Hello, and welcome to the Nyfosa Q3 Report for 2020. Throughout the call, all participants will be in a listen-only mode, and afterwards there will be a question and answer session. Today, I am pleased to present the CEO, Jens Engwall. Please begin your meeting.
Okay. Thank you very much, and thank you for calling in. It's a very busy day with a lot of reports. Present here also in the room is Stina Lindh Hök, who will be Managing Director, CEO as from Monday. Could you just brief a little about your background?
Yeah, sure. As Jens said, from Monday it's my turn to go forward with Nyfosa. Just a short brief for you who don't know me. I'm 47 years old, and I have worked in the real estate industry with over 20 years now. The latest 10 years, I have focused on first Hemfosa as a Head of Transaction, and then after the spin-off, I've been CEO within Nyfosa for three years. I have been involved in the most transaction the latest 10 years, which is over SEK 60 billion.
Okay.
Yeah.
Yeah. Thank you, Stina. You will come back a little and tell a little about going further what will happen after me leaving. Shortly, we have a very strong growth in Q3. We believe we have a low financial risk, and still we have a good cash position for further acquisition. We have only been listed less than two years. If we just focus on some figures on a yearly basis, this is September to-
Change slide.
Sorry. Change slide. This should be the figure. This is Nyfosa on the top. Sorry. If you see the figures in red, that's the last 12 months, what has happened with the portfolio. It's a 57% increase in property value. Property management is up 50%, and earning capacity, which is a key figure for us, is up 40%. Still, we believe with the portfolio we have, we have a limited financial risk. We have a equity ratio of 41%, LTV is 60%, but net LTV is 56% actually because we have a lot of cash, and the interest coverage ratio is around four. With the diversified portfolio as we have, we believe that there is low financial risk in our portfolio. Next slide. Just a few words about the impact from coronavirus.
In short, you can say that the tenants who had problem in Q2 have also problem in Q3. It's obvious still problem for the hotels, for restaurants, conferences, and that type. I think we can't see any major increase from other businesses than those I mentioned. We have a slightly higher losses from bankruptcy situation, but so far it's very limited. It's not any dramatic, and I think we have focused on trying to help those tenant we will want to have back after the Corona pandemic is leaving us. Next page. A very short summary. We are starting to be a little bigger company, mid-size. It's 2.5 million sq m, SEK 2.4 billion in rental value, and the economic leasing rate is almost 93%, which is quite good. The property portfolio as from September, almost SEK 29 billion. Next slide.
This is just an illustration that we are working on very broadly when it goes for acquisitions or transactions in general terms. We work long-term with bigger portfolios where we are very patient. Most of them we try to act off-market, I will say the two big transactions we have done this year, Randviken and SBB, are typical because they are off-market, we have discussed those transactions for a quite long period. Then we also mix it with the single assets or smaller portfolios where we can also find good acquisitions. It's important for us as a opportunistic company to always have a big pipeline of acquisition objects and be patient. Sooner or later, they might be interesting to buy. I would say, even though the market is very competitive now, everybody is trying to find assets.
You can say that more or less all listed company and the institutions in Sweden are on the buying side, even the foreign investors, I think, is net buyer. It's more a lack of objects to be possible to buy. I think with that said, still we have a quite big pipeline for the fourth quarter, and hopefully Stina can make some of those transactions going through. Next page. We did this acquisition in Q3. SBB was the seller, and it's a portfolio with around 80% tax-funded tenants, and this fits very well into the contribution of stable cash flow as we're seeking. This means it's a quite big proportions now. We have tax-funded tenants and if we can, we would like to increase it a little further to get the stability from the tax-funded.
We're very happy with that, and that acquisition was very important for us taking the next step, so to speak. Next page. Strong period with high growth. The figures, I think, speak for themselves. On the right side, you have percentages from January to September, that also speaks by itself, I think. It's a strong growth, but still we are able, as I said, to make further acquisitions because we are in a good financial position. Next page. We have a good, efficient financing. We rely very much on lending from banks, we have only SEK 1.5 billion in bonds due to May 2022. I think the banks like us. They like the approach with cash flow and a verified portfolio. We believe that you can say that the mood from the banks is back to where we were before Corona.
The pricing is similar, perhaps even slightly lower. The banks have a lot of liquidity to lend to good tenants or to good real estate companies, which we are one of them. It's not difficult to lend on good assets as we have. Next page. This is perhaps the most important figure that we are strengthen our earning capacity up to SEK 1.3 billion . We hopefully get to increase it little further in fourth quarter. This means the profit from property management is how much per square meters? Per share, sure.
7.2.
7.2 per share, which is quite good compared with at least the present stock price. I think I will stop there and give the word back to Stina and just she can give us some ideas going further what she will be focusing on.
