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Eik fasteignafélag hf.: Interim results for the first six months of 2021

·7-min read
  • Operating Income amounted to ISK 4,162 million.

  • Impairment of trade receivables amounted to ISK 80 million.

  • Operating profit before changes in value, sales profit and depreciation amounted to ISK 2,700 million.

  • Total comprehensive income amounted to ISK 2,306 million.

  • Net cash from operations was ISK 1,492 million.

  • The book value of investment properties amounted to ISK 101,408 million at the end of the period.

  • The book value of assets for own use amounted to ISK 4,060 million at the end of the period.

  • Change in value of investment properties was ISK 2,535 million.

  • Cash and cash equivalents amounted to ISK 3,141 million.

  • Interest-bearing debt amounted to ISK 64,333 million at the end of the period.

  • Equity ratio was 31.4%.

  • Earnings per share was ISK 0.68.

  • Economic occupancy rate was 93% at the end of the period.

  • Weighted indexed interest was 3.06% at the end of the period.

  • Weighted unindexed interest was 3.45% at the end of the period.

The Interim Financial Statements of Eik fasteignafélag hf. for the period 1 January to 30 June 2021 were approved by the Company’s Board of Directors and CEO on 25 August 2021.

In case of any discrepancy in the English and the Icelandic versions of this announcement or the Financial Statements, the Icelandic version shall prevail.

Attached is an interim financial report which contains Interim Financial Statements for the first six months of the year together with further information on the Company’s operations than are included in the announcement.

Company operations

The Company performed well in the first six months of the year 2021 and the results were above management’s forecasts. Operating income for the first six months of the year 2021 amounted to ISK 4,162 million. Of this amount, rental income was ISK 3,789 million. Operating profit before changes in value, sales profit and depreciation amounted to ISK 2,700 million and increased by 8.3% between years. Profit before income tax amounted to ISK 2,878 million and comprehensive income of the Group for the first six months of the year 2021 amounted to ISK 2,306 million.

The Net Operating Income (NOI) ratio (i.e. operating profit before changes in value and depreciation as a ratio of lease income) was 71.4% for the first six months of the year 2021, compared to 67.7% for the same period in 2020.

The Company's investment properties are valued at fair value in accordance with International Financial Reporting Standards (IFRS), based in part on the discounted future cash flows of individual assets. Changes in fair value are recognised in changes in value of investment properties, which were ISK 2,535 million in the first six months of the year.

Balance Sheet

The Company's total assets amounted to ISK 110,874 million as at 30 June 2021. Of this, investment properties valued at ISK 101,408 million, which consist of real estate leased to tenants amounting to ISK 97,953 million, leased assets ISK 2,299 million, investment properties under development ISK 696 million, building rights and lots ISK 447 million and pre-paid street construction fees in the amount of ISK 13 million. Assets for own use amounted to ISK 4,060 million and assets under development amounted to ISK 659 million. The Company's equity amounted to ISK 34,855 million at the end of June 2021 and its equity ratio was 31.4%. The Company’s total liabilities amounted to ISK 76,018 million as at 30 June 2021, of which interest-bearing debt was ISK 64,333 million and deferred tax liability ISK 8,017 million.

Economic occupancy rate

The Company's economic occupancy rate increased by 1% from the beginning of the year and was 93% at the end of the first half of the year.

Updated forecast and effects due to COVID-19

The Company published an updated forecast on 10 August 2021 and its adjusted EBITDA forecast for the year 2021 is currently between ISK 5,400 – 5,700 million at price levels in July 2021.

COVID-19 continues to affect the Company’s operations. The Company estimates that direct impact of COVID-19 on the operations was ISK 150–160 million in the first six months of the year and that it can mostly be traced to tourism companies. The effects are quite visible in impairment of trade receivables and the operations of Hotel 1919. It is likely that the pandemic will continue to have effects on the Company’s operations in the coming periods, but the timeline is unclear.

Financing

The Company issued two new bond classes in March, EIK 23 1 and EIK 100327. Bonds amounting to nominal value of ISK 1,200 million were sold in the bond class EIK 23 1 which bears 2.9% unindexed interest, and the bond class was registered for trading at Nasdaq Iceland on 18 May 2021. Furthermore, bonds amounting to nominal value of ISK 2,200 million were sold in the bond class EIK 100327 in March which bear 1.45% indexed interest and in May the bond class was increased by ISK 800 million with a yield of 1.25%.

The bond class EIK 15 1, bearing 3.3% interest, was settled in March 2021. The repayment was fully financed with an unindexed bank loan.

Weighted indexed interest terms were 3.06% at the end of the quarter and weighted unindexed interest terms were 3.45%.

Company Portfolio

The Company has sold Hafnarstræti 4 in the city centre of Reykjavík and Fjölnisgata 3b in Akureyri. Both assets were delivered in the second quarter. The Company acquired just over 200 sqm. of space in Síðumúli 15, but prior to the acquisition the Company owned Síðumúli 13 and part of Síðumúli 15.

The Company’s offer to acquire a part of the property at Sóltún 24 has been accepted and work is currently under way on fulfilling conditions precedent in the offer. The property shares a plot and parking garage with the Company’s property at Sóltún 26. Furthermore, the Company has accepted an offer for its property at Kirkjubraut 28 in Akranes and work is also currently under way on fulfilling conditions precedent in the offer.

The Group owns over 100 properties which total almost 310,000 sqm. of rental space in over 600 units. Total number of tenants is over 400. The Company's principal properties in the capital region are Borgartún 21 and 21a; Borgartún 26; Suðurlandsbraut 8 and 10; Mýrargata 2-16; Pósthússtræti 2 (Hotel 1919); Smáratorg 3 (Turninn); Smáratorg 1; Álfheimar 74 (Nýi Glæsibær); Grjótháls 1-3 and Austurstræti 5, 6, 7 and 17. The Company’s principal property outside the capital region is Glerártorg. The Company’s largest tenants are Húsasmiðjan, Icelandair Hotels, Ríkiseignir, Rúmfatalagerinn, Sýn, Landsbankinn, Össur, Míla, Síminn and Deloitte.

The largest part of Eik's real estate portfolio is office space, or 45%, followed by commercial premises (24%), warehouses (13%), hotel (9%), health related operations (5%) and bars and restaurants (3%). Approximately 92% of the Company's real estate are in the capital region, of which 38% is in financial and business districts of Reykjavík (mainly within postal codes 105 and 108), 19% in Smárinn-Mjódd and 17% in the Reykjavik city centre 8% of the portfolio is located outside the capital region, whereof almost 7% is in Akureyri.

Electronic presentation

An electronic presentation will be held on Thursday 26 August 2021 at 8:30 a.m. Garðar Hannes Friðjónsson, CEO, and Lýður H. Gunnarsson, CFO, will present the results and respond to questions following the presentation

Registration to the meeting is here:

https://origo.zoom.us/webinar/register/WN_sInuteQYThmcLkfnurnIZA

Following registration, participants will receive an e-mail with further information.

2021 Financial Calendar

Following are planned dates for publishing of interim and annual results:

Quarterly results Q3 2021 28 October 2021
Management accounts 2021 and 2022 budget 11 February 2022
2021 Annual Results 3 March 2022

For further information contact:

Garðar Hannes Friðjónsson, CEO, gardar@eik.is, tel. 590-2200
Lýður H. Gunnarsson, CFO, lydur@eik.is, tel. 820-8980

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