Hemfosa Fastigheter AB: Yer-end report January - December 2015

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Nordic specialist in community service properties

THE QUARTER: OCTOBER - DECEMBER 2015

• Rental income amounted to MSEK 624 (422)

• Profit from property management totaled MSEK 405 (179), corresponding to SEK 2.88 per ordinary share (1.52)*

• Profit after tax amounted to MSEK 573 (552), corresponding to SEK 4.13 per ordinary share (4.12)*

• Cash flow from operating activities was MSEK 455 (247), corresponding to SEK 3.25 per ordinary share (1.80)*

FULL-YEAR JANUARY–DECEMBER 2015

• Rental income amounted to MSEK 2,443 (1,612)

• Profit from property management totaled MSEK 1,363 ( 821), corresponding to SEK 9.55 per ordinary share (7.36)*

• Profit after tax amounted to MSEK 2,339 (1,124), corresponding to SEK 16.86 per ordinary share (10.13)*

• Recognized property value of SEK 29.6 billion (24.7) includes 411 (353) directly owned properties

• Net asset value (EPRA NAV) per ordinary share was SEK 76.63 (74.49)*

• Cash flow from operating activities was MSEK 1,172 (627), corresponding to SEK 8.10 per ordinary share (5.59)*.

• The Board proposes a dividend of SEK 4,20 per ordinary share with a quarterly payment of SEK 1,05, as well as a dividend of SEK 10,00 per preference share with a quarterly payment of SEK 2,50 per preference share.

* Key figures have been retroactively restated due to a 2:1 share split implemented in May 2015 and a voluntary change of accounting policy, which became effective in 2015.

SIGNIFICANT EVENTS DURING AND AFTER THE QUARTER

• Hemfosa completed its first property acquisition in Finland, comprising two community service properties in Helsinki at an underlying property value of approximately MSEK 500.

• Hemfosa continued to acquire community service properties in Sweden through the acquisition of 43 care properties at an underlying property value of MSEK 258.

• Streamlining of the property portfolio continued through agreements concerning the divestment of five residential properties in Gävle at an underlying property value of MSEK 170 and four logistics properties at an underlying property value of MSEK 335. Takeover of the properties occured following the end of the quarter.

• Hemfosa’s joint venture, Gardermoen Campus Utvikling AS, signed an agreement to construct a new local medical center, which is already fully leased, for approximately MSEK 200.

• After the end of the quarter, Hemfosa acquired nine community service properties in Norway through the acquisition of Statens Park in the municipality of Tønsberg at an underlying property value approximately MSEK 420.

• After the end of the quarter, Hemfosa acquired an additional three community service properties in Finland at an underlying property value of approximately MSEK 500.

• After the end of the quarter, Hemfosa signed a ten-year lease with If Skadeförsäkring for 11,000 square meters of previously vacant floor space in the Södra Porten area of Mölndal.

COMMENT FROM THE CEO

From Hemfosa’s standpoint, the pace of activity at the end of 2015 was just as fast as when the year started. Through our first acquisitions in Finland in December 2015 and an additional transaction in January this year, we have broadened our business to become a Nordic specialist in community service properties with operations in three countries. During the fourth quarter, we also reported strong profit from property management and a continued increase in earnings capacity .

A Nordic player wiht breadth

With the aim of continuing to grow in community service properties, we worked actively in 2015 to broaden the operations to additional markets and to streamline the portfolio with a focus on the community service area. At the beginning of the year, we took our first steps into Norway and, during the fourth quarter, following a meticulous market analysis, we completed our first acquisition in Finland, of two community service properties in Helsinki, for SEK 0.5 billion, followed by an equally large transaction after year-end. We view this geographic expansion as a strategically important, and logical, progression for Hemfosa. The Finnish and Norwegian markets both have distinct similarities with our Swedish core market, in terms of both function and development, and Hemfosa sees great potential for a large and specialized operator in the community service market. With a presence in three countries and a growing share of community service properties, we have also decided, as of this report, to switch to a segment division based primarily on the different markets and secondarily on the type of properties, which we hope will provide a clearer picture of the property portfolio and the Group’s progress.

Target-oriented transaction activity

In the “hot” market climate that currently prevails, a targeted approach is becoming more important than ever. Hemfosa has been extremely clear in its focus on community service properties that generate stable cash flows and we know when to turn down a transaction. During the year, we proved in the face of intense competition that we can implement transactions that are good for us, and I believe a key reason for our success is our position as a well-known and knowledgeable counterparty in the community service sector, where decisions made by property buyers are not solely based on monetary factors. In Sweden during the fourth quarter, we were able to sell non-priority properties and simultaneously acquire 43 fully leased healthcare and personal care properties; a growing area in which we believe that Hemfosa is ideally suited as a property owner with its long-term approach and experience. The pace of activity was also high in Norway, where Hemfosa built up a portfolio of community service properties worth approximately SEK 3 billion. In addition to one major acquisition, we initiated during the quarter our second large-scale joint venture at the Gardermoen Campus outside Oslo; a fully leased health and medical center close to the specialist hospital on which construction commenced in September. And we have identified good potential for additional attractive projects in this expansive area.

Strong trend

Since its foundation, Hemfosa has worked actively and consistently to secure expertise and it is continuing to build up an organization based on skillful employees with the ability and the will to grow within the company. During the autumn and winter, a number of employees were hired in the Swedish organization and for the new team in Norway. We also strengthened Group Management by promoting several company employees. When we summarize the year, we can report strong growth in profit from property management; up 66 percent compared with 2014, and cash flow from operating activities that rose from MSEK 627 to MSEK 1,172. In line with our business concept, in which stable and healthy earnings are the lodestars, we should and we can pay a high dividend to our shareholders and our policy is to distribute 60 percent of our distributable profit over time. The Board’s proposal that the dividend per ordinary share for 2015 be SEK 4.20 represents an increase by 40 percent on 2014. We also aim to continue to pay quarterly dividends, something that benefits and is appreciated by our shareholders.

Jens Engwall, CEO

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Contacts

Hemfosa Fastigheter
Jend Engwall, +46 70 690 65 50
CEO
jens.engwall@hemfosa.se
or
Karin Osslind, +46 70 794 93 37
CFO
karin.osslind@hemfosa.se

Contacts

Hemfosa Fastigheter
Jend Engwall, +46 70 690 65 50
CEO
jens.engwall@hemfosa.se
or
Karin Osslind, +46 70 794 93 37
CFO
karin.osslind@hemfosa.se