. The risk within in the customer portfolio shall be kept low.
Overall objective
Castellum's overall objective is an annual growth in cash fl ow, i.e.income from property management per share, of at least 10%
Strategic tools Strategic tools Outcome Outcome Investments In order to achieve the overall objective of 10% growth, annual net investments of at least 5% of the property value will be made. This is currently equivalent to approx. SEK 2 billion. Subsidiaries One of the three largest real estate owners in each local market. SEKm – 529 net investments 2014 Customer and employee satisfaction In order to develop the Group as well as customer relations, the customers' level of satisfaction shall be measured regularly. Customer and employee satisfaction shall constantly improve. Sustainability Focus on effi cient energy usage, sustainable new constructions, good controll and continuously improved status in the properties, green customer relations and social commitment and responsibility in our regions. Lease value per region NKI79 Satisfied Customer Index 2014 NMI85 Satisfied Employees Index 2014
Strategic tools Outcome
Capital structure
Loan to value ratio not permanently exceeding 55%. Interest coverage ratio of at least 200%.
Dividend
At least 50% of pre-tax property management income shall be distributed. Investment plans, consolidation needs, liquidity and fi nancial position in general will be taken into account.
The stock and credit markets
In the long term, Castellum shall be one of the largest listed real estate companies in Sweden.
Low operational risk
Commercial portfolio in fi ve growth regions distributed on different cathegories with general, fl exible premises. The customer risk shall be kept low using diversifi cation over many fi elds of business, length and size of contracts.
Loan to value ratio Interest coverage ratio
49% Loab-to-value ratio 2014
4,400 commercial contracts where the single largest contract accounts for approx. 2%
Customers and Organization
Customers - a reflection of Swedish economy
Castellum has approx. 4,400 commercial contracts, with good risk diversifi cation regarding geography, type of premises, length of contracts and fi elds of industry of the customer. The single largest contract corresponds to approx. 2% of Castellum's total rental income.
Satisfied customers
It is important that Castellum meets customers expectations. To follow up and evaluate activities, an external customer survey is carried out annually, Satisfi ed Customer Index.
The survey carried out in 2014 - which included offi ces, warehouses, industry and retail - showed continued consistently high marks for Castellum, with a weighted index of 79. This is higher than the industry benchmark of 73. A signifi cant portion of the surveyed customers - 88% - reply that they want to lease from Castellum again and gladly recommend Castellum as a landlord to others.
Leasing activity
Castellum's leasing activity is high. During 2014 the organization signed 728 new leases with a total annual value of SEKm 304. Robust leasing activities indicate the importance of taking care of customers and networks. Of the newly signed lease volume, 69% came from Castellum's own networks, recommendations or existing customer expansions, while 19% originated from web pages, and the remaining 12% came through agents.
Decentralized and small-scale organization near the customers
Castellum's operations are run by six subsidiaries which own and manage the properties. By having local roots, the subsidiaries forge close relationships with customers and short decision making processes. Customers can thereby be offered premises suited to their needs and benefi t from optimal personal service and quick response.
The subsidiary organizations are not identical but are in principle made up of a Managing Director, 2-4 market areas, project developers and 4-8 employees within fi nance and administration. Each market area employs one property manager with one assistant, one person working with leasing and 3-9 facility managers. Everyone has customer contact.
Property management is mainly carried out by own personnel and in cases where external services are used, high demands are placed on suppliers in terms of quality, customer contact, service and environmental awareness.
Subsidiaries with strong brands
Castellum's subsidiaries operate under their own names, which are strong brands on each local market. Each subsidiary is involved in the local business community through business associations where important contacts are taken with both current and prospective customers.
Castellum, as one of the largest real estate owners on each local market, also contributes to the regional development where local subsidiaries operate through co-operation with municipalities and universities/colleges.
Employees
Castellum is actively working to recruit and retain top notch employees by offering a stimulating work environment, competence development and sharing experiences. Employees viewpoint on Castellum is regularly measured and the survey conducted in 2014 shows a continued high index, 85 on a 100-point scale, which means that employees are satisfi ed with their work situation and have a high confi dence in the company and its management.
Castellum had at year-end 295 (293) employees.
Sustainable business
Castellum's sustainability efforts focus on the effi cient use of resources, a sustainable real estate portfolio and sustainable collaborations, as well as on social commitment and responsibility.
Today, Castellum's energy consumption is less than 40% of the business-sector average. In addition, a growing 20% of the real estate portfolio is environmentally classifi ed according to the Green Building, Miljöbyggnad or the BREEAM criteria.
Our contribution to positive development in the communities where Castellum is active involves various forms of ongoing collaborations. These include joint projects with customers, business colleagues, municipalities and educational institutions. In 2014, 60 young people received their introduction to working life through our apprenticeship program, as holiday workers, interns or trainees.
Parent company
The parent company, Castellum AB, is responsible for matters concerning the stock market, such as consolidated reports and stock-market information, and the credit market, such as funding and fi nancial risk management, as well as overall IT/IS strategies and human resource. Castellum AB has 23 (19) employees.
Castellum is responsible for capital allocation and measures and compares subsidiary management effi ciency and asset value growth in the real estate portfolio. Castellum develops best practice for the Group. As a part of this, a business development manager was appointed during the year. The parent company takes active part in operations through involvement in subsidiary Boards.
Castellum's operations are controlled by rules for decision making and work allocation, policies and instructions. Policies are in place for fi nance and fi nancial work, information, information security, Code of Conduct, sustainability, insurance and personnel, etc.
Market comments
Swedish economy
The Swedish economy continues to improve, although recovery is somewhat modest. The current economy continues to be divided into two parts: a strong domestic demand driving growth, and a sluggish export market. Exports usually comprise the major driving force behind a Swedish economic recovery. The latter can partially be attributed to the fact that economic development has been weak in some parts of the world – particularly in the Euro zone – where geopolitical turmoil has further dampened the economy. Here one might add that the parliamentary situation in Sweden has been uncertain.
The economic situation in Sweden and abroad, along with sharply falling oil prices, has resulted in very low infl ation, which is expected to remain low in the coming year.
Despite the economic situation, the labour market continues to developed positively and the employment rate is rising in most sectors, with the exception of manufacturing.
| Macro indicators | ||
|---|---|---|
| Unemployment | 7.4% | (November 2014) |
| Inflation | – 0.3% | (December 2014 compared to December 2013) |
| GDP growth | 2.1% | (Q3 2014 compared to Q3 2013) |
| Source: SCB |
Rental market
During the year, the rental market has been solid or positive in all markets and segments, featuring high demand for both new constructions and existing premises. Rental levels generally remained unchanged. However, a slight increase in rental levels was noted for offi ce rents in markets where the demand was higher and the vacancy rate was low. Compared with 2013, the supply of newly constructed offi ce space has remained relatively stable in Gothenburg and Stockholm, but decreased in Malmö. An increase in new constructions in a number of Castellum's markets outside the big cities could also be seen. However, this increase started from a low level and is not considered to result in excess supply.
Property market
In 2014, the Swedish real estate market was characterized by strong demand and high turnover. In total, the transaction volume amounted to approximately SEK 160 billion (100), in line with record years 2006–2008. Turnover was particularly high in the fourth quarter when it amounted to nearly SEK 70 billion (35). In addition to continued strong domestic interest, increased foreign interest was also noted: Foreign buyers accounted for 17% (13%) of the volume. Commercial properties accounted for about 76% (69%) of the volume. The interest in office properties was stable and still accounts for the largest segment. However, interest in community properties and hotels also increased.
Big-city regions accounted for 62% (58%) of the volume. However, in absolute terms, significantly increased interest was demonstrated for markets outside major cities.
Castellum estimates that the overall increase in value noted earlier in 2014 has been sustained. Price structure has generally remained unchanged from the previous quarter.
Interest and credit market
At its meeting in October, the Riksbank decided to cut the repo rate from 0.25% to 0%. At that time, the interest rate path was also revised downwards. At the December meeting, the interest rate path was revised downwards even further, by postponing an initial increase to the second half of 2016.
The 3-month STIBOR rate - of major signifi cance for Castellum - was halved to just under 0.25% after the Riksbank's repo- rate decision in October. It has since remained stable on that level, whereas long-term rates have continued to fall.
Access to credit is considered favourable in both credit and capital markets, and credit margins were stable.
Income, Costs and Results
Comparisons, shown in brackets, are made with the corresponding amounts previous year. For defi nitions see www.castellum.se
Income from property management during the year, i.e. net income excluding changes in value and tax, amounted to SEKm 1,450 (1,346), equivalent to SEK 8.84 (8.21) per share - an increase with 8%.
During the year changes in value on properties amounted to SEKm 344 (328) and on derivatives to SEKm –660 (429). Net income after tax for the year was SEKm 1,211 (1,707), equivalent to SEK 7.38 (10.41) per share.
Rental income
Group's rental income amounted to SEKm 3,318 (3,249). For offi ce and retail properties, the average contracted rental level, including charged heating, cooling and property tax, amounted to SEK 1,295 per sq.m., whereas for warehouse and industrial properties, it amounted to SEK 791 per sq.m. Rental levels, which are considered to be in line with the market, have in comparable portfolio increased by 1% compared with previous year, which mainly is an effect from indexation and can be compared with the usual industry index clause (October to October), which was –0.1% in 2014. Castellum's higher indexation is due to the Groups focus on index clauses with minimum upward adjustment in the contract portfolio, which offers protection against defl ation / infl ation.
The average economic occupancy rate was 88.7% (88.4%). The total rental value for vacant premises on yearly basis amounted to approx. SEKm 417 (467).
The rental income for the period includes a lump sum of SEKm 10 (11) as a result of early termination of leases.
Gross leasing (i.e. the annual value of total leasing) during the year was SEKm 304 (366), of which SEKm 55 (96) were leasing of new constructions, extensions and reconstructions. Notices of termination amounted to
SEKm 246 (261), of which bankruptcies were SEKm 12 (23) and SEKm 36 (18) were notices of termination with more than 18 months remaining length of contract.
