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
July – September 2020
Net sales for the third quarter 2020 in business area Project Development amounted to SEK 1,750 million (2,015). Operating profit amounted to SEK 162 million (221).
January – September 2020
Net sales for the period January-September 2020 in business area Project Development amounted to SEK 5,696 million (6,441) and operating profit was SEK 474 million (737). The comparison period included an income contribution of SEK 170 million from the divestiture of property in the partially owned company Acturum.
Capital employed in Project Development at the end of the period amounted to SEK 13,174 million (17,033). Annehem Fastigheter was included with approximately SEK 1,900 million at the corresponding time last year.
Vaasan, Silvia
Vasa, Finland
Capital employed
| MSEK | 30 Sep 2020 | 30 Sep 2019 | Dec 31 2019 | |
| Mkr | 30 sep 2020 | 30 sep 2019 | 31 dec 2019 | |
| Operations property | Driftsfastigheter | 146 | 1,156 | 1,226 |
| Investment property | Förvaltningsfastigheter | 113 | 648 | 500 |
| Project and development property | Projekt- och exploateringsfastigheter | 9,428 | 11,745 | 11,850 |
| of which housing development rights | varav bostadsbyggrätter | 5,172 | 5,621 | 5,674 |
| of which commercial development rights | varav kommersiella byggrätter | 588 | 615 | 556 |
| of which unsold part of ongoing housing projects | varav osåld del av pågående bostadsprojekt | 1,771 | 3,465 | 3,520 |
| of which ongoing rental projects in Sweden | varav pågående hyresrättsprojekt i Sverige | 929 | 954 | 846 |
| of which ongoing commercial projects | varav pågående kommersiella projekt | 346 | 476 | 445 |
| of which completed property | varav färdigställda fastigheter | 332 | 244 | 391 |
| of which other | varav övrigt | 290 | 370 | 418 |
| Participation in joint ventures | Andelar i joint ventures | 1,790 | 1,885 | 2,019 |
| Loans to joint ventures | Utlåning till joint ventures | 1,142 | 1,032 | 1,106 |
| Working capital and other | Rörelsekapital och övrigt | 555 | 567 | -22 |
| Total | Summa | 13,174 | 17,033 | 16,679 |
Key ratios
| Jul-Sep 2020 | Jul-Sep 2019 | Jan-Sep 2020 | Jan-Sep 2019 | Oct-Sep 2019/2020 | Jan-Dec 2019 | ||
| Jul-sep 2020 | Jul-sep 2019 | Jan-sep 2020 | Jan-sep 2019 | Okt-sep 2019/2020 | Jan-dec 2019 | ||
| Net sales, MSEK | Nettoomsättning, Mkr | 1,750 | 2,015 | 5,696 | 6,441 | 8,380 | 9,125 |
| of which Property Development | varav Fastighetsutveckling | 71 | 180 | 304 | 607 | 483 | 786 |
| of which Housing Development | varav Bostadsutveckling | 1,679 | 1,835 | 5,392 | 5,834 | 7,897 | 8,339 |
| Operating profit, MSEK | Rörelseresultat, Mkr | 162 | 221 | 474 | 737 | 752 | 1,015 |
| of which Property Development | varav Fastighetsutveckling | 13 | 34 | 21 | 272 | 49 | 300 |
| of which Housing Development | varav Bostadsutveckling | 149 | 187 | 453 | 465 | 703 | 715 |
| Operating margin, % | Rörelsemarginal, % | 9.3 | 11.0 | 8.3 | 11.4 | 9.0 | 11.1 |
| of which Property Development | varav Fastighetsutveckling | 18.3 | 18.9 | 6.9 | 44.8 | 10.1 | 38.2 |
| of which Housing Development | varav Bostadsutveckling | 8.9 | 10.2 | 8.4 | 8.0 | 8.9 | 8.6 |
| Capital employed at the end of the period, MSEK | Sysselsatt kapital vid periodens utgång, Mkr | 13,174 | 17,033 | 13,174 | 17,033 | 13,174 | 16,679 |
| Orders received, MSEK | Orderingång, Mkr | 1,639 | 1,528 | 4,729 | 4,684 | 6,209 | 6,164 |
| Order backlog, MSEK | Orderstock, Mkr | 4,673 | 5,764 | 4,673 | 5,764 | 4,673 | 5,027 |
| Number of employees at the end of the period | Antal anställda vid periodens utgång | 256 | 340 | 256 | 340 | 256 | 343 |
Housing Development
July – September 2020
Net sales decreased by nine percent and amounted to SEK 1,679 million (1,835). Operating profit decreased to SEK 149 million (187) and the operating margin was 8.9 percent (10.2).
The number of start-ups of our own developed homes during the third quarter amounted to 591 units (522) with a good geographic spread. The number of sold homes was 730 (695). During the quarter sales were good in all three countries.
