Q1 2019 Collaboration is our strategy - Hembla
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Q1 2019 Collaboration is our strategy
Highlights and
key figures
HIGHLIGHTS, JAN – MAR 2019 KEY FIGURES
→ Continued high pace of refurbishments Jan-Mar Jan-Mar
• 321 apartments refurbished in Q1 2019 SEKm 2019 2018 2018
• Improvement of refurbishment labor costs following renegotiation of Rental income 477 386 1,786
contracts Net operating income (NOI) 218 166 931
→ NOI increased to SEK 218 million Change in investment prop. 659 222 3,737
• Increase of 31.1% compared to same period last year EPRA NAV per share (SEK) 175 125 167
• Mainly driven by a larger property portfolio and apartment renovations
→ Comparable portfolio as of Q1 2019
• NOI margin of 45.2% RENTAL INCOME AND NOI MARGIN (SEKm)
• NOI increased by 5.9% compared to same period last year 2 000 60%
1 800
→ Unrealized value of investment properties up by SEK 659 million 50%
1 600
• During the quarter, unrealized value of investment properties increased by
1 400
SEK 659 million compared to SEK 222 during the same period last year 40%
1 200
• Supported by strong market fundamentals and NOI growth
1 000 30%
800
20%
600
400
10%
200
0 0%
Jan-Dec 2015 Jan-Dec 2016 Jan-Dec 2017 Jan-Dec 2018
Rental income NOI margin
2
Organizational change with focus on
tenants
ORGANIZATIONAL CHANGE CURRENTLY TAKING PLACE IN
THE COMPANY
→ For us, improving the tenant satisfaction is the most important factor that will
ultimately tell us that we have succeeded
→ The regional structure of the property management business area is being
converted into an organizational setup divided by function
→ The new organization is expected to deliver a higher level of service, enabling
us to:
→ Better harness the skills of our employees
→ Create new, professional development opportunities for our employees
→ Every employee in the property management organization has actively
participated in the creation of new processes and working methods
→ An organizational change of this scale is a big investment which requires:
→ Time
→ Personnel
→ Monetary resources
→ Non-recurring costs for the organizational change are estimated to be
approximately SEK 25 million and are expected to yield in excess of SEK 10
million in annual savings going forward
3
Overview
property portfolio
STRONG FOOTHOLD IN STOCKHOLM
21,410 1,690k
APARTMENTS LETTABLE SQM
11%
3%
SEK 4%
9%
32.1bn
MARKET VALUE 10% 63%
Stockholm Norrköping Eskilstuna
Uppsala Västerås Other
4
The number of people in the Stockholm rental
housing queue is still increasing
STOCKHOLM HOUSING QUEUE STATISTICS COMMENTS
→ We remain focused on improving and increasing our portfolio to help
address the demand for rental housing
9,0%
600 000
7,5%
500 000
6,0%
400 000
4,5%
300 000
200 000 3,0%
100 000 1,5%
0 0,0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Number of people in rental queue Let apartments per year as share of total queue
Source: Bostadsförmedlingen i Stockholm 5Rental income and net operating income increased
by 24% and 31% respectively in Q1 2019
KEY INCOME FIGURES DEVELOPMENT (SEKm) COMMENTS
→ Rental income increased by 23.5% in Q1 2019 compared to same period
600 100% previous year
→ Net operating income increased by 31.1% in Q1 2019 compared to the same
period last year
500
80% → Q1 2019 NOI margin amounting to 45.6%, compared to 43.0% in the same
period previous year
400
60%
300
40%
200 Q1 2019 Q1 2019 Q1 2019
RENTAL INCREASE NOI INCREASE NOI MARGIN
100
20% 23.5% 31.1% 45.6%
0 0%
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19
Rental income Net operating income
NOI - Margin Surplus ratio - target
6Continued strong growth in
EPRA NAV per share
EPRA NAV DEVELOPMENT, Q1 2019 VS Q1 PREVIOUS YEARS EPRA NAV DEVELOPMENT QUARTER ON QUARTER
200 40% 200 60%
180 35% 180
50%
160 160
30%
140 140
40%
120 25%
120
100 20% 100 30%
