Quarterly Report • Oct 19, 2017
Quarterly Report
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| 2017 Jul-Sep |
2016 Jul-Sep |
2017 Jan-Sep |
2016 Jan-Sep |
|
|---|---|---|---|---|
| Rental income | 580 | 534 | 1,688 | 1,573 |
| Net operating income | 435 | 401 | 1,230 | 1,125 |
| Profit from property management | 264 | 229 | 713 | 637 |
| Profit before tax | 2,798 | 2,051 | 5,389 | 5,166 |
| Profit after tax | 2,201 | 1,616 | 4,202 | 4,346 |
| Surplus ratio,% | 75 | 75 | 73 | 72 |
| Loan-to-value ratio, properties, % | 44 | 47 | ||
| EPRA NAV, SEK per share | 190 | 144 | ||
¹The comparison figures for income and expense items relate to values for the January–September 2016 period and for balance sheet items at 31 December 2016.
CREATING THE RIGHT CONDITIONS
Christian Hermelin, CEO
Target 2017: 73% Long-term target 2020: 75%
Target: At least SEK 1,500m per year
Target: At least 20%
Target: SEK 80m per year.
Fabege's strong performance was maintained in the third quarter of 2017, with increased earnings from property management and persistently rising property values.
High demand and low vacancies are giving rise to continually rising rent levels in the Stockholm market. We have taken care of the possibilities and five of the ten largest office leases in the Stockholm market in 2017 have been signed by Fabege. Lettings that indicate persistently rising rent levels on the market and that enable even more profitable project development. Net lettings in the period totalled SEK 190m, which is one of our best years to date. Renegotiations during the period produced an average increase in the rental value of 27 per cent, which is evidence of the robust trend we have recently observed in Stockholm's rental market.
Rising rent levels and completed projects continued to contribute to higher rental income and an improvement in net operating income in Q3. The surplus ratio for the first nine months of the year amounted to 73 per cent, which is in line with our expectations for the 2017 full-year. Improved net operating income, combined with persistently low interest rates, led to strong growth in earnings from property management compared with the previous year. I anticipate a sustained increase in net operating income as projects are completed and begin generating cash flow.
During the third quarter, growth in value continued both in the management portfolio and in projects. Value growth for the period totalled just over 9 per cent, primarily fuelled by higher rent levels, development gains in projects and revaluations of development rights.
I am particularly pleased with the two major lettings to Swedbank and Bilia, which pave the way for continued value-adding project development. The letting to Bilia of the Stora Frösunda property in Solna releases development rights for sale and development. As a result of the transaction with Bilia, the development rights for the property were revised upwards by SEK 695m. The letting to Swedbank in the Orgeln 7 property in Sundbyberg means that the office space is fully let, which has significantly reduced the level of risk in the project. In addition to this, continued value growth will be generated via increased rent levels resulting from renegotiations and new lettings, along with contributions from other ongoing project investments. The occupancy rate in the project portfolio now amounts to 88 per cent. Projects continued to deliver at a high level – the return on invested capital during the period was 66 per cent, well above our declared target of at least 20 per cent. Siemens will have moved into Arenastaden by the end of this year, marking the completion of another project property.
The strong capital market and considerable level of interest in green bonds meant that we continued to increase the share of capital market financing. In September we extended our green MTN framework from SEK 2bn to SEK 5bn. We have endeavoured to extend the capital maturity period via the bond issues we have carried out during the past quarter. We have also converted a bank loan to green financing to coincide with refinancing of a bank limit. The proportion of green loans now totals 35 per cent of outstanding loans.
The Swedish Ministry of Finance has announced proposals regarding changes to corporate taxation, which will mean a lower tax rate, reduced deductions for interest expenses and restrictions regarding offsetting against past loss carryforwards. The consultation period ended in September, and Fabege has submitted its views on both proposals. We note that many felt compelled to respond and that the industry as a whole regards the proposals as inhibitive for Swedish property development.
The office market in Stockholm is robust, with extremely low vacancies and high demand. At the same time, interest rates are set to remain low for an extended period of time, although gradual interest rate hikes are anticipated in 2018. If economic forecasts are confirmed, this will mean a persistently favourable development for properties. We are seeing a sustained rise in rental income via renegotiations and new projects, while we maintain the ambition of increasing cost effectiveness and continuing to improve profitability in property management into next year. Fabege is an organisation that is capable of exploiting opportunities to create value. With our stable cash flow in property management and our well located project portfolio, I look forward to our positive trend continuing into 2018.
Higher rental income and continued low interest expenses meant that earnings from property management increased by 12 per cent in comparison with the previous year. Growth in value continued both in the investment property portfolio and via the major projects.
Profit after tax for the period was SEK 4,202m (4,346), corresponding to earnings per share of SEK 25.40 (26.28). Profit before tax for the period amounted to SEK 5,389m (5,166). The increase is primarily due to improved earnings from property management and a lower negative fair value in the derivatives portfolio compared with the previous year.
Rental income amounted to SEK 1,688m (1,573) and net operating income to SEK 1,230m (1,125). In an identical portfolio, rental income rose by around 8.5 per cent (9) and net operating income increased by roughly 11.5 per cent (10). The surplus ratio was 73 per cent (72).
The Selfoss 1 property was sold in the second quarter to co-owned Selfoss Invest. The transaction did not have any impact on earnings. No further transactions were carried out during the period, and realised changes in the value of properties were consequently SEK 0m (182). Unrealised changes in value totalled SEK 4,452m (4,478). The unrealised change in the value of the investment property portfolio of SEK 2,685m (3,312) was largely attributable to increased rent levels for new lettings and renegotiations. The average yield requirement declined to 4.39 per cent (4.53 at year-end). The decline in the third quarter was 0.06 per cent. The project portfolio contributed to an unrealised change in value of SEK 1,072m (1,166), primarily due to development gains in the major project properties. Following the signing of an agreement with Bilia regarding vacation and construction of a new facility at the Stora Frösunda 2 property in Solna, the value of the remaining development rights was adjusted upwards by SEK 695m in the third quarter.
The share in profit of associated companies was SEK −81m (−23) and related to a capital contribution to Friends Arena during the period.
Unrealised changes in value in the derivatives portfolio totalled SEK 227m (−131), primarily due to higher long-term interest rates and the fact that some of the older, more expensive swaps have expired. Net interest items declined to SEK −383m (−412). Increased borrowing was offset by lower average interest.
The Property Management segment generated net operating income of SEK 1,134m (1,044), representing a surplus ratio of 77 per cent (73). The occupancy rate was 94 per cent (94). Earnings from property management totalled SEK 710m (663). Unrealised changes in the value of properties amounted to SEK 2,685m (3,312).
The Property Development segment generated net operating income of SEK 96m (81), giving a surplus ratio of 47 per cent (56). Earnings from property management totalled SEK 3m (−26). Unrealised changes in the value of properties totalled SEK 1,072m (1,166), corresponding to a yield of 66 per cent on invested capital in the project portfolio. In addition, building rights were upgraded by SEK 695m.
The only divestment during the period concerned the land property Selfoss 1, which was sold to a co-owned company. The transaction did not generate any recognised earnings, which is why the Transactions segment had realised changes in value of SEK 0m (182).
Reclassifications during the period between the Property Management and Property Development segments are stated in the note on Segment Reporting on page 14.
¹The comparison figures for income and expense items relate to values for the January–September 2016 period and for balance sheet items at 31 December 2016.
| 2017 | 2016 | |
|---|---|---|
| SEKm | Jan-Sep | Jan-Sep |
| Profit from Property Management activities | 710 | 663 |
| Changes in value (portfolio of investment | ||
| properties) | 2,685 | 3,312 |
| Contribution from Property | 3,395 | 3,975 |
| Management | ||
| Profit from Property Management activities | 3 | -26 |
| Changes in value (profit from Property | ||
| Development) | 1,767 | 1,166 |
| Contribution from Property | 1,770 | 1,140 |
| Development | ||
| Realised changes in value | 0 | 182 |
| Contribution from Transactions | 0 | 182 |
| Total contribution | ||
| from the operation | 5,165 | 5,297 |
66%
Return on Projects
Fabege employs long-term credit facilities subject to fixed terms and conditions. The company's
creditors mainly comprise the major Nordic banks. The company regards the capital market as an excellent addition to bank financing and has gradually increased the proportion of capital market financing. At the end of the quarter, such financing accounted for 44 per cent of total debt, including commercial papers.
Interest-bearing liabilities at the end of the period totalled SEK 24,436m (21,978), with an average interest rate of 2.08 per cent excluding, and 2.18 per cent including, commitment fees on the undrawn portion of committed credit facilities. Undrawn committed credit facilities amounted to SEK 2,083m.
