Strong value growth and high rate of investment

Transcription

1 Strong value growth and high rate of investment Interim report January March April 2018 CEO Peter Strand CFO Tommy Åstrand In the event of discrepancies between this Presentation and the Swedish Presentation, the Swedish Presentation shall prevail.

2 Agenda 1. Quarter in brief 2. Property portfolio 3. Statement of financial position 4. Summary 2 Borås 2

3 1. QUARTER IN BRIEF Kvartalet i korthet Revenues: SEK 284 M (257) Profit from property management: SEK 89 M (70) Profit after tax: SEK 274 M (415) Property portfolio marketvalue: SEK 16.2 Bn (12.9) Net asset value: SEK per share (22.25) Number of renovated flats: 293 (290) + 10% + 27% + 40% 3 Nyköping 3

4 1. QUARTER IN BRIEF Possession and acquisition MALMÖ POSSESSED 1 MARCH Malmö Lindängen Supplementary acquisitions 285 flats, 20,000 sqm Fully leased Rent of approximately SEK per sqm Most of the portfolio is subject to ROT renovation MALMÖ & TRELLEBORG POSSESSION PREL. 15 MAY Supplementary acquisitions 327 flats, of which 230 in Malmö 26,000 sqm, centrally located properties Fully leased, Rent of SEK 1,100 per sqm Portfolio is subject to ROT renovation Malmö & Trelleborg 4

5 2. PROPERTY PORTFOLIO Property portfolio 1,083,000 Lettable area, sqm Rental value by region, % 13,725 Number of flats 1,101 Rental value, SEK/sqm Region Gothenburg Number of flats: 2,367 Region Stockholm Number of flats: 6,027 Lettable area by category, % Region Malmö Number of flats: 5,331 As well as 25 percent of the associated company Rosengård Fastighets AB with 1,660 flats in Malmö. 5

6 2. PROPERTY PORTFOLIO Management model with social responsibility Property-improvement measures Increased operating net ROT Renovation Optional increased standard Remodelling Densification Long-term maintenance/ investments Increased focus on environmental issues Social investments develop the area The social life dialogue with residents Property offices with own staff, resident in the area Employ local residents Environment wardens Residential coaches Contracting with a social clause Broad social commitment Result: A successively improved property portfolio and more attractive residential area. ROT Renovation : Flats are renovated one by one when a tenant moves out and the rent level is known to the next tenant. 6

7 2. PROPERTY PORTFOLIO High rate of investment 97% Economic leasing rate 16% Turnover rate 69% Percentage of unrenovated flats Number of renovated flats Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q Linköping 7

8 2. PROPERTY PORTFOLIO Rental value trend 25 percentage points Rental increase for homes since 2012/2013 Before: Vacant apartment Percentage points 128, , , , , , , Actual development 20 percentage points General annual development 100, Q1-18 After: Renovated apartment 8

9 2. PROPERTY PORTFOLIO Densification project 3, ,250 SEK 230 M Number of flats GFA sqm Market value Stockholm Planning in progress Land ready for development New detailed development plan required Linköping 9

10 2. PROPERTY PORTFOLIO Strong growth SEK 16.2 Bn Properties market value SEK M 20 20, , , , Q1-18Target 2020 Karlskrona 10

11 3. STATEMENT OF FINANCIAL POSITION Investment and financing model Rolling ROT Investment New capital Increased NOI Borrowing Investments Value increase Totalrenoverad lägenhet 11

12 3. STATEMENT OF FINANCIAL POSITION Refinancing model Typical example SEK 500 M approx. 8% SEK 40 M 4.23% SEK 950 M SEK 600 M Rolling ROT Investment Yield Increased NOI Yield requirement, properties Increase in the value of properties 65% borrowing from banks 12

13 3. STATEMENT OF FINANCIAL POSITION Income statement SEK M Jan-Mar Jan-Mar Jan-Dec Revenues ,062 Property costs Net operating income Administrative costs Net financial items Profit from property management Change in value of properties ,016 Change in value of derivatives Share of profit after tax from ass. comp Tax expense Earnings from discontinued operations 61 Profit for the period ,901 Earnings per share, SEK % Revenues increase 15% Net operating income increase 27% Profit from property management increase 267 Mkr (455) Value change in properties through standard-enhancing investments 13

