YEAR-END REPORT FEBRUARY 2017 BILJANA PEHRSSON CEO ANDERS KVIST DEPUTY CEO AND CFO

Transcription

1 YEAR-END REPORT FEBRUARY 2017 BILJANA PEHRSSON CEO ANDERS KVIST DEPUTY CEO AND CFO

2 AGENDA Full year in summary Property portfolio Financial performance and key figures Proposed rights issue 2017 Questions are welcome KUNGSLEDEN AB (PUBL) 2

3 FULL YEAR IN FIGURES KUNGSLEDEN AB (PUBL)

4 HIGHLIGHTS DURING 2016 AND AFTER Important lease agreements of SEK 55m were signed for our project properties. As a result, four projects entered implementation stage with a total investment volume of SEK 826 m. Nobis hotel signed a 20-year-lease in Blästern 14 (70% of gross leasable area). 6,000 sqm to Kista Check-in in Holar 1 (100% of gross leasable area) Lease agreements with ÅF, Actic and Tidermans Café in Enen 10 (53% of gross leasable area) 3,000 sqm to a key tenant in Tegnér 15 (85% of gross leasable area) Divestments of non-strategic properties of approx. SEK 700 m and acquisition of one strategic property Emporia Office in the Hyllie cluster of SEK 457 m. Properties with residential building rights divested realizing value today and forward Five properties with residential building rights potential were divested at a price of SEK 321 m with a realised value gain of SEK 42 m and an additional purchase price of approx. SEK 240 m, all in all SEK 282 m more than booked value. Three asset and property management units as of Jan 2017 Three more equally sized overall asset and property management units created Stockholm, Gothenburg/Malmö and Mälardalen Ulrica Sjöswärd recruited ad Head of Real Estate Gothenburg/Malmö. KUNGSLEDEN AB (PUBL) 4

5 HIGHLIGHTS DURING 2016 AND AFTER, CONT. Equity continued to increase and amounted to SEK per share (51.28). EPRA NAV amounted to SEK per share (56.76) LTV fell further and amounted to 56.4 per cent (61.9). The Board of Directors proposes a dividend of SEK 2.00 (2.00). The Board of Directors has resolved to conduct rights issue Extraordinary General Meeting on March 6 regarding a rights issue of approximately SEK 1,600 million with pre-emptive rights for Kungsleden s shareholders. The rights issue is fully underwritten by Kungsleden s largest private shareholders. The aim is to strengthen Kungsleden s balance sheet and enable further profitable growth with financial discipline through value-creating investments and selective property acquisitions. KUNGSLEDEN AB (PUBL) 5

6 KUNGSLEDEN IN BRIEF PER YEAR-END KUNGSLEDEN AB (PUBL) 6

7 7 PROPERTY PORTFOLIO

8 A FOCUSED PROPERTY PORTFOLIO WITH HIGH QUALITY 1 KUNGSLEDEN AB (PUBL) 8

9 RENTAL VALUE DISTRIBUTION RENTAL VALUE BY REGION 2015 OCH 2016 RENTAL VALUE BY CATEGORY 2015 OCH 2016 KUNGSLEDEN AB (PUBL) 9

10 PROPERTY VALUE DEVELOPMENT SINCE NEW STRATEGY 1 KUNGSLEDEN AB (PUBL) 10

11 STRONG LEASING RESULTS IN 2016 LEASING FULL-YEAR PERIOD JAN-DEC 2015 AND 2016 KUNGSLEDEN AB (PUBL) 11

12 DEVELOPMENT PROJECTS TOTAL OF SEK 2 BILLION IN THE PIPELINE KUNGSLEDEN AB (PUBL) 12

13 DEVELOPMENT PROJECTS IN PIPELINE KUNGSLEDEN AB (PUBL) 13

14 14 FINANCIAL PERFORMANCE AND KEY FIGURES

15 RENTAL REVENUE KUNGSLEDEN AB (PUBL) 15

16 PROPERTY COST KUNGSLEDEN AB (PUBL) 16

17 INCOME STATEMENT KUNGSLEDEN AB (PUBL)

18 DEVELOPMENT EQUITY As of the end of the period, equity was SEK 10,839 (9,333) million, or SEK 60 (51) per share. This corresponds to an equity ratio of 37 (33) per cent. Kungsleden requires that its equity ratio is at least 30 per cent. KUNGSLEDEN AB (PUBL) 18

