Klövern AB: Interim Report January-September 2016
»» Income increased by 6 per cent to SEK 2,138 million (2,013).
»» The operating surplus increased by 8 per cent to SEK 1,439 million (1,333).
»» Profit from property management increased by 17 per cent to SEK 918 million (786).
»» Changes in value of properties amounted to SEK 1,406 million (1,084).
»» Net profit increased by 14 per cent to SEK 1,694 million (1,482), corresponding to SEK 1.58 (1.35) per ordinary share.
»» After taking possession of 2 properties for SEK 398 million, sale of 8 properties for SEK 365 million and investments of SEK 1,109 million, the value of the property portfolio amounted to SEK 37,585 million.
»» The interest coverage ratio increased to 3.0 (2.6) and the adjusted equity ratio improved to 36.9 per cent.
»» After the end of the nine-month period a total of 28 properties have been acquired in Malmö and Lund for SEK 910 million with transfer of possession on 1 December 2016.
Statement by the CEO
Continued good development of earnings
Klövern’s development of earnings continued to be strong during the third quarter and profit from property management increased by 11 per cent. With contribution from positive changes in value of properties, profit before tax increased by 24 per cent. We have for some time held back with major acquisitions and instead focused on creating value through projects, while at the same time gradually further reinforcing the balance sheet. Market conditions continue to be favourable in the form of solid economic development and historically very low interest rates.
The healthy earnings in the third quarter have led to a further improvement in the company’s financial strength. At the end of September, the adjusted equity ratio was 36.9 per cent, an improvement of just over one percentage point since the beginning of the year and on the way toward our longterm goal of 40 per cent.
Net moving-in, which was positive during the ninemonth period but negative during the quarter, was affected by a couple of long-announced large vacations in Kista. These have to a great extent been compensated for by Tele2 in September moving in to its new head office encompassing around 20,000 sq.m. and that StayAt has at the same time opened a new apartment hotel of over 7,000 sq.m. in the same area. Looking at future moving in, it may be noted that we have signed lease contracts during the quarter for a new upper secondary school of around 4,000 sq.m. in Västerås and with the EU agency European Centre for Disease Prevention and Control for 9,400 sq.m. in Solna, in both cases with moving-in planned to take place during 2018. The office premises vacated by Ericsson in Kista are of high quality and we are now working on further developing the 40,000 sq.m. under the name of Kista Gate to a top modern multi-tenant unit to attract a good mix of tenants.
On the transaction side, Klövern has had relatively few large transactions for a long period. Looking back, it can be noted that, with the exception of the acquisition of a midsize project building in central Stockholm during the spring, we have not taken possession of any major acquired property since November 2015. Although there has continued to be a high level of activity in the Swedish transaction market, we have not seen many properties for sale that would fit our portfolio. This is also a question of price. Apace with rising property values, we have gradually become more selective and instead allocated more capital to project activities, where we have often seen greater potential for long-term creation of value. Through the over 350 projects now in process, with a remaining investment volume of SEK 1.3 billion, we are strengthening Klövern’s position in a number of important cities, including Stockholm, Uppsala, Gothenburg, Karlstad and Västerås.
We are continuing to concentrate the property portfolio geographically and during 2016 have signed contracts to sell some smaller properties in, among other places, Helsingborg and Köping. We can also envisage divesting properties with a good development of value, which are fully developed from Klövern’s point of view.
In the residential segment, Klövern Living is continuing to work with a number of projects at different stages. We maintain the assessment that there may be scope for as many as between 8,000 and 12,000 apartments in our existing property portfolio, in Stockholm, among other places. The pace and extent of our future expansion in the residential segment depends partly on the additional volume of building rights for residential properties that is created in the future. At the same time, alternative ways of developing the value of building rights provide great flexibility as regards investment volume and the balance between risk level and value creation.
Overall, we are very satisfied with the development during the third quarter of 2016 and look forward to favourable conditions for continued healthy development in the final quarter of the year.
Rutger Arnhult, CEO Klövern
For additional information:
Rutger Arnhult, CEO, +46 70-458 24 70, email@example.com
Lars Norrby, IR, +46 76-777 38 00, firstname.lastname@example.org
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: email@example.com.
This information is information that Klövern AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out above, at 07:30 CET on 20 October 2016.