wallenstam interim report - cision · wallenstam interim report january 1–march 31, 2019 january...
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WALLENSTAM INTERIM REPORTJANUARY 1–MARCH 31, 2019
JANUARY 1–MARCH 31, 2019
• Net asset value per share amounted to SEK 83.60 (75.80), which meant an increase of SEK 1.30 per
share in the quarter and SEK 4.40 per share to date during the business plan, where the goal is an
increase of SEK 40 per share through 2023.
• Income from property management increased by 20 percent and amounted to SEK 260 million (217).
• Rental income increased by just over 6 percent and amounted to SEK 497 million (467).
• Construction of properties amounted to SEK 770 million (451).
• On closing day, we had 2,933 apartments under construction.
• Changes in value of investment properties amounted to SEK 285 million (126).
• Profi t before tax amounted to SEK 416 million (397) and profi t after tax amounted to
SEK 340 million (310), equivalent to SEK 1.1 per share (1.0).
Comparisons in brackets refer to the corresponding period of the previous year unless otherwise stated.
“The profi t for the quarter is in line with our plan. Our income from property management increased by about 20 percent
compared to the same quarter last year and we created net asset value that added a further SEK 1.30 per share –
SEK 4.40 in total to date – on the way towards our goal of an increase in net asset value of SEK 40 per share through 2023.”
“In March, we started the largest project in Wallenstam’s history, Kallebäcks Terrasser. Here, we intend to build a mixed-use
district featuring 1,800 apartments, offi ce workplaces, shops and school, etc. We are fi nancially strong and are planning for
investments of about SEK 3 billion per year in new residential properties and we also have commercial projects at the plan-
ning stage, which can add more commercial fl oor space in central locations of the city.”
HANS WALLENSTAM, CEO
• No. of investment properties: 216 • Investment property value: SEK 47 billion • Market capitalization: SEK 31 billion • Occupancy rate, lettable area: 99% • Occupancy rate, lettable area: 1,2 million sq m
• No. of apts. under construction: 2,933 • No. of wind turbines: 66
Read more about Wallenstam on page 20.
IMPORTANT EVENTS FIRST QUARTER
WALLENSTAM IN BRIEF
During the quarter, construction started of 766 apartments in
four projects: 305 rental apartments in Söra Kvarter, Österåker,
50 co-op apartments in the New York block at Gärdet, Stock-
holm, 141 rental apartments in phase 2, Umami Park in Hal-
lonbergen, Sundbyberg and 270 rental apartments in Kallebäcks
Terrasser, Gothenburg.
Th e property Mässhaken 2 in Helsingborg was sold to
Willhem. Th is was the last property included in the agreement
entered into with Willhem in December 2015 on a gradual ac-
quisition by the company of Wallenstam’s properties in Helsing-
borg. Th e agreed property value amounted to SEK 229 million,
and the property was vacated on February 27, 2019.
In February, Wallenstam signed an agreement with SEB
Trygg Liv for the acquisition of a commercial property at Lo-
rensbergsgatan 2-4/Vasagatan 45 in the Avenyn area of central
Gothenburg, which was taken into possession on April 1, 2019.
In March, an agreement was signed with Jämtkraft, which
will take over electricity sales to end customers through the
company Svensk NaturEnergi from April 1, 2019. Th e transac-
tion does not include the wind farms, which will continue to be
owned by Wallenstam, which will produce and continue to be
self-suffi cient in renewable energy.
During the quarter, it was also confi rmed that Wallenstam
will be one of six construction and property companies that
together with Landvetter Södra Utveckling and Härryda Muni-
cipality will develop Landvetter Södra, an entirely new town for
at least 25,000 inhabitants.
GOAL 2023Goal 2023 – Increase in net asset value of SEK 40 per shareIn the business plan 2019-2023, Wallenstam’s goal is to deliver
an increase in net asset value of SEK 40 per share. Th e goal is
measured from October 1, 2018 when the net asset value per
share was SEK 79.20. On March 31, 2019, the net asset value
per share was SEK 83.60, which meant an increase of SEK 1.30
per share in the quarter and SEK 4.40 in total to date during the
business plan.
Net asset value Net asset value describes the Group’s total generated value and
includes equity and deferred tax liability and amounted to SEK
27,011 million (24,548) on closing day. Deferred tax liability
refers mainly to diff erences between carrying amounts and resi-
dual values for tax purposes in Group properties. A net deferred
tax liability of SEK 4,671 million (4,132) is recognized in the
balance sheet, which consists of a deferred tax asset of SEK 392
million (846) and a deferred tax liability of SEK 5,062 million
(4,978). Th e non-current net asset value (EPRA NAV), which
in addition to reversal of deferred tax liabilities also reverses the
eff ects of unrealized changes in value of derivatives, amounted to
SEK 27,210 million (25,123).
INCREASE IN NET ASSET VALUE SEK/SHARE
3.10
Q4 2018
20232022202120202019
40
30
20
10
0
2 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
Goal 2023: An increase in net asset value of SEK 40 per share
4.40
commercial projects at the planning stage, which can add more
commercial fl oor space in central locations of the city.
Our major urban development project in Umami, Sund-
byberg, has got off to a good start with Convendum’s coming
venture. Convendum’s establishment features several parts,
including a coworking center and a conference center, the “Big
Offi ce” concept, which off ers fl exible, larger premium offi ces with
an all-inclusive solution incorporating furniture, technology and
ancillary service. It also includes the “Coliving” concept, which
off ers fl exible corporate housing with an all-inclusive solution.
Residential and commercial strengthen each otherIn Umami, we have also recently conducted viewings for our
fi rst, soon ready for occupation, rental apartments in the area –
viewings that pleasingly attracted very strong interest. Th e com-
bination of residential and commercial in an area is the key to
what we call a mixed-use district, where the residential properties
provide the basis for services and a commercial off ering such as
restaurants, gyms, shops, while the commercial space contributes
to the attractiveness of the residential area. Th is mix leads to a
greater city pulse during all hours of the day – a lively city.
In March, we started the largest project in Wallenstam’s
history, Kallebäcks Terrasser. Here, we also intend to build a
mixed-use district featuring 1,800 apartments, offi ce workplaces,
shops and school, etc.
Our renewable energyIn March, it was announced that we are initiating cooperation
with Jämtkraft, which through a business transaction took over
Svensk NaturEnergi and its electricity customers from April 1.
Th is is taking place, in light of the increasingly complex rules
and regulations in the electricity trading market, among other
reasons. Th is is diffi cult for a smaller electricity company such
as Svensk NaturEnergi to manage and pay for by themselves. It
feels natural to initiate cooperation with Jämtkraft in particular,
which shares the same values as us when it comes to customer
service and renewable energy. It is important to point out that
Wallenstam still owns the wind farms and will also continue to
produce and be self-suffi cient in renewable energy.
Learn from history, live with a view to the future We have now also entered our anniversary year, where we will
celebrate the fact that Wallenstam, which was established in No-
vember 1944, is now turning 75! We are marking this through
our 75-year symbol and through various activities during the
year, highlighting small and major milestones in the company’s
history. Developments that contributed to where the company is
today, events that became the basis for our strategies, and stories
that demonstrate our roots and provide reassurance when we
take on new challenges. We learn from our history, but we live
with a view to our future.
Hans Wallenstam, CEO
Strong profi t in the fi rst quarterTh e profi t for the quarter is in line with our plan. Our income
from property management increased by about 20 percent com-
pared to the same quarter last year and we created net asset value
that added a further SEK 1.30 per share – SEK 4.40 in total to
date – on the way towards our goal of an increase in net asset
value of SEK 40 per share through 2023.
Interest expenses have essentially halved, still as a result of the
restructuring we carried out during 2018, where we redeemed
derivatives with a higher interest rate and entered into new de-
rivatives with a lower interest rate. I think that interest rates will
remain extremely low for a long time to come. Using derivatives,
we can secure a low interest rate for a long time in the unlikely
event that this situation should change. However, the interest
rate has fallen further from an already low level, which in our
income statement has generated a theoretical defi cit value in the
derivative portfolio.
