January March 2020 Biljana Pehrsson, CEO & Magnus Jacobson, CFO - - PowerPoint PPT Presentation

Interim Report January–March 2020

Biljana Pehrsson, CEO & Magnus Jacobson, CFO Stockholm 23 April 2020

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Agenda

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• First Quarter 2020 in summary
• Financial performance and key figures
• Outlook
• Questions are welcome

• 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

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Highlights Q1: Strong start 2020

• 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.

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Highlights after Q1

Jan–Mar 2020 in figures (Jan–Mar 2019)

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No of properties

209

(208) Profit fr. prop. mgmt SEK million

310

(267) Gross leasable area, th sq m

1,996

(1,983) Property value, SEK million

38,912

(35,418) Total revenues SEK million

638

(589) Unrealised value changes properties, SEK million and % uplift

243

New and net leasing SEK million Renegotiated leases, SEK million and % rent uplift

52 (39) +13% (8%)

• Ec. occup. rate, %

investm. properties

92.8

(92.8) +0.6% +16.1%

38

(46)

3

(2)

Rental growth, like for like, %

6.4

(4.7)

Right properties in the right locations

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Almost 90 per cent of the property value in four priority growth markets

• Stockholm
• Gothenburg
• Malmö
• Västerås

Book value SEK 38,912 m Book value SEK 38,912 m

VÄSTERÅS STOCKHOLM MALMÖ GOTHENBURG

Office 75% Industrial/Warehouse 15% Retail 4% Other 6% Stockholm 47% Västerås 18% Malmö 11% Gothenburg 11% Other 13%

Danderyd, Stockholm 100,000 sq.m. Kista, Stockholm 147,000 sq.m. Stockholm City East 85,000 sq.m. Stockholm City West 40,000 sq.m. Västberga, Stockholm 38,000 sq.m. Göteborg South Center 40,000 sq.m. Högsbo, Göteborg 109,000 sq.m. Hyllie, Malmö 48,000 sq.m. Fosie, Malmö 53,000 sq.m. Västerås City 153,000 sq.m. Finnslätten 237,000 sq.m. Östersund 79,000 sq.m.

70 per cent of the property value in one of our twelve clusters

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Good leasing results and positive net leasing

New leasing, SEK million

38

(46) Net leasing, SEK million

3

(2)

• 75
• 50
• 25

25 50 75 100 125 Q4 2017 Q1 2018 Q2 Q3 Q4 Q1 2019 Q2 Q3 Q4 Q1 2020 SEK m New leasing, investment properties New leasing, development properties Termination, investment properties Termination, development properties Net leasing

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Double digit rent uplifts – average rent uplift 13% on renegotiations

2 4 6 8 10 12 14 16 50 100 150 200 250 300 350 400 2018 jan-dec 2019 jan-dec 2020 jan-mar Rental value, before renegotiation Rental value, after renegotiation Increase, %

Rent increase, % Rental value, SEK m

100 200 300 400 500 600 700 800 900 200 400 600 800 1000 1200 2020 2021 2022 2023 2024-

Office Industrial/Warehouse Retail Other

• No. of lease contracts

Rental value, SEK m

• No. of lease contracts

Maturity stucture Renegotiations

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Increasing surplus ratio and average rent per square meter

Surplus ratio Investment properties

68.2%

(66.8%) Average rent Investment properties

1,479 SEK/sq.m.

(1,377)

+7%

900 1 000 1 100 1 200 1 300 1 400 1 500 300 325 350 375 400 425 450 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) Operating net per quarter

• total properties

Per quarter, SEK m Average rent

• investment properties

12 months rolling, SEK per sq.m

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

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Rising property values – driven by operating net improvement & yield contraction

Valuation yield on average 5.2% (5.2%) Valuation yield contraction 2 bps (Q4 2019 to Q1 2020) no effects of divestments and acquisions

Ten largest customers Rental value, SEK m Share of total rental revenue, % Average lease duration, 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 Sweden 25 1 2.8 Tullverket 22 1 3.5 10 largest tenants 568 23 5.5 Total 2,444 100 4.2

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Strong and well-known customers

25% of rental value of ten largest customers from public tenants

Property designation Category Municipality Completed Leasable area, sq.m. Estimated rental value, SEK m Pre-letting rate Book value, SEK m Estimated investment SEK m Of which completed SEK m Eden by Kungsleden Office, new construction Malmö 2021 7,900 25 54 86 350 38 Finnslätten 1 – part of Office, Industry Västerås 2024 21,000 28 39 135 250 32 Stettin 6 Office Stockholm 2021 25,000 57 77 1,165 230 76 The Rotterdam District Office Stockholm 2021 21,300 61 69 1,035 225 74 Karlslund 5:2 – part of Social services property, new construction Östersund 2020 3,300 11 100 190 140 130 Taktpinnen 1 Office Norrköping 2022 16,000 25 100 246 136 28 Oxel – part of Oxelbergen 1:2 Office Norrköping 2021 6,000 12 27 55 91 30 Total 100,500 219 68 2,913 1,422 408

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Large ongoing development projects – total investment of SEK 1.4 bn

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Successfully completed project 2020

Blästern 14, Stockholm - Blique by Nobis design hotel with 249 rooms and 5,500 sq.m. co-working and conference at Convendum

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Successfully completed project 2020

B26, Västerås – A creative arena for co-working for over 550 co- workers in shared and leased

• ffice spaces

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Development under construction

The Rotterdam District, Stockholm – A creative hub and attractive business district. The new headquarters of Kungsleden 2021

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Development under construction

Eden in Hyllie, Malmö – New office building with Symbiotic Building concept of 8,000 sq.m.

