Sponda Financial Results Q4 and FY February 2017

Transcription

1 Sponda Financial Results Q4 and FY February 2017

2 Highlights for the Period Kari Inkinen Portfolio Development Pia Arrhenius Financials Niklas Nylander Business Environment and Business Update Kari Inkinen 5. Q & A 2

3 1. Highlights for the Period Kari Inkinen

4 Sponda has carried out majority of the divestment plans set in its strategy Divestments Property Funds business AUM EUR 720m Investments in Funds EUR 73m AUM EUR 0m 1) Investments in Funds EUR 0m The Property Funds business and the properties in the Fund sold to Certeum Sponda s shares in Certeum sold at the end of 2015 Logistics property portfolio Fair value EUR 409.5m Fair value EUR 69.0m Logistics properties sold for EUR 325 million Properties in Turku # of properties 8 # of properties 0 All properties sold by July Russian portfolio Fair value EUR 268.3m Fair value EUR 116.3m Properties in Russia sold for EUR 63 million 1) Investments in two property funds reported as part of the Property Investment Companies segment 4

5 Q in brief Net operating income were at EUR 47.2 million, up 14.3% y-o-y - Like-for-like net rental growth positive in Shopping Centres at 2.1%, negative for Offices at -0.2% Occupancy rate increased to 89.6% ( : 87.7%) - Shopping Centres 93.5% (91.3%) - Offices 89.2% (88.2%) Fair value of properties increased by EUR 33.7 million - Decrease of yield requirements in Finland 5

6 Q key figures Total revenue, M +12.4% ,0 230, % ,2 65, Net operating income, M +15.2% ,9 165, % 41,3 47, Group occupancy rate, % , ,

7 FY 2016 in line with prospects Strong full-year results and improved occupancy rates driven by the Forum acquisition Net operating income, M Adjusted EPRA Earnings, M

8 Cash earnings and dividend per share Stable dividend payout throughout the year target to pay 50% of CEPS CEPS Dividend 0,45 0,4 0,35 0,3 0,25 0,2 0,15 2) 0,1 0,05 1) ) Dividend paid during 2016 based on AGM 2016 authorisation, in total 0,12 /share 2) Board s proposal to the AGM 2017, 0,08 /share 8

9 Helsinki CBD continues to perform well Like-for-like rental growth and occupancy rates in Helsinki CBD Like-for-like net income, M 2016 Change % 2015 Offices % 39.5 Shopping Centres % 12.9 Economic occupancy rate, % Offices Shopping Centres

10 Economic occupancy rates % %* 92.1% 89.6% 89.2% Office properties 89.2% Shopping centres 93.5%* Helsinki CBD 92.1% Total property portfolio 89.6% 80 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 *) In Shopping Centre segment the Anttila bankruptcy impact in Q3 was 1.5%-points 10

11 Sponda s priorities in 2016 All priorities completed as planned Occupancy rate development Our target is to increase the occupancy rate from 87.7% ( ) level. Occupancy rate in Q was 89.6% Implementing our strategy We will continue the non-core property divestments and the core property acquisitions. During Q1 we acquired CBD properties for EUR 576 million. In 2016 we have sold properties for EUR 65.5 million. Stable cash flow from operations per share Focus in property development We aim to maintain our ability to pay stable dividend. Our target is to start at least one development project in 2016 and to keep our property development gain of 15% on each project. Dividend for 2015 was EUR 0.19 (2014: EUR 0.19). Already EUR 0.12 dividend paid during Ratina shopping centre in Tampere is progressing. New office and retail development started in July

12 Sponda s priorities in 2017 Occupancy rate development Our target is to increase the occupancy rate from 89.6% ( ) level. Implementing our strategy Our target is to sell all properties in Russia and the logistics properties by the end of Stable cash flow from operations per share We aim to maintain stable dividend. Growth from property development Our target is to start at least one development project in 2017 and to keep our property development gain of 15% on each project. 12

13 2. Portfolio Development Pia Arrhenius

14 Share of Helsinki CBD s office and shopping centre properties has clearly increased Sponda s portfolio ) Sponda s portfolio today Russia Property development 8% 4% Logistics 13% Offices and Shopping Centres 34% CBD Property Development Russia Logistics 3% Oulu 4% 2% 2% Tampere 7% Offices and Shopping Centres Tampere, Oulu and Turku 8% Rest of HMA 17% 49% CBD Rest of HMA 17% 17% Ruoholahti Ruoholahti 16% EUR 3,266.5 million - Total portfolio - EUR 3,755.5 million 1) Excluding Property Funds 14

15 Like-for-like development in 2016 Like-for-like net rental growth has been calculated from a portfolio that Sponda has held for 2 years excluding acquisitions, divestments and property development. 14,0 % 12,0 % 10,0 % 8,0 % 6,0 % 4,0 % 2,0 % 0,0 % -2,0 % -4,0 % 13,1 % 8,3 % 1,6 % 2,1 % 0,2 % -0,2 % -0,2 % -2,3 % -1,2 % -3,5 % Offices Shopping Centres Logistics Russia In Offices like-for-like net rental income is positive for Helsinki CBD and Ruoholahti, but there is negative impact from rest of Helsinki HMA In Shopping Centres we continue to see positive development. -6,0 % -8,0 % -6,7 % -10,0 % -12,0 % -14,0 % -12,9 % Change in turnover Change in maintenance expenses Net change 15

16 Shopping centres The economic occupancy rate was 93.5% (Q4 2015: 91.3) Sponda s combined footfall of all shopping centres increased by 4.3% compared to Q Combined OCR in 2016 of all shopping centres including Forum was 15.7%. Combined sales of all shopping centres including Forum decreased by -0.2% compared to Q

17 Office properties Demand for CBD offices remains strong. - Q4 CBD office occupancy rate was approximately 92% (Q4 2015: 91). Rental levels in CBD offices have remained strong. 17

18 Expanding MOW Opening of a new MOW concept office in Ruoholahti, Helsinki Opening in Autumn 2017 with 300 working stations Good location with excellent public transportation MOW is a unique concept in Helsinki and has received excellent customer feedback New MOW locations in the pipeline 18

19 Development projects progress as planned For greenfield projects Sponda expects 15% development gain Leasable area, m² Estimated completion Total investment, Investment by the end of December 2016 Pre-let % Greenfield developments Ratina shopping centre, Tampere 53,000 Spring /45 Tikkurila office and retail building 9,500 Spring Total 62, We are continuously looking for investment opportunities Any possible decision to start a greenfield project will be disciplined and based on at least 15% development gain. 19

20 3. Financials Niklas Nylander

21 Financial highlights 10-12/ / / /2015 Total revenue, M Net operating income, M EBITDA*, M EPRA Earnings, M NAV/share, EPRA NAV/share, CEPS, FY NOI boosted by Forum acquisition. Like-for-like NOI impact +0.5m : positive development in shopping centre segment (+2.1%) and in CBD offices (+2.2%) and Ruoholahti offices (+0.4%). NOI% of revenue 73.7% in 2016 vs. 71.9% in 2015: positive impact from finalised development projects and from healthier portfolio mix (investments/divestments). NAV/share and EPRA NAV/share impacted positively by solid result development for the year. Impact from dividends paid during the year and the increased number of shares. Positive development in CEPS from strong underlying result *) Net operating income administrative and marketing expenses (inc. depreciations 1.0m ) 21

22 Net operating income development Y-o-Y Solid development driven by Forum acquisition MEUR ,3 1,9 190, ,7-8,

23 Valuation gains/losses Lower yield requirements especially in shopping centres and Helsinki CBD office properties (external) M 10-12/ / / /2015 Changes in yield requirements (Finland) Changes in yield requirements (Russia) (4.1) (7.4) Profit/loss from property development projects Modernization investments (11.2) (10.2) (31.0) (37.8) Change in market rents and maintenance costs (Finland) Change in market rents and maintenance costs (Russia) (2.9) (12.5) (14.1) (26.8) Change in exchange rates (2.1) 0.3 Investment properties, total Real estate funds (2.0) 0.0 Realised share of profit from real estate funds Group, total

24 Investment property valuation M Investment properties 1 Jan ,101.7 Investment properties held for sale 10,2 Capitalised interest 1,2 Acquisitions 590,5 Investments 91,9 Divestments -35,9 Change in fair value 28,7 Reclassifications to non-current assets held for sale -32,8 Investment properties 31 Dec ,

25 Key balance sheet figures Equity ratio, % Gearing ratio, % , Average interest rate, % Hedging, % Average loan maturity, yrs Average fixed interest rate period, yrs Interest cover ratio 3.8x 3.7x 3.6x 3.5x 3.5x Loan to Value (LTV)*, % Interest-bearing debt, M 1,863 1,840 1,913 1,902 1,661 Unused credit limits, M Covenants at: Equity ratio, 28% (long-term ER target: 40% ICR 1.75x *) LTV is calculated based on net debt. 25

26 Loan maturities 31 December 2016 M Bank loans Syndicated loans Bonds Commercial papers

27 Prospects and financial targets Sponda provides prospects for 2017 with regard to the development of the company s net operating income and adjusted EPRA Earnings. Net operating income, EUR million Adjusted EPRA Earnings, EUR million e e Financial targets Long-term equity ratio target is 40%. Dividend policy is to pay approx. 50% of the operational cash earnings per share, taking into account of the economic situation and company s development needs. Starting from 2016, Sponda will pay dividend three times a year. 27

28 4. Business Environment and Business Update Kari Inkinen

29 2% Activity in the Finnish property market continues GDP growth in Finland Real estate transaction volume EURbn in Finland 9% Prime yields 1% 0% -1% 5,4 6,3 4,2 1,8 2,4 1,8 2,1 2,5 4,3 5,5 7,2 8% 7% 6% 5% -2% E 2018E Foreign buyers Domestic buyers 4% Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Q2 Office Helsinki CBD Retail Helsinki CBD Logistics HMA Economic growth slowly turning positive Record-high transaction volumes Prime property yield requirements decreasing Source: Finnish Ministry of Finance, KTI, Catella 29

30 05 Q2 05 Q4 06 Q2 06 Q4 07 Q2 07 Q4 08 Q2 08 Q4 09 Q2 09 Q4 10 Q2 10 Q4 11 Q2 11 Q4 12 Q2 12 Q4 13 Q2 13 Q4 14 Q2 14 Q4 15 Q2 15 Q4 16 Q2 16 Q4 05 Q2 05 Q4 06 Q2 06 Q4 07 Q2 07 Q4 08 Q2 08 Q4 09 Q2 09 Q4 10 Q2 10 Q4 11 Q2 11 Q4 12 Q2 12 Q4 13 Q2 13 Q4 14 Q2 14 Q4 15 Q2 15 Q4 16 Q2 16 Q4 Prime properties performing well 25% 20% 15% 10% 5% 0% Vacancy rates, office properties EUR/m 2 /month Rental levels, office properties Ruoholahti Keilaniemi - Ring Road I 21.5% 12.7% Helsinki Inner City Aviapolis 16.8% 12.7% Helsinki CBD Ruoholahti Aviapolis Airport Area Keilaniemi - Ring Road I Turning point in vacancy rate development Office rental levels remain high in Helsinki CBD Source: Catella 30

31 Economic vacancy rate % % 13.5% 10.8% 10.4% 6.5% Offices 10.8% Shopping Centres 6.5% Logistics 26.0% Russia 15.2% Total property portfolio 10.4% HMA market office vacancy 13.5% 0 Q4/2010 Q4/2011 Q4/12 Q4/13 Q4/14 Q4/15 Q

32 Lease agreements in Q Pcs M² /m²/month (avg)* New agreements that came into force during the period Agreements that ended during the period Agreements that were extended during the period *) Agreements that came into force and ended do not necessarily correlate with same sector or space. All lease agreements in Finland are linked to CPI (upwards only). Ten largest tenants account for 29% of rental income. 32

33 Investment portfolio development We are creating value by property development and active portfolio management. Our aim is to sell non-core assets classified as such either by location or development potential. M Property development investments Maintenance investments/ Tenant improvements Acquisitions Divestments

34 Key takeaways from 2016 The Forum block acquisition 1 2 strengthens Sponda s position in Helsinki CBD. Improved occupancy rates against the market trend. Property development proceeded as planned Ratina 3 4 and Tikkurila projects on schedule. Strong cash earnings enables stable dividend payment. 34

35 Appendix

36 Sponda continues to further improve quality of portfolio Focus on the two by population fastest growing areas in Finland HMA and Tampere The sale of non-strategic properties (Logistics and Russia) will continue Mature, non-core properties with low future development potential will be divested (both offices and shopping centres) Capital to be reinvested in office and retail properties in areas with growth potential 36

37 37

38 Largest shareholders 31 December 2016 Major shareholders No. of shares Holding % 1. Mercator Invest Ab 95,344, HC Fastigheter Holding Oy Ab 34,181, Varma Mutual Pension Insurance Company 29,083, Åbo Akademi University Foundation 4,957, Elo Pension Company 4,893, The State Pension Fund 3,950, OP-Finland Value Fund 2,183, OP-Finland Small Firms Fund 1,868, Odin Eiendom 1,500, Danske Invest Finnish Institutional Equity Fund 1,042, Nominee-registered shareholders 34.74% of the total 38

