Eik fasteignafélag hf.: Interim results for the first nine months of 2023
The Interim Consolidated Financial Statements of Eik fasteignafélag hf. for the period 1 January to 30 September 2023 were approved by the Company’s Board of Directors and CEO on 15 November 2023
Key results of the Interim Consolidated Financial Statement are:
- Income from operations amounted to ISK 8,453 million
- Thereof, rental income amounted to ISK 7,115 million
- Adjusted EBITDA amounted to ISK 5,806 million
- One-time costs amounted to ISK 40 million. And EBITDA for the period amounted to ISK 5,766 million.
- Total profit amounted to ISK 6,886million.
- Net cash from operations amounted to ISK 3,498 million.
- The book value of investment properties amounted to ISK 130,677 million.
- The book value of assets for own use amounted to ISK 6,003 million at the end of the period.
- Change in value of investment properties amounted to ISK 7,095 million.
- Cash and cash equivalents amounted to ISK 1,276 million.
- Interest-bearing debt amounted to ISK 74,390 million at the end of the period.
- Equity ratio was 34.7%.
- Profit per share was ISK 1.6.
- Economic occupancy rate was 93.5% at the end of the period
- Weighted indexed interest was 3.03%.
- Weighted unindexed interest was 9.85%.
Attached is an interim financial report which contains Interim Consolidated Financial Statements for the first nine months of the year 2023 together with further information on the Company’s operations than are included in the announcement.
In case of any discrepancy in the English and the Icelandic versions of this announcement or the Financial Statements, the Icelandic version shall prevail.
Group´s operations
The Group performed well in the first nine months of the year 2023 and the results were in accordance with management’s updated forecasts. Operating income for the first nine months of the year 2023 amounted to ISK 8,453 million. Thereof, rental income amounted to ISK 7,115 million. Operating costs amounted to 2,866 million and write down of trade receivables was positive during the period, amounting to ISK 179 million.
Operating profit before changes in fair value change and depreciation amounted to ISK 5,766 million. Adjusted for one-time costs related to the merger discussion, takeover bid and other items the operating profit before changes in fair value change and deprecation amounted to ISK 5,806 million, increasing by just over 19% between years. Profit before income tax amounted to ISK 6,823 million and total profit of the Group for the first nine months of the year 2023 amounted to ISK 5,459 million. Other comprehensive income amounted to ISK 1,427 million. Total comprehensive income for the first nine months amounted to ISK 6,886 million
The NOI Ratio (i.e. operating profit before changes in value and depreciation adjusted for one-time costs as a ratio of lease income) was 77.8% for the first nine months of the year 2023, compared to 74.6% for the same period in 2022.
The Group’s investment assets are valued at fair value in accordance with International Financial Reporting Standards (IFRS), which is based on, among other, discounted future cash flows of individual assets. Changes in fair value are recognised and classified within changes in value of investment assets in the consolidated statement of comprehensive income, which amounted to ISK 7,095 million in the first nine months of the year 2023. The main assumptions driving the change are inflation, increase in rental rates and increase in value of building permits. On the other hand, the main driver lowering the estimate is lower weighted average cost of capital and the fact that future growth has now been removed.
Financial Position
The Group’s total assets amounted to ISK 140,178 million at the end of the period, whereof investment properties amounted to ISK 130,677 million which consist of real estate leased to tenants amounting to ISK 120,452 million, investment properties under development ISK 3,902 million, building rights and land ISK 3,532 million, pre-paid street construction tax ISK 13 million and lease assets ISK 2,778 million. Assets for own use amounted to ISK 6,003 million and assets under development ISK 676 million. The Group’s equity amounted to ISK 48,630 million at the end of the period and its equity ratio was 34.7%. At the Group’s Annual General Meeting on 30 March 2023 a dividend payment to shareholders due to the year 2022 amounting to ISK 2,000 million was approved, which was subsequently paid on 12 April 2023.
