Corem Property Group Ab Class A · OMXSTO:CORE_A
Corem Property Group Ab Class A — Klövern — Debt Investor Presentation (October 2020)
46 slides from Corem Property Group Ab Class A's debt investor presentation, October 2020
Slide 1: Investor Presentation October 2020
Investor Presentation October 2020 Final draft
Slide 2: Disclaimer
Disclaimer IMPORTANT INFORMATION Acceptance of limitations: The information in this presentation (the “Material”) is furnished by Klövern AB (publ), 556482-5833, (“Klövern” or the “Company”) solely for the recipient’s information in connection with a contemplated issuance of MTN (the “MTNs”). The in
Slide 3: The offering in brief
The offering in brief Issuer Klövern AB (publ) Instrument Senior unsecured green bond Initial issue amount SEK benchmark Nominal amount SEK 1,250,000 Coupon Stibor 3m + [●] bps, no STIBOR floor. To be paid quarterly arrears Maturity [●] April 2024 Use of proceeds In accordance with the green bond fr
Slide 4: Klövern management & today's speakers
Klövern management & today’s speakers Rutger Arnhult Jens Andersson Teresa Mattisson CEO Head of Finance Head of Sustainability Joined Klövern: 2012, CEO since 2012 Joined Klövern: 2013, Head of Finance since Joined Klövern: 2018, Head of Sustainability CEO experience in the industry: +30 years 2013
Slide 5: Agenda
Agenda 1 Introduction & credit highlights 6 2 Market & outlook 18 3 Financials & capital structure 23 4 Sustainability 29 5 Appendix 35 5
Slide 6: 1. Introduction & credit highlights
1. Introduction & credit highlights 6
Slide 7: Klövern in brief
Klövern in brief 348 SEK 56.1bn SEK 3.8bn Number of Property Value Rental Value properties 2,558,000 sqm 4,300 Total Lettable Area Number of Tenants SEK 1.3bn 59,300 Profit from Property Management Number of Shareholders 7 Note: Figures as of 2020 Q2 (LTM) if not otherwise stated
Slide 8: Leading Swedish real estate player
Leading Swedish real estate player Property value Property mix and geographical segmentation 25,000 60,000 Divestments Property value by region of un- prioritized 50,000 15% 20,000 locations Stockholm New York 16% West 54% 40,000 East 15% International 15,000 30,000 Stockholm Property value by type
Slide 9: Klövern owns an assorted range of properties
Klövern owns an assorted range of properties Codan Office building Stapelbädden 4 Isafjord 8 Helgafjäll 7 322-326 7th Ave, NY Gl. Kongevej, Frederiksberg Östra Varvsgatan, Malmö Torshamnsgatan 19, Kista Torshamnsg. 48, 50, 52, 54, Kista 28 & 7th Ave, NY Sqm: 31,204 Sqm: 7,699 Sqm: 23,698 Sqm: 21,510
Slide 10: With strong tenant and contract features across portfolio
With strong tenant and contract features across portfolio Average lease # Contracts 7,200 New York term, years 3.5 Tenant credit Rental value, rating* 4.2/5 Stockholm SEKbn ~3.8 West Economic Rental value occupancy rate**, % 90 East per sq.m. (SEK) 1,499 Copenhagen Leading office space real estate c
Slide 11: Low tenant concentration also reduces financial risks
Low tenant concentration also reduces financial risks No tenant take up Customer contract value1 more than 8% of Contracts terms, due year % total contract value 31 Communications and spread out Other 12% across range of Average 15% customers lease term of 3.5 Grocery Public service years 20 3% 9% 1
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Slide 14: Preferential rights issue
Preferential rights issue Rights issue of SEK 2bn is fully covered Strengthening the balance sheet • On October 6, Klövern announced a fully covered rights issue of approximately SEK 2 billion with preferential rights for existing holders of ordinary shares, 50 subject to approval at an Extraordinar
Slide 15: Issuer rating published 10 June 2020
Issuer rating published 10 June 2020 Positive rating drivers Negative rating drivers Medium-sized commercial real estate company with good Top three tenants relatively concentrated, with Ericsson access to capital markets accounting for 7.6% of 2019 rental income • Moderate geographical diversif
Slide 16: Covid-19 impact
Covid-19 impact SEKm 2020 Jan-Jun 2019 Jan-Jun Comments Income 1,649 1,817 Property costs -565 -574 Continued stable and good earnings for the first half of the year Operating surplus 1,084 1,243 Earnings are in line with expectations even if the ongoing corona- Central administration -73 -77 pa
Slide 17: Key credit highlights
