Hemsö Annual Report and Sustainability Report 2020 Annual Report and Sustainability Report 2020 We are strengthening the backbone of society! Nursing homes | Educati on | Health care | Justi ce system Contents Hemsö Hemsö is the leading owner of Overview public properti es in Sweden,*and This is Hemsö ......................................... on the right also operates in Finland and Germany. Hemsö in fi gures ........................... inside of fold-out The aim of the company is to sustain- Signifi cant events in 2020 ....................................... 2 ably own, manage and develop public CEO statement ........................................................ 4 properti es in: Strategy and value creati on .................................... 7 Hemsö’s targets ..................................................... 13 Hemsö is strengthening the backbone of society ....14 Employees ............................................................. 18 Market overview ................................................... 22 Nursing homes Operations Property portf olio ................................................. 29 Education Property management .......................................... 40 A customer focus .................................................. 45 Development projects .......................................... 51 Health care Financial statements and governance Directors’ Report ...................................................59 Proposed appropriati on of profi ts ........................62 Justice system Financing ...............................................................63 Risk management ..................................................69 Corporate governance ..........................................77 Tenants are mainly state, municipal, Board of Directors .................................................81 regional operators and private compa- Senior executi ves ..................................................82 nies with taxpayer-funded operati ons. Multi -year overview ..............................................85 Hemsö’s principal owner is the Third Financial statements .............................................86 Swedish Nati onal Pension Fund (AP3). Notes .....................................................................92 Vision Audit report .........................................................115 Hemsö’s vision is to strengthen the List of properti es .................................................118 backbone of society. Hemsö’s Sustainability Report ............................126 GRI Content Index ...............................................128 Mission Summary of Hemsö’s compliance Hemsö shall make its employees with applicable accounti ng standards ................130 and customers proud. Key rati o calculati ons ..........................................131 Defi niti ons ...........................................................133 Business concept Reporti ng – Sustainability bonds ........................134 To sustainably own, manage and develop public properti es. * Public property:A property that is predominantly used for taxpayer-funded operati ons and is purpose-built for public services. Internati onally, these properti es are generally referred to as social infrastructure. 2020 Annual Report and Sustainability Report The statutory Annual Report, including the Directors’ Report, for Hemsö Fasti ghets AB (publ), Corp. Reg. No. 556779-8169 has been audited and comprises pp. 59–114. The Directors’ Report comprises pp. 59–76. Sustainability issues are integrated into Hemsö’s day-to-day acti viti es. For informati on about the company’s sustainability performance and the GRI Content Index, see pp. 126–130. Hemsö in fi gures Profi t from property management SEK 1,810 Market value of million investment properti es SEK 62,240 million Net operati ng income SEK 2,425 million No. of properti es 392 Change in value of properti es SEK 2,441 million Rental income SEK 3,270 million Loan-to-value rati o 60.0% Economic occupancy rate 97.9% Interest-coverage rati o 4.5times Rental durati on 9.8 years No. of environmentally certi fi ed properti es Public-sector tenants 56 63 % Gender balance, management Gender balance total, % Age balance <29 years, 13% Men, 60% Men, 43% 30-49 years, 62% Women, 40% Women, 57% >50 years, 25% Engagement Index eNPS 88/100 58 1 Signifi cant events in 2020 Q4 Q1 Q3 Q2 • A property owned jointly • Hemsö signed a 15-year rent- • Hemsö acquired a nurs- by Hemsö and Sveanor, “ Development of al agreement with the City of ing home portf olio of 10 Princeton 1 in Hagastaden, a new school in Helsinki for a new elementa- properti es in Germany. The Stockholm, was divested. ry school for 700 students in investment amounted to ap- The underlying property