Net lease for the year was hence SEKm 58 (105) and for the fourth quarter isolated SEKm –17 (24). The quarter's net lease includes two major terminations of SEKm 32 where the tenants leave in 16 and 24 months respectively.
The time difference between reported net leasing and the effect in income thereof is estimated to be between 9-18 months.
Property costs
Property costs amounted to SEKm 1,096 (1,105) corresponding to SEK 307 per sq.m. (307). Consumption for heating during the year has been calculated to 81% (96%) of a normal year according to the degree day statistics.
The increased costs for leasing and property administration SEK per sq.m. can partly be explained by the sales completed by the end of the year.
| Property costs | Offi ce/ | Warehouse/ | 2014 | 2013 |
|---|---|---|---|---|
| SEK/sq. m | Retail | Industrial | Total | Total |
| Operating expenses | 177 | 109 | 146 | 161 |
| Maintenance | 44 | 29 | 37 | 35 |
| Ground rent | 9 | 7 | 8 | 7 |
| Real estate tax | 69 | 22 | 48 | 47 |
| Direct property costs | 299 | 167 | 239 | 250 |
| Leasing and property administration |
– | – | 68 | 57 |
| Total | 299 | 167 | 307 | 307 |
| Previous year | 317 | 171 | 307 |
Central administrative expenses
Central administrative expenses totalled SEKm 108 (96). This includes costs for a profi t-and-share-price related incentive plan for 10 persons in executive management of SEKm 15 (8).
Income from Property Management per share
Rental value and economic occupancy rate
Net interest
Net interest items were SEKm –664 (–702). The average interest rate level was 3.3% (3.7%). Net fi nancial income was positively affected by approx. SEKm 70 due to the average interest rate level decrease by 0.4%-units. Other effects on the interest cost can be explained by a larger credit portfolio.
Changes in value
The real estate market 2014 is characterized by high activity and strong demand. The general increase in prices that was noted during the fi rst half year remains, and the downward adjustment of the average valuation yield of 0.1% in the internal valuations remains fi rm. This, together with acquisition gains, project gains and individual adjustments on property level has resulted in a change in value totaling SEKm 488. Realized sale of real estate has resulted in a change in value of SEKm –144. Net sales price amounted to SEKm 3,054 after reduction for assessed deferred tax and transaction costs of SEKm 163. Hence the underlying property value, which amounted to SEKm 3,217, exceeded last valuation of SEKm 3,198 with SEKm 19.
The value in the interest derivatives portfolio has changed by SEKm –657 (429). Castellum's currency derivatives has during the period changed SEKm –17 (–7) where the effective part of the value changes of SEKm –14 (–7) is accounted for in other total net income.
Tax
The nominal corporate tax rate in Sweden is 22%. Due to the possibility to deduct depreciation and reconstructions for tax purposes, and to utilize tax loss carry forwards, the paid tax is low. Indirect property sales through companies are usually not taxable as refl ected in this year's tax. Paid
tax occurs since a few subsidiaries have no possibilities to group contributions for tax purpose.
Remaining tax loss carryforwards can be calculated to SEKm 1,193 (921). Fair values for the properties exceed their fi scal value by SEKm 18,602 (18,570) of which SEKm 991 (830) relates to the acquisition of properties accounted for as asset acquisitions. As deferred tax liability, a full nominal 22% tax of the net difference is reported, reduced by the deferred tax relating to asset acquisitions, i.e., SEKm 3,612 (3,700).
Castellum has no current tax disputes.
Tax calculation 2014
| SEKm | Basis current tax |
Basis deferred tax |
|---|---|---|
| Income from property management | 1,450 | |
| Deductions for tax purposes | ||
| depreciations | – 718 | 718 |
| reconstructions | – 322 | 322 |
| Other tax allowances | 24 | 37 |
| Taxable income from property management | 434 | 1,077 |
| Properties sold | 6 | – 1,695 |
| Changes in value on properties | – | 488 |
| Changes in value on interest rate derivatives | – 660 | – |
| Taxable income before tax loss carry forwards | – 220 | – 130 |
| Tax loss carry forwards, opening balance | – 921 | 921 |
| Tax loss carry forwards, closing balance | 1,193 | – 1,193 |
| Taxable income | 52 | – 402 |
| Tax according to the income statement | – 11 | 88 |
Income over time
Income from property management over the past 10 years shows stable development and has grown by an average of 7% per year. Property values have been volatile over the past 10 years with average growth of 1.1% per year which is in line with the infl ation.
Net leasing Income over time
Real Estate Portfolio
The real estate portfolio is located in Greater Gothenburg, the Öresund Region, Greater Stockholm, Mälardalen and Eastern Götaland. The main focus, which represents approx. 76% of the portfolio, is in the three major urban regions.
The commercial portfolio consists of 65% offi ce and retail properties as well as 31% warehouse and industrial properties. The properties are located from inner city sites (except in Greater Stockholm from inner suburbs) to wellsituated working-areas with good means of communication and services. The remaining 4% consist of projects and undeveloped land.
Castellum owns approx. 800,000 sq.m. of unutilized building rights and ongoing projects with remaining investments of approx. SEKm 750.
Investments
During the year, investments totalling SEKm 2,525 (1,768) were carried out, of which SEKm 1,378 (1,583) were new constructions, extensions and reconstructions and SEKm 1,147 (185) were acquisitions. Of the total investments SEKm 1,275 refers to Greater Gothenburg, SEKm 393 to Mälardalen, SEKm 361 to Greater Stockholm, SEKm 248 to Eastern Götaland and SEKm 248 to the Öresund Region.
After sales of SEKm –3,054 (687) net investments amounted to SEKm –529 (1,081).
Larger investments and sales
Algen 1 in Jönköping
Location Munksjön in central Jönköping Area 4,321 sq.m. Time plan Completed Q1 2015
In central Jönköping Castellum started during 2013 the second phase in the development in the Atollen-area, which is carried out together
Jägmästaren 1 in Linköping
Location Djurgården in Linköping Area 7,750 sq.m. Time plan Completed Q1 2015
During 2013 Castellum started an investment in Djurgården area, Linköping, which is an urban
with several partners. Castellum's part consists of 10,470 sq.m. in total. The new construction comprises of 4,321 sq.m. office, retail and restaurant premises. The reconstruction and extension will be completed in accordance with the enviromental system Miljöbyggnad. The investment is calculated to SEKm 136 and has an occupancy rate of 35%.
construction project in the new district Djurgården. Castellum constructs a retail building of 7,750 sq.m. in accordance with the environmental system Miljöbyggnad. The investment is calculated to SEKm 109 and has an occupancy rate of 92%.
During the period the real estate portfolio has changed according to the table below.
Changes in the real estate portfolio
| Value, SEKm | Number | |
|---|---|---|
| Real estate portfolio on 1 January, 2014 | 37,752 | 626 |
| + Acquisitions | 1,147 | 24 |
| + New constructions, extensions and reconstructions | 1,378 | – |
| – Sales | – 3,198 | – 67 |
| +/– Unrealized changes in value | 488 | – |
| +/– Currency translation | 32 | – |
| Real estate portfolio on 31 December, 2014 | 37,599 | 583 |
Investments
Drottningparken in Örebro
Location South entrance of Örebro Area 4,280 sq.m. Time plan Completed Q3 2016
In central Örebro Castellum has during 2014 started a new construction of a fully let office building of 4,280 sq.m.kvm flexible office premises. The new construction is located at the south entrance of Örebro and will be completed in accordance with the environmental system Miljöbyggnad, silver level. The investment is calculated to SEKm 100 and has an occupancy rate of 36%.
Fanan 26, 30, 39, 43, 47, 49, 51 and Fanborgen 3 and 4 in Halmstad
Location Halmstad Campus area Area 43,485 sq.m. Time plan March 2014
In March 2014 Castellum acquired nine properties in Halmstad Campus area. The largest tenant is
Halmstad University with approx. 10,000 students and 600 employees. The portfolio comprises of 30,850 sq.m. office and the remainder are retail, education facilities, warehouse and library.
The investment has an occupancy rate of 94% and is calculated to SEKm 637.
