Kungsleden delivers strong results for 2020, with sights set on growth ahead
- Profit from property management increased by 6 per cent to SEK 1,257 million (1,185). The increase is mainly due to higher rental revenue, increased surplus ratio and decreased selling- and administration costs.
- New leasing was SEK 156 million (210), and net leasing was SEK 22 million (58).
- 109 contracts (131) with rental value of SEK 238 million (252) were renegotiated in the year, resulting in a rental value uplift of 12 per cent (10) on average.
- After investments of SEK 1,395 million, transactions and positive value changes, total property value was SEK 40,718 million, compared to SEK 38,310 million at the beginning of the year.
- Unrealised value changes on properties amounted to SEK 948 million (1,762), which corresponds to an uplift of 2.5 per cent. The value increase is due to a reduction in the required yield and also to higher rents.
- Current net asset value increased to SEK 97.13 per share (90.10).
- The Board of Directors is proposing to increase Kungsleden’s dividend to SEK 2.80 per share (2.60), an increase of 8 per cent.
Significant events during and after the fourth quarter
- The Eden by Kungsleden office project in Hyllie in Malmö attained an occupancy rate of 85 per cent after renal services provider Diaverum signed a seven-year lease contract in December.
- Kungsleden completed several major leasings in the quarter, by example in Kista, with four new tenants signing on a total of 2,000 sq.m. Kungsleden signed three new leases on a total of 2,500 sq.m. in Växjö with the Swedish Transport Administration, Outnorth and the restaurant chain Brödernas.
- In November, the Board of Directors decided to repurchase treasury shares to optimise Kungsleden’s capital structure, and create increased shareholder value.
- Kungsleden vacated the retail property Tändstiftet 2 at the beginning of 2021 after divesting it to its tenant Europeiska Motor AB in the fourth quarter. In January, Kungsleden signed an agreement with JM AB to divest the property Isolatorn 12, with its future residential building rights.
- During 2020 to date, we have issued a total of SEK 3.2 billion, the majority being green bond loans with long maturities and attractive pricing.
- We’ve delivered on the financial goals we set in 2017. For the coming five years, we’ve adopted a new business plan and new financial goals focused on growth and an even stronger financial position.
“Kungsleden delivers strong results in 2020 despite the pandemic, with profit from property management increasing by 6 per cent to SEK 1,257 million. The surplus ratio and average rent are our highest yet. We’re delivering on our financial goals, while also setting new ambitious goals going forward, focusing on growth, sustainability and an even stronger financial position.
2020 was a really special year. After a positive start, the pandemic followed, triggering shutdowns across society affecting people, businesses and whole nations. Despite the pandemic, we can summarise 2020 as another strong year for Kungsleden. In like-for-like portfolio terms, our revenue increased by 4 per cent, and in total, rose to SEK 2,530 million. Our operating net increased by 6 per cent to SEK 1,743 million, and our profit from property management of SEK 1,257 million is Kungsleden’s highest to date, and well above the financial goal we set in 2017, of profit from property management of SEK 1,200 million for 2020.
Healthy demand on the market and positive changes in value
The demand on our main markets of Stockholm, Gothenburg, Malmö and Västerås was positive. We signed 288 new lease contracts in the year with rental value of SEK 156 million. Net leasing was SEK 22 million. In the year, we successfully renegotiated existing lease contracts worth SEK 238 million, increasing rent by an average of 12 per cent, or SEK 29 million.
The surplus ratio on investment properties was 70.4 per cent, the highest in Kungsleden’s history, and average rent across our property portfolio increased by 5 per cent to SEK 1,506 per sq. m. We are maintaining positive and close dialogue with our customers, especially those in difficulty during the pandemic. Any effect on Kungsleden has been limited. Granted rent relief has gradually tapered off, and the fourth quarter, was significantly lower than the previous quarter.
2020 was Sweden’s third-strongest year for transactions, with volume of SEK 181 billion. Pricing levels for completed transactions demonstrate that the required yield of Office, Warehouse, Logistics and Industrial properties has decreased. The value of Kungsleden’s property portfolio increased by SEK 2.4 billion to SEK 40.7 billion in the year thanks to completed projects and project investments, as well as improved rental revenue and lower required yields.
Lowest-ever LTV ratio and a higher share of green financing
In the year, we increased our share of green financing to 38 per cent through a series of successful bond issues. In 2020 and to date, we have issued a total of SEK 3.2 billion, most being green bonds on long maturities with attractive pricing. This further enhances our already good liquidity coverage. At year-end, our LTV ratio was 45.0 per cent, Kungsleden's lowest ever.
We adopted a new sustainability strategy in 2020, with the aim of being climate positive right through the entire value chain by 2035, with the milestone of being climate positive in property and facility management by 2025. To achieve our targets, we’re working successfully on reducing our climate footprint in several contexts. This includes reducing energy consumption by 10 per cent this year, and by 28 per cent since 2014. We signed 122 new green leases in the year, and 42 per cent of our properties are now certified, enabling us to keep growing our share of green financing.
New business plan and financial goals for the next five years
After a persistently volatile autumn with a second pandemic wave, forecasters are now seeing light at the end of the tunnel. Assuming vaccination programmes continue to plan and countries progressively ease restrictions, like several other commentators, we anticipate a broader-based recovery across economies, and in Sweden, GDP growth of about 3 per cent in 2021. With growing economies, the demand for offices and commercial premises also increases. We will see new ways of working post-pandemic, with the demand for more flexible office solutions, more meeting places and a bigger focus on health and well-being. We’re looking forward to this, and are well prepared to address our customers’ changing needs.
We’ve delivered on the financial goals we set in 2017 for 2020. For the coming five years, we’ve adopted a new business plan and new financial goals focused on growth and an even stronger financial position. This includes us growing our property portfolio from SEK 41 to 55 billion, through continued successful property development, rent growth and strategic acquisitions. We intend to increase our profit from property management by over 30 per cent to a minimum of SEK 1,650 million by 2025. Our LTV ratio should not exceed 45 per cent for the long term, and our ambition is to keep improving our investment grade rating.
With an attractive property portfolio in growth markets, creditworthy tenants, more focus on sustainability, improved financial position and record-high employee commitment, we have great potential to achieve our high goals!”
Presentation of year-end report
Kungsleden is pleased to invite investors, analysts, and the financial media to its interactive online Capital Markets Update on 11 February 2021 at 10.00. The year-end report will be presented as well as the company’s five-year business plan with a focus on growth and new financial goals. To participate click here.
The presentation and the interactive online Capital Markets Update will be held in English and is available here.Regulatory
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This information is mandatory for Kungsleden AB to publish pursuant to the Swedish Securities Markets Act. This information was submitted for publication at 6:55 a.m. CET on 11 February 2021 by the contacts above.
About Kungsleden. We are people that create places and experiences for people. By developing and managing attractive and sustainable places, we offer people a better and more inspiring work experience. We are a long-term property owner focused on commercial properties in Sweden’s growth regions. As of 31 December 2020, we owned 211 properties with total value of SEK 40,718 million. Kungsleden (KLED) is listed on the Nasdaq Stockholm Large Cap. Read more at www.kungsleden.se