Quarterly Report • Apr 28, 2016
Quarterly Report
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Central, flexible and environment friendly office properties
0 100 200 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16
210 111 258 219 100 200 300
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16
0
81 81 75 80 85
Q1 15 Q2 15 Q3 15 Q4 15 Q1 16
| All figures in NOK millions | Q1-16 | Q1-15 | 2015 | 2014 | 2013 |
|---|---|---|---|---|---|
| Rental income | 454 | 440 | 1 760 | 1 772 | 1 632 |
| Change period-on-period | 3% | 2% | (1%) | 9% | 3% |
| Net operating income | 429 | 406 | 1 574 | 1 624 | 1 475 |
| Change period-on-period | 6% | 2% | (3%) | 10% | 3% |
| Net income from property management | 278 | 210 | 799 | 774 | 525 |
| Change period-on-period | 32% | 5% | 3% | 47% | na |
| Profit before tax | 284 | 1 016 | 3 075 | 1 377 | 458 |
| Change period-on-period | (72%) | 1015% | 123% | 201% | (43%) |
| Profit after tax | 221 | 948 | 2 721 | 1 026 | 466 |
| Change period-on-period | (77%) | 1247% | 165% | 120% | (35%) |
| Market value of the property portfolio* | 29 862 | 27 689 | 29 598 | 28 358 | 24 963 |
| Net nominal interest-bearing debt | 14 515 | 12 271 | 14 640 | 13 890 | 14 350 |
| Loan to value* | 45.2% | 43.7% | 46.1% | 48.4% | 56.6% |
| Interest coverage ratio* | 2.8 | 2.3 | 2.5 | 2.0 | 1.8 |
| Number of shares | 183.7 | 183.7 | 183.7 | 183.7 | 0.1 |
| All figures in NOK per share* | Q1-16 | Q1-15 | 2015 | 2014 | 2013 |
| EPRA Earnings | 1.1 | 0.8 | 3.2 | 3.0 | 3 158 |
| Change period-on-period | 40% | na | 8% | na | na |
| EPRA NAV | 90 | 81 | 89 | 76 | 76 998 |
| Change period-on-period | 11% | na | 16% | na | na |
| EPRA NNNAV | 82 | 74 | 81 | 68 | 69 253 |
| Change period-on-period | 12% | na | 20% | na | na |
| Cash earnings/* | 1.5 | 1.1 | 5.0 | 4.1 | 3 833.3 |
| Change period-on-period | 32% | na | 21% | na | na |
| Dividend per share | na | na | 3.0 | 2.5 | na |
| Change period-on-period | na | na | 0.2 | na | na |
Reference
* See section "Calculation of key figures and definitions"
** Cash earnings in 2015 has been adjusted by 115 million due to termination of swap contracts in Q2-2015.
The termination fee was defined as a one-off item and did not reduce cash earnings as a basis for dividend for 2015.
*** Cash earnings definition changed in Q1-16 to also include net income from property management for JVs excluding Oslo S Utvikling. See definitions.
Several of the numbers are marked as not applicable ("na") as the figures are not comparable either due to historical changes in the P&L or due to changes in the outstanding shares of Entra ASA.
The Group's rental income was up by 3 per cent from 440 million to 454 million quarter on quarter which can be explained by the factors in the below income bridge.
| Rental income as of Q1 2015 | 440 |
|---|---|
| Development projects | 16 |
| Acquistitions | 0 |
| Disposals | -23 |
| Other | -3 |
| Like-for-like growth | 24 |
| Rental income as of Q1 2016 | 454 |
On a like-for-like basis the rental growth was 6.7 per cent compared to the same quarter last year, of which the annual indexation of the lease contracts constituted 2.8 per cent. The remaining is mainly driven by high letting activity in Biskop Gunnerus gate 14 which is now fully let. Average 12 months rolling rent per square meter was 1,773 (1,697) as of 31.03.16. Near all of Entra´s lease contracts are 100 per cent linked to positive changes in CPI. The annual adjustment is mostly made on a November to November basis.
RENT PER SQM AND EPRA OCCUPANCY
The occupancy rate increased to 94.7 per cent (94.6 per cent). The rental value of vacant space as of 31.03.16 was approximately 93 million (91 million) on an annualised basis. Gross letting including re-negotiated contracts was 78 million in the quarter of which 29 million is attributable to letting in the project portfolio. Lease contracts with a total value of 10 million were terminated in the quarter. Net letting defined as new lease contracts plus lease-up on renegotiated contracts less terminated contracts came in at 25 million (33 million). The time difference between the net letting in the management portfolio in the quarter and its effect on the financial results is normally 6-12 months. Effects from letting in the project portfolio can be found in the project table under the section Investments and Divestments
Total property costs amounted to 24 million (34 million) in the quarter and is split as follows:
| All figures in NOK millions | Q1-16 | Q1-15 |
|---|---|---|
| Maintenance | -2 | -8 |
| Tax, leasehold fees and insurance | -6 | -8 |
| Letting and property management | -6 | -6 |
| Direct property costs | -10 | -12 |
| Total operating costs | -22 | -26 |
| Total property costs | -24 | -34 |
As a consequence of the effects explained above, net operating income from property management came in at 429 million (406 million) in the quarter.
Other revenue were 58 million (166 million). 38 million is related to Youngskvartalet in Oslo which is classfied as a construction contract. Until the project is delivered to the buyer, the Group will recognise other income and other costs based on the completion level. Other costs associated with the project amounted to 38 million.
During the first quarter of 2016 the Group delivered 3 (22) apartments at Ringstabekk to the buyers, and thus recognised 8 million (148 million) in income and 8 million (148 million) in costs. The remaining part of the Ringstabekk project including 5 apartments and commercial premises was sold in the quarter. Closing took place in the beginning of April 2016.
Other revenue also consists of income from services provided to tenants of 12 million and additional other property costs are mainly related to depreciation and rental expenses.
Administrative costs amounted to 44 million (54 million). The reduction is mainly a result of streamlining of the cost base.
Entra`s share of profit from associates and JVs were 8 million (10 million) and is composed as follows:
| All figures in NOK millions | Q1 16 | Q1 15 |
|---|---|---|
| Income from property management | 22 | -1 |
| Changes in market value | -7 | 2 |
| Other income and costs | -3 | 2 |
| Tax | -4 | 7 |
| Results from associates and JVs | 8 | 10 |
For a more detailed breakdown of the results from associates and JVs see the section on Partly owned companies.
Net realised financials amounted to 133 million (149 million) and is composed as follows:
| Net realised financials | -133 | -149 |
|---|---|---|
| Interest and other finance expense | -135 | -151 |
| Interest and other finance income | 2 | 3 |
| All figures in NOK millions | Q1 16 | Q1 15 |
Net realised financials is reduced due to lower market interest rates on floating rate debt and the expiry and termination of high interest rate hedging agreements. The average interest
rate was 3.6 per cent (4.7 per cent) as at 31.03.16. The net interest-bearing debt has increased by approximately 2 billion compared to the same quarter last year mainly due to acquisitions.
Net income came in at 265 million (221 million). When including only the income from property management in the results from JVs the actual net income from property management were 278 million (210 million), representing a y-o-y increase of 32 per cent.
| Net income from property management | 278 | 210 |
|---|---|---|
| Profit from Oslo S Utvikling | -3 | 2 |
| Tax from associates and JVs | -4 | 7 |
| Value changes in associates and JVs | -7 | 2 |
| Less: | ||
| Net income | 265 | 221 |
| All figures in NOK millions | Q1 16 | Q1 15 |
(Annualised, rolling 4 quarters)
* Q215 adjusted for 115 million swap termination fee.
The valuation of the property portfolio resulted in a net positive value change of 182 million (716 million). 127 million is attributable to yield compression. 30 million relates to the current project portfolio and 53 million is the result of new contracts signed in the quarter. The remaining changes are related to terminations of contracts, transactions in the quarter and other property related changes.
Net changes in value of financial instruments was -162 million (79 million) in the quarter. The negative development is mainly explained by decreased market interest which affects the value on the Group's fixed rate loans and financial derivatives.