Record number of apartments in productionChanges in value amounted to SEK 285 million, of which about
half came from our cost-effi cient new construction. Th ere were
a record number of construction starts during the quarter, some
766 apartments in total, and this means that we now have 2,933
apartments in production ‒ also a record number. Th is is great
in several respects – naturally because we are advancing our pro-
jects, but also the fact that these production starts will gradually
become new homes for many families, and not least because the
absolute majority are rental apartments, which we are building
for our own management operations.
Strong demand for commercial premisesOur commercial properties have also had a very good develop-
ment during the quarter. Th ere is still strong demand for our
commercial premises in the city of Gothenburg. Th e vacancy
rate remains very low, demand is high, and we are continuing to
densify with new commercial space in central areas such as the
Sturefors project in the Avenyn area, for example. We are fi nan-
cially strong and are planning for investments of about SEK 3
billion per year in new residential properties and we also have
COMMENTS BY THE CEO
.
H W ll t CEO
3 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
SEK million Note Jan-Mar
2019 Jan-Mar
2018 Apr-Mar
2018/2019Jan-Dec
2018
Rental income 497 467 1,940 1,910
Operating expenses -133 -126 -488 -481
Net operating income, properties 364 341 1,452 1,429
Management costs and administrative expenses -58 -52 -217 -211
Financial income 2 3 5 6
Financial expenses -48 -75 -185 -212
Income from property management 260 217 1,054 1,011
Realized changes in value, fi nancial instruments - - -767 -767
Income from natural energy management operations 1 10 7 -32 -35
Participation in profi ts/losses of associated companies -1 - -1 -
Revenue, development property sales 262 23 776 537
Expenses, development property sales -186 -20 -587 -421
Profi t before changes in value and impairment losses 345 228 441 324
Changes in value, investment properties 285 126 1,991 1,832
New construction 132 93 637 598
Other 153 33 1,354 1,234
Unrealized changes in value, fi nancial instruments -202 43 533 778
Unrealized changes in value, synthetic options* -12 - -25 -13
Impairment losses and reversals, wind turbines - - 524 524
Profi t before tax 416 397 3,464 3,445
Taxes -76 -87 -436 -447
Profi t for the period, after tax 340 310 3,028 2,998
OTHER COMPREHENSIVE INCOME
Items that may be transferred to profi t/loss for the period 1 0 1 0
Items that may not be transferred to profi t/loss for the period 0 0 2 2
Tax attributable to other comprehensive income -1 -1 -2 -2
Comprehensive income 340 309 3,029 2,998
DISTRIBUTION OF PROFIT FOR THE PERIOD
Profi t for the period attributable to parent company shareholders 340 310 3,028 2,998
Average number of outstanding shares, thousands 323,000 325,050 321,804 323,854
Profi t after tax, SEK per share; dilution does not occur 1.1 1.0 9.4 9.3
SEK million Jan-Mar
2019 Jan-Mar
2018 Apr-Mar
2018/2019Jan-Dec
2018
Electricity revenue 171 136 450 415
Electricity expenses -133 -90 -343 -300
Depreciation -19 -24 -90 -95
Management costs and administrative expenses -5 -9 -27 -31
Financial expenses -4 -7 -22 -25
Income from natural energy management operations 10 7 -32 -35
NOTE 1 – INCOME FROM NATURAL ENERGY MANAGEMENT OPERATIONS
CONSOLIDATED INCOME STATEMENT
4 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
JANUARY 1–MARCH 31
Rental incomeRental income for the period increased by SEK 30 million,
which is equivalent to just over 6 percent and amounted to SEK
497 million (467). Growth in rental income during the period
was mainly the result of occupations in our recently construc-
ted rental properties as well as renegotiated rental rates. Rental
income included re-invoicing of increased property tax of just
over SEK 2 million.
Our residential property holdings are fully let. Rent negoti-
ations for the year for residential properties are in progress. In
the negotiations concluded in Stockholm to date, an average
increase of 2 percent was agreed.
We are experiencing strong and stable demand for premises,
especially in central locations in Gothenburg where our com-
mercial properties are situated. Rental income for our commerci-
al properties in comparable holdings increased by 4.5 percent, as
a result of successfully completed new lets, cost index escalations
and lower vacancy rates. Th e rental rates in renegotiated agre-
ements increased by 8 percent. Th e surrender rate, which refl ects
how large a proportion of the cancellable leases are extended,
amounted to about 93 percent for the period and net letting of
commercial properties amounted to SEK -3 million. Our oc-
cupancy rate for commercial properties in terms of lettable area
amounted to 97 percent on closing day.
Operating expenses & net operating incomeOperating expenses for the period amounted to SEK 133
million (126) and increased as a result of additional recently
produced properties, among other things. Seasonal eff ects at
Wallenstam consist mainly of variable operating expenses. Th ese
are usually highest during quarters one and four when expenses
for heating and property maintenance are generally higher. Cli-
mate-related expenses were SEK 2 million lower during the fi rst
quarter of 2019 compared to the year-earlier period. New tax
assessment values mean that property tax is increasing compared
to the previous year, which resulted in higher operating expenses
of about SEK 3 million. Even if the largest part of the increase
for commercial properties is paid by the customers, the increased
tax assessment values have a negative impact on the surplus ratio.
As a consequence of new accounting rules, site leasehold rents
are recognized within net fi nancial items starting from 2019,
which had a positive impact on operating expenses of almost
SEK 3 million.
Net operating income increased by almost 7 percent and
amounted to SEK 364 million (341). Additional effi cient new
production accounted for just over two thirds of this growth and
the existing holdings for the remainder. Th e surplus ratio was
73.2 percent (73.0).
Management costs & administrative expensesManagement costs and administrative expenses are distributed
among property management, SEK 58 million (52), energy
management, SEK 5 million (9) and transactions, properties of
SEK 2 million (2), SEK 65 million (63) in total.
Financial income & expensesFinancial income amounted to SEK 2 million (3) and fi nancial
expenses totaled SEK 52 million (82), of which SEK 48 million
(75) related to property operations and SEK 4 million (7) to
natural energy operations. Capitalized interest amounted to SEK
17 million (13).
Th e average debt for the period was SEK 2.3 billion higher
than the year-earlier period, due to continued investments in
new production. Th e average interest rate on closing day, which
refl ects future interest to pay in relation to our loans, was 1.25
percent (1.90). Th e reason why the average interest rate on clo-
sing day was lower than the previous year is mainly because we
realized and simultaneously entered into new interest rate deri-
vatives at lower average interest rates during May and June 2018.
COMMENTS ON THE CONSOLIDATED INCOME STATEMENT
Rental income Income from property management
RENTAL INCOME AND INCOME FROM PROPERTY MANAGEMENT
0
400
800
1,200
1,600
2,000
Q1 2019*2018201720162015600
700
800
900
1,000
1,100
* Latest rolling twelve-month period
Rental income,SEK million
Income from property management,SEK million
5 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
Net operating income Surplus ratio
NET OPERATING INCOME AND SURPLUS RATIO
0
400
800
1,200
1,600
Q1 2019*201820172016201572
73
74
75
76
* Latest rolling twelve-month period
Net operating income, SEK million Surplus ratio, %
During the period, the average interest rate (excluding early
redemption of derivative instruments) was 1.15 percent (1.88).
Th e interest coverage ratio, which is 1.5 times (3.6), is also aff ec-
ted in the short-term (twelve months) by the early redemption
of interest rate derivatives. Excluding this, the interest coverage
ratio is 7.0 times, see table on page 19.
Realized changes in value, fi nancial instrumentsDuring May and June 2018, Wallenstam decided to realize de-
rivative contracts with a defi cit value for the purpose of adapting
the Group to the new corporate taxation rules, which apply from
January 1, 2019. In total, derivative contracts with a market value
of SEK -776 million were realized up to and including Decem-
ber 31, 2018.
Income from natural energy management operationsTh e comments on the results below are based on the segment
reporting as this includes the profi t/loss from electricity hedges
and therefore better refl ects the business area’s income for the
period. Income from natural energy management operations
consists of revenue less expenses, depreciation and changes
in value of electricity derivatives as well as administrative and
interest expenses attributable to electricity trading and electricity
generation. Income from management operations is also aff ected
by realized sales results from renewable energy certifi cates.
