Klövern AB (publ): Interim Report January – March 2019

2019-04-26

»» Income increased by 16 per cent to SEK 896 million (772).

»» The operating surplus increased by 18 per cent to SEK 599 million (507).

»» Profit from property management increased by 13 per cent to SEK 362 million (319).

»» Profit before tax amounted to SEK 848 million (708) and net profit, attributable to the parent company’s shareholders, totalled SEK 633 million (585), corresponding to SEK 0.67 (0.58) per ordinary share.

»» Changes in value of properties totalled SEK 544 million (395).

»» Project development, including development of building rights, contributed to increases in value of properties of SEK 122 million (80).

»» After taking possession of 1 property for SEK 632 million, transfer of possession of 5 properties for SEK 129 million and investments of SEK 326 million, the value of the property portfolio amounted to SEK 54,180 million.

»» The interest coverage ratio amounted to 2.6 (2.9) and the adjusted equity ratio improved to 38.2 per cent.

»» EPRA NAV increased to SEK 18.15.

Statement by the CEO

A STRONG FIRST QUARTER
Klövern is reporting strong earnings for the first quarter of 2019. Acquisitions, high net moving-in, rising rent levels and continued positive changes in value of properties contributed to the good earnings performance. We have continued to realize our strategy of streamlining and concentration.

CONTINUED STRONG EARNINGS DEVELOPMENT
Income increased to SEK 896 million in the first quarter of 2019 and to SEK 3,374 million in the past 12 months. Profit from property management improved to SEK 362 million, with the operating margin amounting to 67 per cent. Positive changes in value of properties amounting to SEK 544 million contributed to a profit before tax of SEK 848 million. Net moving-in amounted to SEK 47 million, as compared with SEK 89 million in all of 2018. The two largest moving-in during the quarter were in Åby Arena in Gothenburg, where Åbymässan has moved in on approximately 15,000 square metres and Åby Hotel has opened a new hotel with around 8,000 square metres.

GOOD RENTAL MARKET
Despite a long period of strong rental growth, particularly in the Stockholm region, rental growth also remained good in the first quarter of the year. The vacancy rate for modern office premises is low in many places, both in Stockholm and in other metropolitan areas, as well as in Klövern’s regional cities. The trend of rising rent levels has been offset to some extent in that many tenants have found a way to decrease their space by switching to a more flexible way of working, but the net effect is positive, as is reflected by the solid development in income.

COPENHAGEN FULLY LET
The property portfolio in Copenhagen, which constitutes 7 per cent of Klövern’s total portfolio, is performing well. Including the two additional lease agreements that were signed in late March/early April, the economic occupancy rate in Klövern’s seven properties in Copenhagen amounts to just over 99.9 per cent. In New York the project at 1245 Broadway is progressing according to plan. The ground-breaking at the parking lot was in January, and ground work in the form of excavation and laying the foundation is now being performed. The state-of-the-art office building will be 22 stories high with a project area of almost 17,000 square metres. It is a clear strategy on Klövern’s part to invest outside of Sweden in order to minimize the geographic risk that focusing exclusively on the Swedish market would entail. We remain open to additional acquisitions of office properties, particularly in Copenhagen and New York.

PROJECT DEVELOPMENT CREATES VALUE
Project development is an important part of Klövern’s business model. We consistently focus on identifying profitable projects based on our existing property portfolio. In terms of results, in the form of increased property values, the project operations (including development of building rights) contributed SEK 122 million during the first quarter of 2019 and SEK 953 million during the last 12 months. The largest ongoing projects are 1245 Broadway in New York and the soon-to-be completed Åby Arena in Gothenburg.

In the housing sector, we have continued to act carefully in Klövern Living with a focus on pushing forward local plans and developing the future project portfolio while planned production starts have been postponed. However, through its ownership in Tobin Properties, Klövern has an ongoing project development of housing. These projects will be completed with a high quality.

ACQUISITION IN STOCKHOLM
The first quarter of the year was relatively quiet on the transaction front. This came on the heels of a very intensive year in 2018 in which we were involved in 55 transactions to streamline our portfolio while at the same time entering two new foreign markets. In the first quarter of 2019 we strengthened our position in Stockholm by acquiring a high-quality office property in Kista with a lettable area of around 18,700 square metres. The property is a good complement to Klövern’s already strong presence in Kista. Five smaller divestments were carried out during the quarter as part of the ongoing streamlining of the portfolio.

FINANCIAL STRENGTH
Klövern’s financial strength continues to be good. The adjusted equity ratio improved during the quarter to 38.2 per cent. At the same time, the average period of tied-up capital amounted to 4.3 years, while the average fixed-interest period was 2.6 years, and as much as 90 per cent of the credit volume was interest rate hedged or at a fixed rate. The capital market continues to offer relatively good liquidity. During the first quarter of 2019, we issued SEK 1,600 million under an existing unsecured green bond programme.

GOOD VALUE GROWTH
The net asset value per share (EPRA NAV) amounted to SEK 18.15, corresponding to an increase of 3 per cent since the end of last year and 22 per cent during the past 12 months.

CONTINUED GOOD DEVELOPMENT
Overall, we are pleased with the result for the first quarter of the year and look forward to a continued good development during the rest of 2019.

Rutger Arnhult, CEO Klövern

Klövern AB (publ)

For additional information, please contact:
Rutger Arnhult, CEO, +46 (0)70-458 24 70, rutger.arnhult@staging-wwwklovernse.wp4.triggerfish.cloud
Lars Norrby, IR, +46 (0)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 attractive premises in growth regions. 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 (0)10-482 70 00. E-mail: info@staging-wwwklovernse.wp4.triggerfish.cloud.

The information in the interim report is such that Klövern AB (publ) is obliged to publish under the EU Market Abuse Regulation. The information was made available for publication, through the abovementioned contact persons, at 07:30 CEST on 26 April 2019.

This is a translation of the original Swedish language press release. In the event of discrepancies, the original Swedish wording shall prevail.

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