YEAR-END REPORT JANUARY – DECEMBER 2017
• Rental income amounted to MSEK 792 (684) in the quarter and MSEK 3,134 (2,642) for the full year
• Profit from property management excluding the share in profit from jointly owned companies amounted to MSEK 375 (319) in the quarter and MSEK 1,619 (1,270) for the full year. Profit from property management including the share in profit from jointly owned companies amounted to MSEK 525 (537) in the quarter, corresponding to SEK 3.15 per ordinary share (3.23). The lower profit from property management was due to the change in value of jointly owned properties being higher in 2016. Full-year profit from property management amounted to MSEK 2,186 (1,812), corresponding to SEK 13.16 per ordinary share (11.49)
• Profit after tax in the quarter totaled MSEK 528 (837), corresponding to SEK 3.17 per ordinary share before dilution (5.02). The lower profit in 2017 was due to the change in value of jointly owned properties being higher in 2016 combined with the preceding year’s changed assessment of loss carryforwards. Full-year profit after tax amounted to MSEK 3,163 (3,583), corresponding to SEK 19.22 per ordinary share before dilution (23.25)
Significant events during and after the
• In October, possession was taken of ten centrally located community service properties acquired in Halmstad for an underlying property value of MSEK 1,066
• In November, the Board of Directors of Hemfosa Fastigheter decided to evaluate the conditions for demerging the Group into two listed companies
• At the end of the year, Hemfosa signed an eight-year lease for about 20,000 square meters of previously vacant floor space in the Arendal 1:17 logistics property in Gothenburg. Occupancy will occur on March 1, 2018
• Following the close of the quarter, the specialist hospital and local medical center in Gardermoen, Norway, were completed and the tenants have moved in
• The Board proposes a dividend of SEK 4.80 per ordinary share with quarterly payment of SEK 1.20 per share, as well as a dividend of SEK 10.00 per preference share with quarterly payment of SEK 2.50 per share
COMMENTS FROM THE CEO
Stronger position and new initiatives
There is always something going on at Hemfosa. During 2017, we continued to grow sharply through acquisitions of just over SEK 4 billion and with exciting investments and new build project in primarily community service properties. The fourth quarter was stable with increased earnings capacity and a high rate of maintenance. Although we did not complete any major transactions during the quarter, work to evaluate acquisitions of various sizes is continuously under way. In November, we took an important step towards safeguarding the best possible value for Hemfosa’s shareholder, in the future too, by deciding to evaluate the possibility of a demerger of the Group into two listed companies.
Following another active year of acquisitions, we now have a property portfolio worth a total of SEK 41 billion. Community service properties valued at just over SEK 26 billion, which account for 64 percent of the portfolio, generate stable cash flows in Sweden, Norway and Finland. We also have an attractive holding of commercial properties primarily in high-growth regions, valued at some SEK 15 billion. Hemfosa continues to grow with a low financial risk – at year-end, the equity/assets ratio was 40.4 percent. In the fourth quarter, we took possession of properties acquired at a value of about SEK 1.1 billion and increased profit from property management excluding the share in profit from jointly owned companies with MSEK 56 compared to previous year. We also report a continuing stable increase in earnings capacity during each quarter of the year.
Closer cooperation with tenants of community service properties
Hemfosa’s main focus is to be best at offering community service properties to the most important services in society – from schools and preschools, healthcare facilities and nursing homes, police stations and courts of law to public authorities. During the year, we made further investments in remodeling and new builds, which we regard as strategically important for additionally strengthening Hemfosa’s position in community service properties. There is a limited supply of available acquisition objects at what we consider reasonable prices, at the same time as there is considerable demand in many parts of the country for new properties for use, for example, as schools and nursing homes. In this context, we have utilized our experience, size and financial capacity to take a more distinct grip of the market by such means as collaborations with municipalities, building contractors and service operators. A typical example is a collaboration with Emrahus, which assembles modern, innovative passive buildings for LSS (support and service for the disabled) homes in Sweden and with which we reached agreements in 2017 to acquire properties when they are ready for occupancy and leased. This entailed the acquisition of two newly produced LSS homes from Emrahus during the year and a further two to date in 2018. Our first really major investment in a new build project is the specialist hospital and local medical center at Gardermoen in Norway, which we implemented with the property developer Aspelin Ramm in a joint venture. Equipment is now being installed to enable the start of advanced cardiovascular treatment in the newly completed property, which is planned for sustainability in every detail – from construction and materials selection to function and maintenance. We are delighted over and proud of this project which, together with the project team, we completed according to the established timetable, within budget and with a clean bill of health at final inspection. This gives us the confidence, experience and credibility to implement more advanced, large-scale projects involving community service properties moving forward. During the first quarter of 2018, we are acquiring the remainder of the project and will thus become the sole owner of the properties.
Evaluating the conditions for a demerger of Hemfosa
In November, we initiated a process aimed at evaluating what we believe is a wise next step in Hemfosa’s development; a demerger of the Group into two listed companies. With a streamlined community service property company, we will be able to establish an even stronger position, in part by focusing more distinctly on project development and specialist know-how in the various operations conducted in our community service properties. Meanwhile, we have an excellent portfolio of other properties and transaction competencies that will have better prospects to develop their full potential on a standalone basis. We are now analyzing the opportunities and formats for such a potential demerger and this work is proceeding as planned. The Board intends to return with more information to shareholders in connection with the Annual General Meeting and the interim report for the first quarter 2018. Should any decision be made to propose a distribution of the new company, the Board will convene an extraordinary shareholders’ meeting. I look forward to the next step in the evaluation of a demerger into two new companies with roots in Hemfosa’s excellent corporate culture and entrepreneurship. Until then, we will continue to develop our partnerships with tenants and evaluate growth opportunities in an environment where we see good access to debt, reasonably stable property prices and demand for the development of community service properties. We never sit still at Hemfosa.
Jens Engwall, CEO
For further information, please contact:
Jens Engwall, CEO, email@example.com, phone +46 70 690 65 50
Karin Osslind, CFO, firstname.lastname@example.org, phone +46 70 794 93 37
The information is such that Hemfosa Fastigheter AB is obligated to disclose in accordance with the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was issued for publication under the auspices of the CEO on February 16, 2018 at 7:30 a.m. CET