39 Overview of the current reporting segments Fair value 1 Valuation yield 2 EPRA Net initial yield 3 Office M 5.9% 5.6% % of portfolio 4 58% Shopping Centres M 5.3% 4.4% 32% Logistics 69.0 M 9.2% 6.3% 2% Property Development M n/m n/m 5% Russia M 10.1% 7.8% 3% Property Investment Companies 22.4 M (Equity invested) Notes: 1) Fair value of investment properties as at 31 December ) Average valuation yield requirement as at 31 December ) Net initial yield of the segment as at 31 December ) Share of total fair value of properties as 31 December

40 Segment performance Office Shopping Centres Logistics Russia 1-12/ / / / / / / /15 Net Operating Income, M Fair Value of Properties, M Change in Fair Value of Properties, m Economic Occupancy Rate, % Divestments, M Acquisitions, M

41 Like-for-like development in 2016 Like-for-like net rental growth has been calculated from a portfolio that Sponda has held for 2 years excluding acquisitions, divestments and property development. Like-for-like net rental change, M 0,9 0,7 0,5 0,3 0,7 0,7 0,6 0,5 0,1 0,3-0,1-0,3 0,0-0,2-0,1-0,2-0,3 Offices Shopping Centres Logistics Russia -0,4-0,5-0,5 Change in turnover Change in maintenance expenses Net change 41

42 Lease agreement composition Q Lease maturity profile, % of rental income Q Q Office Shopping centres Logistics Russia Total Average lease maturity Q Q Tenant breakdown by sector, based on rental income 5,1 0,3 7,9 4,8 0,3 3,0 10,8 3,1 10,7 25,9 Professional, scientific and technical Energy Public sector Wholesale/retail Education Logistics/transport Hotel and catering business Media/publishing Other services Banking/investment Construction 0,0 1,0 2,0 3,0 4,0 5,0 6,0 Yrs 15,8 Industry/manufacturing 3,2 7,1 0,7 1,2 Healthcare Telecommunications Other 42

43 Profit & loss statement M 10-12/ / / /2015 Total revenue Expenses Net operating income 47,2 41,3 190,9 165,7 Profit on sale of inv. properties -0,1-3,0 0,8-4,5 Valuation gain / loss on fair value assessment 33,7 10,3 26,7 23,2 Amortisation of goodwill -1,0-0,4-3,1-3,0 Profit / loss on sales of associated companies 0,0 5,2-0,1 5,2 Profit / loss on sale of trading properties 1,2 0,2 14,6 2,8 Sales and marketing expenses -0,6-0,6-2,1-2,3 Administrative expenses -5,9-5,0-20,6-19,4 Share of profit from associated companies - 0,0-10,2 Other operating income 0,0 0,1 0,5 0,9 Other operating expenses -0,7-0,2-0,8-0,7 Operating profit 73,9 47,8 206,7 178,1 Financial income and expenses -13,1-12,1-51,2-48,9 Profit before taxes 60,8 35,7 155,5 129,2 Taxes from previous and current fin. years 0,1-7,5-2,4-9,3 Deferred taxes -0,7 129,9-15,6 107,3 Income taxes, total -0,5 122,3-17,9 98,1 Profit for the period 60,3 158,0 137,5 227,2

44 Balance sheet M ASSETS Investment properties 3, ,101.7 Other non-current assets Fixed assets & other non-current assets, total 3, ,163.1 Current assets, total Non-current assets held for sale Assets, total 3, ,441.0 SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity, total 1, ,585.0 Non-current liabilities, total 1, ,192.0 Current liabilities, total Liabilities associated with non-current assets held for sale Shareholders equity and liabilities, total 3, ,

45 NAV/share and EPRA NAV/share 6 5,5 5 4,5 5,26 5,07 5,12 5,22 5,29 5,31 5,39 5,47 5,58 5,60 5,30 5,25 5,18 4,95 4,83 4,77 4,82 4,88 4,84 4,64 4,66 4,68 4,45 4,38 4,43 4,50 4,56 4,63 4,65 4,71 4,50 4,49 5,35 5,04 4,59 4 3,5 3 2,5 4,01 4,06 4,17 4,03 4,12 3,99 3,92 3,93 3,90 3,92 3,82 3,60 3,68 3,70 3,62 3,45 3,58 3,49 3,42 3,31 3,19 3,12 3,09 2,95 2,82 Closing price NAV EPRANAV 2 45

46 EPRA NAV calculation 5.49 /share 2 000, , , , , , , , ,0 Equity attributable to equity holders of parent company Other equity reserve Fair value of financial instruments Deferred tax liabilities from fair value assessment of investment properties Goodwill relating to fair value assessment of properties *) Deferred tax relating to fair valuation of property and interest rate derivatives * Total 46