Financial Results Year February 2013

Transcription

1 Financial Results Year February 2013

2 Agenda 1. Performance highlights and our priorities Kari Inkinen 2. Market Update Kari Inkinen 3. Financials Erik Hjelt 4. Business Update Kari Inkinen 2

3 Performance Highlights and Our Priorities 3

4 Sponda Q4 2012: Performance highlights 10-12/12 Change % 10-12/ /12 Change % 1-12/11 Total revenue, M Net Operating Income, M 47.4 (0.4) Operating profit, M Cash flow from operations/share, Earnings/share, (5.1) 0.39 NAV/share, EPRA NAV/share, Economic occupancy rate, % 88.1 (0.1) 88.2 Dividend per share, 0.17*) 0.16 *) Board proposal 4

5 Key issues in Q Growth estimate for GDP in Finland turned slightly negative for For 2012, GDP growth estimate is -0.1% For 2013, GDP growth is estimated to be 0.5% Our portfolio performance is stable. Cash flow per share was 0.40, up 8% from NAV per share was up by 4.8 % y-on y. Occupancy was nearly back to 2011 year-end level, 88.1% (88.2%). Positive development was seen in CBD office and in Russian portfolio. Like-for-like rental growth positive in Finnish offices (5.3%) and in Russia (3.6%). Logistics rents are down due to lack of demand (-3.3 %) and Shopping Centres negative (-10.2 %) due to investment costs reduction in one large lease agreement in Q Properties were sold for EUR 61.8 million during Guidance for 2013 is for economic occupancy rate and NOI growth. New hybrid bond was issued in December and old, expiring June 2013, was partly repurchased. 5

6 New hybrid bond issued and tender offer announced for the outstanding hybrid New hybrid bond for EUR 95 million issued on 21 November Hybrid bond is an instrument which is subordinated to the company s other debt obligations and is treated as equity in the IFRS financial statements. Coupon is 6.75% per annum. Coupon is tax deductible. First call option is five years after the settlement date, 5 December At the same time, Sponda announced tender offer for outstanding hybrid bond that will be called in June Repurchase was completed for a nominal amount of EUR 37,2 million which represents 28.6% of the original EUR 130 million notional amount. 6

7 Segment performance Office & Retail Shopping Centres Logistics Russia Occupancy rate rose to 89.4 % (2011 yearend: 88.4%). Occupancy rate was 93.0% (2011: 94.1%). Decrease is mainly due to vacant office space in some shopping centres. Occupancy rate decreased to 75.6% (2011: 78.1%) partly due to sale of assets and low market demand. Occupancy was 95.4% (2011: 98.7%). Letting has recovered from the decline in Q3/2012. Like-for-like rents were up by 5.3%. Like-for-like rents were -10.2%. Decrease was due to one lease agreement where comparable rents in 2011 included investment charges. Like-for-like rents were down, -3.3%. Like-for-like rents were up by 3.6%. 7

8 Our strengths and possibilities Prime locations are performing well. Occupancy rates hold well in Helsinki CBD. Rents are stable. We concentrate on the quality of the cash flow. Our Finnish portfolio is mostly located in CBD Helsinki and Ruoholahti areas (67 %). Our equity ratio improved to 40% and LTV to 52%. Our NAV per share and Cash Flow per share improved from previous year by 5% and 8% respectively. We believe in non-speculative development. Russia has strong NIY of 9.2% at the end of

9 Our priorities in 2012 We will guard our vacancy Occupancy was stable y-on-y. We will further develop our portfolio More than EUR 60 mn of non-core properties sold during We aim to retain the rental levels L-f-l rents were positive apart from logistics properties. We will guard our balance sheet No re-fi requirements. Equity ratio 40% at year-end. 9

10 Our priorities in 2013 Occupancy rate development Our target is to keep vacancy at the end-of-2012 level despite the challenging market conditions. We will further develop our portfolio In 2013, our aim is to continue to sell non-core properties to cover our investments at the very least. We will strengthen our balance sheet Our dividend policy is to pay out 50% of operational cash earnings per share. Activating property development Our target is to add value by starting new property development projects. 10

