Klövern AB (publ)
Year-end Report January – December 2020
» Income amounted to SEK 3,294 million (3,638). The decline is due to divestment of properties during 2019, including the whole portfolio in Karlstad and all investment properties in Örebro which together accounted for SEK 278 million of income in 2019. For a comparable portfolio, i.e. properties owned for the whole of 2019 and 2020, income was stable and amounted to SEK 3,128 million (3,150).
» The operating surplus amounted to SEK 2,194 million (2,463). For a comparable portfolio, the operating surplus amounted to SEK 2,113 million (2,121).
» Profit from property management amounted to SEK 1,269 million (1,462).
» Profit before tax amounted to SEK 2,467 million (3,431) and net profit, attributable to the parent company’s shareholders, totalled SEK 1,908 million (3,002), corresponding to SEK 1.67 (2.92) per ordinary share.
» The year 2020 was characterized by a continued strong focus on project development. Investments amounted to SEK 2,376 million. Project development, including development of building rights, contributed to increases in value of properties of SEK 513 million (681). In total, changes in value of properties amounted to SEK 1,322 million (2,125).
» After taking possession of 9 properties for SEK 2,613 million and transfer of possession of 5 properties for SEK 387 million, the value of the property portfolio amounted to SEK 57,448 million.
» The interest coverage ratio amounted to 2.5 (2.6), leverage to 50 per cent (50) and the adjusted equity ratio to 43.2 per cent (43.5).
» The net asset value (NRV) per ordinary share amounted to SEK 19.87.
» The Board of Directors proposes to the Annual General Meeting, for the 2020 financial year, a dividend of in total SEK 0.26 (0.26) per ordinary share to be paid in two instalments and a dividend of in total SEK 20.00 (20.00) per preference share to be paid in four instalments.
Statement by the CEO
Good earnings as a conclusion of the year and for me as CEO
Klövern is ending this different, pandemic-affected year with good earnings and a strengthened financial position. After nine years as the company’s CEO, I am leaving a company that is very different from when I started in 2012. The property value then totalled SEK 15 billion, the corresponding figure is now SEK 57 billion. During the same period, the average rent/sq.m. has increased by 49 per cent, which reflects the upgrading of the portfolio. It has been a fantastic journey together with all of Klövern’s highly motivated personnel.
Klövern’s earnings for 2020 are good and have, thanks to effective property management, among other things, developed in a stable way despite some loss of income associated with the challenging conditions in the world. Some tenants have, of course, had a tough time but overall our diversified portfolio has provided stabiIity. Klövern has received 99 per cent of the rents invoiced for 2020.
For a comparable portfolio, both income and the operating surplus were at the same level as in 2019. Profit from property management amounted to SEK 1,269 million and after positive changes in value of properties of SEK 1,322 million, profit before tax was SEK 2,467 million.
A RECOVERING MARKET
The pandemic has had a marked negative effect on both the global and the Swedish economy. The consequences can be seen, in, for instance, reduced GDP growth and increased unemployment. However, it can be noted in the fourth quarter that some macroeconomic forecasts have been adjusted upwards and the ongoing vaccination provides hope for a good recovery during 2021. We can ourselves see clear indications that the market is gradually recovering by increasing demand in the rental and transaction market and by an increasing improvement in financing conditions in the capital market.
NET MOVING-IN POSITIVE AGAIN
During the fourth quarter, the external net moving-in amounted to SEK 11 million, bringing to an end the series of negative moving-in figures during the first three quarters. During the last quarter of the year, we have welcomed a number of new tenants including Volvo Cars and NetOnNet and two new leases were signed in Copenhagen for a total of approximately 2,900 sq.m. with Dior and Politiforbundet.
In December/January, we have also extended three large leases for a total of approximately 52,600 sq.m. in Kista. The aggregate lease contract value for the extended periods of between three and five years, amounts to SEK 430 million.
We have worked for many years with the strategy of focusing the property portfolio on the growth locations and markets where we want to be long-term owners, and primarily on office properties. During the fourth quarter, we took another big step in line with our strategy through divesting 12 properties in a transaction with Mileway, mainly consisting of warehouse and logistics premises. The transaction took place at a premium of 21 per cent in relation to book value. In total, the contracts for divestment of properties signed during 2020 have exceeded book values by 20 per cent.