Finland” central Helsinki. proximately EUR 100 million. value was approximately • Constructi on commenced in SEK 2.6 billion. The property • Hemsö received a long-term Gothenburg of Sweden’s fi rst will be transferred upon credit rati ng of ‘A’ with a sta- development project where “ Climate-smart completi on in 2021. ble outlook from Fitch Rati ngs. an elementary school and a nursing home” • Hemsö expanded its prop- nursing home are combined “ Construction erty portf olio in Germany in the same building. with an educati onal property • Hemsö commenced the con- commenced for for the justi ce system in structi on of Sweden’s fi rst a Nordic Swan Wiesbaden. The investment “ School meets NollCO2-certi fi ed nursing Ecolabel school” amount was approximately nursing home home in Tyresö, with the SEK 700 million and a 15-year in Gothenburg” Stora Sköndal Foundati on as rental agreement was signed tenant. • The constructi on of Stock- with the German state. • Hemsö signed a rental holm’s fi rst Nordic Swan • A university building in • Hemsö acquired fi ve nursing agreement and collaborati on Ecolabel school, the Raoul central Helsinki and an upper homes in Germany, of which agreement with the Stock- Wallenberg School in Bagar- secondary school in Jyväsky- one is Hemsö’s fi rst munic- holm Sjukhem Foundati on torp in Solna, was started. lä were acquired. ipal nursing home in the and Raoul Wallenberg School The school will accommo- • Hemsö commenced the country. for a new multi -generati onal date 360 students. development of new schools in • The new police stati on in building with a preschool Staff anstorp, Trelleborg, Nacka, Rinkeby, with approximately and nursing home in Up- Kungälv, Gothenburg, Borås 330 workplaces, was inaugu- plands-Väsby. and Joensuu, and new nursing rated by the Swedish Prime • Hemsö acquired four proper- homes in Gothenburg, Täby Minister, Stefan Löfven. ti es in the old military area and Upplands Väsby. of Ystad. 2 Signifi cant events in 2020 Health care – Pati enten 1, Eye Centre of Excellence in Hagastaden, Solna. Hemsö in brief 3 CEO statement A stable operational year despite turbulent times In 2020, COVID-19 paralysed the eff ects of the pandemic whole world. The pandemic has on Hemsö’s results was led to immense human suff ering, largely due to our low-risk bankruptcies, economic damage and business model. We have soaring unemployment. We have long-term rental agree- not yet seen the full extent of the ments with predominantly crisis or the long-term eff ects of the public-sector tenants, and pandemic. It will take years for the others who provide taxpay- world to recover. er-funded services. Our success is also due to the long-term approach, As I summarise the year, I send a commitment and professionalism thought to our tenants and to all of Hemsö’s employees and owners, fi nancial sustainability and lower of the health care staff who have who are always striving to make the GHG emissions with healthy building worked so hard under such diffi cult company and the local community materials to integrati ng the social conditi ons. That also applies to other b e tt e r . aspect into the design of both indoor essenti al workers, such as elementa- and outdoor environments. The ry school teachers and other school Many local government budgets vision also highlights the common staff who have gone to work and were already strained before the thread – collaborati on. Every day, we given students a sense of security pandemic, while the need for more are working together with the public and conti nued access to educati on. nursing homes and schools is grow- sector and helping to solve the un- ing. During the year, we strength- met need for schools, nursing homes I am grateful that the pandemic ened our partnership with the public and other public properti es. has not had any signifi cant fi nan- sector. In 2020, Hemsö initi ated cial impact on Hemsö and that our development projects that will add Our enhanced focus on energy employees have fared well under the 650 new nursing home beds and and climate change through cli- circumstances. We have supported 8,000 new school places. mate-smart constructi on is refl ected our tenants by off ering, for example, in several development projects that rent-free premises for quaranti ne Close collaboration is started during the year. and temporary care beds. We also creating innovative decided at an early stage to not development projects One example is the Raoul Wallen- make use of government grants Hemsö’s new vision – We will berg School in Bagartorp – the fi rst in the form of reduced employer strengthen the backbone of society Nordic Swan Ecolabel school in contributi ons and subsidised rent – was launched at the end of the Stockholm – which is an environmen-