K-FASTIGHETER Announcement presentation - 11 December 2024 | 15:30 CET
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K-FASTIGHETER Announcement presentation 11 December 2024 | 15:30 CET
TRANSACTION OVERVIEW AND RATIONALE
BACKGROUND
Background Transaction with Brinova
• Founded in 2010 with the ambition to primarily own investment • The divestment of a SEK 10.8bn1) property portfolio to Brinova is a
properties but subsequently started construction to lower acquisition unique opportunity to unlock value in Brinova by doubling the size of the
costs company, increasing liquidity by introducing +6,000 new shareholders,
making it more accessible to capital markets and banks and over time get
• Proven concept to challenge a conservative business segment by building included in relevant indexes
repetitively and conceptually
• Scope to accelerate business plan of K-Fastigheter and shift focus to
• Control the value chain by owning input parameters, including the prefab proven construction concept while maintaining control of property
operation – key component in keeping construction cost low and portfolio
constantly improving margins
• Accelerate growth of the highly profitable construction business
• New business plan adopted in May 2024 with a shift of strategy from (historical PtV of 70-75%)
building only for own ownership to also focus on offering concept houses
to external customers • Increased cost efficiency and growth potential of the divested
asset to Brinova (historical ROE ~10%)
• Divides the company into two independent business segments to clarify
where value is created and to simplify investment and risk analysis • Value in K-Fastigheter will very clearly post-transaction reside in:
• So much more than a property company • Construction, segment broken out in reporting. Average annual
profit of SEK 438m (82% share of Group profits) L5Y until 2023
• Proof of concept via unique construction set-up
• Remaining directly owned property portfolio of completed
properties of SEK 3.1bn at yield 4.3% along with ongoing projects
of SEK 4.2bn at completion value at yield 4.3%
• Brinova at most 58.4% ownership. Public value check-mark on a
daily basis
Note: 1) Three ongoing projects (forward funded where K-Fastigheter is responsible for completion) are included in the SEK 10.8bn. Book value of The Divested Property Portfolio as of 30 Sep 2024 amounts to 10.1bn.
Source: Company information.
TRANSACTION OVERVIEW
The transaction – Property portfolio in exchange for new shares in Brinova Key transaction rationale – Brinova’s perspective
The Divested Property
Significant geographic overlap in the attractive Öresund Region with the
Portfolio
SEK 10.8bn
1. new property portfolio
Focused geographical footprint enabling strengthened operating
2. leverage
Economies of scale due to more than doubling of the property
Consideration in
5 3. value to SEK 19.2bn
Brinova shares
• K-Fast Holding AB (“K-Fastigheter”) will divest a property portfolio of 108 properties in South
Sweden, K-Fastigheter Syd, with a combined property value of SEK 10.8bn1) (“The Divested
•
Property Portfolio”). Value based on external valuations (book value as of 30 Sep 2024)
Three ongoing projects are included in The Divested Property Portfolio where value is based on
4. Creating a leading Swedish residential real estate company
external valuations at completion1)
• Total consideration will amount to at most 137.4m2) in newly issued shares in Brinova. The
exact number of shares to be determined at the closing date3)
Potential for increased share liquidity from larger market cap, inclusion in
•
•
The transaction is subject to customary regulatory approvals
K-Fastigheter has received exemption from the Swedish Securities Council to launch a
5. indices etc.
mandatory public offer for Brinova
• Shareholder support in K-Fastigheter from Erik Selin Fastigheter AB and Jacob Karlsson for the transaction amount to 73.3% of votes
• Shareholder support in Brinova from Backahill and Balder for the transaction amount to 71.4% of the votes
Note: 1) Three ongoing projects (forward funded where K-Fastigheter is responsible for completion) are included in the SEK 10.8bn. Book value of The Divested Property Portfolio as of 30 Sep 2024 amounts to 10.1bn. 2) The distribution of A and B shares to
reflect Brinova’s current relation. 3) Share consideration limited to a maximum of 27.0m A shares and 110.4m B shares, in total 137.4m shares in Brinova.
Source: Company information.
