Professional Documents
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2019 Akelius
2019 Akelius
year-end report
January to December 2019
Loan-to-value, percent 40 44 40 44
Interest coverage ratio excluding
realized value growth 12 months 2.0 1.8 2.0 1.8
Pål Ahlsén,
CEO and Managing Director
year-end report, January to December 2019
3
year-end report, January to December 2019
1,750
Washington D.C. 64
Berlin 42
74%
Montreal 30 1,003
Boston 16
Stockholm 13
Hamburg 5
London 5
investments sales price
Toronto 4 purchase price
Other 2
Akelius has signed agreements for property sales
in Germany and Canada with closing date during
2020.
4
year-end report, January to December 2019
7,492 108.3
21.8
719
6,773 86.5
move out move in net letting move out move in net letting
474 64 485
30 440 5 445
410
7,2%
5
year-end report, January to December 2019
like-for-like growth
rental income 5.7 percent net operating income 2.9 percent
10.7
8.0
7.1
5.7
5.1 5.1
4.3 4.1 4.0
3.4 3.2 2.9
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
1.3 1.4
1.0 1.1 1.1
0.9 0.9
0.6 0.7 0.7 0.7
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 average
6
year-end report, January to December 2019
percent
20
18
16
14
12
10
8
6
4
2
0
2013 2014 2015 2016 2017 2018 2019
Jan–Dec Jan–Dec Jan–Dec Jan–Dec Jan–Dec Jan–Dec Jan–Dec
Growth Jan–Dec
EUR million percent
Fair value, Jan 1, 2019 12,379
Revaluations 423 3.4
Investments 468 3.8
Purchases 181 1.5
Sales -1,616 -13.1
Exchange difference 129 1.0
Fair value, Dec 31, 2019 11,964 -3.4
Net operating income 255 2.1
Total property return 678 Per annum: 5.5
7
year-end report, January to December 2019
financing
loan-to-value ratio equity and hybrid capital ratio
40 percent 50 percent
50
47 4
5
44
5
40
25
26 46
37
19
14
1,047
39
841 167
661
21
461 50
841
590
129 116
8
year-end report, January to December 2019
financing
debt maturities interest rate hedges,
EUR million, year interest rate
EUR million, percent, year
2,473
2,430
2.26
775
590 642 621 603 649
259 331
3.75 1.74 223 1.65
118
2.22 1.22
0–1 1–2 2–3 3–4 4–5 >5 0–1 1–2 2–3 3–4 4–5 >5
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
financing
EBITDA EUR 227 million interest coverage ratio 7.8
7.8
Earnings
capacity
current interest and debt coverage capacity as per
Jan 2019– Dec 31,
EUR million Dec 2019 20191
Rental income 496 5252
Operating expenses -210 -195
Maintenance -31 -28
Net operating income 255 302
Central administrative expenses -36 -36
Other income and expenses 3 3
Reversal operational exchange differences -2 -2
Reversal depreciation 7 7
EBITDA 227 274
Other financial income and expenses 1 2
Adjusted EBITDA 228 276
Net interest expenses -115 -109
Interest coverage ratio excluding realized value growth 2.0 2.5
Realized value growth 673 -
Interest coverage ratio 7.8 -
Net debt as per Dec 31, 2019 4,838 4,838
Net debt/EBITDA 21.3 17.7
Net debt/EBITDA including realized value growth 5.4 -
1) The earnings capacity is based on the property portfolio as per Dec 31, 2019 and the
property portfolio’s gross rent, real vacancy, estimated operating expenses, maintenance
costs and central administration during a normal year.
2) Includes EUR 456 million in residential rental value as of Jan 1, 2020, EUR 38 million in
rental income for commercial properties and parking, EUR -7 million in real vacancy for
apartments and EUR 38 million in other income.
Residential rental value of EUR 456 million minus real vacancy and discounts offered is
equivalent to EUR 445 million in residential in-place rent.