The Group is currently not in a tax payable position due to tax loss carry forward. At year-end 2015 the tax loss carry forward for the Group was 1,272 million. The change in deferred tax was 63 million (68 million) in the quarter. The current tax rate is 25 per cent. However, the effective tax rate is less than 25 per cent mainly due to sales of property without tax effect.
Profit before tax was 284 million (1,016 million) in the quarter, while profit after tax was 221 million (948 million) which also equals the comprehensive income for the period.
The Group's assets amounted to 34,063 million (29,986 million) as at 31.03.16. Of this, investment property amounted to 29,070 million (27,406 million) and investment property held for sale to 148 million (299 million). Three properties were classified as held for sale as at 31.03.16. Intangible assets were 161 million (187 million) at the end of the quarter of which 146 million is goodwill related to Hinna Park.
Investments in associates and jointly controlled entities were 2,877 million (1,122 million). The increase is mainly related to the purchase of 33.3 per cent of Oslo City Kjøpesenter AS, of which Steen & Strøm owns the remaining part. The property was sectioned and demerged into three separate companies in the beginning of April 2016. From, and including, the second quarter 2016, Entra will fully consolidate the office section of the property. In addition, Entra own 50 per cent of the parking section that will continue to be treated as a jointly controlled entity in our accounts.
Property and housing-units for sale amounted to 645 million (51 million) at the end of the quarter mainly impacted by the reclassification of the property "Gullfaks" at Hinna Park following the forward sale of the property with expected delivery to the buyer in Q3 2016. At the end of first quarter 2015 the amount comprised the housing-unit project at Ringstabekk of which the major part of the apartments was sold during 2015.
Other receivables was 238 million (77 million) at the end of the first quarter 2016. The increase was affected by capitalised construction costs of 140 million related to the property in Youngskvartalet that will be delivered to the buyer in the fourth quarter of 2017. The Group held 136 million (127 million) in cash and cash equivalents at 31.03.16. In addition the Group has 3,631 million ( 4,652 million) in unutilised credit facilities.
The Group had interest bearing debt of 15,096 million (12,943 million) as of 31.03.16. The increase is mainly explained by the acquisition of Oslo City Kjøpesenter AS for approximately 1.6 billion and the development project "Trondheimsporten" for 132 million in Q4 2015.
Book equity totaled 13,575 million (12,012 million), representing an equity ratio of 40 per cent (40 per cent). Book equity per share was 74 (65). Equity per share was 90 (81) based on the EPRA NAV standard and 82 (74) based on EPRA NNNAV. Outstanding shares at 31.03.16 totalled 183.7 million (183.7 million)
Net cash flow from operating activities came to 277 million (194 million) for the first quarter of 2016. The change mainly relates to higher net income from property management compared to the same quarter last year.
The net cash flow from investments was -147 million (1,426 million). Proceeds from property transactons of 162 million (1,598 million) was mainly related to the sale of Strandveien 13 in Tromsø of 158 million and three apartments at Ringstabekk in the quarter. In the first quarter of 2015 the amount mainly related to the sale of the six properties in Østfold and Lillestrøm.
The cash effect from upgrades of investment properties amounted to 132 million (166 million) in the quarter. Investment in property and housing-units for sale of 100 million (2 million) is mainly related to investments in the property "Gullfaks" in Stavanger.
Net payment of loans to associates and jointly controlled entities of - 80 million (-37 million) mainly relates to capital increase of 79 million in Entra OPF.
Net cash flow from financing acitivites was -206 million (-1,690 million) and was mainly related to net repayment of 201 million in bank debt. In the first quarter of 2015 the net cash flow from financing activities was related to repayment of bank debt following the sale of the six properties in Østfold and Lillestrøm.
The net change cash and cash equivalents was -76 million (-71 million) in the quarter.
During the first quarter, Entra has refinanced commercial paper loans for a total of 1,3 billion. Entra´s total bank debt was reduced by 201 million, mainly due to divestment of noncore real estate assets.
As at 31.03.16 net interest-bearing nominal debt after deduction of liquid assets of 136 million was 14,515 million. The average remaining term of the Group's debt portfolio was 4.3 years at 31.03.16 (5.3 years as at 31.03.15). The calculation takes into account that available long-term credit facilities can replace short-term debt.
Entra's financing is mainly based on negative pledge of the Group´s assets, which enables a broad and flexible financing mix. Entra's financing structure includes bank, bonds and commercial paper. At the end of the period 57 per cent of the Group's financing was from the capital market.
| Maturity profile | 0-1 yrs | 1-2 yrs | 2-3 yrs | 3-4 yrs | 4+ yrs | Total |
|---|---|---|---|---|---|---|
| Commercial paper (NOKm) | 1 900 | - | - | - | - | 1 900 |
| Bonds (NOKm) | - | 1 600 | 1 200 | 1 000 | 2 700 | 6 500 |
| Bank loans (NOKm) | 1 200 | 820 | 1 186 | 1 490 | 1 555 | 6 250 |
| Total (NOKm) | 3 100 | 2 420 | 2 386 | 2 490 | 4 255 | 14 650 |
| Commercial paper (%) | 61 | 0 | 0 | 0 | 0 | 13 |
| Bonds (%) | 0 | 66 | 50 | 40 | 63 | 44 |
| Bank loans (%) | 39 | 34 | 50 | 60 | 37 | 43 |
| Total (%) | 100 | |||||
| Unutilised credit facilities (NOKm) | 1 000 | 1 030 | 14 | 10 | 1 577 | 3 631 |
| Unutilised credit facilities (%) | 28 | 28 | 0 | 0 | 43 | 100 |
| Sources of financing | NOKm | % | ||||
| Bonds listed at OSE | 5 400 | 37 | ||||
| Secured bond 2030 Entra | 1 100 | 8 | ||||
| Bank loans Entra | 4 190 | 29 |
| Total | 14 650 | 100 |
|---|---|---|
| Commercial paper | 1 900 | 13 |
| Bank loans subsidiaries | 2 060 | 14 |
| All figures in NOK millions | 31.03.2016 | Target |
|---|---|---|
| Loan-to-value (LTV) | 45.2 | Approx. 50% |
| Interest coverage ratio (ICR) | 2.8 | Min. 1.65x |
| Debt maturities <12 months | 21% | Max 30% |
| Maturity of hedges <12 months | 45% | Max 50% |
| Average time to maturity (hedges) | 3.6 | 2-6 years |
| Financing commitments next 12m | 118% | Min. 100% |
| Average time to maturity (debt) | 4.3 | Min. 3 years |
The average interest rate of the debt portfolio was 3.6 per cent as at 31.03.16, down from 3.7 per cent as at 31.12.15. 55 per cent of the Group's financing was hedged at a fixed interest rate as at 31.03.16 with a weighted maturity of 3.6 years.
The Group's interest-bearing debt is subject to variable interest rate, including fixed rate bonds, which are swapped to variable
| The Group's average interest rate | |||||
|---|---|---|---|---|---|
| NIBOR on debt | 1.03 | ||||
| Swap interest rate (net) | 1.59 | ||||
| Credit margin on debt | 0.98 | ||||
| Total | 3.60 |
rate. The Group manages interest rate risk by entering into floating-to-fixed interest rate swaps. The table below shows the maturity profile and contribution from floating-to-fixed interest rate swaps used for hedging purposes, as well as maturity profile for credit margins on debt.
| Pay fixed / receive floating swaps¹ | Forward starting swaps² | Average credit margin | ||||||
|---|---|---|---|---|---|---|---|---|
| Amount (NOKm) |
Interest rate (%) |
Amount | Interest rate (%) |
Tenor (years) |
Amount (NOKm) |
Credit margin (%) |
||
| <1 year | 170 | 3.13 | 500 | 2.83 | 8 | 6 650 | 0.92 | |
| 1-2 years | 642 | 4.69 | - | - | 2 350 | 1.18 | ||
| 2-3 years | 2 050 | 3.86 | 1800 | 2.25 | 7 | 1 950 | 1.12 | |
| 3-4 years | 900 | 3.79 | 200 | 1.71 | 7 | 1 000 | 0.92 | |
| 4-5 years | 1 800 | 4.14 | 700 | 1.24 | ||||
| 5-6 years | 550 | 4.47 | - | - | ||||
| 6-7 years | 550 | 3.71 | 900 | 1.17 | ||||
| 7-8 years | 150 | 5.36 | - | - | ||||
| 8-9 years | 400 | 2.56 | - | - | ||||
| 9-10 years | - | - | - | - | ||||
| >10 years | 510 | 5.36 | 1 100 | 0.39 | ||||
| Total | 7 722 | 4.06 | 2 500 | 2.33 | 14 650 | 0.98 | ||
¹Excluding forward starting swaps.
