Samhallsbyggnadsbolaget I Norden Ab Class B · OMXSTO:SBB_B
Samhallsbyggnadsbolaget I Norden Ab Class B — Investor Presentation (September 2019)
96 slides from Samhallsbyggnadsbolaget I Norden Ab Class B's investor presentation, Sep 24, 2019
Slide 1: Creating the Leading Nordic Social Infrastructure Property Company
CREATING THE LEADING NORDIC SOCIAL INFRASTRUCTURE PROPERTY COMPANY 24th September 2019 Ulricehamn Svalan 7 – Care home Linköping Adjunkten 2 – Elderly care Sigtuna 2:227 – Pre-school
Slide 2: Disclaimer
DISCLAIMER IN REVIEWING THIS PRESENTATION AND ITS CONTENTS, YOU ARE AGREEING TO ABIDE BY THE TERMS OF THIS DISCLAIMER. THIS PRESENTATION AND ITS CONTENTS ARE BEING MADE AVAILABLE TO EACH RECIPIENT SOLELY FOR ITS INFORMATION AND IS SUBJECT TO AMENDMENT. If you are not the intended recipient of this p
Slide 3: I. Introduction to SBB
I. Introduction to SBB Borlänge Spännaren 10 – City hall
Slide 4: Creating the leading Nordic social infrastructure property company
SBB – ‘CREATING THE LEADING NORDIC SOCIAL INFRASTRUCTURE PROPERTY COMPANY’ Key pillars of SBB’s story to deliver attractive returns Portfolio has grown from SEK 7.6bn to SEK 30bn+ over 2.5 years… 30.3 GAV (SEKbn) 25.6 21.1 7.6 Unique and difficult to SEK 30bn and growing low- replicate long-term ris
Slide 5: SBB's journey to becoming a leading player within Nordic social infrastructure
SBB’S JOURNEY TO BECOMING A LEADING PLAYER WITHIN NORDIC SOCIAL INFRASTRUCTURE Selected company milestones Selected properties €142m acquisition in Sale of DNB Bank’s head Finland of 48 community Sep office in Oslo for SEK service properties 2019 4,897m Jul Oslo, Gullhaug Torg 4 – Government agency
Slide 6: SBB today – company overview
SBB TODAY – COMPANY OVERVIEW Company Overview Portfolio overview Property value¹ split by type SBB is a leading Nordic social infrastructure property Community service properties company, and aims to continuously support Nordic municipalities and other market participants to address the increasing
Slide 7: Overview of SBB's total property portfolio – by geography
OVERVIEW OF SBB’S TOTAL PROPERTY PORTFOLIO – BY GEOGRAPHY Swedish portfolio breakdown SEK SEK By property value By passing NOI SEK 25.4bn Portfolio value 1,658m 1,047m Passing rent Passing NOI 9% 6% Community properties service ~6.6% ~4.8% 96.6% GAV 36% NOI GIY1 NIY1 Occupancy 51% SEK 25.4bn SEK 1.0
Slide 8: Difficult to replicate relationship with municipalities driving shareholder returns
DIFFICULT TO REPLICATE RELATIONSHIP WITH MUNICIPALITIES DRIVING ATTRACTIVE SHAREHOLDER RETURNS THROUGH A COMBINATION OF RECURRING INCOME STREAMS Income from property management Social infrastructure building rights Stable and low-risk rental income from community Income from development of build
Slide 9: Green initiatives – supporting the transition towards a more sustainable world
GREEN INITIATIVES – SUPPORTING THE TRANSITION TOWARDS A MORE SUSTAINABLE WORLD SBB focuses on reducing CO2 emissions within its property portfolio and employs a definite environmental perspective which permeate all of SBB’s properties SBB’s Social engagement SBB prioritises social efforts for youn
Slide 10: II. Highlights
II. Highlights Borlänge Spännaren 10 – City hall
Slide 11: Highlights
HIGHLIGHTS Differentiated strategy of focusing on low risk social infrastructure offering attractive yields, underpinned by 1 strong relationships with municipalities Rent-regulated residential portfolio ensures low tenant turnover and income stability with significant 2 value upside Additive recurr
Slide 12: Community service properties are core to the business
DIFFERENTIATED STRATEGY OF FOCUSING ON LOW RISK SOCIAL INFRASTRUCTURE OFFERING ATTRACTIVE YIELDS, UNDERPINNED BY STRONG RELATIONSHIPS WITH MUNICIPALITIES COMMUNITY SERVICE PROPERTIES ARE CORE TO THE BUSINESS AND A TRULY 1 UNIQUE ASSET CLASS TO SBB 59%4 This unique asset class is defined by low ris