10
year-end report, January to December 2019
Berlin Hamburg
Berlin Hamburg
Property portfolio
Fair value, EUR million 3,038 816
Proportion of property fair value, percent 25 7
Capitalization rate, percent 3.39 3.67
Proportion upgraded apartments, percent 42 54
Average apartment size, sqm 63 55
Walk score 91 91
11
year-end report, January to December 2019
London Paris
like-for-like properties
London Paris
Property portfolio
Fair value, EUR million 951 402
Proportion of property fair value, percent 8 3
Capitalization rate, percent 4.13 4.06
Proportion upgraded apartments, percent 63 28
Average apartment size 422 sqft 31 sqm
Walk score 86 97
Average rent GBP/sqft/month EUR/sqm/month
Total portfolio Jan 1, 2019 2.77 22.79
Sales 0.00 -
Like-for-like Jan 1, 2019 2.77 22.79
Like-for-like increase 0.11 2.67
– Increase in percent 3.6 11.7
Like-for-like Jan 1, 2020 2.88 25.46
Purchases - 0.15
Total portfolio Jan 1, 2020 2.88 25.61
New lease level 3.10 40.64
12
year-end report, January to December 2019
Stockholm Malmö
Stockholm Malmö
Property portfolio
Fair value, EUR million 1,657 970
Proportion of property fair value, percent 14 8
Capitalization rate, percent 2.69 3.23
Proportion upgraded apartments, percent 53 57
Average apartment size, sqm 72 65
Walk score 69 91
13
year-end report, January to December 2019
like-for-like properties
14
year-end report, January to December 2019
15
year-end report, January to December 2019
Toronto Montreal
Toronto Montreal
Property portfolio
Fair value, EUR million 908 828
Proportion of property fair value, percent 8 7
Capitalization rate, percent 4.14 4.29
Proportion upgraded apartments, percent 46 47
Average apartment size, sqft 557 720
Walk score 81 87
Average rent CAD/sqft/month CAD/sqft/month
Total portfolio Jan 1, 2019 2.13 1.68
Sales 0.11 -
Like-for-like Jan 1, 2019 2.24 1.68
Like-for-like increase 0.18 0.07
– Increase in percent 8.0 3.7
Like-for-like Jan 1, 2020 2.42 1.75
Purchases -0.01 -0.02
Total portfolio Jan 1, 2020 2.41 1.73
New lease level 3.57 2.01
16
year-end report, January to December 2019
result
rental income EUR 496 million increase in property value
Rental income was EUR 496 million (482), 3.4 percent
an increase of 2.7 percent compared to the The increase in property value was
same period in 2018. EUR 423 million (553) or 3.4 percent (5.2).
Like-for-like growth in rental income was The growth in value is due to increasing cash
EUR 20 million (12) or 5.7 percent (3.2). flow and sales above fair value.
As of 31 December,
33,842 rental contracts (26,118) with an annual net financial items EUR -161 million
rent of EUR 410 million (253) were renewed Interest expenses were EUR -116 million (-129)
or renegotiated. and interest income were EUR 1 million (1).
The new yearly rent is EUR 418 million (258), The decrease of interest expenses is partly due
an increase of 1.8 percent (2.3). to a decreased average loan volume in 2019
The vacancy rate for residential units was compared to 2018.
8.6 percent (9.6). Interest expenses for the hybrid bond were
88 percent (86) was due to upgrades or planned EUR -19 million (-14).
sales of apartments. Financial derivatives affected earnings
The real vacancy rate decreased by by EUR -28 million (0).
0.3 percentage points to 1.1 percent (1.4) Other financial income and expenses
during 2019. amounted to EUR 1 million (-3).
17
year-end report, January to December 2019
18
year-end report, January to December 2019
Profit attributable to
- owners of the Parent Company 379 501 70 32
- non-controlling interests 6 6 2 1
Total comprehensive income attributable to
- owners of the Parent Company 410 448 64 16
- non-controlling interests 6 6 2 1
Earnings per share before and after dilution,
EUR 0.11 0.15 0.02 0.01
*) Net income from the revaluation and disposal for Jan-Dec 2019 include change in fair value
of properties of EUR 422 million, minus transaction cost EUR 18 million, minus revaluation
reserve for owner-occupied properties of EUR 1 million.
Realized gain and loss from the disposal of investment properties amounted to EUR 194 million
in Jan–Dec 2019 and EUR 4 million in Jan–Dec 2018.