Demand for Fabege's green bonds has remained extremely healthy, and in the third quarter the framework for the green MTN programme was extended from SEK 2,000m to SEK 5,000m. At the end of September, outstanding bonds totalled SEK 2,600m. The green MTN programme allows the company opportunities to issue non-covered green bonds. Interest on bond loans is calculated without a Stockholm Interbank Offered Rate (STIBOR) floor, which with the current negative STIBOR rate means the financing cost at present will be extremely advantageous compared with bank loans. In addition, Fabege also had outstanding bonds of SEK 3,048m via SFF, of which SEK 2,366m related to green bonds.
The proportion of green financing totalled 35 per cent at the end of the period. As the company's properties gain environmental certification, the objective is for financing to be sustainable as well, and Fabege welcomes and encourages the new responsible financing opportunities that are being established on the market. During the quarter, new green bank loans totalling SEK 2,200m have been raised with two different banks.
Fabege has a commercial paper programme of SEK 5,000m, which was fully subscribed at the end of the quarter. The company has available credit facilities covering all outstanding commercial papers at any given time.
At 30 September, the average maturity was 3.7 years and the loan-to-value ratio was 44 per cent (46). The level of capital tied up in certificate loans is calculated on the basis of underlying loan commitments.
The average fixed-interest term for Fabege's loan portfolio was 2.3 years, including the effects of derivative instruments. During the third quarter, callable interest-rate swaps of SEK 1,000m matured, while new interest-rate swaps totalling SEK 700m were signed with maturities of six to ten years. At 30 September, Fabege's derivatives portfolio then comprised interest-rate swaps totalling SEK 9,700m with terms of maturity extending through 2027 and carrying fixed interest at annual rates of between 0.24 and 2.73 per cent before margins. Fabege also holds callable swaps totalling SEK 3,000m at interest rates of between 3.95 and 3.98 per cent before margins, maturing in summer 2018. Interest rates on 52 per cent of Fabege's loan portfolio were fixed using fixed-income derivatives. The derivatives portfolio is measured at market value and the change in value is recognised in profit or loss. At 30 September, the recognised negative fair value adjustment of the portfolio was SEK 332m (559). The derivatives portfolio is measured at the present value of future cash flows. The change in value is of an accounting nature and has no impact on the company's cash flow. At the due date, the market value of derivative instruments is always zero.
Net financial items included other financial expenses of SEK 20m, mainly pertaining to accrued opening charges for credit agreements and costs relating to bond and commercial paper programmes. The total loan volume at the end of the quarter included SEK 3,654m (2,553) in loans for projects, on which interest of SEK 44m (39) pertaining to the first three quarters of the year has been capitalised.
| Average | |||
|---|---|---|---|
| Amount | interest | ||
| SEKm | rate,% | Share,% | |
| < 1 year | 16,036 | 2.47 | 65 |
| 1-2 years | 1,200 | 2.11 | 5 |
| 2-3 years | 0 | 0.00 | 0 |
| 3-4 years | 1,000 | 2.68 | 4 |
| 4-5 years | 600 | 0.76 | 2 |
| 5 -6years | 1,000 | 0.81 | 4 |
| 6-7 years | 1,200 | 0.93 | 5 |
| 7-8 years | 1,200 | 1.00 | 5 |
| 8-9 years | 1,000 | 1.02 | 4 |
| 9-10 years | 1,200 | 1.16 | 5 |
| Total | 24,436 | 2.08 | 100 |
The average interest rate for the < 1 year period includes the margin for the entire debt portfolio because the company's fixed-interest period is established using interest rate swaps, which are traded without margins.
| Credit agreement SEKm |
Drawn, SEKm |
|
|---|---|---|
| Commercial paper programme | 5,000 | 5,000 |
| < 1 year | 7,733 | 3,723 |
| 1-2 years | 6,895 | 5,530 |
| 2-3 years | 5,245 | 3,537 |
| 3-4 years | 300 | 300 |
| 4-5 years | 1,100 | 1,100 |
| 5-10 years | 3,993 | 3,993 |
| 10-15 years | 0 | 0 |
| 15-20 years | 0 | 0 |
| 20-25 years | 1,253 | 1,253 |
| Total | 31,519 | 24,436 |
Revolving facilities 11% Bond financing 21% Commercial Paper 19% Other loans 41% Unutilised facilities 8%
Tax expense for the period amounted to SEK −1,187m (−820). The amount for the previous year includes the resolution of a deferred tax liability of SEK 270m relating to property sale. Tax was calculated at a rate of 22 per cent on taxable earnings.
The Swedish Ministry of Finance's proposal regarding changes to corporate taxation and the previously announced proposal on changes to taxation for property transactions both have a negative impact on the property sector's ability to pursue operations.
For Fabege, the tax rate cut to 20 per cent combined with restrictions on interest deductions will initially have a positive effect due to current low market rates. However, rising market rates will increase the negative effect (assuming cash flow remains generally the same). The proposal to halve deductions against loss carryforwards will impact liquidity as Fabege will pay a certain amount of income tax. Furthermore, there will be a positive non-recurring accounting effect when the deferred tax liability is measured at the new tax rate.
The packaging inquiry proposal and effect on Fabege are entirely dependent on future property sales. There is a provision in the balance sheet for deferred tax on properties, which amounted to roughly SEK 4.5bn at year-end. Full application would increase the deferred tax liability by an additional SEK 1.3bn, based on the current tax rate of 22 per cent. However, in accounting terms this liability would not be activated until the properties to which it relates are divested.
The proposal regarding changes to the charging of transaction tax (stamp duty) means that the deferred stamp duty of 2 per cent will most likely have a directly negative impact on property valuations. For Fabege, this effect corresponds to 2 per cent of the current property value, roughly SEK 1bn.
The consultation period for both proposals ended in September. Fabege has submitted its views on the proposals to the Ministry of Finance.
Equity, including a minority share of SEK 55m acquired during the period, amounted to SEK 26,597m (23,002) and the equity/assets ratio to 47 per cent (46) at the end of the period. Equity per share attributable to Parent Company shareholders totalled SEK 161 (139). Excluding deferred tax on fair value adjustments of properties, net asset value per share was SEK 194 (166). EPRA NAV was SEK 190 per share (163).
Cash flow from operating activities before changes in working capital amounted to SEK 567m (568). Changes in working capital had an impact on cash flow of SEK 65m (−80). Investing activities had an impact of SEK –2,330m (345) on cash flow, while financing activities had a positive impact of SEK 1,797m (–829) on cash flow. In investing activities, cash flow was driven by property transactions and projects. Overall, cash and cash equivalents changed by SEK 99m (4) during the period.
In Haga Norra, Fabege plans to create an attractive mix of housing, workplaces and services that will form a vibrant district forpeople from different backgrounds and of different ages living, working and spending time in the district.
The area will be home to six unique residential districts, each with its own character, and housing units of varying sizes, as well as two new, flexible office buildings. In addition to the housing and offices, there will also be a high street featuring a variety of shops, services and restaurants. In total, the district will include 900 homes, 55,000 sqm of office space for 5,000 employees and 7,000 sqm of services and retail units. The plan is for the entire area to be fully developed by 2025.
For further information, visit www.haganorra.se.
EPRA NAV 30 Sep 2017
Several major project lettings during the period mean more project start-ups and continued value creation. Meanwhile cash flow in the property management portfolio is being strengthened via new lettings and renegotiations at increasingly high rent levels.
Fabege's Property Management and Property Development activities are concentrated on a few selected submarkets in and around Stockholm: Stockholm inner city, Solna and Hammarby Sjöstad. On 30 September 2017, Fabege owned 90 properties with a total rental value of SEK 2.6bn, lettable floor space of 1.1m sqm and a carrying amount of SEK 55.5bn, of which development and project properties accounted for SEK 12.4bn. The financial occupancy rate for the entire portfolio, including project properties, was 94 per cent (93). The occupancy rate in the property management portfolio was 94 per cent (94).
During the period, 132 new leases were signed at a total rental value of SEK 296m (160), of which 87 per cent pertained to Green leases. Lease terminations totalled SEK 106m (73), while net lettings amounted to SEK 190m (87). Rental contracts totalling SEK 168m were renegotiated in the period, with an average rise in rental value of 27 per cent, reflecting the persistently strong trend on the rental market in the first half of the year. Net renegotiations include a significant contract that was renegotiated in advance and that will have an effect in 1.5 years. The retention rate during the period was 86 per cent (79).
Three new properties – Hörnan 1, Lagern 3 and Lagern 4 – have been separated from Lagern 2 via property reallotment.
