Corporate Presentation Q3 2018 SHH Bostad AB
SHH in brief
A residential developer offering affordable housing throughout Sweden 3
SHH in brief Introduction SHH Bostad AB (publ) (SHH), incorporated 2010, is a residential developer which rationally develops functional and affordable apartments and homes for a large customer base Tenant owned units Rental units Senior housing Sustainability Economic sustainability for your wallet Social sustainability for the society Sustainability for the environment 362 units in production as of 30 September 2018 SHH increases from 2019 the number of rental projects in its development program Customer base (tenant-owned units) High end SEK +50.000/kvm Medium SEK 30.000-50.000/kvm Low SEK 20.000-30.000/kvm Execution power and track record From 2010 SHH has completed more than 30 residential projects and 1,200 apartment units Proven and scalable business model Niche towards affordable homes decreases business risk Technical platforms and building systems create cost & time efficiency and decreases capex SHH flexible housing products fit both tenant-owned and rental schemes Experienced and competent management, organization and board Financially strong with 420 MSEK shareholders equity 4
Business Overview
SHH value adding business processes (1/2)d risk 1. Idea / Analysis 2. Land acquisition, site planning and design 3. Project development Description Structured search process through significant in-house competence, partnerships and a broad network of contractors, real estate companies, municipalities, architects and brokers. Project proposal evaluation process based on specific criteria and significant analysis of demand, prices, production costs, financing and risks. Close contact with municipalities ensures attractive land allocations. Land acquisition: Buy (i) options on unzoned land, (ii) ready to build land. Standardized process for site planning and design enabled by toolbox of building systems and reuse of building drawings. In-house project managers are appointed and follows through to completion. Quick delivery of complete solution of zoning plan and process planning enabled by repetitiveness. Development activities are often initiated together with municipalities. Drawings and data is drafted to get building permits from municipalities and procure building contractors. The project group collaborates closely with the municipality, construction partners, architects (in house and external) and brokers to develop attractive residential buildings for the identified target group. Partners Risk mitigation SHH has significant experience of analyzing ideas and determining which to pursue further. Joint ventures minimizes risk as an additional partner confirms the idea and shares the risk. Strict acquisition prerequisites. Land acquisitions conditional to zoning plan approval. SHH in charge of the zoning plan process. Experienced in-house project management with one project manager per project through the whole process. 6
SHH value adding business processes (2/2) profitability with limited risk 1 week - 6 months 10-12(24) months 3-12 months 4. Sales 5. Construction 6. Quality follow-up Description Fast sales process Identify core target group s key barriers, key triggers & key message. Local broker appointed with local market knowledge. SHH handles administration and purchase agreements. Target of 60-70% pre-sale prior to construction start (irrevocable purchase contracts). Standardized housing enables fast construction planning. Well established process for professional procurement of contractors focus on total contracting at fixed price. Collaboration with some of Sweden s most well established contractors leads to high quality, reduced costs and lower risk (NCC s largest customer of industrial housing construction). Sustainable approach and long-term view ensures quality follow-up. Turn-key contracts transfers responsibility to contractor and then handed over to the new tenantowner s association. After sales & customer evaluation programs. Best practice philosophy. Partners Risk mitigation Pre-sales of minimum 60% secures the majority of revenue before construction. Typically, 10% of purchase price paid by the buyer as down-payment. Rental projects fully financed and pre-sold to institutional investors prior to construction start reducing the financial exposure. Turn-key construction contracts with solid counterparties secures project costs. Standardized building provides visibility of construction costs. In-house highly competent and experienced project management enables cost-efficient construction. Turn-key construction limits post-sale risk with warranties provided by turn-key contractor. SHH reputational risk reduced by long history and close collaboration with contractors. Focus on new construction, limiting construction risk (entrepreneur responsibility). 7
