Best annual results ever for Vasakronan
Continued high demand for office premises, low vacancies and rising rents resulted in a profit after tax of SEK 12.9 billion (9.3). The strong rent trend contributed to a 6% increase in net operating income and growth in property values of 8.5% in 2018.
- Rental revenue increased to SEK 6,718 million (6,490). For comparable property holdings, the increase was 5% and was mainly attributable to positive effects from new lettings and renegotiated leases.
- The occupancy rate was 93.1% (93.1) at year end. Of total vacancies, 2.5 percentage points (2.8) were attributable to ongoing projects and development properties.
- Property expenses amounted to a total of SEK 1,849 million (expense: 1,812). For comparable property holdings, the increase was 4% and was mainly due to higher costs for electricity and district cooling.
- Net operating income increased in total to SEK 4,869 million (4,678). For comparable property holdings, the increase was 6% and was due to higher rental revenue.
- Profit before value changes and tax rose to SEK 3,884 million (3,413), corresponding an increase of 14%.
- The change in the property value amounted to SEK 10,651 million (7,973), corresponding to an 8.5% (6.9) increase in value mainly due to rising market rents in Stockholm.At the end of the period the portfolio value amounted to SEK 138,934 million (126,875).
- Profit after tax amounted to SEK 12,902 million (9,269).
- The share of environmentally certified buildings amounted to 85% (84) at the end of the period.
- The energy intensity was 103 kWh/sq. m (100).
- A dividend of SEK 4 000 million (4,000), has been proposed to the Annual General Meeting.
During the year, new lettings corresponded to 146,000 sq. m. (167,000) with annual rents of SEK 510 million (613). Major lettings during the quarter included a six-year lease with the Swedish Council for Higher Education (UHR) for 6,600 sq. m. in Solna Strand and a seven-year lease for 3,200 sq. m. with the XXL retail chain at Triangeln in Malmö. Moreover, renegotiations encompassed 324,000 sq. m. (369,000) with an annual rent of SEK 990 million (1,036), corresponding to a rent increase of 12% (10).
“We are experiencing extremely strong demand for office space in prime locations. The processes we have developed to help customers streamline their resources in terms of premises are gaining increasing appreciation, at the same time as they boost square metre rent levels for us. The retail side is facing new challenges due to the ongoing structural changes. We have a clear advantage here due to our portfolio only including city retail locations, but we are still working intensively to develop our precincts and districts. Examples of the results our work methods generate are provided by Södra Förstadsgatan and Triangeln in Malmö, which are now essentially fully let,” says Fredrik Wirdenius, CEO of Vasakronan.
During the quarter, Vasakronan’s long-term climate targets were approved by the Science Based Targets Initiative, a collaboration between the World Wide Fund for Nature (WWF), the United Nations Global Compact, CDP and the World Resources Institute (WRI). Science Based Targets comprises a scientific method to ensure that a company’s objectives are aligned with what is needed to reach the Paris Agreement target of limiting global warming to 2°C.
After the end of the financial year, Vasakronan signed a ten-year lease with the Swedish Tax Agency for 42,000 square metres at the Nya Kronan property in Sundbyberg. The agreement encompasses two newly constructed buildings and one existing building undergoing renovation with occupancy scheduled for the end of 2021.