3 rd quarter 2012 Oslo 26 October 2012
3Q 2012 PRESENTATION Agenda Highlights Olav Line Financial update Svein Hov Skjelle Markets and operations Olav Line Closing remarks Olav Line Q&A session
HIGHLIGHTS 3Q 2012 Good operations – letting and project execution key priorities Good operations maintained despite ongoing portfolio investment program Positive letting market Letting and good project execution are key priorities Energy efficiency program supported by Enova :: LYSAKER TORG 35, LYSAKER : ATTRACTIVE 10 YEAR LEASE AGREEMENT WITH UMOE RESTAURANT GROUP :: 2
3Q 2012 PRESENTATION Agenda Highlights Olav Line Financial update Svein Hov Skjelle Markets and operations Olav Line Closing remarks Olav Line Q&A session
FINANCIAL UPDATE Financial highlights 2.0 66 13 90 80 64 12 1.5 70 62 11 60 1.0 NOK per share 60 NOK million 10 50 % % 0.5 58 40 9 56 30 0.0 8 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 54 20 -0.5 7 10 52 6 0 -1.0 50 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 3Q 2011 4Q 2011 1Q 2012 2Q 2012 3Q 2012 -1.5 Net LTV Profit before tax and value adj. Value adjustments EPRA NAV excl. one-off effects Net LTV incl. vendor financing Net asset value (NAV) Profit before tax and value adj. 4
FINANCIAL UPDATE Income statement NOK million 3Q 2012 3Q 2011 YTD 2012 YTD 2011 2011 Gross rental income 226.7 259.2 702.3 765.4 1 020.7 Maintenance and property related cost -20.1 -20.0 -48.9 -51.2 -65.1 Other property costs -4.8 -8.6 -31.5 -25.0 -33.9 Administrative and group expenses -16.8 -16.1 -49.3 -49.8 -67.4 Operating result before value adjustments 185.0 214.5 572.6 639.4 854.3 Net gain/loss on value adjustments of investment properties -210.4 24.8 -209.5 498.8 281.9 Net gain on disposals - - 2.4 1.0 1.0 Operating result -25.4 239.3 365.4 1 139.2 1 137.1 Net financial items excluding derivatives -114.6 -129.2 -356.1 -387.1 -516.4 Termination financial instruments and currency gain/loss 0.4 -0.7 -44.6 -1.1 -1.1 Change in market value of financial derivatives -130.6 -366.7 -177.4 -330.3 -336.1 Net financial items including derivatives -244.8 -496.6 -578.1 -718.5 -853.6 Profit before income tax for continued operations -270.2 -257.3 -212.7 420.7 283.6 Income tax for continued operations (not payable) 16.8 79.0 1.5 21.9 -59.7 Profit for the period for continued operations -253.5 -178.3 -211.1 442.6 223.8 Profit for discontinued operations - - - - 4.8 Profit for the period -253.5 -178.3 -211.1 442.6 228.6 Earnings per share (NOK) -0.51 -0.36 -0.42 0.89 0.46 Profit before tax and value adjustments excl. one-off effects 70.4 85.3 216.5 252.3 337.9 5
FINANCIAL UPDATE Portfolio valuation by area Net yield for total portfolio is 5.8 per cent based on current payable rent (including development projects) External valuation conducted by DTZ RealKapital and Akershus Eiendom • Negative fair value adjustment of NOK 210.4 million (-1.4 per cent) – Two properties accounting for NOK 94 million of write down – Remaining NOK 116 million relating to somewhat higher yield requirements in general . Reduced remaining duration for some properties on long-term contracts added to this effect, while new lease contracts had a positive influence on value adjustments Market rent estimated to be 7.0 per cent higher than current payable rents (2Q: 7.9 per cent) Valuation Gross rent per year EPRA 1) Space Net Gross Total space Duration yield 2) Area vacancy vacancy market rent (m²) (years) fully let 3) (%) (%) (%) NOK mill. NOK/m² NOK mill. NOK/m² CBD 88 566 6.8 11.3 4.2 4 204.4 47 472 251.5 2 840 5.6 305.2 Skøyen 86 543 0.7 0.7 5.6 2 395.5 27 679 165.4 1 911 6.5 159.4 Oslo Nydalen 110 295 14.8 18.7 6.5 1 813.3 16 440 112.9 1 024 5.9 145.4 Other 102 188 0.0 0.0 6.0 1 998.7 19 559 154.7 1 514 7.3 133.0 Stavanger 114 703 1.7 1.7 3.6 2 009.5 17 519 152.5 1 330 7.1 173.7 Running operations 502 296 4.5 7.2 5.0 12 527.0 24 940 838.5 1 669 6.3 916.6 Development projects 54 071 45.4 48.0 9.5 1 996.4 36 922 63.0 1 166 3.0 218.4 Land development - - - - 105.8 - - - - - Total office portfolio 556 367 9.5 15.0 5.3 14 523.4 26 104 901.6 1 620 5.8 1 135.0 1) Market rent of vacant space divided by market rent of the whole portfolio 2) Based on gross rent and estimated operating expenses of 6 % 3) Estimated fully let gross market rent, average of Akershus Eiendom and DTZ RealKapital 6
