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

·7-min read
  • Operating Income amounted to ISK 6,421 million.

  • Impairment of trade receivables amounted to ISK 104 million.

  • EBITDA amounted to ISK 4,229 million.

  • Total comprehensive income amounted to ISK 3,638 million.

  • Net cash from operations was ISK 2,579 million.

  • The book value of investment properties amounted to ISK 103,537 million at the end of the period.

  • The book value of assets for own use amounted to ISK 4,160 million at the end of the period.

  • Change in value of investment properties was ISK 3,591 million.

  • Cash and cash equivalents amounted to ISK 3,028 million.

  • Interest-bearing debt amounted to ISK 64,463 million at the end of the period.

  • Equity ratio was 32.1%.

  • Earnings per share were ISK 1.07.

  • Economic occupancy rate was 93.2% at the end of the period.

  • Weighted indexed interest was 3.03% at the end of the period.

  • Weighted unindexed interest was 3.62% at the end of the period.

The Interim Financial Statements of Eik fasteignafélag hf. for the period 1 January to 30 September 2021 were approved by the Company’s Board of Directors and CEO on 28 October 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 are Interim Financial Statements for the first nine months of the year.

The Company performed well in the first nine months of 2021 and the results were in line with the Company’s updated management forecast. Operating income for the first nine months of the year 2021 amounted to ISK 6,421 million. Of this amount, rental income was ISK 5,714 million. EBITDA amounted to ISK 4,229 million and increased by 12.1% between years. Profit before income tax amounted to ISK 4,545 million and comprehensive income of the Group for the first nine months of the year 2021 amounted to ISK 3,638 million.

The Net Operating Income (NOI) ratio (i.e. operating profit before changes in value and depreciation as a ratio of lease income) was 72.7% for the first nine months of the year 2021, compared to 67.5% 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 3,591 million in the first nine months of the year.

Balance Sheet

The Company's total assets amounted to ISK 112,900 million as at 30 September 2021. Of this, investment properties were valued at ISK 103,537 million, which consist of real estate leased to tenants amounting to ISK 100,043 million, leased assets ISK 2,357 million, investment properties under development ISK 698 million, building rights and lots ISK 448 million and pre-paid street construction fees in the amount of ISK 13 million. Assets for own use amounted to ISK 4,160 million and assets under development amounted to ISK 659 million. The Company's equity amounted to ISK 36,188 million at the end of June 2021 and its equity ratio was 32.1%. The Company’s total liabilities amounted to ISK 76,711 million as at 30 September 2021, of which interest-bearing debt was ISK 64,463 million and deferred tax liability ISK 8,352 million.

Economic occupancy rate

The Company's economic occupancy rate increased by 1.2% from the beginning of the year and was 93.2% at the end of the third quarter.

Updated forecast and effects due to COVID-19

When the Company published updated forecast on 10 August 2021, the EBITDA forecast for the year 2021 was between ISK 5,400 – 5,700 million at price levels in July 2021. The Company currently estimates that the EBITDA for the year will be between ISK 5,500 – 5,800 million at October 2021 price levels. As previously stated, the Company’s forecast is subject to risk and uncertainty factors, mostly effects of the pandemic, which can lead to different results than are specified in the forecast.

The effects of COVID-19 on the Company’s operations are still considerable but are decreasing. The Company estimates that direct effects of COVID-19 on the operations were ISK 185–195 million in the first nine months of the year and they can mostly be traced to tourism companies. The effects are quite visible in impairment of trade receivables and the operations of Hótel 1919. It is unclear how long and to what extent the pandemic will continue to have effect on the Company’s operations in the coming periods.

Financing

The Company sold for the nominal value of ISK 1,500 million in the bond class EIK 141233 in September with the required return 1.73%. Earlier in the year the Company issued two new bond classes, EIK 23 1 and EIK 100327, and sold in total in both classes for the nominal value of ISK 4,200 million. These three bond classes have been listed on Nasdaq Iceland, EIK 23 1 in May and EIK 100327 and EIK 141233 in September. The bond class EIK 15 1, bearing 3.3% interest rate, was settled in March 2021 and the repayment was fully financed with an unindexed bank loan.

Weighted indexed interest terms were 3.03% at the end of the quarter and weighted unindexed interest terms were 3.62%, as the Company always strives for the most economical financing terms.

Company Portfolio

The Company has acquired just under 1,000 sqm. of space in Síðumúli 15 during the year and now owns the whole property at Síðumúli 13 and 15. In addition the Company acquired Vatnagarðar 24 and 26 which are just over 2,300 sqm. of commercial and industrial space housing the headquarters of Tesla in Iceland. These properties have all been delivered to the Company.

The Company has sold Hafnarstræti 4 in the city centre of Reykjavík, Fjölnisgata 3b in Akureyri and Kirkjubraut 28 in Akranes. These properties have all been delivered to the new owners.

The Group owns over 110 properties which total almost 312,000 sqm. of rental space in over 650 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, Landsbankinn, Sýn, Rúmfatalagerinn, Össur, Míla, Deloitte and Síminn.

The largest part of Eik's real estate portfolio is office space, or 45%, followed by commercial premises (24%), warehouses (14%), hotel (10%), health related operations (4%) 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.

Changes to department roles

Development of real estate and lots, previously handled by the construction department, is now handled by business development.

Amended Financial Calendar for 2021

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

2021 Annual Results 17 February 2022

2022 Annual general meeting 31 March 2022

Previously planned dates for publishing of management accounts 2021 and 2022 budget were 11 February 2022 and annual results on 3 March 2022.

Electronic presentation

An electronic presentation will be held on Friday 29 October 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_CZUoDSvURLyFhz8AcuvsXA

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

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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