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Development under construction

Oxel, Norrköping – Redevelopment of

• ffice building of 5,900 sq.m. including

solar plant

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Development under construction

City Custody of Östersund – Inauguration 27th of April

Financial performance and key figures

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Growing profit from property management

Jan-Mar 2020 (Jan-Mar 2019) SEK million

310

(267)

+16%

200 400 600 800 1 000 1 200 1 400 50 100 150 200 250 300 350 Q4 2017 Q1 2018 Q2 Q3 Q4 Q1 2019 Q2 Q3 Q4 Q1 2020 Per quarter Rolling 12 months Per quarter, SEK m 12 months rolling, SEK m

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Good funding mix and low LTV

LTV

45.6%

(46.6) Green funding

28%

Loan portfolio

1 500 3 000 4 500 6 000 7 500 9 000 Bank loans Mortgage loans Life company loans Bond loans Commercial papers 31 Dec 2019 31 Mar 2020 Green share Green share SEK m

LEED certified properties

33%

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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 400 1671 2451 2472 630 1594 1701 2400 2500 1100 1000 300 500 1000 1500 2000 2500 3000 3500 4000 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

SEK million

Commercial paper Bank loans and other borrowings Bonds

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Maturity structure of bonds 2020-2022

550 500 1350 2500 500 1000 1500 2000 2500 3000 Q2 2020 Q3 Q4 Q1 2021 Q2 Q3 Q4 Q1 2022 Q2 Q3 Q4 Q1

SEK million

Bonds

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Long average debt maturity & average fixed interest term

5,1 5,0 5,6 5,5 5,2 4,8 4,5 4,3 3,0 2,9 2,7 3,5 3,2 3,3 3,7 3,6 1 2 3 4 5 6 Q2 2018 Q3 Q4 Q1 2019 Q2 Q3 Q4 Q1 2020 Average debt maturity Average fixed interest term

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Strong average interest coverage & low average interest rate

3,6 3,9 4,1 4,3 4,6 4,6 4,6 4,7 2 1,9 1,8 1,8 1,8 1,8 1,9 1,9

0,5 1 1,5 2 2,5 3 3,5 4 4,5 5 Q2 2018 Q3 Q4 Q1 2019 Q2 Q3 Q4 Q1 2020 Average interest coverage, times Average interest rate, %

2020 Jan–Mar 2019 Jan–Mar EPRA EPS (profit from property management after tax), SEK per share 1.34 1.17 EPRA NRV (long-term net asset value), SEK per share 94.48 84.40 EPRA NTA (current net asset value), SEK per share 92.58 83.20 Interest Coverage Ratio 4.7 4.3 LTV (Loan-to-value) Ratio, % 45.6 46.6

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Key financial ratios

+11%

Outlook

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Continued good office rental market in Stockholm, Gothenburg, Malmö and Västerås

0% 1% 2% 3% 4% 5% 6% 7% 8%

• 1 000

2 000 3 000 4 000 5 000 6 000 7 000 8 000 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 2020E Stockholm CBD Göteborg CBD Malmö CBD Central Västerås Stockholm CBD Göteborg CBD Malmö CBD Central Västerås RENTAL VALUE, CBD/SQ.M. (BARS) VACANCY RATE %, (LINES) Source: Newsec

50 100 150 200 250 300 350 400 50 100 150 200 250 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 Domestic buyers Foreign Investors

• No. of deals

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All time high transaction volume in Q1 2020

Bn, SEK

• No. of deals

~19% higher than the previous record set in Q1 2019 Source: Newsec

At present the future development pipeline is approximately SEK 8 billion Investment programme

Actual Target SEK m 2015 2016 2017 2018 2019 2020- 2023

Development projects 14 141 312 578 598 2,400 Tenant improvements and other value creating investments 337 341 499 596 799 2,800 Maintenance investments 99 127 114 126 112 400 Total investments 450 609 925 1,300 1,509 5,600

Return targets on development projects, tenant improvements and other value- creating investments

• IRR in excess of 9 per cent
• Yield on cost in excess of 6

per cent

• Tenant improvements pay

back time less than half of the leasing contract duration

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Investment programme – Target 2020-2023

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Development in pipeline

a:place – Redevelopment of

• ffice building of 10,000 sq.m. in

Kista.

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Development in pipeline

Verkstaden 7 – New Offices and hotel 13,000 sq.m. in Västerås

Summary and going forward

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• Stable financial position with LTV of 45.6 per

cent, cash and credit facilities of 2.7 bn net of commercial papers and no debt maturities in 2020

• Marginal effects of COVID-19 to date but

uncertainty going forward

• Changed dividend proposal from the board

due to COVID-19 uncertainties going forward

• Our base case scenario COVID-19:
• Re-opening of countries, societies and

businesses by June.

• Gradual step by step recovery in the market in

second half of 2020 and onwards.

• Big thank you to all of our tenants and my co-

workers in these difficult times.

Questions are welcome

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Thank you!

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