NEW BRINOVA AT A GLANCE – LEADING SWEIDSH RESIDENTIAL REAL
ESTATE COMPANY
Introduction to New Brinova and pro forma KPIs (Q3’24) Rental value and property value splits (Pro forma Q3’24)
• One of the largest listed residential real estate companies in Sweden, with scope for Contracted rent by category Property value (SEKbn)
4.5-5.0% rental increases from 2024-2025
Community service
• Operating leverage due to high degree of geographical overlap 20%
• Initial cost increase for central administration is expected to be limited
• Combined property portfolio entails an attractive mix of predominantly residential
properties
SEK SEK Old B
Divested
1,008m 10.81) 19.2bn 8.4
• Pro forma NAV of New Brinova as of 30 Sep 2024 is SEK 7.5bn
• CEO: Per Johansson
Commercial
• Chairman: Erik Selin 16% Residential
64%
SEK SEK SEK Geographic overview of Brinova and The Divested Property Portfolio
19.2bn 1,711
property value1) 1,008m 1,073m residential rental
Old Brinova
contracted rent2) rental value2)
value/sq.m.2) The Divested
Property Portfolio
Both
649.8k SEK 187m 60.5% 231 administrative
sq.m. lettable area at IFPM number of properties at
net LTV2) offices and
completion (Q1-3’24)2) completion3)
properties
One property under
29.6k 5.2% 1.7x 4.8% development in Geographical overlap in
property value/sq.m. at valuation yield4) at
vacancy2) ICR2) Copenhagen Helsingborg, Höör,
completion completion
Kristianstad, Kävlinge,
Landskrona, Lund och Malmö
Note: At completion includes the three projects as if they were completed in 30 Sep 2024. 1) Three ongoing projects (forward funded where K-Fastigheter is responsible for completion) are included in the SEK 10.8bn. Book value of The Divested Property
Portfolio as of 30 Sep 2024 amounts to SEK 10.1bn. 2) Including properties that have recently been completed excluding ongoing projects. 3) Viktoria 22 in Helsingborg was a completed property in K-Fastigheter as of 30 Sep 2024, now a forward funded
project. 4) Volume weighted average yield based on external valuations as of 30 Sep 2024.
BENCHMARKING VS. PEERS – SIGNIFICANT INCREASE IN SIZE
Property value (SEKbn)
Portfolio of SEK 10.8bn1) in property
value will be transferred to Brinova
24.5
19.2
15.0
13.9 13.7 13.3 13.0
9.0
8.4
7.0
4.8
Sveafastigheter New Brinova K-Fastigheter John Mattson Neobo HEBA Trianon Klarabo Brinova Genova Fortinova
Brinova’s property portfolio will more than double after the transaction, triple the number of shareholders, keep leverage at a constant level and have a balance sheet solely
consisting of bank debt and equity
Note: 1) Three ongoing projects (forward funded where K-Fastigheter is responsible for completion) are included in the SEK 10.8bn. Book value of The Divested Property Portfolio as of 30 Sep 2024 amounts to 10.1bn.
Source: Company information, Quarterly reports.
TRANSACTION RATIONALE
– EXECUTING ON THE COMMUNICATED STRATEGY
Facilitate the creation of Sweden’s second largest public residential company, benefiting
1. from geographical overlap, scale and operational synergies for future value uplift
potential
Natural step in the execution phase of K-Fastigheter’s communicated strategy,
2. accelerate construction activities
5 3. Profits historically primarily created within the Construction segment
Return on equity driven by turnover of balance sheet, home in on K-Fastigheter’s
4. unique setup and proprietary construction model
Continue to manage the legacy portfolio, ambition to time transactions with market
5. opportunities while simultaneously receiving exposure to a higher yielding property
portfolio
K-FASTIGHETER POST TRANSACTION
Property
Construction
management
South West East Project dev. Construction Prefab
~58%
ownership in
Brinova
• Clear structure with synergies between two legacy segments, Property management and Construction
• Lion’s share of value in Property management will post divestiture reside in the South portfolio through the ~58% ownership in Brinova, generating higher rental income
than owning 100% of The Divested South Property Portfolio. Optimized management setup
• East and West Property management structure remain intact
VISUALISUNG VALUE AND POTENTIAL IN K-FASTIGHETER’S
BUSINESS MODEL
Illustrative change in K-Fastigheter’s property value transitioning into K-Fastigheter 2.0
1 2 3
8.4 Value in Brinova
8.4 8.4
visualised through
being a public company
Ongoing 1.3 Deconsolidation post and can thus be more
New Brinova
intended dividend easily valued by owners
and analysts
Consolidated K-Fastigheter 10.8 10.8
Completed 9.5 K-Fastigheter Syd
Completed 3.1 3.1
K-Fastigheter 2.0 7.3 K-Fastigheter 2.0 7.3 K-Fastigheter 2.0
Ongoing 4.2 4.2
K-Fastigheter post transaction & pre K-Fastigheter post transaction and post
1 K-Fastigheter pre transaction 2 3
intended dividend of Brinova shares intended dividend of Brinova shares
• New strategy outlined in May 2024, dividing • Sale of K-Fastigheter Syd, and K-Fastigheter • Following the intended dividend, K-
operations in two business segments: becomes the largest shareholder in Brinova Fastigheter has the capability to in-house
Construction and Property Management • K-Fastigheter consolidates Brinova into P&L manage its newly built conceptual houses and
and BS the flexibility to time the markets to optimise
returns
Note: Based on Q3 2024 financials. Not adjusted for future balance sheet impacting items. Graph based on property values at completion.
