Fabege (FABG) Q4 2010 earnings summary

Executive summary

• FY2010 profit before tax rose to SEK 1,929m from SEK 680m and after-tax profit to SEK 1,697m from SEK 425m, driven by property value gains; Property Management profit was SEK 782m.

• Portfolio streamlining left 98% of properties in three priority Stockholm submarkets; the year-end portfolio comprised 103 properties valued at SEK 27.0bn.

Financial highlights

• FY rental income fell to SEK 2,007m from SEK 2,194m, mainly due to disposals; net operating income was SEK 1,348m vs SEK 1,465m, with a 67% surplus ratio in both years.

• Net financial expense, excluding value changes, improved to SEK 504m from SEK 565m; Property Management profit declined to SEK 782m from SEK 838m.

• Realised property gains rose to SEK 237m from SEK 57m; unrealised property value changes were SEK 843m vs negative SEK 310m.

• Q4 after-tax profit was SEK 606m vs SEK 223m; rental income was SEK 487m vs SEK 547m, reflecting net property sales.

Outlook and guidance

• 2011 priorities included raising the letting and surplus ratios, improving Property Portfolio returns, increasing acquisitions and investments, and pursuing strong net lettings.

• Earnings were expected to remain strong if the positive economic trend continued, with management, development and transactions all expected to contribute substantially.

• Project investments target at least 20% return on invested capital; the largest ongoing projects could lift annual rent to SEK 269m when fully let, from SEK 65m current annualised rent.