Slide 13: Unique long term relationships with municipalities support portfolio growth
DIFFERENTIATED STRATEGY OF FOCUSING ON LOW RISK SOCIAL INFRASTRUCTURE OFFERING ATTRACTIVE YIELDS, UNDERPINNED BY STRONG RELATIONSHIPS WITH MUNICIPALITIES SBB’S UNIQUE AND LONG TERM RELATIONSHIPS WITH MUNICIPALITIES SUPPORT 59%52 CONTINUED PORTFOLIO GROWTH AND UPSIDE Long term reliable partner for mu
Slide 14: Rent-regulated residential properties in Swedish growth municipalities
RENT-REGULATED RESIDENTIAL PORTFOLIO ENSURES LOW TENANT TURNOVER AND INCOME STABILITY WITH SIGNIFICANT VALUE UPSIDE 34%5 2 RENT-REGULATED RESIDENTIAL PROPERTIES IN SWEDISH GROWTH MUNICIPALITIES Key portfolio figures Distribution by region Northern Gothenburg Key cities Sweden 1% 5% SEK 10.2bn SEK 70
Slide 15: Rent-regulated residential portfolio provides stable income and limited downside
RENT-REGULATED RESIDENTIAL PORTFOLIO ENSURES LOW TENANT TURNOVER AND INCOME STABILITY WITH SIGNIFICANT VALUE UPSIDE RENT-REGULATED RESIDENTIAL PORTFOLIO PROVIDES STABLE INCOME AND LIMITED 34%7 DOWNSIDE RISK, COUPLED WITH POTENTIAL FOR VALUE GROWTH 1,742 Only Swedish rent-regulated residential unit
Slide 16: Additive recurring income streams
ADDITIVE RECURRING INCOME STREAMS FROM DEVELOPMENTS, RENOVATIONS AND TRANSACTIONS, ACCESSED VIA HIGHLY SPECIALISED CORE BUSINESS PROVIDING ASSISTANCE TO LOCAL AUTHORITIES ADDITIVE RECURRING INCOME STREAMS UNDERPINNED BY SBB’S UNIQUE AND DIFFICULT TO 3 REPLICATE RELATIONSHIPS WITH MUNICIPALITIES Addi
Slide 17: Income from social infrastructure building rights
ADDITIVE RECURRING INCOME STREAMS FROM DEVELOPMENTS, RENOVATIONS AND TRANSACTIONS, ACCESSED VIA HIGHLY SPECIALISED CORE BUSINESS PROVIDING ASSISTANCE TO LOCAL AUTHORITIESincome streams from renovations, developments and transactions, accessed via highly specialized core business providing assistance
Slide 18: Income from property renovations
ADDITIVE RECURRING INCOME STREAMS FROM DEVELOPMENTS, RENOVATIONS AND TRANSACTIONS, ACCESSED VIA HIGHLY SPECIALISED CORE BUSINESS PROVIDING ASSISTANCE TO LOCAL AUTHORITIES INCOME FROM PROPERTY RENOVATIONS RENTAL INCOME IS DEPENDENT ON THE STANDARD OF THE PROPERTIES; SBB CONTINUALLY SEEKS TO IMPLEME
Slide 19: Income from real estate transactions
ADDITIVE RECURRING INCOME STREAMS FROM DEVELOPMENTS, RENOVATIONS AND TRANSACTIONS, ACCESSED VIA HIGHLY SPECIALISED CORE BUSINESS PROVIDING ASSISTANCE TO LOCAL AUTHORITIES INCOME FROM REAL ESTATE TRANSACTIONS OFF-MARKET TRANSACTIONS PROVIDE THE GROUP WITH A COMPETITIVE ADVANTAGE TO ACQUIRE DIVERSE
Slide 20: Robust balance sheet position and attractive funding mix
INVESTMENT GRADE CREDIT RATING ENSURES BROAD ACCESS TO CAPITAL MARKETS AND FINANCIAL FLEXIBILITY 4 ROBUST BALANCE SHEET POSITION AND ATTRACTIVE FUNDING MIX Strong cash generation enabling deleveraging Long-dated maturity profile1 Percentage Equity 32% 32% 41% 43% of total debt 57%10 / 66%7 matures b
Slide 21: Strong management team and board of directors
HIGHLY EXPERIENCED MANAGEMENT TEAM, SCALABLE PLATFORM AND REPUTABLE OWNERS 5 STRONG MANAGEMENT TEAM AND BOARD OF DIRECTORS Active and hands-on management team with exceptional experience and track-record 23 years Management team’s average years of experience Ilija Batljan Lars Thagesson Krister Karl
Slide 22: Experienced asset management team with local market knowledge
HIGHLY EXPERIENCED MANAGEMENT TEAM, SCALABLE PLATFORM AND REPUTABLE OWNERS EXPERIENCED ASSET MANAGEMENT TEAM WITH LOCAL MARKET KNOWLEDGE Experienced asset management team Local market presence Country office Fredrik Holm Ulf Rydell Daniel Blixt Regional office Head of Asset Management Region Sweden
Slide 23: III. Market Overview
III. Market Overview Borlänge Spännaren 10 – City hall
Slide 24: Supportive and stable underlying macroeconomic fundamentals in SBB's key markets