Th e segment’s income from natural energy management ope-
rations amounted to SEK 25 million (12). In 2019, 117 GWh
(85) was produced and 133 GWh (134) was sold to end custo-
mers. Production is higher than the previous year, due to more
wind during 2019. In addition, the electricity price is higher
than the previous year, which resulted in increased income and
increased expenses.
Th e value of renewable energy certifi cates is lower than
the previous year and is also lower than at year-end 2018. On
closing day, the consolidated value was SEK 81 per renewable
energy certifi cate compared to SEK 135 at year-end and SEK 97
in the previous year.
Income from sales of development properties A profi t or loss from sales of development properties is recog-
nized when the apartment or property is taken into possession
by the purchaser. Apart from the cost, selling and marketing
expenses are included, which are expensed as they arise.
Net profi t for the period amounted to SEK 76 million (3)
and included sales of the development property Pålsjö (Mässha-
ken 2) in Helsingborg and a small number of individual co-op
apartments including costs.
6 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
7 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
THE TEN LARGEST COMMERCIAL TENANTSTenant Floor space, sq m
City of Gothenburg 23,762
SF Bio AB 14,508
Essity Hygiene and Health AB 13,317
Academedia AB 11,382
Gothenburg Regional Archives 11,000
Västra Götaland County Council 7,590
ICA Fastigheter AB 6,906
Sandryds Handels AB 6,730
Folkuniversitetet 6,308
Frisk Service i Göteborg AB 6,212
Total 107,715
Our total commercial fl oor space is approximately 510,000 sq m.
Changes in value, investment propertiesChanges in value of investment properties during the period
amounted to SEK 285 million in total (126), of which the
increase in value generated from our own work in cost-effi cient
new construction accounted for SEK 132 million (93). Th e value
growth in investment properties, which were in operation for
one calendar year or more amounted to SEK 153 million (33)
and was mainly due to higher net operating income.
Unrealized changes in value, fi nancial instrumentsTh e change in value of fi nancial instruments in the income sta-
tement includes changes in value of interest rate and electricity
derivatives and holdings of listed shares.
Th e value of interest rate and electricity derivatives developed
negatively during the period, SEK -197 million (24) and SEK
-6 million (18), respectively. On closing day, the 10-year swap
rate amounted to 0.83 percent, compared to 1.12 percent at the
start of the year. Changes in value of other fi nancial instruments
amounted to SEK 0 million (1) on closing day.
Unrealized changes in value, synthetic options Th e Annual General Meeting on April 24, 2018 resolved to in-
troduce a synthetic options scheme directed to all personnel. Th e
term of the scheme runs until May 31, 2024 and the expected
cost in the event of a maximum outcome is SEK 330 million.
At the start of the scheme in May 2018, personnel were invited
to acquire the allotted number of options at a market price. Th e
value of the synthetic options, which varies with Wallenstam’s
share price, increased during the year. Th e unrealized expense
including costs connected to the scheme, amounted to SEK
12 million (-) during the period. To date, the total recognized
expense for the scheme amounts to SEK 25 million (-).
TaxesTh e tax expense for the period, which consists in its entirety of
deferred tax, amounted to SEK 76 million (87) net.
Tax was calculated at 21.4 percent on current taxable income,
while deferred tax liabilities and receivables were calculated
at the lower tax rate of 20.6 percent that applies starting from
2021. Wallenstam’s assessment is that the new rules, which apply
from January 1, 2019, will not have any material impact on the
calculation of taxes for the year 2019 provided that an effi cient
balancing can occur in the Group of net interest income and
expense.
Residential, 45%
Office, 27%
Industry/warehouse, 3%
DISTRIBUTION, RENTAL VALUE
Retail, 10%
Garage, 3%
Education, 3%
Other, 9%
SEK million Mar 31, 2019 Mar 31, 2018 Dec 31, 2018
ASSETS
NON-CURRENT ASSETS
Investment properties 47,289 42,187 45,811
Wind turbines 1,166 658 1,167
Participations in associated companies 112 - 113
Financial assets 417 355 408
Financial derivative instruments 7 19 11
Other non-current assets 63 66 64
Total non-current assets 49,054 43,285 47,574
CURRENT ASSETS
Development properties 156 656 317
Financial derivative instruments 18 14 39
Other current assets 221 205 249
Cash and cash equivalents 496 266 83
Total current assets 891 1,141 688
Total assets 49,945 44,426 48,262
EQUITY AND LIABILITIES
EQUITY
Equity 21,949 19,570 21,609
Equity attributable to non-controlling interests 2 2 2
Total equity 21,951 19,572 21,611
NON-CURRENT LIABILITIES
Provisions for deferred tax 4,671 4,132 4,595
Other provisions 108 55 86
Interest-bearing liabilities 9,121 2,330 8,545
Financial derivative instruments 279 771 82
Lease liability 421 - -
Other non-current liabilities 36 49 5
Total non-current liabilities 14,636 7,337 13,313
CURRENT LIABILITIES
Interest-bearing liabilities 12,699 17,001 12,699
Other current liabilities 659 516 639
Total current liabilities 13,358 17,517 13,338
Total equity and liabilities 49,945 44,426 48,262
CONSOLIDATED BALANCE SHEET, CONDENSED
8 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
CHANGES IN PROPERTY HOLDINGS, INVESTMENT PROPERTIESBook value, SEK million
Property holdings, January 1, 2019 45,811
+ Acquisitions 32
+ Construction 759
+ Changes in value, properties 285
+ Right-of-use asset, site leasehold right 402
Property holdings, March 31, 2019 47,289
OUR PROPERTIES
Development during the periodDuring the year, we invested a total of SEK 802 million (700), of
which SEK 791 million (651) in investment properties and SEK
11 million (49) in construction of development properties. New
construction projects in progress involve 2,933 apartments. Total
investments in rental apartment and development projects in
progress amounted to SEK 4.0 billion (4.0) on closing day.
From January 1, 2019, property companies must report the
right of use to land granted with site leasehold rights as an
asset and an equally large lease liability. Th e value of the right of
use for the land has been estimated at SEK 402 million and is
recognized as part of the properties’ value.
Investment propertiesChanges in value aff ected the value of investment properties
positively by SEK 285 million (126) in total, of which SEK 132
million (93) came from new construction of rental apartments
and the remainder from properties that have been in operation
for one calendar year or more.
For the commercial holdings, the average yield requirement
amounts to 4.6 percent (4.8). For residential properties in opera-
tion, the average yield requirement amounts to 3.3 percent (3.2).
Th e average yield requirement was unchanged from the previous
quarter. Th e approved value of investment properties was SEK
47,289 million (42,187) at the end of the period.
Development propertiesDevelopment properties include 15 apartments in the Vasaga-
tan 33 project in Gothenburg and the recently started co-op
apartment project New York at Gärdet in Stockholm. For new
construction in progress, also see the table on page 10. Th e book
value of Development properties amounted to SEK 156 million
(656) at the end of the period.
Our marketsTh e cities in which we do business are characterized by strong
growth and heavy demand for housing. Only a minor proportion
of our rental apartments become available for rent due to reloca-
tion, and demand for fi nished, newly built rental apartments is
high.
We build mainly rental apartments, but also cooperative
apartments, for example when the land available for rental
apartment construction is limited. Our fl exible business model,
where co-op apartment sales do not start until the project is
approaching completion, makes it possible to convert a co-op
apartment project into a rental apartment project if demand for
co-op apartments is uncertain.
We see strong demand for offi ce and retail space in Gothen-
burg, particularly in the central parts of the city, which is also
refl ected in the low vacancy rate for the period.
ValuationInvestment propertiesWallenstam measures all of its investment properties internally
at fair value. We enjoy good market and property intelligence
through active property trading, which provides us with a fi rm
basis for performing internal valuations of our property holdings.
However, we must emphasize that a property’s fair value only
becomes a reality when the property is sold, for which reason a
valuation is always an estimation.
In its assessments of property values, Wallenstam has used
diff erent yield requirements. Th e yield requirements refl ect mar-
ket conditions and diff er based on where a property is located
and its type, e.g. housing or offi ces, etc.