11 Creating value 0,9 6,00 0,8 4,930,78 5,00 0,7 0,6 3,54 3,86 4,06 4,27 4,00 0,5 0,45 3,00 NAV/share, 0,4 0,37 0,37 0,40 CEPS/share, 0,3 2,00 0,2 1,00 0, , Number of shares, million 11

12 Dividend per share 0,50 4,5 0,45 3,9 4,0 0,40 3,6 3,5 0,35 0,30 0,25 0,20 0,15 1,9 2,7 0,15 3,1 0,16 0,17 **) 3,0 2,5 2,0 1,5 Share price at the year-end Dividend per share 0,10 0,12 1,0 0,05 0,5 0,00 0, *) 0,0 *) Rights issue in 2009 **) Board proposal 12

13 Market Update 13

14 The Finnish property market At the end of 2012, the transaction level was at EUR 2.1 bn. Office market vacancy has now risen in all sectors of the market. Rental growth under pressure apart from Helsinki CBD. In 2013, approx m² of new office space is under construction in the HMA. 1000MEUR 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 Property transaction volume * Source: KTI and company 14

15 Vacancy rate in HMA % % % % % 0 Retail Office Industr./warehouse Total Source: Catella Property 15

16 Rental levels of office premises EUR / sq m / year Helsinki CBD prime Helsinki CBD Keilaniemi prime Ruoholahti prime Aviapolis prime Leppävaara prime Source: Catella Property 16

17 The Russian property market GDP growth for 2012 is expected to be around 3.7 %. Outlook for 2013 GDP growth has remained in 3.7 %. Transaction volume in Russia was around USD 7 billion in In Moscow office market prime rents are still around USD 1200/m²/year. In average, rents in class A offices are USD 800/m²/year. Vacancy in offices in Moscow are between 11% and 12%. In 2013, approx m² of new office space will be completed. In St. Petersburg, rents are stable despite the fact that vacancy has declined slightly. Class A office vacancy was approx. 13% and Class B approx. 8%. Source: BoFi, company 17

18 Financials 18

19 Profit & loss statement Me 10-12/ / / /2011 Total revenue Expenses (19.0) (17.4) (72.4) (68.8) Net operating income Profit on sale of inv. properties Valuation gain / loss Profit on sale of trading properties Valuation gain/loss from trading properties (1.8) SGA expenses (6.2) (6.7) (22.9) (23.1) Share of result of associated companies (0.1) Other operating income/expenses 0.1 (0.3) Operating profit Financial income and expenses (14.4) (20.4) (58.7) (75.6) Profit before taxes Taxes from previous and current fin. years (1.0) (1.0) (3.7) (3.1) Deferred taxes (12.4) (5.0) (33.0) (25.1) Change of tax base of deferred taxes Profit for the period

20 Valuation gains/losses M 10-12/ / / /2011 Changes in yield requirements (Finland) Changes in yield requirements (Russia) Profit/loss from property development projects (0.9) 0.1 (0.7) 8.2 Modernization investments (11.5) (13.3) (28.5) (50.6) Change in market rents and maintenance costs (Finland) Change in market rents and maintenance costs (Russia) (1.6) 1.7 (0.1) 2.7 Change in exchange rates (1.9) Investment properties, total Real estate funds 0.0 (1.5) 0.6 (4.4) Realised gains/losses in re funds Group, total

21 Direct and indirect result M 10-12/ / / /2011 Direct result Net operating income Realised shares of profit from real estate funds Marketing and administrative expenses (6.2) (6.7) (22.8) (23.1) Other income and expenses for business 0.1 (0.4) operations Financial income and expenses (15.7) (18.4) (67.9) (69.0) Taxes based on direct result (1.0) (0.9) (3.9) (3.0) Deferred taxes based on direct result (5.8) (2.0) (22.4) (14.0) Non-controlling holding share of direct result Total P/l (14.4) Change in fair value of derivatives (0.7) Capitalized interest expenses (0.3) Cap option premiums (0.3) (15.7) 21

