Eva Landén, Administrerende direktør Klövern
Through the acquisition of Klövern, which has been consolidated in Corem from 15 June, a leading commercial Nordic real estate company has been created with its focus on growth regions. During the third quarter, we have, without slowing down in our everyday operations, worked in a focused way to integrate the two companies. The customer offering has been broadened to include both offices and logistics as well as retail and residential properties. Furthermore, we have many new skilled colleagues to get to know and many new well-run properties to manage and further develop. At the same time, I am pleased to note that we are reporting a good quarter with positive net letting, a strong profit from property management and an improvement in net asset value (NAV) to SEK 27.21 per share.
The increased activity in the office rental market, which we could note during the second quarter, has continued during the third quarter. The lifting of restrictions and return to work places now taking place provide good hope for positive future development. Logistics properties continue to benefit from increased demand for logistics close to cities.
Extensive stimulation packages and mass vaccination combined with the gradual removal of restrictions around the world create good conditions for a con-tinued economic recovery. Concern about new variants of the virus that causes covid-19 however creates some uncertainty. Short- and long-term interest rates continue to be at historically low levels, which overall means favourable conditions for the real estate market, although there is now mention of the possibility of accelerated inflation.
In all, net letting during the quarter amounted to SEK 7 million and to SEK 31 million during the first nine months of the year. During the quarter, lease contracts have been signed with, among others, Avalanche Studios Group for approxi-mately 1,400 sq.m. in New York, and Every Padel for around 3,800 sq.m. in Norrköping.
The profit is developing positively. During the first nine months of the year, profit from property management in-creased, excluding the part coming from Klövern of SEK 416 million and acquisition expenses of SEK 21 million, by 24 per cent.
Through the acquisition of Klövern, value creation from project development has increased in importance for Corem. A number of exciting projects are in progress, both in Sweden and abroad. In central Stockholm, for instance, an office property Orgelpipan 4 on Klarabergs-gatan is being modernized and in Örebro a new hotel and office building is being built as part of the first stage of the project Örebro Entré. Two residential projects with a total of 233 tenant-owner apartments are in process and there is great potential in the portfolio for future residential projects. Our two largest new build projects now in process are two high-quality office buildings in attractive locations in Manhattan. Both projects will obtain LEED Gold environmental certifi-cation. This is only one of many examples of our major focus on sustainability producing results. Activity on the rental market is also increasing in New York. In addition to the letting to Avalanche, we have at the start of the fourth quarter had the pleasure of being able to communi-cate that we have signed a 15-year lease with A24 Films for approximately 3,800 sqm in the 1245 Broadway project. The tenant is planned to move in during the second half of 2022. A total of seven floors and a third of the project is thus leased. It is gratifying that the rental market is recovering well in New York and we hope to be able to communicate further leases before the end of the year.
Our foremost focus in the new merged company is to complete projects and reduce vacancies. And it is precisely letting work which is the single most imp-ortant key for Corem’s future profitability. We are also working continuously to secure long-term sustainable, cost-effective financing. The aim is within two years to complement our BBB- rating from Scope with an additional investment grade rating from one of the three large rating institutions.
Sustainability is now a naturally integrated part of all of our activities. It is important that we at all times live up to, and preferably exceed, the expectations of our tenants and the finance market as regards sustainability. The Board of Directors have set a number of ambitious long-term sustainability goals for the merged company, including that Corem should be climate neutral throughout the whole value chain by 2035.
I look forward to an eventful conclusion to 2021 where we in the merged company together develop and optimize our real estate portfolio with an unchanged focus on local management close to the customer.
Eva Landén, CEO
Stockholm October 27, 2021