Annual Report 2019 Stockholm: the heart of our business You can’t be the best at everything. Which is why we focus on commercial property and exclusively on the market we know best: Stockholm. It is here that we develop long-term, attractive districts in a select number of submarkets, all with considerable potential and unique conditions. We believe there are several aspects to a long-term approach. We are long- term property owners. We have a long-term approach to our relation- ships, forged using our own people. We want to know our customers and understand how we can work together to meet changing needs. Social sustainability is a fundamental driving force, in addition to climate and the environment. As one of Sweden’s largest urban developers, we need to think big. We have to look at the whole picture. The whole company. The whole area. The whole person. All the time. And that’s exactly what we try to do. Haga Norra Stockholm’s most inviting district is gradually emerging in a fantastic location close to the inner city, with The Royal Park, Hagaparken and Arenastaden just around the corner. With a mix of residential properties, offices and visitors, the area will be alive around the clock, with a focus on quality of life. Page 14 CONTENTS INTRODUCTION Highlights of the year 2 Message from the CEO 4 Developing an attractive location 8 Stockholm inner city 10 Hammarby Sjöstad 11 Arenastaden 12 Haga Norra 14 Solna Business Park 16 Flemingsberg 18 Sustainability 20 Case study 22 Employees 24 Targets and results 26 FINANCIAL REPORTING Directors’ Report 29 Financing 32 Risks and opportunities 34 Group 41 Statement of comprehensive income 41 Statement of financial position 42 Statement of changes in equity 43 Statement of cash flows 44 Parent Company 45 Profit and loss accounts 45 Balance sheet 45 Statement of changes in equity 46 Statement of cash flows 46 Notes 47 Corporate Governance Report 62 Message from the Chairman 62 Flemingsberg Executive Management Team 71 Our new major project will soon be under­ Board of Directors and Auditor 72 Signing of the Annual Report 74 way. We have a vision of 50,000 workers, Auditor’s Report 75 50,000 residents and 50,000 visitors coming together to create a thriving district and SUSTAINABILITY redressing the imbalance between the north­ Sustainability Report 78 GRI index 101 ern and southern parts of Stockholm. Limited assurance review of the Sustainability Report 103 Page 18 OTHER INFORMATION Property portfolio 104 Projects 107 Property listing 110 Share information 116 Five-year summary 118 Reconciliation of key ratios 119 Definitions 120 Annual General Meeting and registration 121 Employees You’ll find a flourishing team spirit at Fabege. We’re often different, but driven by the same values – towards the same goals. Those who enjoy working for us are real team players Audited financial information who always put the team before their ego. Sustainability information reviewed in brief Everything we do each day is guided by our core values. This is a translation of the Swedish original. In case of any inconsistency between the Swedish and the English version, Page 86 the Swedish version shall prevail. Fabege Annual Report 2019 1 HIGHLIGHTS OF THE YEAR Highlights of the year NEW PRESIDENT AND CEO OF FABEGE Stefan Dahlbo joined on 1 September Stefan Dahlbo was previously on the boards of Fabege, Wihlborgs and Klövern. He has also been CEO of Investment AB Öresund for a number of years. SALES OF PROPERTIES New owner for DN-huset as of 23 January 2020 In line with our business model, several properties were divested during the year to allow scope for future investments. In the first quarter, the newly­produced Pelaren 1 property at Globen was sold for roughly SEK 1.6bn to KPA Pension. Trängkåren 7, or DN­huset, was sold to Areim in the fourth quarter for approximately SEK 3.5bn. A total of three proper­ ties were sold during the year. ICA’S NEW HEADQUARTERS BREEAM Building of the Year 2019 ICA moved into their new 31,000 sqm Fabege received headquarters at Signalen 3 in Arena­ 100% an upgraded staden. The property was also named of Fabege’s investment properties now BREEAM Building of the Year 2019 by certified credit rating of Sweden Green Building Council. Fabege is blazing a trail among property companies for certifying the most square Baa2, stable metres in 2019 according to sustainability outlook from requirements. An impressive 32 proper­ WAW – a popu- ties with a total area of around 500,000 Moody’s. sqm achieved certification to BREEAM lar alternative. standard in 2019. Find out more on NEW PROJECT LETTING page 96. TietoEVRY to Arenastaden TietoEVRY has signed a lease of around 22,000 sqm in Fabege’s newly­launched project Kvarter Poolen, which will also house the City of Solna’s new swimming pool. They will move into their new offices in Q1 2022. 