Source: Company information
CONTRASTING VALUE CREATION MODELS
Production of concept houses Ongoing property management
• Equity needed per started apartment SEK 0.43m • Each newly constructed apartment ties up about SEK 1.23m of equity
• Project profit per apartment SEK 0.80m • 3% return on equity at 4% interest rate
• Gross margin 26% (PtV 74%) • 4.5% return on equity at 3% interest rate
• Return on equity = 186% • Another 5% return with 2% value increase per year. Over time value of residential properties
has developed in line with GDP
About SEK 430m is needed to construction start 1,000 apartments per year
Translating into favoured approach
Increase initiation of constructions, selling parts of the portfolio and/or sell ongoing and future constructionsSTRATEGY IN PRACTICE, K-FASTIGHETER GOING FORWARD
Production of concept houses Ongoing property management – decreased platform
• Proven value creation model, proprietary construction setup • Ongoing activites:
• +80% of profits historically generated within Construction • Identify what and where we shall keep properties
• Time market for optimal returns, risk appetite function of see-through to end-customer demand • See divestments as part of ongoing operations
• Flexibility with regards to divestment options • Flexibility and ability to keep properties in the books and sell when the timing on the
• Forward funding or forward sale market is favourable for optimal returns
• Co-Op transformation, always started on rental calculation • Transaction with Brinova will generate higher rental income than owning 100% of
The Divested South Property Portfolio
• Turnkey contracts – no own equity needed
• Economies of scale post Brinova transaction due to more than doubling of the
• Portfolios, based on geography or as single units property value to SEK 19.2bn
SEKm Profit/loss1) Profit/loss1)
Period Property mgmt. Share of profit Construction Share of profit
2021 – 2023 344.7 16% 1,650.0 84%
2019 – 2023 472.9 18% 2,189.7 82%
Strategy in practice
Accelerated growth within ongoing property management through the Brinova transaction and continued focus on high-growth capability within construction
Note: 1) Profit excluding change in value for properties under management and derivatives.NEW K-FASTIGHETER
– SO MUCH MORE THAN A PROPERTY COMPANY
Introduction to New K-Fastigheter Geographical footprint ranging from Skåne to Stockholm
• Income will continue to primarily be generated from the Construction segment (prior to the Offices
transaction 74% of income Q1-3 2024 and 81% of income since 2019), while balance sheet
remains property tilted Production plants
• K-Fastigheter’s operations will mainly comprise activities in project development, prefab Property portfolio
manufacture of frame solutions, and construction management for external parties
Brinova
• The current goal is to commence construction of 1,000 apartments per year and gradually
increase this to 1,200 apartments per year in the coming years
• K-Fastigheter has the capability to in-house manage its newly built conceptual houses and the
flexibility to time markets to optimise returns
• K-Fastigheter has a portfolio of ~SEK 3.1bn completed projects and ongoing projects with
~SEK 4.2bn in expected value after completion Production plants for
• Besides its development focus, K-Fastigheter will also own at most 58.4% of Brinova, e.g. prefab
generating an increased rental income to the group manufacturing in
• CEO: Jacob Karlsson regions with attractive
population growth
• Chairman: Erik Selin
621 1,745 2,257 1,056
number of number of apartments number of apartments number of apartments
construction starts in construction in project development under management
(Q1-3’24) (30 Sep ‘24) (30 Sep ‘24) (30 Sep ‘24)
K-Fastigheter will continue to focus on construction, hold completed projects with a value of SEK ~3.1bn and ongoing projects with a completion value of SEK ~4.2bn post
the transaction and own at most 58.4% of BrinovaAPPENDIX
THE DIVESTED PROPERTY PORTFOLIO IN BRIEF (1/2) 65% of properties
completed after
2019
Financials (Q3’24) Selected properties
Rental value by geography Contracted rent by category
Amerika Södra 27, Helsingborg Värnhem 2, Hässleholm
Commercial
Hässleholm 7%
Other 21%
25%
SEK SEK
Helsingborg
563.8m 16% 534.9m
Malmö
11%
Residential
Växjö Kristianstad 93%
13% 13%
Söderberg 1, Kristianstad Dammsnäckan 2, Malmö
SEK 10.8bn 304.4k SEK 35.3k 59.7%
property value1) sq.m. lettable area property value/sq.m. net LTV at completion2)
5.1% 108 / 4,279 SEK 1,898 4.4%
number of residential rental
Vacancy3) reported yield4)
properties / apartments value/sq.m.