Swap interest rate
²The table displays future starting point, notional principle amount, average fixed rate and tenor for forward starting swaps.
³Hedge ratio = outstanding notional principal amount (swaps) / nominal interest bearing debt.
Pay fixed 7 722 4.06 Receive float -7 722 1.05
(net) 3.01
Hedge ratio adjusted rate³ 1.59
Entra owns and manages 96 buildings with a total area of approximately 1.2 million square metres. As of 31.03.16 the property portfolio had a market value of around 30 billion. The occupancy rate was 94.7 per cent (94.6 per cent). The weighted average unexpired terms for the Group's leases was 7.5 years (7.4) for the management portfolio and 7.8 years (7.6) when the project portfolio is included. The public sector represents approximately 73 per cent of the total customer portfolio. Entra's strategic areas of concentration are Oslo and the surrounding region, Bergen, Stavanger and Trondheim. Entra has its head office in Oslo.
Entra´s properties are valued by two external appraisers (Akershus Eiendom and DTZ) on a quarterly basis. The market value of the portfolio in Entra´s balance sheet is based on the average of the two external appraiser's valuation of each individual property. Valuation of the management portfolio is performed on property basis, using individual DCF models and taking into account the property's current characteristics
combined with the external valuer's estimated return requirements and expectations on future market development. The market value is defined as the external valuer's estimated transaction value of the individual properties on valuation date. The project portfolio is valued based on the same principles, but with deduction for remaining investments and risk on valuation date. The land and development portfolio is valued based on actually zoned land.
As of 31.03.16 the portfolio was valued at 29.9 billion (27.7 billion).
Year-on-year the portfolio net yield is reduced from 6.1 per cent to 5.8 per cent. 12 months rolling rent has increased from 1,697 to 1,773 per square meter whereas the market rent has increased from 1,725 to 1,772 per square meter.
| Number | Area | Occupancy | Wault | Market value | 12 months rolling rent | Net yield | Market rent | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (#) | (sqm) | (%) | (year) | (NOKm) | (NOK/sqm) | (NOKm) | (NOK/sqm) | (%) | (NOKm) | (NOK/sqm) | |||
| Oslo | 38 | 518 625 | 94.8 | 6.9 | 17 874 | 34 465 | 1 079 | 2 081 | 5.6 | 1 080 | 2 082 | ||
| Trondheim | 9 | 117 187 | 98.2 | 6.5 | 2 435 | 20 780 | 175 | 1 490 | 6.5 | 165 | 1 410 | ||
| Sandvika | 10 | 100 047 | 90.6 | 10.5 | 2 193 | 21 920 | 127 | 1 268 | 5.3 | 134 | 1 335 | ||
| Stavanger | 6 | 79 194 | 93.7 | 10.0 | 2 057 | 25 976 | 136 | 1 718 | 6.1 | 135 | 1 711 | ||
| Drammen | 8 | 71 506 | 92.3 | 8.8 | 1 713 | 23 952 | 109 | 1 531 | 6.0 | 105 | 1 470 | ||
| Bergen | 6 | 57 119 | 98.8 | 5.5 | 1 217 | 21 298 | 84 | 1 477 | 6.2 | 92 | 1 617 | ||
| Kristiansand | 7 | 45 158 | 95.6 | 8.6 | 616 | 13 645 | 53 | 1 171 | 7.6 | 49 | 1 086 | ||
| Other | 2 | 9 823 | 84.6 | 4.2 | 74 | 7 487 | 7 | 752 | 8.0 | 9 | 906 | ||
| Management portfolio |
86 | 998 659 | 94.7 | 7.5 | 28 179 | 28 216 | 1 771 | 1 773 | 5.8 | 1 770 | 1 772 | ||
| Project portfolio | 6 | 104 834 | 16.4 | 1 277 | 12 183 | ||||||||
| Development sites | 4 | 120 911 | 0.9 | 407 | 3 364 | ||||||||
| Property portfolio | 96 | 1 224 404 | 7.8 | 29 862 | 24 389 |
Ringstabekk housing project is included in market value of management portfolio at cost price of 11 million. Youngsgt. 7-9 is included in market value of the management portfolio at sales price of 60 million. The calculation of net yield is based on the valuers' assumption of ownership costs, which at 31.03 corresponds to 8.2 per cent of market rent.
The below table reconciles the individual balance sheet items to the property market value presented above.
| All figures in NOK millions | Q1 16 | Q1 15 | 2015 |
|---|---|---|---|
| Investment property | 29 070 | 27 406 | 28 823 |
| Investment properties held for sale | 148 | 299 | 165 |
| Properties and housing-units held for sale | 653 | 51 | 617 |
| Other | -9 | -67 | -7 |
| Property market value | 29 862 | 27 689 | 29 599 |
During the fourth quarter Entra signed new and renegotiated leases with an annual rent totalling 78 million (38,000 square metres) and received notices of termination on leases with an annual rent of 10 million (3,700 square metres). The increase in rent from the total amount of renegotiated contracts signed within the quarter was about 3.1 per cent. Net letting was 25 million in the quarter. Net letting is calculated as the annualised rent of new lease contracts plus lease-up on renegotiated contracts less terminated contracts.
Entra has invested 208 million in the portfolio of investment properties in the quarter. In addition, Entra has invested 130 million through its non-consolidated jointly controlled entities (260 million on a 100 per cent basis).
The portfolio of ongoing project with a total investment exceeding 50 million is presented below. The below description includes projects in jointly controlled entities not consolidated in the financial accounts except projects in Oslo S Utvikling.
| Ownership (%) |
Location | Expected completion |
Project area ('000 sqm) |
Occupancy (%) |
Estimated total project cost* (NOKm) |
Of which accrued* (NOKm) |
Yield on cost** |
|
|---|---|---|---|---|---|---|---|---|
| Group: | ||||||||
| Strømsveien 96 | 100 | Oslo | Dec-16 | 18 100 | 46 | 433 | 215 | 6.6 |
| Cort Adlersgate 30 | 100 | Oslo | Dec-16 | 4 700 | 100 | 162 | 97 | 6.3 |
| Trondheimsporten | 100 | Trondheim | Nov-17 | 28 600 | 77 | 680 | 220 | 6.4 |
| Total Group | 51 400 | 1 275 | 532 | |||||
| Jointly controlled companies: | ||||||||
| Sundtkvartalet | 50 | Oslo | Dec-16 | 31 300 | 45 | 1 055 | 710 | 6.7 |
| MediaCity Bergen | 50 | Bergen | Aug-17 | 45 000 | 69 | 1 677 | 1 086 | 6.1 |
| Total Jointly controlled companies | 76 300 | 2 733 | 1 797 | |||||
| Forward sold property projects: | ||||||||
| Gullfaks *** | 50 | Stavanger | Aug-16 | 17 900 | 100 | 539 | 505 | 6.7 |
| Total Forward sold projects | 17 900 | 539 | 505 |
* Total project cost (Including book value at date of investment decision/cost of land)
** Estimated net rent (fully let) at completion/total project cost (including cost of land)
*** Gullfaks; Occupancy is reported as 100 per cent let due to a rental guarantee included in the purchase transaction of Hinna Park AS
At Strømsveien 96 in Oslo the refurbishment of 18,100 square metres (12,500 sqm offices) is ongoing. Assembling of the façade is still ongoing and internal work has begun. The Norwegian Medicines Agency will be one of the tenants, letting approximately 6,500 square metres. The project aims to obtain a BREEAM Very Good classification and will obtain energy class B. The refurbishment will be completed in December 2016.
