Business area Project Development

Project Development, which comprises Housing Development and Property Development, creates sustainable and vibrant urban environments with both residential and commercial property. The business area is responsible for the Group’s property acquisitions and divestitures as well as project development which generates contract work for the other business areas. Project Development works through wholly owned projects or in collaboration with other partners in joint ventures.

Housing Development develops all kinds of housing such as apartment buildings in tenancy ownership, ownership and rental form as well as single homes.

Operations in Property Development revolve around the acquisition, development, maintenance and management as well as the divestiture of commercial property. In cases where no divestment is planned property may remain in the Group for a long period of time in order to generate rental and appreciation revenues or a combination of both.

Peab’s primary ambition is to work with development projects on our own balance sheet. Collaboration with other partners via joint ventures may take place from time to time during a project. The goal is to create capital efficient developments with partners that bolster business and profit generation.

Net sales and profit

Net sales for the first quarter 2019 in business area Project Development amounted to SEK 1,863 million (2,287) and operating profit was SEK 178 million (201).

Capital employed in Project Development at the end of the period amounted to SEK 13,910 million (10,867). The increase is due to investments in project and development properties, more ongoing housing projects in Finland and Norway as well as investments in operations and investment properties in Property Development. The increase also included additional IFRS 16, Leases per 31 March 2019 of SEK 343 million divided into SEK 115 million in operations properties, SEK 54 million in investment properties, SEK 176 million in project and development properties and SEK -2 million in other receivables.

Brf Brovaktaren

Åkersberga

Capital employed

MSEK 31 Mar
2019		 31 Mar
2018		 31 Dec
2018
Mkr 31 mar
2019		 31 mar
2018		 31 dec
2018
Operations property Driftsfastigheter 1,156 1,050 915
Investment property Förvaltningsfastigheter 675 988 589
Project and development property
Projekt- och exploateringsfastigheter
 10,539 7,708 9,685
of which housing development rights varav bostadsbyggrätter 5,484 5,266 5,394
of which commercial development rights varav kommersiella byggrätter 626 604 656
of which on going housing projects varav pågående bostadsprojekt 2,298 1,035 2,034
of which on going commercial projects including rental projects
varav pågående kommersiella projekt inklusive hyresrättsprojekt
 1,557 497 1,227
of which completed projects varav färdigställda fastigheter 250 132 14
of which other varav övrigt 324 174 360
Participation in joint ventures Andelar i joint ventures 1,189 913 1,019
Loans to joint ventures Utlåning till joint ventures 1,253 1,387 1,466
Working capital and other Rörelsekapital och övrigt -902 -1,179 -690
Total Summa 13,910 10,867 12,984

Key ratios

Jan-Mar
2019		 Jan-Mar
2018		 Apr-Mar
2018/2019		 Jan-Dec
2018
Jan-mar
2019		 Jan-mar
2018		 Apr-mar
2018/2019		 Jan-dec
2018
Net sales, MSEK Nettoomsättning, Mkr 1,863 2,287 7,420 7,844
of which Property Development varav Fastighetsutveckling 173 156 755 738
of which Housing Development varav Bostadsutveckling 1,690 2,131 6,665 7,106
Operating profit, MSEK Rörelseresultat, Mkr 178 201 762 785
of which Property Development varav Fastighetsutveckling 46 50 166 170
of which Housing Development varav Bostadsutveckling 132 151 596 615
Operating margin, % Rörelsemarginal, % 9.6 8.8 10.3 10.0
of which Property Development varav Fastighetsutveckling 26.6 32.1 22.0 23.0
of which Housing Development varav Bostadsutveckling 7.8 7.1 8.9 8.7
Capital employed at the end of the period, MSEK
Sysselsatt kapital vid periodens utgång, Mkr
 13,910 10,867 13,910 12,984
Orders received, MSEK Orderingång, Mkr 1,627 2,061 6,247 6,681
Order backlog, MSEK Orderstock, Mkr 6,694 8,275 6,694 7,134
Number of employees at the end of the period
Antal anställda vid periodens utgång
 332 367 332 379

Housing Development

Net sales in Housing Development decreased to SEK 1,690 million (2,131) and operating profit decreased to SEK 132 million (151). The reduction is due to the fact that fewer projects in Norway and Finland were turned over. The operating margin increased to 7.8 percent (7.1). In the latest rolling 12 month period the operating margin amounted to 8.9 percent compared to 8.7 percent for the entire year of 2018.

