Interim report 1 Jan -30 Sep Kari Inkinen CEO

Transcription

1 Interim report 1 Jan -30 Sep 2006 Kari Inkinen CEO 1

2 2 Market review

3 Business conditions for 2006 Finnish GDP growth estimate is just under 5 %. Inflation estimate for 2006 is 1.6 %. Unemployment estimated to drop below 8 %, in 2007 unemployment is close to 7 %. Growth in private consumption estimated to be ~ 3 % in 2006 and % in Source: Statistics Finland, ETLA

4 GDP growth % Finland Euro Area USA Japan * 2005* 2006** 2007** ** Estimated growth for 2006 and Source: Statistics Finland, Ministry of Finance, KTI

5 Rental levels Q2/2006, HMA /m²/year 1600 Helsinki Metropolitan Area, prime rents Q2 89 Q4 89 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q2 Q4 Q Retail, Helsinki CBD Office, Helsinki CBD Warehouse, Ring Road III Retail: Average area 150 m 2, Office: Average area 500 m 2, Gross rent /m²/year excl. VAT, New agreements 5 Source: Catella Property Group

6 Vacancy rate 1990-Q2/2006, HMA % 14 Helsinki Metropolitan Area Q2 90 Q4 90 Q2 91 Q4 91 Q2 92 Q4 92 Q2 93 Q4 93 Q2 94 Q4 94 Q2 95 Q4 95 Q2 96 Q4 96 Q2 97 Q4 97 Q2 98 Q4 98 Q2 99 Q4 99 Q2 00 Q4 00 Q2 01 Q4 01 Q2 02 Q4 02 Q2 03 Q4 03 Q2 04 Q4 04 Q2 05 Q4 05 Q2 06 Retail Office Warehouse&industrial 6 Source: Catella Property Group

7 Transactions /2006 billion *Aleksia sale approx. 1,1 bn ** 8/ ,1 3,4 3,2 2,7 2,3 2,3 2,4 2,0 1,4 70% 1,0 0,6 46% 0,5 46% 39% 21% * ** International Local Forecast 7 Source: Catella Property Group

8 Sponda Plc Operational review 8

9 Major events for the period Acquisition of logistics properties for 16.4 meur Portfolio of four logistics properties from Raskone Oy Properties are located in Vantaa, Oulu, Kuusankoski and Mikkeli. All properties are fully occupied and have lease agreements valid for an average of 10 years. City-Center, Helsinki 9

10 Major events for the period Sponda started negotiations with the Port of Helsinki on two projects in Vuosaari Harbour, logistics centre and a gatehouse. Negotiations on the logistics centre were finalised and an agreement was signed 16 October 2006 Negotiations on the gatehouse are still ongoing, agreement is expected to be signed in November. 10

11 Vuosaari Harbour The logistics centre will have a total of m² of leasable areas. First phase includes building of m² of warehouse space and flowthrough terminals by the end of Rest will be constructed according to demand. Estimated total investment is 100 meur. The first phase of the gatehouse, the passenger terminal and carpark will start early in Estimated investment is 34 meur. The second phase of the gatehouse is to be ready in 2014 and the estimated investment is 8 meur. Gatehouse & terminal Logistics area 11 Picture: Evata Finland Oy

12 Q3 in brief 7-9/ / / / /2005 Total revenue, meur Net operating income, meur Operating profit, meur Profit for the period, meur Earnings / share, eur Operating cash flow / share, eur Fair value of inv. properties, meur NAV / share, eur Economic occupancy rate, %

13 Cash yield for fair value Business unit Geographical area 10,0 % 10,0 % 9,0 % 9,0 % 8,0 % 8,0 % 7,0 % 7,0 % 6,0 % 6,0 % 5,0 % 5,0 % 4,0 % 4,0 % 3,0 % 2,0 % 1,0 % 0,0 % Office & retail Logistics Total 3,0 % 2,0 % 1,0 % 0,0 % CBD HMA HMA Logistics Other Total 5.6% 8.3% 5.9% 5.0% 6.5% 7.3% 9.3% 5.9% 13

14 Lease contracts ,0 % 20,0 % 15,0 % Future cash flows 440 meur Average length of contracts 4.2 years 10,0 % 5,0 % 0,0 % Openended 14

