K-Fast Holding AB: Interim report January-March 2020

Financial ratios for the period 1 January - 31 March 2020 (corresponding period in the preceding year)

• Rental income: SEK 47.8 million (33.0)
• Profit from property management: SEK 15.5 million (11.1)
• Profit after tax for the period: SEK 92.3 million (43.4)
• Net investments in investment properties: SEK 509.2 million (137.5)
• Investment properties: SEK 5,039.5 million (3,203.0)
• Long-term net asset value (NAV): SEK 2,668.2 million (1,275.1)
• Number of apartments under management: 1,789 (1,240)
• Number of apartments under construction: 963 (649)
• Number of apartments under project development: 2,692 (679)
• Interest coverage ratio, multiple: 2.4 (2.6)
• Equity/assets ratio: 40.5% (29.1)
• Loan-to-value ratio: 48.2% (60.9)
• Profit from property management: SEK 0.46 per share (0.44)
• Growth in profit from property management per share: 3.1% (25.9)
• Long-term net asset value (NAV) per share: SEK 78.74 (51.01)
• Growth in long-term net asset value (NAV) per share: 5.0% (5.1)
• Earnings per share*: SEK 2.72 (1.73)
  * Since the number of shares has not been diluted, the earnings per share apply both before and after dilution.

A Message from the CEO

The uncertainty about the rapid spread of the coronavirus has not left anyone unaffected, and its socioeconomic impact is hard to gauge, and we can only hope that this uninvited guest leaves as soon as possible. K-Fastigheter’s business model is based on an infinite investment horizon, which makes me feel particularly secure in the most challenging times.

K-Fastigheter was founded on 1 December 2010, in the midst of the financial crisis and only two years after Lehman Brothers crashed. That crisis played a part in creating the foundations of a company with the ambition of ensuring perpetual life. K-Fastigheter now stands stable in the current storm. A clear sign that our business model is working well is that we reached a key milestone in the first quarter of 2020. K-Fastigheter now has the right conditions in place to achieve 5,000 apartments under management before the end of 2023. As of 31 March 2020, K-Fastigheter had 1,789 apartments under management, 963 apartments in production for proprietary management, 2,692 apartments in ongoing project development and 121 apartments where transfer will take place gradually during 2020. In total, our property and project portfolio totaled 5,565 apartments.

We’ve already met our second operational goal for some time. Of total rental value at the end of the first quarter, 84 percent related to housing units, compared to the operational target of at least 80 percent. At the end of the first quarter, the Group had a net loan-to-value ratio of 48.2 percent, cash and cash equivalents of SEK 460.0 million and was financed with traditional bank borrowing only. K-Fastigheter retains the previously communicated operational and financial targets. In fact, we accelerated the roll-out of planned initiatives during the quarter, and completed a total of six new transactions with building rights for a potential 1,600 apartments.

We also expanded our operations in the Öresund region through the acquisition of building rights in Vallensbæk, south of Copenhagen, expanded our market through an acquisition in Borås, and started a very promising strategic partnership with BoKlok in April, that we are very hopeful can generate significant business opportunities looking ahead. In the first quarter of 2020, we also started construction of 263 apartments in two projects in Gothenburg and Höganäs, with a future rental value of some SEK 35.8 million. At the end of the first quarter, we had a total of 963 apartments in production in the Construction business area, a new record for K-Fastigheter.

The Project Development business area also reached a new high of SEK 94.5 million in value growth in ongoing construction projects in a single quarter. Business area profit before tax corresponded to 78 percent of the Group’s total profit before tax. I want to really emphasize that we are so much more than just a property company.

Our business model creates the right conditions for generating internally driven growth through the development and production of high quality HOMES under long-term management. As mentioned above, we achieved record profit in the Project Development business area, with projects that are now creating employment and growth in our Construction business area, which in turn generates growth and profit in the Property Management business area through new and attractive properties with solid cash flows. Our 963 apartments in ongoing construction have a total rental value of SEK 112.7 million on completion. We have also set a new record in our project portfolio, which included some 2,700 building rights at the end of the quarter.

Profit from property management in the first quarter, which is seasonally weaker, increased by 40 percent year-on-year. Rental income increased by as much as 45 percent and rental values totaled SEK 207.9 million at the end of the period, up 52 percent year-on-year. This indicates positive growth in profit from property management in future.

Looking ahead, it is important that we support our tenants, employees and society at large. We maintain a dialog with tenants, as well as private individuals and businesses, that can demonstrate that their finances or operations have been adversely affected by covid-19. The objective is to arrive at sustainable solutions, which may include providing liquidity relief.

In order to prevent the virus from spreading and increase the safety of our tenants and staff, we have also introduced extensive precautionary and protective measures in our workplaces and properties. In this context, I would like to thank all our employees and partners for your efforts. We have succeeded in achieving a great deal without reducing productivity, and all our construction projects are proceeding according to plan. We have also secured deliveries of all key components for our production for the remainder of the year.

To conclude, in the period the K-Fastigheter share fell by 0.6 percent while the OMX Stockholm MidCap index decreased by 26.6 percent and the OMX Stockholm Real Estate index fell by 25.1 percent. It is pleasing to conclude that interest in the share from institutional investors has increased further since the IPO in November 2019. All major institutional owners increased their holdings in the quarter, despite a turbulent stock market. I am extremely grateful for the confidence all our shareholders have shown in us, and I, and all of K-Fastigheter’s employees, will do everything we can to live up to this confidence.

Jacob Karlsson, May 2020

A complete Interim report January - March 2020 is attached and also published on the Group's website, under the heading Financial reports.
 

For further information, please contact:
Jacob Karlsson, CEO and Founder, K-Fast Holding AB, e-mail: jacob.karlsson@k-fastigheter.se, telephone: +46 738 219 626
Martin Larsson, Deputy CEO/CFO, e-mail: martin.larsson@k-fastigheter.se, telephone: +46 703 533 160
Anders Antonsson, Head of Investor Relations, e-mail: anders.antonsson@k-fastigheter.se, telephone: +46 709 994 970

This information is such that K-Fast Holding AB is obliged to disclose in accordance with the EU’s Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 a.m. CEST on 5 May 2020.

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In a recorded presentation, K-Fastigheter’s President and CEO, Jacob Karlsson, and CFO, Martin Larsson, are commenting on the Group’s Interim report January - March 2020. The presentation is held in Swedish with presentation materials available in English. Link to the presentation: www.k-fastigheter.se/en/investors/presentations

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