High investments generates record results

D. Carnegie & Co AB (publ) reports record results for 2016 driven by the high investment pace. The profit before tax amounted to SEK 2,072 million - up 46 percent compared to last year. Also income from property management was considerably higher, SEK 269 million, compared to SEK 186 million the previous year. This is primarily driven by increased revenue and lowered costs due the large value-adding investments.

Earnings per share after tax were SEK 22.20 (16.10). The adjusted equity (EPRA NAV) increased 39 per cent compared to the same quarter 2015 and amounted to SEK 101.96 per share (73.50) as of 31 December 2016.

1 January – 31 December 2016

• Rental income increased to SEK 1,284 m (1,217)
• Net operating income of SEK 630 m (554)
• Income from property management increased to SEK 269 m (186)
• Changes in the value of investment properties of SEK 1,938 m (1,307), an increase of 12.9 per cent
• Changes in the value of financial instruments of SEK -165 m (-11)
• Profit before tax increased to SEK 2,072 m (1,422)
• Profit after tax increased to SEK 1,678 m (1,139)
• Earnings per share increased to SEK 22.20 (16.10) before dilution and increased to SEK 21.93 (13.50) after dilution

Fourth quarter 2016

• Rental income increased to SEK 332 m (317)
• Net operating income of SEK 154 m (133)
• Income from property management increased to SEK 52 m (48)
• Changes in the value of investment properties of SEK 802 m (867), an increase of 5.0 per cent
• Changes in the value of financial instruments of SEK -12 m (39)
• Profit before tax amounted to SEK 872 m (953)
• Profit after tax amounted to SEK 680 m (734)
• Earnings per share amounted to SEK 8.79 (10.37) before dilution and amounted to SEK 8.64 (8.52) after dilution

Significant events during the fourth quarter

• An extraordinary general meeting on 14 October 2016 has resolved to replace the board members Ranny Davidoff and Terje Nesbakken with James Seppala and Svein Erik Lilleland and to replace Knut Pousette with James Seppala as chairman of the board
• Christian Tapper has been appointed Head of Property Refurbishments with responsibility for D. Carnegie & Co’s refurbishment process
• Vega Holdco S.à.r.l., an entity wholly owned by real estate funds advised by affiliates of The Blackstone Group L.P., has on 7 December 2016 completed a mandatory tender offer in cash amounting to SEK 100 per share to the shareholders and warrant holders in D. Carnegie & Co which was announced on 17 October 2016. After completing the tender offer Vega Holdco S.à.r.l. owns 46 per cent of the shares and controls 65 per cent of the votes in D. Carnegie & Co

Significant events after the fourth quarter

• D. Carnegie & Co has entered into an agreement with Fastighets AB Balder (publ) to acquire residential property portfolios in Arboga, Köping and Tranås. The property portfolios comprises 42 properties and 1,681 apartments. The property value is SEK 1,420 million and the agreed share purchase price amounts to SEK 1,040 million. The transaction is a share deal with closing scheduled for May 2017

Statement from the CEO 

In 2016 we have continued our strong growth through acquisitions and even more so through value creating investments in existing properties. At the same time, we have further strengthened our operational capabilities and have been able to reduce costs meaningfully, due to more efficient processes. During the year, D. Carnegie & Co invested SEK one billion and seen our properties increase almost three billion in value. Combined with a 45 per cent increase in earnings from property management the company has achieved another year of record net income.

The company has reached its target of a total return of at least 10 per cent, which led to an increase in the adjusted shareholders’ equity by 39 per cent during the year, to 101.96 per share. Earning capacity has during 2016 increased by 29 per cent to SEK 396 million on a rolling 12-month basis.

For the full year 2016 we refurbished 1,253 apartments, well above our target of 1,000. We also continued investing at a rapid pace in façades, heating facilities, laundry rooms, etc. which increases our rental income and reduces the cost of repairs and maintenance. The refurbishments in 2016 led to an increase in rental income of 4.7 per cent for comparable properties, 3.8 per cent above general market increases, while operating costs are down 3.5 per cent. This drove an increase in net operating profit in excess of 13 per cent for comparable properties, explaining the majority of the value increase.

Improvement in earnings along with a strong value growth, accomplished mainly through our upgrades of our properties, is clearly visible in the income statement. The profit for the quarter before taxes was SEK 872 million  - for the entire year SEK 2,072 million, as compared with SEK 1,422 million for 2015, an increase of 46 per cent. Earnings per share after taxes amounted to SEK 22.20 as compared with SEK 16.10 for 2015.

We are seeking to create better homes in every way and have thus spent time and money on creating a safe and attractive residential environment for our tenants in other ways than purely through refurbishments. The company has employed staff with the sole purpose of making our tenants comfortable and secure, strolling the areas in evenings and nights. We have supported social projects to include more immigrants in the society and sponsored sport clubs for local initiatives for kids and youngsters. We have also increased our monitoring of our tenants’ view of how we perform in making them satisfied.  All this has also created a sense of purpose among our staff, which has increased work satisfaction and in all likelihood enhanced performance. 

We will continue on our chosen path this year growing in the Stockholm region, renovating our portfolio, and continue exploring the development of building rights.

Stockholm, 24 February 2017

Ulf Nilsson

CEO, D. Carnegie & Co

This information is information that D. Carnegie & Co AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact person set out above, at 7 a.m. CET on 24 February 2016. 

About D. Carnegie & Co

D. Carnegie & Co is a property company focusing on residential properties in the Greater Stockholm region and other growth areas. The company’s business concept is to own property portfolios slated for a gradual renovation of apartments in conjunction with the natural turnover of tenants. This can take place quickly and cost-efficiently thanks to extensive experience from the company's renovation method which, among other things, means that no evacuation needs to take place. In addition to this, the company creates value through the development of building rights in existing portfolios. The market value of the company’s properties amounted to SEK16,998 million on 31 December 2016. The total rental value amounted to SEK 1,379 million annually on 31 December 2016. The economic occupancy rate is high – vacancies are virtually non-existent. D. Carnegie & Co is listed on Nasdaq Stockholm.

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