In the first quarter, the previously agreed transactions pertaining to the Distansen 4, 6 and 7 and Fortet 2 properties, all in Solna, were taken over. Uarda 7 in Arenastaden was vacated. In addition, Peab's share of Visio, which owns the development rights in Solna, was taken over. In the second quarter, the housing development right Selfoss 1, Kista, was sold to the 50 per cent co-owned company Selfoss Invest AB. The transaction did not generate any recognised realised profit. As no other transactions were carried out during the period, realised changes in value totalled SEK 0m (182).
The entire property portfolio is externally valued at least once annually. Approximately 20 per cent of the properties were externally valued in the third quarter and the remainder were internally valued based on the most recent external valuations. The total market value was SEK 55.5bn (47.8).
Unrealised changes in value totalled SEK 4,452m (4,478). The average yield requirement declined somewhat during the period to 4.39 per cent (4.53 at year-end). The change in value in the investment property portfolio of SEK 2,685m (3,312) was principally due to higher rent levels and somewhat lower yield requirements. The project portfolio contributed to a change in value of SEK 1,072m (1,166), mainly due to development gains in major project properties. Furthermore, in the third quarter the development rights on the Stora Frösunda property in Solna were adjusted upwards by SEK 695m following the signing of an agreement with Bilia, and the development rights are thus ready for divestment and development.
30 Sep 2017
¹The comparison figures for income and expense items relate to values for the January–September 2016 period and for balance sheet items at 31 December 2016.
The purpose of Fabege's project investments is to reduce vacancy rates and increase rents in the property portfolio, thereby improving cash flows and adding value. Property development is a key feature of Fabege's business model and should make a significant contribution to consolidated profit. The aim is to achieve a return of at least 20 per cent on invested capital. Another aim is to have all new builds certified under BREEAM-SE.
During the period, investments in existing properties and projects totalled SEK 2,040m (1,719), of which investments in projects and development properties accounted for SEK 1,632m (1,420). The return on capital invested in the project portfolio was 66 per cent. The capital invested in the investment property portfolio, which amounted to SEK 408m (299) and encompassed energy investments and tenant customisations, also contributed to the total growth in value.
The project pertaining to the Uarda 6 property is in its final phase with ongoing tenant customisations. Once Siemens has taken up occupancy at the beginning of November, the property will be fully completed. The occupancy rate is 95 per cent.
In the construction of SEB's offices in the Pyramiden 4 property, Arenastaden, the first stage, corresponding to just over 70 per cent of the total space, has been completed and that part of the building is now occupied. Stage 2 is under way, with installation work and completion of office space ready for occupancy in May 2018. The total investment is estimated at around SEK 2.6bn.
The office project at the Signalen 3 property in Arenastaden is progressing according to plan. The frame has been completed and work is now under way on installations, assembly of the facade and the roof. The investment is expected to amount to SEK 1,130m after an additional amount of SEK 50m was assigned. The increase is explained by a larger area and the fact that the building has been repositioned to allow for possible development rights for housing on the property. ICA has signed a lease corresponding to 78 per cent of the lettable space. The office is scheduled to be ready for occupancy in December 2018.
The office project relating to Hörnan 1, Råsunda, is also under way. The investment amounts to an estimated total of just under SEK 530m. Work is currently continuing on installations and office furnishings. The property is partly let to Telenor Sweden, with occupancy scheduled for summer 2018. The occupancy rate is 69 per cent.
Erection of the frame and facade is under way on the new construction project relating to Pelaren 1, Globen, with plans to make the building weathertight in October. Work will then begin on the interior. The investment is expected to increase from SEK 750m to SEK 780m. The occupancy rate is 94 per cent.
The project relating to conversion and extension of the Orgeln 7 property in Sundbyberg is under way. The frame and facade have been completed and work is under way on finalising the frame and installations. Since the expansion of the project's lettable area and following the Swedbank lease, the estimated investment has risen to SEK 1,050m. The occupancy rate is 89 per cent. The remaining vacancies relate exclusively to storage and retail space on the ground floor. The office is scheduled to be ready for occupancy in June and December 2018 respectively.
Demolition and work on constructing the frame has begun on the project relating to the conversion and extension of Trikåfabriken 9, Hammarby Sjöstad. The investment is estimated at SEK 450m. The occupancy rate is 50 per cent. The property is expected to be ready for occupancy during the spring of 2019.
In the second quarter, a decision was made regarding two new projects: the construction of a new office building on part of the Båtturen 2 property in Hammarby Sjöstad with an investment of around SEK 170m, and the conversion of part of Lagern 4 (formerly part of Lagern 2), Råsunda, into a preschool, school and supported housing for people with disabilities with an investment of roughly SEK 140m. Both projects are fully let. Project planning work is under way.
In the third quarter a decision was taken regarding an investment in the new construction of a facility for Bilia at the Stora Frösunda 2 property in Solna. The investment is expected to amount to approximately SEK 1.1bn and the facility will be completed by summer 2020.
Via co-owned Selfoss Invest AB, Fabege and Svenska Hyreshus AB are leading a housing development project in Kista. The total investment is estimated to be SEK 450m excluding purchase of the land. The project is currently in the planning stage. Selfoss Invest will not be consolidated but will instead be reported as an associated company.
| Changes in property value | 2017 |
|---|---|
| Opening fair value 2017-01-01 | 47,842 |
| Property acquisitions | 1,314 |
| Investments in new builds, extensions and conversions | 2,040 |
| Changes in value | 4,453 |
| Sales and disposals | -140 |
| Closing fair value 2017-09-30 | 55,509 |
| Area | Average yield, % |
|---|---|
| Stockolm city | 4.07 |
| Solna | 4.65 |
| Hammarby Sjöstad | 4.74 |
| Average yield | 4.39 |
| Cat | Lettable | ||
|---|---|---|---|
| Property name | Area | egory | area.sqm |
| Quarter 1 | |||
| Quarter 2 | |||
| Selfoss 1 | Kista | Land | 0 |
| Quarter 3 | |||
| Quarter 4 | |||
| Total sales of properties | 0 |
| Lettable | |||
|---|---|---|---|
| Property name | Area | Category | area, sqm |
| Quarter 1 | |||
| Distansen 4 | Solna | Land | 0 |
| Distansen 6 | Solna | Offices | 11,052 |
| Distansen 7 | Solna | Garage | 9,810 |
| Fortet 2 | Solna | Land | 6,400 |
| Nationalarenan 3 | Solna | Land | 0 |
| Järva 4:17 | Solna | Land | 0 |
| Quarter 2 | |||
| Quarter 3 | |||
| Quarter 4 | |||
| Total acquisitions of properties | 27,262 |
| Lettable | Occupancy rate, | Estimated rental | Carrying | Estimated | of which, worked up. |
||||
|---|---|---|---|---|---|---|---|---|---|
| Property listing | Property type Area | Completed | area, sqm | area, %¹ | value, SEKm² | amount SEKm | investment, SEKm | SEKm | |
| Uarda 6 | Offices | Arenastaden | Q4-2017 | 17,800 | 95% | 52 | 1,007 | 600 | 551 |
| Orgeln 7 | Offices/retail Sundbyberg | Q2-2018 | 38,500 | 89% | 120 | 1,203 | 1,050 | 478 | |
| Hörnan 1 | Offices | Solna | Q2-2018 | 16,300 | 69% | 51 | 695 | 530 | 386 |
| Pyramiden 4 ³ | Offices | Arenastaden | Q2-2018 | 72,200 | 100% | 182 | 3,174 | 2,600 | 2,428 |
| Pelaren 1 | Offices | Globen | Q3-2018 | 21,300 | 94% | 69 | 514 | 780 | 326 |
| Lagern 4 | School | Solna | Q3-2018 | 5,100 | 100% | 14 | 104 | 140 | 16 |
| Signalen 3 | Offices | Arenastaden | Q4-2018 | 31,100 | 78% | 92 | 844 | 1,130 | 438 |
| Trikåfabriken 9 | Offices | Hammarby Sjöstad | Q2-2019 | 16,700 | 50% | 54 | 272 | 450 | 76 |
| Båtturen 2 (part of) | Offices | Hammarby Sjöstad | Q2-2019 | 5,200 | 100% | 18 | 28 | 170 | 4 |
| Total | 224,200 | 88% | 652 | 7,841 | 7,450 | 4,703 | |||
| Other land and project properties | 877 | ||||||||
| Other development properties | 3,672 | ||||||||
| Total projects, land and development properties | 12,390 |
¹ Operational occupancy rate 30 June 2017.