Cort Adlersgate 30 in Oslo will be refurbished during 2016. Entra has signed a 10 year lease contract with the Oslo
Municipality Education Authority for 4,750 sqm and the building is now fully let.
In December 2015 Entra purchased the development project "Trondheimsporten", a new-build project centrally located in Holtermanns veg 70 in Trondheim. When finalised, the property will be a 15-floor building of approx. 28,600 sqm. office/education and parking. The property is 77 per cent prelet to Trondheim municipality and the Norwegian Labour and Welfare Administration on 10-year contracts. The tenants have options to let the remaining areas in the building. Construction started in January 2016. The building is expected to be finalised during the third quarter of 2017 with a BREEAM Very Good classification.
In Sundtkvartalet in Oslo, a new, environmentally leading office building of approximately 31,300 square metres is under construction. Construction of the facade and internal works is currently ongoing. The ambition is to obtain a BREEAM Excellent classification, a passive house with energy class A. The project is organised through a joint venture where Skanska and Entra own 50 per cent each. Skanska is the building contractor and has also signed a lease for approximately 8,000 square metres in the new property.
In Lars Hilles gate 30 in Bergen (Media City Bergen), Internal demolition has been completed and internal work is the main ongoing activity in the first and the middle block. Construction of the façade has started. The project includes total renovation of approximately 35,000 square metres and an extension of approximately 10,000 square metres. The vision behind the concept is to create an environment for innovation and knowledge development within the media industry, through establishing a cluster of media companies, technology, education and research. The largest media companies such as
TV2, NRK, Bergensavisen, Bergens Tidene, the Media Faculty of Bergen University, and Vizrt have signed lease contracts. The property is 50 per cent owned by Entra through Entra OPF.
In July 2015 Wintershall exercised its option to acquire the property project Gullfaks in Stavanger when finalised in August 2016. Gullfaks is a 17,900 sqm office building under construction at Hinna Park in Stavanger. The transaction also includes part of an underground car park. The property is 50 per cent owned by Entra through Hinna Park Eiendom AS.
Entra has started a project in Youngskvartalet in Oslo, involving both a new building and refurbishment of an existing building. The project consists of 9,400 square metres and will be finalised in Q4 2017. The project is forward sold to Industri Energi as part of a larger transaction that took place in 2012 where Entra booked a total value gain of 134 million. When finalised, Entra will deliver the project at cost plus a project management fee. Total project cost (incl. land) is approximately 340 million.
Completion of remaining interior works on 7,400 sqm in one of the blocks in Fredrik Selmersvei 4 of was finalised in January 2016. 3,700 sqm is let to the Norwegian Tax Administration and the project was thus 52 per cent let at completion.
Entra actively seeks to improve the quality of its property portfolio through a disciplined strategy of acquisitions and divestments. Entra focuses on acquisition of large properties and projects in specific areas within its four core markets; Oslo, Bergen, Trondheim and Stavanger. Target areas include both areas in the city centers and selected clusters and communication hubs outside the city centers, allowing Entra to offer rental opportunities at a price range that fits its customer
base. Entra's experience, financial strength and knowledge of its tenants makes the company well positioned to make acquisitions that meets these acquisition criterias. At the same time, Entra actively divests smaller properties and properties outside its core markets. The acquisition and divestment strategy is flexible, allowing Entra to adapt to feedback from customers and market changes, and to respond to market opportunities as they arise.
| Purchased properties | Area | Location | No of sqm | Transaction value |
Closing date |
|---|---|---|---|---|---|
| Office part of Oslo City* | Oslo | Q4 2015 | 33 300 | 1 650 | 31.12.2015 |
| Trondheimsporten | Trondheim | Q4 2015 | 28 600 | 163 | 18.12.2015 |
| Sum | 61 900 | 1 813 | |||
| Transaction | Transaction | Closing | |||
| Sold properties | quarter | No of sqm | value | date | |
| Ringstabekk AS** | Bærum | Q1 2016 | 5 570 | 114 | 06.04.2016 |
| Strandveien 13, Tromsø | Tromsø | Q4 2015 | 11 560 | 158 | 28.01.2016 |
| Tollbugata 2, Bodø | Bodø | Q4 2015 | 940 | 14 | 01.12.2015 |
| Hans Kiersgate 1 b and c | Drammen | Q4 2015 | 2 230 | 11 | 30.10.2015 |
| Kirkegata 2 B | Arendal | Q3 2015 | 5 800 | 33 | 30.09.2015 |
| Gullfaks, Hinna Park (forward sale) | Stavanger | Q3 2015 | 17 900 | Est. 700 | Q3 2016 |
| Keysersgate 15 | Oslo | Q1 2015 | 315 | 16 | 01.03.2015 |
| Grønnegaten 122 | Tromsø | Q4 2014 | 6 600 | 72 | 07.04.2015 |
| Skansegaten 2 | Stavanger | Q4 2014 | 4 379 | 110 | 09.01.2015 |
| Portfolio of six properties | Moss, Skien, Lillestrøm | Q1 2015 | 62 918 | 1 375 | 24.02.2015 |
| Sum | 118 212 | 2 602 |
* Include 50 % of parking basement
** Commercial areas included in number of sqm (residential not included)
Entra selectively gains access to development projects through its shareholding in subsidiaries with non-controlling interests and jointly controlled entities. Entra's interests currently include the following companies:
Entra and Drammen Municipality own Papirbredden Eiendom AS. The company owns six office properties and development potential for one new office property of around 39,000 sqm in Drammen.
Entra and Camar Eiendom AS own Hinna Park Eiendom AS. The company owns three office properties and development potential for two new office properties totalling around 29,300 sqm. The company also owns the ongoing development project Gullfaks which has been forward sold to Wintershall.
Entra and Oslo Pensjonsforsikring (OPF) own Entra OPF Utvikling AS. The company owns two properties in Bergen of which one is the project property MediaCity Bergen in Lars Hilles gate 30. According to the agreement between Entra and Oslo Pensjonsforsikring, Entra OPF Utvikling AS is not to be financed with debt, any capital requirements are thus to be financed with equity contributions from the owners.
Entra and Skanska Commercial Development Norway Holding AS own Sundtkvartalet Holding AS. The company will build a
new office building of approximately 31,000 square meters as described under the project development section above.
OSU is a property development company that is undertaking the development of parts of the city district Bjørvika in Oslo. Entra's share of the market value of the properties and projects in OSU is estimated at approximately 1.3 billion as of 31.03.16. The estimate is based on valuations from two external appraisers. Entra's share of the net asset value as at 31.03.16 was 0.6 billion after taking into account estimated latent deferred tax of 10 per cent.
Oslo City Kjøpesenter AS was acquired 31.12.2015 and owns the property Oslo City. Steen & Strøm AS owns the remaining 66.6 per cent.
The property was sectioned and demerged into three separate companies in the beginning of April 2016. From the second quarter 2016 Entra will accordingly fully consolidate the office section of the property. In addition, Entra owns 50 per cent of the parking section that will continue to be treated as a jointly controlled entity in the accounts.
| All figures in NOK millions | Papirbredden Eiendom AS |
Hinna Park Eiendom AS |
Sum consolidated companies |
Entra OPF Utvikling AS |
Sundtkvartalet Holding AS |
Oslo S Utvikling |
Oslo City Kjøpesenter AS |
Other | Sum associated companies & JVs |
|---|---|---|---|---|---|---|---|---|---|
| Share of ownership (%) | 60 | 50 | 50 | 50 | 33 | 33 | |||
| Rental income | 23 | 19 | 42 | 5 | 0 | 22 | 66 | 92 | |
| Net operating income | 23 | 15 | 38 | 3 | 0 | 22 | 65 | 89 | |
| Net income | 14 | 7 | 21 | 2 | -1 | -15 | 63 | 49 | |
| Changes in value of investment properties |
11 | -25 | -14 | 12 | -25 | 0 | 0 | -14 | |
| Changes in value of financial instruments |
-4 | -4 | -8 | 0 | 0 | 4 | 0 | 4 | |
| Profit for period/year | 16 | -16 | 0 | 10 | -20 | -9 | 47 | 29 | |
| Non-controlling interests | 6 | -8 | -2 | ||||||
| Entras share of profit | 5 | -10 | -3 | 16 | 0 | 8 | |||
| Book value | 577 | 147 | 537 | 1 608 | 7 | 2 877 | |||
| Market value properties | 1 485 | 1 695 | 3 180 | 1 221 | 853 | 3 914 | 4 830 | 10 818 | |
| Entras share of market value properties |
891 | 847 | 1 738 | 610 | 426 | 1 305 | 1 608 | 3 950 |
The transaction volume in the Norwegian market was record high in 2015 and totalled around 120 bn according to Entra's consensus report. The high volumes were driven by low interest rates, demand from foreign investors and several large portfolios being offered in the market.
