Genova Property Group Interim report January-June 2021

Period January-June 2021

• Rental income amounted to SEK 141.8m (110.6), an increase of 28%.
• Net operating income amounted to SEK 104.2m (84.9), an increase of 23%.
• Income from property management¹ increased 69% to SEK 34.8m (20.6), of which income from property management attributable to ordinary shareholders was SEK 11.0m (0.4), corresponding to SEK 0.28 (–0.01) per ordinary share. 

• Net income after tax amounted to SEK 263.8m (231.0), corresponding to SEK 6.06 kr (6.84) per ordinary share.
• Long-term net asset value attributable to ordinary shareholders increased 53% to SEK 2,563.0m (1,675.3), corresponding to SEK 64.76 (54.53) per ordinary share. 


Quarter April-June 2021

• Rental income amounted to SEK 78.2m (56.6), an increase of 38%.
• Net operating income amounted to SEK 58.7m (44.9), an increase of 31%.
• Income from property management¹ increased 95% to SEK 23.2m (11.9), of which income from property management attributable to ordinary shareholders was SEK 9.9m (1.4), corresponding to SEK 0.25 (0.05) per ordinary share. 

• Net income after tax amounted to SEK 160.4m (40.4), corresponding to SEK 3.71 (0.97) per ordinary share. Asides from increased income from property management, the increase is the result of higher value changes during the quarter compared with the year-on-year quarter.
  
  1) Since Q4 2020, currency effects are no longer included in income from property management and are presented on a separate line in the income statement where the comparative figures have been restated.

Significant events during and after the end of the period

Second quarter

• In April, Genova announced that the company had proposed a redemption of outstanding preference shares in accordance with the redemption clause in the Articles of Association, as set out in the Notice convening the Annual General Meeting.

• Also in April, Genova published a prospectus and applied for admission of its green capital securities to trading on Nasdaq Stockholm.
• In May, a new green rental agreement was signed with the Swedish Police Authority for six years and an extension with Botkyrka Municipality for three years. The agreements, which relate to properties in Tumba, cover almost 9,000 sqm with a total annual rental value of approximately SEK 13.6m. Rental levels in the new agreements have been increased by an average of 25% with rents up to SEK 1,600/sqm.
• In May, Genova successfully issued a further tranche of green capital securities of SEK 200m under its outstanding green framework.
• In May, an agreement was signed to acquire a green project property for warehouse and logistics purposes in Uppsala. The property is strategically located and upon completion will comprise approximately 14,000 sqm of lettable area for warehouse and logistics purposes. The total investment for Genova when completed will amount to SEK 210m (SEK 15,000/sqm) before deductions for deferred tax. Accession is scheduled for August 2021.
• In May, the Annual General Meeting of Genova resolved on the redemption of all preference shares in the company in accordance with the redemption clause in the company’s Articles of Association. The record date for the redemption was set as 9 June 2021. 7 June was the last day of trading in Genova’s preference shares.
• In May, the Annual General Meeting resolved to issue a maximum of 400,000 warrants. Each warrant entitles the holder to subscribe for one new ordinary share in the company for SEK 125.10 per ordinary share during the period from 20 June 2024 until the date that follows 30 calendar days thereafter. All employees have been offered to participate in the programme and in June the staff subscribed for 400,000 warrants.
• In June, an agreement was signed to acquire properties with development potential in Täby at an underlying property value of SEK 92m. Annual rental income amounts to approximately SEK 5.5m with initially expected net operating income of approximately SEK 4.7m. The total lettable area is approximately 4,400 sqm with a total land area of approximately 6,300 sqm. Genova deems that future residential building rights will amount to approximately 16,000 sqm gross lighted floor area. Accession is scheduled for 1 September 2021.
• In June, an agreement was signed to acquire properties with development potential in Uppsala at an underlying property value of SEK 97m. Annual rental income amounts to approximately SEK 6.9m with initially expected net operating income of just over SEK 4.8m. The total lettable area is approximately 4,900 sqm with a total land area of approximately 9,200 sqm. Genova deems that future residential building rights could amount to approximately 23,000 sqm gross lighted floor area. Accession is scheduled for 1 September 2021.
• In June, Genova published a prospectus and applied for admission to trading on Nasdaq Stockholm of its green capital securities issued in May 2021.

Events after the end of the period

• In July, a new two-year rental agreement was signed with Cytiva for 2,000 sqm in the Boländerna 9:11 property in Uppsala. The annual rental value is approximately SEK 2.1m.

CEO’s statement

Genova continued on its growth journey during the first half of 2021. Acquisitions that strengthened earnings were completed and we significantly increased the volume of the ongoing construction of rental apartments. The production will increase further during the autumn, with project starts with a clear focus on sustainability in our core markets of Stockholm and the Uppsala region.

In the first half of the year 2021, Genova posted significant increase in net asset value and income from property management, our most important measurements of growth. Over the past 12 months, income from property management has risen to SEK 75m, up 76% per ordinary share. Growth in net asset value per ordinary share increased 19%. In pace with our accession of completed acquisitions, earnings capacity will further increase during the second half of the year.

Increased ongoing production

During the first half of the year, we significantly accelerated the production pace of sustainable rental apartments for own long-term management by starting the construction of projects in Knivsta and Enköping, and expanding the area in our ongoing project in Norrtälje.

With these projects totalling about 60,000 sqm, we will strengthen our rental income by over SEK 100m annually and add almost 1,000 rental apartments to our portfolio during the 2022–2023 period. We are planning for construction starts of additional projects during the second half of the year totalling 70,000 sqm, including almost 800 rental apartments, schools, preschools, etc. Demand for rental apartments remains high in our core markets and we possess the organisational capacity and financing to gear up production. The goal is to have at least 1,500 rental apartments in ongoing production per year from 2022.

Acquisitions with stable cash flow and potential

Through acquisitions of investment properties with development potential, we are strengthening our earnings and acquiring the potential to create new building rights. During the second quarter, we acquired two properties in Täby and Uppsala that have potential for future residential development. These properties are strategically situated with stable cash flows in attractive growth communities where we own several other properties.

Green finance

All of Genova’s ongoing construction projects are being constructed with a clear sustainability profile and will be environmentally certified. This provides us with efficient tools in our property management and clear goals for increasing environmental performance. During 2021, Genova is taking further steps in regard to its sustainability initiatives that include focusing on the certification of existing investment properties and prioritising green finance. In May, Genova issued a further tranche of green capital securities of SEK 200m under its green framework. We have thus issued a total of SEK 700m under the outstanding framework of SEK 1,250m. The capital was used in accordance with the green framework and for the redemption of preference shares outstanding in June, a change in our capital structure that will contribute to a stronger cash flow and better terms and conditions for our continued growth.

Growth and sustainability in focus

June marked one year since Genova’s listing of its ordinary share on Nasdaq Stockholm, a milestone for the company. In May, Genova was awarded the prize of best 2020 listing in the “Quality in class environmental company” category by Affärsvärlden. It is of course extremely pleasing for us that Genova has been recognised for our work with the listing of our ordinary shares. I am proud that we were able to complete the offering and listing successfully in the uncertain market at that time. We had investors that believed in us, a long-term plan and a strong team to make it possible. Our performance since the listing demonstrates that our business concept with sustainable value creation, quality and a long-term perspective is appreciated by the market. Now we are looking forward to an intense second half of the year, with growth and sustainability in focus

Michael Moschewitz, VD

The interim report in its entirety is available on Genova's website: www.genova.se.

For further information, please contact:

CEO, Michael Moschewitz, phone +46 70 713 69 39, michael.moschewitz@genova.se
CFO, Edvard Schéele, phone +46 70 399 69 90, edvard.scheele@genova.se

ABOUT GENOVA
Genova Property Group AB (publ) is a modern and personal real estate company that owns, manages and develops properties with a focus on Greater Stockholm and Uppsala. As of June 30, 2021, the company owned properties to a value of approximately SEK 7.1 billion with a lettable area of 243,000 sq.m. and held 6,782 residential building rights. Genova's ordinary shares have been listed on Nasdaq Stockholm since 30 June 2020.

This information is inside information that Genova Property Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact persons set out above, on 16 August 2021 at 8.00 a.m. (CEST).

Genova Property Group – Smålandsgatan 12 – 111 46 Stockholm – www.genova.se