A valuation is calculated based on a property’s net operating
income, set in relation to the yield requirement for each property.
As our properties are valued separately, no consideration is given
to the portfolio premium that may exist in the property market.
New constructions of rental properties are measured at fair value,
which is determined as cost plus the estimated surplus on the
completion date in relation to the degree of completion of the
construction. Th is is in turn based on expenses incurred.
Land rights and building rights for zoned land are measured
at market value.
Development propertiesDevelopment properties are properties where we intend to
construct co-op apartments that shall be divested on comple-
tion. Development properties are recognized at the lower of cost
(investments incurred) and the estimated net realizable value.
Th e profi t/loss is recognized when the property or apartment is
completed and handed over to the buyer.
TOTAL VALUE, PROJECTS IN PROGRESSBook value, SEK million
Land for future new production 743
Projects in progress, rental apartments 3,082
Development properties 156
Total projects in progress 3,981
COMMENTS ON THE CONSOLIDATED BALANCE SHEET
9 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
NEW CONSTRUCTION IN PROGRESS, MARCH 31, 2019Project No. of apts. Expected occupation * Sq m**
STOCKHOLM
Umami Park, phase 1A, Sundbyberg 147 Q2 2019 12,000
Norrgårdshusen, Österåker 128 Q4 2019 7,000
Terrassen Elva, Tyresö 54 2019/2020 2,500
Allén, Tyresö 221 2020 13,500
New York, Gärdet (co-op)*** 50 2020 3,500
Parkstråket 1, Haninge 162 2020 13,500
Parkstråket 2, Haninge 131 2020 7,500
Söra Kvarter, Österåker*** 305 2020 15,500
Trollesunds gårdar, Bandhagen 158 2020 14,500
Umami Park, phase 1B, Sundbyberg 75 2020 3,000
Umami Park, phase 2, Sundbyberg*** 141 2020 9,500
UPPSALA
Tre vänner, Rosendal 141 Q2 2019 6,500
GOTHENBURG
Vasagatan 33 (co-op) 30 Q3 2018 3,500
Stallbacken Nivå5, Mölndal 109 Q3 2019 6,500
Sten Stures Kröningar, Regenten 29 2020 8,500
Elisedal 336 2021 24,000
Godhems Backe 138 2021 6,500
Kallebäcks Terrasser Kv. 11*** 270 2021 16,000
Kv. Rosengången, Mölnlycke Fabriker, Härryda 123 2021 7,000
Kv. Kvarnen, Mölnlycke Fabriker, Härryda 185 2022 10,500
CommercialKvarteret Sturefors, Avenyn Q3 2019 2,000
Total 2,933 193,000
* Refers to estimated start of occupation. Occupation will occur gradually, often over several quarters.** Number of sq m includes garage, and is rounded off to the nearest 500.
*** Started during quarter 1, 2019.
CHANGE, CONSTRUCTION IN PROGRESS
No. of apts.
New construction in progress,Jan 1, 2019 2,167
- Completed -
+ Started 766
New construction in progress, Mar 31, 2019 2,933
10 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
APARTMENTS, CONSTRUCTION IN PROGRESS
0
500
1,000
1,500
2,000
2,500
3,000
Total Stockholm business area Gothenburg business area
Q12019
Q4Q3Q2Q12018
Q4Q3Q2Q12017
No. of apts.
Public use properties, 5%
Commercial properties, 39%
Residential properties, 56%
PROPERTY TYPE
Shows the distribution of our property holdings per
category. See definitions on page 19.
PROPERTY ACQUISITIONS, 2019
Name of property Address
Year of construction/
conversion
Residen-tial
sq m Offi cesq m
Retailsq m
Industry/warehou-sing sq m
Education sq m
Garage sq m
Other sq m
Total sq m
No. of
apts.
GOTHENBURG
Inom Vallgraven 60:9*
*Land that was previously site leasehold right
PROPERTY SALES, 2019
Name of property Address
Year of construction/
conversion
Residen-tial
sq m Offi cesq m
Retailsq m
Industry/warehou-sing sq m
Education sq m
Garage sq m
Other sq m
Total sq m
No. of
apts.
HELSINGBORG
Mässhaken 2 Kantorsgatan 1-7 2018 5,116 - - - - - - 5,116 96
Total 5,116 - - - - - - 5,116 96
11 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
PROPERTY HOLDING STRUCTURE AS OF MARCH 31, 2019
Lettable area, sq m Residential
sq m Offi cesq m
Retailsq m
Industry/warehousing
sq m Education
sq m Garage
sq mOther sq m
Total sq m
Distribu-tion, place
No. of
apts.
Stockholm 286,937 25,616 18,358 15,350 4,479 49,578 3,292 403,610 34% 4,682
Uppsala 21,491 1,982 933 93 - 5,732 - 30,231 3% 401
Gothenburg 249,454 202,997 90,802 87,057 25,849 58,284 32,907 747,350 63% 4,019
Total 557,882 230,595 110,093 102,500 30,328 113,594 36,199 1,181,191 100% 9,102Distribution by type of premises
47% 20% 9% 9% 3% 9% 3% 100%
WIND POWER
On closing day, Wallenstam had 66 wind turbines in operation
divided among 20 wind farms. Th e installed output amounted to
143 MW (139).
Wind turbines are measured at cost less depreciation and
impairment losses. Depreciation for the period amounted to SEK
19 million (24). Due to the introduction of IFRS 16, Leases, the
right of use to land through land leases shall be recognized as a
right-of-use asset and an equally large lease liability from January
1, 2019. Estimated value in use of land leases, based on so-
called minimum rents, amounted on closing day to SEK 18
million (-) and is recognized as part of the wind power value. On
March 31, 2019, the consolidated book value of wind turbines
amounted to SEK 1,166 million (658). Th e renewable energy cer-
tifi cate inventory amounted to SEK 9 million (16) on closing day.
FINANCING
EquityShareholders’ equity, including non-controlling interests amoun-
ted to SEK 21,951 million (19,572), equivalent to SEK 68 per
share (60). Th e equity/assets ratio was 44 percent (44).
Interest-bearing liabilitiesOn closing day, outstanding bond loans amounted to SEK
2,950 million (3,050), the outstanding volume of commercial
paper, with a framework amount of SEK 4 billion, amounted to
SEK 3,526 million (2,861), and total interest-bearing liabilities
amounted to SEK 21,820 million (19,331).
All the bond loans of SEK 2,950 million (2,150) are con-
tained within the framework of our MTN program (Medium
Term Notes), which has a total framework amount of SEK 5
20192018201720162015Acquisition
New constructions
and conversions
Divested
Reclassification
development properties
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
SEK million
ACQUISITION, CONSTRUCTION AND SALES
OF INVESTMENT PROPERTIES
12 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
billion. Th e bond loans are listed on Nasdaq Stockholm.
Th e average remaining fi xed interest term is 44 months (34).
Of the loan portfolio, 45 percent (51) of the loans have fi xed
interest terms longer than one year. On closing day, the average
interest rate on our loans was 1.25 percent (1.90).
Financing of the loan portfolio is mainly secured by mort-
gage deeds for properties. Th e commercial paper program has
underlying credit commitments for the outstanding volume of
commercial paper at each date. Covenants are issued for this.
Lease liabilityDue to the introduction of IFRS 16, Leases, from January 1,
2019 a lease liability is recognized as a separate line item, equiva-
lent to the rights of use for land leases and site leasehold rights.
On March 31, 2019, the liability amounted to SEK 421 million.
Derivative instrumentsWallenstam’s fi nancial derivative instruments consist of interest
rate and electricity derivatives. On closing day, Wallenstam had a
net indebtedness in respect of derivative instruments of SEK 254
million compared to a net indebtedness of SEK 32 million on
December 31, 2018. Of this, interest rate derivatives accounted
for SEK -279 million (-82) and electricity derivatives for SEK
25 million (49).