Q1 2016 saw transaction volumes of around 1/3 of the volume seen in Q1 2015. The participants contributing to the consensus report expect transaction volumes at around 60 bn for 2016 which is a high level historically but significantly lower than in 2015. The interest from international investors is expected to continue in 2016. Prime yield is expected to remain at current historically low levels in the years to come according to the consensus report.
Source: Entra Consensus report
Office vacancy in Oslo has peaked at 8.3 per cent and is expected to drop to around 8.0 per cent by the end of the year according to Entra's consensus report. The reduction is explained by an expected increase in employment and continued conversion of office buildings to residential, school and refugee homes. Rent levels in Oslo and Bærum has on an overall basis decreased by some 2 per cent this quarter compared to Q1 2015. However, rents for modern offices in the city centre is remaining stable at around 3,000 per square meter. A positive trend is expected going forward, driven by lower vacancy.
In Bergen, Stavanger and Trondheim the office vacancy has reached about 10 per cent. In Bergen, rents in the city centre has remained relatively stable. Centrally located office premises may even see an increase in rent. The vacancy in Stavanger is concentrated to the oil & gas intensive Forus area outside the Stavanger city centre where the rent levels are experiencing significant downward pressure. In Stavanger city centre and at Hinna Park, the vacancy is still below 5 per cent and rent levels remain more stable. In Trondheim modern offices located in or near by city centre are attractive and rents are stable. Outside the city centre rent levels are experiencing downward pressure and the office vacancy is increasing due to high new building activity.
In general, sub markets situated outside city centres with a high level of oil sector exposure are still experiencing increasing vacancies and pressure on rents. Entra, however, is in a relatively good position having long lease contracts with solid tenants and a low exposure towards the oil sector. Modern offices located near public transportation are attractive and obtain solid rents compared to premises located in less central areas.
| 2013 | 2014 | 2015 | 2016e | 2017e | 2018e | |
|---|---|---|---|---|---|---|
| Vacancy Oslo and Bærum (%) | 7.4 | 7.8 | 8.3 | 8.0 | 7.7 | 7.3 |
| Rent per sqm, high standard Oslo office | 2 907 | 3 025 | 2 930 | 2 926 | 3 015 | 3 135 |
| Prime yield (%) | 5.2 | 4.7 | 4.1 | 4.1 | 4.1 | na |
Source: Entra Consensus report
At 31.03.16 the Group had 166 employees, of whom 14 are employed in Hinna Park AS. During the quarter there were one injury that caused absence from work. Entra has a continuous HSE focus both in on-going projects and in the operations and works continually to avoid injuries. The Group had an LTIF rate (number of accidents with lost time per million hours worked in last 12 months) on ongoing projects of 4.0 (5.8) at the end of the period.
The Group is exposed to financial risk through its debt financing, and changes in interest rate levels on loans at floating rates will affect the Group's cash flow. The risks associated with the development in market rates are managed through active use of interest rate hedging instruments. Liquidity/ refinancing risk is reduced by entering into long-term loan agreements, as well as through establishing a diversified maturity structure and the use of various credit markets and counterparties.
The Group's equity is affected by value changes on properties and financial instruments that are due to changes in, among other things, interest and rent levels, yields and other market conditions. Entra is exposed to the letting market, which is affected by macroeconomic changes in, among other things, GDP, the CPI rate and employment. Vacancy in the portfolio and rent changes on renegotiation of existing contracts affect the ongoing cash flow. Efforts are made to reduce the letting risk by systematic customer service, following up contract expiries and plans for letting work, as well as by adapting properties to customers' requirements. By entering into long leases with a diversified maturity structure, the Group achieves a stable and predictable cash flow. Due to recent political changes in the city council in Oslo, Entra will be exposed to property tax on all its properties in Oslo, effective from 2017. Entra carries out major upgrading and development projects involving risks in relation to deadlines and costs.
The property Oslo City was sectioned and demerged into three separate companies in the beginning of April 2016. From, and including, the second quarter 2016 Entra will accordingly fully consolidate the office section of the property. In addition, Entra own 50 per cent of the parking section that will continue to be treated as a jointly controlled entity in the financial accounts.
Entra's share capital is NOK 183,732,461 divided into 183,732,461 shares, with each with a par value of NOK 1 per share. Entra has one class of shares and all shares provide equal rights, including the right to any dividends.
As of 20 April 2016, Entra had 5,586 shareholders. Norwegian investors held 69 per cent of the share capital and foreign investors 31 per cent. The 10 largest shareholders as of 20 April 2016 were:
| Shareholder | % holding |
|---|---|
| Norwegian Ministry of Trade, Industry and Fisheries |
49.7 |
| Geveran Trading | 7.7 |
| Folketrygdfondet | 6.8 |
| Danske Invest Norske | 2.1 |
| State Street Bank (Nominee) | 2.0 |
| JP Morgan Bank Luxemburg (Nominee) | 1.9 |
| The Bank of New York (Nominee) | 1.4 |
| Danske Invest Norske | 1.1 |
| State Street Bank (Nominee) | 1.0 |
| The Bank of New York (Nominee) | 1.0 |
| SUM 10 LARGEST SHAREHOLDERS (VPS 20.04.16) |
74.5 |
The Norwegian economy is influenced by a weaker macroeconomic development and general uncertainty. Office vacancies have increased slightly despite the relatively low volume of new buildings being completed. Sub markets with a high level of oil sector exposure are experiencing increasing vacancies and pressure on rents. Entra is in a relatively good position having long lease contracts with solid tenants and a low exposure towards the oil sector.
Particularly in Oslo, that constitutes some 60 per cent of Entra's revenues, we now expect vacancy levels to have peaked and to see a falling trend going forward as net new office space coming into the market during 2016 and 2017 is marginal due to low new building activity and high conversion from commercial to residential buildings. Market rent levels decreased slightly in 2015 but according to Entra's consensus report, they are now expected to level out and see a positive trend from 2017.
Modern offices located near public transportation are attractive and obtain solid rents compared to premises located in less central areas.
The good credit availability and historically low market interest rates for all maturities has continued. During recent weeks, we have also experienced that credit margins have contracted, albeit margins are still at higher levels than what we experienced during early last year.
Property investors seek quality properties with good locations and long and secure cash flows.
The yield compression in the Norwegian market is expected to level out. However, Entra's portfolio with a healthy mix of attractive properties and value enhancing development projects should provide a continued positive value development, albeit at a significantly slower pace.
With its flexible properties in attractive locations, strong tenant base with long lease contracts, exciting project pipeline and solid financial position, the Board believe that Entra is well positioned for the future.
