Klövern AB: Interim Report January – March 2017

»» Profit before tax increased by 16 per cent to SEK 1,018 million (876) and net profit increased by 11 per cent to SEK 789 million (712), corresponding to SEK 0.77 (0.69) per ordinary share.

»» Income increased by 7 per cent to SEK 762 million (714).

»» The operating surplus increased by 9 per cent to SEK 503 million (463).

»» Profit from property management increased by 9 per cent to SEK 319 million (293).

»» Changes in value of properties amounted to SEK 676 million (726).

»» After taking possession of 5 properties for SEK 415 million, transfer of possession of 4 properties for SEK 109 million and investments of SEK 224 million, the value of the property portfolio amounted to SEK 40,442 million.

»» The interest coverage ratio amounted to 3.0 and the adjusted equity ratio improved to 37.5 per cent.

Statement by the CEO

Record profit and continued streamlining of the property portfolio

Today, as much as 98 per cent of Klövern’s total property value is located at our 12 selected growth locations. The average population growth during the past ten years at these locations has been above 15 per cent. The Stockholm portfolio makes up 45 per cent of the property value followed by Gothenburg at 9 per cent, Linköping at just over 7 per cent and Uppsala at 6 per cent.

There is no doubt that we are working in a tailwind at present. The property market continues to be strong, there are many project opportunities, prospects for financing are good and our local rental markets are showing strength. We are reporting a positive net moving-in of SEK 33 million for the quarter. At the same time, we note new records on many markets both as regards rental levels and yield requirements. Overall, this is continuing to drive property values in a positive direction and it is gratifying to see an increase in value of SEK 676 million during the quarter.

Profit from property management increased by 9 per cent to SEK 319 million. A basically stable operating surplus is supported by positive net moving-in, strong rental development and continued low interest rates. Acquisitions in Malmö and Lund at the end of last year and our own new production also made a positive contribution. During the quarter, Elite Hotels moved into around 10,000 sq.m. of newly built hotel space at the property Uppsala Gate in Uppsala.

Our aim of expanding to an increasing extent through our own development projects is starting to have a clear impact. The currently most extensive new build projects are S7 in Västerås, Gamlestaden in Gothenburg and Skeppet in Karlstad. Letting at these properties is making very good progress and we envisage these new builds being fully let on completion. Major refurbishment projects are taking place for the tenant ECDC in Solna, for Choice Hotels in Kista and for Mio Möbler in Lund. These major projects involve total investments of SEK 1 billion and encompass around 55,000 square metres.

Project development, including development of building rights, contributed to increase in property value by SEK 156 million during the quarter, which is a result that should now rather be regarded as part of our operating profit. During the quarter, we have invested a total of SEK 224 million in development projects compared with total investments of SEK 1.6 billion last year. I regard it as feasible for Klövern to achieve a project volume of SEK 2 billion during 2018, bearing in mind that we will by then have also started production of some residential projects in Klövern Living.

Klövern Living is working with a large number of development projects. Local planning processes are in progress for over 5,000 apartments in above all Stockholm, Uppsala, Västerås, Karlstad, Linköping and Nyköping. My assessment is that Klövern will start production of at least 200-300 apartments in 2017/2018 and at least 300-500 apartments in 2019/2020.

At the beginning of the year, we have continued to work actively with transactions. Through acquisitions we have complemented the portfolio in Gothenburg, Stockholm and Nyköping. Our divestments mean that we completely leave Borås, Karlskrona, Hässleholm, Ängelholm, Kristinehamn and Ystad. We have also sold some properties in Lund, Örebro and Norrköping to further streamline the portfolios at these locations.

Klövern’s financial strength also improved further during the quarter. The interest coverage ratio amounted to 3.0 and the adjusted equity ratio increased to 37.5 per cent compared with 36.7 per cent at year-end. The net asset value per share (EPRA NAV) amounted to SEK 12.93, corresponding to an increase of over 10 per cent since the year-end.

All in all, we are very satisfied with developments and our achievements at Klövern in early 2017. We look forward confidently to continued healthy development during the year.

Rutger Arnhult, CEO Klövern

For additional information:
Rutger Arnhult, CEO, +46 70-458 24 70, rutger.arnhult@klovern.se
Lars Norrby, IR, +46 76-777 38 00, lars.norrby@klovern.se

Klövern is a real estate company committed to working closely with customers to offer them efficient premises in Swedish growth regions. Klövern is listed on Nasdaq Stockholm. For further information, see kelly.corem.se.

Klövern AB (publ), Bredgränd 4, 111 30 Stockholm. Phone: +46 8-400 500 50. E-mail: info@klovern.se.

This information is such that Klövern AB (publ) is obliged to disclose under the Securities Market Act and/or the Financial Instruments Trading Act. The information was made available for publication on 26 April 2017.