SUPPORTIVE AND STABLE UNDERLYING MACROECONOMIC FUNDAMENTALS IN SBB’S KEY MARKETS ■ Underlying growth across SBB’s target markets Average GDP growth Finland ■ Underlying economic growth provides low risk from strong-rated 1.9% publicly financed tenants between 2018 – 2021E1 Norway Average ■ Strong so
Slide 25: Favourable key economic indicators underpin Nordic markets
FAVOURABLE KEY ECONOMIC INDICATORS UNDERPIN NORDIC MARKETS Declining unemployment rates ■ Steady and robust growth Unemployment rate (%) despite the uncertainty in the global economy 10% 9% ■ Competitive and strong position 8% 7.4% in the global market 7% 6.9% 6.6% 6% ■ Declining unemployment rates
Slide 26: Favourable demographic trends driving demand for SBB's underlying assets
FAVOURABLE DEMOGRAPHIC TRENDS DRIVING DEMAND FOR SBB’S UNDERLYING ASSETS Key considerations Population growth across all the Nordics Population evolution Sweden Norway Finland Denmark Strong population growth expected in the Nordic 35 countries (c.3m additional inhabitants within 40 years), concen
Slide 27: Community service market overview
COMMUNITY SERVICE MARKET OVERVIEW Community Regulated service residential Oslo Gullhaug Torg 4 | 27
Slide 28: Favourable demand/supply imbalance driven by demographic trends
COMMUNITY SERVICE FAVOURABLE DEMAND/SUPPLY IMBALANCE DRIVEN BY DEMOGRAPHIC TRENDS, UNDERSUPPLY AND RISING CONSTRUCTION COSTS Key drivers of demand Number of planned (2019-2022) and needed units (2022) Demographic trends in Sweden and in Nordic countries: Planned (2019–2022) and needed units (2022)
Slide 29: Increased investor appetite has led to strong investment volumes and yield compression
COMMUNITY SERVICE INCREASED INVESTOR APPETITE HAS LED TO STRONG INVESTMENT VOLUMES RESULTING IN YIELD COMPRESSION Strong and increasing transaction volumes Property net yields remain at healthy spreads to Gov. Bonds Transaction volume, including transactions >= SEK 100m 9% SBB average net Stockholm
Slide 30: Supportive regulatory environment and attractive lease terms lead to tenant stickiness
COMMUNITY SERVICE SUPPORTIVE REGULATORY ENVIRONMENT AND ATTRACTIVE LEASE TERMS LEAD TO HIGH STICKYNESS OF TENANTS Overview SBB low tenant turnover Tenant turnover assessment High creditworthy of tenants: public agencies, tenants with operations indirectly financed by state, council or municipality
Slide 31: Key market characteristics and dynamics position SBB favourably
COMMUNITY SERVICE KEY MARKET CHARACTERISTICS AND DYNAMICS POSITION SBB FAVOURABLY Market size Ownership structure Community service market in the Nordic countries is dominated by Historically, municipalities, counties and state owned the properties in municipalities, counties and states which th
Slide 32: Regulated residential market overview
REGULATED RESIDENTIAL MARKET OVERVIEW Community Regulated service residential Tidaholm Stensiken 1 | 32
Slide 33: Highly regulated market makes Swedish residential an attractive asset class
REGULATED RESIDENTIAL HIGHLY REGULATED MARKET MAKES SWEDISH RESIDENTIAL AN ATTRACTIVE ASSET CLASS Overview Utility value rent compared to presumption and expected market rent levels As of 2017 year-end, the Swedish housing stock consisted of 4.8m Average rent in Stockholm would increase by 46% if
Slide 34: Demand driven by demographic and urbanisation trends, underpinned by undersupply
REGULATED RESIDENTIAL DEMAND DRIVEN BY DEMOGRAPHIC AND URBANISATION TRENDS, UNDERPINNED BY UNDERSUPPLY Urbanisation dynamics will continue to maintain a high demand for housing, which Population growth, completed dwellings and accumulated housing combined with the housing shortage, is causing queu
Slide 35: Development of housing prices and construction costs
REGULATED RESIDENTIAL DEVELOPMENT OF HOUSING PRICES AND CONSTRUCTION COSTS Construction costs development have developed stronger than inflation House prices over the last 20 years, leading to even higher replacement costs Construction cost development (excl. land) vs. inflation Swedish housing pr
Slide 36: Unique rent setting model upon renovation allows for significant upside
REGULATED RESIDENTIAL UNIQUE RENT SETTING MODEL UPON RENOVATION ALLOWS FOR SIGNIFICANT UPSIDE Key considerations Rent and yields levels across new / non-renovated / renovated dwellings Rent levels (SEK/sqm) Yield Drivers for rental growth are mainly inflation and the Area New production Non-renova
Slide 37: Residential yields are at all time lows
REGULATED RESIDENTIAL RESIDENTIAL YIELDS ARE AT ALL TIME LOWS DRIVEN BY INCREASING INTERNATIONAL INVESTOR INTEREST AND INVESTMENT Residential transaction volumes, including transactions >= SEK 40m Net yields development 8% Stockholm Prime Gothenburg Prime Malmö Prime 60 Other Major Cities Rest of Sw
Slide 38: Sizeable market with high barriers to entry offering opportunities
REGULATED RESIDENTIAL SIZEABLE MARKET WITH HIGH BARRIERS TO ENTRY OFFERING OPPORTUNITIES Market size Ownership structure The Swedish dwelling stock in multi-dwelling buildings consists of In Sweden, 46% of all rental apartments are owned by public housing approximately 2.46m apartments companies
Slide 39: IV. Detailed Portfolio Overview
IV. Detailed Portfolio Overview Borlänge Spännaren 10 – City hall
Slide 40: Overview of SBB's total property portfolio – by property type
OVERVIEW OF SBB’S TOTAL PROPERTY PORTFOLIO – BY PROPERTY TYPE Backed by SBB’s strong relationship with Nordic municipalities, SBB offers a distinctive opportunity, unlike any competitor, to invest in community service and regulated residential properties, supported by predictable cash flows and furt
Slide 41: Property management – community service properties overview
PROPERTY MANAGEMENT – COMMUNITY SERVICE PROPERTIES OVERVIEW 1 Community service properties (Elderly care, education, group housing for people with disabilities, and gov. agencies) Oslo, Gullhaug Torg 4 - Norwegian Ministry of Justice and Public Security | 41
Slide 42: Overview of community service properties
COMMUNITY SERVICE PROPERTIES OVERVIEW OF COMMUNITY SERVICE PROPERTIES Key portfolio figures Distribution of value by region Key cities SEK 17.9bn SEK 1,173m SEK 927m 97.5% 2% 9% Portfolio value¹ Passing rent Passing NOI Occupancy 16% ~6.7% ~5.3% 7 years SEK 20,363 GAV GIY2 NIY2 WAULT Value per sqm3
Slide 43: Overview of community service properties (cont'd)
COMMUNITY SERVICE PROPERTIES OVERVIEW OF COMMUNITY SERVICE PROPERTIES (CONT’D) Breakdown of asset type SEK 12.9bn SEK 18,305 portfolio value¹ Value per sqm2 By lettable area By passing NOI 5% 2% 5% 1% 5% 367 96.6% 6% # of assets Occupancy 26% 31% 10% Area 18% NOI (k sqm) SEK 612m SEK 832m SEK 612m 6
Slide 44: Overview of community service properties (cont'd)
COMMUNITY SERVICE PROPERTIES OVERVIEW OF COMMUNITY SERVICE PROPERTIES (CONT’D) Breakdown of asset type SEK 1.7bn SEK 25,461 portfolio value¹ Value per sqm2 By lettable area By passing NOI 54 100% 8% 10% # of assets Occupancy 17% 17% Area NOI (k sqm) SEK 101m SEK 111m SEK 101m 65,.2 Passing rent Pass
Slide 45: Community service properties – stable cash flows
COMMUNITY SERVICE PROPERTIES COMMUNITY SERVICE PROPERTIES – STABLE CASH FLOWS Portfolio breakdown by passing rent Top 10 tenants 2% Tenant % Passing gross rent¹ Country Sweden 10% Norwegian State 12.5% Norway 17% Passing 5.3% Bodens municipality Gross Rent SEK 1.2bn Finland 4.7% 71% Health/elderly c
Slide 46: SBB's footprint in the Greater Oslo area
COMMUNITY SERVICE PROPERTIES SBB’S FOOTPRINT IN THE GREATER OSLO AREA Kongsvinger Properties • At the end of 2018, Oslo had ~673,000 inhabitants and population has increased by ~4% between 2015-2018; ~1 million people live in Oslo’s urban area Oslo • Oslo Region has Norway’s highest GDP per capita a
Slide 47: Case study – partnership with the municipality of Skellefteå
COMMUNITY SERVICE PROPERTIES CASE STUDY – PARTNERSHIP WITH THE MUNICIPALITY OF SKELLEFTEÅ Comments Summary Partnership with Skellefteå municipality regarding a a new culture house, including a Property name Skellefteå Perseus 6 congress hall Skellefteå is one of the wealthiest municipalities in
Slide 48: Property management – overview of regulated residential
PROPERTY MANAGEMENT – OVERVIEW OF REGULATED RESIDENTIAL 2 Regulated residential Tidaholm Stensiken 1 – Regulated residential | 48
Slide 49: Rent-regulated residential properties in Swedish growth municipalities
REGULATED RESIDENTIAL RENT-REGULATED RESIDENTIAL PROPERTIES IN SWEDISH GROWTH MUNICIPALITIES Key portfolio figures SEK 10.2bn SEK 701m SEK 372m 94.6% Cities with an portfolio value¹ Passing rent Passing NOI Occupancy2 underlying • Regulated residential assets in population growth cities implies lo
Slide 50: SBB's footprint in the Greater Stockholm area
REGULATED RESIDENTIAL SBB’S FOOTPRINT IN THE GREATER STOCKHOLM AREA SEK 2.5bn 98k sqm 5.6% 3.5% 1,906 SEK 129m SEK 23.6k Portfolio value1 Lettable area GIY2 NIY3 Number of units Passing rent Value per sqm4 • At the end of 2018, Stockholm County had ~2.3 million inhabitants and population has increas
Slide 51: SBB's footprint in Falun and Borlänge
REGULATED RESIDENTIAL SBB’S FOOTPRINT IN FALUN AND BORLÄNGE SEK 1.0bn c.65k sqm 6.7% 3.7% 1,866 c. SEK 67m SEK 15.3k Portfolio value1 Lettable area GIY2 NIY3 Number of units Passing rent Value per sqm4 The Falun-Borlänge Region is highly integrated through modern infrastructure (freeway and railway
Slide 52: V. SBB's Additive Recurring Income Streams
V. SBB’s Additive Recurring Income Streams Borlänge Spännaren 10 – City hall
Slide 53: SBB's additive recurring income stream
SBB’S ADDITIVE RECURRING INCOME STREAM Social infrastructure building rights 3 Additive income Developments streams from: & Transactions 3 Property renovations Real estate transactions | 53
Slide 54: Income from social infrastructure building rights starts at zoning
DEVELOPMENTS & TRANSACTIONS: SOCIAL INFRASTRUCTURE BUILDING RIGHTS INCOME FROM SOCIAL INFRASTRUCTURE BUILDING RIGHTS STARTS AT ZONING SBB’s focus area – maximised risk-adjusted return • To limit its production risk, SBB seeks to sell its acquisitions prior to attaining final approval of its zoning p
Slide 55: Income from social infrastructure building rights starts at zoning
DEVELOPMENTS & TRANSACTIONS: SOCIAL INFRASTRUCTURE BUILDING RIGHTS INCOME FROM SOCIAL INFRASTRUCTURE BUILDING RIGHTS STARTS AT ZONING Building rights in the current portfolio based on planning phase Building rights sales value achieved Area Value Value Valueper per Total rights area split (sqm) (sqm
Slide 56: Current development portfolio offers potential upside
DEVELOPMENTS & TRANSACTIONS: SOCIAL INFRASTRUCTURE BUILDING RIGHTS CURRENT DEVELOPMENT PORTFOLIO OFFERS POTENTIAL UPSIDE Key drivers Current residential or community Development properties acquired Selectively participating in JVs service properties within the ■ Properties with cash flow that are ■
Slide 57: Income from selectively participating in joint ventures
DEVELOPMENTS & TRANSACTIONS: SOCIAL INFRASTRUCTURE BUILDING RIGHTS INCOME FROM SELECTIVELY PARTICIPATING IN JOINT VENTURES ■ 360,6001 of rights sold to JVs as SBB’s share of the JV ■ 20 current JV projects subject to zoning plan and 5 projects ongoing Case study – Sale of building rights and JV Falk
Slide 58: Additive recurring income stream
ADDITIVE RECURRING INCOME STREAM Social infrastructure building rights 3 Additive income Developments streams from: & Transactions 3 Property renovations Real estate transactions | 58
Slide 59: Unique residential renovation business model in Sweden