86% The new building, which is designed by Strategisk Arkitektur, has a total of of our employees would recommend us around 28,000 sqm of lettable office space. as an employer according to the 2019 TietoEVRY has signed a lease for 22,000 employee survey. sqm with an option during the construction period to take the remaining 6,000 sqm. 2 Fabege Annual Report 2019 HIGHLIGHTS OF THE YEAR 87 PROPERTIES 188 EMPLOYEES SEK 3.2bn RENTAL VALUE SEK 74.3bn PROPERTY VALUE 100 % ENVIRONMENTALLY CERTIFIED INVESTMENT PROPERTIES 1,255,000 (SQM) LETTABLE AREA Message from the CEO Principles that add value and care for our world It’s now just over six months since I walked through Fabege’s doors. It’s been an very exciting and intense few months. But whoever I speak to, I almost always get asked the same three questions; questions that I intend to answer now for a slightly larger audience. Stockholm: the heart of our business constantly develop, and sometimes change. That goes for all areas, The first question I get is almost always about whether I plan to from expertise, internal processes and customer relations, to how make changes to Fabege’s strategy. I think the company’s perfor­ we harness the latest technology. mance speaks for itself. Our focus is on commercial property and We have a robust corporate culture based on our core values. on the Stockholm area, which has proved to be extremely successful. All activities – whether it’s about changes, development or busi­ Stockholm is Sweden’s growth engine. Although there are some in­ ness deals – should always be carried out with respect for the in­ dications that the economy will slow down over the next few years, dividual, the customer and the wider community. We must never Stockholm will continue to grow. forget that it is people who do the work that needs to be done, who Our geographical focus also gives us a considerable practical have offices in our properties, or who live in apartments in our advantage. Instead of having properties spread out across the areas. People we meet every day. whole country, we are close to our customers, and sometimes even in the same block. This doesn’t just mean that we are physically Flemingsberg – time for southern Stockholm to step forward close in that we know what their street looks like and who is mov­ The third question I get asked is what are my thoughts on our project ing in or out. It also means that we know them, and we understand in Flemingsberg. My response is that I think it’s time for southern their businesses and their needs. We are part of their working day, Stockholm to grow and come into its own. Our thinking is that the and they are part of ours. It’s a unique advantage. So no, there are area will be southern Stockholm’s answer to what has now emerged no major plans to change course. in Arenastaden, what we call Stockholm’s second central business district, where companies like SEB, ICA, Vattenfall and Telia Compa­ “I’m a man of simple tastes. I’m always satisfied with the ny have relocated to our properties. Flemingsberg is already home to best.” – Oscar Wilde institutions such as Södertörn University, Karolinska University Hos­ The second question I get asked is whether I’m happy at Fabege. And pital and Polishögskolan. Now we just need to add the missing pieces. the answer is a resounding yes. I can’t imagine anything better. I’ve Clearly there is still a great deal to be done in the southern met so many new persons and witnessed the enthusiasm and know­ suburbs, particularly to develop and improve the situation for how that exists in the organisation, which is highly experienced in business. Flemingsberg has been neglected for far too long, but we adding value both through its capacity to develop existing properties are well on the way and the planning processes are progressing as and businesses, and by consistently taking on new development expected. The Royal Swedish Opera and the Royal Dramatic Theatre projects in different districts and areas. have already signed leases to relocate parts of their operations to Managing projects such as these takes skill. Fabege’s expertise Flemingsberg. Over the past 15 years we have seen the emergence of has been gradually built up over time. Many employees were in­ the Stockholm city–Arlanda axis. It was a huge investment, but now volved back when Wihlborgs developed Klara Zenit, Järla sjö and it’s southern Stockholm’s turn. For Fabege, this will mean we can Marievik here in Stockholm, as well as Västra hamnen in Malmö.