Fabege (FABG) Q2 2009 earnings summary

Executive summary

• Property management earnings rose 23% YoY to SEK 379m; rental income declined to SEK 1,096m, mainly due to property sales, while the surplus ratio improved to 66%.

• H1 profit after tax was SEK 131m and diluted EPS SEK 0.80, versus SEK 523m and SEK 3.10 a year earlier; occupancy was 92%.

Financial highlights

• H1 rental income was SEK 1,096m (SEK 1,125m); net operating income was SEK 723m (SEK 726m). Comparable-property rental income rose 2% and net operating income rose 3%.

• H1 profit from property management activities increased to SEK 379m from SEK 308m; net interest expense fell to SEK 311m from SEK 388m.

• H1 profit after tax was SEK 131m versus SEK 523m; diluted EPS was SEK 0.80 versus SEK 3.10. Q2 profit after tax was SEK 212m versus SEK 135m.

• H1 unrealised property value changes were -SEK 200m versus -SEK 7m; realised property value changes were SEK 12m versus SEK 143m.

Outlook and guidance

• 2009 priorities were higher tenant retention, an improved surplus ratio and maintaining a strong balance sheet.

• Annual rent from the largest projects in progress could increase to SEK 180m when fully let, from SEK 65m at 30 June 2009.

• Investment projects are generally initiated only when substantially let and fully funded; projects are intended to reduce vacancies, raise rents and improve cash flows.