² Rental value including additions. The annual rent for the largest projects in progress could increase to SEK 641m (fully let) from SEK 131m in annualised current rent as of 31 March 2017. ³ More than 70% of the project is completed with occupation in May 2017
| Lettable area, '000 | Market | Rental | Financial | ||
|---|---|---|---|---|---|
| No. of properties | sqm | value SEKm | value² | occupancy rate % | |
| Investment properties ¹ | 63 | 964 | 43,119 | 2,291 | 94 |
| Development properties ¹ | 7 | 109 | 3,672 | 91 | 80 |
| Land and Project properties ¹ | 20 | 75 | 8,718 | 176 | 100 |
| Total | 90 | 1,148 | 55,509 | 2,558 | 94 |
| Of which, Inner city | 29 | 400 | 23,445 | 1,122 | 94 |
| Of which, Solna | 47 | 643 | 27,080 | 1,210 | 93 |
| Of which, Hammarby Sjöstad | 11 | 105 | 4,437 | 226 | 95 |
| Of which, Other | 3 | 0 | 547 | 0 | 0 |
| Total | 90 | 1,148 | 55,509 | 2,558 | 94 |
¹ See definitions on page 17.
² In the rental value, time limited deductions of about SEK 91m (in rolling annual rental value at 31 March) have not been deducted.
| 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | |
|---|---|---|---|---|---|---|---|---|
| Jan-Sep | Jan-Sep | Jan-Sep | Jan-Sep | Jan-Sep | Jan-Sep | Jan-Sep | Jan-Sep | |
| Property | Property | Property | Property | |||||
| SEKm | Management | Development | Transaction | Total | Management | Development | Transaction | Total |
| Rental income | 1,482 | 206 | 1,688 | 1,428 | 145 | 1,573 | ||
| Property expenses | -348 | -110 | -458 | -384 | -64 | -448 | ||
| Net operating income | 1,134 | 96 | 0 | 1,230 | 1,044 | 81 | 0 | 1,125 |
| Surplus ratio, % | 77% | 47% | 73% | 73% | 56% | 72% | ||
| Central administration | -42 | -11 | -53 | -41 | -12 | -53 | ||
| Net interest expense | -301 | -82 | -383 | -320 | -92 | -412 | ||
| Share in profits of associated companies | -81 | 0 | -81 | -20 | -3 | -23 | ||
| Profit from property management activities | 710 | 3 | 0 | 713 | 663 | -26 | 0 | 637 |
| Realised changes in value of properties | 0 | 0 | 0 | 0 | 0 | 0 | 182 | 182 |
| Unrealised changes in value of properties | 2,685 | 1,767 | 4,452 | 3,312 | 1,166 | 4,478 | ||
| Profit/loss before tax per segment | 3,395 | 1,770 | 0 | 5,165 | 3,975 | 1,140 | 182 | 5,297 |
| Changes in value, fixed income derivatives and equities | 224 | -131 | ||||||
| Profit before tax | 5,389 | 5,166 | ||||||
| Properties, market value | 55,509 | 37,073 | 7,586 | 44,659 | ||||
| Occupancy rate, % | 94% | 93% | 94% | 94% | 84% | 93% |
¹ See definitions on page 17
| Change in value, % | Impact on after-tax profit, SEKm |
Equity/as sets ratio, % |
Loan-to value ratio, % |
|---|---|---|---|
| +1 | 433 | 47.0% | 43.6% |
| 0 | 0 | 46.7% | 44.0% |
| -1 | -433 | 46.4% | 44.5% |
Earnings and key ratios are affected by realised and unrealised changes in the value of properties. The table shows the effect of a 1 percentage point change in value after deferred tax deduction.
| Effect, | ||
|---|---|---|
| Change | SEKm | |
| Rental income, total | 1% | 23.2 |
| Rent level, commercial income | 1% | 22.8 |
| Financial occupancy rate | 1 percentage point | 25.6 |
| Property expenses | 1% | 6.2 |
| Interest expense, rolling 12 months ¹ | +/-1 percentage point | 54 / 63 |
| Interest expenses, longer term perspective | 1 percentage point | 244.4 |
|---|---|---|
The sensitivity analysis shows the effects on the Group's cash flow and earnings on an annualisedbasis after taking account of the full effect of each parameter.
In the short term, interest expenses increase regardless of whether the short-term rate rises or falls. Due to interest rate floors in loan agreements, Fabege is not able to fully utilise negative interest rates, whereby a negative outcome arises even when interest rates are reduced.
The graph above shows the development of contracted rental income, including occupancies and vacations that are known about and renegotiations, but excluding letting targets. The graph therefore does not constitute a forecast, but rather aims to demonstrate the rental trend in the existing contract portfolio on the balance sheet date.
At the end of the year, 162 people (155) were employed by the Fabege Group.
Sales during the period amounted to SEK 155m (120) and earnings before appropriations and tax amounted to SEK 121m (–627).
Net investments in property, equipment and shares totalled SEK 0m (0).
The 2017 AGM renewed the authorisation of the Board to buy back and transfer shares in the company for the period extending up until the
next AGM. Share buybacks are subject to a limit of 10 per cent of the total number of outstanding shares at any time. No shares were bought back during the period.
Fabege's Chairman Erik Paulsson has informed the chairman of the nominating committee that he intends to step down from his position on the Board at the AGM on 9 April 2018. The nominating committee will now be tasked, according to standard procedure, to propose the election of the Board, including its chairman, prior to the 2018 AGM. Pursuant to the AGM's resolution, the nominating committee has been formed with Bo Forsén as chairman and representative of Backahill AB. The nominating committee's proposal will be published when the notice convening the AGM is issued.
No significant events occurred after the balance sheet date.
Risks and uncertainties relating to cash flow from operations relate primarily to changes in rents, vacancies and interest rates. The effect of the changes on consolidated profit, including a sensitivity analysis and a more detailed description of risks and opportunities, are presented in the section on Risks and opportunities in the 2016 Annual Report (pages 56–59).
Properties are recognised at fair value and changes in value are recognised in profit or loss. Effects of changes in value on consolidated profit, the equity/assets ratio and the loan-to-value ratio are also presented in the section on Risks and opportunities and the sensitivity analysis in the 2016 Annual Report. Financial risk, defined as the risk of insufficient access to long-term funding through loans, and Fabege's management of this risk are also described in the Risks and opportunities section of the 2016 Annual Report (pages 56–59).
No material changes in the company's assessment of risks have arisen following publication of the 2016 Annual Report. Fabege's aims for the capital structure are to have an equity/assets ratio of at least 35 per cent and an interest coverage ratio of at least 2.0. The aim for the loan-to-value ratio is a maximum of 55 per cent.
Expenses for the running and maintenance of properties are subject to seasonal variations. For example, cold and snowy winters give rise to higher costs for heating and snow clearance, while hot summers result in higher cooling costs. Activity in the rental market is seasonal. Normally, more business transactions are completed in the second and fourth quarters, whereby net lettings in these quarters are often higher.
Both the property and rental markets remain strong. Given prevailing market conditions and Fabege's attractive property and project portfolio, circumstances are favourable for a strong end to 2017 and a continued positive trend in 2018. More completed projects will increase rental volumes which, combined with continued operational efficiency and low interest expense, is expected to boost profit from property management. Fabege is well positioned to capitalise on the business opportunities that lie ahead.
Fabege prepares its consolidated financial statements according to International Financial Reporting Standards (IFRS). This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act.
Disclosures in accordance with IAS 34 Interim Financial Reporting are submitted both in the notes and in other sections of the interim report. The Group applies the same accounting policies and valuation methods as in the latest annual report. New or revised IFRS standards or other IFRIC interpretations that came into effect after 1 January 2017 have not had any material impact on consolidated financial statements. The Parent Company prepares its financial statements according to RFR 2 Accounting for Legal Entities and the Swedish Annual Accounts Act, and applies the same accounting policies and valuation methods as in the latest annual report.
Stockholm, 19 October 2017
CHRISTIAN HERMELIN Chief Executive Officer.
We have conducted a limited assurance review of the interim report for Fabege AB (publ) for the 1 January – 30 September 2017 period. The Board of Directors and the Chief Executive Officer are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our limited assurance review.
We conducted our limited assurance review in accordance with the International Standard on Review Engagements ISRE 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A limited assurance review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other limited assurance procedures. The procedures performed in a limited assurance review vary in nature from, and are considerably less in scope than for a reasonable assurance engagement conducted in accordance with the ISA and other generally accepted auditing standards in Sweden. The procedures performed consequently do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance conclusion.
Based on the limited assurance procedures we have performed, nothing has come to our attention that causes us to believe that this interim report has not been prepared for the Group, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, and for the Parent Company in accordance with the Swedish Annual Accounts Act.