Oslo, 27 April 2016
The Board of Entra ASA
| All figures in NOK millions | Q1 16 | Q1 15 | 2015 |
|---|---|---|---|
| Rental income | 454 | 440 | 1 760 |
| Repairs & maintenance | -2 | -8 | -56 |
| Operating costs | -22 | -26 | -129 |
| Net operating income | 429 | 406 | 1 574 |
| Other revenue | 58 | 166 | 240 |
| Other costs | -54 | -159 | -224 |
| Administrative costs | -44 | -54 | -168 |
| Share of profit from associates and JVs | 8 | 10 | 44 |
| Net realised financials | -133 | -149 | -625 |
| Net income | 265 | 221 | 840 |
| - of which net income from property management | 278 | 210 | 799 |
| Changes in value of investment properties | 182 | 716 | 1 818 |
| Changes in value of financial instruments | -162 | 79 | 417 |
| Profit before tax | 284 | 1 016 | 3 075 |
| Tax payable | 0 | 0 | 0 |
| Change in deferred tax | -63 | -68 | -354 |
| Profit for period/year | 221 | 948 | 2 721 |
| Actuarial gains and losses, net of tax | 0 | 0 | 39 |
| Change in deferred tax on comprehensive income | 0 | 0 | -10 |
| Total comprehensive income for the period/year | 221 | 948 | 2 750 |
| Profit attributable to: | |||
| Equity holders of the Company | 223 | 936 | 2 648 |
| Non-controlling interest | -2 | 12 | 73 |
| Total comprehensive income attributable to: | |||
| Equity holders of the Company | 223 | 936 | 2 677 |
| Non-controlling interest | -2 | 12 | 73 |
| All figures in NOK millions | 31.03.2016 | 31.03.2015 | 31.12.2015 |
|---|---|---|---|
| Intangible assets | 161 | 187 | 161 |
| Investment property | 29 070 | 27 406 | 28 823 |
| Other operating assets | 28 | 37 | 35 |
| Investments in associates and JVs | 2 877 | 1 122 | 2 789 |
| Financial derivatives | 634 | 537 | 530 |
| Long-term receivables | 66 | 65 | 53 |
| Total non-current assets | 32 835 | 29 354 | 32 391 |
| Property and housing-units for sale | 645 | 51 | 589 |
| Investment property held for sale | 148 | 299 | 165 |
| Trade receivables | 61 | 79 | 56 |
| Other receivables | 238 | 77 | 206 |
| Cash and bank deposits | 136 | 127 | 212 |
| Total current assets | 1 227 | 633 | 1 227 |
| Total assets | 34 063 | 29 986 | 33 619 |
| Shareholders equity | 13 218 | 11 714 | 12 995 |
| Non-controlling interests | 357 | 298 | 359 |
| Total equity | 13 575 | 12 012 | 13 354 |
| Interest-bearing debt | 11 973 | 10 393 | 12 083 |
| Deferred tax liability | 3 380 | 3 025 | 3 324 |
| Financial derivatives | 1 295 | 1 274 | 1 121 |
| Other non-current liabilities | 230 | 202 | 237 |
| Total non-current liabilities | 16 878 | 14 893 | 16 764 |
| Interest-bearing debt | 3 123 | 2 550 | 3 123 |
| Trade payables | 221 | 248 | 142 |
| Other current liabilities | 266 | 283 | 236 |
| Total current liabilities | 3 609 | 3 081 | 3 501 |
| Total liabilities | 20 488 | 17 974 | 20 265 |
| Total equity and liabilities | 34 063 | 29 986 | 33 619 |
| All figures in NOK millions | Share capital |
Other paid in capital |
Retained earnings |
Non controlling interest |
Total equity |
|---|---|---|---|---|---|
| Equity 31.12.2014 | 184 | 3 556 | 7 039 | 286 | 11 064 |
| Profit for the year | 2 648 | 73 | 2 721 | ||
| Other comprehensive income | 28 | 28 | |||
| Dividend paid | -459 | -459 | |||
| Acquired own shares - employee saving scheme | 0 | -6 | -1 | -7 | |
| Sold own shares - employee saving scheme | 0 | 6 | 0 | 6 | |
| Equity 31.12.2015 | 184 | 3 556 | 9 255 | 359 | 13 354 |
| Profit for period | 223 | -2 | 221 | ||
| Equity 31.03.2016 | 184 | 3 556 | 9 478 | 357 | 13 575 |
| All figures in NOK millions | Q1 16 | Q1 15 | 2015 |
|---|---|---|---|
| Profit before tax | 284 | 1 016 | 3 075 |
| Income tax paid | 0 | 0 | 0 |
| Net expensed interest and fees on loans | 132 | 145 | 645 |
| Net interest and fees paid on loans | -126 | -159 | -584 |
| Share of profit from associates and jointly controlled entities | -8 | -10 | -44 |
| Depreciation and amortisation | 3 | 10 | 18 |
| Changes in value of investment properties | -182 | -716 | -1 818 |
| Changes in value of financial instruments | 162 | -79 | -417 |
| Change in working capital | 11 | -14 | -26 |
| Net cash flow from operating activities | 277 | 194 | 850 |
| Proceeds from property transactions | 162 | 1 598 | 1 792 |
| Purchase of business net of cash | 0 | 0 | 0 |
| Purchase of investment properties | 0 | 0 | -132 |
| Upgrades of investment properties | -132 | -166 | -911 |
| Investment in property and housing-units for sale | -100 | -2 | -82 |
| Purchase of intangible and other operating assets | -2 | -14 | -41 |
| Net payment financial assets | 5 | -16 | -30 |
| Net repayment of loans to associates and JVs | 0 | 62 | 62 |
| Net payments in associates and JVs | -80 | -37 | -1 720 |
| Dividends from associates and JVs | 0 | 0 | 51 |
| Net cash flow from investment activities | -147 | 1 426 | -1 010 |
| Proceeds interest-bearing debt | 3 517 | 850 | 19 126 |
| Repayment interest-bearing debt | -3 723 | -2 540 | -18 492 |
| Proceeds from/repayment of equity | 0 | 0 | -1 |
| Dividends paid | 0 | 0 | -459 |
| Net cash flow from financing activities | -206 | -1 690 | 174 |
| Change in cash and cash equivalents | -76 | -71 | 14 |
| Cash and cash equivalents at beginning of period | 212 | 198 | 198 |
| Cash and cash equivalents at end of period | 136 | 127 | 212 |
The results for the period have been prepared in accordance with IAS 34 Interim Financial Reporting.
The accounting principles that have been used in the preparation of the interim financial statements are in conformity with the principles used in preparation of the annual financial statements for 2015.
The financial reporting covers Entra ASA, subsidiaries, associated companies and jointly controlled entities. The interim financial statements have not been audited.
In the first quarter of 2016 the Group has done some changes to how the profit and loss statement is presented in order to better reflect the underlying operational results and to a greater extent be harmonised with how peer companies and equity analysts present their figures. The major changes are:
In addition, some changes in the balance sheet have been done in order to improve the presentation.
The Group is organised into two geographic units: Oslo and Regional Cities. These units are supported by a Letting and Business Development division and a Development and Technology division. In addition, Entra has group and support functions within accounting and finance, legal, procurement, communication and HR.
Each of the geographic units are organised and monitored by management teams in seven geographic areas: Oslo, Trondheim, Sandvika, Stavanger, Drammen, Bergen and Kristiansand.
The geographic units do not have their own profit responsibility. The geographical units are instead followed up on economical and non-economical key figures ("key performance indicators"). These key performance indicators are reported and analysed by geographic area to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. Hence, the Group report their segment information based upon these seven geographic areas.
