Klövern AB (publ): Interim Report January - June 2018
July 12, 2018 --
»» Income increased by 4 per cent to SEK 1,585 million (1,518).
»» The operating surplus increased by 3 per cent to SEK 1,066 million (1,032).
»» Profit from property management increased by 2 per cent to SEK 680 million (665).
»» Profit before tax amounted to SEK 1,244 million (1,718) and net profit, attributable to the parent company's shareholders, totalled SEK 1,198 million (1,439), corresponding to SEK 1.20 (1.39) per ordinary share.
»» Changes in value of properties totalled SEK 546 million (1,025).
»» Project development, including development of building rights, contributed to increases in value of properties of SEK 131 million (231).
»» After taking possession of 3 properties for SEK 2,855 million, transfer of possession of 4 properties for SEK 685 million and investments of SEK 849 million, the value of the property portfolio amounted to SEK 46,625 million.
»» The interest coverage ratio amounted to 2.9 (3.1) and the adjusted equity ratio amounted to 35.8 per cent.
»» EPRA NAV amounted to SEK 14.58.
Statement by the CEO
Stable earnings combined with establishment in Copenhagen
Klövern is reporting strong earnings for the first six months of 2018, at the same time as project activities have continued to develop well and establishment in Copenhagen has taken place through six large acquisitions.
Income increased to SEK 1,585 million during the first half of the year, and to SEK 3,096 million during the last 12 months. Profit from property management improved to SEK 680 million and the operating margin amounted to 67 per cent. Positive changes in value of properties amounting to SEK 546 million contributed to a profit before tax of SEK 1,244 million. Net moving-in was strong and amounted to SEK 49 million, compared with SEK 27 million during the first half of 2017 and SEK 54 million for the full year of 2017. The largest single moving-in was the EU agency European Centre For Disease Prevention and Control (ECDC) at around 9,400 sq.m. in Solna.
After a very intensive 2017 when Klövern through 81 transactions continued to focus the portfolio on strong growth locations in Sweden, we have during 2018, through acquisition of six large properties in Copenhagen, established a strong position in the Danish market. At the end of June, the value of the two first acquired properties in Copenhagen amounted to SEK 2.8 billion. After taking possession of four additional properties on 4 July, at an underlying property value of around SEK 1.0 billion, Copenhagen is Klövern's second largest city by value. At the same time, the streamlining of the portfolio has continued through the divestment of all investment properties in Härnösand, Sollefteå and Falun (with planned transfer of possession on 31 August) whereafter Klövern's Swedish portfolio is fully focused on 12 selected growth cities.
After a long period of reconnoitering, Klövern took a first step into the US market during the second quarter. We have signed a contract, at a value of USD 16 million, for a site leasehold in Manhattan, a corner property close to 6th Avenue (1241-1251 Broadway) which is currently used for parking and is less than 500 meters from the Empire State Building. The ambition is to develop a high-quality office building encompassing around 14,000 sq.m. together with the local property developer GDS Development. CBRE has been commissioned to take care of letting. Skidmore, Ownings & Merrill (SOM) has been commissioned to design the building, which is planned to have LEED green certification.
Klövern has a relatively stable project volume with an annual volume of around SEK 1.5 billion. After successful completion of, amongst other things, the refurbishment of an office building for the EU agency ECDC, the most extensive projects now include the hotel and fairs facility Åby Arena in Gothenburg and the office project Kopparhusen in Norrköping. Project development, including development of building rights, contributed with increases in property value of SEK 131 million during the first six months of the year, or by SEK 446 million during the past 12 months.
In Klövern Living, we are working with a large number of residential projects. In the light of the current state of the market, we have moved our first planned project starts further away in time to the first half of 2019.
During 2018, Klövern has acquired shares in the property development company Tobin Properties in three steps; through a directed share issue, a mandatory public cash offer and a rights issue. Klövern's ownership amounts to 62.1 per cent of the share capital and 63.4 per cent of the voting rights. During the first quarter, the holding was reported as participation rights in associated companies but from 4 April 2018 Tobin Properties is consolidated in Klövern.
Klövern's financial strength continues to be good. At the end of the second quarter, the adjusted equity ratio amounted to 35.8 per cent while the interest coverage ratio during the past 12 months remained unchanged at 2.9. During the second quarter we have worked on extending both the period of tied-up capital and period of fixed interest, which have increased to 4.0 years and 3.0 years, respectively. At the same time, the fixed-interest share of credit volume has risen from 68 per cent to 88 per cent. During the first half of the year we have also been active in the capital market by issuing a bond loan of SEK 1,500 million, a green bond loan of SEK 900 million and a hybrid bond loan of SEK 800 million.
The net asset value per share (EPRA NAV) amounted to SEK 14.58 on 30 June, corresponding to an increase of 4 per cent since the year-end and 15 per cent during the past 12 months.
Overall, we are satisfied with the development during the first half of 2018 and look forward confidently to a continued stable development during the rest of the year.
Klövern is a real estate company committed to working closely with customers to offer them efficient premises in growth regions. Klövern is listed on Nasdaq Stockholm. For further information, see www.klovern.se.
Klövern AB (publ), Bredgränd 4, 111 30 Stockholm. Phone: +46 (0)10-482 70 00. E-mail: [email protected]
The information in the interim report is such that Klövern AB (publ) is obliged to publish under the EU Market Abuse Regulation and the Securities Market Act. The information was made available for publication, through the abovementioned contact persons, at 10:00 CEST on 12 July 2018.