During the fi rst quarter, the Group entered into new interest
rate derivative contracts totaling SEK 1.5 billion with a matu-
rity of 10 years. Th e total volume of outstanding interest rate
derivatives, where Wallenstam pays fi xed interest, subsequently
amounts to SEK 9.5 billion (9.7)
Interest rate derivatives are used to obtain a desired interest
maturity profi le in a fl exible, cost-effi cient way. Th ey are measu-
red through discounting future cash fl ows at present value based
on observable market interest rates and are classifi ed at level 2.
Th e arising defi cit or surplus value for interest rate derivatives,
which refl ects how the Group’s hedged interest rates relate to the
market rate of interest on closing day, is recognized in the balan-
ce sheet and in unrealized changes in value, fi nancial instruments
in the income statement.
Electricity derivatives are used to mitigate the eff ect of
market fl uctuations by hedging income for future electricity
production. Th ese are measured at market value and the changes
in value are continually recognized in the Group in the line item
unrealized changes in value, fi nancial instruments. Surpluses and
defi cits arising on electricity derivatives are adjusted in advance
on a daily basis (futures contract), for which reason, the closing
balance sheet item for electricity derivatives only refers to older
contracts (forward contract). As we do not apply hedge accoun-
ting for electricity derivatives, no reversal eff ect arises in unrea-
lized changes in value in the consolidated income statement in
connection with realization of electricity derivatives. However, in
the segment reporting, hedge accounting is applied and therefore
all comments on the income from natural energy management
operations are based on the segment reporting, which thereby
provides a fairer presentation.
Currency derivatives are used to a limited extent in order to
hedge purchasing from foreign countries. Hedge accounting is
applied and therefore translation eff ects are recognized in other
comprehensive income.
Available liquid assetsAvailable liquid assets, including available bank overdraft
facilities and excluding blocked bank balances with Nasdaq
Commodities of SEK 3 million (-) amounted to SEK 1,293
million (1,066). Approved overdraft facilities amounted to
SEK 800 million (800). None of these were used on closing
day. Th e Group also has an approved credit commitment and
credit facilities of SEK 4,000 million (4,238). Th e entire amount
SEK 4,000 million (4,088) was available for use on closing day.
On March 31, 2019, available liquid assets totaled SEK 5,293
million (5,154), of which SEK 3,526 million (2,861) represented
a credit commitment for issued outstanding commercial paper.
Accordingly, SEK 1,767 million (2,293) was available for use on
closing day.
FIXED TERMS, AVERAGE INTEREST RATES, MARCH 31, 2019
Interest maturity structure
Amount, SEK million
Average inte-rest rate, % Proportion, %
0–3 mths 11,171 1.44* 51.2
3 mths–1 year 749 0.48 3.4
1–2 years 400 2.42 1.8
2–3 years - - -
3–4 years - - -
4–5 years - - -
5–6 years 1,200 0.67 5.5
6–7 years 1,300 0.87 6.0
7–8 years 1,500 1.00 6.9
8–9 years 1,500 1.16 6.9
> 9 years 4,000 1.16 18.3
Total 21,820 1.25 100
* Variable interest loans with an interest maturity within three months have
an average interest rate of 0.77%. 1.44% includes the effect of swap
agreements that mature within the three-month period.
AVAILABLE LIQUID ASSETS
Available liquid assets including overdraft facilities.
0
200
400
600
800
1,000
1,200
1,400
Q1 2019Q4Q3Q2Q1 2018
SEK million
_ Equity attributable to parent company shareholders _
SEK million Share capitalOther capital contributed
Otherreserves
Profi t brought forward
Non-controlling interests Total equity
Opening equity, Jan 1, 2018 165 359 4 18,880 2 19,410Profi t for the period - - - 310 - 310
Translation difference - - 1 - - 1
Changes in value of currency derivatives - - -1 - - -1
Tax attributable to other comprehen-sive income - - -1 - - -1
TRANSACTIONS WITH SHAREHOLDERS
Dividends - - - - - -
Repurchase of own shares - - - -147 - -147
Closing equity, Mar 31, 2018 165 359 4 19,042 2 19,572
Opening equity, Jan 1, 2019 165 359 4 21,081 2 21,611Profi t for the period - - - 340 - 340
Translation difference - - 1 - - 1
Changes in value, owner-occupied properties - - 0 - - 0
Tax attributable to other comprehen-sive income - - -1 - - -1
TRANSACTIONS WITH SHAREHOLDERS
Dividends - - - - - -
Repurchase of own shares - - - - - -
Closing equity, Mar 31, 2019 165 359 4 21,421 2 21,951
SEK millionJan-Mar
2019 Jan-Mar
2018Apr-Mar
2018/2019 Jan-Dec
2018
Profi t before changes in value and impairment losses* 345 228 441 324
Adjustment for items not included or arising in cash fl ow -40 -9 -96 -65
Taxes paid 0 0 0 0
Cash fl ow before change in working capital 305 219 345 259
Change in working capital 65 38 138 111
Cash fl ow from operating activities 370 257 483 370
INVESTMENTS/DIVESTMENTS
Investment in properties and individual co-op apartments -777 -700 -2,758 -2,681
Investments in wind turbines, intangible assets & property, plant and equipment -26 -2 -33 -9
Investments in fi nancial assets - -100 -6 -106
Investments in associated companies - - -113 -113
Divestment of other securities held as non-current assets 0 - 35 35
Divestment of properties, development properties & property, plant and equipment 267 23 799 555
Cash fl ow from investing activities -536 -779 -2,076 -2,319
FINANCING
Raised interest-bearing liabilities 3,110 3,148 10,240 10,278
Amortization of interest-bearing liabilities -2,415 -2,518 -7,753 -7,856
Net change in overdraft facilities -119 - - 119
Advance payment futures contracts 3 - 10 7
Amortization of fi nancial assets - 77 -9 68
Dividends paid - - -583 -583
Repurchase of own shares - -147 -82 -229
Cash fl ow from fi nancing activities 579 560 1,823 1,804
Changes to liquid assets 413 38 230 -145
Cash and cash equivalents at beginning of the period 83 228 266 228
Cash fl ow for the period 413 38 230 -145
Cash and cash equivalents at the end of the period 496 266 496 83
Unutilized overdraft facilities at the end of the period 800 800 800 681
Blocked bank balances -3 - -3 -3
Available liquid assets 1,293 1,066 1,293 761
*Includes interest paid and received, including gross fl ows from interest rate swap contracts, of SEK -75 million (-89) and SEK 2 million (1) respectively, of which SEK 17 million (13) was capitalized as a non-current asset.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
13 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
2019SEK million
Gothenburg Jan-Mar
Stockholm Jan-Mar
Natur al energy* Jan-Mar
Other Jan-Mar
Elimination Jan-Mar
Total Jan-Mar
INCOME STATEMENT
Rental income 345 158 - - -6 497
Operating expenses -86 -47 - - - -133
Electricity revenue - - 171 - -171 -
Electricity expenses - - -135 - 135 -
Net operating income 259 111 35 - -41 364
Management costs and administrative expenses -31 -24 -5 -8 11 -58
Net fi nancial items -58 -27 -5 39 5 -46
Income from management operations 170 59 25 31 -25 260
Income from natural energy management operations - - - - 10 10
Unapportioned itemsParticipation in profi ts/losses of associated companies -1
Sales result, development properties 76
Profi t before changes in value and impairment losses 345Changes in value 71
Profi t before tax 416
BALANCE SHEET
Investment properties 29,598 17,691 - - - 47,289
Wind turbines - - 1,166 - - 1,166
Development properties 79 77 - - - 156
Unapportioned assets - - - - - 1,334
Total assets 49,945
Equity - - - - - 21,951
Interest-bearing liabilities and lease liabilities 12,645 7,993 1,241 362 - 22,241
Unapportioned liabilities - - - - - 5,753
Total equity and liabilities 49,945
Property investments in progress including land 1,301 2,680 3,981
2018SEK million
Gothenburg Jan-Mar
Stockholm Jan-Mar
Natur al energy* Jan-Mar
Other Jan-Mar
Elimination Jan-Mar
Total Jan-Mar
INCOME STATEMENT
Rental income 326 147 - - -6 467
Net operating income, properties 245 102 - - -6 341Income from property management operations 167 74 12 -24 -12 217Electricity revenue - - 132 - -132 -
Income from natural energy management operations - - - - 7 7
Unapportioned itemsSales result, development properties 3
Profi t before changes in value and impairment losses 228Changes in value 169
Profi t before tax 397
BALANCE SHEET
Investment properties 26,758 15,429 - - - 42,187
Wind turbines - - 658 - - 658
Development properties 576 80 - - - 656
Unapportioned assets - - - - - 925
Total assets 44,426
Equity - - - - - 19,572
Interest-bearing liabilities 10,214 2,879 1,242 4,996 - 19,331
Unapportioned liabilities - - - - - 5,523
Total equity and liabilities 44,426
Property investments in progress including land 1,812 2,224 4,036
* Difference between segments and the consolidated income statement relates to the presentation of unrealized and realized electricity deriva-tive instruments and unrealized remeasurement effect of renewable energy certifi cates. For more information see Annual Report, Note 2.