Transaction costs amounted to EUR 18 million in Jan–Dec 2019 and EUR 5 million in
Jan–Dec 2018.
20
year-end report, January to December 2019
Currency Non
Share Share translation Retained controlling Total
EUR million capital premium reserve earnings Total interests equity
Balance at
January 1, 2018 204 1,504 -154 3,327 4,881 20 4,901
Profit for the year - - - 501 501 6 507
Other
comprehensive
income - - -55 2 -53 - -53
Total other
comprehensive
income - - -55 503 448 6 454
Acquired minority - - - - - 52 52
Dividend - -846 - - -846 - -846
Share issue 7 802 - - 809 - 809
Balance at
December 31,
2018 211 1,460 -209 3,830 5,292 78 5,370
EUR conversion1 -24 -145 24 145 - - -
Adjusted
opening balance,
Jan 1 2019 187 1,315 -185 3,975 5,292 78 5,370
Profit for the year - - - 379 379 6 385
Other
comprehensive
income - - 30 1 31 - 31
Total other
comprehensive
income - - 30 380 410 6 416
Redeemed shares -1 -585 - -21 -607 - -607
Share issue 13 372 - -7 378 - 378
Dividend - - - -32 -32 - -32
Acquired minority - - - - - 1 1
Balance at
December 31,
2019 199 1,102 -155 4,295 5,441 85 5,526
22
year-end report, January to December 2019
23
year-end report, January to December 2019
loans
segment information
24
year-end report, January to December 2019
Financing
Loan-to-value ratio, secured loans, percent 14 19 18 24 36
Loan-to-value ratio, percent 40 44 44 43 48
Unencumbered asset ratio 1.87 1.74 1.63 1.18 1.00
Interest coverage ratio 12 months 7.8 2.8 4.7 4.5 3.0
Interest coverage ratio excluding realized
value growth 12 months 2.0 1.8 1.9 1.9 1.6
Average interest rate, percent 2.25 2.64 2.58 2.62 3.44
Fixed interest term, years 4.5 4.5 5.3 4.5 4.3
Debt maturities, years 5.4 5.7 5.6 5.0 5.7
Properties
Number of apartments 44,226 50,407 47,177 46,516 51,231
Rentable area, thousand sqm 2,968 3,422 3,228 3,236 3,587
Real vacancy rate, residential, percent 1.1 1.4 0.9 1.1 1.3
Vacancy rate, residential, percent 8.6 9.6 6.6 5.0 4.3
Turnover of tenants, percent 15 15 14 14 15
Fair value, EUR per sqm 4,031 3,617 3,292 2,834 2,220
Capitalization rate, percent 3.67 3.67 3.60 3.82 4.33
Change in capitalization rate1,
percentage points 0.00 0.02 -0.22 -0.49 -0.36
Fair value of properties opening balance,
EUR million 12,379 10,624 9,171 7,965 6,068
Change in fair value, EUR million 423 553 886 1,343 857
Investments, EUR million 468 349 288 316 237
Purchases, EUR million 181 1,286 1,297 643 1,293
Sales, EUR million -1,616 -300 -737 -957 -615
Exchange difference, EUR million 129 -133 -281 -139 125
Fair value of properties closing balance,
EUR million 11,964 12,379 10,624 9,171 7,965
25
year-end report, January to December 2019
key figures
2019 2018 2017 2016 2015
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
Properties, Sweden
Average residential rent, SEK/sqm/year 1,372 1,316 1,287 1,246 1,184
Growth in average residential rent2, percent 3.5 2.3 2.4 2.6 2.6
Growth in rental income3, percent 4.0 2.4 3.8 1.9 3.0
Growth in net operating income3, percent 6.6 5.0 10.8 2.4 1.8
Fair value, EUR per sqm 3,279 2,976 2,821 2,421 1,877
Capitalization rate, percent 2.89 3.02 3.00 3.43 4.30
Number of apartments 10,000 12,298 13,808 17,381 23,520
Vacancy, percent 1.6 2.1 1.1 1.2 1.5
Real vacancy, percent 0.0 0.0 0.0 0.1 0.1
26
year-end report, January to December 2019
key figures
2019 2018 2017 2016 2015