In addition to the acquisition of a large project property on Park Avenue in New York which took place in early 2020, we have only carried out additional smaller, although strategically important, add-on acquisitions. Through these, we have complemented the portfolios in Linköping, Gothenburg and Lund among other places. At the end of the year, the value of the real estate portfolio totalled SEK 57 billion, of which the foreign portfolio in Copenhagen and New York accounted for 15 per cent.
GROWTH THROUGH PROJECT DEVELOPMENT
Klövern engages in project development in all prioritized locations and thus makes an active contribution to urban development. At the end of the year, development properties accounted for 16 per cent of the total property value and investments amounted to SEK 2,376 million during the year. In all, project development, including development of building rights, contributed to increases in value of properties of SEK 513 million in 2020.
The two largest ongoing projects, both in New York, are expected to be completed in the third quarter of 2021 and the beginning of 2022 respectively, after which additional tenant customizations will take place. Letting work is in process and last week the first lease contract was signed in the project 1245 Broadway. In total, the ongoing projects in New York, Sweden and Copenhagen are expected to have a large positive effect on net moving-in during the coming two years.
STRONGER FINANCIAL POSITION
During 2020, we have placed special emphasis on securing good long-term financing and enhancing our financial strength even more.
During the second quarter, SEK 5 billion in existing bank loans and secured bonds were refinanced. We also obtained new loans and credit decisions for new loans of over SEK 4 billion. In June, Klövern obtained an investment grade rating (BBB– with stable outlook) from Scope Ratings and in October SEK 2 billion of green bonds were issued.
At the end of the year, a fully guaranteed rights issue of around SEK 2 billion was completed which provides us with even greater opportunities of value creation through efficiently financed project development of commercial and residential premises.
SUSTAINABLE DEVELOPMENT AND SMART CLIMATE CHOICES
At Klövern, sustainable development is about making our properties better both for the environment and for our tenants at the same time as making them more profitable. We have set up goals where we make great demands on ourselves and I can note that we have already come a good way towards achieving them. One of the goals, that at least half of our properties shall have energy consumption lower than 100 kWh/sq.m., was achieved a long time ahead of the plan which led to us raising that target an additional step.
During 2020, we have built an additional 6 new solar cell facilities. Our total solar cell capacity is now 1.5 GWh/year, which corresponds to just under 2 per cent of the company’s total electricity consumption.
POSITIONED FOR A CONTINUED RECOVERY
During the past year, some of our tenants in industries that are particularly affected have had a tough situation. However, these tenants account only for a limited part of our total customer base. Through close dialogue, we have made a number of assessments of conditions for e.g. discounts and respite in combination with the government rent support.
I hope that we now – when vaccination can take place on a broad scale – will see a gradual return to our normal existence. It is difficult to say anything about the long-term effects of the pandemic but Klövern has shown in the past year that it stands on a stable foundation and we are now positioned for a continued economic recovery.
Finally, I would like to emphasize the fine, committed work that all Klövern’s employees have done during my nine years as CEO. I am also happy to conclude this Statement by the CEO with good hope of a more stable year for society at large in 2021.
Rutger Arnhult, CEO Klövern
Klövern AB (publ)
For additional information, please contact:
Rutger Arnhult, CEO, +46 70 458 24 70, firstname.lastname@example.org
Lars Norrby, IR, +46 76 777 38 00, email@example.com
Klövern is a real estate company committed to working closely with customers to offer them attractive premises in growth regions. Klövern is listed on Nasdaq Stockholm. For further information, see www.klovern.se.
Klövern AB (publ), Bredgränd 4, 111 30 Stockholm. Phone: +46 10 482 70 00. E-mail: firstname.lastname@example.org.
This information is information that Klövern AB is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication through the agency of the contact persons set out above at 07.30 CET on 17 February 2021.
This interim report has been published in Swedish and in English. In the event of a discrepancy between the language versions, the Swedish version shall take priority.
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