January–March 2022 period
- Rental income amounted to SEK 93.6m (63.6), an increase of 47%.
- Net operating income amounted to SEK 63.5m (45.5), an increase of 40%.
- Income from property management increased 166% to SEK 30.9m (11.6), of which income from property management attributable to shareholders was SEK 19.2m (1.1), corresponding to SEK 0.46 (0.03) per share.
- Net income after tax amounted to SEK 167.0m (103.5), corresponding to SEK 3.19 (2.35) per share.
- Long-term net asset value attributable to shareholders increased 44% to SEK 3,439.5m (2,388.7), corresponding to SEK 81.94 (60.36) per share.
Events during and after the end of the period
- In January, Genova let and extended rental agreements for 9,600 sqm with an average duration of more than seven years in Lund, Uppsala, Nacka and Gävle. The total rental value for the entire duration of all rental agreements was approximately SEK 110m, and Genova’s investment commitment totalled approximately SEK 8.9m.
- In February, Genova completed a combined transaction with ADR Fastigheter where Genova divested the Veddesta 5:12 property in Järfälla containing a long stay hotel at an underlying property value of SEK 214.5m and acquired a portfolio of properties in Greater Stockholm, Nyköping and Hallstahammar at an underlying property value of SEK 104m. Closing took place on 18 February 2022.
- In February, the Board of Genova established a new growth target and sustainability targets for the business. The company’s other operational targets, financial targets, risk limits and dividend policy are unchanged.
- In April, Genova and Green Group extended their collaboration with the acquisition of the Veddesta 1:20 and Veddesta 1:29 properties, which are directly adjacent to each other in the Södra Veddesta development area in Järfälla. The properties were acquired for an underlying property value of approximately SEK 115m. The lettable area is approximately 4,000 sqm with a lot size of about 13,000 sqm. The annual rental value is approximately SEK 8m.
- In April, Genova issued subsequent green hybrid bonds in the amount of SEK 100m under its green finance framework of SEK 1,250m. The green hybrid bonds carry a perpetual tenor and were issued at a price of 100.25% of nominal amount representing 3 months STIBOR plus 668 basis points.
- In April, Genova entered into new financing arrangements with Swedbank AB (publ) for a total amount of SEK 3,200m, including a revolving credit facility of SEK 350m. The new facilities will be used for Genova’s existing investment property portfolio and comprise a total of 43 properties. The refinancing also strengthens Genova’s liquidity by almost SEK 170m. The new financing agreements will mature in May 2027, with an average maturity of approximately four years.
Despite war in Ukraine and unstable macro environment factors, Genova started the year with a stable quarter. We reported a strong trend in rental income, income from property management and net asset value while we concurrently continued our organic growth, particularly from project development. After the end of the period, we conducted a successful refinancing linked to our green framework, of a significant share of the loan stock. Genova's positive position and stability is reflected in favorable terms and long loan maturities.
New situation in our macro environment
During the quarter, we experienced a complete change in the macro environmental situation and new market conditions in areas that impact the property sector and Genova. Energy prices and costs for building materials are rising while problems in logistics flows can disrupt and delay new construction projects. There are, of course, challenges with this development for us but we can also see that Genova’s business model and operations are resilient and stable with a clear long-term approach and secure cash flows. We have noted a slight impact on costs from energy price rises though a large share of this will be charged to tenants under the contracts we have with them. In addition, 98% of our rental income is inflation-proofed through price escalation clauses. In our ongoing projects, we have continuing procurements with fixed prices that mean we are unaffected by cost increases in the short term.
During the winter, Genova worked actively to secure our financing and in April we signed new financing arrangements of approximately SEK 3.2 billion for 43 properties in our existing investment property portfolio, which also strengthened Genova’s liquidity by almost SEK 170m. The financing agreements mean we have refinanced a substantial share of our lending volume, with long maturities and at favourable terms that reduce Genova’s total borrowing costs. The fact that we can complete this successful refinancing in the current market situation is both gratifying and important for Genova’s future development. Our business model with stable cash flows from our investment property portfolio provides us with a solid foundation for good financing terms.
Our intensified efforts to environmental certify the properties and projects that we are developing for our own long-term management, also play a central role in the refinancing. The new financing agreements are based on Genova’s Green Finance Framework and can be converted into green finance when the investment properties become environmentally certified, which is aligned with Genova’s sustainability targets that were adopted during the quarter. We have decided that all new construction is to be environmentally certified and the target is that all investment properties that are owned and managed on a long-term basis are also to have environmental certification by the end of 2023. Our aim is additionally that 85% of Genova’s financing for new construction and investment properties is to be green by the end of 2023.
Long-term development based on market conditions
During 2022, Genova will carefully navigate in our new market situation, and continue to evaluate acquisition opportunities that we believe will strengthen Genova in the long-term. We will have a clear focus on developing Genova’s building rights portfolio with low purchase costs, which will enable high profitability and strong growth in net asset value. Currently, we have five projects in ongoing production that are progressing as planned and properties in Uppsala and Norrtälje will be completed and ready for occupancy in 2022, which will contribute towards increased earnings. We believe market conditions remain favourable to develop residential units in Greater Stockholm, the Uppsala Region and other growth regions. We are planning to begin additional construction during the year. With stable cash flows and healthy financing, Genova has a solid foundation for the future.
Michael Moschewitz, CEO
For further information, please contact:
CEO, Michael Moschewitz, mobile +46 (0)70-713 69 39, firstname.lastname@example.org
Genova Property Group AB (publ) is a modern property company with a personal touch that owns, manages and develops properties with focus on Greater Stockholm area and Uppsala Region. On 31 March 2022, the value of the company's property portfolio amounted to approximately SEK 8.2 billion with a lettable area of approximately 267,000 sqm and the company held approximately 7,000 building rights for residential units. Genova's ordinary shares have been listed on Nasdaq Stockholm since June 2020.
This information is such information that Genova Property Group AB (publ) is obligated to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, on 4 May 2022 at 8.30 a.m. CEST.
Genova – Smålandsgatan 12 – SE-111 46 Stockholm – www.genova.se