Larger investments and sales
| Larger projects | Area, | Econ. occup. | Total investment, | Remaining | ||
|---|---|---|---|---|---|---|
| Property | sq.m | Jan 2015 | incl. land SEKm | investm. SEKm Completed | Comment | |
| Algen 1, Jönköping | 4,321 | 35% | 136 | 32 | Q1 2015 | New construction retail/office/restaurant |
| Jägmästaren 1, Linköping | 7,750 | 92% | 109 | 21 | Q1 2015 | New construction retail |
| Drottningparken, Örebro | 4,280 | 36% | 100 | 94 | Q3 2016 | New construction office |
| Verkstaden 14, Västerås | 6,100 | 100% | 78 | 75 | Q1 2016 | Reconstruction and extension school |
| Visionen 3, Jönköping | 2,472 | 88% | 59 | 51 | Q3 2015 | New construction office |
| Varla 3:22, Kungsbacka | 5,000 | 100% | 42 | 1 | Q1 2015 | Reconstruction and extension warehouse |
| Boländerna 35:1, Uppsala | 8,716 | 98% | 38 | 2 | Q2 2015 | Reconstruction retail |
| Godståget 1, Stockholm | 6,568 | 100% | 31 | 23 | Q2 2015 | Reconstruction and extension warehouse |
| Projects completed / partly moved in | ||||||
| Lindholmen 28:3, Gothenburg | 9,453 | 100% | 275 | 5 | Q2 2013 | New construction office |
| Dragarbrunn 20:4, Uppsala | 10,020 | 90% | 242 | 4 | Q4 2014 | Reconstruction and extension office |
| Lundbyvassen 8:1, Gothenburg | 8,990 | 100% | 221 | 23 | Q1 2015 | New construction office |
| Fullriggaren 4, Malmö | 5,593 | 61% | 157 | 16 | Q1 2013 | New construction office* |
| Atollen 3, Jönköping | 5,963 | 78% | 153 | 2 | Q4 2013 | New construction office/retail/residentials |
| Spejaren 3, Huddinge | 6,391 | 100% | 83 | 1 | Q4 2014 | New construction retail |
| Kulan 3, Helsingborg | 9,689 | 100% | 83 | 5 | Q2 2014 | New construction logistic |
| Solsten 1:108, Härryda | 6,534 | 100% | 62 | 0 | Q3 2014 | New construction warehouse |
| Högspänningen 1, Västerås | 3,911 | 70% | 48 | 3 | Q3 2014 | New construction logistic/office |
| Kärra 74:3, Gothenburg | 9,305 | 0% | 33 | 0 | Q4 2014 | Reconstruction and extension logistic |
| Larger acquisitions during 2014 | Econ. occup | Acquisition |
| Property | Area sq.m | Jan 2015 | SEKm | Access | Category |
|---|---|---|---|---|---|
| Fanan 26, 30, 39, 43, 47, 49, 51 and | Office/retail/education facilities/warehouse | ||||
| Fanborgen 3 and 4, Halmstad | 43,485 | 94% | 637 | March 2014 | and library |
| Rosersberg 11:94, Sigtuna | 9,353 | 100% | 105 | Dec 2014 | Warehouse/office and building right |
| Solsten 1:155 and Solsten 1:118, Härryda | 4,860 | 100% | 85 | June 2014 | Warehouse/office and building right |
| Dumpern 7, Huddinge | 6,792 | 100% | 70 | June 2014 | Logistic |
| Lindholmen 30:5, Gothenburg | – | – | 51 | Dec 2014 | Land |
| Part of Olaus Petri 3:329, Örebro | – | – | 43 | Dec 2014 | Land |
| Marielundvej 10, Herlev, Denmark | 2,561 | 100% | 34 | Jan 2015 | Office |
| Larger sales during 2014 | Underlying prop. | Transaction costs and | Net sales | |||
|---|---|---|---|---|---|---|
| Property | Area sq.m | price, SEKm | deferred tax, SEKm | price, SEKm Access | Category | |
| The entire Växjö portfolio | 127,921 | 905 | – 46 | 859 | Dec 2014 | Office/retail/warehouse/industry |
| The entire Värnamo portfolio | 143,525 | 878 | – 43 | 835 | Dec 2014 | Office/retail/warehouse/industry |
| Lybeck 10, Stadt Hamburg 14, Malmö | 40,714 | 633 | – 24 | 609 | Oct 2014 | Retail/office/residential/garage |
| Guldheden 8:11, Gothenburg | 10,500 | 241 | – 11 | 230 | Dec 2014 | Office |
| Kampen 25, Malmö | 40,669 | 255 | – 20 | 235 | Maj 2015 | Warehouse/office |
| St Botulf 11, Lund | 4,878 | 118 | – 9 | 109 | Oct 2014 | Office/residential |
| Renseriet 25, Stockholm | 4,215 | 79 | – 4 | 75 | Feb 2014 | Office/warehouse |
| Instrumentet 1, Solna | 3,673 | 35 | – 2 | 33 | Nov 2014 | Industry |
* The remaining investment volume will be used as the vacant spaces are rented.
Property value
Internal valuations
Castellum assesses the value of the properties through internal valuations, as at the year end, corresponding to IFRS 13, level 3.
The valuations are based on a 10-year cash fl ow based model with an individual valuation for each property of both its future earnings capacity and the required market yield. In the valuation of a property's future earnings capacity, consideration has been taken of potential changes in rental levels, occupancy rates and property costs - as well as an assumed infl ation level of 1.5%.
Projects in progress have been valued using the same principle, but with deductions for remaining investments. Properties with building rights have been valued on the basis of an estimated market value per square metre, on average approx. SEK 1,500 (1,100) per sq.m.
The required market yield can be calculated according to the following chart.
| Required yield | Office/ Retail |
Warehouse/ Industrial |
|---|---|---|
| Real interest rate | 3.0% | 3.0% |
| Inflation | 1.5% | 1.5% |
| Risk | 4.5% - 12.5% | 6.9% - 14.0% |
| Return on equity | 9.0% - 17.0% | 11.4% - 18.5% |
| Interest rate | 5.5% | 5.5% |
| Loan to value ratio | 35% | 45% |
| Return on total capital | 6.7% - 9.5% | 8.1% - 11.3% |
| Weighted d:o, disc. factor year 1-9 | 7.8% | 8.9% |
| Weighted disc. factor residual value* | 6.3% | 7.4% |
*(Required yield on total capital minus growth equal to inflation)
Based on these internal valuations, the value of the properties at year-end were assessed to SEKm 37,599 (37,752), corresponding to SEK 11,118 per sq.m. (10,285).
Average valuation yield
The average valuation yield for Castellum's real estate portfolio, excluding development projects and undeveloped land, can be calculated to 6.9% (7.2%). The lower valuation yield can partly be explained by major reallocations in the property portfolio.
Average valuation yield, Mkr
| (excl. project/land and building rights) | 2014 | 2013 | |
|---|---|---|---|
| Net operating income properties | 2,286 | 2,341 | |
| + Estimated index adjustment 2015, 1% (1%) | 25 | 35 | |
| + Real occupancy rate, 94% at the lowest | 251 | 279 | |
| – | Property administration, 30 SEK/sq.m. | – 99 | – 107 |
| Normalized net operating income | 2,463 | 2,548 | |
| Valuation (excl. building rights of SEKm 559) | 35,506 | 35,613 | |
| Average valuation yield | 6.9% | 7.2% |
Average valuation yield over time
Uncertainity range
A property's market value can only be confi rmed when sold. The value range of +/– 5-10%, often used in property valuations in a normal market, should therefore be seen as an indication of the uncertainty that exists in assumptions and calculations. In a market with lower liquidity, the range may be wider. For Castellum, an uncertainty range of +/– 5% means a range in value of the property portfolio of +/– SEKm 1,880, corresponding to SEKm 35,719 - 39,479.
External valuation
In order to provide further assurance and validation of the valuation, 154 properties - representing 57% of the value of the portfolio - have been valued externally by Forum Fastighetsekonomi AB. The properties were selected on the basis of the largest properties in terms of value, but they also refl ect the composition of the portfolio as a whole in terms of category and geographical location of the properties. Forum's valuation of the selected properties amounted to SEKm 21,109, within an uncertainty range of +/- 5-10% on property level, depending on each property's category and location. Castellum's valuation of the same properties totalled SEKm 21,383, i. e., a net deviation of SEKm –274, corresponding to –1%. The gross deviation was SEKm +620 and SEKm –894 respectively, with an average deviation of 7%.
In addition, NAI Svefa made a desk-top valuation of 41 properties corresponding in value to 25% of the portfolio. Forum's valuation of the selected properties amounted to SEKm 9,105. Castellum's valuation of the same properties amounted to SEKm 9,348, i.e. a net deviation of SEKm –243 corresponding to –3%. Forum's valuation of the same properties amounted to SEKm 9,216, i.e. en net deviation of SEKm –132 corresponding to –1% compared to Castellum's valuation.
It can be noted that Castellum's deviation from the two external valuers accommodated well within the uncertainty range of +/–5-10%.
Castellums' real estate portfolio 31-12-2014
| 31-12-2014 | January-December 2014 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| No. of properties |
Area thous. sq.m |
Property value SEKm |
Property value SEK/sq.m |
Rental value SEKm |
Rental value SEK/sq.m |
Economic occupancy rate |
Rental income SEKm |
Property costs SEKm |
Property costs SEK/sq.m |
Net operating income SEKm |
|
| Office/retail | |||||||||||
| Greater Gothenburg | 86 | 478 | 7,604 | 15,924 | 635 | 1,330 | 91.6% | 582 | 134 | 281 | 448 |
| Öresund Region | 63 | 362 | 5,269 | 14,549 | 483 | 1,334 | 84.6% | 408 | 111 | 307 | 297 |
| Greater Stockholm | 50 | 343 | 4,610 | 13,435 | 469 | 1,367 | 83.5% | 391 | 102 | 298 | 289 |
| Mälardalen | 72 | 399 | 4,899 | 12,263 | 471 | 1,178 | 91.5% | 431 | 120 | 299 | 311 |
| Eastern Götaland | 23 | 176 | 2,202 | 12,521 | 219 | 1,247 | 89.0% | 195 | 59 | 335 | 136 |
| Total offi ce/retail | 294 | 1,758 | 24,584 | 13,983 | 2,277 | 1,295 | 88.2% | 2,007 | 526 | 299 | 1,481 |
| Warehouse/industrial | |||||||||||
| Greater Gothenburg | 103 | 659 | 5,316 | 8,068 | 505 | 766 | 91.7% | 463 | 97 | 146 | 366 |
| Öresund Region | 43 | 284 | 1,874 | 6,594 | 213 | 752 | 86.8% | 185 | 50 | 176 | 135 |
| Greater Stockholm | 52 | 288 | 2,871 | 9,993 | 287 | 998 | 88.6% | 254 | 59 | 205 | 195 |
| Mälardalen | 38 | 187 | 1,190 | 6,362 | 139 | 746 | 88.4% | 123 | 36 | 193 | 87 |
| Eastern Götaland | 11 | 68 | 230 | 3,375 | 30 | 442 | 92.0% | 28 | 6 | 93 | 22 |
| Total warehouse/industrial | 247 | 1,486 | 11,481 | 7,728 | 1,174 | 791 | 89.7% | 1,053 | 248 | 167 | 805 |
| Total | 541 | 3,244 | 36,065 | 11,118 | 3,451 | 1,064 | 88.7% | 3,060 | 774 | 239 | 2,286 |
| Leasing and property administration | 221 | 68 | –221 | ||||||||
| Total after leasing and property administration | 995 | 307 | 2,065 | ||||||||
| Development projects | 18 | 85 | 1,267 | – | 76 | – | – | 50 | 17 | – | 33 |
| Undeveloped land | 24 | – | 267 | – | – | – | – | – | – | – | – |
| Total | 583 | 3,329 | 37,599 | – | 3,527 | – | – | 3,110 | 1,012 | – | 2,098 |
The table above relates to the properties owned by Castellum at the end of the period and reflects the income and costs of the properties as if they had been owned during the whole year. The discrepancy between the net operating income of SEKm 2,098 accounted for above and the net operating income of SEKm 2,222 in the income statement is explained by the deduction of the net operating income of SEKm 193 on properties sold during the year, as well as the adjustment of the net operating income of SEKm 69 on properties acquired/completed during the year, which are recalculated as if they had been owned or completed during the whole period.