SEGMENTS REPORT
14 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
SHAREHOLDINGS, MARCH 31, 2019A shares B shares Equity, % Votes, %
Hans Wallenstam and family, and company 34,500,000 48,078,000 25.02 62.05
AMF – Insurance and funds 32,660,000 9.90 5.16
Agneta Wallenstam 22,204,000 6.73 3.50
Anna-Carin B Wallenstam and Anders Berntsson, and company 20,100,000 6.09 3.17
Henric and Ulrika Wiman 12,037,752 3.65 1.90
Bengt Norman and company 8,180,000 2.48 1.29
Monica and Jonas Brandström 7,673,326 2.33 1.21
Vanguard 5,692,626 1.73 0.90
David Wallenstam 5,640,000 1.71 0.89
BlackRock 5,158,965 1.56 0.81
Other owners 121,075,331 36.69 19.12
Total number of shares 34,500,000 288,500,000Repurchased shares* 7,000,000 2.11
Registered shares 34,500,000 295,500,000
Total registered shares 330,000,000 100.00 100.00Total outstanding shares 323,000,000
The proportion of institutional ownership amounted to around 15 percent of equity and around 8 percent of votes.Foreign ownership amounted to around 10 percent of equity and around 5 percent of the votes.
Source: Modular Finance, Monitor*Repurchased own shares lack voting rights.
Th e Wallenstam B share is listed on Nasdaq Stockholm, Large
Cap. During 2019, the Wallenstam share price has increased by
14.2 percent. Th e property indices OMX Stockholm Real Estate
and OMX Stockholm PI rose by 15.6 percent and 11.7 percent,
respectively, during the same period.
At the end of the period, the Wallenstam share price was
SEK 93.85 compared to SEK 82.20 at year-end 2018. Market
capitalization was SEK 30,971 million (27,126) based on the
total number of registered A and B shares. Equity per share
amounted to SEK 68 (67).
Wallenstam has a mandate from the Annual General
Meeting (AGM) to repurchase so many shares, such that the
company’s holding at any one time does not exceed 10 percent of
all shares in the company. No shares have been repurchased so
far during 2019. On closing day, the company held a total of
7,000,000 treasury shares, repurchased at an average price of
SEK 76.16 per share.
Dividend Th e Board of Directors will propose a dividend of SEK 1.90 per
share (1.80) to the Annual General Meeting for the 2018 fi nan-
cial year, an increase of 5.6 percent, spread over two payment
dates of SEK 0.95 each per share.
TurnoverDuring the fi rst quarter, the Wallenstam share had an average
daily turnover on Nasdaq Stockholm of about SEK 16.8 million
(24.0).
THE WALLENSTAM SHARE*
15 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
* Comparisons in brackets refer to amounts as of December 31, 2018.
AVERAGE SHARE LIQUIDITY PER DAY
Refers to trading on Nasdaq Stockholm.
0
5
10
15
20
25
20192018201720162015
SEK million
OMX Stockholm Real Estate PI OMX Stockholm PI
Wallenstam B share
50
60
70
80
90
100
110
120
SHARE PRICE TREND 2014–2019, SEK
2014 2015 2016 2017 2018 2019
Th e parent company’s primary operations are the performance
of Group-wide services. In addition, the parent company owns a
small number of properties.
Total revenue during the period amounted to SEK 111 mil-
lion (109), of which management revenue amounted to SEK 80
million (80) and rental income was SEK 31 million (29).
Th e performance was aff ected by changes of SEK -217 mil-
lion (24) in the value of fi nancial derivative instruments. Profi t
after tax amounted to SEK -138 million (-15).
Investments in non-current assets during the period amoun-
ted to SEK 5 million (4). Parent company external loans amoun-
ted to SEK 9,249 million (8,826) on closing day.
INCOME STATEMENT, PARENT COMPANY
SEK million Jan-Mar
2019 Jan-Mar
2018 Jan-Dec
2018
Revenue 111 109 389
Expenses -122 -106 -446
Profi t/loss from participations in Group companies -1 -2 3,106
Net interest income/expense 48 -49 -728
Unrealized changes in value, fi nancial instruments -217 24 761
Profi t/loss before tax -181 -24 3,081
Group contributions 1 - 641
Taxes 41 9 -185
Profi t/loss after tax -138 -15 3,538
Changes in value of currency deri-vatives - -1 -1
Tax attributable to other comprehen-sive income - 0 0
Comprehensive income -138 -16 3,537
BALANCE SHEET, PARENT COMPANY
SEK millionMar 31,
2019Mar 31,
2018Dec 31,
2018
AssetsProperties 1,355 1,378 1,361
Participations in Group companies 5,372 5,369 5,369
Financial derivative instruments 25 7 50
Receivables from Group companies 19,635 20,072 19,929
Other assets 245 396 248
Cash and cash equivalents 489 222 77
Total assets 27,122 27,444 27,034
Equity and liabilitiesEquity 10,712 7,962 10,850
Provisions 55 - 32
Interest-bearing external liabilities 9,249 8,826 9,802
Liabilities to Group companies 6,713 9,742 6,152
Financial derivative instruments 279 771 82
Other liabilities 114 143 115
Total equity and liabilities 27,122 27,444 27,034
PARENT COMPANY
16 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
OPPORTUNITIES & RISKS
Wallenstam’s opportunities and risks, and how we manage them,
are presented in the 2018 Annual Report on pages 34–37. No
signifi cant changes have taken place since then.
SENSITIVITY ANALYSIS
As of March 31, 2019, the estimated market value of properties
amounted to around SEK 47 billion. A change in value of plus/
minus 10 percent is thus equivalent to about plus/minus SEK
4.7 billion. A general change of 0.25 percentage points in pro-
perty yield requirements is equivalent to about SEK -2.8 billion
or SEK +3.2 billion.
A change in the electricity price of 1 öre per kWh is equi-
valent to about plus/minus SEK 43 million during valuation of
wind turbines, while a change in the renewable energy certifi cate
price of 1 öre per kWh is equivalent to about plus/minus SEK
23 million during valuation of wind turbines.
TRANSACTIONS WITH RELATED PARTIES
Wallenstam’s related parties consist chiefl y of Group companies.
Board members, company management and their families and
the companies they control are also related parties. Transactions
with related parties mainly consist of administrative fees and
the renting of premises between Group companies. Individuals
related to Board members and the Group Management rent
apartments and are also electricity customers. Insurance services
are purchased from companies where members of Wallenstam’s
Board of Directors are Board members, for a total equivalent to
almost SEK 4 million in net expenditure for the year. In addi-
tion, a company to which one of Wallenstam’s Board members
was related at the time of contracting, performed building con-
tract services with a total contract value of SEK 89 million. Th is
company is an electricity customer of Svensk NaturEnergi.
Th e CEO is a joint owner (50 percent) of Aranea Holding
AB. Aranea Holding AB owns 48 percent of Renew Group
Sweden AB , a fl oorball equipment manufacturer. Aranea is a
tenant of Wallenstam with an annual rental value equivalent to
SEK 0.6 million. Aranea and Renew Group are both electricity
customers.
