Q2 2019 Delivering for our Tenants
Highlights and key figures HIGHLIGHTS KEY FIGURES H1 H1 Q2 Q2 FY Continued high pace of refurbishments SEKm 2019 2018 2019 2018 2018 • 411 apartments refurbished in Q2 2019 Rental income 956 852 479 466 1,787 • Continued reduced investment costs following renegotiation of Net operating income (NOI) 488 431 271 265 931 refurbishment contracts and better control of extras and material costs Change in investment prop. 1,125 2,061 466 1,840 3,737 NOI increased to SEK 488 million for H1 2019 • EPRA NAV per share (SEK) 181 146 181 146 167 Increase of 13.3% compared to same period last year • Driven both by a larger property portfolio and apartment renovations KEY FIGURES (Like-for-like) Like-for-like portfolio as of H1 2019 H1 H1 % • NOI margin of 50.7% SEKm 2019 2018 Growth • NOI increased by 4.7% compared to same period last year Rental income 811 777 4.4% Unrealized value of investment properties up by SEK 1,125 million in H1 Net operating income (NOI) 411 393 4.7% 2019 • RENTAL INCOME AND NOI MARGIN (SEKm) During the quarter, unrealized value of investment properties increased by SEK 466 million 1 200 60% • Primarily driven by NOI growth 1 000 50% 800 40% 600 30% 400 20% 200 10% 0 0% H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 Rental income NOI margin 2
New organization launched to deliver better service to our tenants New service and maintenance organization launched Improved service and professional development • The new organization will enable us to deliver a better service to our tenants and will also create better opportunities for professional development for our employees Four company-wide functions replacing regional structure • The property management organization is now structured in four company-wide functions working with common best practice methods, processes and routines: i) Customer service, ii) Customer management, iii) Technical property maintenance, iv) Business development property management Journey towards becoming the most tenant-focused company continues • With the new organization, Hembla continues its journey towards becoming the most customer-centric residential housing company in Sweden Centralized customer service a direct response to tenants’ wishes • The set up of a centralized customer service function with extended opening hours and the ability to handle requests and questions in multiple languages is one of the key components of the new organization and something that was clearly requested by tenants in our annual surveys Non-recurring costs of SEK 25 million and yearly savings in excess of SEK 10 million • Non-recurring costs for the organizational change are estimated to be approximately SEK 25 million and are expected to yield in excess of SEK 10 million in annual savings going forward 3
Focus on the strategic development of our communities and districts A holistic approach to community development Development in close cooperation with municipalities Hembla’s vision of creating vibrant communities requires coordinated efforts spanning many different areas including social sustainability, development of commercial offerings as well as investments in the properties and the outdoor environments New role created to coordinate all our efforts • Newly appointed city district development manager will ensure that the long- term development of our properties and communities is reflecting our vision and strategy Development of our communities is performed in dialogue with our tenants • Hembla actively engages our tenants in our development plans through surveys and forums where they can express their views on what they value most ”I am convinced that municipalities and property owners have to cooperate closely to be able to improve entire districts. Hembla is a dedicated property owner which I have a good dialogue with. The company’s investments in outdoor areas, in properties and in social sustainability initiatives all contribute into making Jordbro a better place to live” Meeri Wasberg, Mayor of Haninge 4
Developing entire districts Area Project description Pre capex project Post capex project • Refurbishment and upgrading of outdoor common areas for the benefit of all tenants, including new playgrounds and outdoor gym Jordbro • Full refurbishment of historic façade and balconies, including additional insulation and triple glazed windows to improve energy efficiency • Refurbishment and upgrading of outdoor common areas for the benefit of all tenants, including new playgrounds • Husby Full refurbishment of historic façade and balconies, including additional insulation and triple glazed windows to improve energy efficiency • Stairwells and lifts upgraded and refurbished • Full refurbishment of historic façade, including additional insulation and triple glazed windows to improve energy efficiency • Vallsta Refurbishment and upgrading of outdoor common areas for the benefit of all tenants, including new playgrounds • New recycling and waste management system
Sustainable property ownership THE ONGOING WORK – ONE STEP AT A TIME Hembla is continuously focused on measures to reduce our environmental impact. During the first half of 2019 the following projects have been completed: • Geothermal projects in Jordbro, Norrköping and Vårberg have been completed and are now in full operation • Installation of geothermal has been started in four new areas: Husby, Ronna, Visättra and Uppsala • Projects in Huddinge, Södertälje and Husby for additional insulation of façades and replacement of windows have been finalized • Solar panels with an effect of 400 kW have been successfully installed as a pilot and Hembla has decided to increase its rate of investment into solar panels materially Investments in energy solutions reduces carbon footprint • In Katrineholm Hembla finalized several large projects with the goal to reduce our environmental impact and save costs. Geothermal heating and upgraded ventilation systems with FTX (heat recovery) have been installed. Also, solar panels have been installed on the roofs. One of the sites also uses geothermal cooling. • Through this, CO2 emissions are being reduced by 15 tonnes / year 6
Geothermal heating projects reduce energy consumption and associated costs in Hembla’s portfolio significantly… Short introduction to Geothermal heating Sample projects from the Hembla portfolio Project description Energy consumption (MWH) -598 -68% 884 • Geothermal heating investment 0 Linden project 582 Katrineholm • Total inv cost: SEKm 5.9 53 884 286 Geothermal heating is an environmentally friendly 529 286 energy solution where energy is extracted from the ground through geothermal wells drilled deep 2016 2017 2018 into the ground and a system of heating pumps converts the energy to heat • The solution requires one-time initial investment, -1,567 but OPEX costs over time are reduced significantly -69% – Large reduction in heating cost 2,271 0 • – Geothermal heating investment Increased electricity costs as geothermal 1,770 Topasen project heating pumps are electrically driven 149 Södertälje • Total inv cost: SEKm 12.6 – Net effect is a substantial reduction of energy 2,271 704 1,621 usage 703 2016 2017 2018 Electricity Heating Net Savings 7
Solar panels are also a great investment for Hembla and the environment Short introduction to solar panels • Solar produces renewable electricity that Hembla can use or sell back to the electricity grid Pilot project Investment cost (kSEK) Yearly production (kWh) 50,000 547 Solar project data Investment cost Yearly production 8
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