Significant housing shortage in a cautious market
Summary July – September, 2018
- Net sales for projects run entirely by SSM totaled 52.4 MSEK (104.1).
- Operating profit was 2.9 MSEK (124.9) and the operating margin was 5.5% (120.0). Operating profit for the third quarter 2017 was impacted by 112.6 MSEK as a result of the JV initiated with Partners Group.
- Cash flow from operating activities was -29.3 MSEK (-24.9).
- 24 pre-purchase agreements signed during the quarter.
- All 255 apartments in Turbinhallen and The Tube sold and occupied.
- Head of Business Development Erik Lemaitre joined Group Management Team.
- Housing concept enhanced by Urban Score index that indicates strategic direction and facilitates informed housing choices for home seekers.
Summary January – September 2018
- Net sales for projects run entirely by SSM totaled 221.1 MSEK (408.9).
- Operating profit was 12.2 MSEK (165.9) and the operating margin was 5.5% (40.6). Operating profit for Q3 2017 was impacted by 112.6 MSEK as a result of the JV initiated with Partners Group.
- Cash flow from operating activities was -0.5 MSEK (-257.1).
- 63 pre-purchase agreements signed during the period.
- Production carried out entirely by SSM started for 270 rental units at Täby Turf and Sollentuna Quarters.
- Change in terms and conditions for bonds to enable production starts for projects with low sales rates provided total number of apartments in production in the company amounts to at least 60%.
- An early consultation for Tellus Towers took place during the spring. A decision by the City Planning Administration from the early consultation is expected by the end of 2018 after which an ordinary consultation will take place.
Significant events after the reporting date
- Sale of Täby Turf rental project (176 units) to property company Willhem for 473.0 MSEK.
- After investigating preconditions, SSM will not complete the acquisition of five industrial properties corresponding to 1,200 homes in the Greater Stockholm area from Keyser Fastigheter.
Mattias Roos, President & CEO, comments on the quarter:
“The housing market is still cautious, although some stabilization has taken place. Prospective buyers attended open house events for our projects, although sales processes are longer. We can see that the ages and incomes of our buyers have risen, which is natural given the increased financial requirements for buying real estate. By the end of the period, we had signed 63 pre-purchase agreements during the year, of which 24 were signed during the third quarter. The sales rate for homes in production was 96.4 percent at the end of the quarter.
Operating income decreased during the quarter, reflecting the lower level of activity in the company’s production at the moment. Profits were recognized primarily from the West Side Solna and Metronomen projects. Operating income during the corresponding period last year was significantly impacted by the joint venture with Partners Group that was initiated during the third quarter 2017. SSM is working to start production in more projects, which will be facilitated by changes made to the terms and conditions for bonds that will provide increased flexibility going forward. Profits from Täby Turf will be recognized from Q1 2019. Cash flow from operations for the year improved during the first nine months of the year, mainly as a result of the occupation of Turbinhallen and The Tube.
The housing market in the Greater Stockholm area is a paradox: There is a widespread housing shortage and low utilization of existing capacity while at the same time, there is a large supply of homes for sale. Amortization requirements, interest calculations at banks, capital gains taxes and a general shortage of rental apartments are clearly both locking in and locking out potential buyers. It is my opinion that with our concept of building affordable housing with a focus on public transport, everyday services, community and health, SSM is well positioned given the ongoing calibration of the market. This is also confirmed by the fact that we completed 521 cooperative apartments during the year, all of which have been sold and are now occupied.”
The information in this press release is such, which SSM Holding AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out below, at 07.30 CET on November 14, 2018.
For more information, please contact:
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About SSM Holding AB (publ)
SSM produces functionally smart and affordable homes with attractive common areas, close to public transport and the city center for the company’s target group — the urbanites of tomorrow. The company envisions a housing market that is accessible to as many people as possible and aspires to produce 60 percent cooperative apartments, 30 percent rental units and 10 percent student housing. SSM is the leading property developer in its niche within the Greater Stockholm area and in September 2018, the company has approximately 6,500 building permits in its portfolio. SSM was listed on Nasdaq Stockholm (Mid-cap) April 6, 2017 www.ssmlivinggroup.se