Hemfosa Fastigheter evaluates the conditions for splitting the Group into two listed companies
The Board of Directors of Hemfosa Fastigheter has today decided to evaluate the conditions for splitting the Group into two listed companies. One company that will focus on community service properties and one transaction-based, opportunistic company. The purpose is to create higher shareholder value by further streamlining the operations.
Since it was founded in 2009, Hemfosa has generated a significant property portfolio with a growing share of community service properties with stable long-term cash flows. Growth opportunities in the community service property sector are deemed to remain favorable, primarily in new builds and project development in properties for community service operations. In addition, Hemfosa has a strong portfolio of attractive commercial properties that generate high earnings and has a platform for expansion based on opportunistic acquisitions in a changeable property market, particularly for a player with experience of managing complex and challenging transactions and situations.
For this reason, the Board and management have analyzed potential strategic alternatives for the continued development of the company and as part of this work the Board tasked management with evaluating the conditions for splitting Hemfosa into two listed companies.
“Hemfosa has been highly successful since it was listed in 2014. We have achieved the targets that we set then and the company has reached a size and structure that means it is now a natural time, and it is feasible, to analyze more strategic alternatives for continued value creation. The Board sees many potential advantages of splitting Hemfosa into two specialized companies for leveraging the potential of various parts of the operations, improving efficiency and drive in the organizations and creating the highest possible value for shareholders. Accordingly, we have decided to carry out an in-depth evaluation of the conditions for this scenario,” says Bengt Kjell, Chairman of the Board of Hemfosa.
“A specialized community service property company means that we can enhance competitiveness and strengthen the conditions for growth, for example, by more clearly investing in project development, specialist expertise for community service properties such as schools, offices, care services and criminal services properties, and strong customer relationships. We also believe that a split will allow us to better leverage the potential of the remaining property portfolio. A separate transaction-based company will enhance the flexibility and conditions for leveraging opportunities in a variable and changeable market,” says Jens Engwall, CEO of Hemfosa.
The Board intends to provide more information to shareholders during the first quarter of 2018.
Community service properties* in Hemfosa’s portfolio had a value of MSEK 24,573 on June 30, 2017, corresponding to approximately 64 percent of the total property value. The 307 community service properties had on the same date an earnings capacity with rental income of MSEK 1,891 and net operating income of MSEK 1,392. The properties encompass premises for schools, offices for public authorities and municipalities, the judicial system such as the police and courts, as well as health and care services.
On June 30, 2017, Hemfosa’s other property portfolio comprised 152 commercial properties with office, logistics and warehouse premises, plus a small number of other types of properties, such as retail properties. The value of these properties totaled MSEK 13,580 at the end of the half year, with an earnings capacity with rental income of MSEK 1,108 and net operating income of MSEK 771.
* Hemfosa’s definition of community service properties is properties with, directly or indirectly, publicly financed tenants that account for at least 70 percent of the rental income.
For further information, please contact:
Jens Engwall, CEO, jens.engwall@hemfosa.se, mobile +46 70 690 65 50, office +46 8 448 04 80
Bengt Kjell, Chairman of the Board, mobile +46 070 594 5398 98
About Hemfosa Fastigheter
Hemfosa is a Swedish property company focused on community service properties in the Nordic region, with the Swedish state and municipalities as its largest tenants. This provides stable revenue flows and a healthy yield. Hemfosa also aims to create value through active participation in the transaction market. At June 30, 2017, Hemfosa owned properties with a total property value of SEK 38.2 billion. The company’s ordinary share has been listed since March 2014, and the preference share since December 2014, both on Nasdaq Stockholm. Read more at www.hemfosa.se
Tags: