2016-05-04 07:30:01 CEST
2016-05-04 07:30:01 CEST
REGULATED INFORMATION
Sponda - Interim report (Q1 and Q3)
Sponda Plc’s interim report January–March 2016
Sponda Plc Interim Report 4 May 2016 at 8:30
Sponda Plc’s interim report January–March 2016
JANUARY–MARCH 2016 IN BRIEF (compared with 1 January – 31 March 2015)
-- Total revenue increased to EUR 59.3 (57.2) million, primarily due to a
property transaction completed in February 2016.
-- Net operating income increased by more than 6% and totalled EUR 42.1 (39.6)
million.
-- Operating profit was EUR 46.7 (27.6) million. This includes a fair value
change of EUR -2.0 (-9.9) million.
-- Cash flow from operations per share was EUR 0.12 (0.08).
-- The fair value of the investment properties amounted to EUR 3,702.5
(3,136.1) million.
-- Net assets (NAV) per share totalled EUR 4.95 (4.50).
-- The economic occupancy rate was 88.7% (86.8%).
KEY FIGURES
1-3/2016 1-3/2015 1-12/2015
Total revenue, M€ 59.3 57.2 230.5
Net operating income, M€ 42.1 39.6 165.7
Operating profit, M€ 46.7 27.6 178.1
Earnings per share, € 0.09 0.04 0.78
Cash flow from operations per share, € 0.12 0.08 0.36
Equity per share, € 4.95 4.50 5.26
Equity ratio, % 45.7 39.8 46.2
Interest cover ratio 3.5 3.5 3.5
KEY FIGURES ACCORDING TO EPRA BEST PRACTICES RECOMMENDATIONS
1-3/2016 1-3/2015 1-12/2015
EPRA Earnings, M€ 23.3 24.9 232.0
EPRA Earnings per share, € 0.08 0.09 0.82
Company adjusted EPRA Earnings, M€ 21.7 24.6 98.6
Company adjusted EPRA Earnings per share, € 0.08 0.09 0.35
EPRA NAV/share, € 5.25 5.30 5.60
EPRA NNNAV/share, € 4.85 4.34 5.15
EPRA Net Initial Yield (NIY), % 5.52 5.44 5.62
EPRA “topped-up” NIY, % 5.55 5.45 5.63
EPRA Vacancy rate, % 11.35 13.19 12.26
EPRA Cost Ratio (including direct vacancy costs), 17.68
%
EPRA Cost Ratio (excluding direct vacancy costs), 12.90
%
PRESIDENT AND CEO KARI INKINEN
The first quarter of 2016 was exceptionally eventful for Sponda. In conjunction
with the publication of our result for 2015, we announced the year’s largest
property transaction in the Finnish market as we acquired six properties in the
Forum block located in Helsinki’s central business district. The acquisition
was completed at the end of February and we have also completed the integration
of the properties into Sponda as planned.
In March, we carried out a rights offering of approximately EUR 220 million as
part of the financing of the Forum acquisition. The offering was fully
subscribed for and the net proceeds were used entirely for the repayment of the
short-term bridge loan raised for the acquisition.
Sponda currently has one active property development project underway, the
Ratina shopping centre in Tampere. The project is progressing according to
plan, as is the pre-letting of the property. The property will be completed in
spring 2018.
FORUM PROPERTY ACQUISITION
In February 2016, Sponda announced it is acquiring six properties in the Forum
block in Helsinki. The transaction was completed on 29 February 2016 and the
debt-free price was EUR 576 million. The details of the acquisition are
discussed in stock exchange releases published on 4 February and 29 February.
The Forum block’s five office properties and one retail property are an
excellent fit with Sponda’s strategy of focusing its property portfolio on
Helsinki’s central business district. The properties were allocated to Sponda’s
Office Properties and Shopping Centres segments according to their use. As a
result, the Office Properties segment grew from approximately EUR 2.0 billion
to approximately EUR 2.2 billion, while the Shopping Centres segment grew from
approximately EUR 0.7 billion to approximately EUR 1.1 billion.