80 15% 80
60 20%
60
10%
40 40
10%
20 5%
20
0 0% 0 0%
Q1-16 Q1-17 Q1-18 Q1-19 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19
Equity (EPRA NAV) per share Equity ratio
Equity (EPRA NAV) per share Equity ratio Equity ratio - target
COMMENTS
→ Increase in EPRA NAV to 175.3 SEK per share as of Q1 2019, up 40% YoY
→ Compared to the most recent quarter (Q4 2018), EPRA NAV increased by 4.9%, driven by NOI growth and strong market fundamentals
→ The slight drop in Q1 2018 is a result of the dilutive effect of the rights issue
→ EPRA NAV per share development shows consistently strong growth over time
7Investing in a
strengthened organization
CENTRAL ADMINISTRATION COST DEVELOPMENT, LTM COMMENTS
→ Central administration has increased to SEK 194 million for the period April
250 120 2018 – March 2019 compared to SEK 128 million for the same period in the
previous year
→ The increase is partly driven by non-recurring costs amounting to SEK 27
100 million for the year relating to costs for digitalization (SEK 6 million) and
200
rebranding (SEK 21 million)
→ A strengthened organization resulting in increased personnel costs, further
80
improved IT- system and consultancy costs are other drivers of the increased
150 central administration during the period. We expect this to increase the
performance on asset-level when fully implemented.
60
100
40
50
20
0 0
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19
CA (LTM) CA per sqm (LTM)
8Continuously
optimizing capital structure
OVERVIEW LOAN VOLUME & AVERAGE INTEREST RATE (SEKbn)
→ Hembla is continuously focused on optimizing its capital structure
→ 93% of the debt is non-recourse, improving financial
resilience
→ Maturity on senior secured debt of 5.6 years
~93% Non-Recourse
→ Average interest rate on senior secured debt 2.0% (2.1% on strengthening
financial resiliance
total debt)
→ Financings and capex drawdowns amounted to
SEK 855 million in Q1
→ Total LTV1 at 56.0%.
→ Focus on financings in line with Hembla’s
overall financing strategy PROPERTY VALUE AND LOAN-TO-VALUE (SEKbn)
→ Long-term loans combined with
capex top-up facilities
→ Non-recourse
1: Including building rights & bond
9Enhanced living environments for tenants
through refurbishment
NUMBER OF REFURBISHED APARTMENTS, LTM1 COMMENTS
1800 → Hembla renovated 321 apartments during Q1 2019
1600
1400 → The total number of renovated apartments in the portfolio amount to 5 966
1200 units
1000
800 → The number of non-refurbished apartments in the portfolio amounts to 15,444,
600 corresponding to 72% of the total stock
400
200 → Apart from apartment refurbishments, Hembla has also invested ~ SEK 200
0 million during Q1 2019 in the properties’ exterior and surroundings such as
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 façades, common areas, outdoor environments, geothermal heating etc.
15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19
Refurbished apts (LTM) → Significant development potential and asset-level upside remains
→ Refurbishments driving continued growth in rental income
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
Refurbished
apts as % of
9.2% 8.8% 8.5% 7.9% 7.3%
average apt
stock:
% of unrefurb. 11.7% 10.8% 9.9% 9.9% 10.4%
Stock:
1 Figures include all apartments refurbished by Hembla, i.e. numbers exclude acquired renovated apartments and include divested renovated apartments
10Closing
CLOSING REMARKS
→ Listening to and acting on the views of our tenants
→ Being a long-term residential owner
→ Creating value by renovating and enhancing living environments for our
tenants
→ Continuing to focus on improving and growing our portfolio
→ Providing good service to make our tenants’ life easier
11Thank you! SVEIN ERIK LILLELAND CEO SEL@HEMBLA.SE JONAS ANDERSSON CFO JONAS.ANDERSSON@HEMBLA.SE hembla.se
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