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. 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

April – June 2019

Net sales for the second quarter 2019 in business area Project Development amounted to SEK 2,068 million (1,775). Operating profit amounted to SEK 371 million (174). In Property Development Peab’s partially owned company Acturum divested a number of properties in the second quarter, which was announced earlier. The divestitures had a positive effect of SEK 170 million in profit contributions from partially owned companies.

January – June 2019

Net sales for the first half-year 2019 in business area Project Development amounted to SEK 3,931 million (4,062) and operating profit was SEK 549 million (375).

Capital employed in Project Development at the end of the period amounted to SEK 15,269 million (11,549). The increase is due to investments in project and development properties, more ongoing housing projects in Finland and Norway, investments in rental projects as well as investments in operations and investment properties in Property Development. The increase also included additional IFRS 16, Leases per June 30, 2019 of SEK 362 million divided into SEK 114 million in operations properties, SEK 55 million in investment properties, SEK 196 million in project and development properties and SEK -3 million in other receivables.

Brf S:t Lars Park

Lund

Capital employed

MSEK Jun 30
2019
Jun 30
2018
Dec 31
2018
Mkr 30 jun
2019
30 jun
2018
31 dec
2018
Operations property Driftsfastigheter 1,232 1,102 915
Investment property Förvaltningsfastigheter 701 1,030 589
Project and development property
Projekt- och exploateringsfastigheter
11,057 8,531 9,685
of which housing development rights varav bostadsbyggrätter 5,806 5,543 5,394
of which commercial development rights varav kommersiella byggrätter 612 598 656
of which ongoing housing projects in Norway and Finland varav pågående bostadsprojekt i Norge och Finland 2,507 1,447 2,034
of which ongoing rental projects in Sweden
varav pågående hyresrättsprojekt i Sverige
1,063 297 925
of which ongoing commercial projects
varav pågående kommersiella projekt
431 216 302
of which completed projects varav färdigställda fastigheter 249 130 14
of which other varav övrigt 389 300 360
Participation in joint ventures Andelar i joint ventures 1,472 944 1,019
Loans to joint ventures Utlåning till joint ventures 1,207 1,430 1,466
Working capital and other Rörelsekapital och övrigt -400 -1,488 -690
Total Summa 15,269 11,549 12,984

Key ratios

Apr-Jun
2019
Apr-Jun
2018
Jan-Jun
2019
Jan-Jun
2018
Jul-Jun
2018/2019
Jan-Dec
2018
Apr-jun
2019
Apr-jun
2018
Jan-jun
2019
Jan-jun
2018
Jul-jun
2018/2019
Jan-dec
2018
Net sales, MSEK Nettoomsättning, Mkr 2,068 1,775 3,931 4,062 7,713 7,844
of which Property Development varav Fastighetsutveckling 254 171 427 327 838 738
of which Housing Development varav Bostadsutveckling 1,814 1,604 3,504 3,735 6,875 7,106
Operating profit, MSEK Rörelseresultat, Mkr 371 174 549 375 959 785
of which Property Development varav Fastighetsutveckling 195 13 241 63 348 170
of which Housing Development varav Bostadsutveckling 176 161 308 312 611 615
Operating margin, % Rörelsemarginal, % 17.9 9.8 14.0 9.2 12.4 10.0
of which Property Development varav Fastighetsutveckling 76.8 7.6 56.4 19.3 41.5 23.0
of which Housing Development varav Bostadsutveckling 9.7 10.0 8.8 8.4 8.9 8.7
Capital employed at the end of the period, MSEK
Sysselsatt kapital vid periodens utgång, Mkr
15,269 11,549 15,269 11,549 15,269 12,984
Orders received, MSEK Orderingång, Mkr 1,529 1,157 3,156 3,218 6,619 6,681
Order backlog, MSEK Orderstock, Mkr 6,131 7,492 6,131 7,492 6,131 7,134
Number of employees at the end of the period
Antal anställda vid periodens utgång
336 383 336 383 336 379

Housing Development

April – June 2019

Net sales increased by 13 percent and amounted to SEK 1,814 million (1,604) due to more turned over housing projects in Finland and Norway. Net sales contracted in Sweden during the second quarter. Operating profit increased to SEK 176 million (161) but the operating margin decreased to 9.7 percent (10.0).

The number of start-ups of our own developed homes during the second quarter amounted to 540 units (559), most of which were in Sweden and Finland, with a good geographic spread in both countries. The number of sold homes was 669 (391), most of which were in Sweden and Finland.

