Quarter April–June 2020
- Rental income amounted to SEK 56.6m (41.9).
- Net operating income amounted to SEK 44.9m (31.6).
- Income from property management amounted to SEK 2.9m (18.6), of which income from property management attributable to ordinary shareholders was SEK -7.6m (10.7), corresponding to SEK
-0.14 (0.21) per ordinary share. - Net income after tax amounted to SEK 40.4m (78.5), corresponding to SEK 0.55 (1.32) per ordinary share.
- Long-term net asset value attributable to ordinary shareholders amounted to SEK 1,675.3m (920.0), corresponding to SEK 54.53 (18.40) per ordinary share.
Period January–June 2020
- Rental income amounted to SEK 110.6m (81.4).
- Net operating income amounted to SEK 84.9m (58.4).
- Income from property management amounted to SEK 21.3m (23.0), of which income from property management attributable to ordinary shareholders was SEK 0.3m (7.2), corresponding to SEK 0.01 (0.15) per ordinary share.
- Net income after tax amounted to SEK 231.0m (120.3), corresponding to SEK 3.64 (1.82) per ordinary share.
- Long-term net asset value attributable to ordinary shareholders amounted to SEK 1,675.3m (920.0), corresponding to SEK 54.53 (18.40) per ordinary share.
Significant events during and after the end of the period
First quarter
- In February, Genova’s Board of Directors adopted new financial and operational targets and a new dividend policy.
- In March, Genova concluded an agreement to divest 50% of the shares in the property-owning company that owns Stapelbädden 3 in Lidingö at an underlying property value of SEK 400m before deductions for deferred tax.
- In March, Genova signed a letter of intent with Internationella Engelska Skolan to build an elementary school with a 20-year rental agreement in the Viby 19:3 property in Upplands-Bro, where Genova is planning to build a new district together with housing company K2A.
- In March, Genova agreed to acquire the Skarpnäs 6:12 ground lease in Nacka at an underlying property value of approximately SEK 40m. Accession took place in May 2020.
- During the quarter, rental agreements for approximately 4,500 sqm in two properties in Lund were extended, with an annual rental value of approximately SEK 6.2m. The agreements have terms of five and eight years, respectively, with National Historical Museums and Friskis & Svettis as the tenants.
- Genova decided to change its accounting policies and will henceforth consolidate the co-operative housing association that owns the Liljegatan 1 project in Fålhagen, Uppsala. Under the new policies, the date on which income from newly constructed co-operative apartments is recognised is the point in time when home buyers gain accession to their units and not, as previously, over a period of time as the work is completed. Due to application of the new accounting policies from the first quarter of 2020, items attributable to prior periods have been restated, which is presented in Note 1. As a result of the restatement, equity decreased by SEK 47.0m. When the project is completed, which is scheduled for the fourth quarter of 2020, SEK 47m will be returned to equity.
Second quarter
- In May, Genova agreed to acquire the Flogsta 47:1 community service property in Ekeby, Uppsala, at an underlying property value of SEK 350m. The lettable area is approximately 16,500 sqm with a lot size of about 16,700 sqm. The largest tenants are Gluntens Montessori School, Stadsmissionens Skolstiftelse, Friskis & Svettis and Uppsala Municipality. The average rental duration is 2.9 years and the annual rental value approximately SEK 26m. Accession took place in August 2020.
- In June, Genova agreed to acquire the Runö 7:146 property in Åkersberga at an underlying property value of SEK 20m. The property is located in central Åkersberga adjacent to one of Genova’s existing properties. The lettable area is about 1,100 sqm, with an approximate lot size of 6,000 sqm. The property is fully let to Lidl Sweden, has an annual rental value of approximately SEK 1.3m and a rental term of approximately 3.5 years. Accession took place in July 2020.
- In June, 50% of the shares in the property-owning company that owns Stapelbädden 3 in Lidingö were divested. The shares were acquired by Samhällsbyggnadsbolaget i Norden AB (SBB) in March 2020, and the parties will develop the property jointly with a focus on sustainable homes with elements of community properties. The underlying property value of SEK 400m in the transaction exceeded Genova’s book value by approximately SEK 220m, which was recognised as a value change in the first quarter.
- In June, Genova’s first own-produced rental apartments were completed and occupied. Genova will own and manage the 35 rental apartments, which are located in Alsike in Knivsta.
- As of 12 June, Genova’s preference shares were admitted to trading on Nasdaq Stockholm’s Main Market.
- In June, Genova decided on an offering to subscribe for and purchase ordinary shares in the company, and a subsequent listing of the ordinary shares on Nasdaq Stockholm. The offering was over-subscribed and in total, including the over-allotment option that was exercised in July, the company generated proceeds of approximately SEK 576m before listing expenses.
- 30 June was the first day of trading for the ordinary shares on Nasdaq Stockholm’s Main Market.
- During the quarter, new rental agreements for approximately 3,000 sqm were signed and extended in four properties, with an annual rental value of approximately SEK 3m. The agreements have terms ranging from one to three years.
Events after the end of the period
- In July, Genova announced that the over-allotment option had been fully exercised.
- In July, the zoning plan for Genova’s jointly owned project in central Knivsta came into force. The zoning plan for the Segerdal project grants permission to develop approximately 25,000 sqm, where Genova is planning to construct approximately 300 rental apartments combined with some commercial operations.
- In July, Peter Lövgren resigned from his position as Head of Business Development. In conjunction with this, Head of Properties Henrik Sandström assumed responsibility for Genova’s business development.
