Klövern AB (publ): Interim Report January – June 2014


Income increased by 13 per cent to SEK 1,222 million (1,081).

The operating surplus increased by 19 per cent to SEK 794 million (670).

Profit from property management increased by 21 per cent to SEK 369 million (305).

Changes in value of properties amounted to SEK 728 million (-114), of derivatives to SEK -319 million (317) and share of profits in associated companies amounted to SEK -56 million (7).

Net profit amounted to SEK 671 million (440), corresponding to SEK 3.44 (2.09) per common share.

Taking possession of 9 properties for SEK 4,080 million and sale of 7 properties for SEK 330 million.

Globen City was taken possession of at the start of the second quarter.

During the second quarter the business centre activities were launched under a separate brand name: First Office. Klövern now intends to also conceptualise its self storage operations under a separate brand name: Big Pink.

Statement by the CEO

Continued great interest in investing in the real estate market
“The pace of activity continued to be high during the second quarter when the property portfolio expanded by around SEK 4 billion all at once through the acquisition of Globen City in early April. We also made a couple of smaller transactions during the quarter, including
the acquisition of some properties in Kalmar and Gothenburg. Furthermore, Klövern signed its next biggest lease contract with the mobile phone operator Tele2 in Kista.

Income during the quarter rose by 18 per cent, driven by acquisitions as well as an increased occupancy rate. Continued focus on costs contributed to costs only increasing at a moderate pace. As Globen City was taken possession of during the quarter, this has not yet had its full impact on earnings, although the operating surplus of SEK 426 million for the period is the highest that Klövern has ever had for a quarter by a good margin. The operating margin, the operating surplus as a proportion of income, increased to 67 per cent (65).

Interest in investing in the real estate market is increasing more and more. With a repo rate of 0.25 per cent and a 5-year rate at historic lows, it can be difficult to find the yield that many investors require in other kinds of asset. We notice this increased interest in a number of ways, including several institutional investors participating in making offers. These investors can often accept a lower required yield on properties and thus a higher price. This leads to a general reduction in the required yields in the property market. We can also see this in the existing portfolio where required yields for certain
properties are falling slightly leading to positive changes in value.

Klövern’s strategy is to operate in selected growth locations. At the places we choose, we shall be among the leading and dominating real estate owners at the location. We will accordingly continue to reinforce the portfolio by acquisitions, investments in the existing portfolio, or new production. We can make our administration more efficient by selling properties in peripheral locations and instead investing in acquiring properties that are close to our existing portfolio.

During the quarter, we acquired four properties in Kalmar for SEK 100 million. The properties are fully let and the total lettable area of around 13,500 sq.m. consists of office, retail and warehouse space. Klövern has a strong position on the Kalmar market and it is gratifying to be able to add on some properties that can be managed within the existing organization. We also continued to work on concentrating the portfolio by selling our remaining properties in Kristianstad and Landskrona.

During the quarter we launched our business centre activities under a separate brand name:
First Office. By clarifying the breadth of our geographic presence – we have 54 business centres in 16 cities – and adding new services, we expect to attract tenants to an even greater extent. We now also intend to conceptualise our self storage operations under a new brand name: Big Pink. We currently have a handful of self storage units and intend to open more.

The banks’ willingness to lend remains strong. During the quarter, we have extended a number of larger loans and have been offered continued good margins. We also took the opportunity of making use of a strong market interest to invest in preference shares during the quarter. We issued over 1.5 million preference shares in two different issues.

In terms of earnings, the second quarter was Klövern’s strongest ever, which feels very satisfactory. I would like to take the opportunity of wishing all tenants, employees and investors a pleasant summer”, says Klöverns CEO Rutger Arnhult.

For further information, please contact:
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. As of 30 June 2014, the value of the properties totalled SEK 29 billion and the rental value on an annual basis was SEK 2.9 billion. Klövern is listed on Nasdaq OMX Stockholm Mid Cap. For further information, see kelly.corem.se.

Klövern AB (publ), Box 1024, SE-611 29 Nyköping, Sweden. Phone: +46 155-44 33 00, fax: +46 155-44 33 22,
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 10 July 2014.

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