Castellum Ab · OMXSTO:CAST
Castellum Ab — Kungsleden — Debt Investor Presentation (March 2018)
47 slides from Castellum Ab's debt investor presentation, March 2018
Slide 1: Investor Presentation March 2018
INVESTOR PRESENTATION MARCH 2018
Slide 2: Disclaimer
DISCLAIMER This presentation material (the “Material”) has been prepared by Kungsleden AB (publ) (“Kungsleden” or the “Company”) solely for a limited group of potential investors in connection with a potential issue by the Company of senior unsecured notes (the “Notes”). The joint bookrunners for su
Slide 3: Today's Presenters
TODAY’S PRESENTERS Biljana Pehrsson Anders Kvist Maria Sandell CEO Deputy CEO, CFO Sustainability Manager Tel: +46 8 503 052 04 Tel: +46 8 503 052 11 Tel: +46 8 503 052 33 biljana.pehrsson@kungsleden.se anders.kvist@kungsleden.se maria.sandell@kungsleden.se KUNGSLEDEN AB (PUBL) | 3
Slide 4: Our Vision
OUR VISION: TO CREATE ATTRACTIVE AND SUSTAINABLE PLACES THAT ENRICH PEOPLE’S EVERYDAY WORKLIFE
Slide 5: Kungsleden's Core Values
KUNGSLEDEN’S CORE VALUES KUNGSLEDEN AB (PUBL) | 5
Slide 6: Agenda
AGENDA › Overview of Kungsleden › Financial key ratios, targets and rating grid › Sustainability – A part of the vision › Kungsleden’s Green Bonds › Kungsleden’s Green assets and Green investments › Appendix KUNGSLEDEN AB (PUBL) | 6
Slide 7: Overview of Kungsleden
OVERVIEW OF KUNGSLEDEN
Slide 8: Introduction to Kungsleden
INTRODUCTION TO KUNGSLEDEN Kungsleden in brief Book value by property category ■ Kungsleden is a long-term owner of properties focusing on active Retail Other 4% management and development of offices and other commercial properties 7% in Stockholm and Sweden’s other growth regions ■ Kungsleden’s tra
Slide 9: Transformation Completed – Key Figures (1/2)
TRANSFORMATION COMPLETED – KEY FIGURES DEVELOPMENT VERSUS TARGETS (1/2) KUNGSLEDEN AB (PUBL) | 9
Slide 10: Transformation Completed – Key Figures (2/2)
TRANSFORMATION COMPLETED – KEY FIGURES DEVELOPMENT VERSUS TARGETS (2/2) KUNGSLEDEN AB (PUBL) | 10
Slide 11: Credit Rating Ba1 with Positive Outlook from Moody's
CREDIT RATING “Ba1” WITH POSITIVE OUTLOOK FROM MOODY’S Ambition to achieve Investment Grade rating over time by maintaining a sustainable leverage below 50% and increasing the share of unencumbered assets Ba1 (pos) Rating assigned to Kungsleden A medium sized and geographically diversified portfolio
Slide 12: Clustered Properties That Provide Customer Value and Operational Benefit
CLUSTERED PROPERTIES THAT PROVIDE CUSTOMER VALUE AND OPERATIONAL BENEFIT 85% of book value in four prioritized growth regions* Our cluster strategy ■ Important attributes – At a good location with high accessibility – Near thoroughfares and hubs – In a market with high growth and momentum – Contain
Slide 13: New Cluster – Gothenburg City South – Proforma
NEW CLUSTER – GOTHENBURG CITY SOUTH – PROFORMA KEY RATIOS (31 December 2017) No. of properties 6 Leasable area, thousand sq.m 52 Rental value, SEKm 81 Rental revenue, SEKm 78 Operating net, SEKm 62 Book value, SEKm 1,362 Economic occupancy rate, office, % 97.0 Rental revenue, office, SEK m/sq.m 1,83
Slide 14: Newly Acquired – Tyfonen 1, Malmö
NEWLY ACQUIRED – TYFONEN 1, MALMÖ KEY RATIOS Leasable area 18,244 Rental value, SEK m 60 Rental revenue, SEK m 56 Operating net, SEK m 45 Purchase price/valuation, SEK m ~1,000 Economic vacancy 93% Rental value, SEK/sq m 3,291 Surplus ratio, % 80% Direct yield, % 4.5% Story Hotel, EY, United Largest
Slide 15: Urbanisation and Growth Benefits
URBANISATION AND GROWTH BENEFITS Favourable market 2013 fundamentals Vacancy rate office, %** ■ Population growth expected to continue in concentrated major urban areas Greater Stockholm ■ Demand for commercial premises expected Greater Gothenburg to continue as large portions of the Greater Malmö p
Slide 16: Stable Rental Revenue Supported by Evenly Spread Lease Maturity Profile
STABLE RENTAL REVENUE SUPPORTED BY AN EVENLY SPREAD LEASE MATURITY PROFILE Rental revenue Tenants Rent per square meter increased Top 10 largest tenants are to a large extent reputable creditworthy private by ~40% (2017 compared to 2013) operations or government owned operations on the back of a
Slide 17: Financial Key Ratios, Targets and Rating Grid
FINANCIAL KEY RATIOS, TARGETS AND RATING GRID