19 DEVELOPMENT - NET DEBT KUNGSLEDEN AB (PUBL) 19

20 AVERAGE INTEREST RATE AND INTEREST COVERAGE RATIO KUNGSLEDEN AB (PUBL) 20

21 21 PROPOSED RIGHTS ISSUE 2017

22 DISCLAIMER Important information The following presentation constitutes merely an advertisement under Chapter 2, Section 32 of the Swedish Financial Instruments Trading Act and does not contain or constitute an offer to acquire, subscribe or otherwise trade in shares, subscription rights or other securities in Kungsleden. Any invitation to the persons concerned to subscribe for shares in Kungsleden will only be made through the prospectus that Kungsleden estimates to publish on its website, on or around 9 March This presentation may not be released, published or distributed, directly or indirectly, in or into Australia, Hong Kong, Japan, Canada, Singapore, the United States or any other jurisdiction where such action is wholly or partially subject to legal restrictions or where such action would require additional prospectuses, registrations or other actions in addition to what follows from Swedish law. Nor may the information in this presentation be forwarded, reproduced or disclosed in a manner that contravenes such restrictions or would entail such requirements. Failure to comply with this instruction may result in a violation of applicable securities laws. No subscription rights, BTAs (interim shares) or new shares will be registered under the United States Securities Act of 1933 ( Securities Act ) or securities legislation in any state or other jurisdiction in the United States and may not be offered, subscribed, used, pledged, sold, resold, allotted, delivered or otherwise transferred, directly or indirectly, within the United States, other than pursuant to an exemption from the registration requirements of the Securities Act and in accordance with securities laws in relevant state or other jurisdiction in the United States. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States. The following presentation may contain forward-looking statements which reflect Kungsleden s current view on future events and financial and operational development. Words such as intend, expect, anticipate, may, believe, plan, estimate and other expressions which imply indications or predictions of future development or trends, and which are not based on historical facts, are intended to identify forward-looking statements. Forward-looking statements inherently involve both known and unknown risks and uncertainties as they depend on future events and circumstances. Forward-looking statements do not guarantee future results or development and the actual outcome could differ materially from the forward-looking statements. The publication of the following presentation shall not be deemed to imply that the information herein is accurate or applicable at any time other than on the date of the publication of this presentation or that there have been no changes in Kungsleden s business since this date. No person, including Kungsleden and its advisors, is under any obligation to update the information contained in this presentation. Neither Kungsleden nor its advisors make any guarantee, representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this presentation, and no reliance should be placed on such information. Neither Kungsleden nor any of its advisors accept any responsibility for any loss arising from the use of this presentation or in connection therewith. By accepting any copy of this document, you agree to be bound by the foregoing limitations. KUNGSLEDEN AB (PUBL) 22

23 RIGHTS ISSUE IN BRIEF Subject to EGM approval, Kungsleden s board has resolved to conduct a rights issue of approximately SEK 1.6 billion with pre-emptive rights for existing shareholders. Gösta Welandson with companies (14.2% 1 ) and Olle Florén with companies (3.0% 1 ) have committed to subscribe pro-rata to their current shareholdings. In addition, Welandson has underwritten the remaining portion of the rights issue. The main purpose of the rights issue is to strengthen our balance sheet and enable further profitable growth with financial discipline. The final rights issue terms (including subscription price and subscription ratio) will be announced 1 March. The Extraordinary General Meeting will be held 6 March. The subscription period will run from 10 March up until 24 March. KUNGSLEDEN AB (PUBL) 23 1) Of capital and votes. Gösta Welandson with companies is the largest shareholder. Olle Florén is a large shareholder in Kungsleden.

24 24 USE OF PROCEEDS

25 USE OF PROCEEDS SUMMARY 31 Dec ILLUSTRATIVE 1 Investments in existing portfolio Approx. SEK 2-3bn 6% target yield on investments LTV 56.4% LTV 50.9% 1 Illustrative, three years cumulative LTV 50-55% 2 Deleveraging Targeting an LTV in the interval 50-55% at this point in the cycle Reduce risk profile given lower debt level Gain from reduced financing costs Portfolio value Net debt Rights issue Operating cash flow 2 Releveraging 3 Net acquisitions Use remaining headroom for selective accretive acquisition opportunities in core markets in line with our 2020 goals Investing in our existing portfolio and deleveraging KUNGSLEDEN AB (PUBL) 25 1) Per 31 December 2016 adjusted for rights issue of SEK 1,600m. 2) Retained earnings post dividend, based on 2016 financials, cumulative 3 years.

