Interim Report January – March 2020 Biljana Pehrsson, CEO & Magnus Jacobson, CFO Stockholm 23 April 2020 1
Agenda ● First Quarter 2020 in summary ● Financial performance and key figures ● Outlook ● Questions are welcome 2
Highlights Q1: Strong start 2020 ● Increased profit from property management by 16 per cent to SEK 310 million mainly due to strong like for like performance and completed development projects ● Good new letting, positive net leasing and strong renegotiation results ● Solid value uplift of SEK 243 million ● Stable financial position with LTV of 45.6 per cent ● Effects of COVID-19 very limited 3
Highlights after Q1 ● Effects COVID-19 on Q2: - Close dialogue with tenants within retail, hotel and restaurant businesses under financial pressure. - Payment of Q2 rents in line with previous quarters. - Individual agreements on monthly instead of quarterly rent payment corresponding to SEK 32 million in Q2. - Rent discounts of SEK 21 million for Q2 against either extended leases or increased rent on the remaining lease term. - Allowed rent deferral of SEK 20 million of rent in Q2 against 12- 24 month repayment schedule. ● Changed proposal from the board concerning dividend due to COVID-19 uncertainties onwards. ● Ylva Sarby Westman appointed new CFO, starting from May 1, 2020. 4
Jan – Mar 2020 in figures (Jan – Mar 2019) No of Property value, SEK Unrealised value changes Profit fr. prop. mgmt Gross leasable area, properties, SEK million properties th sq m million SEK million and % uplift 209 1,996 38,912 310 243 (208) (1,983) (35,418) (267) +0.6% +16.1% Rental growth, New and net leasing Renegotiated leases, Ec. occup. rate, % Total revenues SEK million SEK million and % rent investm. like for like, % SEK million uplift properties 6.4 638 38 3 52 (39) 92.8 (4.7) (589) (46) (2) +13% (8%) (92.8) 5
Almost 90 per cent of the property Right properties in the value in four priority growth right locations markets ● Stockholm ● Gothenburg ● Malmö ● Västerås VÄSTERÅS Book value SEK 38,912 m Book value SEK 38,912 m STOCKHOLM GOTHENBURG Stockholm 47% Office 75% Västerås 18% MALMÖ Industrial/Warehouse 15% Malmö 11% Retail 4% Gothenburg 11% Other 6% Other 13% 6
70 per cent of the property value in one of our twelve clusters Danderyd, Stockholm Kista, Stockholm Stockholm City East Stockholm City West 100,000 sq.m. 147,000 sq.m. 85,000 sq.m. 40,000 sq.m. Västberga, Stockholm Göteborg South Center Högsbo, Göteborg Hyllie, Malmö 38,000 sq.m. 40,000 sq.m. 109,000 sq.m. 48,000 sq.m. Fosie, Malmö Västerås City Finnslätten Östersund 53,000 sq.m. 153,000 sq.m. 237,000 sq.m. 79,000 sq.m.
Good leasing results and positive net leasing SEK m 125 New leasing, SEK million 100 38 75 50 (46) 25 0 -25 Net leasing, -50 SEK million 3 -75 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2020 (2) New leasing, investment properties New leasing, development properties Termination, investment properties Termination, development properties Net leasing 8
Double digit rent uplifts – average rent uplift 13% on renegotiations Maturity stucture Renegotiations Rental value, SEK m No. of lease contracts Rental value, SEK m Rent increase, % 1200 900 400 16 800 350 14 1000 700 300 12 800 600 250 10 500 200 8 600 400 150 6 400 300 100 4 200 50 2 200 100 0 0 2018 2019 2020 0 0 jan-dec jan-dec jan-mar 2020 2021 2022 2023 2024- Rental value, before renegotiation Rental value, after renegotiation Increase, % Office Industrial/Warehouse Retail Other No. of lease contracts 9
Increasing surplus ratio and average rent per square meter Operating net per quarter Average rent - total properties - investment properties Surplus ratio 12 months rolling, Per quarter, SEK per sq.m SEK m Investment properties 450 1 500 68.2% 425 1 400 (66.8%) 400 1 300 375 1 200 +7% Average rent 350 1 100 Investment properties 1,479 SEK/sq.m. 325 1 000 300 900 (1,377) Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Operating net - total properties, SEK m Rent SEK per sq.m (12 months rolling) 10
Rising property values – driven by operating net improvement & yield contraction Unrealised changes in values Jan-Mar 2020, SEK m Total Change in yield requirements 158 Change in operating net 153 Changed assumptions of investments and other factors affecting the value -68 Total 243 Valuation yield on average 5.2% (5.2%) Valuation yield contraction 2 bps (Q4 2019 to Q1 2020) no effects of divestments and acquisions 11
