- Rental Income: Almost SEK2.6 billion, slightly higher than the previous year.
- Like-for-Like Portfolio Income Increase: 5% for the first nine months.
- Surplus Ratio: 77% for the third quarter, 75% for the entire period.
- Birger Bostad Gross Profit/Loss: Minus SEK17 million, with a profit of plus SEK3 million excluding administration costs.
- Central Administration Costs: Minus SEK80 million.
- Average Interest Rate: 3.16% at the end of the quarter.
- Profit from Property Management: Just over SEK1 billion, approximately SEK100 million lower than the previous year.
- Impairment of Development Properties: Minus SEK1.2 billion, with a positive change in value of SEK224 million in the third quarter.
- Equity per Share: SEK121 per share.
- EPRA NRV: SEK147 per share.
- Equity/Asset Ratio: 46%.
- Loan-to-Value Ratio: 43%.
- Interest Coverage Ratio: 2.5.
- Undrawn Revolving Credit Facilities: SEK8.5 billion.
- Net Letting: Minus SEK11 million for the quarter, SEK85 million for the first nine months.
- Occupancy Rate: Slightly lower than 90%.
- Property Value: SEK78.2 billion, with an additional SEK0.7 billion for development properties.
- GRESB Sustainability Benchmark Rating: 95 out of 100 for property management, 98 out of 100 for project development.
- Energy Consumption: 71-kilowatt hours per square meter, with a goal to reduce to 70-kilowatt hours per square meter.
Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fabege AB (FBGGF, Financial) reported a positive valuation change in the third quarter after seven quarters of negative value changes.
- Rental income increased by 5% on a like-for-like basis for the first nine months of 2024.
- The surplus ratio for the third quarter was strong at 77%, indicating efficient cost management.
- Interest expenses decreased in the third quarter due to falling market interest rates and effective management of interest rate derivatives.
- The company achieved an excellent sustainability ranking, with a GRESB rating of 95 out of 100 for property management operations.
Negative Points
- Net letting was negative for the quarter, with a decrease of SEK11 million, indicating challenges in securing new tenants.
- The occupancy rate is expected to decrease in the near future due to tenant departures, such as Telia.
- The company faces challenges in the office market, with longer decision times for new contracts due to economic uncertainty.
- Convendum, a significant tenant, filed for Chapter 11, raising concerns about potential rent adjustments or vacancies.
- The overall property value decreased by SEK1.2 billion for the entire period, despite a positive change in the third quarter.
Q & A Highlights
Q: What impact will the SAAB and Alfa Laval tenants have on vacancy rates in the next 18 months?
A: Asa Bergstrom, CFO, noted that while the occupancy rate might initially decrease due to Telia vacating some areas, the completion of projects and SAAB moving in will positively impact occupancy rates in the future.
Q: Is the decline in space needed by businesses a cyclical effect or a fundamental shift?
A: Stefan Dahlbo, CEO, explained that the current decline is more related to the business cycle and economic uncertainty. However, there is a long-term trend of using office space more efficiently, with less square meters per employee.
Q: What needs to change for operations to turn positive in the challenging office market?
A: Stefan Dahlbo, CEO, stated that the main issue is the uncertainty in the economy and global political situations. This uncertainty affects decision-making for new contracts. The business cycle is the primary factor impacting operations.
Q: Why are Fabege's properties appraised at a lower NOI yield compared to the rest of the continent?
A: Stefan Dahlbo, CEO, mentioned that the valuation system used in Sweden is consistent and transparent, allowing for comparisons. The transactions in the market support the valuations, often at the same or better levels than recorded.
Q: What is Fabege's exposure to co-working spaces, particularly with Convendum?
A: Stefan Dahlbo, CEO, noted that Convendum is Fabege's second-largest tenant, accounting for over 3% of rental income. The units are considered attractive and are rented at market levels. Convendum's challenges are attributed to rapid expansion rather than the rent levels of Fabege's properties.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