The Divested Property Portfolio constitutes the vast majority of K-Fastigheter’s property portfolio in South Sweden
Note: The Divested Property Portfolio currently consist of 108 properties of which 3 properties under construction in Copenhagen, Helsingborg and Malmö. All figures include properties under construction (rental value of SEK 67m) unless otherwise stated.
1) Three ongoing projects (forward funded where K-Fastigheter is responsible for completion) are included in the 10.8bn. Book value of The Divested Property Portfolio as of 30 Sep 2024 amounts to SEK 10.1bn. 2) Assuming LTV at completion for the 3
properties under construction of 57.3%. 3) Including properties that have recently been completed excluding ongoing projects. 4) Volume weighted average yield based on external valuations as of 30 Sep 2024.THE DIVESTED PROPERTY PORTFOLIO IN BRIEF (2/2)
Ongoing development projects constitute ~10% of The Divested Property Portfolio value
Pederstrup By 1, Copenhagen
Total Expected
Total sq.m
apartments completion
11,054
153 Q2-Q4’25
Skjutskontoret 3, Malmö Viktoria 22, Helsingborg
Total Total
apartments apartments
154 41
Total Total
sq.m sq.m
8,997 3,128
Expected
Expected completion
completion Q4’26-
Q3’26 Q1’27
Note: Three ongoing projects (forward funded where K-Fastigheter is responsible for completion) are included in the SEK 10.8bn. Book value of The Divested Property Portfolio as of 30 Sep 2024 amounts to SEK 10.1bn. Viktoria 22 in Helsingborg was a
completed property in K-Fastigheter as of 30 Sep 2024, but is now one of three forward funded projects.CAPITALISATION TABLES
Pre transaction Post transaction Illustrative example – post intended dividend
Largest owners Capital % Votes % Largest owners Capital % Votes % Largest owners Capital % Votes %
Backahill AB 24.0% 40.0%
K-Fastigheter 57.7% 57.7% Erik Selin Fastigheter AB 18.7% 18.7%
Fastighets AB Balder 18.9% 31.4%
Familjen Hofmann 10.4% 11.7% Backahill AB 10.2% 16.9% Jacob Karlsson AB 18.4% 18.1%
Tor-Björn Bengtsson 7.7% 2.8% Fastighets AB Balder 8.0% 13.3% Backahill AB 10.2% 16.9%
Länsförsäkringar Fonder 5.0% 1.8% Familjen Hofmann 4.4% 5.0% Fastighets AB Balder 8.0% 13.3%
SEB Investment Management 4.4% 1.6%
Tor-Björn Bengtsson 3.2% 1.2% Familjen Hofmann 4.9% 5.5%
First Fondene 3.0% 1.1%
ODIN Fonder 2.8% 1.0% Länsförsäkringar Fonder 2.1% 0.8% Capital Group 4.3% 4.3%
Lannebo Kapitalförvaltning 2.4% 0.9% SEB Investment Management 1.9% 0.7% Länsförsäkringar Fonder 4.4% 3.0%
PriorNilsson Fonder 2.1% 0.8% First Fondene 1.3% 0.5% Fjärde AP-fonden 2.3% 2.3%
Top-10 total 80.6% 93.0%
ODIN Fonder 1.2% 0.4% ODIN Fonder 2.5% 1.8%
Lannebo Kapitalförvaltning 1.0% 0.4% First Fondene 2.4% 1.6%
K-FASTIGHETER PriorNilsson Fonder 0.9% 0.3% SEB Investment Management 2.4% 1.2%
Nordea Liv & Pension 0.5% 0.2% Tor-Björn Bengtsson 3.2% 1.2%
Largest owners Capital % Votes %
Erik Selin Fastigheter AB 32.4% 37.1% Carnegie Fonder 0.5% 0.2% Andra AP-fonden 1.1% 1.1%
Jacob Karlsson AB 31.1% 36.2% Jacob Karlsson AB 0.4% 0.2% Handelsbanken Fonder 1.1% 1.0%
Capital Group 7.4% 5.4% Tredje AP-fonden 0.9% 0.9%
Henry Dunkers Stiftelse 0.4% 0.2%
Fjärde AP-fonden 4.1% 3.0%
Catella Property IM 0.3% 0.1% Carnegie Fonder 1.0% 0.7%
Länsförsäkringar Fonder 3.9% 2.9%
ODIN Fonder 2.4% 1.7% Dala Marknad AB 0.3% 0.1% Futur Pension 0.7% 0.6%
First Fondene 2.1% 1.5% Gillesvik 0.2% 0.1% Sara Mindus 0.4% 0.4%
Andra AP-fonden 1.9% 1.4% Swedbank Robur Fonder 0.4% 0.4%
Anders Bengtsson 0.2% 0.1%
Handelsbanken Fonder 1.6% 1.2%
PAM Capital AB 0.2% 0.1% Lannebo Kapitalförvaltning 1.0% 0.4%
Tredje AP-fonden 1.5% 1.1%
Top-10 total 88.4% 91.5% Top-20 total 94.9% 98.1% Top-20 total 88.4% 93.4%
Note: Based on Brinova NAV per share of SEK 32.46, The Divested Property Portfolio NAV of 4.3bn and total new issued shares in Brinova of 133.4m (at the most 58.4% K-Fastigheter ownership if max number of shares of 137.4m).
