Stable earnings combined with establishment in Copenhagen
Klövern is reporting stable earnings for the first quarter of 2018, at the same time as project activities have continued to develop well and establishment in Copenhagen has taken place through two large acquisitions.
Income increased to SEK 772 million during the first quarter of the year, and to SEK 3,039 million during the last 12 months. Profit from property management of SEK 319 million and the operating margin of 66 per cent were unchanged compared with the corresponding quarter in 2017. Positive changes in value of properties amounting to SEK 395 million contributed to a profit before tax of SEK 708 million.
Net moving-in was strong and amounted to SEK 40 million, compared with SEK 33 million during the first quarter of 2017 and SEK 54 million for the full year of 2017. The largest single moving-in was the EU agency European Centre For Disease Prevention and Control (ECDC) at around 9,400 sq.m. in Solna.
After a very intensive 2017 when Klövern through 81 transactions continued to focus the portfolio on strong growth locations in Sweden, two major steps were taken into the Danish market during the first quarter of 2018. Through acquisition of two large properties in Copenhagen, we have in a short time established a strong position for further growth in Denmark. At the end of the quarter, the value of the properties in Copenhagen amounted to SEK 2.8 billion, which means that Copenhagen is Klövern’s fifth largest city by value.
After a long period of reconnoitering, Klövern has also taken a first step into the US market during the quarter. We have signed a contract, at a value of USD 16 million, for a site leasehold in Manhattan, a corner property close to 6th Avenue (1241–1251 Broadway) which is currently used for parking and is less than 500 metres from the Empire State Building. The ambition is to develop a high-quality office
building encompassing around 14,000 sq.m. together with the local property developer GDS Development. CBRE has been commissioned to take care of letting. Skidmore, Ownings & Merrill (SOM) has been commissioned to design the building, which is planned to have LEED green certification.
Klövern has a relatively stable project volume with an annual volume of around SEK 1.5 billion. After successful completion of, amongst other things, the refurbishment of an office building for the EU agency ECDC, the most extensive projects now include the hotel and fairs facility Åby Arena in Gothenburg and the office project Kopparhusen in Norrköping. Project development, including development of building rights, contributed with increases in property value of SEK 80 million during the first quarter, or by SEK 470 million during the past 12 months.
In Klövern Living, we are working with a large number of residential projects. In the light of the current state of the market, the first project starts are planned to take place at the earliest at the end of 2018.
During 2018, Klövern has acquired shares in the property development company Tobin Properties in two steps; through a directed share issue, followed by additional shares through a mandatory public cash offer. During the first quarter, the holding is reported as participation rights in associated companies. Tobin Properties is consolidated in Klövern from 4 April 2018.
Klövern’s financial strength continues to be good. At the end of the first quarter, the adjusted equity ratio amounted to 36.4 per cent while the interest coverage ratio during the past 12 months remained unchanged at 2.9 and the average financing rate improved to 2.3 per cent. During the quarter, we have issued an unsecured bond loan of SEK 1,500 million and an unsecured green bond loan of SEK 900 million.
The net asset value per share (EPRA NAV) amounted to SEK 14.86, corresponding to an increase of 6 per cent since the year-end and 15 per cent during the past 12 months.
Overall, we are satisfied with the development at the beginning of 2018 and look forward confidently to a continued stable development during the rest of the year.