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
Properties, Canada
Average residential rent, CAD/sqm/month 2.03 1.90 1.92 1.89 1.79
Growth in average residential rent2, percent 6.5 3.5 4.4 6.7 3.6
Growth in rental income3, percent 2.0 3.1 9.5 7.0 4.1
Growth in net operating income3, percent -6.8 0.7 28.2 29.0 25.1
Fair value, EUR per sqm 3,895 3,147 2,968 2,743 2,345
Capitalization rate, percent 4.21 4.26 4.29 4.36 4.37
Number of apartments 7,366 7,779 5,500 4,513 3,999
Vacancy, percent 14.9 13.0 3.9 7.1 11.1
Real vacancy, percent 1.4 2.3 0.6 3.4 3.6
27
year-end report, January to December 2019
key figures
2019 2018 2017 2016 2015
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
Properties, England
Average residential rent, GBP/sqft/month 2.88 2.77 2.75 2.55 2.07
Growth in average residential rent2, percent 3.6 0.3 3.3 5.9 11.5
Growth in rental income3, percent 4.4 4.2 16.2 7.5 15.1
Growth in net operating income3, percent 2.2 5.1 15.4 15.4 23.0
Fair value, EUR per sqm 9,106 8,772 8,689 8,274 7,407
Capitalization rate, percent 4.13 4.14 4.16 4.11 4.22
Number of apartments 2,242 2,244 2,148 1,224 1,404
Vacancy, percent 16.0 19.1 14.7 12.4 8.0
Real vacancy, percent 1.7 3.0 2.0 3.7 2.8
Properties, France
Average residential rent, EUR/sqm/month 25.61 22.79 23.40 20.99 22.50
Growth in average residential rent2, percent 11.7 8.4 14.9 1.7 15.7
Growth in rental income3, percent 16.2 6.3 -1.4 11.9 -
Growth in net operating income3, percent -67.5 254.1 -7.1 241.1 -
Fair value, EUR per sqm 7,559 7,143 6,883 6,411 6,857
Capitalization rate, percent 4.06 4.06 4.16 4.20 4.21
Number of apartments 1,550 1,546 1,100 941 467
Vacancy, percent 38.6 43.8 46.4 46.2 35.3
Real vacancy, percent 2.3 1.8 1.3 3.7 1.3
28
year-end report, January to December 2019
key figures
2019 2018 2017 2016 2015
Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
Properties, Denmark
Average residential rent, DKK/sqm/year 1,065 1,011 936 916 -
Growth in average residential rent2, percent 5.4 8.0 5.3 - -
Growth in rental income3, percent 11.8 0.9 - - -
Growth in net operating income3, percent 28.9 12.1 - - -
Fair value, EUR per sqm 3,649 3,385 3,129 2,836 -
Capitalization rate, percent 2.95 2.99 3.09 3.42 -
Number of apartments 1,031 1,031 1,031 216 -
Vacancy, percent 1.0 4.2 6.1 1.9 -
Real vacancy, percent 0.0 0.1 0.6 - -
29
year-end report, January to December 2019
30
year-end report, January to December 2019
2019 2018
EUR million Dec 31 Dec 31
Equity 5,526 5,370
Deferred tax 933 884
Deferred taxes reported as liabilities held for sale 13 -
Derivative financial instruments 61 30
Net asset value 6,533 6,284
31
year-end report, January to December 2019
2019 2018
EUR million Jan–Dec Jan–Dec
Proceeds from the sale of properties 1,616 300
Costs of sale -18 -5
Acquisition costs -663 -112
Accumulated investments -262 -54
Realized value growth 673 129
32
year-end report, January to December 2019
other information
basis of presentation The cost for site leasehold fees are reported as
a financial expense,
The Akelius Residential Property Group’s unlike the previous policy, according to which
Interim report has been prepared in the fees were reported as operating costs.
accordance with IAS 34, Interim Financial The rent cost is allocated between
Reporting and the Swedish Annual Accounts impairments and financial expenses.
Act.