Stockholm, 19 October 2017
Deloitte AB
Kent Åkerlund Authorised Public Accountant
Fabege's shares are listed on Nasdaq Stockholm and are included in the Large Cap segment.
Fabege had a total of 39,069 shareholders on 30 September 2017. The 15 largest owners controlled 45.2 per cent of the total number of shares and votes.
| 2017-09-30 | Number of shares* |
Proportion of equity, % |
Proportion of votes,% |
|---|---|---|---|
| Erik Paulsson with family, | |||
| privately and company | 25,310,825 | 15.4 | 15.3 |
| Fourth AP-fund | 7,264,687 | 4.4 | 4.4 |
| BlackRock | 6,397,201 | 3.9 | 3.9 |
| Investment AB Öresund | 5,500,000 | 3.3 | 3.3 |
| Länsfötrsäkringar Funds | 4,530,421 | 2.7 | 2.7 |
| Vanguard | 3,848,687 | 2.3 | 2.3 |
| Mats Qviberg with family | 3,747,868 | 2.3 | 2.3 |
| E.N.A City AB | 2,867,200 | 1.7 | 1.7 |
| Handelsbanken Funds | 2,824,981 | 1.7 | 1.7 |
| Swedbank Robur Funds | 2,232,838 | 1.4 | 1.4 |
| Principal Global Investors | 2,119,631 | 1.3 | 1.3 |
| Stichting Pensionfonds ABP | 1,965,885 | 1.2 | 1.2 |
| TR Property Investment Trust | 1,933,221 | 1.2 | 1.2 |
| Standard Life | 1,921,156 | 1.2 | 1.2 |
| Pensionskassan SHB Försäkringsförening | 1,920,000 | 1.2 | 1.2 |
| Total 15 largest shareholders | 74,384,601 | 44.6 | 44.6 |
| Other | 91,006,971 | 55.4 | 54.4 |
| Total no. of | |||
| shares outstanding | 165,391,572 | 100.0 | 100.0 |
| Treasury shares | 0 | 0 | 0 |
| Total no. of registrated shares | 165,391,572 | 100.0 | 100.0 |
*The verification date may vary for foreign shareholders.
| Capital & | ||
|---|---|---|
| Number of shares | votes,% | |
| Foreign institutional owners | 48,714,268 | 29.5 |
| Swedish institutional owners | 41,181,886 | 24.9 |
| Other owners | 36,225,454 | 21.9 |
| Swedish private individuals | 24,970,473 | 15.1 |
| Anonymous ownership | 14,299,491 | 8.6 |
| Total | 165,391,572 | 100 |
The largest trading places for Fabege's shares during the period were Nasdaq Stockholm, BOAT, BATS Chi-X and London Stock Exchange. The share price at the end of the period was SEK 156.40. For further information about the share price trend,
| Large Cap Nasdaq Stockholm |
||
|---|---|---|
| Turnover and trading, Jul-Sep 2017 | Fabege | (average) |
| Lowest price, SEK | 154.0 | |
| Highest price, SEK | 167.2 | |
| VWAP, SEK | 161.2 | |
| Average daily turnover, SEK | 45,132,273 | 117,089,227 |
| Number of traded shares, no | 18,473,509 | |
| Number of transactions, no | 279,902 | |
| Average transactions per day, no | 1,395 | 2,174 |
| Numver of transactions, no | 92,072 | |
| Average value per transcation, SEK | 32,352 | 34,693 |
| Daily turnover relative to market capitalization | 0.17 | 0.24 |
Source of share statistics: Holdings av Modular Finance AB. Compiled and processed data from various sources, including Euroclear, Morningstar and the Swedish Financial Supervisory Authority (Finansinspektionen).
| 2017 | 2016 | 2017 | 2016 | 2016 | Rolling 12 m | |
|---|---|---|---|---|---|---|
| SEKm | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec | Oct-Sep |
| Rental income | 580 | 534 | 1,688 | 1,573 | 2,105 | 2,220 |
| Property expenses | -145 | -133 | -458 | -448 | -598 | -608 |
| Net operating income | 435 | 401 | 1,230 | 1,125 | 1,507 | 1,612 |
| Surplus ratio, % | 75% | 75% | 73% | 72% | 72% | 73% |
| Central administration | -17 | -17 | -53 | -53 | -70 | -70 |
| Net interest/expense | -127 | -139 | -383 | -412 | -541 | -512 |
| Share in profits of associated companies | -27 | -16 | -81 | -23 | -425 | -483 |
| Profit/loss from property management | 264 | 229 | 713 | 637 | 471 | 547 |
| Realised changes in value of properties | 0 | 20 | 0 | 182 | 491 | 309 |
| Unrealised changes in value of properties | 2,463 | 1,760 | 4,452 | 4,478 | 7,614 | 7,588 |
| Unrealised changes in value, fixed income derivatives | 71 | 42 | 227 | -131 | 99 | 457 |
| Changes in value of shares | 0 | 0 | -3 | 0 | 5 | 2 |
| Profit/loss before tax | 2,798 | 2,051 | 5,389 | 5,166 | 8,680 | 8,903 |
| Current tax | -1 | 2 | -1 | 1 | -88 | -90 |
| Deferred tax | -596 | -437 | -1,186 | -821 | -1,485 | -1,850 |
| Profit/loss for period/year | 2,201 | 1,616 | 4,202 | 4,346 | 7,107 | 6,963 |
| Items that will not be restated in profit or loss | 0 | |||||
| Revaluation of defined-benefit pensions | - | - | - | - | -5 | -5 |
| Comprehensive income for the period/year | 2,201 | 1,616 | 4,202 | 4,346 | 7,102 | 6,958 |
| Total comprehensive income attributable to: | ||||||
| Parent company shareholders | 2,201 | 1,616 | 4,202 | 4,346 | 7,102 | 6,958 |
| Non-controlling interest | - | - | - | - | - | - |
| Earnings per share, SEK | 13:30 | 9:77 | 25:40 | 26:28 | 42:97 | 43:29 |
| Total earnings per share, SEK | 13:30 | 9:77 | 25:40 | 26:28 | 42:94 | 43:27 |
| No. of shares at period end, millions | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 |
| Average no. of shares, thousands | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 |
| 2017 | 2016 | 2016 | |
|---|---|---|---|
| SEKm | Sep 30 | Sep 30 | Dec 31 |
| Assets | |||
| Properties | 55,509 | 44,659 | 47,842 |
| Other tangible fixed assets | 3 | 2 | 2 |
| Financial fixed assets | 495 | 916 | 516 |
| Current assets | 586 | 500 | 1,687 |
| Short-term investments | 152 | 89 | 114 |
| Cash and cash equivalents | 161 | 36 | 62 |
| Total assets | 56,906 | 46,202 | 50,223 |
| Equity and liabilities | |||
| Shareholder's equity | 26,597 | 20,246 | 23,002 |
| Deferred tax | 4,455 | 2,648 | 3,271 |
| Other provisions | 216 | 142 | 215 |
| Interest-bearing liabilities¹ | 24,436 | 20,818 | 21,978 |
| Other long-term liabilities | 625 | 0 | |
| Derivative instrument | 332 | 789 | 559 |
| Non-interest-bearing liabilities | 870 | 934 | 1,198 |
| Total equity and liabilities | 56,906 | 46,202 | 50,223 |
¹ Of which short-term SEK 8,723m (7,458)
| SEKm | Shareholders' equity |
Of which, attributable to Parent Company shareholders |
Of which attributable to non controlling interest |
|---|---|---|---|
| Shareholders' equity, 1 January 2016, according to adopted Statement of financial position | 16,479 | 16,479 | - |
| Cash dividend | -579 | -579 | - |
| Profit for the period | 7,107 | 7,107 | - |
| Other comprehensive income | -5 | -5 | - |
| Shareholders' equity, 31 December 2016 | 23,002 | 23,002 | - |
| Cash dividend | -662 | -662 | - |
| Acquired minority interest | 55 | - | 55 |
| Profit for the period | 4,202 | 4,202 | - |
| Other comprehensive income | - | - | - |
| Shareholders' equity, 30 June 2017 | 26,597 | 26,542 | 55 |
| 2017 Jan-Sep |
2016 Jan-Sep |
2016 Jan-Dec |
|
|---|---|---|---|
| SEKm Operations |
|||
| Net operating income | 1,230 | 1,125 | 1,507 |
| Central administration | -53 | -54 | -70 |
| Reversal of depreciation | 0 | 0 | 0 |
| Interest received | 28 | 3 | 11 |
| Interest paid | -485 | -506 | -647 |
| Income tax paid | -153 | 0 | 4 |
| Cash flow before changes in working capital | 567 | 568 | 805 |
| Change in working capital | |||
| Change in current receivables | 210 | -50 | 84 |
| Change in current liabilities | -145 | -30 | -112 |