Slide 18: Sustainable Leverage Profile and Diversified Funding Mix (1/2)
SUSTAINABLE LEVERAGE PROFILE, STRONG FIXED CHARGE COVERAGE AND DIVERSIFIED FUNDING MIX (1/2) Loan-To-Value Greater diversification of funding sources 70% FINANCING MIX AS OF 31 DEC 2016 7% 8% 60% 6% Bank Loans, 73% 50% 51% 13% Bond loans (unsecured), 13% 40% Commercial paper, 6% 30% Mortgage loans &
Slide 19: Sustainable Leverage Profile and Diversified Funding Mix (2/2)
SUSTAINABLE LEVERAGE PROFILE, STRONG FIXED CHARGE COVERAGE AND DIVERSIFIED FUNDING MIX (2/2) Interest coverage ratio Investment programme and financial management 4x 1 Investments in existing portfolio 2018-2019 3x ‒ SEK 2.3bn according to plan 2x ‒ ≥ 6% target yield on investments 1x 0x 2 Delever
Slide 20: Grid Outcome
GRID OUTCOME Rating Factors Kungsleden AB REITs and Other Commercial Property Firms Industry Grid [1][2] Current Moody's 12-18 LTM 6 / 30 / 2017 Month Forward View Unencumbered Assets >30% would render a B which As of in turn would indicate a Grid Rating of Baa3 9 / 8 / 2017 [3] Factor 1: Liquidity
Slide 21: Increased Share of Unsecured Debt to Increase Unencumbered Assets
INCREASED SHARE OF UNSECURED DEBT TO INCREASE PROPORTION OF UNENCUMBERED ASSETS As of December 2016 As of February 2018 Objective within 12-18 months 13% 19% 30% 87% 81% 70% Secured debt Unsecured debt Secured debt Unsecured debt Secured debt Unsecured debt Unencumbered assets >30% would indicate a
Slide 22: Sustainability – A Part of the Vision
SUSTAINABILITY – A PART OF THE VISION
Slide 23: Sustainability Vision and Goals
SUSTAINABILITY VISION AND GOALS 2020 ”Kungsleden has a clear sustainability profile and sustainability is an obvious and integrated part in all our business. The sustainability efforts generate profits for both Kungsleden and the society.” KUNGSLEDEN AB (PUBL) |
Slide 24: Selected Milestone Achievements in Sustainability Work
SELECTED MILESTONE ACHIEVEMENTS IN KUNGSLEDEN’S SUSTAINABILITY WORK Key achievements in Kungsleden’s sustainability development • Develops guidelines for • First green leases offered relationship promoting activities • First Green Bond after risk analysis of business risk • Sustainability included i
Slide 25: Sustainability Goals 2020
SUSTAINABILITY GOALS 2020 We will actively reduce our The working environment at We will have an inclusive We are professional in our We take responsibility for use of finite resources and Kungsleden will be safe, corporate culture founded areas of expertise and show the people and the local reduce
Slide 26: Environment
ENVIRONMENT Energy consumption per sq m ■ Sustainability issues integrated throughout the entire kWh/m2 organisation 300 – Sustainability targets are set for all development projects and annual sustainability plan is performed for all market units ■ Kungsleden conducts a risk analysis of sustainabil
Slide 27: Certify All Long-Term Properties According to LEED
Kungsleden will strive to certify all properties that will be held long- term according to LEED KUNGSLEDEN AB (PUBL) |
Slide 28: Certification Strategy
CERTIFICATION STRATEGY Goal 2020 Kungsleden will strive to certify all properties that will be held long term according to LEED 50% of the properties to be environmentally certified Strive for certification of all new construction 20% less energy consumption compared to projects or major reb
Slide 29: Kungsleden's Green Bonds
KUNGSLEDEN’S GREEN BONDS
Slide 30: Drivers Behind Green Bonds
DRIVERS BEHIND GREEN BONDS Kungsleden aims to develop customer offerings that contribute to a sustainable society with a tangible value-add, which make customers want to stay with Kungsleden Through a successful sustainability program Kungsleden wish to ‒ Take global responsibility ‒ Ensure long
Slide 31: Eligible Projects for Green Framework
ELIGIBLE PROJECTS FOR GREEN FRAMEWORK ■ New and/or existing commercial properties that have or will have a certification: – LEED ≥ gold – BREEAM/BREEAM in-use ≥ very good – Miljöbyggnad ≥ Silver – EU Green Building ■ Kungsleden requires that for LEED and BREEAM certified buildings at least 70% of th
Slide 32: Green Project Selection
GREEN PROJECT SELECTION Kungsleden’s Green Bond Committee Chief Investment Officer/ Treasurer Sustainability Manager Deputy CEO Fredrik Sandell Maria Sandell Ylva Sarby Westman ■ Responsible for managing the Green Bond project evaluation and selection ■ Scheduled to meet at least twice per year ■ De