DEVELOPMENTS & TRANSACTIONS: PROPERTY RENOVATIONS UNIQUE RESIDENTIAL RENOVATION BUSINESS MODEL IN SWEDEN IN SWEDEN, RESIDENTIAL RENTS ARE DETERMINED BY THE ‘UTILITY VALUE SYSTEM’ AND RENOVATIONS ARE A MEANS TO INCREASE THE UTILITY AND HENCE ACTS AS A CATALYST FOR RENT INCREASE SBB’s Renovation pro
Slide 60: Unique residential renovation business model in Sweden (cont'd)
DEVELOPMENTS & TRANSACTIONS: PROPERTY RENOVATIONS UNIQUE RESIDENTIAL RENOVATION BUSINESS MODEL IN SWEDEN (CONT’D) ILLUSTRATIVE EXAMPLE OF INCREASE IN RENT THROUGH RESIDENTIAL RENOVATION Rent formula After renovation but with Before After renovation 𝑁𝑜𝑟𝑚𝑎𝑡𝑖𝑣𝑒 𝑟𝑒𝑛𝑡 ∗ additional room…
Slide 61: Illustrative renovation of a 60 sqm apartment
DEVELOPMENTS & TRANSACTIONS: PROPERTY RENOVATIONS ILLUSTRATIVE RENOVATION OF A 60 SQM APARTMENT ■ Renovations are gradually carried out when existing apartments become vacant – renovations are never forced on existing tenants ■ Interested tenants are offered the opportunity to have their apartment r
Slide 62: Value-adding floor plans
DEVELOPMENTS & TRANSACTIONS: PROPERTY RENOVATIONS VALUE-ADDING FLOOR PLANS ■ Evaluate value-enhancing floor plan changes of the apartments in connection to the renovations ■ During the past 2 years, close to 100 incremental bedrooms have been created in the existing portfolio through more efficient
Slide 63: Case study – income from renovations and value-enhancing initiatives
DEVELOPMENTS & TRANSACTIONS: PROPERTY RENOVATIONS CASE STUDY – INCOME FROM RENOVATIONS AND VALUE-ENHANCING INITIATIVES Renovation in Motala and the residential property Tellus 1 In late 2016 SBB acquired the residential property Tellus 1, with 476 apartments Average rent before renovation, SEK/sqm
Slide 64: Additive recurring income stream
ADDITIVE RECURRING INCOME STREAM Property renovations 3 Additive income Developments streams from: & Transactions 3 Social infrastructure building rights Real estate transactions | 64
Slide 65: Income from transactions – attractive acquisition pipeline
DEVELOPMENTS & TRANSACTIONS: REAL ESTATE TRANSACTIONS INCOME FROM TRANSACTIONS – ATTRACTIVE ACQUISITION PIPELINE GAV bridge in 2017 2,790 23,001 13,470 209 (729) (311) 7,572 SEK 12,741m Net value of real estate transactions SEKm GAV 2016A Acquisitions Disposals Investments Translation Gains/Losses U
Slide 66: Income from transactions – case studies
DEVELOPMENTS & TRANSACTIONS: REAL ESTATE TRANSACTIONS INCOME FROM TRANSACTIONS – CASE STUDIES Example – Nyköping, Raspen 1, 2 & 3 Example – Karlskronahem Example – Drammen Grønland 1 Acquisition: Greater Stockholm area in a municipality ■ Acquisition: Two residential and two community Acquisitio
Slide 67: VI. Financials and Outlook
VI. Financials and Outlook Stockholm Gunnebo 15 – School
Slide 68: Introduction
INTRODUCTION The consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretation Committee (IFRIC IC). In addition, the Swedish Annual Accounts Act (ÅRL) and "RFR1 Supplementary Accounting Rules fo
Slide 69: Key financial highlights
KEY FINANCIAL HIGHLIGHTS As of H1 2019 Key operating items Portfolio level KPIs Key balance sheet items SEK 1,999m passing SEK 1,737m LTM adj. 790 properties SEK 30,331m GAV 43% LTV6 rent1 recurring earnings 1,797k sq.m. lettable area SEK 12.69 EPRA NAV p.s.3 1.96% weighted 68.1% NOI margin1 avg. co
Slide 70: Key P&L items
KEY P&L ITEMS KEY P&L ITEMS Income statement, SEKm FY 2016 FY 2017 FY 2018 H1 2018 H1 2019 Comments Rental income 1 187 1,339 1,680 800 893 Growth (y-o-y %) - N.M. 25.5% 36.9% 11.6% 1 Rental income: Operating costs (51) (303) (386) (201) (223) As of H1 2019, SBB held a total of 790 properties wit
Slide 71: Rental income evolution and drivers
KEY P&L ITEMS RENTAL INCOME EVOLUTION AND DRIVERS Last 12-month rental income and NOI Comments Community services Regulated residential 1,800 85% 1,800 60% Steady rental growth in both the community 1,600 78.7% 78.6% 1,600 service and regulated residential segments 75.7% 80% 74.7% 55% Fall in ma
