Prime Office (PRIMOF) Q4 2023 earnings summary

Executive summary

• 2023 rental income growth lifted revenue and operating profit; property fair-value gains were lower YoY, while hedge revaluations weighed on total comprehensive income.

• Occupancy remained high: residential 98.5%, office 100%, and commercial 97.6%; the portfolio comprised 3,543 apartments and 276,455 m².

Financial highlights

• Revenue was DKK 197.4m vs DKK 188.7m in 2022; EBIT was DKK 120.7m vs DKK 114.0m, with revenue above the prior forecast range.

• Profit before fair-value adjustments and tax was DKK 83.0m, below the DKK 85–100m forecast; high maintenance and Aarhus Ø project costs contributed.

• Property fair-value gains were DKK 31.4m vs DKK 80.3m; profit before tax was DKK 114.4m vs DKK 166.3m, and net income was DKK 92.7m vs DKK 155.7m.

• Total comprehensive income was DKK 43.6m vs DKK 322.7m, including negative DKK 62.5m fair-value changes in hedging instruments, following interest-rate declines.

• Operating cash flow was DKK 112.3m vs DKK 80.0m; year-end cash rose to DKK 293.3m from DKK 150.9m.

Outlook and guidance

• 2024 guidance: revenue DKK 195–210m, EBIT DKK 95–125m, and profit before fair-value adjustments and tax DKK 75–100m.

• Guidance assumes higher core rental income, cost discipline and lower maintenance costs; financing is expected to remain based on mortgage loans with interest hedges.

• Aarhus Ø development is expected to cost DKK 1.4bn including land and interest; management maintained its execution outlook despite a request to reopen the rejected planning appeal.