Interim report January - September 2016

STRONG PLATFORM FOR CONTINUED GROWTH

THE QUARTER - JULY-SEPTEMBER 2016

• Rental income amounted to MSEK 666 (615)

• Profit from property management totaled MSEK 582 (345), corresponding to SEK 3.52 per ordinary share (2.35)

• Profit after tax amounted to MSEK 1,389 (587), corresponding to SEK 8.59 per ordinary share (4.13)

• Cash flow from operating activities was MSEK 398 (291), corresponding to SEK 2.35 per ordinary share (1.96)

INTERIM PERIOD - JANUARY-SEPTEMBER 2016

• Rental income amounted to MSEK 1,958 (1,819) 

• Profit from property management totaled MSEK 1,275 (958), corresponding to SEK 8.23 per ordinary share (6.48)  

• Profit after tax amounted to MSEK 2,746 (1,766), corresponding to SEK 19.40 per ordinary share (12.34)  

• Recognized property value of SEK 33.0 billion (28.4) pertains to 418 (369) directly owned properties  

• Net asset value (EPRA NAV) per ordinary share was SEK 88.40 (71.61)  

• Cash flow from operating activities was MSEK 812 (824), corresponding to SEK 5.03 per ordinary share (5.50)

SIGNIFICANT EVENT DURING AND AFTER THE QUARTER

• In total, Hemfosa took possession of four properties in the care services and school segments during the quarter at an underlying property value of approximately MSEK 390.  

• Streamlining of the property portfolio continued and Hemfosa vacated three units in the Other properties area during the quarter at an underlying property value of MSEK 126.  

• During the quarter, Hemfosa established a direct presence in Finland by employing Pasi Nieminen as Head of Property Management with responsibility for the Finnish property portfolio.  

• After the end of the quarter, Hemfosa acquired and took possession of two properties in Espoo, Finland, with the police authority and the office of the public prosecutor as the largest tenants. The property value amounted to approximately MSEK 420.   

• Joacim Sjöberg took office as Deputy CEO on October 3.

COMMENTS FROM THE CEO

Hemfosa reports a very strong third quarter; both profit from property management and comprehensive income improved considerably and earnings increased. At the same time, we are continuing to conduct long-term and structured work to strengthen our position as specialists in community service properties and we have acquired community service properties for more than SEK 2.2 billion to date this year. We are financially strong and both equipped and ready to capitalize on attractive acquisition opportunities. 

A CHALLENGING ACQUISITION MARKET
We know what we are looking for and, as always, we are selective in our acquisitions. In the challenging Swedish property market in which Hemfosa is currently active, our assessment is that pricing on the supply side is high. As a result, we opted to abstain from a number of transactions during the quarter when we concluded that the price tag was too high. In fact, we have never abstained from as many transactions due to pricing as we have this year. This is particularly apparent in Sweden, with a highly liquid market and with many new players, not least financial investors. We are beginning to see a similar trend in the Norwegian market, while we view the competitive situation for community service properties as somewhat less intensive in Finland. Since Hemfosa started to focus on community service properties at an early stage, we have relatively quickly accumulated knowledge that we believe will give us strength to decide correctly whether to buy or pass. Everyone who knows Hemfosa is aware that we are keen on implementing interesting acquisitions but, in the final analysis, it is always about ensuring that we can add value for the shareholders.

Hemfosa has a long-term strategy and an alert organization. We continue to methodically analyze all business opportunities of interest and the pace is high. We’re building close partnerships with established community players that have operations with which we can grow, such as large school and care companies, municipalities and county councils. We’re identifying complex and unconventional transactions, such as portfolios comprising a variety of property types, in which our experience and financial capacity gives us strength. Viewed as a whole, this means that we have a solid platform for continued growth.

At the same time, we’re continuing to manage and add value to Hemfosa’s existing property portfolio, with a property value of approximately SEK 33 billion at period-end. During the quarter, our investment activity was high. This autumn, for example, we are refurbishing previously vacant floor space for new tenants in Mölndal and for hotel operations, among other activities, in Haninge, where we are also working to establish care service operaions in parts of the property.

A STRONGER ORGANIZATION
Hemfosa is continuing to build an organization with skilled employees adapted to a growing operation. We announced during the quarter that we as of October 3rd are strengthening Group Management with Joacim Sjöberg as Deputy CEO. We have also strengthened other important functions in the company, in both financing and property management and, in Finland, Pasi Nieminen has been employed as Head of Property Management.

Following a relatively calm quarter in terms of transactions, we now want to proceed by getting more capital to work. With strong financial performance figures and good access to capital, Hemfosa has all the prerequisites to take the next step in its growth in community service properties. We believe that attractive business opportunities will arise, and then we will be prepared – financially, organizationally and mentally.

Jens Engwall, CEO

For further information, please contact:

Jens Engwall, CEO, jens.engwall@hemfosa.se, mobile +46 70 690 65 50

Karin Osslind, CFO, karin.osslind@hemfosa.se, mobile +46 70 794 93 37

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