Slide 72: Breakdown of total property expenses
KEY P&L ITEMS BREAKDOWN OF TOTAL PROPERTY EXPENSES SEKm FY 2017 FY 2018 H1 2019 Comments Rental income 1,339 1,680 893 1 Operating costs: Comprise general property expenses such as 1 Operating costs (303) (386) (223) SEKm heating, electricity and other utilities As a % of rental income 22.6% 23.0
Slide 73: Breakdown of central administration costs
KEY P&L ITEMS BREAKDOWN OF CENTRAL ADMINISTRATION COSTS SEKm FY 2017 FY 2018 H1 2019 Comments Rental income 1,339 1,680 893 (-) Total property expenses (462) (609) (333) Central administration costs relate to A Net operating income 877 1,071 560 costs that are grouped at the group- wide level that
Slide 74: Strong positive cash flow from operations – key cash flow items
KEY CASH FLOW ITEMS STRONG POSITIVE CASH FLOW FROM OPERATIONS – KEY CASH FLOW ITEMS Cash flow statement, SEKm FY 2016 FY 2017 FY 2018 H1 2018 H1 2019 Comments Profit from property management 6 338 321 182 254 Depreciation 1 2 1 1 0 1 Interest paid, net: Net financial items 66 464 661 280 304 Comp
Slide 75: EBITDA – Group FFO / FFO / adjusted recurring earnings bridge
KEY CASH FLOW ITEMS EBITDA – GROUP FFO / FFO / ADJUSTED RECURRING EARNINGS BRIDGE Group FFO to adjusted recurring earnings bridge (SEKm) FY 2018 FY 2018 Group FFO 373 0.50 (-) Hybrid coupons (82) SEKm (-) Preference shares dividends (12) (-) D-share dividends - (-) Contribution to non-controlling in
Slide 76: Key balance sheet items
KEY BALANCE SHEET ITEMS KEY BALANCE SHEET ITEMS Assets, SEKm FY 2016 FY 2017 FY 2018 H1 2018 H1 2019 Comments Goodwill - - 24 25 24 Investment properties 1 7,572 23,001 25,243 25,637 30,331 1 Investment properties: Other tangible fixed assets 6 10 5 5 138 Comprise assets that SBB retains to earn
Slide 77: Increasing value of the property portfolio
KEY BALANCE SHEET ITEMS INCREASING VALUE OF THE PROPERTY PORTFOLIO Fair value of investment properties (SEKm) Lettable area 1,366 1,330 1,797 (sq.m. ‘000s) Passing 5.1% 4.7% 4.7% NIY1 % social 89% 92% 93% Infrastructure 8,864 226 (5,681) 30,331 1,201 478 (3,359) 3,597 311 1,517 25,243 23,001 176 +20
Slide 78: Robust GAV development – increased focus on social infrastructure
KEY BALANCE SHEET ITEMS ROBUST GAV DEVELOPMENT – INCREASED FOCUS ON SOCIAL INFRASTRUCTURE Evolution of fair value of investment properties by segment since FY 2016 (SEKm) Community service Regulated residential +29.7% / SEK 13,439m 30,331 Q1-17 to Q2-19 CAGR Other 27,201 2,295 25,637 25,122 25,243 2
Slide 79: Treasury
TREASURY BGGE SEER Fy at
Slide 80: Diverse source of funding – capital structure as of H1 2019
DIVERSE SOURCE OF FUNDING – CAPITAL STRUCTURE AS OF H1 2019 Assets (SEK 36.5bn) Equity and Liabilities (SEK 36.5bn) A+B+D : SEK 10,534m ■ Shares in associated companies/JV ■ Equity excl. hybrid Pref.: SEK 88m NCI: SEK 41m - SEK 514m (1.4%) - SEK 10,663 (29.2%) SEK 15,641m Total equity ■ Hybrid
Slide 81: Simplifying our share structure: rights attached to shares and profit distribution
SIMPLIFYING OUR SHARE STRUCTURE: RIGHTS ATTACHED TO SHARES AND PROFIT DISTRIBUTION As of today Share of class A Share of class B Share of class D Preference shares Listed – Share count 209,977,491 546,071,540 76,498,230 30,713 Voting rights 1 vote per share 1/10 vote per share 1/10 vote per sh
Slide 82: Loan-to-value and debt profile
LOAN-TO-VALUE AND DEBT PROFILE Strong cash generation enabling deleveraging Long-dated maturity profile2 Percentage Equity 32% 32% 41% 43% of total debt 57%6 / 66%3 matures beyond 4 years ratio5 63% 12%3 5%3 13%3 3%3 14%3 52%3 61% 61% 60% 58% 59% 59% 56% 56% 16% 6% 17% 4% 18% 39% Debt nominal value
Slide 83: Green bonds – sustainable financing sources
GREEN BONDS – SUSTAINABLE FINANCING SOURCES By setting up a green bond framework, aligned with the Green Bond Principles published in June 2018 by the International Capital Market Association, SBB offers investors further insights into the company’s sustainability strategy and commitments and ther