Property related key ratios Segment information
| 2014 | 2013 | |
|---|---|---|
| Rental value, SEK/sq.m. | 1,064 | 1,036 |
| Economic occupancy rate | 88.7% | 88.4% |
| Property costs, SEK/sq.m. | 307 | 307 |
| Net operating income, SEK/sq.m. | 637 | 608 |
| Property value, SEK/sq.m. | 11,118 | 10,285 |
| Number of properties | 583 | 626 |
| Lettable area, thousand sq.m. | 3,329 | 3,623 |
| Rental income | Income from property management | ||||
|---|---|---|---|---|---|
| SEKm | 2014 Jan-Dec |
2013 Jan-Dec |
2014 Jan-Dec |
2013 Jan-Dec |
|
| Greater Gothenburg | 1,050 | 1,014 | 524 | 493 | |
| Öresund Region | 673 | 669 | 278 | 263 | |
| Greater Stockholm | 637 | 623 | 299 | 263 | |
| Mälardalen | 556 | 548 | 235 | 213 | |
| Eastern Götaland | 402 | 395 | 166 | 152 | |
| Total | 3,318 | 3,249 | 1,502 | 1,384 |
The difference between the income from property management of SEKm 1,502 (1,384) above and the groups accounted income before tax of SEKm 1,134 (2,103) consists of unallocated income from property management of SEKm –52 (–38), changes in property value of SEKm 344 (328) and changes in values of interest rate derivatives of SEKm –660 (429).
Property value by property type Property value by region
Financing
Castellum shall have a low fi nancial risk, meaning a loan to value ratio not permanently exceeding 55% and an interest coverage ratio of at least 200%. Castellum's assets had on December 31, 2014, a value of SEKm 38,088 (38,113) and are fi nanced by shareholders´s equity of SEKm 13,649 (13,127), deferred tax liabilities of SEKm 3,612 (3,700), interest bearing liabilities of SEKm 18,446 (19,481) and other liabilities of SEKm 2,381 (1,805).
Interest bearing liabilities
At the end of the year Castellum had binding credit agreements totalling SEKm 26,065 (24,300) of which SEKm 22,357 (21,859) was long term binding and SEKm 3,708 (2,441) short term binding.
During the year MTN of SEKm 1 500 were issued and SEKm 500 repurchased. A new credit agreement of SEKm 500 has added and agreements for a total of SEKm 11 500 have been renegotiated. Along with the year's completed sales, Castellum stands fi nancially strong and has long-term unutilized credit facilities of approx. SEK 4 billion. After deduction of cash of SEKm 47 (70), net interest bearing liabilities were SEKm 18,399 (19,411), of which SEKm 4,200 (3,200) were MTN and SEKm 1,280 (1,014) outstanding commercial papers.
Most of Castellum's loans are short-term revolving loans, utilized in long-term binding credit agreements in the largest Nordic banks. This means great fl exibility. Bonds issued under the MTN program and the commercial papers are a complement to the existing funding in banks and broadens the funding base. At the end of the period the fair value of the liabilities is in principle in line with the value accounted for.
Long-term loan commitments in banks are secured by pledged mortgages in poperties and/or fi nancial covenants. Outstanding commercial papers and bonds under the MTN-program are unsecured.
Net interest bearing liabilities amounted to SEKm 18,399 (19,411) of which SEKm 12,919 (15,197) were secured by
the company's properties and SEKm 5,480 (4,214) unsecured. The proportion of used secured fi nancing was thus 34% of the property value. The fi nancial covenants state a loan-tovalue ratio not exceeding 65% and an interest coverage ratio of at least 150%, which Castellum fulfi ls with comfortable margins, 49% and 318% respectively. The average duration of Castellum's long-term credit agreements was years 3.3 (3.4). Margins and fees on long-term credit agreements had an average duration of 2.7 years (2.4).
Credit maturity structure 31-12-2014
| Credit | ||||
|---|---|---|---|---|
| SEKm | agreements | Bank | MTN/Cert | Total |
| 0-1 year | 3,708 | 904 | 2,480 | 3,384 |
| 1-2 years | 4,708 | 3,266 | 500 | 3,766 |
| 2-3 years | 8,308 | 2,208 | 1,000 | 3,208 |
| 3-4 years | 6,708 | 4,408 | 1,000 | 5,408 |
| 4-5 years | 1,570 | 1,070 | 500 | 1,570 |
| > 5 years | 1,063 | 1,063 | – | 1,063 |
| Total | 26,065 | 12,919 | 5,480 | 18,399 |
| Unutilized credit in long term credit agreements | 3,958 |
Interest rate maturity structure
In order to secure a stable and low net interest cash fl ow the interest rate maturity structure is distributed over time. The average fi xed interest term on the same date was 2.8 years (2.7). The average effective interest rate as per December 31, 2014 was 3.4% (3.5%).
Castellum utilizes interest rate derivatives to achieve the desired interest rate maturity structure. Interest rate derivatives is a cost effective and fl exible way to manage the interest terms. In the interest rate maturity structure, interest rate derivatives are accounted for in the earliest time segment in which they can mature.
Credit margins are distributed in the interval of the underlying loans.
Distribution of interest bearing financing 31-12-2014
Secured credit facilities 31-12-2014
Interest rate maturity structure 31-12-2014
| Interest rate | Closing | |||
|---|---|---|---|---|
| Credit. SEKm | derivates SEKm | Net. SEKm | interest rate | |
| 0-1 year | 18,399 | – 9,750 | 8,649 | 3.4% |
| 1-2 years | – | 650 | 650 | 2.4% |
| 2-3 years | – | 900 | 900 | 2.9% |
| 3-4 years | – | 1,600 | 1,600 | 3.3% |
| 4-5 years | – | 1,600 | 1,600 | 3.3% |
| 5-10 years | – | 5,000 | 5,000 | 3.5% |
| Total | 18,399 | – | 18,399 | 3.4% |
Currency
Castellum owns properties in Denmark with a value of SEKm 530 (466), which means that the Group is exposed to currency risk. The currency risk is primarily related to when income statement and balance sheet in foreign exchange are translated into Swedish currency. In accordance with the fi nancial policy, between 60-100% of investments in foreign subsidiaries are to be fi nanced in local currency.
Interest rate and currency derivatives
Castellum utilizes interest rate derivatives to achieve the desired interest rate maturity structure. According to the accounting standard IAS 39, derivatives are subject to market valuation. If the agreed interest rate deviates from the market interest rate, there is a surplus or sub-value in the interest rate derivatives where the non-cash fl ow changes in value are reported in the income statement. At maturity, a derivative's market value is dissolved and the change in value over time has thus not affected equity. Castellum also has derivatives in order to hedge currency fl uctuation in its investment in Denmark. As for currency derivatives, a surplus or sub-value occurs if the agreed exchange rate deviates from the current exchange rate, where the effective portion of value changes is accounted for in other total income.
To calculate the market value of derivatives, market rates for each term and, where appropriate, exchange rates, as quoted on the market at the closing date are used. Interest rate swaps are valued by discounting future cash fl ows to present value while instruments containing options are valued at current repurchase price.
As of December 31, 2014, the market value of the interest rate derivatives portfolio amounted to SEKm –1,344 (–687) and the currency derivative portfolio to SEKm –13 (4). All derivatives are classifi ed according to IFRS 13, level 2.
| Castellum's financial policy and commitments in credit agreements | |||||||
|---|---|---|---|---|---|---|---|
| Policy | Committment | Outcome | |||||
| Loan to value ratio | Not in the long run exceeding 55% | No more than 65% | 49% | ||||
| Interest coverage ratio | At least 200% | At least 150% | 318% | ||||
| Interest rate risk | |||||||
| – average fixed interest term | 1-4,5 years* | – | 2.8 years | ||||
| – proportion maturing within 6 months | No more than 50% | – | 39% | ||||
| Currency risk | |||||||
| – investment | 60%-100% funded in local currency | – | 72% | ||||
| – other currency risks | Not allowed | – | No exposure | ||||
| Funding risk | At least 50% of interest bearing liabilities have a duration | – | |||||
| of at least 2 years | 96% | ||||||
| Counterparty risk | Credit institutions with high ratings, at least "investment grade" | – | Satisfi ed | ||||
| Liquidity risk | Liquidity reserve in order to fulfi ll payments due | – | SEKm 3,958 unutilized credit agreements |
||||
| * * Mandate in financial policy have, in accordance with the Board's decision, changed during the year from 0.5-3 years to 1-4.5 years. |
Credit agreement maturity structure Interest rate maturity structure
Consolidated statement of Comprehensive Income
| SEKm | 2014 Oct–Dec |
2013 Oct–Dec |
2014 Jan–Dec |
2013 Jan–Dec |
|---|---|---|---|---|
| Rental income | 822 | 818 | 3,318 | 3,249 |
| Operating expenses | – 139 | – 146 | – 542 | – 583 |
| Maintenance | – 44 | – 37 | – 136 | – 125 |
| Ground rent | – 7 | – 7 | – 27 | – 26 |
| Property tax | – 41 | – 41 | – 170 | – 169 |
| Leasing and property administration | – 67 | – 55 | – 221 | – 202 |
| Net operating income | 524 | 532 | 2,222 | 2,144 |
| Central administrative expenses | – 29 | – 29 | – 108 | – 96 |
| Net interest costs | – 157 | – 172 | – 664 | – 702 |
| Income from property management | 338 | 331 | 1,450 | 1,346 |
| Changes in value | ||||
| Properties | – 10 | 27 | 344 | 328 |
| Derivatives | – 162 | – 11 | – 660 | 429 |
| Income before tax | 166 | 347 | 1,134 | 2,103 |
| Current tax | – 1 | 6 | – 11 | – 6 |
| Deferred tax | 273 | – 51 | 88 | – 390 |
| Net income for the period/year | 438 | 302 | 1,211 | 1,707 |
| Other total net income Items that will be reclassified into net income |
||||
| Translation difference of currencies | 11 | 9 | 22 | 10 |
| Change in value derivatives, currency hedge | – 7 | – 6 | – 14 | – 7 |
| Total net income for the period/year | 442 | 305 | 1,219 | 1,710 |
Since there are no minority interests the entire net income is attributable to the shareholders of the parent company.
