Tenants remain our top priority
D. Carnegie & Co AB (publ) reports for the second quarter of 2018 an increased profit after tax amounting to SEK 1,672 million compared to SEK 475 million for the second quarter of the previous year. For the first half year, profit after tax for January-June amounted to SEK 1,827 million compared with SEK 704 million corresponding period previous year.
Earnings per share after tax were SEK 21.45 (9.10). The adjusted equity (EPRA NAV) increased 29 percent compared to the second quarter 2017 and amounted to SEK 145.98 per share (113.12) as of 30 June 2018.
January – June 2018
- Rental income increased to SEK 852 million (702)
- Net operating income of SEK 431 million (352)
- Income from property management amounted to SEK 119 million (160)
- Changes in the value of investment properties of SEK 2,061 million (695)
- Changes in the value of financial instruments of SEK -44 million (-8)
- Profit before tax amounted to SEK 2,116 million (913)
- Profit after tax amounted to SEK 1,827 million (704)
- Earnings per share amounted to SEK 21.45 (9.10) before dilution and amounted to 21.40 (9.06) after dilution
April – June 2018
- Rental income increased to SEK 466 million (365)
- Net operating income of SEK 265 million (205)
- Income from property management amounted to SEK 118 million (100)
- Changes in the value of investment properties of SEK 1,840 million (457)
- Changes in the value of financial instruments of SEK 5 million (21)
- Profit before tax amounted to SEK 1,927 million (616)
- Profit after tax amounted to SEK 1,672 million (475)
- Earnings per share amounted to SEK 18.41 (6.14) before dilution and amounted to 18.37 (6.11) after dilution
Significant events during the second quarter
- Jonas Andersson appointed as new CFO, replacing Per-Axel Sundström who has decided to leave.
- On 26 April D. Carnegie & Co completed the acquisition of 1,274 apartments in Stockholm and issues, in the connection to the transaction, new shares to the seller Byggmästare Anders J Ahlström.
- In the beginning of April D. Carnegie & Co completes the acquisition of 749 apartments in Västerås and 1,420 apartments in the Stockholm region.
- The Annual General Meeting on 8 May 2018, resolved on re-election of the board members James Seppala, Karolina Keyzer, Melissa Pianko and Fredrik Brodin, and lection of the board member Donatella Fanti. Rolf Buch, Jean-Christophe Dubois and Svein Erik Lilleland were not available for re-election.
Statement from the CEO
It has been an exciting and intensive second quarter. First, we completed three acquisitions which had been announced previously totalling 3,443 apartments located across Stockholm County and Västerås. We now own a portfolio comprising 21,478 apartments. Second, we completed 441 apartment renovations, leading to a total of 814 apartment renovations during the first six months of this year. Third, we continue to show strong commitments through social activities in our areas and prioritizing our tenants. And lastly, we took notice of a number of large international investors entering the residential market here in Sweden. I believe that they see what we see when it comes to this very attractive asset class.
Same strategy and more tenants
We completed three acquisitions in April; 749 apartments in Västerås, 1,420 apartments in Södertälje and Nynäshamn, and 1,274 apartments in Alby, Stockholm. These acquisitions fit our portfolio and business strategy well, allowing us to refurbish and improve the homes of our new tenants while continuing to be a responsible residential owner long-term providing first-class tenant services in greater Stockholm and Mälardalen. We are also continuously looking to expand our residential portfolio through additional acquisitions.
Renovating the right way and creating value
We believe that renovating in the right way is one of our most important driving forces behind creating value. Our way of renovating apartments, properties, common areas, playgrounds, in order to lift the quality and value of an entire residential district, differentiates us in the market and benefits all of our stakeholders. Our investments and renovations are extensive and take time but we are convinced that we are renovating in the right way and that we are on the right path. A total of 441 apartment renovations were completed in the second quarter, totalling 814 renovated apartments during the first six months of this year.
In recent years, we have been determined to follow our business strategy by carrying out comprehensive renovations in the right way, lifting our areas to today’s standards, being active through social engagements and most importantly placing our tenants first. Due to strong interest amongst investors in the residential property segment, and in particular for our segment, our business strategy has resulted in an accelerating valuation this quarter. Change in value of
investment properties amounted to SEK 1,840 million in the second quarter and EPRA NAV amounted to SEK 145.98 per share, up 29 percent compared to the same period last year. Our strategy works!
Also, the continued meaningful growth in both domestic and international investor demand (such as Starwood and Vonovia's recent acquisitions of large stakes in the residential company Victoria Park, for example) for Swedish residential assets further supports our model and business prospects. This corroborates the potential our business strategy has, and validates our renovation model for improving our tenants' homes and neighbourhoods.
Continuing our social engagement
An important part of our business is to facilitate social engagements with municipalities, real estate owners and other associations for our tenants. In the second quarter we hosted a series of soccer events for about 60 children of our tenants in Jordbro with AIK Football, a collaboration we have
expanded this year. AIK Fotboll’s Henok Goitom visited the school and talked to the children about how it is to be a professional soccer player and came with good advice to the children. Another sporting event was organized together with Djurgården Hockey in Husby where children could borrow equipment and skates. We organize events like these for our tenant’s children, an opportunity to find new friends and to have a good time.
Future market conditions and proposed interest deductions
Looking forward, we continue to view prospects for the rental housing market in Sweden extremely positively, despite a degree of uncertainty facing certain for-sale developments. Furthermore, while we will investigate in depth the proposed rules for interest deductions and how this may affect our
company, our initial belief is that any effects will be minor.
I would like to thank Rolf Buch and Jean-Christophe Dubois, who stepped down from our board in May of this year, for their invaluable contributions to D. Carnegie & Co.
Lastly, I want to thank Pax (Per-Axel Sundström), our CFO since the company’s inception, who has decided to leave us. He has been a driving force behind the company from day one. At the same time, I am very pleased to see Jonas Andersson, who has been with us since 2015 succeed him.
Stockholm 13 July, 2018
Svein Erik Lilleland
CEO, D. Carnegie & Co
This information is information that D. Carnegie & Co AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, at 7.00 a.m. CEST on 13 July, 2018.
About D. Carnegie & Co
D. Carnegie & Co is a property company focusing on residential properties in the Greater Stockholm region and other growth areas. The company’s business concept is to own property portfolios slated for a gradual renovation of apartments in conjunction with the natural turnover of tenants. This can take place quickly and cost-efficiently thanks to extensive experience from the company's renovation method which, among other things, means that no evacuation needs to take place. In addition to this, the company creates value through the development of building rights in existing portfolios. The market value of the company’s properties amounted to SEK 28,761 million on 30 June 2018. The total rental value amounted to SEK 1,874 million annually on 30 June 2018. The economic occupancy rate is high – vacancies are virtually non-existent. D. Carnegie & Co is listed on Nasdaq Stockholm.