January – September 2020
Net sales decreased to SEK 5,392 million (5,834) and the reduction is related to Sweden. Operating profit amounted to SEK 453 million (465) and the operating margin improved to 8.4 percent (8.0). In the latest rolling 12 month period the operating margin amounted to 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 1,612 units (1,529), most of which were in Sweden. The start-ups have been spread geographically in Sweden, Norway and Finland. The number of sold homes was 2,018 (1,954). Sales of homes were high during the beginning of the year but slowed down when the coronavirus broke out in the spring. During the summer and in the beginning of autumn demand for our housing has grown and all together sales have been good during the period in all three countries. The number of own developed homes in production at the end of the period was 4,056 (5,309). The level of sold homes in production was 72 percent (68). The number of repurchased homes per September 30, 2020 was 195 (169) 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.
Capital employed has decreased at the end 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. In recent years we have completed more homes than production started which is why the amount has contracted. At the same time we have had a good rate of sales, which has reduced the amount of capital tied up in unsold homes. 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. | Sep 30 2020 | Sep 30 2019 | Dec 31 2019 | |
| Antal, cirka | 30 sep 2020 | 30 sep 2019 | 31 dec 2019 | |
| Development rights on our own balance sheet | Byggrätter i egen balansräkning | 19,600 | 20,200 | 20,300 |
| Development rights via joint ventures | Byggrätter via joint ventures | 4,600 | 5,200 | 4,600 |
| Development rights via options etc. | Byggrätter via optioner m.m. | 9,700 | 9,900 | 9,500 |
| Total | Totalt | 33,900 | 35,300 | 34,400 |
Time of completion of our own developed ongoing housing
Net sales
Own housing development construction
| Jul-Sep 2020 | Jul-Sep 2019 | Jan-Sep 2020 | Jan-Sep 2019 | Oct-Sep 2019/2020 | Jan-Dec 2019 | ||
| Jul-sep 2020 | Jul-sep 2019 | Jan-sep 2020 | Jan-sep 2019 | Okt-sep 2019/2020 | Jan-dec 2019 | ||
| Number of housing starts during the period | Antal under perioden produktionsstartade bostäder | 591 | 522 | 1,612 | 1,529 | 2,150 | 2,067 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 730 | 695 | 2,018 | 1,954 | 2,773 | 2,709 |
| Total number of homes under construction, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 4,056 | 5,309 | 4,056 | 5,309 | 4,056 | 4,616 |
| Share of sold homes under construction, at the end of the period | Andel sålda bostäder i produktion, vid periodens slut | 72% | 68% | 72% | 68% | 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 | 195 | 169 | 195 | 169 | 195 | 253 |
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 property and shares in partly owned companies.
July – September 2020
During the third quarter 2020 net sales were SEK 71 million (180) and operating profit was SEK 13 million (34). During the quarter Peab divested its 50 percent ownership in Nya Bara Utvecklings AB to Brinova with a positive effect on profit of SEK 30 million.
January – September 2020
During the period January-September 2020 net sales in Property Development were SEK 304 million (607) and operating profit was SEK 21 million (272). Some operations connected to air travel and tourism have been negatively affected by the corona pandemic which has lowered operating profit by SEK -59 million, of which SEK -44 million is related to Ängelholm Airport. The amount includes a SEK -20 million write-down of goodwill. Ängelholm Airport was divested during the period. The comparable period included an income contribution of SEK 170 million from the sales of property in the partially owned company Acturum.
At the end of the period capital employed in Property Development had contracted compared to the same period 2019 due to the transfer of fully developed properties to Annehem Fastigheter. At the same time last year Annehem Fastigheter was included by approximately SEK 1,900 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 now larger ongoing projects in Property Development are intended for sales to Annehem Fastigheter and will thereby be included in the planned extra distribution. During the second quarter 2020 property containing offices and parking space in Solna was divested to Annehem Fastigheter. The table below presents the larger ongoing property projects per September 30, 2020.
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, % | ||
| Retail | Oslo | Handel | Oslo | 3,600 | 100 | 198 | 251 | Q4-2020 | 79 |
| Office building | Helsingborg | Kontor | Helsingborg | 2,900 | 88 | 74 | 106 | Q2-2021 | 70 |
| Office building | Solna | Kontor | Solna | 4,300 | 89 | 92 | 194 | Q3-2021 | 47 |
| Other ongoing projects | Övriga pågående projekt | 56 | |||||||
| Total | Summa | 420 | |||||||
| of which operations property | varav driftsfastigheter | 74 | |||||||
| of which project and development property | varav projekt- och exploateringsfastigheter | 346 | |||||||
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
Own 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 September 30, 2020 1): SEK 4,953 million (4,020)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 332 million (232)
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 other 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 September 30, 2020 1): SEK 6,894 million (6,448)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 427 million (394)
Major ongoing projects: No major ongoing projects
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 September 30, 2020: SEK 1,924 million (1,837)
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 September 30, 2020: SEK 1,355 million (1,240)
Major ongoing projects: No major ongoing projects
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.