Sponda financed the acquisition with its existing cash funds and a short-term
bridge loan of approximately EUR 325 million. The company also carried out a
rights offering in March 2016. More information is provided in the section
“Rights offering”.
BUSINESS CONDITIONS – FINLAND
According to preliminary data from Statistics Finland, Finnish GDP grew by 0.1%
in October–December compared to the preceding quarter. The year-on-year
increase was 0.6%. The full-year GDP growth rate for 2015 was 0.5%.
The Finnish Ministry of Finance predicts GDP growth of 0.9% for 2016. The most
significant factor underlying this growth continues to be private consumption,
which is predicted to grow by approximately one per cent, and investments,
which are predicted to grow by 5.2%. Exports are predicted to grow by 1.3% and
imports by 2.6%.
In the first quarter, the property transaction market maintained the good level
of activity seen last year. According to KTI Property Information, the
transaction volume for the first quarter amounted to EUR 1.77 billion, which is
the second-highest first quarter volume in the past ten years. International
investors accounted for 24% of property acquisitions. By far, the largest
transaction in the first quarter was for the Forum block, with Sponda as the
buyer at a debt-free price of approximately EUR 576 million. The level of
activity in the property transaction market is expected to remain high in 2016.
According to Jones Lang LaSalle, the office property market in central Helsinki
remained unchanged in the first quarter. The net rental level for prime office
space remained at EUR 306/m²/year and the yield requirement remained at 4.75%.
GROUP RESULT IN JANUARY–MARCH 2016
Sponda Group’s result for the period was EUR 26.7 (11.3) million, while the
result before taxes was EUR 33.7 (15.0) million and operating profit was EUR
46.7 (27.6) million.
Net operating income for the period was EUR 42.1 (39.6) million. The increase
in net operating income is primarily attributable to the Forum property
acquisition and completed property development projects. Net operating income
was reduced by property divestments made last year. The effect of the Forum
acquisition is included in the consolidated figures for one month. Marketing
and administration expenses remained at the previous year’s level, at EUR 5.7
(5.8) million.
During the period, the Group recognised gains on divestments of EUR 12.7 (-0.5)
million, primarily related to the sale of land associated with a property
development project. The change in the fair value of the investment properties
was EUR -2.0 (-9.9) million. In the corresponding period in 2015, the Group’s
share of Certeum’s result recognised in consolidated profit amounted to EUR 3.6
million.
Financial income and expenses totalled EUR -13.0 (-12.6) million. The increase
in expenses is related to loan arrangements pertaining to the Forum
acquisition.
According to IFRIC 21 the company recognizes a liability in the balance sheet
when the obligating event occurs. The company periodises real estate taxes in
the profit and loss statement during the financial year.
PROPERTY ASSETS 1 JANUARY – 31 MARCH 2016
At the end of March 2016, the fair value of Sponda’s investment properties was
assessed internally. The change in the fair value of the investment properties
in January-March 2016 was EUR -2.0 (-9.9) million. The value of Sponda’s
properties in Finland developed favourably due to an increase in market rents,
especially with regard to Central Business District properties. Other factors
contributing to the increase in fair value included the development margin of
property development. The negative change in the fair value of properties was
associated with the valuation of properties located in Russia. These changes
were primarily attributable to exchange rate fluctuations and the resulting
decrease in cash flow.
Valuation gains/losses on fair value assessment
M€
1-3/16 1-3/15 1-12/15
Changes in yield requirements (Finland) 0.0 0.0 39.2
Changes in yield requirements (Russia) -1.8 0.0 -7.4
Development gains on property development projects 1.7 1.1 25.4
Modernisation investments -6.9 -11.0 -37.8
Change in market rents and maintenance costs (Finland) 8.3 9.2 30.2
Change in market rents and maintenance costs (Russia) -1.1 -12.5 -26.8
Change in currency exchange rates -2.3 3.3 0.3
Group, total -2.0 -9.9 23.2
RENTAL OPERATIONS
Sponda calculates the growth in net rental yield for its properties according
to EPRA Best Practices Recommendations by using a like-for-like net rental
growth formula based on a comparable property portfolio owned by the company
for two years. Like-for-like net rental growth was 0.7% (0.7%) for office
premises, 2.7% (0.5%) for shopping centres, -3.8% (15.5%) for logistics
premises and -8.8% (-7.2%) for properties in Russia. All of Sponda’s lease
agreements in Finland are tied to the cost of living index.
