Klövern AB (publ): Interim Report January – June 2015

2015-07-10

» Income increased by 10 per cent to SEK 1,346 million (1,222).

» The operating surplus increased by 10 per cent to SEK 873 million (794).

» Profit from property management increased by 35 per cent to SEK 498 million (369).

» Changes in value of properties amounted to SEK 775 million (728), of derivatives to SEK 87 million (-319) and share in profit of associated companies amounted to SEK 24 million (-56).

» Net profit amounted to SEK 1,102 million (671), corresponding to SEK 1.02 (0.63) per ordinary share.

» Taking possession of 12 properties for SEK 818 million and sale of 11 properties for SEK 487 million.

» Investments in own projects amounted to SEK 558 million (417).

Statement by the CEO

Continued good profit development
Klövern is reporting a good result for the second quarter of the year. Net moving-in amounted to SEK 24 million and the operating surplus for a comparable portfolio rose by four per cent. The transaction market continues to be strong with large inflows of capital to the real estate market, which is reducing yield requirements. The most recent acquisitions have continued to strengthen Klövern’s position in Stockholm and Gothenburg.

Property Management is performing well. Income increased by 7 per cent in the second quarter, driven both by acquisitions and a positive net moving-in. The operating margin amounted to 67 per cent, which means that the operating margin after the first two quarters is in line with the goal of
65 per cent. The rental market in the metropolitan areas continues to be strong and focused letting work means that we are well on our way to achieving the goal for net moving-in of at least 1 per cent of the rental value per year. I am pleased to note that net moving-in for the first half of the year is SEK 29 million, which is just below the goal for the full year.

Klövern is working actively with growth through both projects and acquisitions. We will continue to place great focus on our work of refining and developing existing properties, not least due to the generally lower yield requirements, which make investments in our own properties more attractive. At present, we have some twenty projects in early stages, which aim at producing new or expanded local plans for properties in strategic locations with great development potential. There are also a number of properties in the portfolio where we can in the course of time create high-class tenant-owned properties and rented property in attractive locations.

A major development project was initiated during the second quarter in connection with new letting to the apartment hotel operator StayAt in Kista. The 20-year lease contract encompasses 7,300 sq.m. in the property Helgafjäll 2 which will be completely renovated. The preliminary date for moving in is August 2016.

The market continues to be strong on the transaction side and Klövern has acquired a number of properties during the year. The largest acquisition is Aprikosen 2, also known as Solna Gate, where the purchase price was SEK 1.2 billion. Possession will be taken of Solna Gate on 1 October. With a lettable area of 35,000 square metres, the property is a fine addition to Klövern’s continuously expanding Stockholm portfolio. There is also an increased focus on the Gothenburg market. After the end of the second quarter, the city property Inom Vallgraven 15:2 – also called the Old Riksbank Bulinding – in Gothenburg was acquired. Transfer of possession will take place in November. In accordance with Klövern’s growth strategy, properties for a total of SEK 675 million have been acquired in Gothenburg so far this year. Next after Stockholm and Linköping, which account for 43 per cent and 8 per cent of the property portfolio respectively (including coming transfers of possession), Gothenburg accounts for 7 per cent, closely followed by Västerås and Uppsala at 6 per cent each. During the quarter, we have also carried out a number of small divestments, in Eslöv and Katrineholm among other places, with the intention of continuing to concentrate our property portfolio.

To further strengthen Klövern’s long-term financial position, two financial targets have been adjusted by the board during the quarter. The target for the interest coverage ratio has been increased to at least 2.0 from the previous target of at least 1.5. A new goal has been introduced that the adjusted
equity ratio should be 40 per cent. This replaces the previous goal that the equity ratio should be at least 30 per cent. Apace with declining yield requirements, I regard it as a natural development for Klövern to work on strengthening its financial position.

To sum up, I have a positive view of Klövern’s future development and I am convinced that the second half of the year will be at least as successful as the first half.

Rutger Arnhult
CEO, Klövern

For additional information:
Rutger Arnhult, CEO, +46 70-458 24 70, rutger.arnhult@staging-wwwklovernse.wp4.triggerfish.cloud
Lars Norrby, IR, +46 76-777 38 00, lars.norrby@staging-wwwklovernse.wp4.triggerfish.cloud

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 2015, the value of the properties totaled SEK 31.9 billion and the rental value on an annual basis was SEK 3.0 billion. Klövern is listed on Nasdaq Stockholm. For further information, see www.staging-wwwklovernse.wp4.triggerfish.cloud.

Klövern AB (publ), Bredgränd 4, 111 30 Stockholm. Phone: +46 8-400 500 50. E-mail: info@staging-wwwklovernse.wp4.triggerfish.cloud.

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 2015.