Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rental income remained stable at NOK853 million, with a 4% growth when adjusted for one-offs and divestments.
- Net income from property management increased by 7% from Q1 and 18% from Q4 of the previous year.
- Successfully closed the Trondheim transaction and sold Hotel Savoy, reducing debt by NOK6.2 billion and improving leverage by 4 percentage points.
- Positive net letting of NOK12 million, with new and renewed leases totaling NOK176 million.
- Occupancy rate remains high at 94.8%, with a significant portion of vacant space being quality assets in good locations.
Negative Points
- Slight increase in vacancy rates, currently at 94.8%, due to a more letting intense portfolio.
- Rental income expected to decrease by 9% in Q3 due to the divestment of the Trondheim portfolio.
- Net value changes of only NOK2 million in the quarter, indicating limited growth in property values.
- Financing costs are up compared to last quarter, despite trending downwards from previous quarters.
- Property net yield is currently at 4.99%, which is relatively low compared to the potential yield if the portfolio was fully leased at market rents.
Q & A Highlights
Q: Do you have further vacant buildings or soon-to-be vacant buildings that you will need to refurbish or redevelop?
A: We have just started reporting on three projects. There is one more building where we could potentially start refurbishment if leasing is resolved. Other than that, no big projects are in the pipeline for the next 12 months. - Sonja Horn, Chief Executive Officer
Q: Can you comment on the reversion potential in the portfolio?
A: The market rental growth has been strong over the last couple of years, almost 18% in the Oslo market, which is above CPI. Currently, our portfolio has a reversion potential of 14%, with 16% in the Oslo market. This presents an opportunity for us during renegotiations and letting vacant space. - Sonja Horn, Chief Executive Officer
Q: How do you expect property values to evolve over the second half of 2024?
A: We use external appraisers every quarter. We expect that we are close to a bottom and do not foresee further declines. However, there were differences in appraisers' views this quarter, with one increasing yields on some assets while the other remained stable. - Sonja Horn, Chief Executive Officer
Q: What was the difference in valuations between the appraisers?
A: This quarter, the difference in valuations was 4.3%, which is tighter than usual. - Sonja Horn, Chief Executive Officer
Q: Is there any plan for further disposals?
A: We have done significant divestments and are comfortable with our balance sheet. We still have some non-strategic assets we are willing to sell if we get the right pricing, potentially up to NOK2 billion. This would also help finance future CapEx for profitable projects. - Sonja Horn, Chief Executive Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