15 Customers by sector customers 1116 lease agreements 0,10 % 7 % 12 % 26 % Retail Manufacturing/R&D Healthcare/Education Bank/Investment 10 % Public sector 10 % 6 % 6 % Construction/Logistics/Transport IT/Media/Publishing Hotel/Restaurant 7 % 17 % Energy Other services 15

16 Economic vacancy rate Sponda 16,0 14,0 12,0 10,0 8, % 11.8 % 9.9 % 6,0 4,0 2,0 0, Q3/06 Office & retail Logistics Total property portfolio 16

17 17 Q3 Results

18 Profit & loss statement Q3/2006 meur Q3/2005 meur 1-9/2006 meur 1-9/2005 meur 1-12/2005 meur Total revenue 26,5 25,6 79,8 77,5 103,1 Maintenance expenses -6,2-5,7-18,9-18,8-25,6 Net operating income 20,3 19,9 60,9 58,7 77,5 Profit/loss on sale of inv. properties - 0,2 - -0,3-0,2 Valuation gain / loss 8,9-5,5 19,1-11,2-5,1 SGA expenses -2,4-1,7-7,2-5,5-7,0 Other operating income/expenses - 0,0 0,3 0,3 0,3 Operating profit/loss 26,8 12,9 73,1 42,0 65,5 Financial income and expenses -7,7-6,7-22,1-19,6-26,3 Profit/loss before taxes 19,1 6,2 51,0 22,4 39,2 Taxes from previous and current financial years -0,5-0,1-0,9-0,1-0,1 Deferred taxes -4,5-1,8-12,4-5,8-9,5 Net income for the period 14,1 4,3 37,7 16,5 29,6 18

19 Net operating income meur 20,5 20,4 20, ,5 19,4 19,4 19,9 19, ,6 18,7 18,8 18,5 18, , ,5 Q1/2004 Q3/2004 Q1/2005 Q3/2005 Q1/2006 Q3/2006

20 Fair value of properties meur ,9 1241,1 1221,5 1259,7 1281,4 1339,5 1372, Q1/2006 Q2/2006 Q3/2006

21 Yield requirements in valuation 30 Sep 2006, % CBD Helsinki/Vantaa Espoo Rest of Finland Office and retail 6,0 6,9 7,5 8,0 7,5 8,0 Logistics 8,0 8,5 8,5 9,0 11,5 21

22 Balance sheet ASSETS meur meur meur Long-term assets 1 388, , ,3 Short-term assets 6,3 7,3 7,4 Assets total 1 394, , ,7 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity total 577,0 557,7 574,3 Long-term liabilities Interest-bearing debt 499,2 549,2 549,2 Pension liability - 0,1 - Provisions 0,8 1,2 1,1 Other debt 0,7 10,4 5,8 Deferred tax liabilities 75,2 60,4 63,4 Long-term liabilities total 575,9 621,3 619,5 Short-term liabilities 241,8 88,5 84,9 Liabilities total 817,7 709,8 704,4 Shareholders equity and liabilities 1 394, , ,7 22

23 Financing Q3/2006 Q2/2006 Q1/ Equity ratio 41 % 41 % 42 % 45 % Average interest rate 4,2 % 4,3 % 4,3 % 4,2 % Hedging 67 % 68 % 75 % 76 % Average loan maturity 3,2 yrs 3,3 yrs 2,9 yrs 3,2 yrs Average interest-bearing period 2,7 yrs 2,4 yrs 1,9 yrs 2,1 yrs Interest cover 2,7 2,7 2,7 2,7 23

24 Loan maturity % 15 % 14 % Total amount of interestbearing debt 699 meur 28 % 15 % 15 %

25 Shareholders State Treasury The State Pension Fund Etera Mutual Life Insurance Company Pension Trust of Yleisradio Support Fund for the Commercial and Technical Sc. Livränteanstalten Hereditas Nordea European Equity Hedge Odin Forvaltnings AS Med. Understödsföreningen Liv o Häls Icecapital European Property Total Number of shares % of shares and votes Nominee-registered (foreign shareholders) (54,9 %) Altogether registered shareholders