| Number | Area | Occupancy | Wault | Market value | 12 months rolling rent | Net yield | Market rent | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (#) | (sqm) | (%) | (year) | (NOKm) | (NOK/sqm) | (NOKm) | (NOK/sqm) | (%) | (NOKm) | (NOK/sqm) | |
| Oslo | 38 | 518 625 | 94.8 | 6.9 | 17 874 | 34 465 | 1 079 | 2 081 | 5.6 | 1 080 | 2 082 |
| Trondheim | 9 | 117 187 | 98.2 | 6.5 | 2 435 | 20 780 | 175 | 1 490 | 6.5 | 165 | 1 410 |
| Sandvika | 10 | 100 047 | 90.6 | 10.5 | 2 193 | 21 920 | 127 | 1 268 | 5.3 | 134 | 1 335 |
| Stavanger | 6 | 79 194 | 93.7 | 10.0 | 2 057 | 25 976 | 136 | 1 718 | 6.1 | 135 | 1 711 |
| Drammen | 8 | 71 506 | 92.3 | 8.8 | 1 713 | 23 952 | 109 | 1 531 | 6.0 | 105 | 1 470 |
| Bergen | 6 | 57 119 | 98.8 | 5.5 | 1 217 | 21 298 | 84 | 1 477 | 6.2 | 92 | 1 617 |
| Kristiansand | 7 | 45 158 | 95.6 | 8.6 | 616 | 13 645 | 53 | 1 171 | 7.6 | 49 | 1 086 |
| Other | 2 | 9 823 | 84.6 | 4.2 | 74 | 7 487 | 7 | 752 | 8.0 | 9 | 906 |
| Management | 86 | 998 659 | 94.7 | 7.5 | 28 179 | 28 216 | 1 771 | 1 773 | 5.8 | 1 770 | 1 772 |
| portfolio | |||||||||||
| Project portfolio | 6 | 104 834 | 16.4 | 1 277 | 12 183 | ||||||
| Development sites | 4 | 120 911 | 0.9 | 407 | 3 364 | ||||||
| Property portfolio | 96 | 1 224 404 | 7.8 | 29 862 | 24 389 |
Ringstabekk housing project is included in market value of management portfolio at cost price of 11 million. Youngsgt. 7-9 is included in market value of the management portfolio at sales price of 60 million. The calculation of net yield is based on the valuers' assumption of ownership costs,
which at 31.03 corresponds to 8.2 per cent of market rent.
| Number | Area | Occupancy | Wault | Market value | 12 months rolling rent | Net yield | Market rent | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (#) | (sqm) | (%) | (year) | (NOKm) | (NOK/sqm) | (NOKm) | (NOK/sqm) | (%) | (NOKm) | (NOK/sqm) | |
| Oslo | 36 | 492 502 | 93.9 | 7.0 | 15 618 | 31 711 | 976 | 1 982 | 5.8 | 1 014 | 2 058 |
| Sandvika | 10 | 101 032 | 96.1 | 9.9 | 2 080 | 20 592 | 133 | 1 316 | 5.9 | 132 | 1 310 |
| Drammen | 8 | 61 757 | 98.9 | 9.2 | 1 353 | 21 901 | 92 | 1 486 | 6.3 | 83 | 1 342 |
| Bergen | 6 | 57 084 | 97.2 | 5.3 | 1 124 | 19 690 | 82 | 1 432 | 6.4 | 89 | 1 564 |
| Trondheim | 9 | 117 186 | 97.0 | 7.0 | 2 306 | 19 679 | 171 | 1 458 | 6.6 | 163 | 1 395 |
| Stavanger | 6 | 79 103 | 92.3 | 8.8 | 2 052 | 25 938 | 150 | 1 901 | 6.9 | 137 | 1 730 |
| Kristiansand | 8 | 46 034 | 91.6 | 9.3 | 589 | 12 800 | 47 | 1 021 | 6.9 | 48 | 1 043 |
| Other | 6 | 34 799 | 95.6 | 4.6 | 374 | 10 749 | 29 | 824 | 6.3 | 40 | 1 150 |
| Management portfolio |
89 | 989 497 | 94.6 | 7.4 | 25 496 | 25 766 | 1 680 | 1 697 | 6.1 | 1 707 | 1 725 |
| Project portfolio | 4 | 86 621 | 11.8 | 1 735 | 20 029 | ||||||
| Development sites |
6 | 137 143 | 0.5 | 458 | 3 339 | ||||||
| Property portfolio |
99 | 1 213 261 | 7.8 | 27 689 | 22 822 |
Ringstabekk housing project is included in market value of management portfolio at cost price of 51 million. Youngsgt. 7-9 is included in market value of the management portfolio at sales price of 60 million. The calculation of net yield is based on the valuers' assumption of ownership costs,
which at 31.03 corresponds to 7.6 per cent of market rent.
| All figures in NOK millions | Q1 16 | Q1 15 | 2015 |
|---|---|---|---|
| Closing balance previous period | 28 989 | 28 230 | 28 230 |
| Purchase of investment property | 0 | 0 | 213 |
| Investment in the property portfolio | 208 | 162 | 807 |
| Capitalised borrowing costs | 1 | 9 | 22 |
| Sale of investment property | -161 | -1 412 | -1 548 |
| Reclassified to property and housing-units for sale | 0 | 0 | -493 |
| Reclassified to construction contracts | 0 | 0 | -60 |
| Changes in value of operational lease | 17 | 1 | -59 |
| Changes in value of investment properties | 165 | 715 | 1 877 |
| Closing balance | 29 218 | 27 705 | 28 989 |
| Investment property held for sale | 148 | 299 | 165 |
| Investment property | 29 070 | 27 406 | 28 823 |
Investment properties held for sale include the properties Telemarksgata 11/Lundegata 4 in Skien, Ringstabekkveien 105 in Sandvika and Fritzners gate 12 in Oslo.
Sale of property in Q1-16 relates to the sale of the property Strandveien 13 in Tromsø.
The value change on operational lease agreements relates to the property Langkaia 1, which is owned under a lease that expires on 31 December 2030. The property will then revert without consideration to the Oslo Harbour Authority. The property is classified as an investment property under IAS 40 and is valued at 668 million (705 million) as at the end of the first quarter of 2016. The Group records quarterly a negative value change on the property as the maturity date of the lease approaches.
Entra is currently involved in legal arbitration proceedings or disputes with Norwegian Datasenter Group AS/ Greenfield Property AS and Evry ASA.
The hearing of the dispute with Norwegian Datasenter Group AS and Greenfield Property AS took place in Oslo District Court in January 2015 and Entra prevailed on all counts. The judgment has been appealed by the counterparty and the hearing of the dispute will take place in February 2017.
The hearing of the dispute with Evry ASA AS took place in Oslo District Court in February 2015 and Evry ASA prevailed. Entra disagree with the verdict and the ruling has been appealed. The hearing of the dispute will take place in June 2016.
Entra has not made any provision for the claims as thse Group considers it not probable that an outflow of resources involving economic benefits will be required to settle the obligation.
The valuation methods and principles are unchanged in the quarter. See the annual financial statements for 2015 for further information. Set out below is a summary of assets and liabilities measured at fair value divided between the different valuation hierarchies set out in IFRS 7.
With the exception of equity capital instruments of 0.6 million (level 3) all assets and liabilities are level 2. Investment properties of 29,070 million are classified at level 3.