Corporate Governance
Corporate Governance Board of Directors Johan Ericsson Chairman of the Board More than 30 years experience of Swedish and European real estate. Group CEO Catella 2010-2013. CEO Logistea. Board member Brinova among other appointments. Misha Moeremans d Emaus CEO, Founder, Member of the Board More than 30 year experience of Swedish and European real estate. Head of Business Development Catella 1994-2005. Deputy Group CEO Catella 1999-2005. Thomas Eriksson Founder, Member of the Board Founder and CEO of architect company TEA. Marcus Hansson Member of the Board Head of Finance Balder, CEO and Member of the Board Trenum. Johan Hessius Member of the Board Lawyer and founding partner of lawyer firm Cirio, specialized on corporate and real estate. Ulrika Hallengren Member of the Board Group CEO Wihlborgs. 9
Corporate Governance Management Group Misha Moeremans d Emaus CEO, Founder, Member of the Board More than 30 year experience of Swedish and European real estate. Member of Group Management and Head of Business Development Catella 1994-2005. Deputy Group CEO Catella 1999-2005. Ann-Louise Gustafsson Head of Sales 15 years experience of production of apartments including market analysis and sales. Joined SHH 2012. Martin Hildebrandt Head of Residential development Construction engineer with 25 years experience from architectural firms. Previous experience include 13 years with Thomas Eriksson Arkitektkontor. Joined SHH 2011. Fredrik Johansson Head of Production and property management More than 15 years experience of real estate and construction industry. Previous positions include regional manager and business developer at Jernhusen. Joined SHH 2017. Ando Wikström CFO 30 years experience of real estate and finance industry. Previous positions include CFO and member of group management at Catella. Joined SHH 2015. 10
Shareholders Shareholders as of September 30, 2018 Nominal shares Number of shares Share Preference shares Capital Votes Ägare Serie A Serie B % % Misha Moeremans d'emaus direct and via company 1 395 556 20 493 31,3% 36,1% Fastighets AB Balder 808 088 148 080 21,2% 21,2% Johan Ericsson via company 604 545 6 789 13,5% 15,6% Ando Wikström via company 604 544 6 793 13,5% 15,6% Martin Hildebrandt via company 150 000 8 148 3,5% 3,9% Thomas Eriksson Holding AB 120 000 113 514 7 508 5,3% 3,4% von Euler & Partners AB fund 80 000 132 800 4,7% 2,4% Total 3 762 733 113 514 330 611 93,1% 98,2% Other shareholders 45 355 118 836 148 476 6,9% 1,8% Grand Total 3 808 088 232 350 479 087 100,0% 100,0% 11
Project Portfolio
Project Portfolio Q3 2018 Project portfolio amounts to a total of 3 492 (3 657) units Ø 362 (10 %) of portfolio in production, total sales value approx. 930 MSEK Ø 183 (5 %) of portfolio ongoing sale, not in production Ø 959 (28 %) of portfolio other building rights with residential zoning Ø 1 988 (57 %) of portfolio without planning consent, ie ongoing rezoning SHH share of portfolio ownership: 67 % (66 %) 262 (314) units completed January-September 2018 Project Portfolio 10% 5% Share tenant owned / rental (in production) 0% Geographical diversification 8% 7% 57% 28% 26% 59% Ongoing Production For sale, not yet in production Zoned land Ongoing rezoning 100% Tenant Owned Rental Greater Stockholm Center Northern South 13
Joint ventures diversifies risk and increases dealflow Partner(s) SHH ownership Number of units Municipality SHH Landbolaget AB Stjernvalvet Bostad AB Fastighets AB Bodal 50 % 50 % 957 58 Botkyrka Sigtuna Upplands Väsby Ekerö Kristianstad Ystad JV Balder 50 % 189 Huddinge JV Fabege 50 % 279 Kista JV NREP 20 % 152 Huddinge JV HSB 50 % 308 Enköping 14
Sustainable approach lowering costs over time Clear environmental focus ensuring environmentally efficient and affordable living As a residential developer, SHH strives to form and shape our future society. Sustainability and long-term thinking therefore pervade everything SHH does. Sustainability controls our choice of material and the design of homes and green areas. SHH aim for Nordic Eco labeling (Svanen or Miljöbyggnad Silver) in all our constructions and build on a sustainable life-cycle perspective. The ambition is always to ensure as long a lifespan as possible at the residence with minimal environmental impact. SHH conducts long-term and responsible environmental work in order to exceed the environmental requirements of all homes with good margin. SHH also builds with a high degree of variation to reduce the risk of category-living and segregation, thus contributing to sustainable social development. 15