26 26 The Acquisition of Kapiteeli Plc

27 Transaction Overview Sponda has agreed to acquire all of the shares in Kapiteeli for approx. EUR 950 million Represents enterprise value of EUR 1.3 bn Enterprise value of the office and retail portfolio is approx. EUR 1 bn Remainder, EUR 0.3 bn, is divided between the development and sales portfolio Estimated net operating income yield for office and retail portfolio is approximately 7 % 27

28 Transaction Overview Acquisition financing provided by Nordea Sponda is actively exploring options to reduce the initial indebtedness including asset sales and raising additional equity Targeted disposals ~ EUR 300 million during 2007 Completion is subject to the approval of the Finnish Competition Authority Transaction expected to close by the end of

29 Financial Effects of the Transaction Enhancing to earnings per share Sponda expects the transaction to be enhancing to earnings per share in the first full year after closing. Net Asset Value (NAV) per share Sponda expects the transaction to have a positive impact on NAV per share growth and the transaction is expected to be NAV accretive in the first full year after closing. Dividend The management of Sponda expects future dividends, subject to customary board and shareholder approvals, to be substantially in line with historic levels. 29

30 Acquisition Highlights Unique opportunity to acquire prime assets in the Helsinki Metropolitan Area (HMA) and other major cities in Finland. Drive growth from attractive property development portfolio Creation of a leading Nordic real estate company Enlarged portfolio to enhance Sponda s ability to offer customers better space solutions Compelling financial rationale 30

31 Unique Acquisition Opportunity Office and Retail portfolio Increase exposure to attractive and growing HMA market More than 50 % of the net operating income comes from the HMA Opportunity to acquire prime properties Ruoholahti area in Helsinki accounts for 42 % of the book value of office and retail properties Prime assets in other major Finnish cities 31

32 Some of Kapiteeli s assets in Ruoholahti 32

33 Unique Acquisition Opportunity Property Development portfolio Development portfolio has strong growth potential More than 90 % of the potential building rights are situated within HMA Selective development and disposal process Opportunity to realise significant value Sales portfolio To be divested within 3 years 33

34 Some of Kapiteeli s development assets Ruoholahden Noste Vanhanlinnantie 3 Lautatarhankatu 2 34 Location: Helsinki Building right (sqm): 13,400 Book value ( m): 10.7 Current plan: City plan for office Future plan: Planning is completed Location: HelsinkI Est. building right (sqm): 49,000 Book value ( m): 12.5 Current plan: City plan for office/retail Future plan: Residential/retail in -06 Location: Helsinki Building right (sqm): 12,000 Book value ( m): 3.0 Current plan: City plan for office Future plan: Planning is completed

35 Property portfolios Total leasable area sqm (as of 30 Jun 2006) Total leasable area in Office and Retail portfolio sqm (as of 30 Jun 2006) SPONDA KAPITEELI 19 % 27 % 22 % 38 % 12 % 1 % 32 % 22 % 8 % 14 % 5 % CBD HMA HMA Logistics Rest of Finland Ruoholahti Espoo Turku Rest of Helsinki Vantaa Tampere Other 35

36 Unique Acquisition Opportunity Tenant Diversification Broader customer base Diversified sector exposure Both companies emphasize the importance of customer satisfaction Larger portfolio enables Sponda to offer wider variety and style of space for customers Highly professional personnel brings benefit for both investors and customers 36

37 Leading Nordic Real Estate Company 2005 Net operating Income SPONDA (1) EUR 78 million KAPITEELI (2) EUR 70 million 2 % 30 % 4 % 70 % 94 % Office and Retail Logistics Sales Property Property Development 37 (1) Sponda 2005 AR (2) Kapiteeli 2005 AR, excluding the hotels properties which were divested in June 2006

38 Leading Nordic Real Estate Company Total leasable area sqm (as of 30 Jun 2006) SPONDA Total leasable area 1,1 million sqm ¹ (as of 30 Jun 2006) KAPITEELI 32 % 50 % 50 % 68 % Office & retail Logistics Office & Retail Sales 38 (1) Office & Retail porfolio and Sales portfolio

39 Timetable 2 November Sponda s Interim Results Kapiteeli will publish its Q3 results during November End of November Expected decision from the Finnish Competition Authority End of 2006 Expected Closing of Transaction 39

40 IR contacts: Kari Inkinen President and CEO Tel: Robert Öhman CFO Tel: Pia Arrhenius IR Manager Tel: