Genova Property Group Interim Report January–June 2022

January–June 2022 period

• Rental income amounted to SEK 185.7m (141.8), an increase of 31%.
• Net operating income amounted to SEK 132.3m (104.2), an increase of 27%.
• Income from property management increased 62% to SEK 56.3m (34.8), of which income from property management attributable to shareholders was SEK 31.1m (11.0), corresponding to SEK 0.74 (0.28) per share.
• Net income after tax amounted to SEK 342.5m (263.8), corresponding to SEK 7.06 (6.06) per share.
• Long-term net asset value attributable to shareholders increased 42% to SEK 3,649.5m (2,563.0), corresponding to SEK 86.94 (64.76) per share.

April–June 2022 quarter

• Rental income amounted to SEK 92.1m (78.2), an increase of 18%.
• Net operating income amounted to SEK 68.8m (58.7), an increase of 17%.
• Income from property management increased 9% to SEK 25.4m (23.2), of which income from property management attributable to shareholders was SEK 11.9m (9.9), corresponding to SEK 0.28 (0.25) per share.
• Net income after tax amounted to SEK 175.5m (160.4), corresponding to SEK 3.87 (3.71) per share.

Events during the second quarter

• In April, Genova and Green Group extended their collaboration with the acquisition of two properties in the Södra Veddesta development area in Järfälla, at an underlying property value of approximately SEK 115m. The lettable area is approximately 4,000 sqm with a lot size of about 13,000 sqm, and the annual rental value amounts to approximately SEK 8m.
• In April, additional green hybrid bonds of SEK 100m were issued under the green finance framework of SEK 1,250m. The green hybrid bonds carry a perpetual tenor and the issue price was 100.25% of nominal value, equal to 3 months STIBOR plus 668 basis points.
• In April, new financing agreements totalling SEK 3,200m were concluded, including a revolving credit facility of SEK 350m attributable to Genova’s existing investment property portfolio comprising 43 properties. The refinancing also strengthened liquidity by almost SEK 170m. The financing agreements will mature in May 2027, with an average maturity of approximately four years.
• In May, a newly developed and environmentally certified property was acquired in Järfälla at an underlying property value of SEK 94.5m. The property has a lettable area of 4,200 sqm and is fully let. The annual rental value amounts to SEK 5.5m with estimated annual net operating income of approximately SEK 5.3m and a remaining duration of nine years.
• In June, two properties were accessed in Norrtälje at an underlying property value of approximately SEK 153m before deductions for deferred tax, and with a lettable area of approximately 10,800 sqm, where 96% of the area has been let. The annual rental value amounts to approximately SEK 10.5m with estimated net operating income of approximately SEK 7.2m and a remaining average duration of 4.3 years. Genova thereby owns adjacent properties in Norrtälje covering an area of approximately 30,000 sqm, in an area that is expected to be developed with residential units over time.
• In June, available liquidity was increased by approximately SEK 500m when SBAB granted approximately SEK 400m in additional construction credit, and Nordea granted a revolving credit facility of SEK 100m.

Events after the end of the period

• Edvard Schéele has announced that he is leaving his position as CFO for a new position outside the company. Edvard will continue his position until the turn of the year and the recruitment process to appoint a new CFO has started immediately.

CEO’S STATEMENT

The period was characterised by a turbulent business environment and tougher market conditions. In this environment, Genova’s focus on cash flows, liquidity and a healthy balance sheet is important for creating the right conditions for the business. Genova posted stable results for the first half-year with strengthened income from property management, increased earnings, a continued high level of activity in project development and several acquisitions. At the same time, we also see conditions for continued growth and for starting additional projects at the end of the year.

Continued growth

During the period, Genova continued to grow profitably through acquisitions and completed projects. Growth in net asset value per share amounted to 36%. Rental income rose 31% to SEK 186m and income from property management amounted to SEK 56m, corresponding to a 52% increase in income from property management per share over the last twelve months, where the increase was mainly attributable to increased net operating income. The earnings growth is expected to continue in the coming quarters. We estimate that the acquisitions we completed during the year and the occupancies taking place in the properties completed in 2022 will lead to increased annual rental income of approximately SEK 62m.

Changed business environment

In the second quarter, we experienced continued macroeconomic instability with rising inflation, higher interest rates and general market turmoil. As I mentioned in the first quarter report, this trend obviously holds challenges for Genova, and for the property sector in general, but we can also confirm that the company’s business model and operations are resilient and stable with a clear long-term approach and secure cash flows. Our ongoing projects have been procured at fixed prices, which means that we are not affected by cost increases in relation to these. 98% of our rental agreements are index-linked to protect against inflation, which balances the effects of rising interest rates. Current rates of inflation would offset a 100 basis-point rate increase to just over 50%, all other things being equal.

Long-term financing

During the period, we focused on securing our long-term financing and liquidity and during the quarter, we signed new financing agreements for approximately 3.2 billion for our existing investment property portfolio, and were granted additional construction credit of approximately SEK 400m for our project development. This means that we have refinanced a substantial share of our loan volume, with long maturities at favourable terms that reduce Genova’s total borrowing costs, while also strengthening liquidity. The fact that we have completed this successful refinancing and improved our liquidity in the prevailing market conditions is a sign of strength and important for Genova’s continued development.

Occupancy in Norrtälje

In the third quarter, we will complete the first stage of our largest ongoing project, Handelsmannen in Norrtälje, with the occupancy of a retirement home, preschool and 66 rental apartments in the Tryckeriet quarter. We acquired the property six years ago, and several buildings have now been completed in what will be a new Nordic Swan Ecolabelled district with green courtyards, and a central location with good transport links. In total, the project comprises 408 rental apartments, 80 retirement home apartments and a preschool, with a lettable area of approximately 30,000 sqm. It is obviously gratifying to see the results of a long process where we have worked closely with the municipality to create safe and functional neighbourhoods that are in line with the development of Norrtälje. The intense interest in our residential units in Norrtälje shows that we have made the right decision, and we are taking this with us into our upcoming projects where a new district in Brunna in Upplands-Bro outside Stockholm is next in line with construction scheduled to start at the end of 2022. This will be a mixed-use development project with about 850 residential units, a supermarket, services, a school and preschool that we are constructing jointly with property company K2A, comprising approximately 60,000 sqm in total. Our assessment is that the construction market will gradually normalise and we see conditions for continued construction at reasonable prices and with good profitability.

In the prevailing market environment, we must exercise great caution when evaluating business opportunities. We will safeguard cash flow and liquidity, while continuing to create long-term growth by developing attractive residential units and community service properties in growth areas.

Michael Moschewitz, CEO

For further information, please contact:

CEO, Michael Moschewitz, mobile +46 (0)70-713 69 39, michael.moschewitz@genova.se

About Genova

Genova Property Group AB (publ) is a modern property company with a personal touch that owns, manages and develops properties with focus on Greater Stockholm area and Uppsala Region. On 30 June 2022, the value of the company's property portfolio amounted to approximately SEK 8.8 billion with a lettable area of approximately 296,000 sqm and the company held approximately 7,100 building rights for residential units. Genova's shares have been listed on Nasdaq Stockholm since June 2020.

This information is such information that Genova Property Group AB (publ) is obligated 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 17 August 2022 at 8.30 a.m. CEST.

Genova – Smålandsgatan 12 – SE-111 46 Stockholm – www.genova.se