14 3. STATEMENT OF FINANCIAL POSITION Current earnings capacity Com.por SEK M 31 Mar 31 Mar 31 Dec 31 Dec 31 Dec Revenues 1,160 1,136 1,115 1, Property costs Net operating income Administrative costs Interest expense Profit from management Tax expense Profit for the period Profit before tax per share, SEK Earnings capacity is on a 12-month basis and considers the company s property portfolio by the end of the accounting period, associated company excluded. Earnings capacity includes only fixed and known factors. Changes in rents, vacancies or interest rates are not reflected in the current earnings capacity. SEK 1,160 M Rental revenues 293 flats Renovated flats in the quarter SEK 35 M Net operating income increase SEK 20 M Net operating income increase, identical property portfolio 14

15 3. STATEMENT OF FINANCIAL POSITION Balance sheet SEK M 31 Mar 31 Mar 31 Dec Tangible fixed assets Financial assets Investment properties 16,173 12,878 15,440 Receivables Cash and cash equivalents Assets in disposal group held for sale 98 Total assets 16,666 13,315 16,333 Equity 6,454 4,746 6,180 Deferred tax liability 1, ,281 Non-current interest-bearing liabilities 7,858 6,821 7,867 Derivatives Current interest-bearing liabilities Other liabilities Liabilities in disposal group held for sale Mkr (578) Increase in investment properties Investment SEK 133 M Value change SEK 267 M Acquisition SEK 333 M 51% (55) Loan-to-value ratio 39% (36) Equity/assets ratio SEK (22.25) Net asset value per share Total equity and liabilities 16,666 13,315 16,333 15

16 3. STATEMENT OF FINANCIAL POSITION Interest-bearing liabilities with loan maturities Capital tied up Fixed-rate Maturity year SEK M Share, % SEK M Interest rate, % , , , , , , > , Total 8, , In 2018, loans of SEK 640 M will mature, comprising SEK 400 M in bonds and loan maturities of SEK 240 M. 4.0 years (4.1) Capital term 2.0% (2.2) Average interest rate 1.9 years (2.2) Fixed-rate period 50% (51) Share of loans with interest hedging 16

17 3. STATEMENT OF FINANCIAL POSITION Cash flow SEK M Jan-Mar Jan-Mar Jan-Dec Cash flow from continuing operations before changes in working capital Changes in working capital Cash flow from investing activities Cash flow from financing activities Cash flow for the period Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period % Increase in cash flow before changes in working capital SEK 365 M - Investments in properties - The quarter s acquisition, entirely funded with own cash 17

18 3. STATEMENT OF FINANCIAL POSITION Goals and results Multiple ggr 3,0 3.0 Interest-coverage ratio 2.9 % 75 Loan-to-value ratio 2, Target <65% 2,0 2.0 Target > % 1, Q Q1-18 % Equity/assets ratio 39 SEK Bn Property portfolio market value > Target > Q Q1-18 Target

19 4. SUMMARY Strong value growth and high rate of investment Possession of 285 flats in Malmö. Acquisition of 327 flats in Malmö and Trelleborg. Lifestyle property segment divested. Net asset value growth increased by 40 percent to SEK per share (22.25). Property Manager Per Ekelund appointed as new CEO and CFO Tommy Åstrand as new Deputy CEO. Public cash offer from Starwood Capital Group. Rate of renovation, number of flats Residential rental value trend, % , , Actual Faktisk development utveckling Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q , , , , , , Q percentage points Generell General årlig annual development utveckling 19