Yeah. Thank you. I will just say a few word about what I will focus on going forward. As Jens said, we have a good position going forward, and we'll continue with high activity on transactions, and I believe that for an opportunist, there is always some transactions to be done. The transaction is a really important part in our business and will continue, of course to be. We will continue to build strong and stable cash flow together with spreading risk with a diversified portfolio both in category and geography, just as we have right now. We will continue as we always have done to develop our properties. We have a really good team working with the properties every day, and they will continue to develop and optimize the portfolio. Sustainable business is also important, and it's hand in hand with profitability, I think.
There is now a strong focus to work through all our properties in order to optimize operations and also to reduce carbon dioxide. That we started this year. We have just two years back, so this work started this year. Finally, as I said, we have a really good starting position, and we are a strong, dedicated team ready to take Nyfosa along. I, as the new CEO, really look forward to lead and develop Nyfosa on our continued journey.
Thank you, Stina. I will just finish off with me leaving now. I think the company is in a very good position. It has quite a lot of cash, lots of opportunities, and as Stina said, we have a very strong management team. I'm very happy that Stina is the new one because we have been working together the last 10 years. I know she can do the business. I will support the company as Board member, Shareholder, and Advisor if Stina wants me for the next year or so. That's where I think we end, and I'm very happy and looking forward to see new transactions as soon as possible. Thank you. I will stop there.
Thank you. Ladies and gentlemen, if you wish to ask a question please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. And there will be a brief pause while the questions are being registered.
Yeah
Our first question comes from the line of Fredric Cyon of Carnegie. Go ahead.
Good afternoon, Stina and Jens. Two or three questions from my side. At the end of Q3, you had cash of about SEK 1 billion, and after that, you have announced the divestment of Blackstone for the tune of SEK 2 billion, but also the acquisition of Gamlestaden. If you do nothing, you have SEK 2 billion in cash. For how long you think you're going to sit on that cash?
I think that's a question mainly for Stina.
Yeah
Maybe for me as a board member, then I can say as soon as possible.
It's good to have much cash because we can do business, but also, of course, we want to do it as soon as possible. We are working as we always are doing, trying to find opportunities all the time. We have a pipeline, so hopefully we will do something there the coming quarter.
In terms of that pipeline, how is that compared to the situation, let's say, a year ago? Do you have more to look at, or is the list diminishing?
I think it's pretty much the same. It's the same situation, a big demand for properties and not so much supply. As an opportunist, we have very much to look into. If I compare, I think it's pretty much the same as last year. Of course, you can never say. It always depends on what's coming up.
You have work to do.
Yeah.
We have a big-
Yeah, we have work.
Portfolio under consideration. I don't know how much, but it's several SEK billions under consideration.
That's how it's always is.
Yeah.
That's clear. One detailed question on the earnings capacity. Since you still own the Blackstone portfolio by the end of the quarter, and Gamlestaden has not yet been closed, are Blackstone portfolio still included in the earnings capacity and Gamlestaden?
Exactly. You got it right.
Perfect. Those were my questions. Thank you very much.
You're welcome.
Our next question comes from the line of Jan Ihrfelt of Kepler Cheuvreux. Please go ahead.
Okay, thanks for that. Actually, two questions. The first one's regarding your NOI margin that was surprisingly strong, and I just wonder if there were any one-off items in that or what we could expect for the coming quarter, so to say.
As far as I remember and see, there are no special, extraordinary in the report. We believe that this is the new normal.
Okay. My second question regards your property uplift, which were about 1.4% up. I just wonder if you could put a little bit flavor on that regarding geographies, and also segments in that figure.
Well-
You can say that it comes from a variation of sources, of course. There are some yield drops, and we have made good, perhaps letting and investments in the buildings we have. We might also have bought some assets at the price which we normally should, which is the price is slightly lower than the valuation. I think it comes from a variation of sources. You can't say it's just 1.4% or what you said on the whole portfolio.
We also sold Blackstone portfolio.
Yeah
And that's also-
Yeah.
Yeah.
That's included as well.
That's included, yeah.
Okay. Logistics is a large part of it or?
No.
No.
Less than 100.
Close to 100, not more.
Okay. Okay, thanks very much for taking my questions.
Okay. You're welcome.
Welcome.
Again, just to remind everyone, if you would like to ask a question, please press zero one on your telephone keypads. If you wish to withdraw your question, you may do so by pressing zero two to cancel. We'll now have a further pause while any questions are being registered. There are no further questions at this time. Please go ahead, speakers.
Okay. That means that we will finish off. Thank you very much for listening in, and hopefully you will follow the company, what's happened in the fourth quarter. It will be very interesting. Thank you very much, and bye.
Thank you very much.