Wallenstam’s involvement in environmental and social
responsibility issues is described in more detail on pages 27–33
of the 2018 Annual Report. As part of its social responsibility
work, the Wallenstam Group not only contributes fi nancially to
a number of organizations but also gives its time in the form of
e.g. board work. As a result of such board positions, related party
status arises in the case of the Rescue Mission in Gothenburg
and Barn i Nöd (Swedish International Help for Children).
During the year, the Rescue Mission in Gothenburg received
discounts equivalent to SEK 0.7 million. Th e Rescue Mission
in Gothenburg and Barn i Nöd rent premises from Wallenstam
equivalent to annual rental income of about SEK 4.7 million
and SEK 0.1 million, respectively. Both organizations are Svensk
NaturEnergi electricity customers.
All transactions take place on market-related terms.
ACCOUNTING PRINCIPLES
Th is report was prepared in accordance with IAS 34. Th e
accounting principles are unchanged compared to the 2018
Annual Report, and the accounting principles mentioned below
have been adopted from 2019. Th e Parent Company’s accoun-
ting principles comply with the Swedish Annual Accounts Act
and the Swedish Financial Reporting Board’s recommendation
RFR 2.
New accounting principles that entered into force on January 1, 2019 and subsequently IFRS 16 Leases Th e standard replaced IAS 17 on January 1, 2019 and means,
among other things, that lessees must report leases in the
balance sheet. Wallenstam does not apply the standard retro-
spectively. As a landlord and lessor, the change does not impact
Wallenstam’s reporting. However, as a lessee, the handling of site
leasehold rents and minimum rents for land for wind turbines is
of importance. As of January 1, 2019, the lease liability for site
leasehold rents amounted to SEK 402 million and for minimum
rents for land it amounted to SEK 18 million. Th e liability is
recognized on a separate line item in the balance sheet. Corres-
ponding right-of-use assets are recognized in the balance sheet
and are included as part of the items Investment properties and
Wind turbines, respectively. Th e expense for site leasehold rents
is recognized as a fi nancial expense. For minimum rents for land,
the new standard means that the rent shall instead be distributed
between depreciation and fi nancial expenses, respectively. Th is
means that fi nancial expenses will be higher during the start of
the lease term and will then decline in line with amortization
of the liability. Th e depreciation is the same over the entire lease
term. However, income from property management is only
impacted by the accrual eff ect arising for the land leases, which
is extremely marginal.
Calculation of key ratios is based on the current accounting,
which means for example that net fi nancial items includes
interest for leases. Comparative fi gures for previous years have
not been restated.
No other new and amended standards approved by the EU
and interpretations from the IFRS Interpretations Committee
are deemed to have a material impact on the Group’s fi nancial
position.
EVENTS AFTER THE END OF THE REPORTING PERIOD
On April 1, 2019, Wallenstam initiated deeper cooperation
with Jämtkraft, which through a business transaction took over
Svensk NaturEnergi AB and electricity sales to end customers.
Wallenstam is retaining all 66 wind turbines and through its
own production of wind power will remain self-suffi cient in
renewable energy.
OTHER INFORMATION
17 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
Accumulated during periodMar 31,
2019Dec 31,
2018Sep 30,
2018Jun 30,
2018Mar 31,
2018Dec 31,
2017Sep 30,
2017Jun 30,
2017Mar 31,
2017
PROPERTY-RELATED KEY RATIOS
Net operating income, properties, SEK million 364 1,429 1,078 706 341 1,264 953 615 301
Surplus ratio, property management, % 73 75 76 75 73 74 76 74 73
Income from property management, SEK million 260 1,011 758 462 217 806 621 391 191
Changes in value, new construction* 132 598 421 267 93 733 389 247 132
Value of investment properties, SEK million 47,289 45,811 44,360 43,446 42,187 41,410 39,660 38,797 37,025
Area, sq m (thousand) 1,181 1,186 1,197 1,196 1,175 1,145 1,090 1,078 1,064
Occupancy rate – lettable area, % 99 99 99 99 99 98 98 98 98
Development properties, net, SEK million 156 317 658 691 656 606 850 875 765
FINANCIAL KEY RATIOS
Profi t after tax, SEK million 340 2,998 1,769 1,310 310 2,421 1,781 1,447 540
Return on equity, % 14.6 14.8 12.2 11.8 11.5 13.0 19.3 20.0 21.6
Return on total capital, % 9.5 9.7 8.4 8.3 7.2 8.0 11.6 11.9 12.7
Interest coverage ratio, times 1.5 1.3 1.2 1.1 3.6 3.8 3.8* 3.8* 3.9*
Loan-to-value ratio, % 45 45 46 46 44 43 43 42 41
Average interest rate on closing day, % 1.25 1.06 0.98 1.01 1.90 1.88 1.92 1.95 2.08
Average fi xed-interest term, months 44 39 36 38 34 36 34 36 38
Equity/assets ratio, % 44 45 44 44 44 44 45 45 46
Equity, SEK million 21,951 21,611 20,688 20,252 19,572 19,410 19,073 18,826 18,281
Net asset value, SEK million 27,011 26,574 25,608 25,113 24,548 24,314 23,866 23,505 22,741
Non-current net asset value (EPRA NAV),SEK million 27,210 26,595 25,560 25,110 25,123 24,915 24,491 24,163 23,460
Market capitalization, SEK million 30,971 27,126 27,786 26,582 25,031 26,037 26,763 27,591 24,565
Repurchase of shares, SEK million - 229 204 182 147 235 220 129 46
PER SHARE DATA
Net asset value per share, SEK 83.60 82.30 79.20 77.60 75.80 74.60 73.20 71.80 69.30
Profi t after tax , SEK 1.1 9.3 5.5 4.0 1.0 7.4 5.4 4.4 1.6
P/E ratio, times 10.0 8.9 11.3 11.5 11.3 10.7 7.7 7.7 6.6
Cash fl ow from operating activities, SEK 1.1 1.1 0.2 -0.8 0.8 2.6 2.1 1.6 1.1
Equity, SEK 68 67 64 63 60 60 58 57 56
Share price, SEK 93.85 82.20 84.20 80.55 75.85 78.90 81.10 81.15 72.25
Shares outstanding, average, thousands 323,000 323,854 324,073 324,405 325,050 327,333 327,728 328,208 328,583
Shares outstanding at end of period, thousands 323,000 323,000 323,310 323,550 324,000 326,000 326,200 327,325 328,350
Jan-Mar 2019
Oct-Dec2018
Jul-Sep 2018
Apr-Jun 2018
Jan-Mar 2018
Oct-Dec2017
Jul-Sep 2017
Apr-Jun 2017
Jan-Mar 2017
Rental income, SEK million 497 488 480 475 467 444 428 415 414
Net operating income, properties, SEK million 364 351 372 365 341 311 338 314 301
Surplus ratio, property management, % 73 72 77 77 73 70 79 76 73
Income from property management, SEK million 260 253 296 245 217 185 230 200 191
Return on equity, % 14.6 14.8 12.2 11.8 11.5 13.0 19.3 20.0 21.6
Net asset value per share, SEK 83.60 82.30 79.20 77.60 75.80 74.60 73.20 71.80 69.30
Earnings per share after tax, SEK 1.1 3.8 1.4 3.1 1.0 2.0 1.0 2.8 1.6
Cash fl ow per share from operating activities, SEK 1.1 0.9 1.0 -1.6 0.8 0.4 0.6 0.4 1.1
Equity per share, SEK 68 67 64 63 60 60 58 57 56
Share price, SEK 93.85 82.20 84.20 80.55 75.85 78.90 81.10 81.15 72.25
Earnings-based key ratios are calculated on the average number of outstanding shares; yield fi gures are calculated on rolling twelve-month profi t or loss. * Has been updated after changed distribution in the income statement regarding realized and unrealized changes in value of investment properties.
KEY RATIOS – MULTI-YEAR SUMMARY
QUARTERLY OVERVIEW
18 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
Share yieldThe proposed dividend as a percentage of the share price at the end of the period.
Share total yieldThe share price trend during the year including distributed dividend as a percentage of the
share price at the start of the period.