The economic occupancy rates by type of property and geographical area were as
follows:
Type of property 31.3.2016 31.12.2015 30.9.2015 30.6.2015 31.3.2015
Office properties, % 88.1 88.2 88.0 88.1 87.9
Shopping centres, % 93.8 91.3 90.6 89.8 90.3
Logistics properties, % 68.9 68.3 67.8 68.6 68.5
Russia, % 82.9 84.6 82.3 84.5 90.1
Total property 88.7 87.7 86.2 86.3 86.8
portfolio, %
Geographical area 31.3.2016 31.12.2015 30.9.2015 30.6.2015 31.3.2015
Helsinki business 92.4 90.1 89.3 88.3 88.2
district, %
Helsinki Metropolitan 85.3 85.7 83.5 83.7 83.6
Area, %
Turku, Tampere, Oulu, % 89.4 90.8 91.1 92.3 92.9
Russia, % 82.9 84.6 82.3 84.5 90.1
Total property 88.7 87.7 86.2 86.3 86.8
portfolio, %
DIVESTMENTS AND INVESTMENTS
Divestments M€
1.1.- 1.1.- 1.1.-
31.3.2016 31.3.2015 31.12.2015
Properties sold
Selling price 5.0 6.3 157.6
Profit/loss on sale* 0.2 -0.3 -4.3
Balance sheet value 4.8 6.6 161.9
*) Includes sales costs
Investments M€
1.1.- 1.1.- 1.1.-
31.3.2016 31.3.2015 31.12.2015
Properties acquired -587.5 - -4.7
Modernisation investments -6.9 -11.0 -37.8
Property development investments -12.1 -10.8 -65.2
Investments, total -606.5 -21.8 -107.7
Property development investments were mainly directed to the construction of
the Ratina shopping centre.
RISKS AND UNCERTAINTY FACTORS IN THE NEAR FUTURE
Sponda estimates that the risks and uncertainty factors in the current
financial year are related to the development of the Finnish and Russian
economies.
In Russia, these risks are related to the depreciation of the Russian rouble,
which may cause tenant insolvency and a decrease in property values. The
operations in Russia present a foreign exchange risk to Sponda. Changes in
exchange rates may cause exchange rate losses that have a negative impact on
the company’s financial result. The uncertain situation in the Russian market
may slow down the sale of Sponda’s properties in Russia in 2016.
The slow positive development of the Finnish economy may cause a decline in net
operating income and tenant insolvency.
For Sponda’s property development projects, the key risk is related to the
degree of success in leasing premises.
PROSPECTS FOR 2016
Sponda provides prospects for 2016 with regard to the development of the
company’s net operating income and adjusted EPRA Earnings.
Net operating income
Sponda estimates that the net operating income for 2016 will amount to EUR
175-190 million. The estimate is based on the company’s view of property
acquisitions and divestments to be completed and the development of rental
operations during the year.
Adjusted EPRA Earnings
Sponda estimates that company adjusted EPRA Earnings in 2016 will amount to EUR
94-110 million. This outlook is based on the development of net operating
income and the company’s estimate of the development of financial expenses.
4 May 2016
Sponda Plc
Board of Directors
Additional information:
Kari Inkinen, President and CEO, tel. +358 20 431 3311 or +358 400 402 653,
Pia Arrhenius, SVP, Corporate Planning and IR, tel. +358 20 431 3454
or +358 40 527 4462,
Niklas Nylander, CFO, tel. +358 20 431 3480 or +358 40 754 5961.
Distribution:
NASDAQ OMX Helsinki
Media
www.sponda.fi
© 2024 Nasdaq, Inc. All Rights Reserved |