FINANCIAL UPDATE Tighter financing market has a certain negative effect on yields Interest rates and prime transaction yields 2002-2012 As banks faces new regulations (Solvency II/Basel III) they are likely to: (i) reduce the overall lending volume to real estate; (ii) increase margins; (iii) heighten equity requirements; and (iv) tighten covenants Access to bank loans and other capital sources will likely be a major competitive advantage going forward Source: Akershus Eiendom 7
FINANCIAL UPDATE Financial position Interest bearing debt and hedging 30.09.2012 30.06.2012 Total interest bearing debt NOK million 9 431.9 9 860.4 Property value (gross of deferred tax at acquisition) NOK million 14 523.4 14 621.8 Loan to value Per cent 64.9 67.4 Net Loan to value 1) Per cent 63.3 62.8 Net Loan to value including vendor financing 2) Per cent 59.2 58.7 Cash and cash equivalents NOK million 233.5 681.8 Vendor financing NOK million 600.0 600.0 Unused committed credit facilities (short and long term) NOK million 1 216.0 1 216.0 Average remaining duration, hedging Years 5.65 5.82 Average interest rate (including margin) Per cent 5.02 5.02 Average margin Per cent 1.21 1.22 Average remaining duration, borrowing Years 4.12 4.31 Hedging ratio (including vendor financing) Per cent 85.1 74.0 In October, the margin period for the SEB/Nordea-facility has been extended to July 2014 increasing average margins to 1.35 1) Gross interest bearing debt less cash divided by gross property value 2) Gross interest bearing debt less cash and vendor financing divided by gross property value 8
FINANCIAL UPDATE Loan to value within target range Net loan to value 1) Average interest rate 2) 85 5.8 80 5.6 75 5.4 70 % 5.2 65 5 60 Long-term target range for LTV ratio 4.8 55 50 4.6 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Net LTV incl. vendor financing Net LTV Interest rate 1) Gross interest bearing debt less cash divided by gross property value. Net LTV including vendor financing is also shown for 2012, 2011 and 4Q 2010 2) Comparable figures, excluding financing of Norgani Hotels AS historically 9
FINANCIAL UPDATE Balance sheet NOK million 30.09.2012 30.09.2011 31.12.2011 Investment properties 1) 14 319.3 15 607.8 13 561.3 Property, plant and equipment 47.1 34.2 40.1 Receivables 739.1 670.3 705.2 Deferred tax asset 15.8 94.0 12.8 Cash and cash equivalents 233.5 120.9 15.6 Assets held for sale - - 1 873.4 Equity 4 855.5 5 376.7 5 164.1 Long term interest bearing debt 9 385.2 8 833.5 8 798.6 Short term interest bearing debt 46.8 1 406.2 1 366.2 Market value financial derivatives (net) 824.3 637.4 645.2 Net other debt 243.1 273.4 234.3 Equity ratio (%) 31.6 32.5 31.8 Net asset value per share (NOK) 2) 9.74 10.78 10.36 Net asset value per share (NOK), EPRA 2) 11.27 12.10 11.67 1) Net of deferred tax at acquisition 2) Number of outstanding shares : 498 575 596 (30.09.2012), 489 596 832 (30.09.2011 and 31.12.2011) 10
FINANCIAL UPDATE Cash flow NOK million 3Q 2012 3Q 2011 YTD 2012 YTD 2011 2011 Cash flow from operating activities 99.8 205.7 145.0 224.0 245.4 Cash received from sale of assets - - 1 905.1 1.0 33.1 Purchase of tangible assets and subsidiaries -117.4 -169.7 -992.6 -275.0 -353.2 Cash flow from investment activities -117.4 -169.7 912.5 -274.0 -320.2 Net change in interest bearing debt -430.7 -3.7 -739.7 -27.6 -108.2 Paid dividend - - -99.7 -49.9 -49.9 Other financing activities - - -0.3 - - Net cash flow from financing activities -430.7 -3.7 -839.7 -77.5 -158.0 Net change in cash -448.3 32.3 217.8 -127.5 -232.8 Net cash at end of period 233.5 120.9 233.5 120.9 15.6 300 200 NOK million Cash flow from operating 100 activities 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q -100 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 1) Figures for 2010 include the hotel business, -200 Norgani Hotels, which was sold in 4Q 2010 11
3Q 2012 PRESENTATION Agenda Highlights Olav Line Financial update Svein Hov Skjelle Markets and operations Olav Line Closing remarks Olav Line Q&A session
MARKETS AND OPERATIONS Operational highlights Portfolio investment program at Aker Brygge well underway Total space vacancy of 9.5 per cent, up from 8.9 per cent at the end of the previous quarter • Strategic vacancy pending upcoming renovation accounts for about 5.0 per cent, up from 4.2 per cent at 30.06.2012 Positive market outlook • Forecasts indicate further reductions in Oslo office market vacancy from current level of seven per cent Seven new contracts, renewals or :: FINNESTADVEIEN 44, STAVANGER : extensions with total annual value of NOK LETTER OF INTENT WITH TOTAL E&P FOR AN EXTENSION OF THE PROPERTY :: 14.6 million • Estimated rental uplift of 1.2 per cent for new leases 13
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