Fabege (FABG) Q1 2011 earnings summary

Executive summary

• After-tax profit rose to SEK 378m from SEK 161m and EPS to SEK 2.32 from SEK 0.98, mainly on higher unrealised property and derivative values.

• Favourable rental conditions, positive net lettings and ~1% property-value growth supported the outlook.

Financial highlights

• Rental income was SEK 446m vs SEK 518m and net operating income SEK 275m vs SEK 318m; comparable-portfolio rental income rose ~1% and NOI ~3%.

• Profit from property management fell to SEK 113m from SEK 181m as the portfolio contracted and market interest rates increased; pre-tax profit was SEK 511m vs SEK 219m.

• Unrealised property gains were SEK 291m vs SEK 65m, including SEK 226m from investment properties and SEK 65m from project properties; derivative and equity value changes were positive SEK 107m vs negative SEK 58m.

• Net interest expense was SEK 147m vs SEK 116m, including SEK 4m of non-recurring costs; tax expense was SEK 133m vs SEK 58m.

Outlook and guidance

• Favourable net lettings, lower vacancies and increased project-portfolio investment were expected to support future revenue growth; projects were proceeding as planned.

• The project portfolio target was a return of at least 20% on invested capital; returns on completed investments exceeded that objective.

• Annual rent for the largest projects in progress was expected to reach SEK 315m when fully let, from SEK 85m in annualised current rent at 31 March 2011.