Strong and well-known customers Share of total rental Average lease duration, Ten largest customers Rental value, SEK m revenue, % years ABB 263 11 4.6 Försäkringskassan 53 2 4.9 Biz Apartments 42 2 8.3 Västerås kommun 39 2 5.1 ICA 39 2 2.2 Blique by Nobis 31 1 20.8 AFRY 28 1 4.4 Stockholms stad 27 1 4.3 Westinghouse Electric 25 1 2.8 Sweden Tullverket 22 1 3.5 10 largest tenants 568 23 5.5 Total 2,444 100 4.2 25% of rental value of ten largest customers from public tenants 12
Large ongoing development projects – total investment of SEK 1.4 bn Estimated Estimated Of which Property Leasable rental value, Pre-letting Book value, investment completed designation Category Municipality Completed area, sq.m. SEK m rate SEK m SEK m SEK m Eden by Office, new Malmö 2021 7,900 25 54 86 350 38 Kungsleden construction Finnslätten 1 Office, Industry Västerås 2024 21,000 28 39 135 250 32 – part of Stettin 6 Office Stockholm 2021 25,000 57 77 1,165 230 76 The Rotterdam Office Stockholm 2021 21,300 61 69 1,035 225 74 District Social services Karlslund 5:2 property, new Östersund 2020 3,300 11 100 190 140 130 – part of construction Taktpinnen 1 Office Norrköping 2022 16,000 25 100 246 136 28 Oxel – part of Office Norrköping 2021 6,000 12 27 55 91 30 Oxelbergen 1:2 Total 100,500 219 68 2,913 1,422 408 13
Blästern 14, Stockholm - Blique by Nobis design hotel with 249 rooms and 5,500 sq.m. co-working and conference at Convendum Successfully completed project 2020 14
B26, Västerås – A creative arena for co-working for over 550 co- workers in shared and leased office spaces Successfully completed project 2020 15
The Rotterdam District, Stockholm – A creative hub and attractive business district. The new headquarters of Kungsleden 2021 Development under construction 16
Eden in Hyllie, Malmö – New office building with Symbiotic Building concept of 8,000 sq.m. Development under construction 17
Oxel, Norrköping – Redevelopment of office building of 5,900 sq.m. including solar plant Development under construction 18
City Custody of Östersund – Inauguration 27 th of April Development under construction 19
Financial performance and key figures 20
Growing profit from property management +16% Per quarter, 12 months rolling, SEK m SEK m Jan-Mar 2020 (Jan-Mar 2019) 350 1 400 SEK million 310 1 200 300 1 000 250 (267) 800 200 600 150 400 100 200 50 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2020 Per quarter Rolling 12 months 21
Good funding mix and low LTV LTV 45.6% Loan portfolio (46.6) SEK m 9 000 7 500 Green funding 28% 6 000 4 500 3 000 LEED certified properties 1 500 33% 0 Bank loans Mortgage loans Life company Bond loans Commercial loans papers 31 Dec 2019 31 Mar 2020 Green share Green share 22
No loan or bond maturities in 2020 - even maturity structure onwards 2.7 bn in cash and credit facilities, net 1.9 bn RCF (outstanding CP deducted) 0.25 bn Credit line 0.5 bn Cash 4000 3500 3000 1000 2500 SEK million 1100 2000 1500 2500 2472 2451 2400 1000 1701 1671 1594 300 500 630 400 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Commercial paper Bank loans and other borrowings Bonds 23
Maturity structure of bonds 2020-2022 3000 2500 2500 2000 SEK million 1500 1350 1000 550 500 500 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2020 2021 2022 Bonds 24
Long average debt maturity & average fixed interest term 6 5,6 5,5 5,2 5,1 5,0 4,8 5 4,5 4,3 4 3,7 3,6 3,5 3,3 3,2 3,0 2,9 3 2,7 2 1 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2018 2019 2020 Average debt maturity Average fixed interest term 25
Strong average interest coverage & low average interest rate 5 4,7 4,6 4,6 4,6 4,3 4,5 4,1 3,9 4 3,6 3,5 3 2,5 2 1,9 1,9 1,9 1,8 1,8 1,8 1,8 2 1,5 1 0,5 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2018 2019 2020 Average interest coverage, times Average interest rate, % 26
Key financial ratios 2020 2019 Jan – Mar Jan – Mar EPRA EPS (profit from property 1.34 1.17 management after tax), SEK per share EPRA NRV (long-term net asset value), 94.48 84.40 SEK per share EPRA NTA (current net asset value), SEK +11% 92.58 83.20 per share Interest Coverage Ratio 4.7 4.3 LTV (Loan-to-value) Ratio, % 45.6 46.6 27
Outlook 28
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