Business area Project Development
Business area 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.
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 2020 in business area Project Development amounted to SEK 1,969 million (2,167). Operating profit amounted to SEK 174 million (180).
Capital employed in Project Development at the end of the period amounted to SEK 13,898 million (15,633). Annehem Fastigheter was included with approximately SEK 1,600 million at the corresponding time last year.
Goldfinger
Helsinki
Capital employed
| MSEK | 31 Mar 2020 | 31 Mar 2019 | Dec 31 2019 | |
| Mkr | 31 mar 2020 | 31 mar 2019 | 31 dec 2019 | |
| Operations property | Driftsfastigheter | 118 | 1,041 | 1,226 |
| Investment property | Förvaltningsfastigheter | 114 | 621 | 500 |
| Project and development property | Projekt- och exploateringsfastigheter | 10,932 | 11,747 | 11,850 |
| of which housing development rights | varav bostadsbyggrätter | 5,144 | 5,308 | 5,674 |
| of which commercial development rights | varav kommersiella byggrätter | 584 | 626 | 556 |
| of which unsold part of ongoing housing projects | varav osåld del av pågående bostadsprojekt | 3,042 | 3,682 | 3,520 |
| of which ongoing rental projects in Sweden | varav pågående hyresrättsprojekt i Sverige | 946 | 1,187 | 846 |
| of which ongoing commercial projects | varav pågående kommersiella projekt | 524 | 370 | 445 |
| of which completed property | varav färdigställda fastigheter | 218 | 250 | 391 |
| of which other | varav övrigt | 474 | 324 | 418 |
| Participation in joint ventures | Andelar i joint ventures | 1,585 | 1,214 | 2,019 |
| Loans to joint ventures | Utlåning till joint ventures | 1,119 | 1,253 | 1,106 |
| Working capital and other | Rörelsekapital och övrigt | 30 | -243 | -22 |
| Total | Summa | 13,898 | 15,633 | 16,679 |
Key ratios
| Jan-Mar 2020 | Jan-Mar 2019 | Apr 2019- Mar 2020 | Jan-Dec 2019 | ||
| Jan-mar 2020 | Jan-mar 2019 | Apr 2019- mar 2020 | Jan-dec 2019 | ||
| Net sales, MSEK | Nettoomsättning, Mkr | 1,969 | 2,167 | 8,927 | 9,125 |
| of which Property Development | varav Fastighetsutveckling | 122 | 173 | 735 | 786 |
| of which Housing Development | varav Bostadsutveckling | 1,847 | 1,994 | 8,192 | 8,339 |
| Operating profit, MSEK | Rörelseresultat, Mkr | 174 | 180 | 1,009 | 1,015 |
| of which Property Development | varav Fastighetsutveckling | 25 | 46 | 279 | 300 |
| of which Housing Development | varav Bostadsutveckling | 149 | 134 | 730 | 715 |
| Operating margin, % | Rörelsemarginal, % | 8.8 | 8.3 | 11.3 | 11.1 |
| of which Property Development | varav Fastighetsutveckling | 20.5 | 26.6 | 38.0 | 38.2 |
| of which Housing Development | varav Bostadsutveckling | 8.1 | 6.7 | 8.9 | 8.6 |
| Capital employed at the end of the period, MSEK | Sysselsatt kapital vid periodens utgång, Mkr | 13,898 | 15,633 | 13,898 | 16,679 |
| Orders received, MSEK | Orderingång, Mkr | 1,670 | 1,627 | 6,207 | 6,164 |
| Order backlog, MSEK | Orderstock, Mkr | 4,885 | 6,694 | 4,885 | 5,027 |
| Number of employees at the end of the period | Antal anställda vid periodens utgång | 343 | 332 | 343 | 343 |
Housing Development
In Housing Development, net sales decreased to SEK 1,847 million (1,994) due to lower sales in Sweden. Operating profit improved to SEK 149 million (134) and the operating margin improved to 8.1 percent (6.7). The operating margin for the latest rolling 12 month period was 8.9 percent compared to 8.6 percent for the entire year of 2019.
The number of start-ups of our own developed homes amounted to 503 units (467) with a good geographic spread in all three countries. The number of sold homes increased to 787 (590), most of them sold in Sweden. Housing sales were very strong until the end of March when we experienced an abrupt decline. The number of own developed homes in production decreased and amounted to 4,538 (6,019) at the end of the period. The share of sold homes in production was 72 percent (65). The number of repurchased homes per March 31, 2020 was 245 (109). Most of the repurchased homes are related to Sweden and 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.
Capital employed has decreased at the ens of the period compared to the corresponding point in time in 2019. The reduction is largely due to less capital tied up in unsold homes resulting from fewer homes in production. Capital employed also includes apartments for rent projects in Sweden that can be converted to tenant-owned homes or be sold on the investment market.