- In August, Genova and SBB jointly acquired and gained accession to Nackahusen Holding AB, which owns six properties in Nacka Strand. The properties, which contain building rights of approximately 40,000 sqm of gross lighted floor area, were acquired for SEK 1 and the parties assumed the existing bond loan of approximately SEK 360m. Nackahusen Holding has previously divested properties and when these transactions have been settled, Genova and SBB will jointly control properties and building rights of about 30,000 sqm of gross lighted floor area at an underlying property value of approximately SEK 190m. The properties are owned through a joint venture, where Genova’s investment commitment amounts initially to SEK 30m, and is financed with own capital.
- In August, Genova mandated Carnegie Investment Bank and Nordea to explore the conditions to issue new senior unsecured bonds in the range of SEK 300- 400m under a framework of SEK 750m and a tenor of 4 years, subject to market conditions. Genova intends to use the proceeds from the new bonds to repurchase and/or call its SEK 500m (of which SEK 156m is outstanding) 2017/2021 senior unsecured bonds, and for general corporate purposes.
- After the end of the period, rental agreements for approximately 5,000 sqm were signed and extended in two properties, with an annual rental value of approximately SEK 8m. The agreements have terms of three years.
CEO’s statement
The second quarter of 2020 was historical for Genova in several ways. During the quarter, Genova’s first rental apartments were completed, a category of investment properties for long-term ownership that will form a growing part of our investment property portfolio. In June, the company was listed on Nasdaq Stockholm’s Main Market. The listing of our ordinary shares is a milestone on the journey that Genova began 14 years ago, and the positive response from investors and the public to the offering feels fantastic.
Successful issue and listing
In June, Genova decided on an offering to subscribe for and purchase ordinary shares in the company, and a listing of the ordinary shares on Nasdaq Stockholm. I am both proud and gratified that we were able to carry out the offering and listing so successfully in the uncertain market that characterised the spring and summer due to the coronavirus pandemic. A strong effort from everyone at Genova contributed to the positive outcome. We noted a major interest in the company from both reputable institutions and the public, and were able to welcome more than 8,000 new shareholders. That will provide us with a strong and stable ownership base, in which our former principal owners and founders have retained a significant holding and a strong commitment to the company.
Occupation of our first rental apartments
In June, we achieved yet another milestone in Genova’s development when our first own-produced rental apartments in Alsike, Knivsta, were completed and occupied. The project, which is Nordic Swan Ecolabelled, is financed with green loans and the plan is to environmentally certify all our new construction going forward. Genova has a clear focus on the development of sustainable rental apartments which, together with community service proper- ties, will account for a major share of our investment property portfolio over time. This is in line with Genova’s long-term approach and focus on stable cash flows, and aligned with market demand.
In central Knivsta, we are running another project to develop about 300 rental apartments that will also be environmentally certified. In June, the zoning plan for this project came into force and we are now preparing for construction start in the fourth quarter of 2020. During the period, we signed a letter of intent with Internationella Engelska Skolan to construct a school building in Upplands-Bro where we are planning one our other major urban development projects with residential units, a supermarket, school, preschool and healthcare facility.
Acquisitions with potential
It has also been an active quarter in regard to acquisitions. We added properties in Stockholm and Uppsala with stable cash flows and future development potential to our portfolio. Just recently, Genova and SBB jointly acquired the Nackahusen Holding company, with six properties and building rights for about 40,000 sqm, at low intrinsic value. The aim is that we will develop both rental apartments for long-term management and co-operative apartments together. The properties are close to some of Genova’s own properties in Nacka and we believe the area has major development potential.
Performance for the period
In the first half-year, our rental income increased 36% and net operating income rose 45% due to an expanded investment property portfolio. Income from property management declined slightly year-on-year, due to lower value changes in joint ventures and currency effects compared with the corresponding period of 2019. Excluding value changes from joint ventures and currency effects, income from property management increased to SEK 18m in the first half-year, compared with SEK 9m in the first half of 2019.
COVID-19 continues to impact our day-to-day activities and operations. However, the effects of the pandemic have been manageable for Genova, and our assessment is that the conditions for a relatively limited impact will remain favourable. We have a stable financial position and diversified tenant mix, where approximately half of the rental value is derived from publicly funded operations and supermarkets. We are following developments closely and will respond to both the challenges and opportunities that may arise in an uncertain market situation.
Strengthened liquidity
In July, the successful spread of ownership and listing of ordinary shares generated proceeds of approximately SEK 576m for the company before listing expenses. The strengthened liquidity will help us build resilience to market volatility, and to continue developing Genova through acquisitions and projects. With more than 8,000 new shareholders on board, this creates even more motivation now. Together with the team at Genova, I am looking forward to an active autumn and to continuing our exciting journey.
Michael Moschewitz, VD
The interim report in its entirety is available on Genova’s website: www.genova.se.
For further information, please contact:
CEO, Michael Moschewitz, phone +46 70 713 69 39, michael.moschewitz@genova.se
CFO, Edvard Schéele, phone +46 70 399 69 90, edvard.scheele@genova.se
OM GENOVA
Genova Property Group AB (publ) is a modern and personal real estate company that owns, manages and develops properties with a focus on Greater Stockholm and Uppsala. As of June 30, 2020, the company owned properties to a value of approximately SEK 4.7 billion with a lettable area of 168,000 sq.m. and held 5,267 building rights. Genova’s preference shares and ordinary shares have been listed on Nasdaq Stockholm since 12 and 30 June 2020, respectively.
This information is inside information that Genova Property Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact persons set out above, on 31 August 2020 at 08:15 a.m. (CEST).
Genova Property Group – Smålandsgatan 12 – 111 46 Stockholm – www.genova.se