Key credit highlights 1 Leading Swedish real estate company, focused on offices 2 Robust & wide Swedish presence with international exposure 3 Low concentration and varying maturities of rental contracts Credit strengths supported by numerous factors both in terms of the business 4 Stable occupancy
Slide 18: 2. Market & outlook
2. Market & outlook 18
Slide 19: Mega drivers underpin the SE & DK real estate sector
Mega drivers underpin the SE & DK real estate sector SE & DK economy Highest AAA credit standing and low level of government debt SE is the 4th largest Underlying growth trends in both economies real estate market in Ease of doing Europe. DK & SE business High level of GDP and net savings per
Slide 20: Mega drivers underpin the SE & DK real estate sector
Mega drivers underpin the SE & DK real estate sector Ease of doing business High level of ESG focus, high transparency and low corruption SE & DK economy Co-working, flexible offices and business center development supporting growth and occupancy 3.5 Office based employment growth forecast 2019-
Slide 21: Swedish real estate sector highlights and outlook
Swedish real estate sector highlights and outlook Swedish real estate sector highlights Growing investments & increased int. investors Higher level of foreign investment into Swedish real estate Overall office deal activity increased more than 25% in 2019 to ~SEK 50bn Office sector took up ~20
Slide 22: Manhattan market highlights
Manhattan market highlights NYC office vacancy rate forecast, quarterly NYC economy 12% Base line forecast 10% The NYC metropolitan area economy alone is comparable to the size of entire 8% countries, and on its own it would be the 10 th largest economy in the world1) 6% 4% The population in the
Slide 23: 3. Financials & capital structure
3. Financials & capital structure 23
Slide 24: Financial performance
Financial performance Profit from property management & net profit Operating income & investment in portfolio SEKm SEKm 4000 3,500 60,000 3,000 56,060 3500 3,334 52,713 52,377 3,000 3,023 3000 2,927 42,961 2,611 2,500 40,000 39,234 2,000 2500 2,259 35,032 2,008 2,000 2000 30,208 1,462 1500 1,344 1,3
Slide 25: Strong development in earnings
Strong development in earnings Change in property value Income and operating margin SEKm SEKm +77% +38% 6,000 80 2,500 2,309 2,125 2,141 5,000 1,913 2,000 75 1,709 4,000 3,638 3,250 3,469 1,500 1,252 3,029 1,207 2,876 3,000 2,718 70 2,521 1,000 66 2,000 65 500 1,000 0 0 60 2014 2015 2016 2017 2018 2
Slide 26: Funding to optimize for property management
Funding to optimize for property management Net debt overview (reported) Financial management and raising capital Funding SEKm Klövern is a repeat issuer in the capital markets with a broad range of Secured Bonds 450 funding sources Unsecured Bonds 6,000 Commercial paper 1,757 Aim to minimize lo
Slide 27: Financial policy and metrics
Financial policy and metrics Fixed-interest period Financial policy and hedging considerations Fixed-interest period targeted >2.0 years 3 Majority of interest rate risks hedged, 91% as of 30 June 2020 2 Mitigate risks from fixed rental contracts (5.3 years for the 10 largest 1 Fixed-interest
Slide 28: Key metrics leave room under both targets & covenants
Key metrics leave room under both targets & covenants Covenant Target Development 50 40% 40 35 33 Adjusted equity 32 32 32 32 33 Equity ratio > 20% 30 ratio1 > 40% 20 2014 2015 2016 2017 2018 2019 Q2 2020 Adjusted equity ratio Equity ratio 4 3 2.5x Interest 2 > 1.25x > 2.0x Interest coverage coverag
Slide 29: 4. Sustainability
4. Sustainability 29
Slide 30: Sustainability is high on the agenda
Sustainability is high on the agenda Four main sustainability focus areas Long-term development of value We invest for the long term The Climate Climate-related work worthy of the name For Klövern, sustainable development is about making our properties better for the Sustainable urban developm
Slide 31: Continuous work to reduce climate impact
Continuous work to reduce climate impact 2019 target outcomes Positive development Property portfolio climate impact Average energy use in 2019 was 95.4 kWh/sqm, which is CO2e/sqm (tons) 95.4 better than the branch average of approximately 150 7 kWh/sqm kWh/sqm 6 50% Properties with energy use l
Slide 32: Sustainability going forward
