Q&A from Conference call in Swedish Q4 2019
Eric Granström – Carnegie
1. You have lowered your yield requirements now during Q4 and I suspect this is because you have now conducted an external valuation? Is this true?
Answer: This is not true, we have adjusted to the current market situation.
2. Ok, does this mean that something happened during Q4 in other words?
Answer: No, we review our valuations once every half-year and we want it to look like the situation is stabilizing. We have now seen that these lower yield requirements are persisting.
3. Have you mainly adjusted the yield requirements in certain regions?
Answer: They were adjusted broadly across the entire portfolio. Now we have started lowering by around 10 points at a time compared to 25 points previously.
4. If we look at your goal of SEK 40 per share in net asset value growth, a part of what you created during the year of course was in your new construction, but a lot of the SEK 9 you generated also came from changes in value because of lower yield requirements. Is this something that you expect will happen during the remaining period?
Answer: We will build our own values and have not calculated exactly what will create what in the business plan.
5. You should be able to create this, given the project portfolio you have?
6. When we look at construction in progress now, we can see that Stockholm has increased a lot. Is this deliberate? Is this a trend we will see?
Answer: Gothenburg has historically been much lower since it has been difficult to obtain land allocations. We have had to work a lot there to find our own locations, such as Kallebäck for example, where we will build 1,800 apartments. Gothenburg has increased if we compare historically.
7. You are saying that you will invest approximately the same as this year, in the next few years. Will this be in the same markets as today or will this need to change? It may be more expensive to produce in Stockholm compared to e.g. Gothenburg.
Answer: We are sticking to our project portfolio and will build it, regardless of whether it is in Stockholm or Gothenburg, the calculation should of course hold up.
8. Will the SEK 3 billion in investments you have planned be made evenly throughout the year, or will the investments be weighted towards the end of the year?
Answer: This depends on the stage of each project. But of course the more projects we have started, the more different phases and the investments can be evened out because of this.
Niclas Höglund – Nordea Markets Equities
9. What is the cost of the EIB financing, considering that the capital term is longer than you usually have? Is the cost higher then?
Answer: I will not go into the price per counterparty. We would not have done it if we did not feel that it was a reasonable cost structure.
10. Will the stricter requirements on the banks affect you during renegotiations?
Answer: So far we have not noticed anything, but there is uncertainty about what it will mean in practice. So I will take a “wait and see” approach regarding this question.
11. Now you are reporting profit on construction of rental apartments in progress with the largest share at the end of the project, closer to occupation. Have these yield compressions you have made also affected the value of the new construction?
Answer: I must correct you about the valuation of rental apartments in progress. There, we gradually recognize profit throughout the entire production period, some of the yield changes have been in the new construction, but not much.
12.What do you think about the rental negotiations for 2020?
Answer: Unfortunately, I cannot comment on this.