Annual Report 2018

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Annual Report 2018 2018 Annual Report Content Overview Financial statements and governance This is Hemsö 1 Directors’ Report 66 Hemsö in figures 2 Directors’ Report – Financing 70 Significant events in 2018 3 Directors’ Report – Risk management 76 Public properties 5 Chairman’s comments 82 CEO statement 6 Corporate governance 83 Strategy and business model 9 Board of Directors 87 Hemsö’s targets 14 Senior executives 88 Skolgårdslyftet 16 Multi-year overview 91 Market overview 18 Financial statements 92 Notes 98 Operations Proposed appropriation of profits 118 Audit report 121 Property portfolio 24 List of properties 124 Property portfolio – Nursing homes 32 Hemsö’s Sustainability Report 132 Property portfolio – Education 34 GRI Content Index 133 Property portfolio – Health care 36 Key ratio calculations 136 Property portfolio – Justice system 37 Definitions 138 Property management 38 Reporting – Sustainable bonds 139 Development projects 50 Employees 58 Sustainable business 63 2018 Annual Report and Sustainability Report The statutory Annual Report, including the Directors’ Report for Hemsö Fastighets AB (publ), Corp. Reg. No. 556779-8169 has been audited and comprises pages 66-120. The Directors’ Report comprises pages 66-81. Sustainability issues are integrated into Hemsö’s operating activities. A description of the company’s sustainability efforts is therefore included in each operating area. The GRI Content Index is on pages 63–65 and 132–135. Mission Hemsö’s mission is to sustainably own, manage and develop public properties Vision Hemsö’s vision is to be the best property company for public services Hemsö’s core values Three core values permeate Hemsö’s operations: accessible, reliable and progressive. Accessible. We are locally based This is Hemsö and work closely with our custom- ers. We are responsive and always Hemsö is one of the largest private owners of strive to promote positive dialogue. public properties in Sweden. The business is We are a dependable and accessi- ble partner, with high availability. based on sustainably owning, managing and developing public properties for nursing homes, Reliable. We take responsibility education, health care and the justice system. for the properties we manage and build confidence through financial stability and stable ownership. We The properties are located in Sweden, Germa- contribute to sustainable develop- ny and Finland. The tenants are mainly state, ment and our properties are part of the social infrastructure. municipal and county councils, but also private companies with taxpayer-funded operations. Progressive. We drive develop- ments in our industry. We develop The Third Swedish National Pension Fund is offerings and premises based on Hemsö’s principal owner. the requirements and preferences of our customers. This is Hemsö 1 Hemsö in figures and significant events in 2018 Leasable area 1,732 Properties tsqm 365 Economic occupancy rate 98.3 % Property value SEK 46.2 billion Contracted annual rent Profit from SEK 2,750 property management million SEK 1,443 million 2 Hemsö in brief Q2 Hemsö acquired two nursing homes with 90 beds that are currently under construction in Turku. A 12-year lease agreement was signed with Esperi Care for Q1 both of the nursing homes. Hemsö launched the “Skolgårds- lyftet” project and invested SEK 30 million in the development of Within the framework of the school playgrounds. The aim of existing EMTN programme, a 15- the project is to raise the quality year bond of EUR 56 million and of all school playgrounds in the a 20-year bond of SEK 150 million portfolio. were issued. Construction start for the Kronan In central Helsinki, Hemsö ac- nursing home in Luleå. The home quired three university prop- has 144 beds, and a 20-year lease erties with the University of agreement was signed with the Arts Helsinki as tenant. The Luleå Municipality. University of the Arts Helsinki, comprises the Sibelius Academy, Hemsö initiated the development the Theatre Academy and the of a new 60-bed nursing home Finnish Academy of Fine Arts. project in Kristianstad in part- The investment amount was SEK nership with Vardaga, which has 800 million. signed a 15-year lease agreement. Hemsö raised a loan of SEK 800 The City of Stockholm allocated a million from the Nordic Invest- land reserve to Hemsö in Skärhol- ment Bank (NIB). The 8-year loan men with the aim of exploring is unsecured and included in the the possibility of developing a NIB’s loan portfolio, which aims hospital. to promote social sustainability across the Nordic region. Borlänge Municipality awarded Hemsö a contract to develop a Hemsö’s newly constructed re- new school for 600 students. search and educational property A 20-year lease agreement Neo in Huddinge was fully leased. was