The financial statements of the Parent IFRS 9 Financial instrument
Company, Akelius Residential Property AB, Derivative instruments are reported in the
corporate identity number 556156-0383, balance sheet as of the settlement date and
have been prepared in accordance with are valued continuously at fair value through
the Swedish Annual Accounts Act and the profit or loss.
accounting standard RFR 2, The fair value of derivatives not listed in an
Accounting for Legal Entities. active market is determined according to
Disclosures in accordance with IAS 34 Interim valuation techniques,
Financial Reporting are submitted both in based on a series of methods and assumptions
the notes and in other sections of the interim relating to market conditions as of the
report. reporting date.
The figures in this interim report have been Financial instruments that are not measured
rounded, at fair value through profit or loss are
while the calculations have been made without measured at amortized cost using the
rounding. effective interest rate method.
As a result, the figures in certain tables and key The fair values of hybrid bond are based on
figures may appear not to add up correctly. level 1 and the fair values of derivatives and
other loans are based on level 2 in the fair
accounting principles value hierarchy.
Parent Company Compared to 2018,
no transfers have been made between
As of January 1, 2019, the Parent Company´s different levels in the fair value hierarchy for
functional currency is Euro. derivatives and borrowings and no significant
changes have been made to valuation
IFRS 16 Leasing techniques.
IFRS 16 “Leases” has been implemented from
January 1, 2019.
Akelius applied the cumulative catch-up financial instruments recorded at fair value
approach in the transition.
Akelius’ rental agreements for offices and site 2019 2018
leaseholds are reported in the balance sheet EUR million 31 Dec 31 Dec
from 2019. Assets 3 16
Liabilities 64 46
33
year-end report, January to December 2019
other information
risks and uncertainties
Operational risks are limited by concentrating
the property portfolio to residential properties
in metropolitan areas.
Strong residential rental markets in Sweden,
Germany, Canada, England, France,
the United States and Denmark reduce the
risk of long-term vacancies.
To reduce risk or variations in cash flow
further, interest rates are secured on a long-
term basis.
Access to capital from a large number of banks
and through the capital market mitigates the
refinancing risk.
Overseas investments are hedged to reduce
the impact of currency movements related to
the Group´s equity-to-assets ratio.
There have been no material changes in the
company’s assessment of risks since the
publication of the 2018 annual report.
Pål Ahlsén,
CEO, Managing Director
34
year-end report, January to December 2019
definitions
adjusted EBITDA
EBITDA plus other financial income and Interest expenses are based on net debt on
expenses. the balance sheet date calculated at the
It highlights current cash flow capacity from currency rate on the balance sheet date.
property management excluding financial No tax has been calculated as it relates
income and expenses. mainly to deferred tax.
The earnings capacity is not a forecast for
adjusted net operating income margin the coming twelve months.
Net operating income in relation to rental It contains no estimates of rent, vacancy,
income excluding income from operating currency exchange, future property
expenses included in the rent invoiced to the purchases and sales or interest rate
tenants, such as utility and property taxes. changes.
It highlights the ongoing earning capacity
from property management related to rental discount rate
services only. Rate of return used in assessing the present
value of future cash flow and terminal value
annual property return in the fair value assessment of properties.
Gain from the revaluation of investment Defined as the expected return on the
properties and net operating income on an property.
annual basis in relation to the fair value of Mainly used to estimate properties real value.
the properties at the beginning of the year.
It illustrates the total return on the property EBITDA
portfolio. Net operating income plus central
administrative expenses,
capitalization rate other income and expenses with add-back
The rate of return used in assessing the of depreciation and impairment charges and
terminal value of property in the fair value operating exchange rate differences.
assessment. It highlights current cash flow capacity from
The capitalization rate is the net operating property management.
income, when it grows at a constant pace,
divided with the property value. equity ratio
Equity in relation to total assets.
debt maturities, years It highlights the company’s financial stability.
Volume-weighted remaining term of
interest-bearing liabilities and derivatives on income return
the balance sheet date. Net operating income on an annual basis in
It illustrates the company’s refinancing risk. relation to the fair value of the properties at
the beginning of the year.
It measures the yield on the property
debt coverage capacity portfolio.
