K-Fast Holding AB: Interim report January–March 2021

A Message from the CEO

New business area and rapid operational target

We started the year by maintaining the high pace and are optimistic that the worst socioeconomic consequences of the pandemic will soon be behind us. In the first quarter, we welcomed our new colleagues in Finja Prefab to the family, which constitutes a significant part of the new Prefab business area. Throughout K-Fastigheter’s history I have consistently said that K-Fastigheter is so much more than a traditional property company. We are now resting on a stable foundation of four cornerstones that each generate positive cash flow and profit, and that together create a unique business model and add value to the Group. As Kaj Grönvall, CEO of Finja Prefab, put it so well: “We own the process from plot to finished home”. It is not until you own the entire process that financial and environmental sustainability can be secured throughout the chain.We are moving into 2021 with a good gut feeling, and are rapidly moving towards our new target of 1,300 construction starts annually before the end of 2023, which feels realistic and within reach. We will reach the previous target of 1,000 construction starts by the end of 2023 in the current financial year.

In the first three months of the year, net asset value per share grew by 7 percent. Rental income and profit from property management increased by 24 percent and 26 percent respectively year-on-year. In addition, letting in the Folkparken project in Växjö gathered pace, where we had previously reported high initial vacancies on completion. It now appears that the vacancies will be filled just after the end of the first half-year, provided the current net letting rate is maintained. The financial letting ratio at the end of the quarter was 93 percent, against 91 percent at year end. The market value of our total property portfolio increased by 47 percent year-on-year, and the number of apartments under management increased by 27 percent.

At first glance, the composition of the property portfolio could suggest that the proportion of commercial space has increased, which would be misleading. Because of the good supply of building rights over the coming years, and in accordance with our previously communicated strategy, we have chosen to acquire more building rights without detailed development plans with the intention of producing customized plans for our concept buildings. Because we do not want to tie up capital in an asset class that does not generate positive cash flow, we have increasingly acquired development properties that generate cash flow during the planning approval process, where the long-term aim is to demolish the buildings and develop building rights for housing and construct rental apartments.

In the Project Development and Construction business areas, we started construction of 296 apartments in the period, with 1,567 apartments in production at the end of the period with a future rental value of SEK 202 million and a market value in excess of SEK 4,300 million. The high volume of properties, which are being constructed at a total acquisition cost in relation to market value of 72 percent, generates positive unrealized values because 80 percent of the difference is recognized gradually in relation to costs paid. The 1,567 apartments in ongoing production create entirely different development prospects than we have been used to in previous financial years. There were 963 apartments in ongoing production in the corresponding quarter 2020, an increase of 63 percent.

The Project Development and Construction business areas are well coordinated, Project Development is producing a steady stream of building rights with planning permission that ensures continuous growth in the Construction business area, which is managed in a structured and controlled manner from Copenhagen in the south to Gävle in the north. The first quarter 2021 was the Project Development and Construction business areas’ single most profitable quarter to date. In the quarter, we also started construction of our second internal project in the Copenhagen region, 148 Lateral Low-Rise apartments in Greve.

The high pace continued for building rights, where our total portfolio of building rights where construction has not yet started totaled 5,281 apartments at the end of the period, and where we acquired building rights with a gross total area of just over 32,000 sqm GFA Järfälla Barkarbystaden, after the end of the quarter. We will gain preliminary access in December this year, which sharpens our focus on region East with the spotlight on Mälardalen.

The Interim Report includes our Prefab business area for the first time. Prefab is starting the new year with orders that ensure employment at 2019 levels, before the outbreak of the pandemic. The acquisition of Prefab is part of the strategy to secure infrastructure for future expansion and to own the entire production process from idea to finished Home. During a normal year like the current one, Prefab delivers some 2,000 apartments to external customers. The business area is now significantly expanding production. In addition to external market deliveries, the aim is to also deliver our internal volumes, which would imply growth of over 50 percent. As part of our strategy of increasing capacity, we took possession of Kilen Prefab in Strängnäs after the end of the quarter. The process of integrating K-Fastigheter’s factories for lightweight external wall units in Prefab’s operations is also underway. In future, we will be able to deliver heavy concrete frames, lightweight wood frames and a hybrid of heavy concrete with lightweight external wall units in wood. This is the perfect mix for the construction of all K-Fastigheter’s concept buildings.

Prefab is rapidly progressing towards becoming a complete marketleading supplier of construction frames. K-Fastigheter already has 463 internal concept apartments in Prefab’s production and order books, including our two Danish projects. It is particularly pleasing that we also satisfy the Danish requirements for concrete frames, which differ from the Swedish to some extent. Given the full order books, 2021 has come off to a good start.To conclude, after the end of the quarter we signed an agreement relating to the acquisition of 25 percent of Mjöbäcks Entreprenad Aktiebolag, a very well run company which we have considered family for some time, particularly given its relatively large holding of K-Fast shares. Mjöbäcks started operations in the early 1970s and constructs just over 300 housing units annually in single the form of family houses and tenant-owner apartments, corresponding to a total of some 35,000 square meters of residential floor space each year. In addition to being a good investment in a great company, I am convinced that we will generate multiple synergies, particularly through acquisitions and development of major land parcels with mixed title formats.

Jacob Karlsson, May 2021



A complete Interim report January-March 20201 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: +46 708 730 900

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 persons set out above, at 8:00 a.m. CEST on 7 May 2021.

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In a recorded presentation, to be published at 8:30 am CEST today, 7 May 2021, K-Fastigheter’s President and CEO, Jacob Karlsson, and CFO, Martin Larsson, are commenting on the Group’s Interim report January-March 2021. The presentation is held in Swedish. Link to the presentation: www.k-fastigheter.com/en/investors/presentations. Questions may be addressed in writing to ir@k-fastigheter.se with answers being compiled on an ongoing basis during the day and being published on www.k-fastigheter.com/en.

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