The number of start-​ups of our own developed homes amounted to 467 units (557) and they were divided between Sweden and Finland, with a good geographic spread in both countries. The number of sold homes was 590 (372), most of them sold in Sweden. Greater sales efforts in Stockholm led to higher sales during the period compared to the first quarter 2018. The number of own developed homes in production at the end of the period was 6,019 (6,265). The level of sold homes in production was 65 percent (68). The number of repurchased homes per 31 March 2019 was 109 (50) and around half of them were in Finland. Peab develops and builds housing all over Sweden and in large parts of Norway and Finland. Our housing is primarily in the medium price segment and we see that there continues to be a considerable need for new production of housing in this range.

At the end of March 2019 capital employed increased due to higher investments in project and development property and greater activity in our own housing developments in Norway and Finland, which remain on the balance sheet until completion.The diagram shows when in time the housing projects in Norway and Finland are expected to be completed. The total number of ongoing own housing developments in Norway and Finland were 1,360 per 31 March 2019.

Development rights for housing

Number, approx. 31 Mar
2019		 31 Mar
2018		 31 Dec
2018
Antal, cirka 31 mar
2019		 31 mar
2018		 31 dec
2018
Development rights on our own balance sheet Byggrätter i egen balansräkning 20,900 20,300 21,300
Development rights via joint ventures Byggrätter via joint ventures 5,100 5,400 5,000
Development rights via options etc. Byggrätter via optioner m.m. 9,500 7,700 9,100
Total Totalt 35,500 33,400 35,400

When in time ongoing housing projects in Norway and Finland will be completed

Own housing development construction

Jan-Mar
2019		 Jan-Mar
2018		 Apr-Mar
2018/2019		 Jan-Dec
2018
Jan-mar
2019		 Jan-mar
2018		 Apr-mar
2018/2019		 Jan-dec
2018
Number of housing starts during the period
Antal under perioden produktionsstartade bostäder
 467 557 2,123 2,213
Number of sold homes during the period
Antal under perioden sålda bostäder
 590 372 2,043 1,825
Total number of homes under construction, at the end of the period
Totalt antal bostäder i produktion, vid periodens slut
 6,019 6,265 6,019 6,231
Share of sold homes under construction, at the end of the period
Andel sålda bostäder i produktion, vid periodens slut
 65% 68% 65% 63%
Number of repurchased homes in the balance sheet, at the end of the period
Antal återköpta bostäder i egen balansräkning, vid periodens slut
 109 50 109 104

Tegnérlunden

Västerås

Property development

Net sales and operating profit from operations are derived from acquisitions, development, maintaining and managing wholly owned property, shares in the result from partly owned companies as well as capital gains/losses from the divestiture of completed projects and shares in partly owned companies.

During the first quarter 2019 net sales in Property Development were SEK 173 million (156) and operating profit was SEK 46 million (50).

Our partially owned companies continue to develop well and profit in the first quarter from partially owned companies amounted to SEK 46 million (35).

In cases where no divestiture is planned properties can remain in the Group for a considerable length of time in order to garner rent and appreciation revenue or a combination of both. Capital employed in Property Development includes operations property for a recognized value of SEK 1,156 million (1,050), of which SEK 151 is additional IFRS 16 Leases and SEK 675 million (988) is investment property, of which SEK 54 is additional IFRS 16 Leases. Project and development property are as of this report included in the tables below. The tables show our major property projects per 31 March 2019.