Slide 33: CICERO/SEI Second Opinion
CICERO/SEI SECOND OPINION “Based on the project category shadings detailed below, and consideration of the issuer’s systematic sustainability work and governance structure of Kungsleden in terms of management and use of proceeds, we rate the framework CICERO Medium Green.” Rating of Kungsleden’s Gre
Slide 34: Kungsleden's Green Assets and Green Investments
KUNGSLEDEN’S GREEN ASSETS AND GREEN INVESTMENTS
Slide 35: Financing Plan Coming 12 Months
FINANCING PLAN COMING 12 MONTHS SEK 2.5bn SEK 0.5bn New acquisitions, investments and Aim to fund approximately refinancing of SEK 1-2bn with issuance existing debt SEK 1-2bn of green bonds via MTN program during 2018 KUNGSLEDEN AB (PUBL) | 35
Slide 36: Example of Certified Kungsleden Properties
EXAMPLE OF CERTIFIED KUNGSLEDEN PROPERTIES Kv. Tändstickan, Göteborg Färöarna 3, Kista Trekanten 5, Danderyd Tyfonen 1, Malmö Property Two office properties Property type Office property Office property Office and hotel property One parking garage Office space: 11,668 Square Office spa
Slide 37: Kungsleden's Certified Properties and Pending Certifications
KUNGSLEDEN’S CERTFIFIED PROPERTIES AND PENDING CERTIFICATIONS List of certified properties Number and value of certified properties Property Classification As of Square metres Value (SEKm) Tyfonen 1 LEED Platinum 2018 18,244 1,000 Miljöbyggnad Green Building LEED Accumulated value Kv. Tändstickan1 L
Slide 38: Other Green Kungsleden Projects
OTHER GREEN KUNGSLEDEN PROJECTS Bergudden 8, Danderyd Karlslund 5:2, Östersund General green investments 33333 Geothermal heating project Solar panel project on Energy-efficient expected to decrease 1,200 sq m equivalent to installations such as energy consumption 164 000 kWh ventilation, wind
Slide 39: Appendix
APPENDIX
Slide 40: Sustainability Goals 2018
SUSTAINABILITY GOALS 2018 - Reduce energy consumption - Implement and - Increase - Employees - Carry out at by 3% practice crisis proportion of familiar with least one social - Environmental certification of plan employees with guidelines and project in a 14 properties - KPIs in projects a foreign p
Slide 41: Stockholm Clusters
STOCKHOLM CLUSTERS DANDERYD KEY RATIOS No. of properties 4 Leasable area, 100 thousand sqm Rental value, SEK m 189 Book value, SEK m 2,651 KISTA Economic occupancy KEY RATIOS 90.8 rate, % No. of properties 9 New leasing, Jan-Dec, Leasable area, 23 146 SEK m thousand sqm Net leasing, Jan-Dec, Rental
Slide 42: Hyllie Cluster
HYLLIE CLUSTER HYLLIE KEY RATIOS No. of properties 5 Leasable area, thousand 40 sqm Rental value, SEK m 71 Book value, SEK m 1,238 Economic occupancy rate*, 99.2 % New leasing, Jan-Dec, SEK 3 m Net leasing, Jan-Dec, SEK -1 m *Earnings capacity as of 31 December 2017 KUNGSLEDEN AB (PUBL) | 42
Slide 43: Second Opinion – Medium Green
SECOND OPINION – MEDIUM GREEN “Overall, Kungsleden’s Green Bond Framework (“GBF”), together with its “Kungsleden has committed to the principles of the UN Global Compact sustainability policy, building certification strategy and reporting and reports accordingly, as well as according to the Global R
Slide 44: Financial Statements
FINANCIAL STATEMENTS Income statement Cash flow statement SEKm FY 2017 FY 2016 Q4 2017 Q4 2016 SEKm FY 2017 FY 2016 Q4 2017 Q4 2016 Revenue OPERATING ACTIVITIES Rental revenue 2,319 2,422 567 598 Profit from property management 985 990 243 235 Other revenue 4 7 0 4 Adjustments for non-cash items 1 1
Slide 45: Financial Statements (Cont'd)
FINANCIAL STATEMENTS (CONT’D) Balance sheet Key ratios SEKm FY 2017 FY 2016 PROPERTY RELATED FY 2017 FY 2016 ASSETS Direct yield, investment properties, % 5.3% 5.7% Non-current assets Economic occupancy rate, investment properties % 91.8% 91.9% Intangible assets 9 11 Surplus ratio, investment proper
Slide 46: Delivering on Financial Objectives
DELIVERING ON FINANCIAL OBJECTIVES 70% 60% OBJECTIVE* OUTCOME Q4 2017 Leverage ~50% 48% 50% 40% (outcome 2016 56%) 30% Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 LTV Objective 3.5x 3.0x Interest OBJECTIVE** OUTCOME Q4 2017 2.5x coverage >2.5times 3.3times 2.0x 1.5x ratio
Slide 47: Kungsleden AB (publ)
KUNGSLEDEN KUNGSLEDEN AB (PUBL) | 47