Improving our service
Hembla AB (publ) reports for the fourth quarter of 2018 an increased profit after tax amounting to SEK 598 million compared to SEK 350 million for the fourth quarter of the previous year. For the full year 2018, profit after tax amounted to SEK 3,308 million compared with SEK 1,579 million corresponding period previous year.
Earnings per share after tax were SEK 37.31 (20.34). The adjusted equity (EPRA NAV) increased by 30 percent compared to the fourth quarter 2017 and amounted to SEK 166.88 per share (127.90) as of 31 December 2018.
January – December 2018
■ Rental income increased to SEK 1,787 million (1,473)
■ Net operating income increased to SEK 931 million (774)
■ Income from property management amounted to SEK 302 million (357)
■ Unrealized changes in the value of investment properties of SEK 3,737 million (1,599)
■ Changes in the value of financial instruments of SEK -21 million (-9)
■ Profit before tax increased to SEK 4,001 million (2,014)
■ Profit after tax increased to SEK 3,308 million (1,579)
■ Earnings per share amounted to SEK 37.31 (20.34) before dilution and amounted to 37.23 (20.24) after dilution
October – December 2018
■ Rental income increased to SEK 471 million (388)
■ Net operating income increased to SEK 232 million (191)
■ Income from property management increased to SEK 85 million (62)
■ Unrealized changes in the value of investment properties of SEK 652 million (390)
■ Changes in the value of financial instruments of SEK 16 million (-3)
■ Profit before tax increased to SEK 757 million (449)
■ Profit after tax increased to SEK 598 million (350)
■ Earnings per share amounted to SEK 6.50 (4.51) before dilution and amounted to 6.47 (4.48) after dilution
Significant events during the fourth quarter
■ As of 31 October 2018 Hembla changed name from D. Carnegie & Co. Through the new name, the company wants to emphasize the core of its business model - the tenants and their homes.
■ Hembla made changes to group management by appointing Jonatan Öhman as interim head of communications. The former head of communications, Björn Sundberg, was appointed to a new role as Senior Director of Public Affairs.
■ Hembla has completed the earlier announced acquisition of two properties from Fastighets AB L E Lundberg for SEK 70 million on the 1 October. The transaction was structured as a share deal.
■ Hembla has divested two properties comprising 124 residential apartments in Alby to a private housing cooperative on the 18 December. The sale of the properties was completed at an underlying
property value of SEK 167.4 million. The cooperative conversion was initiated by the earlier owner Byggmästare Anders J Ahlström Fastighets AB (publ) ("AJA"). It was completed by Hembla according to the assignment agreement entered in connection with the acquisition from AJA in April 2018.
Statement from the CEO
On 31 October, the company assumed its new name Hembla thus embarking on a new chapter of its history. The immediate change was a new visual identity and the brand platform was also refined with a new vision statement; create vibrant communities where the tenant’s needs are in focus. Our definition of a vibrant community is one where families and individuals want to live, create memories, socially interact with others and where they can feel safe and secure. The new vision does not represent a major strategy shift, but rather clarifies our priorities and is a guiding star for the organization. We want to put our tenants first in everything we do.
Developing our organisation
We have been working hard to better organize ourselves in line with our promise of placing our tenants first. This work has been going on since the beginning of the year and we have made great progress. Our way of working is now more than ever oriented towards putting our tenants first. We have further strengthened our central administration in order to better support and further develop our property management, property development and renovation and new construction business areas. This work will continue throughout this year and we believe we will be able to report on our progress every quarter going forward.
Organisation update – Improved customer service
Our tenants first approach is also evident in the improvements we’ve made to our service organisation during the fourth quarter. In December, we opened a customer service centre in a central location in Stockholm. The intention was to evaluate if a centralized service function would have a positive impact on the availability of service to our tenants. It proved to be a success from the start and it will be developed further during the coming year.
What our tenants think of us matters
During the annual distribution of the tenant survey at the end of 2018, all employees at Hembla participated knocking on our tenants’ doors. Some 20,000 tenants received the questionnaire personally delivered by a Hembla employee, with the opportunity to provide direct feedback to us.
Value increase of our assets
Every quarter we try to highlight how our business model creates value for our tenants through our renovation model and our social commitment. Our business model also increases the valueof our assets directly. During Q4 most of the value increase came from an uplift in our NOI, predominantly stemming from the increased rent from renovated apartments. Through the full year 2018 Hembla has had a significant increase in the value coming from both yield compression and an uplift of our NOI. We believe that both of these factors stem from our business model, i.e. NOI uplift through higher income from renovated apartments and lower expenses based on our CapEx program. The yield compression is mainly market driven, based on strong investor interest in our segment, but also comes from our business model where we continuously improve our neighbourhoods and thereby increasing their attractiveness.
Acquisition of new apartments in Södertälje
On 1 October 2018 we closed the acquisition of two assets in Södertälje with a total of 52 apartments as announced during Q3. The seller was Fastighets AB L E Lundberg and the assets were a great compliment to our existing assets in Södertälje. Södertälje is a municipality and a city with great market fundamentals with a well-developed public transportation system towards central Stockholm and other parts of the country.
Social sustainability and cooperation
Social sustainability is a core element of our strategy. We have continued and strengthened our efforts to improve the social situation and conditions in our neighbourhoods. In one of our areas, we opened a permanent art exhibition and invited all tenants to its opening. The aim is not only to improve the physical environment, but also to provide especially young people in the area with cultural inspiration. Another example is our involvement in a major project together with the ice hockey club DIF, providing sport activities to some 1,000 children every week. This has been a successful way to create meaningful activities and engage children in our neighbourhoods. We have also continued to cooperate with municipalities and other property owners through property owner associations and BID (Business improvement Districts) projects. In several areas, we conducted inspection walks together with politicians and other property owners to decide on improvement potential around our properties and neighbourhoods close by. We believe this type of work is favourable for our tenants and will also have a positive effect on our financials long term.
Stockholm 18 February 2019
Svein Erik Lilleland
CEO, Hembla
This information is information that Hembla 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. CET on 18 February, 2019.
About Hembla
Hembla 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 31,091 million on 31 December 2018. The total rental value amounted to SEK 1,903 million annually on 31 December 2018. The economic occupancy rate is high – vacancies are virtually non-existent. Hembla is listed on Nasdaq Stockholm.