Eik fasteignafélag hf.: Interim results for the first three months of 2022
- Income from operations amounted to ISK 2,284 million
- Impairment of trade receivables amounted to ISK 18 million
- Operating profit before changes in value and depreciation amounted to ISK 1,475 million
- Total profit amounted to ISK 2,216 million
- Net cash from operations was ISK 936 million
- The book value of investment properties amounted to ISK 109,448 million
- The book value of assets for own use amounted to ISK 4,157 million at the end of the period
- Change in vale of investment properties was ISK 2,938 million
- Cash and cash equivalents amounted to ISK 3,091 million
- Interest-bearing debt amounted to ISK 65,535 million at the end of the period
- Equity ratio was 33.5%
- Profit per share was ISK 0.65
- Economic occupancy rate was 94.2% at the end of the period
- Weighted indexed interest was 3.03% at the end of the period
- Weighted unindexed interest was 4.93% at the end of the period
The Interim Financial Statements of Eik fasteignafélag hf. for the period 1 January to 31 March 2022 were approved by the Company’s Board of Directors and CEO on 5 May 2022.
Attached is an interim financial report which contains Interim Financial Statements for the first three months of the year 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.
Company operations
The Company performed well in the first three months of 2022 and the results were in line with management’s forecasts. Operating income for the first three months of the year 2022 amounted to ISK 2,284 million. Of this amount, rental income was ISK 1,990 million. Operating profit before changes in value and depreciation amounted to ISK 1,475 million. Profit before income tax amounted to ISK 2,772 million and total profit of the Group for the first three months of 2022 amounted to ISK 2,216 million.
The Net Operating Income (NOI) ratio (i.e. operating profit before changes in value and depreciation as a ratio of lease income) was 73.5% for the first three months of 2022, compared to 67.8% for the same period in 2021.
The Company’s investment properties are valued at fair value in accordance with International Financial Reporting Standards (IFRS), based in part on the discounted future cash flows of individual assets. Changes in fair value are recognised in changes in value of investment properties, which were around ISK 2.938 million in the first three months of the year.
Balance Sheet
The Company’s total assets amounted to ISK 118,657 million as at 31 March 2022. Of this, investment properties valued at ISK 109,448 million consist of real estate leased to tenants amounting to ISK 105,823 million, leased assets (property utilisation rights) of ISK 2,487 million, investment properties under development of ISK 699 million, building rights and lots of ISK 448 million and pre-paid street construction fees in the amount of ISK 13 million. Assets for own use amounted to ISK 4,157 million and assets under development amounted to ISK 666 million. The Company’s equity amounted to ISK 39,699 million at the end of March 2022 and its equity ratio was 33.5%. At the Company’s Annual General Meeting on 5 April 2022, it was approved to pay dividend to shareholders for the year 2021 amounting to ISK 1,740 million which was paid on 28 April 2022. The balance of equity does not take these liabilities into account.
The Company’s total liabilities amounted to ISK 78,957 million as at 31 March 2022, of which interest-bearing debt was ISK 65,535 million and deferred tax liability ISK 9,236 million.
Economic occupancy rate
The Company’s economic occupancy rate was the same as at the beginning of the year and was 94.2% at the end of the first quarter.
Outlook
Inflation has been somewhat higher than expected. In general, inflation has a positive effect on the Company’s EBITDA since 98% of rental income is linked to consumer price index or consumer price index for financial indexation. Taking inflation into account, the outlook for the year is unchanged.
Effects due to COVID-19
The effects of COVID-19 on the Company’s operations are fast decreasing. The Company estimates that negative effect of the pandemic was between ISK 35–40 million on EBITDA in the first three months of the year. The Company expects that the pandemic will continue to influence the operations for the first half of the year, but that the effect will be minor to none in the second half of the year based on unchanged state of the pandemic. However, outstanding receivables where postponement of payment was granted due to the pandemic are still to be settled, but it is unclear when settlement will be finalised.
Company Portfolio
The Company received a part of the property at Sóltún 24 in February but the property shares land and garage with the Company’s property at Sóltún 26.
As stated in the Company’s Financial Statements for the year 2021, the Company’s tenant at Höfðasel 2 and 4 in Akranes, has exercised its purchase option on the properties and they will be delivered on 30 September 2022. The sales price is tied to consumer price index for financial indexation and sales profit will be booked in the third quarter, amounting to the difference between booked value and sales price. With reference to the consumer price index for financial indexation in April 2022, the difference is ISK 268 million.
The Group owns more than 110 properties which total almost 314,000 sqm. of rental space in just over 600 units. Total number of tenants is over 400. The Company’s principal properties in the capital region are Borgartún 21 and 21a; Borgartún 26; Suðurlandsbraut 8 and 10; Mýrargata 2-16; Pósthússtræti 2 (Hótel 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. The Company’s largest tenants are Húsasmiðjan, Icelandair Hotels, Ríkiseignir, Landsbankinn, Sýn, Össur, Míla, Deloitte, Síminn and VÍS.
The largest part of the Company’s real estate portfolio is office space, or 42%, followed by commercial premises (24%), warehouses (13%), hotel (9%), health related operations (7%) and bars and restaurants (3%). Around 92% of the Company’s real estate is in the capital region, of which 38% is in financial and business districts of Reykjavík (mainly in postal codes 105 and 108), 17% in the Reykjavik city centre and 19% in Smárinn-Mjódd. 8% of the portfolio is located outside the capital region, whereof almost 7% is in Akureyri.
Electronic presentation
An electronic presentation will be held on Friday 6 May 2022 at 8:30 am. Garðar Hannes Friðjónsson CEO and Lýður H. Gunnarsson CFO will present the results and respond to questions following the presentation.
Registration to the meeting is here:
https://us02web.zoom.us/webinar/register/WN_cp0pkbNYTuCm2XL5bJh4yA
Following registration, participants will receive an e-mail with further information.
2022 Financial Calendar
Following are planned dates for publishing of interim and annual results:
Quarterly results Q2 2022 25th August 2022
Quarterly results Q3 2022 27th October 2022
2022 Annual Results 16th February 2023
Financial information will be published after closing of markets.
For further information contact:
Garðar Hannes Friðjónsson, CEO, gardar@eik.is, tel. 590-2200
Lýður H. Gunnarsson, CFO, lydur@eik.is, tel. 820-8980
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