Sustainability going forward Focus areas and sustainable targets during 2020 Operating surplus of at least 65% Long-term development Adjusted equity ratio of >40% of value Satisfied customer index of at least 75% Suppliers shall act in accordance with Klövern’s code of conduct Sustainable ur
Slide 33: Green bond framework
Green bond famework Eligible green assets split Green bond framework overview Use of An amount equivalent to the net proceeds from Klövern’s Green bonds shall be used to finance or re-finance, in part Current pool of proceeds or in full, Eligible Assets providing distinct environmental benefits (“Gr
Slide 34: Second opinion
Second opinion Evaluation by CICERO Based on CICERO’s review, Klövern’s green bond framework rates Medium Green CICERO finds the government procedure in Klövern’s framework to be Excellent Shading of eligible green assets Green and energy efficient buildings MEDIUM GREEN Renewable energy DARK GR
Slide 35: 6. Appendix
KLOVERN 6. Appendix
Slide 36: Best practice for property valuation
Best practice for property valuation Principle for Property value Methodology valuations +Rental income (payments) - Operating expenses (payments) Cash flow Yield based cash flow method Report at fair value = Operating surplus Based on expected cash flow and Valuation every quarter Residual
Slide 37: Active property management driving development
Active property management driving development 2020 Q2 2018 2019 SEK 2017 SEK SEK 2016 56bn 2014 2015 SEK SEK 53bn 52bn SEK SEK 43bn 39bn 30bn 35bn • Moving from regional • Transactions focused • Complemented • Klövern makes it's first • Klövern owns 99.5% of • Structure of Swedish • Secure position
Slide 38: Klövern has a strong tenant mix & low price sensitivity
Klövern has a strong tenant mix & low price sensitivity Largest tenants (Q2 2020) Sensitivities (Q2 2020) Tenant Contract Proportion Remaining Space, Change Income Equity ratio, % Leverage, % value, of total average contract thousand property change, SEKm contract term, years sqm values, % SEKm valu
Slide 39: Portfolio supported by Swedish mega drivers
Portfolio supported by Swedish mega drivers PROPERTY VALUE, SEKm 40% 22,500 16% 20,000 10-year population growth in the Swedish New York 17,500 cities below 15,000 12,500 10,000 7,500 8% 8% 5,000 2,500 0 Klövern’s position, #7 #10 - #2 - #1 #6 #3 #1 #1 #1 #3 area 39
Slide 40: Value creation via projects and building rights, SEKm
Value creation via projects and building rights, SEKm Building rights 800 171 Projects 700 690 SEKm 517 600 500 400 300 200 100 0 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 40 Note: Change in fair value of properties due to projects and developmen
Slide 41: Klövern's largest commercial projects in progress
Klövern’s largest commercial projects in progress Project Fair Estimated Remaining Increase in Estimated Largest tenant, City Property Project type Contractor area, value, investment, investment, rental value, completion moving-in year/quarter sq.m. SEKm SEKm SEKm SEKm year/quarter Triton New York 1
Slide 42: Manhattan projects in process
Manhattan projects in process 1 1245 Broadway 2 28 & 7 23-story office building 12-story office building Aim to obtain LEED silver certification Aim to obtain LEED silver certification Lettable area approx. 16,700 sqm Lettable area approx. 7,800 sqm Expected completion Q2 2021 Expect
Slide 43: Income statement
Income statement SEKm 2020 Jan-Jun 2019 Jan-Jun 2019 Jan-Dec Income 1,649 1,817 3,638 Property costs -565 -574 -1,175 Operating surplus 1,084 1,243 2,463 Central administration -73 -77 -159 Net financial items -394 -412 -842 Profit from property management 617 754 1,462 Income, residential developme
Slide 44: Balance sheet overview - Assets
Balance sheet overview - Assets SEKm 2020 Q2 2019 Q2 2019 Q4 Assets Goodwill 148 151 148 Investment properties 56,060 54,975 52,377 Right of use site leasehold 733 698 733 Machinery and equipment 42 33 28 Participation rights in associated companies 417 198 414 Financial assets at fair value 125 137
Slide 45: Balance sheet overview - Equity and Liabilities
Balance sheet overview - Equity and Liabilities SEKm 2020 Q2 2019 Q2 2019 Q4 Shareholders’ equity and liabilities Shareholders’ equity attributable to parent company’s shareholders 20,340 18,271 20,031 Holdings without controlling for influence 118 136 129 Other provisions 48 - 48 Deferred tax liabi
Slide 46: -KLOVERN =
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