26 1 INVESTMENT PROGRAM On the back of strong letting market in 2016 our portfolio offers value creating investment opportunities. Total planned investments of approx. SEK 2-3bn for : Tenant improvements and modernizations in connection with new lettings; and Development projects, consisting of re-developments, extension projects as well as new constructions. Kungsleden has a target yield of 6% on new investments in the existing portfolio. Investment program Investments in existing properties 1, SEKm (approx.) Actual Plan Development projects, SEKm (approx.) ,300 Total investments, SEKm (approx.) ,900 1) Including tenant improvements Investment program aimed at both increasing rental income and reducing operating costs KUNGSLEDEN AB (PUBL) 26

27 1 INVESTMENTS IN EXISTING PROPERTIES EXAMPLE LUSTGÅRDEN 12 KUNGSLEDEN AB (PUBL) 27

28 1 INVESTMENTS IN DEVELOPMENT PROJECTS Segment Offices Location Investments (SEKm, approx.) 2017 Investments (SEKm, approx.) Västerås Södertälje (greater Stockholm) 30 0 Sollentuna (greater Stockholm) Hotel Stockholm Commercial Växjö Eskilstuna Community services Östersund Total (approx.) 485 1,302 Main focus on offices in growth areas. KUNGSLEDEN AB (PUBL) 28

29 2 DELEVERAGING Stronger balance sheet: Equity ratio will increase from 36.8% to 40.0%. 1 LTV will decrease from 56.4% to 50.9%. 1 Part of the proceeds will be used to repay short term debt facilities reducing the average cost of debt and interest expenses. Positive impact on interest coverage ratio. Positive credit re-rating resulting in repricing around one credit notch justified (i.e. around 30-40bps tightening in the 2019 bond) Debt maturity per year (SEKm) Kungsleden bond credit spread 3 Bps Creating a financially strong Kungsleden with improved key ratios and lower risk KUNGSLEDEN AB (PUBL) 29 1) Per 31 December 2016 adjusted for rights issue of SEK 1,600m. 2) Used loans and credits as per 31 December ) Per 14 February Since announcement of the rights issue, SEK 2.0m of Kungsleden s bond has been traded on Nasdaq Stockholm.

30 3 SELECTIVE STRATEGIC AND ACCRETIVE ACQUISITIONS A more focused property portfolio of higher quality assets Use remaining headroom for selective accretive acquisition opportunities in core markets in line with our 2020 goals Selective acquisitions only in line with acquisition criteria: Predominantly offices Part of identified growth markets Increasing size of our clusters, strengthening customer offer and gaining cost efficiencies KUNGSLEDEN AB (PUBL) 30

31 3 DISCIPLINED TRANSACTION STRATEGY Acquisitions and disposals (SEKm) Net transactions Disposals Acquisitions , , Going forward # properties acquired limited # properties disposed (4) (66) (35) (23) KUNGSLEDEN AB (PUBL) 31 1) During 2014 acquisitions totalling SEK 2,666m were made, of which SEK 2,280m (4 properties) was closed in 2015.

32 32 REITERATION OF OUR STRATEGY

33 FOCUSED STRATEGY HAS CREATED SHAREHOLDER VALUE Earnings per share (SEK) EPRA NAV per share (SEK) 57,18 56,76 69,32 10,27 2,78-5, KUNGSLEDEN AB (PUBL) 33 1) Tax cases corresponding to approximately SEK 1,6bn charged to earnings in ) Tax cases corresponding to approximately SEK 1,3bn charged to earnings in 2015.

34 REITERATION OF OUR STRATEGY Our 2020 business plan is focused on quality growth, optimization of the property portfolio and financial stability. Our strategy is to own properties in clusters. The cluster strategy makes it possible to strengthen the customer value proposition and achieve asset and property management synergies. We will continue realizing value today and forward by divesting potential residential building rights in the existing property portfolio. The target is that our earnings shall grow by increasing the net operating income generated by the existing properties and by growing the portfolio through investments and selective acquisitions. We see the rights issue to be the best way forward to implement our strategy enabling higher net operating income through attractive investment opportunities and increased financial strength Generating attractive total returns for our shareholders with a balanced risk profile KUNGSLEDEN AB (PUBL) 34

35 35 PRELIMINARY TIMETABLE

36 PRELIMINARY TIMETABLE FOR THE RIGHTS ISSUE 1 March Publication of terms (including subscription price and subscription ratio) 6 March Extraordinary General Meeting 6 March Last day of trading in Kungsleden s shares including the right to participate in the rights issue 8 March Record date for participation in the rights issue. 9 March Expected publication of the prospectus March Trading in subscription rights March Subscription period 31 March Expected date for announcement of final outcome of the rights issue KUNGSLEDEN AB (PUBL) 36

37 37 QUESTIONS ARE WELCOME!