| Total change in working capital | 65 | -80 | -28 |
| Cash flow from operating activities | 632 | 488 | 777 |
| Investing activities | |||
| Investments in new-builds, extensions and conversions | -1,979 | -1,677 | -2,600 |
| Acquisition of properties | -1,314 | -332 | -460 |
| Divestment of properties | 1,330 | 2,367 | 2,315 |
| Other tangible fixed assets | -367 | -13 | -332 |
| Cash flow from investing activities | -2,330 | 345 | -1,076 |
| Financing activities | |||
| Dividend to shareholders | -662 | -579 | -579 |
| Change in interest bearing liabilities | 2,459 | -250 | 908 |
| Cash flow from investing activities | 1,797 | -829 | 329 |
| Cash flow for the period | 99 | 4 | 30 |
| Cash and cash equivalents at beginning of period | 62 | 32 | 32 |
| Cash and cash equivalents at end of period | 161 | 36 | 62 |
| 2017 | 2016 | 2016 | |
|---|---|---|---|
| Financial ² | Jan-Sep | Jan-Sep | Jan-Dec |
| Return on capital employed, % | 15.8 | 18.4 | 29.5 |
| Return on equity, % | 16.9 | 31.6 | 36.0 |
| Interest coverage ratio, multiple | 3.1 | 2.6 | 2.7 |
| Equity | 47 | 44 | 46 |
| Loan-to-value ratio, properties, % | 44 | 47 | 46 |
| Debt ratio, multiple | 15.8 | 15.3 | 15.3 |
| Debt/equity ratio, multiple | 0.9 | 1.0 | 1.0 |
| Share related ¹ ² | |||
| Earnings per share, SEK ³ | 25:40 | 26:28 | 42:97 |
| Total earnings per share, SEK | 25:40 | 26:28 | 42:94 |
| Equity per share, SEK | 161 | 122 | 139 |
| Cash flow from operating activities per share, SEK | 3:82 | 2:95 | 4:70 |
| EPRA NAV, SEK per share | 190 | 144 | 163 |
| EPRA, EPS | 3:95 | 3:54 | 3:01 |
| Average no. of shares, thousands | 165,392 | 165,392 | 165,392 |
| No. of outstanding shares at end of period, thousands | 165,392 | 165,392 | 165,392 |
| Property-related | |||
| No. of properties | 90 | 82 | 82 |
| Carrying amount, Properties, SEKm | 55,509 | 44,659 | 47,842 |
| Lettable area, sqm | 1,148,000 | 1,121,000 | 1,062,000 |
| Financial occupancy rate, % | 94 | 93 | 94 |
| Total return on properties, % | 11.1 | 14.4 | 22.4 |
| Surplus ratio, % | 73 | 72 | 72 |
¹ No dilution is possible because no potential dilution shares (such as convertible debentures) exist.
³ Unless otherwise stated, the key figure is not defined under IFRS. Please see page 17 for definitions
⁴ Definitions according to IFRS
Derivatives are measured continuously at fair value in compliance with level 2, with the exception of the callable swaps measured in accordance with level 3. Changes in value are recognised in profit or loss. IAS 39 has been applied in the Parent Company as well since 2006. No changes have been made to the measurement model.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| IFRS, level 3, SEKm | 2017 Sep 30 |
2016 Dec 31 |
2017 Sep 30 |
2016 Dec 31 |
|
| Opening value | -218 | -396 | -218 | -396 | |
| Acquisitions/Investments | 0 | - | 0 | - | |
| Changes in value | 73 | 178 | 73 | 178 | |
| Matured | 35 | - | 35 | - | |
| Closing value | -110 | -218 | -110 | -218 | |
| Carrying amount | -110 | -218 | -110 | -218 |
¹ Is attributable in its entirety to derivative instruments held by the company at the end of the quarter and shown in the statement of comprehensive income.
| 2017 | 2016 | |
|---|---|---|
| Defered tax attributable to: | Sep 30 | Dec 31 |
| - tax loss carryforwards, SEKm | -952 | -1,129 |
| - difference between book value and tax value in respect of properties, SEKm | 5,496 | 4,516 |
| - derivatives, SEKm | -73 | -123 |
| - other, SEKm | -16 | 7 |
| Net debt, deferred tax, SEKm | 4,455 | 3,271 |
Details are provided below regarding reconciliation of the financial key ratios that Fabege continually monitors and for which established financial targets are in place. The following financial
targets have been adopted by the Board:
| 2017 | 2016 | 2016 | |
|---|---|---|---|
| Equity/assets ratio | Sep 30 | Sep 30 | Dec 31 |
| Equity, SEKm | 26,597 | 20,246 | 23,002 |
| Total assets, SEKm | 56,906 | 46,202 | 50,223 |
| Equity/assets ratio | 47% | 44% | 46% |
| 2017 | 2016 | 2016 | |
| Loan-to-value ratio, properties | Sep 30 | Sep 30 | Dec 31 |
| Interst-bearing liabilities, SEKm | 24,436 | 20,818 | 21,978 |
| Booked value properties, SEKm | 55,509 | 44,659 | 47,842 |
| Loan-to-value ratio, properties | 44% | 47% | 46% |
| 2017 | 2016 | 2016 | |
|---|---|---|---|
| Debt ratio | Sep 30 | Sep 30 | Dec 31 |
| Operating surplus, SEKm | 1,612 | 1,429 | 1,507 |
| Central administration, SEKm | -70 | -65 | -70 |
| Total, SEKm | 1,542 | 1,364 | 1,437 |
| Interest-bearing liabilities, SEKm | 24,436 | 20,816 | 21,978 |
| Debt ratio, multiple | 15.8 | 15.3 | 15.3 |
| Interst coverage ratio, multiple | 2017 Sep 30 |
2016 Sep 30 |
2016 Dec 31 |
|---|---|---|---|
| Net operating income, SEKm | 1,230 | 1,125 | 1,507 |
| Central administration, SEKm | -53 | -53 | -70 |
| Total, SEKm | 1,177 | 1,072 | 1,437 |
| Net intrest/expense, SEKm | -383 | -412 | -541 |
| Interst coverage ratio, multiple | 3.1 | 2.6 | 2.7 |
| EPRA EPS | 2017 Jul-Sep |
2016 Jul-Sep |
2017 Jan-Sep |
2016 Jan-Sep |
2016 Jan-Dec |
|---|---|---|---|---|---|
| Profit from property management, SEKm | 264 | 229 | 713 | 637 | 471 |
| Tax-deductable depreciation, SEKm | -148 | -131 | -443 | -393 | -590 |
| Sum, SEKm | 116 | 98 | 270 | 244 | -119 |
| Nominal tax (22%), SEKm | 26 | -22 | 60 | 54 | -26 |
| EPRA earnings in total, (Profit from property management minus nominal tax) SEKm | 238 | 207 | 653 | 583 | 497 |
| Number of shares, millions | 165.4 | 165.4 | 165.4 | 165.4 | 165.4 |
| EPRA EPS, SEK per share | 1:44 | 1:26 | 3:95 | 3:54 | 3:01 |
| 2017 | 2016 | 2016 | |||
|---|---|---|---|---|---|
| EPRA NAV | Jul-Sep | Jul-Sep | Jan-Dec | ||
| Shareholders' equity, SEKm | 26,597 | 20,246 | 23,003 | ||
| Reversal of fixed-income derivatives, SEKm | 332 | 789 | 559 | ||
| Reversal of deferred tax according to the balance sheet, SEKm | 4,455 | 2,648 | 3,271 | ||
| Sum, SEKm | 31,384 | 23,683 | 26,832 | ||
| Number of shares, millions | 165.4 | 165.4 | 165.4 | ||
| EPRA NAV, SEK per share | 190 | 144 | 162 | ||
| 2017 | 2016 | 2017 | 2016 | 2016 | |
| Return on equity | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Profit for the period, SEKm | 8,804 | 6,464 | 6,964 | 5,524 | 7,107 |
| Average shareholders' equity, SEKm | 23,699 | 19,438 | 24,800 | 18,363 | 19,741 |
| Return on equity | 37.1% | 33.3% | 28.1% | 31.6% | 36.0% |
| 2017 | 2016 | 2017 | 2016 | 2016 | |
| Total return on properties | Jul-Sep | Jul-Sep | Jan-Sep | Jan-Sep | Jan-Dec |
| Net operating income, SEKm | 435 | 401 | 1,230 | 1,125 | 1,507 |
| Unrealized and realized value changes properties, SEKm | 2,463 | 1,780 | 4,452 | 4,660 | 8,105 |
| Market value including captal investment during the period, SEKm | 53,045 | 43,079 | 51,056 | 40,180 | 42,927 |
| Total return on properties, % | 5.5% | 5.1% | 11.1% | 14.4% | 22.4% |
Contingent liabilities comprise the balance sheet date guarantees and commitments in favour of associated companies of SEK 340m (202) and other 0 (0).