22 Direct and indirect result M 10-12/ / / /2011 Indirect result Profit/loss on sales of investment properties Valuation gains/losses on fair value assessment Profit/loss on sales of trading properties Change in value of trading property (1.8) Marketing and administrative expenses Other income and expenses for business operations Financial income and expenses 1.3 (2.0) 9.2 (6.6) Taxes based on indirect result 0.0 (0.2) 0.2 (0.2) Deferred taxes based on indirect result (6.6) (3.0) (10.6) (11.1) Change in tax base of deferred taxes Non-controlling holding share of indirect result Total Change in fair value of derivatives 0.7 Capitalized interest expenses 0.3 Cap option premiums

23 Sponda s capital structure Shareholders equity and liabilities 3 521,8 M Assets 3 521,8 M 3000 Current liabilities 3000 Current assets Non-current liabilities 2000 Other noncurrent assets Hybrid Other fixed assets 500 Shareholders' equity 500 Investment properties

24 Loan maturities 31 December 2012 Interest-bearing debt EUR 1,736.2 million Unused financing limits EUR 510 million (EUR m) Bank loans Syndicated loan limits Syndicated loans Bonds 100 Commercial papers

25 Financing Q4/2012 Q3/2012 Q2/2012 Q1/2012 Q4/2011 Equity ratio, % Average interest rate, % Hedging, % Average loan maturity, yrs Average fixed interest rate period, yrs Interest cover ratio 2.8x 2.7x 2.6 x 2.6 x 2.7x Loan to Value, % Long-term equity ratio target 40 % Covenants at equity ratio (28 %) and ICR (1.75 x) 25

26 Development of financing position , , ,0 1700, ,0 1600,0 Interest-bearing debt LTV, % ,0 1500,0 1450,0 Equity ratio, % ,0 26

27 Business Update 27

28 Valuation yield development 3000,0 7, ,0 6,80 6,84 6,86 6,87 6,87 6,84 6,84 6,90 6, ,0 6,70 6,73 6,74 6,71 6,67 6,65 6,65 6,65 6,63 6, ,0 1000,0 6,43 6,51 6,62 6,50 6,60 6,50 6,40 Fair value of investment properties in Finland 500,0 6,30 0,0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 6,20 28

29 Lease agreement composition Q Lease maturity profile Average lease maturity 30% 25% 20% Office and retail Shopping centres 4,8 6,2 15% 10% 5% 0% 15,0 10,0 5,0 0,0-5,0-10,0-15,0 1 yr 2 yrs 3 yrs 4 yrs 5 yrs 6 yrs over 6 yrs Openended Like-for-like net rental growth 5,3 Office and retail Shopping Centres -10,2 Logistics -3,3 3,6 Russia Q Q Logistics 4,5 Q Q Russia 2,8 Total 4,7 0,0 2,0 4,0 6,0 8,0 Tenant breakdown by sector¹ 0% 4% 1% 5% 7% 2% 6% 12% 12% 26% 13% 5% 5% 2% 1% Note 1: Based on rental income Sc. and tech. Activities Energy Public Sector Wholesale/retail Education Media/publishing Log/transport Hotel & catering Other services Banking/investment Construction Industry/manuf. Healthcare Telecomms Other 29

30 Lease agreements in Q Pcs M² /m²/month (avg)* Agreements that came into force during the period Agreements that ended during the period Agreements that were extended during the period *) Agreements that came into force and ended do not necessarily correlate with same sector or space. All lease agreements in Finland are linked to CPI. Ten largest tenants account for 31 % of rental income. Like-for-like net rental growth has been calculated from a portfolio that Sponda has held for 2 years excluding acquisitions, disposals and property development. 30

31 Economic vacancy rate Office & Retail 10.6 % Shopping Centres 7.0 % Logistics 24.4 % Russia 4.6 % Total property portfolio 11.9 % HMA market office vacancy 11.0 % Q4/2007 Q4/2008 Q4/2009 Q4/2010 Q4/2011 Q4/

32 Investment portfolio development We are creating value by property development and active portfolio management. Our aim is to sell non-core assets classified as such either by location or development potential. M Property development investments Maintenance investments Acquisitions Disposals