Data per Share
| 2014 Oct–Dec |
2013 Oct–Dec |
2014 Jan–Dec |
2013 Jan–Dec |
|
|---|---|---|---|---|
| Average number of shares, thousand | 164,000 | 164,000 | 164,000 | 164,000 |
| Income from property management, SEK | 2,06 | 2.02 | 8,84 | 8.21 |
| Income from prop. management after tax (EPRA EPS*), SEK | 1,99 | 2.14 | 8,26 | 8.04 |
| Earnings after tax, SEK | 2,67 | 1.84 | 7,38 | 10.41 |
| Outstanding number of shares, thousand | 164,000 | 164,000 | 164,000 | 164,000 |
| Property value, SEK | 229 | 230 | 229 | 230 |
| Long term net asset value (EPRA NAV*), SEK | 114 | 107 | 114 | 107 |
| Actual net asset value (EPRA NNNAV*), SEK | 100 | 97 | 100 | 97 |
Since there is no potential common stock (e.g. convertibles), there is no effect of dilution.
Financial Key Ratios
| 2014 Oct–Dec |
2013 Oct–Dec |
2014 Jan–Dec |
2013 Jan–Dec |
|
|---|---|---|---|---|
| Net operating income margin | 64% | 65% | 67% | 66% |
| Interest coverage ratio | 315% | 292% | 318% | 292% |
| Return on actual net asset value | 6,3% | 9,2% | 7,6% | 13.2% |
| Return on total capital | 4,9% | 5,6% | 6,5% | 6.4% |
| Net investments, SEKm | – 2,141 | 207 | – 529 | 1,081 |
| Loan to value ratio | 49% | 52% | 49% | 52% |
*EPRA, European Public Real Estate Association, is an association for listed real estate owners and investors in Europe, which among other things, sets standards for financial reporting, e.g. the key ratios EPRA EPS (Earnings Per Share), EPRA NAV (Net Asset Value) and EPRA NNNAV (Triple Net Asset Value).
Consolidated Balance Sheet
| SEKm | 31 Dec 2014 | 31 Dec 2013 |
|---|---|---|
| Assets | ||
| Investment properties | 37,599 | 37,752 |
| Other fixed assets | 28 | 31 |
| Current receivables | 414 | 260 |
| Cash and bank | 47 | 70 |
| Total assets | 38,088 | 38,113 |
| Shareholders' equity and liabilities | ||
| Shareholders' equity | 13,649 | 13,127 |
| Deferred tax liability | 3,612 | 3,700 |
| Other provisions | 23 | – |
| Derivatives | 1,357 | 683 |
| Long term interest-bearing liabilities | 18,446 | 19,481 |
| Non interest-bearing liabilities | 1,001 | 1,122 |
| Total shareholders' equity and liabilities | 38,088 | 38,113 |
| Pledged assets (property mortgages) | 18,222 | 18,375 |
| Contingent liabilities | – | – |
Changes in Equity
| 7,887 – 648 |
12,065 – 648 |
|---|---|
| 1,707 | |
| – | 3 |
| 8,946 | 13,127 |
| – 697 | – 697 |
| 1,211 | 1,211 |
| – | 8 |
| 9,460 | 13,649 |
| 1,707 |
Cash Flow Statement
| 2014 | 2013 | 2014 | 2013 | |
|---|---|---|---|---|
| SEKm | Oct-Dec | Oct-Dec | Jan-Dec | Jan-Dec |
| Net operating income | 524 | 532 | 2,222 | 2,144 |
| Central administrative expenses | – 29 | – 29 | – 108 | – 96 |
| Reversed depreciations | 3 | 3 | 12 | 11 |
| Net interest rates paid | – 161 | – 190 | – 689 | – 701 |
| Tax paid | 2 | 5 | – 7 | – 12 |
| Currency translation difference | – 6 | – 4 | – 10 | – 5 |
| Cash fl ow from operating activities before change in working capital | 333 | 317 | 1,420 | 1,341 |
| Change in current receivables | 47 | 1 | 88 | – 22 |
| Change in current liabilities | – 225 | – 28 | – 118 | 56 |
| Cash fl ow from operating activities | 155 | 290 | 1,390 | 1,375 |
| Investments in new constructions, refurbishments and extensions | – 380 | – 438 | – 1,378 | – 1,583 |
| Property acquisitions | – 293 | 0 | – 1,147 | – 185 |
| Change in liabilities at acquisitions of property | 11 | – 2 | 18 | 14 |
| Property sales | 2,837 | 231 | 3,077 | 687 |
| Change in receivables at sales of property | – 141 | 13 | – 242 | – 6 |
| Other investments | – 1 | – 5 | – 9 | – 18 |
| Cash fl ow from investment activities | 2,033 | – 201 | 319 | – 1,091 |
| Change in long term liabilities | – 2,315 | – 195 | – 1,035 | 387 |
| Change long term receivables | – | – | – | 3 |
| Dividend paid | – | – | – 697 | – 648 |
| Cash fl ow from fi nancing activities | – 2,315 | – 195 | – 1,732 | – 258 |
| Cash fl ow for the period/year | – 127 | – 106 | – 23 | 26 |
| Cash and bank opening balance | 174 | 176 | 70 | 44 |
| Cash and bank closing balance | 47 | 70 | 47 | 70 |
Quartely Summary
| Jan-March 2014 |
Apr-June 2014 |
July-Sept 2014 |
Oct-Dec 2014 |
2014 | Jan-March 2013 |
Apr-June 2013 |
July-Sept 2013 |
Oct-Dec 2013 |
2013 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement, SEKm | ||||||||||
| Rental income | 820 | 843 | 833 | 822 | 3,318 | 814 | 808 | 809 | 818 | 3,249 |
| Property costs | – 302 | – 262 | – 234 | – 298 | – 1 096 | – 317 | – 269 | – 233 | – 286 | – 1,105 |
| Net operating income | 518 | 581 | 599 | 524 | 2,222 | 497 | 539 | 576 | 532 | 2,144 |
| Central administrative expenses | – 26 | – 30 | – 23 | – 29 | – 108 | – 21 | – 28 | – 18 | – 29 | – 96 |
| Net interest costs | – 169 | – 171 | – 167 | – 157 | – 664 | – 176 | – 177 | – 177 | – 172 | – 702 |
| Income from property management | 323 | 380 | 409 | 338 | 1,450 | 300 | 334 | 381 | 331 | 1,346 |
| Changes in value. properties | 52 | 305 | – 3 | – 10 | 344 | 32 | 87 | 182 | 27 | 328 |
| Changes in value. derivatives | – 170 | – 196 | – 132 | – 162 | – 660 | 166 | 221 | 53 | – 11 | 429 |
| Current tax | – 3 | – 1 | – 6 | – 1 | – 11 | – 2 | – 4 | – 6 | 6 | – 6 |
| Deferred tax | – 31 | – 99 | – 55 | 273 | 88 | – 93 | – 139 | – 107 | – 51 | – 390 |
| Net income for the period/year | 171 | 389 | 213 | 438 | 1,211 | 403 | 499 | 503 | 302 | 1,707 |
| Other total net income | ||||||||||
| 0 | 4 | 0 | 4 | 8 | 0 | 3 | – 3 | 3 | 3 | |
| Total net income for the period/year | 171 | 393 | 213 | 442 | 1,219 | 403 | 502 | 500 | 305 | 1,710 |
| Balance Sheet, SEKm | ||||||||||
| Investment properties | 38,668 | 39,385 | 39,733 | 37,599 | 37,599 | 36,683 | 37,301 | 37,505 | 37,752 | 37,752 |
| Other fixed assets | 255 | 408 | 350 | 442 | 442 | 283 | 276 | 303 | 291 | 291 |
| Cash and bank | 185 | 177 | 174 | 47 | 47 | 18 | 59 | 176 | 70 | 70 |
| Total assets | 39,108 | 39,970 | 40,257 | 38,088 | 38,088 | 36,984 | 37,636 | 37,984 | 38,113 | 38,113 |
| Shareholders' equity | 12,601 | 12,994 | 13,207 | 13,649 | 13,649 | 11,820 | 12,322 | 12,822 | 13,127 | 13,127 |
| Deferred tax liability | 3,731 | 3,830 | 3,885 | 3,612 | 3,612 | 3,403 | 3,542 | 3,649 | 3,700 | 3,700 |
| Other provisions | – | – | – | 23 | 23 | – | – | – | – | – |
| Derivatives | 853 | 1,055 | 1,188 | 1,357 | 1,357 | 932 | 721 | 666 | 683 | 683 |
| Long term interest-bearing liabilities | 20,730 | 20,802 | 20,761 | 18,446 | 18,446 | 19,773 | 19,988 | 19,676 | 19,481 | 19,481 |
| Non-interest-bearing liabilities | 1,193 | 1,289 | 1,216 | 1,001 | 1,001 | 1,056 | 1,063 | 1,171 | 1,122 | 1,122 |
| Total shareholders' equity and liabilities | 39,108 | 39,970 | 40,257 | 38,088 | 38,088 | 36,984 | 37,636 | 37,984 | 38,113 | 38,113 |
| Financial key ratios | ||||||||||
| Net operating income margin | 63% | 69% | 72% | 64% | 67% | 61% | 67% | 71% | 65% | 66% |
| Interest rate, avarage | 3.5% | 3.4% | 3.3% | 3.2% | 3.3% | 3.8% | 3.7% | 3.7% | 3.6% | 3.7% |
| Interest coverage ratio | 291% | 322% | 345% | 315% | 318% | 270% | 289% | 315% | 292% | 292% |