20 APPENDIX Broadened ownership base and increased international exposure Number of Name shares Capital, % Votes, % Greg Dingizian 26,000, Foundation for Baltic and East European Studies 17,893, Dan Olofsson (Danir AB) 16,147, Fjärde AP-Fonden 15,670, Fourth Swedish National Pension Fund 14,695, Isabelle Wikner (Fogelvik Holding AB) 14,438, Anders Pettersson 12,946, Ralph Mühlrad 10,210, Peter Strand 6,861, Erik Selin 6,000, ER-HO Fastigheter AB 5,000, Six Securities Services AG 4,242, Lennart Sten 4,076, Gålöstiftelsen 3,963, Others 85,761, Total 243,906, SEK 31,08 (22,25) Net asset value per share SEK 31,70 (23,60) Class B share price 7,097 (6,114) Number of class B shareholders

21 APPENDIX Victoria Park in brief Victoria. Park from lifestyle housing to property management Founded in 2006 to develop lifestyle housing at Limhamn limestone quarry in Malmö. In 2012, the company shifted focus to residential properties in growth districts. Victoria Park s management operations are run in three geographic regions. The regions are divided into Stockholm (Eskilstuna, Linköping, Nyköping, Stockholm and Örebro), Gothenburg (Borås and Gothenburg) and Malmö (Karlskrona, Kristianstad, Malmö, Markaryd and Växjö). Region Gothenburg 2,400 flats Region Stockholm 6,000 flats Property portfolio focused on social responsibility Victoria Park takes a long-term approach to developing attractive residential areas and creating value for residents, employees, shareholders, society and other stakeholders. Prioritises investments in growth districts, with a geographic focus on southern and central Sweden. Acquires residential properties with a high development potential and develops the portfolio for lower yield requirements and higher property values through; Value-creating property improvements for increased operating net, Socially sustainable management to improve residential areas. Region Malmö 5,300 flats Market environment remains favourable High demand for residential portfolios. Low interest rates and good access to capital. Substantial housing shortages in growth districts. Limited new production of rental units. 21

22 APPENDIX Business concept, goals and strategy Business concept Victoria Park is to acquire, develop and manage residential properties in growth districts in Sweden. Goals Overall Financial objectives Generate a growth in net asset value, excluding dividends on ordinary shares, that over time averages at least 15 percent per year. Generate a growth in profit from property management that over time averages at least 12 percent per year. Own assets with a market value of at least SEK 20 Bn by the end of Maintain an equity ratio of at least 30 percent. Maintain a long-term loan-to-value ratio of 65 percent at the most. Maintain an interest coverage ratio of at least 2.0. Investment criteria Growth districts in Sweden. Low initial rent levels (more important than initial yield). For new establishments, the company is looking for > 500 flats. Properties with development potential. Mainly looking in locations classified as B. Municipal processes/relations increasingly important. Additional acquisitions in existing locations. Strategy Prioritise investments in growth districts, with a geographic focus on southern and central Sweden. Develop the existing property portfolio focusing on measures that increase standards and create value as well as densification projects. Create and improve values through long-term and sustainable property management with a social dimension. Have a local social involvement by establishing cooperation with authorities, municipalities and non-governmental organisations to support local development. Dividend policy Dividends to ordinary shareholders shall be proposed each year at 25 percent of the pre-tax profit, with exceptions for changes in value considering Victoria Park's potential acquisitions and financial position. The dividend to holders of preference shares is intended to be paid in accordance with the provisions of the Articles of Association, which means an annual dividend of SEK per preference share, paid in quarterly payments of SEK Greater Gothenburg Housing shortage in 12 of 13 municipalities Greater Malmö Housing shortage in all 12 municipalities Greater Stockholm Housing shortage in all 26 municipalities 22

23 APPENDIX Victoria Park s social housing efforts in figures Economist Ingvar Nilsson Report Behind the Financial Statements. Review of socioeconomic effects of social housing initiatives in individuals in social exclusion, employed in Victoria Park programme for m. 23 individuals progressed immediately to permanent job with other employer. Business profitability and socioeconomic benefit can be compatable. Ingvar Nilsson According to the study, total value of 23 individuals leaving social exclusion over 20 years: Benefits for society SEK 120 M Of which for municipalities SEK 30 M Psychological and indirect impact on individuals and family. A summery in English is available at 23