33 Property development The value of development portfolio was EUR million Land sites: EUR 91.2 million Development projects: EUR 43.9 million Citycenter will be fully completed spring The property was fully valued at fair value at the end of 2012 and transferred from Property Development Unit to Shopping Centre Unit. Ruoholahti office building Total investment, M 23.5 Of which yet to be invested 5.4 Capitalized interest costs by 30 December 2012, M 0.3 Completion time April 2013 *) Does not include capitalised interest 33

34 Prospects and financial targets Prospects Sponda expects the vacancy rates of its investment properties at year s end 2013 to be largely unchanged from the end of The estimate is based on the changes in rental agreements and leases already signed. Comparable net operating income in 2013 is expected to increase slightly from Reasons for this expected increase are rising rent levels in Helsinki s central business district and the completion of the company s property development projects. Financial targets Long-term equity ratio target is 40 %. Dividend policy is to pay approx. 50 % of the operational cash earnings per share, taking into account of the economic situation and company s development needs. 34

35 Environmental responsibility 2012 Target Low-energy concept will be taken into use Energy efficiency program expanded from last year Energy consumption in Sponda s own office will decrease by 2% Recycling of waste increased to over 70% Comparable energy consumption in properties will decrease Comparable water comsumption will decrease Energy consumption monitoring (water and electricity) developed further in Moscow Environmental certificate for possible new properties and for properties under modernization process. Certification process for an office property in Russia completed Result In use 16 partners Decreased 4-24% 85% of waste recycled Decreased 5-30% Decreased by 10% Reporting and monitoring in use in some prop. Two BREEAM s BREEAM in Ducat II 35

36 Environmental responsibility 2013 Target Result Energy consumption declines in properties located in Finland (electricity, heating, cooling, water) Recycling of waste more than 86% of all waste Energy consumption declines in three properties in Russia Environmental partnership program expanded from last year (16 partners) Environmental certificates obtained for possible new properties. Energy consumption in Sponda s own office will further decrease from 2012 Reduction of the amount of waste in Sponda s own office 36

37 SponDay 2011 IR contact: Pia Arrhenius Senior Vice President, Corporate Communications and IR Tel:

38 Property portfolio focused on prime locations in the Helsinki Metropolitan Area Sponda owns a diversified property portfolio with a wide range of space solutions Helsinki CBD and Ruoholahti areas Investment properties by location (excl. Property development & Funds) HMA Turku Tampere Oulu Moscow St Petersburg 83 % 1 % 6 % 2 % 7 % 1 % EUR 3,126.2 million 38

39 Overview of reporting segments Segment in brief Fair value 1 % of portfolio 2 Yield requirement 3 Office & Retail Office and retail properties in the largest cities of Finland Focus on Helsinki CBD and the Ruoholahti area EUR 1,705.7m 52% 6.5% Shopping Centres Specialises in leasing shopping centres in the largest cities in Finland EUR 736.7m 23% 5.6% Logistics One of the largest owners and lessors of logistics properties in Finland and largest supplier in the Helsinki Metropolitan Area EUR 414.4m 13% 8.1% Property Development Sponda s development projects and land assets Currently active projects are the Citycenter project and office building in Ruoholahti. EUR 135.1m 4% n/m Russia Office and logistics properties, shopping centres and land assets in the Moscow and St Petersburg areas EUR 269.4m 8% 9.7% Real Estate Funds Owns and manages office, retail and logistics properties through real estate funds EUR 670m (assets under management) n/m n/m Notes: 1) Fair value of investment properties as at 30 December ) Share of total fair value of properties as at 30 December ) Average valuation yield requirement as at 30 December

40 Strategy Sponda s strategic goal is to seek growth and profitability through customer-focused operations and active property development, by purchasing property, and through operating real estate funds in Finland and Russia. Sponda will focus on active portfolio management through divesting non-core properties, acquiring properties that the company considers to be in core locations and core segments. Sponda reviews its strategy regularly so that it can, if necessary, adjust its operations to prevailing market conditions. 40