| Return on actual net asset value | 5.2% | 12.2% | 6.6% | 6.3% | 7.6% | 12.3% | 15.5% | 14.3% | 9.2% | 13.2% |
| Return on total capital | 5.6% | 8.7% | 5.7% | 4.9% | 6.5% | 5.5% | 6.4% | 7.8% | 5.6% | 6.4% |
| Investments in properties, SEKm | 960 | 523 | 369 | 673 | 2 525 | 413 | 538 | 379 | 438 | 1,768 |
| Sales, SEKm | 96 | 125 | 19 | 2,814 | 3,054 | 80 | 25 | 351 | 231 | 687 |
| Loan to value ratio | 54% | 53% | 52% | 49% | 49% | 54% | 54% | 52% | 52% | 52% |
| Data per share (since there are no potential common stock there is no effect of dilution) | ||||||||||
| Average number of shares, thousand | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 |
| Income from property management, SEK | 1.97 | 2.32 | 2.49 | 2.06 | 8.84 | 1.83 | 2.04 | 2.32 | 2.02 | 8.21 |
| Income prop mgmt after tax (EPRA EPS), SEK | 1.80 | 2.13 | 2.34 | 1.99 | 8.26 | 1.77 | 1.96 | 2.17 | 2.14 | 8.04 |
| Earnings after tax, SEK | 1.04 | 2.37 | 1.30 | 2.67 | 7.38 | 2.46 | 3.04 | 3.07 | 1.84 | 10.41 |
| Outstanding number of shares, thousand | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 |
| Property value, SEK | 236 | 240 | 242 | 229 | 229 | 224 | 227 | 229 | 230 | 230 |
| Long term net asset value (EPRA NAV), SEK | 105 | 109 | 111 | 114 | 114 | 99 | 101 | 104 | 107 | 107 |
| Actual net asset value (EPRA NNNAV), SEK | 94 | 97 | 99 | 100 | 100 | 88 | 92 | 95 | 97 | 97 |
| Dividend, SEK (2014 proposed) | 4,60 | 4.25 | ||||||||
| Dividend ratio | 52% | 52% | ||||||||
| Property related key ratios | ||||||||||
| Rental value, SEK/sq,m, | 1,045 | 1,047 | 1,040 | 1,070 | 1,064 | 1,025 | 1,032 | 1,029 | 1,042 | 1,036 |
| Economic occupancy rate | 87.9% | 89.0% | 88.3% | 88.8% | 88.7% | 89.3% | 87.6% | 89.0% | 88.6% | 88.4% |
| Property costs, SEK/sq,m, | 334 | 289 | 256 | 340 | 307 | 353 | 299 | 258 | 322 | 307 |
| Property value, SEK/sq,m, | 10,394 | 10,552 | 10,621 | 11,118 | 11,118 | 10,006 | 10,081 | 10,170 | 10,285 | 10,285 |
Multi-Year Summary
| 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement, SEKm | ||||||||||
| Rental income | 3,318 | 3,249 | 3,073 | 2,919 | 2,759 | 2,694 | 2,501 | 2,259 | 2,014 | 1,907 |
| Property costs | – 1,096 | – 1,105 | – 1,042 | – 1,003 | – 960 | – 942 | – 831 | – 771 | – 700 | – 637 |
| Net operating income | 2,222 | 2,144 | 2,031 | 1,916 | 1,799 | 1,752 | 1,670 | 1,488 | 1,314 | 1,270 |
| Central administrative expenses | – 108 | – 96 | – 93 | – 83 | – 84 | – 81 | – 71 | – 69 | – 67 | – 68 |
| Net interest costs | – 664 | – 702 | – 683 | – 660 | – 574 | – 541 | – 626 | – 495 | – 364 | – 382 |
| Income from property management | 1,450 | 1,346 | 1,255 | 1,173 | 1,141 | 1,130 | 973 | 924 | 883 | 820 |
| Changes in value, properties | 344 | 328 | – 69 | 194 | 1,222 | – 1,027 | – 1,262 | 920 | 1,145 | 932 |
| Changes in value, derivatives | – 660 | 429 | – 110 | – 429 | 291 | 102 | – 1,010 | 99 | 178 | – 40 |
| Current tax | – 11 | – 6 | – 7 | – 10 | – 5 | – 10 | –14 | – 22 | – 10 | –1 |
| Deferred tax | 88 | – 390 | 404 | – 217 | – 685 | – 35 | 650 | – 434 | – 522 | – 417 |
| Net income for the year | 1,211 | 1,707 | 1,473 | 711 | 1,964 | 160 | – 663 | 1,487 | 1,674 | 1,294 |
| Other total net income | 8 | 3 | – 4 | 0 | – | – | – | – | – | – |
| Total net income for the year | 1,219 | 1,710 | 1,469 | 711 | 1,964 | 160 | – 663 | 1,487 | 1,674 | 1,294 |
| Balance Sheet, SEKm | ||||||||||
| Investment properties | 37,599 | 37,752 | 36,328 | 33,867 | 31,768 | 29,267 | 29,165 | 27,717 | 24,238 | 21,270 |
| Other fixed assets | 442 | 291 | 259 | 207 | 156 | 201 | 230 | 123 | 200 | 103 |
| Cash and bank | 47 | 70 | 44 | 97 | 12 | 8 | 9 | 7 | 8 | 5 |
| Total assets | 38,088 | 38,113 | 36,631 | 34,171 | 31,936 | 29,476 | 29,404 | 27,847 | 24,446 | 21,378 |
| Shareholders' equity | 13,649 | 13,127 | 12,065 | 11,203 | 11,082 | 9,692 | 10,049 | 11,204 | 10,184 | 8,940 |
| Deferred tax liability | 3,612 | 3,700 | 3,310 | 3,714 | 3,502 | 2,824 | 2,785 | 3,322 | 2,723 | 2,126 |
| Other provisions | 23 | – | – | – | – | – | – | – | – | – |
| Derivatives | 1,357 | 683 | 1,105 | 1,003 | 574 | 865 | 966 | – 44 | 55 | 233 |
| Long term interest-bearing liabilities | 18,446 | 19,481 | 19,094 | 17,160 | 15,781 | 15,294 | 14,607 | 12,582 | 10,837 | 9,396 |
| Non-interest-bearing liabilities | 1,001 | 1,122 | 1,057 | 1,091 | 997 | 801 | 997 | 783 | 647 | 683 |
| Total shareholders' equity and liabilities | 38,088 | 38,113 | 36,631 | 34,171 | 31,936 | 29,476 | 29,404 | 27,847 | 24,446 | 21,378 |
| Financial key ratios | ||||||||||
| Net operating income margin | 67% | 66% | 66% | 66% | 65% | 65% | 67% | 66% | 65% | 67% |
| Interest rate, average | 3.3% | 3.7% | 3,9% | 4,1% | 3,7% | 3,7% | 4,7% | 4,2% | 3,7% | 4,3% |
| Interest coverage ratio | 318% | 292% | 284% | 278% | 299% | 309% | 255% | 287% | 343% | 315% |
| Return on actual net asset value | 7.6% | 13.2% | 7,9% | 6,4% | 21,5% | 1,6% | – 8,3% | 16,2% | 20,7% | 18,2% |
| Return on total capital | 6.5% | 6.4% | 5,3% | 6,2% | 9,8% | 2,1% | 1,2% | 9,1% | 10,4% | 10,4% |
| Net investments in properties, SEKm | 2,525 | 1,768 | 2,798 | 2,015 | 1,506 | 1,165 | 2,738 | 2,598 | 2,283 | 1,357 |
| Sales, SEKm | 3,054 | 687 | 253 | 107 | 227 | 36 | 28 | 39 | 460 | 468 |
| Loan to value ratio | 49% | 52% | 53% | 51% | 50% | 52% | 50% | 45% | 45% | 45% |
| Data per share (since there are no potential common stock, there is no effect of dilution) | ||||||||||
| Average number of shares, thousand | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 |
| Income from property management, SEK | 8.84 | 8.21 | 7.65 | 7.15 | 6.96 | 6.89 | 5.93 | 5.63 | 5.38 | 5.00 |
| Income prop mgmt after tax (EPRA EPS), SEK | 8.26 | 8.04 | 7.27 | 7.01 | 6.62 | 6.93 | 5.85 | 5.50 | 5.09 | 4.49 |
| Earnings after tax, SEK | 7.38 | 10.41 | 8.98 | 4.34 | 11.98 | 0.98 | – 4.04 | 9.07 | 10.21 | 7.89 |
| Number of outstanding shares, thousand | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 | 164,000 |
| Property value, SEK | 229 | 230 | 222 | 207 | 194 | 178 | 178 | 169 | 148 | 130 |
| Long term net asset value (EPRA NAV), SEK | 114 | 107 | 100 | 97 | 92 | 82 | 84 | 88 | 79 | 69 |
| Actual net asset value (EPRA NNNAV), SEK | 100 | 97 | 90 | 87 | 85 | 73 | 75 | 85 | 76 | 65 |
| Dividend, SEK (2014 proposed) | 4.60 | 4.25 | 3.95 | 3.70 | 3.60 | 3.50 | 3.15 | 3.00 | 2.85 | 2.62 |
| Dividend ratio | 52% | 52% | 52% | 52% | 52% | 51% | 53% | 53% | 53% | 52% |
| Property related key ratios | ||||||||||
| Rental value, SEK/sq,m, | 1,064 | 1,036 | 1,015 | 995 | 974 | 969 | 921 | 896 | 864 | 851 |
| Economic occupancy rate | 88.7% | 88.4% | 88.6% | 89.3% | 89.0% | 89.8% | 89.7% | 87.9% | 87.1% | 88.1% |
| Property costs, SEK/sq,m, | 307 | 307 | 298 | 300 | 298 | 300 | 268 | 262 | 259 | 247 |
| Property value, SEK/sq,m | 11,118 | 10,285 | 9,916 | 9,835 | 9,499 | 9,036 | 8,984 | 9,098 | 8,466 | 7,930 |
The Parent Company
The parent company Castellum AB is responsible for matters concerning the stock market, such as consolidated reports and stock market information, as well as the credit market, such as funding and fi nancial risk management.