The Group’s total liabilities amounted to ISK 91,542 million at the end of the period, of which interest-bearing debt amounted to ISK 74,390 million and deferred tax liability ISK 12,403 million. The Group´s loan to value is 55,4% at the end of the period. Company’s previously issued bonds (EIK 23) were fully repaid on maturity date of 10. September 2023, the bond had 2.9% unindexed interest.
Economic occupancy rate
The Company‘s economic occupancy rate was 93.5% at the end of the period compared to 95.7% at the beginning of the year. Part of the Company‘s assets have been defined as assets under development. Included in that is the office space that Landsbankinn returned mid-year. Assets under development include Hafnarstræti 8, part of Hafnarstræti 5 and 7, Helluhraun 8, Lónsbakki, Skeifan 7 and 9 and part of the 2nd floor in Smáratorg 3. Assets under development consist of 6% of the total square meters owned by the Company. Economic occupancy rate, including assets under development, was 91.3% at the end of the period.
Merger of subsidiary‘s
The Company has merged the Company‘s subsidiary Landfestar ehf. and its subsidiaries with Eik fasteignafélag hf. The merger is done with the aim of simplifing the structure of the group and ensure operational efficiency. The effective date of the merger is 1. Janary 2023.
Asset portfolio
The Company has acquired Húsfélagið Hafnarstræti 7 ehf., but the Company owns 820 square meters office and retail space located at Hafnarstræti 7. The asset was delivered in November. After the acquistion the Company own the whole area that demarcate of Posthusstræti 2, Tryggvagötu 24-28 and Hafnarstræti 5-9.
The Company’s owns around 110 properties, which counts for over 317.000 thousand square meters on rental place in over 600 units. Total number of tenants is around 500. The The Company owns assets in the capital region, Akureyri, Hveragerði and Selfoss. Company’s principal properties in the capital region are Borgartún 21 and 21a; Borgartún 26; Suðurlandsbraut 8 and 10; Mýrargata 2-16; Pósthússtræti 2 (Hotel 1919); Smáratorg 3 (Turninn); Smáratorg 1; Álfheimar 74 (Nýi Glæsibær); Grjótháls 1-3 and Austurstræti 5, 6, 7 and 17. The Company’s principal property outside the capital region is Glerártorg, Akureyri. The Company’s largest tenants are Húsasmiðjan, Ríkiseignir, Berjaya Hotels Iceland, Sýn, Össur, Míla, Síminn, Bónus, VÍS and Controlant.
The largest part of the Company’s real estate portfolio is office space, or 40%, followed by commercial premises (23%), warehouses (13%), hotel (10%), health related operations (6%), bars and restaurants (4%) and building permits (3%). Around 93% of the Company’s real estate are in the capital region, of which 38% is in financial and business districts of Reykjavík (mainly within postal codes 105 and 108), 17% in the Reykjavik city centre and 18% in Smárinn-Mjódd. 7% of the portfolio is located outside the capital region, whereof over 6% is in Akureyri.
Outlook
The Company’s outlook has been increased on two occasion during 2023. The Company expects that the EBITDA for the year will be in the range of ISK 7.500-7.650 million at a fixed price, based on consumer price index for financial indexation in December 2023. Adjusted for one-time costs the Company expects that the EBITDA for the year will be in the range of ISK 7.540 – 7.690 million.
Online meeting
An online open meeting will be held on Thursday the 16th of November 2023, at 8:30. Garðar Hannes Friðjónsson, CEO and Lýður H. Gunnarsson, CFO, will present the results and respond to questions following the presentation.
Registration of the meeting is through the following link:
https://us02web.zoom.us/webinar/register/WN_SE0At-QlQhi0bLpxYhvqMw
Following registration, participants will receive an e-mail with further information’s.
Financial Calendar
Following is the planned dates for the publishing of annual results:
Annual results 2023 15. February 2024
For further information please contract
Garðar Hannes Friðjónsson, CFO, gardar@eik.is, s. 590-2200
Lýður H. Gunnarsson, CEO, lydur@eik.is, s. 820-8980
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