Source: Company information, Holdings.K-FASTIGHETER PRO FORMA CONSOLIDATED FINANCIALS
K-Fastigheter after the transaction,
Q1-Q3 2024 K-Fastigheter before the transaction Brinova after the transaktion K-Fastigheter excl. Region Syd
consolidated
Rental income 452.9 859.5 727.5 132.0
Other income 367.8 369.1 5.9 363.2
Operating costs -446.2 -587.7 -272.5 -315.2
Gross profit 374.5 640.9 460.9 180.0
Central administration -55.0 -75.5 -21.0 -54.5
Depreciation and amortisation -45.6 -46.1 -0.8 -45.3
Profit from participation in associated and jointly controlled
9.2 9.2 0.0 9.2
companies
Net financial items -204.7 -336.8 -252.4 -84.4
Profit before changes in value 78.4 191.7 186.7 5.0
Balance sheet as of 30 Sep 2024
Investment properties 15,012.8 23,461.0 18,524.8 4,936.2
Other non-current assets 1,599.8 2,165.6 70.0 2,095.6
Total non-current assets 16,612.6 25,626.6 18,594.8 7,031.8
Current assets 359.9 627.9 428.6 199.3
Total assets 16,972.5 26,254.5 19,023.4 7,231.1
Equity and liabilities
Equity 5,214.5 8,386.3 6,529.0 1,857.3
Deferred tax liability 1,079.4 1,909.3 1,031.9 877.4
Non-current interest bearing liabilities 7,063.6 8,955.0 6,657.1 2,297.9
Other non-current liabilities 194.8 224.2 111.4 112.8
Total non-current liabilities 8,337.8 11,088.5 7,800.4 3,288.1
Current interest-bearing liabilities 2,849.3 6,127.4 4,467.8 1,659.6
Total current liabilities 570.9 652.3 226.2 426.1
Total non-current liabilities 3,420.2 6,779.7 4,694.0 2,085.7
Total equity and liabilities 16,972.5 26,254.5 19,023.4 7,231.1
Source: Company information.K-FASTIGHETER KEY PERFORMANCE INDICATORS
K-Fastigheter after the transaction,
30 September 2024 K-Fastigheter before the transaction Brinova after the transaktion K-Fastigheter excl. Region Syd
consolidated
Rental value, SEKm 655.2 1,231.5 1,073.3 157.1
Contracted rent, SEKm 624.7 1,164.1 1,007.6 155.5
Financial occupancy rate, % 95.3% 95.4% 94.8% 99.0%
Profit from property management Q1-Q3 2024, SEKm 102.2 215.5 186.7 28.8
Property value, SEKbn 15.0 23.5 18.5 4.9
Interest coverage ratio (R12M) 1.5 1.6 1.7 1.6
Loan-to-value ratio, % 61.0% 61.1% 60.5% 61.9%
Debt-to-equity ratio, % 58.4% 57.4% 58.5% 54.7%
Number of properties 120.0 243.0 229.0 14.0
Lettable area, thousands of sq.m. 359.7 705.1 626.6 77.9
Share of contracted rental value Residential, SEKm 577.6 788.0 641.2 146.5
Share of contracted rental value properties for public use,
0.0 205.0 205.0 0.0
SEKm
Share of contracted rental value commercial, SEKm 47.1 171.1 161.4 9.0
Number of shares outstanding, millions 246.0 246.0 231.1 246.0
Average number of shares outstanding, millions 244.1 244.1 231.1 244.1
Source: Company information.You can also read
