Interim period January-September 2014

Sights set on growth

JULY-SEPTEMBER 2014 QUARTER

  • Rental income amounted to MSEK 409 (388)
  • Profit from property management totaled MSEK 243 (60), corresponding to SEK 3.7 per share (2.4)*
  • Profit after tax was MSEK 227 (65), corresponding to SEK 3.5 per share (2.6)*
  • Cash flow from operating activities was MSEK 245 (52), corresponding to SEK 3.7 per share (2.1)*

INTERIM PERIOD JANUARY-SEPTEMBER 2014

  • Rental income amounted to MSEK 1,190 (1,177)
  • Profit from property management totaled MSEK 642 (230), corresponding to SEK 11.7 per share (9.2)*
  • Profit after tax amounted to MSEK 572 (136), corresponding to SEK 10.4 per share (5.4)*
  • Recognized property value of SEK 17.5 billion (16.2) pertains to 195 (196) directly owned properties.
  • Net asset value (EPRA NAV) per share was SEK 115.1 (118.4)
  • Cash flow from operating activities was MSEK 380 (129), corresponding to SEK 6.9 per share (5.2)*

* The number of shares at the end of the period was 65,720,000 (25,000,000)

SIGNIFICANT EVENTS DURING AND AFTER THE QUARTER

  • In July, Hemfosa’s joint venture, Söderport Fastigheter, divested a housing project in Stockholm for MSEK 355.
  • On October 13, the Board of Directors decided to convene an Extraordinary General Meeting to pass resolutions about an amendment to the Articles of Association, which will facilitate the issuance of preferential shares.
  • Two major renegotiations totaling approximately 15,000 sqm were implemented for the Police Authority and the National Courts Administration, entailing the extension of both leases for 15 years combined with refurbishment and expansion of approximately MSEK 120, to adapt the premises to the tenants’ needs.
  • After the quarter, Hemfosa implemented two acquisitions of public and logistics properties in central Sweden at a value of about MSEK 795, of which public properties accounted for approximately MSEK 200. The acquired properties represent leasable area of about 94,000 square meters and include schools and properties used in county council operations.

Comments from the CEO

Sights set on growth
We are leaving a quarter behind us that shows that the operations continue to perform well – continued improvement in profit from property management, increased earnings capacity and very strong cash flow. Today, the company also has a significantly more favorable financial structure than in the past. The aspect that really characterizes the soul of Hemfosa – our interest in transactions – was quite evident in our work in the past quarter. We have a clear focus on identifying and evaluating potential business – acquiring property portfolios to which we can add value and that can further strengthen Hemfosa’s property portfolio.

During the quarter, we refused a couple of objects that failed to meet our investment criteria, while we will be moving ahead with other objects that were deemed highly interesting. We also implemented a number of transactions. During the quarter, we divested a housing project through our joint venture company, Söderport Fastigheter. After the close of the quarter, we acquired public and logistics properties in Central Sweden with a value of nearly MSEK 800. I regard this as a completely correct and interesting transaction – it contributes strong cash flow, improves our earnings and also strengthens us strategically in the school sector.

Management of the existing portfolio is progressing well and, during the quarter, this included several renegotiated leases, featuring adaptations and renovations of premises to meet the needs of our tenants. The acquisitions implemented earlier in the year have been smoothly integrated into Hemfosa’s property portfolio and property management.

There is no doubt that Hemfosa has a clear growth objective. In line with this, the Board decided in October to convene an Extraordinary Meeting to request authorization empowering the issue of preference shares in the future. We believe this is an appropriate way to supplement our opportunities to access expansion capital for attractive future acquisitions.

Our impression of the market did not change during the quarter; the macroeconomic prerequisites remain favorable for our sector, with healthy economic growth, low inflation and low interest rates. Competition for objects remains considerable but few possess Hemfosa’s implementation power – in the form of both experience and expertise, but also contact network and financing opportunities. We are proud of the platform we have built and the relationships we have created. It is an excellent foundation on which to stand ahead of our continued expansion.

Jens Engwall, CEO

In accordance with the Securities Market Act, Hemfosa is publishing the information in this interim report on Wednesday November 5, 2014, at 8:30 a.m.

CONTACT INFORMATION

Hemfosa Properties AB
Tel: +46 8 448 04 80
Street address: Hästholmsvägen 28
Postal address: Box 2020, 131 02 Nacka
www.hemfosa.se

Jens Engwall, CEO
Tel: +46 8 448 04 82, e-mail:
jens.engwall@hemfosa.se

Karin Osslind, CFO
Tel: +46 8 448 04 84, e-mail: karin.osslind@hemfosa.se


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About Us

Hemfosa is a Swedish property company focusing on community service properties in the Nordic region with its largest tenants being the Swedish state and municipalities. This provides stable cash flows and a healthy yield. In order to create value, Hemfosa also aims to actively participate in the transaction market. As per June 30, 2016, Hemfosa owned properties with a total property value of approximately SEK 33.2 billion, including the company’s share of the property value in joint ventures. Hemfosa’s common share has been listed since March 2014 and its preference share since December 2014, both on Nasdaq Stockholm. Read more at www.hemfosa.se.

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