Development rights for housing
| Number, approx. | 31 Mar 2020 | 31 Mar 2019 | Dec 31 2019 | |
| Antal, cirka | 31 mar 2020 | 31 mar 2019 | 31 dec 2019 | |
| Development rights on our own balance sheet | Byggrätter i egen balansräkning | 20,000 | 20,900 | 20,300 |
| Development rights via joint ventures | Byggrätter via joint ventures | 4,600 | 5,100 | 4,600 |
| Development rights via options etc. | Byggrätter via optioner m.m. | 9,700 | 9,500 | 9,500 |
| Total | Totalt | 34,300 | 35,500 | 34,400 |
Completion time of our own developed ongoing housing
Net sales
Own housing development construction
| Jan-Mar 2020 | Jan-Mar 2019 | Apr 2019- Mar 2020 | Jan-Dec 2019 | ||
| Jan-mar 2020 | Jan-mar 2019 | Apr 2019- mar 2020 | Jan-dec 2019 | ||
| Number of housing starts during the period | Antal under perioden produktionsstartade bostäder | 503 | 467 | 2,103 | 2,067 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 787 | 590 | 2,906 | 2,709 |
| Total number of homes under construction, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 4,538 | 6,019 | 4,538 | 4,616 |
| Share of sold homes under construction, at the end of the period | Andel sålda bostäder i produktion, vid periodens slut | 72% | 65% | 72% | 69% |
| Number of repurchased homes in the balance sheet, at the end of the period | Antal återköpta bostäder i egen balansräkning, vid periodens slut | 245 | 109 | 245 | 253 |
Brf Kanonhusholmen
Eskilstuna
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.
Net sales in the first quarter 2020 were SEK 122 million (173) and operating profit was SEK 25 million (46). During the quarter some operations connected to air travel and tourism have been affected negatively by the coronavirus pandemic which has led to a lower operating profit by about SEK 20 million compared to the first quarter 2019. Last year Property Development also contained Annehem Fastigheter. No major property transactions have occurred during the quarter.
At the end of the first quarter capital employed in Property Development had contracted compared to the first quarter 2019 due to the transfer of fully developed properties to Annehem Fastigheter. At the same time last year Annehem Fastigheter was included by around SEK 1,600 million. Capital employed in Property Development includes as of 2020 primarily commercial development rights, ongoing property projects, shares in partially owned companies as well as loans to partially owned companies. The creation of Annehem Fastigheter means that our larger ongoing projects in Property Development are intended for sales to Annehem Fastigheter and will thereby be included in the planned extra distribution. The table below presents the larger ongoing property projects per March 31, 2020.
The Gate
Malmö
Ongoing property projects
| Type of project | Location | Area in m2 | Degree rented, % | Recognized value, MSEK | Total investment at completion, MSEK | Timepoint of completion | Level of completion, % | ||
| Typ av projekt | Ort | Uthyrningsbar yta, m2 | Uthyrningsgrad, % | Bokfört värde, Mkr | Beslutad investering, Mkr | Tidpunkt färdigställande | Färdigställande-grad, % | ||
| Office building and parking | Solna | Kontor och parkering | Solna | 2,900 | 89 | 232 | 279 | Q2-2020 | 83 |
| Retail | Oslo | Handel | Oslo | 3,600 | 100 | 134 | 186 | Q4-2020 | 72 |
| Office building | Helsingborg | Kontor | Helsingborg | 2,900 | 77 | 50 | 106 | Q2-2021 | 47 |
| Office building | Solna | Kontor | Solna | 4,300 | 89 | 58 | 194 | Q3-2021 | 30 |
| Other ongoing projects | Övriga pågående projekt | 50 | |||||||
| Total | Summa | 524 | |||||||
| of which operations property | varav driftsfastigheter | 50 | |||||||
| of which project and development property | varav projekt- och exploateringsfastigheter | 474 | |||||||
Significant joint ventures
Peab’s significant joint venture companies Fastighets AB Centur, Tornet Bostadsproduktion AB and Fastighets AB ML4 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 included in Peab’s accounts.
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 March 31, 2020 1): SEK 4,560 million (3,593)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 262 million (221)
Major ongoing projects: Munkebäck, Gothenburg Rentable area 10,900 m2, Kungsängen, Upplandsbro Rentable area 8,900 m2,, LP Parken, Gothenburg Rentable area 15,000 m2, Tallbohov, Järfälla Rentable area 10,500 m2 and several apartment building projects in Västerås and Helsingborg
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 March 31, 2020 1): SEK 6,708 million (6,163)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 426 million (352)
Major ongoing projects: Lyckholms Gothenburg, Rentable area 6,400 m2
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 March 31, 2020: SEK 1,893 million (1,839)
Major ongoing projects: Research building 6,400 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 included in Peab’s accounts.