Alternative performance measures (APM)Wallenstam presents a number of fi nancial measures that are outside IFRS defi nitions
(Alternative performance measures, according to ESMA’s guidelines) with the aim of enabling
effective evaluation of the company’s fi nancial position and performance for investors and
for the company’s management. This means that these measures are not always comparable
with measures used by other companies and shall therefore be considered as a complement
to measures defi ned according to IFRS. Wallenstam applies these alternative key ratios
consistently over time. The defi nitions describe how Wallenstam’s key ratios are calculated.
The key ratios are alternative performance measures according to ESMA guidelines unless
otherwise stated.
The number of sharesThe number of registered shares at any given time.
Number of shares outstanding: the number of registered shares less repurchased own shares
at any given time.
Average number of shares: weighted average number of shares outstanding at any given time.
Residential propertyProperty, which predominantly consists of residential space.
Loan-to-value ratioInterest-bearing liabilities and lease liability less cash and cash equivalents in relation to
the Group’s investments in properties, development properties and wind power at the end of
the period.
Market capitalizationShare price multiplied by the number of registered shares on the closing day.
Net operating incomeRental income less operating and maintenance expenses, and property tax.
Development propertiesDevelopment properties refer to properties constructed with the intention of being sold after
completion.
Rental value*Rental income and the estimated market rent for vacant space.
Cash fl ow per shareCash fl ow for the period in relation to the average number of shares outstanding.
Cash fl ow from operating activities per shareCash fl ow from operating activities for the period in relation to the average number of shares
outstanding.
Commercial propertyProperty, which predominantly consists of commercial space.
Non-current net asset value (EPRA NAV)Equity with reversal of deferred tax liabilities and the net effect of unrealized changes in
value of derivative instruments after tax and less adjusted in advance fi nancial electricity
contracts.
Net lettingNet lets entered into during the period less cancellations and removals.
P/E ratioShare price at the end of the period in relation to profi t after tax for the average number of
shares over the latest rolling 12-month period.
*Operational key ratios, are not considered alternative key ratios according to ESMA’s guideli-
nes.
Earnings per share after taxProfi t after tax in relation to the average number of outstanding shares, in accordance with
IFRS.
Return on equityProfi t after tax in relation to average equity, calculated on a rolling 12-month basis.
Return on total capitalProfi t before tax with reversal of interest expenses and early redeemed derivatives for the
latest rolling 12-month period in relation to average total capital employed.
Interest coverage ratioProfi t or loss before changes in value and impairment charges with reversal of net fi nancial
items and early redeemed interest rate derivatives for the latest rolling 12-month period
in relation to net fi nancial items and early redeemed interest rate derivatives for the latest
rolling 12-month period.
Interest coverage ratio excl. early redeemed interest rate derivatives **Profi t or loss before changes in value and impairment charges with reversal of net fi nancial
items and early redeemed interest rate derivatives for the latest rolling 12-month period in
relation to net fi nancial items for the latest rolling 12-month period.
Community propertyProperty, which is predominantly used by tax funded activities and is specifi cally adapted for
community services.
Average interestInterest expenses for the period including profi t or loss on swap agreements realized during
the period in relation to interest-bearing liabilities.
Equity/assets ratioEquity in relation to total capital employed at the end of the period.
Net asset valueEquity with the addition of deferred tax liabilities.
Net asset value per share The Group’s net asset value in relation to the number of outstanding shares at the end of the
period.
Occupancy rate – lettable areaLet fl oor space in relation to total fl oor space.
Changes in value, investment properties Gains or losses from sales of investment properties during the period less expenses and the
assessed market value of the properties at the previous reporting period and gains or losses
from the change in the assessed market value of investment properties compared to the
previous reporting period.
Changes in value, New construction: The increase in value is gradually recognized during the
construction of the property until the fi rst year the property is taken into operation. Change in
value new construction recognizes the difference between the cost of construction of a new
rental apartment and the value it has on completion.
Change in value Other: Refers to changes in the value of investment properties, which have
been in operation for one calendar year or more.
Surrender rate Proportion of leases extended in relation to the proportion of cancellable leases.
Surplus ratioNet operating income as a percentage of rental income.
For further information, please refer to: www.wallenstam.se/glossary
**Shows interest expenses for current liabilities in relation to profi t/loss on a rolling
12-month basis, which both exclude the non-recurring effect that arose from the early
redemption of interest rate derivatives.
SEK million2018/2019
Apr-May
Profi t before changes in value and impairment charges 441
Reversal prematurely realized fi nancial instruments 776
Reversal net fi nancial items 202
Profi t before interest expenses, changes in value and impairment charges 1,419
Net fi nancial items 202
DEFINITIONS
19 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
BUSINESS PLAN 2023
GoalTo achieve an increase in net asset value of SEK 40 per share
starting from October 1, 2018 through December 31, 2023.
Guiding principles• We shall exceed customer expectations and improve the ove-
rall impression of Wallenstam every year through attractive
apartments and premises as well as good service.
• Th rough our strong corporate culture, we shall be an attracti-
ve employer and improve our Engagement Index score every
year.
• We shall reduce our environmental impacts every year,
through initiatives within the focus areas energy, transports
and resources.
Defi ned key ratios• Th e equity/assets ratio should not be less than 30 percent.
VISION
Wallenstam shall be the natural choice of people and companies
for housing and premises.
BUSINESS CONCEPT
We develop and manage people’s homes and workplaces based
on a high level of service and long-term sustainability in selected
metropolitan areas.
BUSINESS PROCESS
Business processWallenstam builds, develops and manages properties and areas based on the needs of people and society, and based on the wishes and requirements of customers and shareholders.
Through cost-effi cient construction, development and management as well as a high level of service and long-term sustainability, we are creating value growth.
Profi ts are reinvested and used to develop the business further. Shareholders receive a share of the profi ts in the form of dividends.
WALLENSTAM TODAY
Wallenstam was founded in 1944 and is celebrating 75 years as
a company during 2019. Th e head offi ce is located in Gothen-
burg. Th e company’s B share is listed on Nasdaq Stockholm,
Large Cap and Wallenstam is one of the larger listed property
companies in Sweden.
Our residential properties are located in Stockholm, Uppsala
and Gothenburg, while our commercial properties are concen-
trated towards inner city locations in Gothenburg. All in all,
Wallenstam has just over 9,000 apartments and 1,000 commer-
cial tenants. Wallenstam is a major producer of homes in the re-
gions where we operate and we build primarily rental apartments
for our own property management.
Wallenstam is self-suffi cient in renewable energy through its
own wind turbines in operation.
Operations are conducted in the Stockholm business area, the
Gothenburg business area and Natural Energy.
StockholmTh e majority of our apartments, just over 5,000, are located
in the Stockholm business area. Approximately 400 of these
apartments are located in Uppsala. At present, most of our new
construction also takes place in the Stockholm region, including
Uppsala. We had just over 1,700 apartments under construction
in the Stockholm business area on closing day.
Gothenburg Our property holdings in Gothenburg consist of about 4,000
apartments and about 900 commercial tenants that rent offi ce
and retail premises, mainly in inner city locations. Th e Go-
thenburg business area had just over 1,200 apartments under
construction on closing day.
Natural EnergyTh e operations consist of both the generation of and trade in
renewable energy. Production covers our own properties’ needs
and those of our tenants.
Value growth
Cost-effi cient development
and management of
residential properties and
commercial premises
with a high level of service
and long-term sustainability.
Demand
Construction and acquisition Sales
Profi t
Dividend
THIS IS WALLENSTAM
20 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
CALENDAR
CONTACT
Interim report Q2, 2019 July 17, 2019
Interim report Q3, 2019 October 22, 2019
For further information, please contact
Susann Linde, CFO and Head of IR
tel: +46 705-17 11 34
e-mail: [email protected]
21 WALLENSTAM | INTERIM REPORT JAN 1-MAR 31, 2019
This is information that Wallenstam is obliged to make
public pursuant to the EU Market Abuse Regulation.
The information was submitted for publication,
through the agency of the contact person set out
below, at 08:00 CET on May 2, 2019.
WALLENSTAM AB ( publ ) SE-401 84 Göteborg
Visiting address : Kungsportsavenyen 2Telephone +46 31 - 20 00 00
www.wallenstam.seCo reg. no. 556072 -1523