The Distansen 6 and 7 properties in Solna were taken over in the first quarter and classified as investment properties. Fortet 2 was classified as a development property. Distansen 4 (land) and the land properties and development rights (not reallotted), which were acquired through Råsta, were classified as land and project properties. In the second quarter, the project property Hörnan 1 was established via separation from the project property Lagern 2. Sliparen 2 was reclassified from a development property to an investment property. In the third quarter, the project properties Lagern 3 and Lagern 4 were created via separation from Lagern 2.
| 2017 | 2016 | 2016 | |
|---|---|---|---|
| SEKm | Jan-Sep | Jan-Sep | Jan-Dec |
| Income | 155 | 120 | 221 |
| Expenses | -173 | -196 | -263 |
| Net financial items | -85 | -420 | -932 |
| Changes in value, fixed-income derivatives | 227 | -131 | 99 |
| Changes in value, equities | -3 | 0 | 6 |
| Group Contribution | - | - | -204 |
| Profit before tax | 121 | -627 | -1,073 |
| Current tax | 0 | 0 | -19 |
| Deferred tax | -50 | 59 | 50 |
| Profit for the period/year | 71 | -568 | -1,042 |
| 2017 | 2016 | 2016 | |
|---|---|---|---|
| SEKm | Sep 30 | Sep 30 | Dec 31 |
| Participation in Group companies | 12,516 | 12,516 | 12,516 |
| Other fixed assets | 39,871 | 43,247 | 43,105 |
| of which, receivables from Group companies | 39,516 | 42,545 | 42,671 |
| Current assets | 83 | 103 | 184 |
| Cash and cash equivalents | 161 | 34 | 53 |
| Total assets | 52,631 | 55,900 | 55,858 |
| Shareholders' equity | 10,090 | 11,155 | 10,681 |
| Provisions | -4 | -105 | -55 |
| Long-term liabilities | 33,690 | 37,960 | 38,279 |
| of which, liabilities to Group companies | 20,742 | 24,625 | 24,783 |
| Current liabilities | 8,855 | 6,890 | 6,953 |
| Total equity and liabilities | 52,631 | 55,900 | 55,858 |
| 2017 | 2016 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEKm | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 |
| Rental income | 580 | 562 | 546 | 532 | 534 | 520 | 519 | 505 |
| Property expenses | -145 | -146 | -167 | -150 | -133 | -151 | -164 | -156 |
| Net operating income | 435 | 416 | 379 | 382 | 401 | 369 | 355 | 349 |
| Surplus ratio | 75% | 74% | 69% | 72% | 75% | 71% | 68% | 69% |
| Central administration | -17 | -17 | -19 | -17 | -17 | -20 | -16 | -17 |
| Net interest expence | -127 | -123 | -133 | -129 | -139 | -142 | -131 | -146 |
| Share in profits of associated companies | -27 | -43 | -11 | -402 | -16 | 6 | -13 | -14 |
| Profit/loss from property management | 264 | 233 | 216 | -166 | 229 | 213 | 195 | 172 |
| Realised changes in value of properties | 0 | 0 | 0 | 309 | 20 | 2 | 160 | 17 |
| Unrealised value of properties | 2,463 | 1,156 | 833 | 3,136 | 1,760 | 1,199 | 1,519 | 1,282 |
| Unrealised changes in value, fixed-income derivatives | 71 | 67 | 89 | 230 | 42 | -55 | -118 | 151 |
| Changes in value, equities | 0 | 0 | -3 | 5 | 0 | 0 | 0 | -26 |
| Profit for the period/year | 2,798 | 1,456 | 1,135 | 3,514 | 2,051 | 1,359 | 1,756 | 1,596 |
| Current tax | -1 | 0 | - | -89 | 2 | 0 | -1 | -2 |
| Deferred tax | -596 | -337 | -253 | -664 | -437 | -294 | -90 | -416 |
| Comprehensive income for the period/year | 2,201 | 1,119 | 882 | 2,761 | 1,616 | 1,065 | 1,665 | 1,178 |
| 2017 | 2016 | 2015 | ||||||
|---|---|---|---|---|---|---|---|---|
| SEKm | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 |
| Assets | ||||||||
| Properties | 55,509 | 52,464 | 50,832 | 47,842 | 44,659 | 42,418 | 40,467 | 40,279 |
| Other tangible fixed assets | 3 | 2 | 2 | 2 | 2 | 2 | 1 | 1 |
| Financial fixed assets | 495 | 497 | 360 | 516 | 916 | 886 | 906 | 923 |
| Current assets | 586 | 636 | 647 | 1,687 | 500 | 529 | 533 | 446 |
| Short-term investments | 152 | 142 | 142 | 114 | 89 | 64 | 66 | 70 |
| Cash and cash equivalents | 161 | 19 | 24 | 62 | 36 | 195 | 33 | 32 |
| Total assets | 56,906 | 53,760 | 52,007 | 50,223 | 46,202 | 44,094 | 42,006 | 41,751 |
| Equitites and liabilities | ||||||||
| Shareholders' equity | 26,597 | 24,396 | 23,277 | 23,002 | 20,246 | 18,630 | 18,144 | 16,479 |
| Deferred tax | 4,455 | 3,859 | 3,521 | 3,271 | 2,648 | 2,211 | 1,876 | 1,786 |
| Other provisions | 216 | 216 | 218 | 215 | 142 | 154 | 148 | 150 |
| Interest-bearing liabilities | 24,436 | 23,886 | 22,548 | 21,978 | 20,818 | 20,574 | 19,269 | 21,068 |
| Other long-term liabilities | 0 | 0 | 0 | 0 | 625 | 623 | 621 | 619 |
| Derivative instruments | 332 | 402 | 470 | 559 | 789 | 831 | 777 | 658 |
| Non-interest bearing liabilitis | 870 | 1,001 | 1,973 | 1,198 | 934 | 1,071 | 1,171 | 991 |
| Total equity and liabilities | 56,906 | 53,760 | 52,007 | 50,223 | 46,202 | 44,094 | 42,006 | 41,751 |
| 2017 | 2016 | 2015 | ||||||
|---|---|---|---|---|---|---|---|---|
| Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | Quarter 3 | Quarter 2 | Quarter 1 | Quarter 4 | |
| Financial³ | ||||||||
| Return on capital employed, % | 23.4 | 13.4 | 11.7 | 33.2 | 21.2 | 15.2 | 19.6 | 18.4 |
| Return on equtiy, % | 37.1 | 18.8 | 15.2 | 51.1 | 33.3 | 23.2 | 38.5 | 29.7 |
| Interest coverage ratio, multiple² | 3,3 | 3.2 | 2.7 | 2.8 | 2.8 | 2.5 | 2.6 | 2.0 |
| Equity/assets ratio, % | 47 | 45 | 45 | 46 | 44 | 42 | 43 | 39 |
| Loan-to-value ratio, properties, % | 44 | 46 | 44 | 46 | 47 | 49 | 48 | 52 |
| Debt ratio, multiple | 14.6 | 16.1 | 15.5 | 15.3 | 14.8 | 15.0 | 14.1 | 14.7 |
| Debt/equity raio, multiple | 0.9 | 1.0 | 1.0 | 1.0 | 1.0 | 1.1 | 1.1 | 1.3 |
| Share-related¹ ³ | ||||||||
| Earnings per share, SEK⁴ | 13:30 | 6:77 | 5:33 | 16:7 | 9:77 | 6:44 | 10:07 | 7:12 |
| Total earnings per share, SEK | 161 | 147 | 141 | 139 | 122 | 113 | 110 | 100 |
| Cash flow from operating activities per share, SEK | -7:76 | 0:25 | 11:33 | 1:75 | 0:52 | 0:52 | 1:75 | 4:82 |
| EPRA NAV, SEK per share | 190 | 173 | 165 | 163 | 144 | 131 | 126 | 115 |
| EPRA EPS | 1:44 | 1:29 | 1:22 | -0:52 | 1:26 | 1:18 | 1:09 | 0:99 |
| No. of shares outstanding at the end of the period, thousands | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 |
| Average no. of shares, thousands | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 | 165,392 |
| Property-related | ||||||||
| Financial occupancy rate, % | 94 | 94 | 93 | 94 | 94 | 93 | 93 | 93 |
| Total return on properties, % | 5.5 | 3.1 | 2.5 | 8.6 | 5.1 | 3.8 | 5.0 | 4.4 |
| Surplus ratio, % | 75 | 74 | 69 | 72 | 75 | 71 | 68 | 69 |
¹ The interest coverage ratio definition has been changed from 1 January 2016. The comparative figures have been restated according to the new definition.
