Genova Property Group Interim report January–June 2024

January–June period 2024

• Rental income amounted to SEK 262.1m (254.5), an increase of 3%.
• Net operating income amounted to SEK 191.1m (186.4), an increase of 3%.
• Income from property management amounted to SEK 56.6m (24.1), an increase of 135%, of which income from property management attributable to shareholders was SEK 18.6m (-15.2), corresponding to SEK 0.41 (-0.33) per share.
• Net income for the period amounted to SEK 59.6m (-148.3), corresponding to SEK 0.47 (-3.68) per share. The increase was mainly due to improved changes in the value of properties.
• Long-term net asset value attributable to shareholders decreased 8% to SEK 3,262.8m (3,521.8), corresponding to SEK 71.53 (77.21) per share.

Second quarter April–June 2024

• Rental income amounted to SEK 129.0m (125.5), an increase of 3%.
• Net operating income amounted to SEK 97.0m (95.5).
• Income from property management amounted to SEK 29.5m (12.8), an increase of 130%, of which income from property management attributable to shareholders was SEK 12.9m (SEK 26.4m), corresponding to SEK 0.28 (-0.58) per share.
• Net income for the quarter amounted to SEK 14.6m (-106.6), corresponding to SEK -0.04 (-2.34) per share. The increase was mainly due to lower negative changes in the value of properties.

Significant events during and after the end of the period

• In April, additional green senior unsecured bonds of SEK 150m were issued. The issue was initiated by institutional investors. At the same time, additional hybrid bonds of approximately SEK 60m were repurchased.
• In June, two properties in Norrtälje were partially divested to a newly formed joint venture, in which Genova is a half-owner together with Nrep. The sale was carried out at an underlying property value of approximately SEK 1.3 billion, corresponding to the book values.

Events after the end of the period

• After the end of the period, three properties in Uppsala and Upplands-Bro were divested. The sale was carried out at an underlying property value of SEK 121m, which exceeded the book value.
• After the end of the period, interest-rate swaps of SEK 700m were entered into, with an average rate of approximately 2.40% and a term of about six years.
• After the end of the period, a new green finance framework was established with a “second opinion” from Sustainalytics.

CEO’S STATEMENT
Genova reports a stable first half of 2024 with strong growth in income from property management. Project activities are running high and we completed 90 apartments during the period. Nearly 320 additional residential units will be ready for occupancy in the second half of the year. We continued to focus on strengthening our balance sheet and liquidity through measures such as a convertible bond issue and the repurchase of hybrid bonds. During the period, we divested properties for approximately SEK 1.3 billion.

Our business operations showed a stable trend during the first half-year. Rental income and net operating income both increased 3%. Income from property management rose 135% to SEK 56.5m, an effect of lower negative value changes in joint ventures and associated companies, increased net operating income and improved net financial items. Net asset value per share decreased 7% to SEK 71.53 per share year-on-year, but increased compared with the end of the preceding year.

Financing
Both terms and access to bank and capital market financing have gradually improved in 2024. This has enabled us to continue improving Genova’s capital structure, lower our borrowing costs and strengthen our liquidity. We issued convertibles in March, which improved our liquidity by SEK 200m. The issue has diversified Genova’s sources of finance, which is positive for both our shareholders and bondholders. In April, we issued SEK 150m in additional green bonds. In connection with these issues, we repurchased hybrid bonds at a discounted price of approximately SEK 160m, bringing the value of hybrid bonds outstanding to approximately SEK 640m.

During the period, the proportion of hedged liabilities increased to 55% with the aim of increasing predictability while reducing interest expense. After the end of the period, additional hedging was carried out using derivatives of SEK 700m, with an average rate of 2.40% and a term of about six years.

Transactions
In June, we partially divested two properties in Norrtälje to a newly formed joint venture, in which Genova and Nrep each own a 50% share. The sale was carried out at an underlying property value of approximately SEK 1.3 billion, corresponding to the book values. Genova acquired the properties in 2016 at an underlying property value of SEK 40m and has thereafter successfully developed a retirement home, a preschool and just over 400 rental apartments, of which 169 are under construction. The transaction strengthened not only our balance sheet and liquidity, but also the progress of the project.

After the end of the period, three warehouse and industrial properties in Uppsala and Upplands-Bro were divested for SEK 121m. Due to our successful management of these properties for several years, we could divest them above book value.

Property management
Genova’s investment property portfolio, with a good tenant mix, continued to show a stable trend during the period. In new lettings, we have noted that letting processes are taking slightly longer, but we see continued favourable demand for our premises. We have an occupancy rate of 93% and our rental agreements generally have long durations – 4.7 years, on average. Our focus on growth regions, and on Greater Stockholm and Uppsala in particular, combined with a high proportion of income from community service properties, residential units and supermarkets, also provides stability in a weaker market.

Investments
Our ongoing projects with rental apartments in Norrtälje, Knivsta, Enköping and Upplands-Bro, as well as the construction of Apotea’s new central warehouse, are progressing as planned. During the first half-year, 77 rental apartments in Norrtälje were completed, and in the second half-year, nearly 320 rental apartments for own long-term management will be completed – all environmentally certified under the Nordic Swan Ecolabel scheme. Annual rent for the planned accessions in the second half-year is approximately SEK 39m. Our work with zoning plans in the building rights portfolio will continue, with the aim of creating considerable value for Genova.

Looking forward
The property market remains characterised by challenges, but we are also seeing signs of a turnaround with increased optimism and activity. Expectations of a policy rate cut in 2024 have improved, creating conditions for reduced pressure on property values and lower interest expense. Our focus on improving Genova’s capital structure and liquidity will continue to create the best possible conditions for the business moving forward. Genova is stable, and the trend shows that the company’s business concept of sustainable value creation and a long-term approach is working. We are now looking forward to an active second half of 2024.

Michael Moschewitz, CEO

For further information, please contact:
CEO, Michael Moschewitz, mobile +46 (0)70-713 69 39, [email protected]

About Genova
Genova Property Group AB (publ) is a modern property company with a personal touch that owns, manages and develops properties with focus on Greater Stockholm area and Uppsala Region. On 30 June 2024, the value of the company's property portfolio amounted to approximately SEK 9.5 billion with a lettable area of approximately 340,000 sqm and the company held approximately 9,344 building rights for residential units. Genova's share has been listed on Nasdaq Stockholm since 2020.

This information is such information that Genova Property Group AB (publ) is obligated to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Market Act. The information was submitted for publication, through the agency of the contact persons set out above, on 14 August 2024 at 8.30 a.m. CEST.

Genova – Smålandsgatan 12 – SE-111 46 Stockholm – www.genova.se