Interim Report Q2 2022
"High equity/assets ratio, financing exclusively from banks, stable cash flows and low vacancy risk set KlaraBo apart"
Andreas Morfiadakis, CEO
April - June
- Revenue for the quarter amounted to SEK 120.3 million (60.9), a year-on-year increase of 98 per cent.
- The Group's net operating income amounted to SEK 66.4 million (31.7), up 109 per cent year-on-year.
- Profit from property management for the quarter amounted to SEK 20.4 million (10.2), a year-on-year increase of 100 per cent.
- Changes in the value of investment properties amounted to SEK 21.5 million (202.9) and changes in the value of derivatives to SEK 21.7 million (1.5).
- Profit for the quarter totalled SEK 38.4 million (164.4), corresponding to SEK 0.29 per share (3.37) before dilution.
- The loan-to-value ratio was 43.1 per cent at 30 June.
January - June
- Revenue for the period amounted to SEK 239 million (117.0), a year-on-year increase of 104 per cent.
- The Group's net operating income for the period amounted to SEK 125.8 million (57.4).
- Profit from property management amounted to SEK 50.6 million (18.6), a year-on-year increase of 172 per cent.
- Changes in the value of investment properties amounted to SEK 190.7 million (273.4) and changes in the value of derivatives to SEK 61.5 million (5.2).
- Profit for the period totalled SEK 226.9 million (230.0), corresponding to SEK 1.72 per share (4.28) before dilution.
- The net realization value per share is SEK 35.67 (29.21), a 22 per cent increase compared with the preceding year.
Significant events after the end of the period
- Possession of 37 acquired rental apartments was taken in Västervik.
Comments from CEO Andreas Morfiadakis
During the second quarter, rental revenue increased to SEK 120.3 million (60.9), a year-on-year increase of 98 per cent. As in the previous quarter, the increase was driven mainly by value-generating measures, completed new construction and acquisitions. Profit from property management increased 100 per cent to SEK 20.4 million (10.2).
At the end of April, we signed a loan agreement at a loan margin of nearly 1.6 per cent for SEK 1.5 billion pertaining to existing bank loans. Our total average loan margin is just under 1.7 per cent and our credit lock-in period is 2.9 years. We also used the positive surplus value in an existing interest-rate swap to sign a ten-year swap to extend our fixed-interest period, which is now 2.5 years. Our loan-to-value ratio is a low 43.1 per cent, and we have practically no vacancies. Overall, this means that we can act from a strong position when attractive acquisition opportunities arise.
The quarter was characterised by rising inflation and interest rates, which led to uncertainty in the operating environment that impacted the property sector. Property companies that finance themselves through bonds were affected to a greater extent by the rising market rates than companies, like KlaraBo, that rely exclusively on bank financing. Financing through banks is generally less costly than entering the bond market.
Residential properties in Sweden provide one of the most stable cash flows possible, meaning that even in the future KlaraBo should be able finance its operations through the banking system. Bank margins tend to be lower for housing than for other segments, something we believe will continue going forward. On 30 June, we had SEK 685 million in the bank. We also had binding loan commitments for just over SEK 1.3 billion to use for future investments and acquisitions. Thus, we see no need to finance our operations through the capital or bond markets in the foreseeable future, which provides a sense of security in the prevailing situation. With approximately 5,600 rental apartments in its portfolio, KlaraBo has a solid foundation, and we believe that demand for rental units will remain strong.
New construction goal remains unchanged, but no binding building requirements
Our goal of starting construction on 200 apartments this year remains unchanged. As a result of the uncertainty prevailing in the market, with increased material prices and unpredictable price trends, we are expecting somewhat lower development margins in new construction projects going forward. It is worth noting that we can accommodate lower margins since we build for our own long-term management. All of our new construction agreements are flexible, meaning that we have full control and can ensure profitability before we decide to start any construction. We do not need to enter into any binding new construction agreements without first ensuring profitability. Our balance sheet includes only marginal amounts for the project portfolio, meaning that there are limited financial risks in our project operations.
Renovations continue to strengthen rental revenue over the long term
On average, we have renovated just over 70 apartments per quarter over the last three quarters, which is the equivalent of just over 280 apartments in on a rolling 12-month basis. This means that organic growth is continuing and that we are delivering according to plan. Over time, KlaraBo will create increased value based on this business model, which has proven to work well in our market.
We expanded our portfolio in Västervik in June, and we have excellent prospects for continuing to identify and carry out acquisitions with our strong balance sheet.
The conditions in our operating environment have changed, and we have new times ahead. At the same time, our housing portfolio is fully let, we have stable cash flows with a low vacancy risk and we have access to capital and bank financing in the short and long term. Even if today's uncertainty continues, KlaraBo remains strong, and we are well equipped for tough times.
Andreas Morfiadakis, CEO of KlaraBo
KlaraBo's CEO Andreas Morfiadakis and CFO Jenny Appenrodt will present the Interim Report through a webcast presentation and teleconference at 9:00 a.m. (CEST) on Wednesday, 13 July. The presentation will be held in English.
To participate in the teleconference, call: +46 8 505 163 86, pin code 7014325#
For a webcast of the conference go to: https://tv.streamfabriken.com/klarabo-q2-2022
This information is information that KlaraBo Sverige AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the agency of the contact persons set out below, at 08.00 CEST on 13 July 2022.
For more information:
Andreas Morfiadakis, CEO KlaraBo
+46 76 133 16 61
KlaraBo is a real estate company that acquires, builds, owns and manages attractive residential properties. The company was founded in 2017 and operates throughout the country. The strategy is to acquire existing residential properties as well as land for new construction in regions with population growth and a strong labour market. Our newly constructed apartments are developed in-house and space efficient, which contribute to reasonable rents. Both apartments and buildings are designed in collaboration with the municipality to fit local needs. With wood as the main building material, the new construction holds a high environmental standard. KlaraBo is a long-term property owner. KlaraBo is listed on Nasdaq Stockholm and is traded under the ticker KLARA B.
KlaraBo Sverige AB