| All figures in NOK millions | 31.03.2016 | 31.03.2015 | 31.12.2015 |
|---|---|---|---|
| Assets measured at fair value: | |||
| Assets measured at fair value with change over the result | |||
| - Investment property | 29 070 | 27 406 | 28 823 |
| - Investment property held for sale | 148 | 299 | 165 |
| - Derivatives | 634 | 537 | 530 |
| Financial assets held for sale | |||
| - Equity instruments | 1 | 1 | 1 |
| Total | 29 853 | 28 243 | 29 520 |
| Liabilities measured at fair value: | |||
| Financial liabilitites measured at fair value with change over the result | |||
| - Derivatives | 1 295 | 1 274 | 1 121 |
| - Bonds | 4 146 | 3 845 | 4 054 |
| - Commercial paper | 1 900 | 1 350 | 1 900 |
| Total | 7 341 | 6 469 | 7 075 |
| DEBT RATIO (LTV) | |||
|---|---|---|---|
| All figures in NOK millions | Q1 16 | Q1 15 | 2015 |
| Net nominal interest-bearing debt | 14 515 | 12 271 | 14 640 |
| Total market value of the property portfolio | 32 127 | 28 087 | 31 777 |
| Market value of the property portfolio | 29 862 | 27 689 | 29 598 |
| Share of Entra OPF Utvikling (50%) | 610 | 398 | 525 |
| Share of Oslo City Kjøpesenter AS (33,3%) | 1 654 | 0 | 1 654 |
| Debt ratio (LTV) % | 45.2 | 43.7 | 46.1 |
| INTEREST COVERAGE RATIO (ICR) | |||
| All figures in NOK millions | Q1 16 | Q1 15 | 2015 |
| Net income | 265 | 221 | 840 |
| Depreciation | 3 | 10 | 18 |
| Results from associates and joint ventures | -8 | -10 | -44 |
| Net realised financials | 133 | 149 | 625 |
| EBITDA adjusted | 393 | 369 | 1 440 |
| Share of EBITDA Entra OPF Utvikling | 1 | 1 | 5 |
| EBITDA adjusted for share of Entra OPF Utvikling | 394 | 371 | 1 444 |
| Interest cost | 136 | 151 | 548 |
| Other finance expense | 4 | 8 | 24 |
| Applicable net interest cost | 140 | 159 | 572 |
| Interest Coverage Ratio (ICR) | 2.8 | 2.3 | 2.5 |
| NET ASSET VALUE – EPRA NAV AND EPRA NNNAV | |||
| All figures in NOK millions | Q1 16 | YTD Q1 15 | 2015 |
| Total equity | 13 575 | 12 012 | 13 354 |
| Less: Non-controlling interests | 357 | 298 | 359 |
| NAV per financial statement | 13 218 | 11 714 | 12 995 |
| Add: Adjustment to property portfolio | 9 | 1 | 89 |
| Add: Revaluation of investments made in the JV | 125 | 211 | 118 |
| Add: Net market value on financial derivatives | 661 | 736 | 591 |
| Add: Deferred tax arising on revaluation moments | 2 578 | 2 289 | 2 550 |
| EPRA NAV | 16 591 | 14 951 | 16 342 |
| Market value on property portfolio | 29 862 | 27 689 | 29 598 |
| Tax value on property portfolio | 12 277 | 12 739 | 12 476 |
| Basis for calculation of tax on gain on sale | 17 586 | 14 950 | 17 122 |
| Less: Market value of tax on gain on sale (5% tax rate) | 879 | 748 | 856 |
| EPRA NNNAV | 15 105 | 13 519 | 14 954 |
|---|---|---|---|
| Less: Market value of tax on realisation* | 111 | 147 | 89 |
| Basis for calculation of tax on realisation of interest-bearing debt | 445 | 545 | 354 |
| Nominal value of interest bearing debt | 14 650 | 12 398 | 14 851 |
| Book value of interest bearing debt | 15 096 | 12 943 | 15 205 |
| Less: Net result from realisation of financial derivatives | 496 | 538 | 443 |
| Tax expense on realised financial derivatives* | 165 | 199 | 148 |
| Net market value on financial derivatives | 661 | 736 | 591 |
* 25 per cent from Q4 2015, 27 per cent previous periods
| All figures in NOK millions | Q1 16 | Q1 15 | 2015 |
|---|---|---|---|
| Profit for period/year - Earnings per IFRS income statement | 221 | 948 | 2 721 |
| Add: | |||
| Changes in value of investment properties | -182 | -716 | -1 818 |
| Tax on changes in value of investment properties* | 45 | 193 | 491 |
| Reversal of deferred tax arising from sales of properties (tax excempted) | -7 | -208 | -218 |
| Changes in value of financial instruments | 162 | -79 | -417 |
| Tax on changes in value of financial instruments* | -41 | 21 | 112 |
| Profit or losses on disposal of inventory in Oslo S Utvikling | -1 | -6 | -25 |
| Share of profit jointly controlled entities – fair value adjustments | 5 | -7 | -34 |
| Non-controlling interests of subsidiaries | -7 | -6 | -25 |
| Significant one-off items | 0 | 0 | 62 |
| Change in tax rate | 0 | 0 | -252 |
| EPRA earnings | 197 | 140 | 597 |
* 25 per cent from Q1 2016, 27 per cent previous periods
| 12 months rolling rent | - The contractual rent of the management properties of the Group for the next 12 months as of a certain date, adjusted for (i) signed new contracts and contracts expiring during such period, (ii) contract based CPI adjustments based on Independent Appraisers' CPI estimates and (iii) the Independent Appraisers' estimates of letting of current and future vacant areas. |
|---|---|
| Cash Earnings | - Net income from property management less tax payable |
| Contractual rent | - Annual cash rental income being received as of relevant date |
| EPRA Earnings | - Net income after tax excluding value changes on investment properties, unrealised changes in the market value of financial derivatives and gains/losses on the sale of properties and their associated tax effects. All adjustments are also made for jointly controlled entities. EPRA earnings are intended to give an indication of the underlying development in the property portfolio |
| EPRA NAV | - Net asset value adjusted to include market value of all properties in the portfolio and interest-bearing debt, and to |
| exclude certain items not expected to crystallise in a long-term investment property business model such as e.g. financial derivatives and deferred tax on the market value of investment properties. The objective with EPRA NAV is to demonstrate the fair value of net assets given a long-term investment horizon |
|
| EPRA NNNAV | - EPRA NNNAV is EPRA NAV adjusted to reflect the fair value of debt and derivatives and in order to include deferred tax on value changes. The objective with EPRA NNNAV is to report the fair value of net assets in the Group on the basis that these are immediately realised |
| Gross yield | - 12 months rolling rent divided by the market value of the management portfolio |
| Independent Appraisers | - Akershus Eiendom and DTZ |
| Land and dev. properties | - Property / plots of land with planning permission for development |
| Like-for-like | - The percentage change in rental income from one period to another given the same income generating property portfolio in the portfolio. The figure is thus adjusted for purchases and sales of properties and active projects |
| Loan-to-value ("LTV") | - Net nominal value of interest-bearing liabilities divided by the market value of the property portfolio and the market value of the jointly controlled entities Entra OPF Utvikling and Oslo City Kjøpesenter AS |
| Management properties | - Properties that are actively managed by the company |
| Market rent | - The annualised market rent of the management properties, fully let as of the relevant date, expressed as the average of market rents estimated by the Independent Appraisers |
| Market value of portfolio | - 12 months rolling rent less the Independent Appraisers' estimate of ownership costs of the management properties of the Group |
| Net rent | - 12 months rolling rent less the Independent Appraisers' estimate of ownership costs of the management properties of the Group |
| Net letting | - Net letting is calculated as the annualised rent of new lease contracts plus lease-up on renegotiated contracts less terminated contracts. |
| Net yield | - Net rent divided by the market value of the management properties of the Group |
| Occupancy (EPRA) | - Estimated market rent of occupied space of the management properties, divided by the market rent of the total space of the management portfolio. Based on EPRA standard |
| Period-on-period | - Comparison between one period and the equivalent period the previous year |
| Property portfolio | - Properties owned by the parent company and subsidiaries, regardless of their classification for accounting purposes. Does not include the market value of properties in associates and jointly controlled entities |
| Project properties | - Properties where it has been decided to start construction of a new building and/or renovation |
| Interest Coverage Ratio ("ICR") | - Net income from property management excluding depreciation and amortisation for the Group including Entra OPF, divided by net interest on interest-bearing nominal debt and fees and commitment fees related to investment activities |
| Total area | - Total area including the area of management properties, project properties and land / development properties |
| WAULT | - Weighted Average Unexpired Lease Term measured as the remaining contractual rent amounts of the current lease contracts of the management properties of the Group, including areas that have been re-let and signed new contracts, adjusted for termination rights and excluding any renewal options, divided by Contractual Rent, including renewed and signed new contracts |
Arve Regland CEO Phone: + 47 47907700 [email protected]
Anders Olstad CFO Phone: + 47 90022559 [email protected]
Tone K. Omsted Head of IR Phone: + 47 98228510 [email protected]
Entra ASA Post box 52 Økern 0508 Oslo, Norway
Phone: + 47 21605100 [email protected]
| Second quarter 2016 | 14.07.2016 |
|---|---|
| Third quarter 2016 | 01.11.2016 |
| Fourth quarter 2016 | 14.02.2017 |
Head office Biskop Gunnerus gate 14b 0185 Oslo
Postal address Postboks 52, Økern 0508 Oslo
Tel: (+47) 21 60 51 00 Fax: (+47) 21 60 51 01 E-mail: [email protected]
Customer service centre E-mail: [email protected] Tel: (+47) 800 36 872
www.entra.no
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