Financial information
Quarterly report January September 2018 Period July September 2018 Period January September 2018 Net sales: 334,4 (387,4) MSEK Operating profit: 6,0 (15,7) MSEK Net income: 1,6 (9,9) MSEK Sold units during the period amounted to 26 (45) of which 11 (23) is in production Number of production started units amounted to 69 (0) Number of completed units amounted to 99 (30) Net sales: 577,0 (681,0) MSEK Operating profit: 21,8 (39,5) MSEK Net income: 8,0 (27,2) MSEK Sold units during the period amounted to 138 (370) of which 59 (325) is in production Number of production started units amounted to 69 (285) Number of completed units amounted to 262 (314) 17
Income statement 2018 2017 2018 2017 SEKm Jul-sep Jul-sep Jan-sep Jan-sep Total revenue 334,4 387,4 577,0 681,2 Development costs -320,8-365,4-536,5-616,7 Gross profit 13,6 22,0 40,6 64,4 Other external expenses -4,2-4,2-9,3-9,8 Personnel costs -6,4-5,5-20,7-18,1 Depreciation of fixed assets -0,1-0,1-0,2-0,4 Other operating costs -10,6-9,8-30,2-28,2 Share of associated companies' profit after tax 3,0 3,5 11,4 3,3 EBIT 6,0 15,7 21,8 39,5 Financial net -4,4-5,8-13,8-12,3 Profit before tax 1,6 9,9 8,0 27,2 Tax 0,0 0,0 0,0 0,0 Net income 1,6 9,9 8,0 27,2 Employees, average 24 21 23 20 18
Balance sheet - Assets 2018 2017 2017 SEKm 30-sep. 30-sep. 31-dec. ASSETS Goodwill 19,9 19,9 19,9 Inventories 0,9 1,2 1,1 Participation in Group companies 275,2 240,9 254,1 Financial receivables 2,2 1,4 0,8 Total fixed assets 298,2 263,4 275,9 Current assets Housing projects 207,4 434,7 340,2 Receivables 20,6 6,2 6,6 Receivables from Group companies 172,8 104,2 157,3 Other receivables 55,9 120,2 100,0 Prepaid expenses and accrued income 9,8 10,6 9,9 Cash and bank balances 259,6 192,7 211,5 TOTAL ASSETS 1 024,3 1 132,0 1 101,3 19
Balance sheet Equity and liabilities 2018 2017 2017 SEKm 30-sep. 30-sep. 31-dec. EQUITY AND LIABILITIES Share capital 11,3 11,2 11,2 Share premium 189,1 198,6 198,6 Retained earnings 213,3 185,0 185,0 Profit for the period for the parent company's shareholders 8,0 24,5 31,7 Shareholders' equity attributable to the shareholders of the parent company 421,7 419,3 426,5 Non-controlling interest 0,0 6,4 0,1 Shareholders equity 421,8 425,6 426,5 Bond 230,0 230,0 230,0 Other long-term liabilities 0,2 0,3 0,3 Borrowing for housing projects 191,6 280,8 242,8 Payables 13,4 45,4 34,8 Liabilities to Group companies 90,1 69,7 99,0 Deferred tax liabilities 0,3 0,6 0,9 Other short-term liabilities 55,3 58,5 44,9 Accrued expenses and deferred income 21,6 21,0 22,2 Total liabilities 602,6 706,3 674,8 TOTAL EQUITY AND LIABILITIES 1 024,3 1 132,0 1 101,3 20
Appendix Selection of projects
Selected projects (1/2) Botkyrka (Stockholm) Huddinge (Stockholm) Kista (Stockholm) Type of ownership: Tenant-owned/Rental Number of units: 610 Total area: 40,856 sqm Time schedule zoning: H1 2019 SHH share: 50% (LO and Bodal) Type of ownership: Tenant-owned Number of units: 152 Total area: 7,184 sqm Construction start: H2 2017 SHH share: 20% + promote Type of ownership: Tenant-owned Number of units: 279 Total area: 12,862 sqm Construction start Q3 2018 Completion Q1 2021 Planned project Ongoing production Ongoing production [Picture] [Picture] [Picture] 22
Selected projects (2/2) Örebro Botkyrka (Stockholm) Strängnäs Type of ownership: Tenant-owned Number of units: 75 Total area: 4,837 sqm Construction start: Q1 2016 Completion: Q3 2017 Type of ownership: Tenant-owned Number of units: 46 Total area: 2,980 sqm Construction start: Q1 2015 Completion: Q4 2016 Type of ownership: Tenant-owned Number of units: 32 Total area: 2,358 sqm Construction start: Q3 2015 Completion: Q4 2016 Completed Completed Completed [Picture] [Picture] [Picture] 23
Case: Solhagaparken, Huddinge (Stockholm) Solhagaparken, Huddinge 24
Case: Solhagaparken, Huddinge (Stockholm) Solhagaparken, Huddinge Phase 2 Nursing home with 80 units sold on a forward sale bases to institutional investor with a 20 year lease Phase 1 86 tenant owned apartments 65 % presold to individual buyers before construction start 25
SHH Bostad AB 111 40 Stockholm +46 8 623 19 10 www.shhbostad.se