Office building Ulriksdal

Solna

Property projects

Completed projects Location Area in m2 Degree rented, %
Recognized value, MSEK
Färdigställda projekt Ort Uthyrningsbar
yta, m2		 Uthyrningsgrad, %
Bokfört värde, Mkr
Businesspark Ängelholm Företagspark Ängelholm 62,800 95 245
Businesspark Ljungbyhed Företagspark Ljungbyhed 76,100 62 114
Office building Helsinki Kontor Helsingfors 9,300 100 278
Office building Helsinki Kontor Helsingfors 7,600 27 250
Tenancy Malmö Hyresrätt Malmö 4,600 100 142
Office building Sigtuna Kontor Sigtuna 3,600 74 66
Other completed projects
Övriga färdigställda projekt
 105
Total Summa 1,200
of which operations property varav driftsfastigheter     599
of which investment property varav förvaltningsfastigheter     587
of which project and development property varav projekt- och exploateringsfastigheter     14
Ongoing projects Location Area in m2 Degree rented, % Recognized value, MSEK Total investment at completion, MSEK Timepoint of completion
Level of completion, %
Pågående projekt Ort Uthyrningsbar
yta, m2		 Uthyrningsgrad, % Bokfört värde, Mkr Beslutad investering, Mkr Tidpunkt färdigställande
Färdigställande-grad, %
Offices Solna Kontor Solna 12,400 100 338 449 Q4-2019 75
Retail and offices Gothenburg Handel och kontor Göteborg 6,400 95 132 169 Q3-2019 78
Retail Oslo Handel Oslo 3,600 100 117 189 Q3-2020 62
Office building Malmö Kontor Malmö 4,900 68 103 185 Q1-2020 56
Office building and parking Solna Kontor och parkering Solna 2,900 89 97 277 Q2-2020 35
Office building Helsingborg Kontor Helsingborg 4,500 100 35 117 Q1-2021 30
Other ongoing projects Övriga pågående projekt 24
Total Summa 846
of which operations property varav driftsfastigheter     441
of which investment property varav förvaltningsfastigheter     35
of which project and development property varav projekt- och exploateringsfastigheter     370

Peab’s partially owned company Acturum divests properties

Acturum signed a contract in December 2018 with Fastator and Offentliga Hus to sell all the remaining property. Acturum was founded by Peab and FAM – The Wallenberg Foundations’ holding company – as equal partners in 2013. The company acquired a property portfolio in Södertälje from Astra Zeneca which had decided to close up its research operations in the area. Acturum has since developed a number of properties and is now entering a new phase focused primarily on management. The transfer is planned for the second quarter of 2019 and Peab’s share of the profit is expected to be at least SEK 120 million. The profit will be recognized in the second quarter of 2019.

Significant joint ventures

Peab’s significant joint venture companies Fastighets AB Centur, Tornet Bostadsproduktion AB, Fastighets AB ML4 and Point Hyllie Holding AB are developing well and via them Peab has built up considerable indirect holdings in investment property and development property for both commercial and residential purposes. Ongoing returns are in the form of shares in the profit from joint ventures recognized in operating profit and interest income on lending. Changes in market values that effect booked values in joint venture companies are not reported in Peab’s profit.

 

 

Significant joint ventures

Fastighets AB Centur

Own, manage and develop commercial property and housing.

Peab’s share: 50 percent
Partner: Balder
Location: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties 31 March 2019 1): SEK 6,163 million (5,085)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 352 million (328)
Major ongoing projects: Hotel Stay-at Varvsstaden, Malmö Rentable area 3,900 m2, Lyckholms Gothenburg, Rentable area 6,400 m2 

Tornet Bostads­produktion AB

Build and manage attractive and environmentally friendly rentals in larger cities in Sweden.

Peab’s share: 33 percent
Partner: Folksam and Balder
Location: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties 31 March 2019 1): SEK 3,593 million (2,959)
Peab’s portion of unrecognized fair value exclusive tax 1):  SEK 221 million (167)
Major ongoing projects: Munkebäck, Gothenburg Rentable area 14,800 m2´, Kungsängen, Upplandsbro Rentable area 8,800 m2 and several apartment building projects in Västerås, Helsingborg, Malmö and Örebro

Fastighets AB ML4

Own and manage the research facility Max IV. The facility is rented to Lund University.

Peab’s share: 50 percent
Partner: Wihlborgs
Location: Lund
Recognized value on properties 31 March 2019: SEK 1,839 million (1,848)
Major ongoing projects: Research building 6,400 m2

Point Hyllie Holding AB

Develop, own and manage the office property The Point as well as own and manage the hotel property Värdshuset 5 (Operator Quality Hotel View).

Peab’s share: 50 percent
Partner: Volito
Location: Hyllie, Malmö
Recognized value of properties 31 March 2019: SEK 1,075 million (843)
Major ongoing projects: 29 floor office building, The Point, Rentable area 20,000 m2

1) Valued at market price in joint venture companies. The market prices on properties that affect the recognized values in joint venture companies are not recognized in Peab’s profit.