Slide 84: EPRA NAV
EPRA NAV BGGE SEER Fy at
Slide 85: EPRA NAV
EPRA NAV SEKm unless otherwise stated FY 2018 H1 2019 Comments NAV per the financial statements 11,197 15,641 Net asset value (EPRA NAV), which is (-) Equity attributable to hybrids investors (1,873) (4,978) calculated in accordance with the guidelines (-) Equity attributable to D-share investors
Slide 86: Recurring additive income streams significantly driving high growth in earnings
RECURRING ADDITIVE INCOME STREAMS SIGNIFICANTLY DRIVING HIGH GROWTH IN EARNINGS 1 FFO Recurring cash income from property management (+) Realised profit from JV Income from selectively participating in joint venture development developments projects – reflect cash proceeds received Recurring c
Slide 87: VII. Appendix – Supporting Materials
VII. Appendix – Supporting Materials Borlänge Spännaren 10 – City hall
Slide 88: SBB's organisation structure
SBB’S ORGANISATION STRUCTURE CEO Ilija Batljan CEO Legal, IT and Investor Relations Management (outsourced) Finance and Accounting Property Management 128 Property Development 6 Treasury Accounting Krister Karlsson Lars Thagesson Deputy CEO and Head of Property Deputy CEO and COO Development Rosel R
Slide 89: Lars Thagesson, the pioneer "guru" - 3,000 transactions SEK 250bn
LARS THAGESSON, THE PIONEER “GURU” - 3,000 TRANSACTIONS SEK 250BN SBB TEAM BEHIND SOCIAL INFRASTRUCTURE AS ASSET CLASS Right after school, Lars Kungsleden acquired started working at Purchased Appointed CEO for Realia, founded Din HSB (the largest condo properties in Kungsleden IPO of Kungsleden B
Slide 90: Ilija Batljan creating "Samhällsfastigheter" instead of public properties
ILIJA BATLJAN CREATING “SAMHÄLLSFASTIGHETER” (COMMUNITY SERVICE PROPERTIES) INSTEAD OF PUBLIC PROPERTIES Ilija Batljan gave the Set up property Swedish name “Samhälls- management in Disposed to Keops Disposed 50 % of Joined SBB 19th fastigheter” (Community Norway, Finland for SEK 6.3bn Hemsö to AP3
Slide 91: Valuation technique
VALUATION TECHNIQUE The Group reports its investment properties at fair value Under the Group’s valuation policy, 100% of its properties are valued as of 30 June and 31 December each year by external valuers: Newsec Advice AB Jones Lang LaSalle Holding AB Savills Sweden AB Colliers Inter
Slide 92: EPRA NNNAV bridge
EPRA NNNAV BRIDGE SEKm FY 2018 H1 2019 EPRA NAV 8,736 9,593 (-) Fair value of derivative financial instruments (12) (99) (-) Deferred tax liabilities¹ (886) (1,096) EPRA NNNAV 7,838 8,398 (+) Equity attributable to hybrids investors 1,873 4,978 (+) Equity attributable to D-share investors 1,244 2,21
Slide 93: Consolidated income statement
CONSOLIDATED INCOME STATEMENT 01-01-2019 01-01-2018 01-04-2019 01-04-2018 01-01-2018 Amount in SEK, millions 30-06-2019 30-06-2018 30-06-2019 30-06-2018 31-12-2018 Rental income 893 800 464 410 1680 Operating costs -223 -201 -89 -87 -386 Maintenance -51 -39 -25 -23 -100 Management administration -44
Slide 94: Consolidated cash flow statement
CONSOLIDATED CASH FLOW STATEMENT Amount in SEK, millions 01-01-2019 01-01-2018 01-04-2019 01-04-2018 01-01-2018 30-06-2019 30-06-2018 30-06-2019 30-06-2018 31-12-2018 Operations Profit from property management 254 182 148 109 321 Adjustments for non-cash flow items Depreciations 0 1 0 0 2 Net financ
Slide 95: Consolidated balance sheet
CONSOLIDATED BALANCE SHEET Amount in SEK, millions 30-06-2019 30-06-2018 31-12-2018 ASSETS Fixed assets Intangible assets Goodwill 24 25 24 Total intangible assets 24 25 24 Tangible assets Investment properties 30 331 25 637 25 243 Land lease agreements 134 - - Equipment, machinery and installations
Slide 96: Thank you!
THANK YOU! SBB Samhallsbyggnadsbolaget @D c
Samhällsbyggnadsbolaget i Norden — Investor Presentation (September 2019) on 6ix