Profit before tax and revaluation,
including realized value growth.
in-place rent
Net operating income and realized value
Contracted rent, excluding rental discounts
growth are reinvested into existing and new
and temporary charges.
properties.
This leads to a growing operating surplus.
The earnings capacity is based on the interest rate hedge total loans year
property portfolio at balance sheet date and Volume-weighted remaining term of interest
the portfolio’s gross rent, real vacancy, rates on interest-bearing liabilities and
estimated operating expenses and derivatives on the balance sheet date.
maintenance costs during a normal year, It illustrates the company’s financial risk.
as well as central administrative expenses.
35
year-end report, January to December 2019
definitions
interest coverage ratio net debt
Adjusted EBITDA plus realized value growth Interest-bearing liabilities, less subordinated
for the latest rolling 12-month period debt, cash and liquid assets.
in relation to net interest expenses for the It is used to facilitate analysis of the
latest rolling 12-month period. Company’s real indebtedness.
It illustrates the company’s sensitivity to
interest rate changes. net financial items
The net of interest income, interest expenses,
liquid financial assets other financial income and expenses and
Debt securities and equity securities traded changes in the fair value of derivatives.
on a regulated market and with an investment It measures the net of financial operations.
grade rating.
It is used to calculate liquidity. net letting
The sum of agreed contracted annual rents
liquidity for new lettings for the period less terminated
The liquidity reserve consists of free cash, annual rents.
unused credit lines and assets that can be Demonstrates the effect of the vacancy
liquidized within three working days. development illustrated in annual rent.
36
year-end report, January to December 2019
definitions
property costs return on equity
This item includes direct property costs such Comprehensive income divided by opening
as operating expenses, utility expenses, equity.
maintenance costs, leasehold fees and Shows the return offered on the owners’
property taxes. invested capital.
Illustrates the direct property expenses.
unencumbered asset ratio
property portfolio Unencumbered assets divided by cash
Investment property, owner-occupied equivalents divided by unsecured debt minus
properties, and investment property subordinated debt and cash equivalents.
classified as assets held for sale. It is used to assess unencumbered assets in
Summarizes the different accounting relation to unsecured senior interest-bearing
definitions of properties. liabilities.
rental value
12 months rent for apartments including a
market rent for vacant apartments.
Development of the rental value over the
last 12 months, broken down into disposals,
acquisitions and comparable portfolio.
Illustrates what is accountingly included in the
Company’s rental income.
37
Head office
Svärdvägen 3A
Akelius in brief
Box 104,
S-182 12 Danderyd
apartments for metropolitans
+46 (0) 8 566 130 00
akelius.com All apartments are in metropolitan cities,
such as Berlin, Hamburg, Paris, London, Toronto,
Sweden Montreal, New York, Boston,
Rosenlundsgatan 50 Washington D.C., Stockholm and Copenhagen.
Box 38149
100 64 Stockholm
better living
Akelius’ mission is to provide tenants with better
+46 (0)10-722 31 00
living by continuously upgrading buildings and
akelius.se
service.
Germany
Erkelenzdamm 11-13
acquire via cherry-picking
Akelius prefers to make many smaller acquisitions
D-10999 Berlin
of properties that are exactly right,
+49 (0) 30 7554 110
by cherry-picking,
akelius.de
rather than making a few large acquisitions of
properties that are not quite right.
Canada
289 Niagara Street strong capital structure,
Toronto M6J 0C3
+1 (416) 214-2626 low refinancing risk
akelius.ca Akelius has agreements with 31 banks, listed
senior unsecured bonds and listed class D ordinary
England shares.
10 Bloomsbury Way Akelius is amongst the largest listed property
London WC1A 2SL companies in Sweden and has nine thousand
+44 (0) 800 014 8579 shareholders.
akelius.co.uk
first-class personnel
France More than two hundred employees have graduated
24 rue Cambacérès from the Residential Real Estate Management
75008 Paris program at Akelius Business School.
+33 1 40 06 85 00
akelius.fr
United States
300 A Street, 5th Floor
Boston, MA 02210 financial calender
+1 857 930-3900
akelius.us annual report 2019 Mar 13, 2020