The parent company takes part in property-related operations through capital allocation and involvement in subsidiary Boards.
| Income statement SEKm |
2014 Oct-Dec |
2013 Oct-Dec |
2014 Jan-Dec |
2013 Jan-Dec |
|---|---|---|---|---|
| Income | 8 | 6 | 21 | 18 |
| Operating expenses | – 26 | – 22 | – 84 | – 71 |
| Net financial items | – 2 | 3 | 11 | 15 |
| Dividend/group contributions | 897 | 718 | 897 | 718 |
| Change in derivatives | – 162 | – 11 | – 660 | 429 |
| Income before tax | 715 | 694 | 185 | 1,109 |
| Tax | – 65 | – 28 | 51 | – 119 |
| Net income for the period/year | 650 | 666 | 236 | 990 |
| Comprehensive income for the parent company | ||||
| Net income for the period/year | 650 | 666 | 236 | 990 |
| Items that will be reclassified into net income | ||||
| Translation difference foreign operations | 7 | 6 | 14 | 7 |
| Unrealized change, currency hedge | – 7 | – 6 | – 14 | – 7 |
| Total net income for the period/year | 650 | 666 | 236 | 990 |
| Balance sheet, SEKm | 31 Dec 2014 | 31 Dec 2013 | ||
| Participations in group companies | 6,030 | 5,869 | ||
| Receivables, group companies | 17,990 | 18,137 | ||
| Other assets | 181 | 119 | ||
| Cash and bank | 16 | 52 | ||
| Total | 24,217 | 24,177 | ||
| Shareholders' equity | 4,577 | 5,038 | ||
| Derivatives | 1,357 | 683 | ||
| Interest bearing liabilities | 16,280 | 17,315 | ||
| Interest bearing liabilities, group companies | 1,883 | 998 | ||
| Other liabilities | 120 | 143 | ||
| Total | 24,217 | 24,177 | ||
| Pledged assets (receivables group companies) |
15,200 | 14,928 | ||
| Contingent liabilities (guaranteed commitments for subsidiaries) |
2,165 | 2,166 |
Accounting Principles
Castellum follows the EU-adopted IFRS standards. This interim report has been prepared according to IAS 34 Interim Financial Reporting and the Annual Accounts Act. Accounting principles and methods for calculations have remained unchanged compared with the Annual Report of the previous year except for IFRIC 21. IFRIC 21 states that levies, for Castellum property tax, shall be recognized when the obligation arises which occurs annually, January 1. Unconsumed share of the liability is recognized as prepaid costs. The change has no affect on profi t.
Opportunities and Risks for Group and Parent Company
Opportunities and risks in the cash flow
Over time, increasing market interest rates normally constitute an effect of economic growth and increasing infl ation, which is expected to result in higher rental income. This is partly due to the fact that the demand for premises is thought to increase. This leads, in turn, to reduced vacancies and hence to the potential for increasing market rents. It is also partly due to the fact that the index clause in commercial contracts compensates for increased infl ation.
An economic boom therefore means higher interest costs but also higher rental income, while the opposite relationship is true during a recession. The changes in rental income and interest cost do not take place at the exact same time, which is why the effect on income in the short run may occur at different points in time.
Sensitivity analysis - cash fl ow
| Effect on income next 12 months | |
|---|---|
| --------------------------------- | -- |
| Effect on income, SEKm | Probable scenario | |||
|---|---|---|---|---|
| +/– 1% (units) | Boom | Recession | ||
| Rental level / Index | + 31/– 31 | + | – | |
| Vacancies | – 35/+ 35 | – | + | |
| Property costs | – 10/+ 10 | – | 0 | |
| Interest costs | – 67/+ 17* | – | + | |
* With the assumption that the interest rate can't fall below 0%
Opportunities and risks in property values
Castellum reports its properties at fair value with changes in value in the income statement. This means that the result in particular but also the fi nancial position may be more volatile. Property values are determined by supply and demand, where prices mainly depend on the properties' expected net operating incomes and the buyers' required yield. An increasing demand results in lower required yields and hence an upwarded adjustment in prices, while a weaker demand has the opposite effect. In the same way, a positive development in net operating income results in an upward adjustment in prices, while a negative development has the opposite effect.
In property valuations, consideration should be taken of an uncertainty range of +/– 5-10%, in order to refl ect the uncertainty that exists in the assumptions and calculations made.
Sensitivity analysis - change in value
| Properties | – 20% | – 10% | 0% | + 10% | + 20% |
|---|---|---|---|---|---|
| Changes in value, SEKm | – 7,520 | – 3,760 | – | 3,760 | 7,520 |
| Loan to value ratio | 61% | 55% | 49% | 45% | 41% |
Financial risk
Ownership of properties presumes a working credit market. Castellum's greatest fi nancial risk is to lack access to funding. The risk is reduced by a low loan-to-value ratio and long-term credit agreements.
Annual General Meeting
For the AGM on March 19, 2015 the Board of Directors proposes:
- a dividend of SEK 4.60 per share and March 23, 2015 as record day. The proposal is an increase of 8% compared to previous year,
- guidelines for remuneration to members of the executive management,
- a renewed mandate for the Board to decide on purchase or transfer of the company's own shares.
The election committee, which consists of Björn Franzon (chairman) representing the Szombatfalvy family and Stiftelsen Global Challenges Foundation, Mr. Rutger van der Lubbe representing Stichting Pensioenfonds ABP, Mr. Johan Strandberg representing SEB Fonder and Castellum's Chairman of the board Charlotte Strömberg, proposes for the AGM;
- re-election of the present board members Mrs. Charlotte Strömberg, Mr. Per Berggren, Mrs. Nina Linander, Mr. Christer Jacobson, Mr. Jan Åke Jonsson, and Mr. Johan Skoglund, as members of the board of directors. Mrs. Marianne Dicander Alexandersson, board member since 2005, has declined re-election. Mrs. Anna-Karin Hatt is proposed to be elected as a new memeber of the board of directors. Mrs. Charlotte Strömberg is proposed to be re-elected as chairman of the board of directors.
- that remuneration to the board of directors is proposed to be the following. The chairman of the board of directors: SEK 640,000, other members of the board of directors: SEK 300,000, member of the board of directors' remun eration committee, including the chairman: SEK 30,000, chairman of the board of directors' audit and fi nance committee: SEK 50,000, other members of the board of directors' audit and fi nance committee: SEK 35,000.The proposed total remuneration to the members of the board of directors, including remuneration for committee work, accordingly amounts to SEK 2,650,000 (SEK 2,445,000 previous year).
- for AGM to decide on appointing an election committee for the AGM 2016 and for the Chairman to contact the three largest registered or in an other way known shareholders at the end of the last day of share trade in August 2015 and invite them each to appoint one member to the election committee, and that the three appointed members together with the Chairman of the Board of Directors shall constitute the election committee. The election committee appoints a chairman amongst its members. The names of the members of the election committee shall be made public no later than six months before the next annual general meeting 2016.
Gothenburg January 21, 2015
Henrik Saxborn
Chief Executive Offi cer
This Interim Report has not been examined by the company's auditors.
Board of Directors
Charlotte Strömberg Chairman of the Board Per Berggren Board member
Jan Åke Jonsson Board member
Marianne Dicander Alexandersson Board member
Christer Jacobson Board member
Nina Linander Board member
Johan Skoglund Board member
Executive Group Management
Henrik Saxborn Chief Executive Officer Ulrika Danielsson Finance Director
Cecilia Fasth AB
Christoffersson Head of Business
MD Eklandia Fastighets
Claes Larsson
MD Aspholmen
Anders Nilsson MD Fastighets AB Brostaden
Briggen
MD Fastighets AB
Christer Sundberg MD Harry Sjögren AB
The Castellum Share
The Castellum share is listed on NASDAQ Stockholm Large Cap. At the end of the period the company had about 16,270 shareholders. Shareholders registered abroad cannot be broken down in terms of directly held and nominee registered shares except for two foreign shareholders who has fl agged for holding over 5%, Stichting Pensioenfonds ABP and Black rock. In addition, SEB Investment Management AB has fl agged for holding over 5%. Blackrock has declared that they have decreased their holdings to under 5% after the year-end. Castellum has no direct registered shareholders with holdings exceeding 10%. The ten single largest Swedish shareholders are presented in the table below.
| Shareholders on 31-12-2014 | Percentage of | |
|---|---|---|
| Shareholders | Number of shares thousand |
voting rights and capital |
| Stiftelsen Global Challenges Foundation | 5,000 | 3.0% |
| Lannebo Småbolag | 4,000 | 2.4% |
| Länsförsäkringar Fastighetsfond | 3,231 | 2.0% |
| AMF Pensionsförsäkring AB | 2,350 | 1.4% |
| Kåpan Pensioner | 2,180 | 1.3% |
| Magdalena Szombatfalvy | 1,935 | 1.2% |
| Susanna Lööw | 1,627 | 1.0% |
| SEB Swedish Value Fund | 1,525 | 0.9% |
| SEB Sverigefond | 1,476 | 0.9% |
| SEB Sverigefond Småbolag | 1,441 | 0.9% |
| Board and executive management Castellum | 267 | 0.2% |
| Other shareholders registered in Sweden | 53,164 | 32.5% |
| Shareholders registered abroad | 85,804 | 52.3% |
| Total registered shares | 164,000 | 100.0% |
| Repurchased shares | 8,007 | |
| Total registered shares | 172,007 |
There is no potential common stock (eg. convertibles)
Distribution of shareholders by country 31-12-2014
The Castellum share price as at 31 December, 2014 was SEK 122.10 (100.10) equivalent to a market capitalization of SEK 20.0 billion (16.4), calculated on the number of outstanding shares.
