Business area Project Development

Housing development

July – September 2017

Continued strong demand on the housing market has had a positive effect on both net sales and operating profit for the third quarter. Operative net sales increased by 28 percent and amounted to SEK 1,764 million (1,380). Operative operating profit increased to SEK 167 million (130) and the operative operating margin improved to 9.5 percent (9.4).

The number of start-ups of our own developed homes during the third quarter amounted to 463 units (483). A large number of production starts are in different cities in Finland. Production starts in Sweden are also spread all over the country. The number of sold homes was 613 (516).

January – September 2017

Continued strong demand on the housing market has had a positive effect on both net sales and operating profit for the period January-September 2017. Operative net sales amounted to SEK 5,224 million (4,017), an increase of 30 percent. Operative operating profit increased to SEK 452 million (296) and the operative operating margin improved to 8.7 percent (7.4). The operative operating margin improved to 9.2 percent during the latest rolling 12 month period compared to 8.5 percent for the entire year of 2016.

The number of start-ups of our own developed homes has increased during the period January-September and amounted to 1,980 units (1,648) with a good geographic spread. The number of sold homes during the period was 1,797 (1,469). The number of own developed homes in production at the end of the period was 5,327 (3,968). The level of sold homes in production was 71 percent compared to 69 percent at year-end 2016. The number of repurchased homes per 30 September 2017 was 50 (49).

Peab develops and builds homes throughout Sweden as well as in Norway and Finland. We have not limited ourselves to just a few regions in Sweden. As a result we know there is a big demand for new housing in most of the country. In some areas there is a large supply of newly produced, more expensive homes that currently take longer to sell than previously. This is primarily in some parts of the Stockholm region. However, the sales rate for our apartments with a more normal price range is still good in, for example, Södertälje, Upplands Väsby and Åkersberga. Sales of homes to private persons in Finland have risen while the sales rate in Norway is more normal.

Development rights for housing

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.

July – September 2017

During the third quarter 2017 net sales were SEK 131 million (130) and operating profit was SEK -3 million (-37). No major property transactions have occurred during the quarter.

Profit from partially owned companies has improved compared to the corresponding quarter last year.

January – September 2017

During the period January-September 2017 net sales were SEK 896 million (1,237) and operating profit was SEK 92 million (69).

Operating profit included capital gains of SEK 75 million from the divestment of Peab’s participation in joint venture companies to Catena. Peab and Catena have for a long time collaborated on four development properties in Skåne owned as 50/50 companies, which were divested during the first quarter. In December 2016 Peab and Fabege agreed that Peab would in January 2017 sell a number of assets in Arenastaden and Ulriksdal in Solna. The transactions took place on 12 January 2017 and the divestments in Ulriksdal affected net sales during the first quarter by SEK 577 million. The transactions had no net effect on profit since the divestitures in Ulriksdal had a positive effect of SEK 180 million on profits while the divestitures of the assets in Arenastaden had a negative effect of SEK 180 million. The second quarter 2016 included the partial sales of properties in Hyllie, Malmö with an underlying property value of SEK 777 million which affected operating profit by SEK 104 million.

Profit from partially owned companies has improved compared to the corresponding period last year.

In capital employed in Property Development operations property for a booked value of SEK 900 million are included and consist in part of an office building in Helsinki, Finland and office buildings in a business park in Ängelholm. Investment property amounts to SEK 840 million and consists primarily of a hotel in Västerås under construction, commercial premises in Sigtuna and Märsta as well as a business park in Ljungbyhed.

Peab has decided to invest SEK 453 million in a new office building in Ulriksdal in Solna. The office building will be nine stories tall with around 12,500 m2 office space and is the first of five to be built in Ulriksdal. Peab will gather all its operations in Stockholm in this office building. The office building will be ready to move into in the fourth quarter of 2019.

Peab is investing EUR 30 million in the second office building in Sockenbacka Business Park in Helsinki. Peab completed Ultimes Business Garden I in 2016 and it is fully occupied with several different renters in addition to Peab, which has its headquarters in Finland there. The second office building, Ultimes Business Garden II, is a seven story high office building with about 7,900 m2 office space for rent and 150 parking spaces. Construction has begun and the building will be ready in the beginning of 2019. Peab intends to develop a total of six office buildings in the area over time, comprising some 50,000 m2.

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.

Point Hyllie Holding AB has decided to build The Point, a 29 story office building in city district Hyllie in Malmö. The Point will have 20,000 m2 in office space and the ground floor will contain shops, a lobby and lounge. Construction began in April 2017 and the building will be ready to move into at the end of 2019.