January – June 2019

Net sales decreased to SEK 3,504 million (3,735) and the reduction is related to Sweden. Operating profit amounted to SEK 308 million (312) and the operating margin amounted to 8.8 percent (8.4). Operating profit and the operating margin contracted in Sweden but was for the most part countered by more turned over projects in Norway and Finland. 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 1,007 units (1,116) mainly divided between Sweden and Finland, with a good geographic spread in both countries. The number of sold homes was 1,259 (763), most of them sold in Sweden. Greater sales efforts in Stockholm led to higher sales during the period compared to the first half-year 2018. The number of own developed homes in production at the end of the period was 5,187 (6,020). The level of sold homes in production was 65 percent (64). The number of repurchased homes per June 30, 2019 was 174 (82) and around half of them were in Sweden and half of them 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 June 2019 the level of capital employed rose due to investments in project and development property along with rental projects in Sweden. The rental projects may be converted into tenant-owned housing or be sold on the investor market. The level of capital employed has also risen due to increased activity in our own developed housing projects in Norway and Finland, which remain on our balance sheet until they are finished. 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 1,459 per June 30, 2019 (1,233).

Development rights for housing

Number, approx. Jun 30
2019
Jun 30
2018
Dec 31
2018
Antal, cirka 30 jun
2019
30 jun
2018
31 dec
2018
Development rights on our own balance sheet Byggrätter i egen balansräkning 20,300 20,900 21,300
Development rights via joint ventures Byggrätter via joint ventures 5,300 5,700 5,000
Development rights via options etc. Byggrätter via optioner m.m. 9,400 7,800 9,100
Total Totalt 35,000 34,400 35,400

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

Own housing development construction

Apr-Jun
2019
Apr-Jun
2018
Jan-Jun
2019
Jan-Jun
2018
Jul-Jun
2018/2019
Jan-Dec
2018
Apr-jun
2019
Apr-jun
2018
Jan-jun
2019
Jan-jun
2018
Jul-jun
2018/2019
Jan-dec
2018
Number of housing starts during the period
Antal under perioden produktionsstartade bostäder
540 559 1,007 1,116 2,104 2,213
Number of sold homes during the period
Antal under perioden sålda bostäder
669 391 1,259 763 2,321 1,825
Total number of homes under construction, at the end of the period
Totalt antal bostäder i produktion, vid periodens slut
5,187 6,020 5,187 6,020 5,187 6,231
Share of sold homes under construction, at the end of the period
Andel sålda bostäder i produktion, vid periodens slut
65% 64% 65% 64% 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
174 82 174 82 174 104

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.

April – June 2019

During the second quarter 2019 net sales were SEK 254 million (171) and operating profit was SEK 195 million (13). Peab’s partially owned company Acturum divested a number of properties in the second quarter, which was announced earlier. In December 2018 Acturum signed a contract with Fastator and Offentliga hus to sell all its remaining property with the transfer planned for the second quarter 2019. 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 AstraZeneca and has since then developed a number of properties. The divestitures had a positive effect of SEK 170 million in the second quarter in profit contributions from partially owned companies. No other major property transactions have taken place during the quarter.

January – June 2019

During the first half-year 2019 net sales in Property Development were SEK 427 million (327) and operating profit was SEK 241 million (63). Our partially owned companies continue to develop well and profit in the first half-year from partially owned companies amounted to SEK 214 million (45), of which SEK 170 million refers to divestitures in Acturum.

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 1,232 million (1,102), of which SEK 114 million is additional IFRS 16 Leases and SEK 701 million (1,030) is investment property, of which SEK 55 million is additional IFRS 16 Leases. The tables below show our major property projects per June 30, 2019.

Preschool Hyllie

Malmö

Property projects

Completed projects Location Area in m2 Degree rented, %
Recognized value, MSEK
Businesspark Ängelholm 62,800 95 244
Businesspark Ljungbyhed 76,000 64 121
Office building Helsinki 9,300 85 279
Office building Helsinki 7,600 41 269
Tenancy Malmö 4,600 100 141
Office building Sigtuna 3,600 74 66
Other completed projects 104
Total 1,224
of which operations property 599
of which investment property 611
of which project and development property 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 12,400 100 393 449 Q4-2019 88
Retail and offices Gothenburg Handel och kontor Göteborg 6,400 98 146 171 Q3-2019 85
Retail Oslo Handel Oslo 3,600 100 122 192 Q3-2020 64
Office building Malmö Kontor Malmö 4,900 68 126 185 Q1-2020 68
Office building and parking Solna Kontor och parkering Solna 2,900 89 131 277 Q2-2020 47
Office building Helsingborg Kontor Helsingborg 4,500 100 35 117 Q1-2021 30
Other ongoing projects Övriga pågående projekt 32
Total Summa 985
of which operations property varav driftsfastigheter 519
of which investment property varav förvaltningsfastigheter 35
of which project and development property varav projekt- och exploateringsfastigheter 431

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 June 30, 2019 1): SEK 6,296 million (5,151)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 372 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 June 30, 2019 1): SEK 3,832 million (3,127)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 230 million (179)
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 June 30, 2019: SEK 1,831 million (1,861)
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 June 30, 2019: SEK 1,157 million (880)
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.