41 Strategy Strategy revised: Profitable growth strategy and expansion plans to Russia and the Baltic Countries First property fund established: First TopLux Co. First investment to Russia made, a logistics property in St Petersbug. Rights offering for EUR 250 million completed to partly finance Kapiteeli acquisition. Sale of asset portfolio, in total EUR 400 million Along with the economic downturn, Sponda started to sell properties in order to strengthen its balance sheet. Strategy revised: Baltic Countries no longer as a strategic inv. target. Strategy adjusted : modest growth financed by property disposals. Sponda sold its properties for EUR 57 million in total. In total, EUR 800 million was refinanced during the year. Sponda bought Fennia Quarter for EUR 122 million. Re-financing was completed until Sponda bought an office building in the centre of Moscow for USD 47 million. Organisation streamlined to four business units: Office and Retail, Logistics, Property Development and New Business areas. Sponda signed agreement with Helsinki Harbour to buld logistics centre in the new Vuosaari Harbour. A number of property development projects were started in Helsinki Metropolitan Area. At the end of the year, all property development projects were completed on schedule, apart from the City- Center project. Rights offering for EUR 200 million completed to strenghthen balance sheet.. Property development was accelerated after a couple of slower years. Building of new headquarters for publishing house Talentum started. 2nd phase of Citycenter completed. Sponda issued a new hybrid bond for EUR 95 million to replace the old, EUR 130 million hybirid. Sponda bought property investment company Kapiteeli Plc for EUR 950 million. Property development activities increased at the end of the year. Activities in environmental responsibility increased. Russia Invest company cofounded with four other parties. Solidium sold its last holding in Sponda, 14.89% to Oy Palsk Ab. 41

42 Balance sheet M ASSETS Non-current assets 3, ,311.1 Current assets Assets, total 3, ,387.3 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity total 1, ,281.1 Non-current liabilities Interest-bearing debt 1, ,380.8 Other liabilities Deferred tax liabilities Non-current liabilities, total 1, ,656.2 Current liabilities, total Liabilities, total 2, ,106.2 Shareholders equity and liabilities 3, ,

43 NAV/share and EPRA NAV/share 7 6 6,04 6,26 6,06 6, ,16 5,00 5,21 5,08 4,93 3,45 2,65 5,42 5,12 4,59 4,56 4,66 4,83 4,68 4,76 4,82 4,88 4,35 4,20 3,88 4,01 4,01 3,63 3,86 3,82 3,92 3,93 4,06 4,27 4,14 4,18 4,10 4,19 4,27 3,98 4,03 4,12 3,54 3,50 3,54 3,56 3,60 3,46 3,55 3,09 3,12 3,09 3,19 2,95 2,71 2,73 2,82 2,48 Closing price NAV EPRANAV 2 1,93 2,03 1 1,29 0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q

44 EPRA NAV calculation 5.12 /share 1393,8 1450,3 1300,0 800,0 300,0-186,1-14,5 256,5 0,6-200,0 Equity attributable to equity holders of parent company Other equity reserve Goodwill relating to deferred tax liability on properties Deferred tax*) Capitalized borrowing cost Total *) Deferred tax relating to fair valuation of property and interest rate derivatives 44

45 Office market, Helsinki Metropolitan Area Source: Catella Property, Sponda Vacancy 7.3% Rental level avg 230/m²/yr Yield avg % Vacancy 19% Vacancy 17.6% Rental level avg /m²/yr Yield avg % Vacancy 6.9% Rental level avg 235/m²/yr Yield avg % Vacancy 4.9% Rental level avg /m²/yr Yield avg % Vacancy 12.8% Rental level avg /m²/yr Yield avg % 45

46 Office market, Finland and Russia Source: Catella Property, Sponda, Vacancy 6.3% Rental level avg /m²/yr Yield avg 7-8% Vacancy 6.4% Rental levels /m²/yr Yield avg 6,75-8% Vacancy avg 10% Rental levels $ /m²/yr Yield 10 % Vacancy 6.5% Rental levels /m²/yr Yield avg 7,25-8,25% Vacancy avg 11.0% Rental levels /m²/yr Yield 5,5-10% Vacancy avg 11% Rental levels $ /m²/yr Yield 9% 46