During the year a total of 133 million (106) shares were traded, equivalent to an average of 532,000 shares (425,000) per day, corresponding on an annual basis to a turnover rate of 81% (65%). The share turnover is based on statistics from NASDAQ, Chi-X, Burgundy, Turquoise and BATS Europe.
Net asset value
Net asset value is the total equity which the company manages to its owners by creating return and growth given a certain level of risk.
The long term net asset value (EPRA NAV) can be calculated to SEK 114 per share (107). The share price at the end of the year was thus 107% (94%) of the long term net asset value.
| Net asset value | SEKm | SEK/share |
|---|---|---|
| Equity according to the balance sheet | 13,649 | 83 |
| Reversed | ||
| Derivatives according to balance sheet | 1,357 | 9 |
| Deferred tax according to balance sheet | 3,612 | 22 |
| Long term net asset value (EPRA NAV) | 18,618 | 114 |
| Deduction | ||
| Derivatives as above | –1,357 | – 9 |
| Estimated real liability, deferred tax 5.0%* | –829 | – 5 |
| Actual net asset value (EPRA NNNAV) | 16,432 | 100 |
* Estimated real deferred tax liability net has been calculated to 5% based on a discount rate of 3%. Further, assessments have been made that tax loss carry forwards are realized in 2 years with a nominal tax of 22%, giving a present value of deferred tax liability of 21%, and that the properties are realized in 50 years where 33% are sold directly with a nominal tax of 22% and that 67% are sold indirect through company disposals where the buyers tax discount is 6%, which gives a present value of deferred tax liability of 6%.
Earnings
Income from property management adjusted for nominal tax attributable to income from property management (EPRA EPS) amounted to 8.26 (8.04) on rolling annual basis. This results in a share price yield of 6.8% (8.0%) corresponding to a multiple of 15 (12). Income from property management must be adjusted by a long-term increase in the property value.
Earings per share amounted in 2014 to SEK 7.38 (10.41), which based on the share price provides a return on 6.1% (10.4%), corresponding to a multiple of 17 (10).
Dividend yield
The latest carried dividend of SEK 4.60 (4.25) corresponds to a yield of 3.8% (4.2%) based on the share price at the end of the year.
Total share yield
During the last 12-month period the total yield of the Castellum share has been 27% (13%), including a dividend of SEK 4.25.
Net asset yield including long-term change in value
In companies managing real assets, such as real estate, the income from property management only refl ects part – albeit a large part – of the overall result. The defi nition of a real asset is that its value is protected. This means that over time – and with proper maintenance – the real asset increases in value to compensate for infl ation. The net asset value – i.e., the denominator of the yield ratio
income/capital – is adjusted annually in accordance with IFRS regulations for changes in value. In order to provide an accurate fi gure of the yield, the numerator – i.e., income – must be similarly adjusted. Therefore, the recorded net income has to be supplemented with a component of value changes as well as with effective tax to provide an accurate view of income and yield.
One problem is that changes in value can vary greatly between years and quarters, thus leading to volatile results. However, by being a long-term player with stable cash fl ow and a balanced real estate portfolio, Castellum is able to make use of long-term value changes to adjust the numerator of the equation.
Net asset yield and earnings including long-term change in value
| Sensitivity analysis | |||
|---|---|---|---|
| –1%-unit | +1%-unit | ||
| Income from property management 2014 | 1,450 | 1,450 | 1,450 |
| Change in property value (on average 10 years) | 410 | 37 | 782 |
| D:o % | 1.1% | 0.1% | 2.1% |
| Current tax, 5% | – 77 | – 77 | –77 |
| Earnings after tax | 1,783 | 1,410 | 2,155 |
| Earnings SEK/share | 10.87 | 8.60 | 13.14 |
| Return on share | 8.9% | 7.0% | 10.8% |
| Return on actual long-term net asset value | 10.5% | 8.3% | 12.7% |
The share's dividend yield Share price/net asset value
| Growth, yield and fi nancial risk | 2014 | 3 years average/year |
10 years average/year |
|---|---|---|---|
| Growth | |||
| Rental income SEK/share | 2% | 4% | 6% |
| Income from prop. management SEK/share | 8% | 7% | 7% |
| Net income for the year after tax SEK/share | neg | 19% | 3% |
| Dividend SEK/share | 8% | 8% | 7% |
| Long term net asset value SEK/share | 7% | 5% | 7% |
| Actual net asset value SEK/share | 4% | 4% | 6% |
| Real estate portfolio SEK/share | 6% | 6% | 8% |
| Change in property value | 0.9% | 0.5% | 1.1% |
| Yield | |||
| Return on actual long term net asset value | 10.5% | 9.2% | 11.1% |
| Return on actual net asset value | 7.6% | 8.9% | 11.1% |
| Return on total capital | 6.5% | 5.9% | 7.0% |
| Total yield of the share (incl. dividend) | |||
| Castellum | 27% | 17% | 11% |
| NASDAQ Stockholm (SIX Return) | 16% | 20% | 12% |
| Real Estate Index Sweden (EPRA) | 37% | 24% | 14% |
| Real Estate Index Europe (EPRA) | 26% | 22% | 5% |
| Real Estate Index Eurozone (EPRA) | 23% | 19% | 7% |
| Real Estate Index Great Britain (EPRA) | 21% | 25% | 3% |
| Financial risk | |||
| Loan to value ratio | 49% | 52% | 49% |
| Interest coverage ratio | 318% | 298% | 298% |
The Castellum share's price trend and turnover since the IPO May 23, 1997 until December 31, 2014
Calendar
| mid-February 2015 | The Board of Directors in Castellum proposes a dividend to the shareholders of SEK 4.60 per share. |
|
|---|---|---|
| 19 March 2015 | ||
| 15 April 2015, around 1 pm | Record date for AGM | 13 March 2015 |
| 15 July 2015 | Annual General Meeting | 19 March 2015 |
| 15 October 2015 | Ex-dividend date | 20 March 2015 |
| 20 January 2016 | Record date for dividend | 23 March 2015 |
| 17 March 2016 | Dividend payment | 26 March 2015 |
www.castellum.se
On Castellum's website it is possible to download as well as subscribe to Castellum's Pressreleases and Interim Reports. For further information please contact Henrik Saxborn, CEO, tel +46 705 60 74 50 or Ulrika Danielsson, CFO, tel +46 706 47 12 61.
Invitation to Annual General Meeting 2015
The Annual General Meeting of shareholders will be held on Thursday 19 March 2014 at 5 pm at Chalmers Kårhus, RunAn, at Chalmersplatsen 1 in Gothenburg. The entrance opens at 4 pm. Shareholders wishing to attend the Annual General Meeting must be registered as shareholders in the share register kept by Euroclear Sweden AB by Friday 13 March 2015 and must also have notified their attendance to the company no later than 4 pm on Friday 13 March 2015.
Summons to the annual general meeting will be around 12 February 2015 and the summons will be available at www.castellum.se. Also Castellum's annual report and other documents which will be presented at the Annual General Meeting will be available on the website by then. The summons will include the items to be addressed at the Annual General Meeting. Shareholders who wish to attend the Annual General Meeting are already welcome to notify their attendance as described below.
Notification of attendance at the annual general meeting can be made by post to Castellum AB (publ), Box 2269, 403 14, Gothenburg, by phone +46 (0)31-60 74 00, by fax +46 (0)31-13 17 55, by e-mail [email protected], or by filling out a notification form on www.castellum.se. The notification must state name/business name, personal identification number/company registration number, address and telephone number. For those shareholders, who wish to be represented by proxy, the company provides a proxy form on www.castellum.se.
Shareholders with nominee registered shares must temporarily register such nominee shares in their own name in order to have the right to participate at the annual general meeting. Such registration must have been carried out at Euroclear Sweden AB no later than Friday 13 March 2014. Shareholders must, in good time before this date, instruct their nominees to effect such registration.
A shareholder have the right to have a matter addressed at the coming Annual General Meeting. For practical reasons the request should be received by the company no later than 30 January, 2015. The request should be addressed to Castellum AB, Att: Henrik Saxborn, Box 2269, 403 14 Göteborg.
Subsidiaries
Aspholmen Fastigheter AB
Rörvägen 1, Box 1824, 701 18 Örebro Telephone +46 19-27 65 00 Telefax +46 19-27 65 19 [email protected] www.aspholmenfastigheter.se
Fastighets AB Corallen
Bataljonsgatan 10, Box 7, 551 12 Jönköping Telephone +46 36-580 11 50 [email protected] www.corallen.se
Fastighets AB Briggen
Riggaregatan 57, Box 3158, 200 22 Malmö Telephone +46 040-38 37 20 [email protected] www.briggen.se
Eklandia Fastighets AB
Theres Svenssons gata 9, Box 8725, 402 75 Göteborg Telephone +46 31-744 09 00 Telefax +46 31-744 09 50 [email protected] www.eklandia.se
Fastighets AB Brostaden
Tjurhornsgränd 6, Box 5013, 121 05 Johanneshov Telephone +46 8-602 33 00 Telefax +46 8-602 33 30 [email protected] www.brostaden.se
Harry Sjögren AB
Kråketorpsgatan 20, 431 53 Mölndal Telephone +46 31-706 65 00 Telefax +46 31-706 65 29 [email protected] www.harrysjogren.se
In the event of confl ict in interpretation or differences between this report and the Swedish version, the latter will have priority.
Castellum Year-end Report 2014 Castellum AB (publ) • Box 2269, 403 14 Göteborg • Besöksadress Kaserntorget 5 Telefon 031-60 74 00 • Telefax 031-13 17 55 • E-post [email protected] • www.castellum.se Säte: Göteborg • Org nr: 556475-5550