signed with Borlänge The largest tenants are the Municipality. Karolinska Institute and Huddinge Municipality. Hemsö in brief 3 Q4 Hemsö extended the lease agree- ment with Mälardalen University in Västerås. The lease agreement comprises approximately 34,500 sqm and the lease term is Q3 ten years. Hemsö concluded an agreement to construct a secondary school for 1,000 students in Zossen, Hemsö signed a loan agreement south of Berlin in Germany. The of SEK 3,000 million with the City of Zossen signed a 20-year European Investment Bank. The lease agreement. The investment loan agreement supports new amount was EUR 45 million. construction and refurbish- ment for energy-efficient public Hemsö signed a letter of intent properties “Nearly Zero-Energy with the City of Turku to acquire Buildings.” eight nursing homes and health care properties in Turku, Finland. Hemsö acquired a property The investment amount was EUR portfolio in a new segment in 130 million. Germany. The portfolio compris- es four justice system properties Hemsö received the Swedish with the State of Hesse as tenant. Business Award in Germany, pre- The investment amount was EUR sented by the Swedish Chamber 26 million. of Commerce, Business Sweden and Swedish Embassy. In Sandbyhov in Norrköping, the zoning plan was enacted and Hemsö acquired a school under Hemsö commenced construction construction in Haninge and is of “Nodhuset.” The new building planning to construct a 54-bed will house health care premises nursing home in Halmstad. The for Region Östergötland, and 42 investment amount was SEK 320 rental apartments that Hyres- million. bostäder (a housing company owned by Norrköping Municipali- Hemsö acquired Helsinki Court ty) will acquire. House for EUR 200 million. The Finnish state is the largest tenant. Hemsö strengthened its devel- The leasable area is 50,000 sqm opment project department by and the remaining lease term is employing eight people, and 12 years. Transfer is scheduled for recruiting a new Head of Central/ the first quarter of 2019. Northern Region. Hemsö in brief 4 Properties for public use A property that is predominantly used for taxpayer-funded operations and is dedicated to public services. Internationally, these properties are generally referred to as “social infrastructure.” Nursing home Education Health care Justice system 5 Public properties CEO statement We are equipped for the future Hemsö’s stable growth continued years and where public-sector ten- in 2018. Rental income and profit ants accounted for 90 per cent from property management rose of the rental income. Because 10 per cent to SEK 2,607 million of these efforts, the quality and SEK 1,443 million, respectively, of our property portfolio and profit for the year after tax will continue to improve increased 19 per cent to SEK 3,092 in the future. million, mainly driven by changes in property value. Leading project de- veloper of schools Hemsö’s business model with long- and nursing homes term lease agreements and tenants In recent years, Hemsö with good credit scores creates has established a market long-term earnings stability. Over position as one of Sweden’s the past five years, the average leading project developers of increase in Hemsö’s profit from public properties, particularly property management has been schools and nursing homes. 15 per cent per year. Hemsö’s low operational risk combined with an The focus of our investment in extended loan maturity and fixed- development is to help Swedish rate period creates ideal conditions municipalities create the social in line with current research on for stable and predictable cash infrastructure needed to provide quality outdoor environments. flows moving forward. public services. This involves close The research shows that green and cooperation with municipalities varied school playgrounds promote Longer lease duration and private health care and school the learning of children and young and improved property operators when constructing new people, as well as their social and portfolio schools and nursing homes. During physical development. Due to acquisitions and completed the year, we started development development projects during the projects in Sweden with public-sec- Hemsö currently own approximately year, the lease duration increased tor tenants including the City of 100 preschools and elementary to 9.7 years. The proportion of pub- Västerås, Norrköping Municipality, schools across Sweden and Skol- lic-sector tenants, where Hemsö Luleå Municipality, Region Östergöt- gårdslyftet enables us, as a property signs lease agreements directly with land, and taxpayer-funded pri- owner, to embrace our social re- state, municipal or county councils, vate-sector tenants such as Vardaga sponsibility and contribute to great- increased to 60
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