² No dilution is possible because no potential dilution shares (such as convertible debentures) exist.
³ Unless otherwise stated, the key figure is not defined under IFRS. Please see page 17 for definitions
⁴ Definitionen according to IFRS.
The company presents certain financial performance measures in the interim report that are not defined according to IFRS. The company considers that these measures provide valuable supplementary information for investors and company management, as they enable an assessment and benchmarking of the company's presentation.
Since not all companies calculate financial performance measures in the same way, these are not always comparable to measures used by other companies. These financial performance measures should not therefore be regarded as substitutes for measures defined according to IFRS. The following key ratios are not defined according to IFRS, unless otherwise stated.
Total assets less non-interest-bearing liabilities, provisions and deferred tax.
Cash flow from operating activities (after changes in working capital), divided by the average number of outstanding shares.
Interest-bearing liabilities divided by shareholders' equity.
Interest-bearing liabilities divided by rolling twelve-month net operating income less central administration.
Properties in which a conversion or extension is in progress or planned that has a significant impact on the property's net operating income. Net operating income is affected either directly by the project or by limitations on lettings prior to impending improvement work.
Profit from property management less tax at a nominal rate attributable to profit from property management, divided by average number of shares. Taxable profit from property management is defined as profit from property management less such amounts as tax-deductible depreciation and remodelling.
Shareholders' equity per share following the reversal of fixed-income derivatives and deferred tax according to the balance sheet.
Shareholders' equity including non-controlling interest divided by total assets.
Parent Company shareholders' share of equity according to the balance sheet, divided by the number of shares at the end of the period.
Lease value divided by rental value at the end of the period.
Net operating income less central administration in relation to net interest items (interest expenses less interest income).
Properties that are being actively managed on an ongoing basis.
Land and development properties and properties in which a new build/complete redevelopment is in progress.
Stated as an annual value. Index-adjusted basic rent under the rental agreement plus rent supplements.
Interest-bearing liabilities divided by the carrying amount of the properties at the end of the period
New lettings during the period less terminations to vacate.
Parent Company shareholders' share of earnings after tax for the period, divided by average number of outstanding shares during the period. Definition according to IFRS.
Lease value plus estimated annual rent for vacant premises after a reasonable general renovation.
Proportion of leases that are extended in relation to the proportion of cancellable leases.
Profit before tax plus interest expenses, divided by average capital employed. In interim reports, the return is converted into its annualised value without taking account of seasonal variations.
Profit for the period/year divided by average shareholders' equity including non-controlling interest. In interim reports, the return is converted into its annualised value without taking account of seasonal variations.
Dividend for the year divided by the share price at year-end.
In accordance with IFRS 8, segments are presented from the point of view of management, divided into the following segments: Property Management, Property Development and Transactions. Rental income and property expenses, as well as realised and unrealised changes in value including tax, are directly attributable to properties in each segment (direct income and expenses). In cases where a property changes character during the year, earnings attributable to the property are allocated to each segment based on the period of time that the property belonged to each segment. Central administration and items in net financial expense have been allocated to the segments in a standardised manner based on each segment's share of the total property value (indirect income and expenses). Property assets are directly attributed to each segment and recognised on the balance sheet date.
Net operating income divided by rental income.
Net operating income for the period plus unrealised and realised changes in the value of properties, divided by market value at start of period plus investments for the period.
*This key ratio is operational and is not regarded as an alternative performance measure according to ESMA's guidelines.
Fabege is one of Sweden's leading property companies, focusing mainly on letting and managing office premises as well as city district development. The company offers modern premises in prime locations in fastgrowing submarkets in the Stockholm region: Stockholm inner city, Solna and Hammarby Sjöstad.
Fabege offers attractive and efficient premises, mainly offices but also retail and other premises. The concentration of properties to wellcontained clusters leads to greater customer proximity and, coupled with Fabege's extensive local expertise, creates a solid foundation for efficient property management and high occupancy.
At 30 September 2017, Fabege owned 90 properties with a total market value of SEK 55.5bn. The rental value was SEK 2.6bn.
Fabege works with sustainable city district development, with a primary focus on commercial properties within a limited number of well located submarkets in the Stockholm area.
Fabege aims to create value by managing, improving and actively adjusting its property portfolio through sales and acquisitions.
Fabege's operational activities are conducted in three business areas: Property Management, Property Development and Transactions.
Fabege's strategy is to create value by managing and developing the property portfolio and through transactions, acquiring and divesting properties with the aim of increasing potential in the property portfolio. Fabege's properties are located in the most liquid market in Sweden.
Attractive locations lead to a low vacancy rate in the investment property portfolio. Modern properties permit flexible solutions and attract customers. With its concentrated portfolio and high-profile local presence, investments aimed at raising the attractiveness of an area benefit many of Fabege's customers.
A number of external factors affect Fabege's operations and these, together with the transaction volume and the office market trend in Stockholm, represent the prerequisites for the company's success.
Stockholm is one of the five metropolitan areas in Western Europe where the population is rising the most. According to forecasts, Stockholm County will have half a million inhabitants more than today by 2030. People in the active labour force account for the largest growth, which is boosting demand for office premises.
New technology and new working methods are fuelling demand for flexible and space-efficient premises in prime locations. Excellent peripheral service and good communication links in the form of public transport services are in increasing demand, as are environmentally certified offices and green leases.
The trend for both the Swedish and global economy impacts the property market. Lower vacancy rates in Stockholm's inner city and a stronger
economic climate have historically meant rising rents.
Sustainability issues are becoming increasingly important, in terms of both individual properties and entire areas. Interest in environmental considerations involving choice of material and energy-saving measures is on the rise. Demand is increasing for premises in areas with a favourable mix of offices, retail, service and residential units, as well as excellent transport links and environmental commitment.
The essence of Fabege's operations is finding the right premises for a customer's specific requirements and ensuring that the customer is content. This is accomplished through longterm work and based on close dialogue with the customer, thus building mutual trust and loyalty.
Property transactions are an integral part of Fabege's business model and make a significant contribution to the company's earnings. The company continuously analyses its property portfolio to utilise opportunities to increase capital growth, through both acquisitions and divestments.
High-quality property development is the second key cornerstone of our business. Fabege has long-standing expertise in pursuing extensive property development projects with the aim of attracting long-term tenants to properties that have not yet been fully developed and can be redesigned based on the customer's specific requirements.
2017 Annual General Meeting 9 April 2018 Interim report Jan–March 2018 24 April 2018, 8:00 am CET Interim report Jan–June 2018 6 July 2018, 8:00 am CET Interim report Jan–Sep 2018 18 October 2018, 8:00 am CET
Interim report Jan–Sep 2017 19 October 2017, 8:00 am CET Year-end report 2017 5 February 2018, 12:00 noon CET
| 7 Jul 2017 | Interim report January – June 2017 |
|---|---|
| 7 Jul 2017 | Fabege shows strong net lettings and new project |
| start-ups | |
| 13 Sep 2017 | Fabege expands its green MTN programme |
| by SEK 3bn | |
| 19 Sep 2017 | Fabege leases 16,500 sqm to Swedbank in |
| Sundbyberg | |
| 23 Sep 2017 | Erik Paulsson leaves position as Chairman |
| of Fabege | |
| 29 Sep 2017 | Fabege signs agreement with Bilia and begins de |
| velopment of Haga Norra |
*Including regulatory and non-regulatory press releases during the period.
Visit the Group's website for further information about Fabege and its operations. There will also be a web presen
-tation at which Christian Hermelin and Åsa Bergström will present the interim report on 19 October 2017.
CHRISTIAN HERMELIN Chief Executive Officer Phone: +46 (0)8-555 148 25 +46 (0)733-87 18 25
ÅSA BERGSTRÖM Vice President and CFO Phone: +46 (0)8-555 148 29 +46 (0)706-66 13 80
This information is of the type that Fabege AB is required to disclose under the EU Market Abuse Regulation and the Swedish Securities Market Act. This information was released, through the provision of the above-mentioned contact person, for publication on 19 October 2017, at 8:00 am CET.
Fabege AB (publ) Box 730, SE 169 27 Solna, Sweden Visitors: Pyramidvägen 7, 169 56 Solna, Sweden Telephone: +46 (0)8-555 148 00 Email: [email protected] www.fabege.se Corporate registration number: 556049–1523 Registered office of the Board of Directors: Stockholm
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