Hemfosa Fastigheter AB: Interim Report January - March 2015

Regulatory News:

Hemfosa Fastigheter AB (publ) may be legally obliged to publish under the Securities Market Act and/or the Financial Trading Act. The information was issued for publication on May 7, 2015 at 07.30 a.m (CET)

Active start for 2015

January - March 2015 quarter

• Rental income amounted to MSEK 589 (395)

• Profit from property management totaled MSEK 266 (67), corresponding to SEK 3.57 per ordinary share (2.10)*

• Earnings for the quarter attributable to Parent Company shareholders amounted to MSEK 416 (12), corresponding to SEK 5.95 per ordinary share (0.36)*

• Recognized property value of SEK 27.1 billion (16.4) includes 361 (194) directly owned properties

• Net asset value (EPRA NAV) per ordinary share was SEK 126.19 (105.47)

• Cash flow from operating activities was MSEK 420 (69), corresponding to SEK 6.01 per ordinary share (2.06)*

* At the end of the quarter, the number of ordinary shares was 65,720,104 (61,372,278), while the number of preference shares was 5,000,000

Significant events during and after the quarter 

• In early 2015, Hemfosa took the first step into the Norwegian market through the acquisition of eight community service properties in the Oslo region for a consideration of SEK 3.0 billion.

• In February, Hemfosa divested nine logistics properties valued at approximately SEK 0.8 billion.

• In February, Hemfosa agreed to invest in community service properties and one logistics property at a value of approximately SEK 0.2 billion.

• In February 2015, Hemfosa acquired community service properties in western Sweden at a value of SEK 0.4 billion.

• There are no sigificant events after the quarter.

Comments from the CEO

22015 began as actively as 2014 ended — with several strategic acquisitions, divestments of non-priority properties and a number of lease extensions. This precise combination of transactions is the core of Hemfosa’s value creation and a logical continuation of the successful journey we have commenced.

Norway - a new market with continued potential

During the quarter, we took the first step into the Norwegian market through the acquisition of eight community service properties with an underlying value of SEK 3 billion. The properties are located in the Oslo region and we currently have an excellent initial portfolio in the form of long-term leases, low risks and stable counterparties. We see continued major potential for us to expand and to now establish an internal management and development organization to strengthen our position in the Norwegian market.

Sweden - manage, develop and seize opportunities

As most of you know, we are currently conducting business in a distinctly low interest-rate environment and it is not easy to find and implement favorable transactions of a straightforward nature. We will continue to be active with a view to capturing the opportunities that arise and where Hemfosa’s size, flexibility and expertise will be at its best, perhaps by acquiring individual properties and highly complex portfolios. In line with our confirmed strategy, we increased our portfolio of community service properties in Sweden during the quarter, through the acquisition of properties valued at a total of approximately SEK 0,5 billion. Community service properties therefore accounted for 57 percent of Hemfosa’s total property value. At the same time, we also divested properties valued at nearly SEK 1 billion, with a portfolio in the less prioritized segment, Logistics properties, accounting for the largest proportion. In our management operation, we renegotiated and extended several leases and signed new leases with long-term tenants. We see this as confirmation that Hemfosa is perceived as a sensitive and competent landlord that meets the needs of its tenants, which in turn means that we are able to sign leases that will generate stable, strong cash flows.

Increased earnings - equipped for continued growth

We also increased profit from property management during the first quarter to MSEK 266, compared with MSEK 67 in the year-earlier period. We continue to focus on increasing earnings capacity and I am proud that our earnings capacity at the end of the quarter was SEK 1.3 billion compared with SEK 0.6 billion a year earlier. I have the privilege to lead a competent, equal opportunities and expanding organization, where we jointly shape a strong corporate culture that is continuously developing and driven by good business. Hemfosa aims to be the largest and best owner of community service properties, implement complex transactions and divest holdings that do not fit, thus increasing the quality of the property portfolio. Continued growth requires financing, and this is why the Board will request a mandate at this year’s Annual General Meeting to issue new preference shares. We want to be ready if opportunities arise. At the same time, we will continue to develop our operation by acquiring properties with strong cash flows, which in turn will generate shareholder value and facilitate higher dividends. Not such a bad equation.

Jens Engwall, CEO

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