JANUARY-DECEMBER 2023
- Rental income increased to SEK 888 m (839). For the like-for-like portfolio, rental income increased by 5.0 percent as a result of rent increases and a reduced vacancy rate.
- Net operating income increased to SEK 460 m (423) during the year. For the like-for-like portfolio, net operating income increased by 3.8 percent, after adjustments for items affecting comparability, mainly due to increased rental income.
- Profit from property management totaled SEK 148 m (172). The decrease is due to higher financial expenses and items affecting comparability of SEK 18 m in central administration.
- The unrealized change in the value of properties amounted to SEK -1,353 m (-1,151) during the year.
- The value of the property portfolio totaled SEK 14,018 m at year-end, which is a decrease of 8.3 percent compared with the beginning of the year.
- Net loss for the year amounted to SEK -1,373 m (-1,355), corresponding to SEK -9.44 per share (-9.32).
- The net asset value amounted to SEK 45.83 per share (54.26).
- The Board of Directors proposes to the Annual General Meeting that the profits be carried forward and that no dividend shall be paid to the shareholders.
OCTOBER-DECEMBER 2023
- Rental income increased to SEK 230 m (204) during the quarter, as a result of rent increases and a decrease in vacancies.
- Net operating income decreased to SEK 93 m (94), which was a net effect of increased rental income and higher costs for operation and property administration.
- Profit from property management for the fourth quarter totaled SEK 20 m (11). The increase was attributable to both reduced financial expenses and lower costs for central administration. Items affecting comparability of SEK 3 m were charged to administration costs in the fourth quarter.
SIGNIFICANT EVENTS DURING THE FOURTH QUARTER
- An Extraordinary General Meeting on October 4 resolved to expand the Board of Directors by one person and Jakob Pettersson was elected as new Board member.
- Eva Swartz Grimaldi resigned from the Board in December for health reasons, with immediate effect.
- In December, the Board of Directors resolved to remove the dividend policy using the motivation that it is assessed that the best total yield can be achieved if profits are reinvested in the business. In addition, the Board of Directors resolved to remove the equity/assets ratio from Neobo’s financial targets.
- The Board has tasked Management to prepare Neobo for a list change to Nasdaq Stockholm’s main list in 2024.
SIGNIFICANT EVENTS AFTER THE END OF THE YEAR
- In January, Neobo became a member of the European Public Real Estate Association (EPRA).
- In February, Peter Wågström stepped down from the Board of Directors at his own request due to a commitment in another company.
- After the balance sheet date, final settlement of the separation from SBB was completed. Neobo’s financial receivable from SBB that was announced earlier has thus been settled.
- In February, six residential properties in Eskilstuna were divested at an underlying property value of SEK 113 m, which is in line with the most recent external valuation conducted.
CEO STATEMENT
WELL PLACED FOR VALUE CREATION GOING FORWARD
Neobo’s first year was intense and challenging. Developing and listing a residential housing company during a period of sharp interest rate hikes, high inflation and declining market values is no easy task. However, everything has exceeded expectations due to the dedicated efforts of all involved – the Board of Directors, Management and our committed employees.
Despite turbulence in the world around us, our operations have continued to perform positively, and net operating income increased by 8.7 percent year-on-year. We operate in a market in which we see a long-term positive trend. Sweden needs more residential properties that people can afford to live in. We are active in locations where vacancies are low and considering that residential construction has largely ground to a halt, this will generate even greater demand for the residential properties already on the market. By managing and refining our properties and adapting them on the basis of people’s needs, we want to contribute to a more sustainable residential property market in Sweden.
FOCUS ON CUSTOMERS AND VACANCIES BEGINNING TO YIELD POSITIVE EFFECT
We entered 2023 with a vacancy rate in the residential portfolio of 6.6 percent and ended it at 5.4 percent. We have targeted specific efforts toward areas with a high vacancy rate, including tending to outdoor environments and carrying out apartment renovations. The customer survey that we conducted in December displayed a strong year-on-year improvement in all areas. In addition, the response frequency was high, which we are very grateful for. On the basis of this result, we can now take the next step to enhance the attractiveness and sense of satisfaction in our areas and further reduce the vacancy rate.
STABLE FINANCIAL POSITION AND INTEREST RATE REDUCTIONS IN SIGHT
Profit from property management fell to SEK 148 m (172) mainly due to higher financing costs. Interest rates increased sharply during the year but a high hedge ratio has enabled us to limit the impact of this. We have a stable financial position based exclusively on bank financing. When the long-term interest rates began to fall at the end of the year, we signed new swap agreements of SEK 600 m to hedge future cash flows and further reduce financial risk.
The decision by the Swedish Riksbank in February to leave the policy rate unchanged while declaring itself open to an initial interest rate reduction in the spring, indicates that we have most likely reached the interest rate peak and that interest rate cuts are now in sight.
Since the beginning of the year, the property portfolio’s value declined by 8.3 percent as a result of increased yield requirements. The average weighted yield requirement now amounts to 4.7 percent (4.1).
SUSTAINABILITY EFFORTS ACCELERATING
During the year, we developed a sustainability strategy – based on the requirements of the CSRD – that uses the two perspectives of sustainable living environments and corporate social responsibility as its starting point. We are now preparing to accelerate our sustainability efforts in the coming years to create value for our customers, owners and the society in which we operate.
FOUNDATION IN PLACE FOR VALUE CREATION
An activity I prioritized this year was to travel around the country to meet all of our employees and to acquire an overview of our property portfolio with my own eyes. I can conclude that we have an excellent foundation to build on and that there are significant values in the portfolio that can be highlighted.
During the year, we increased the return from our properties by raising rental income, reducing the vacancy rate and implementing value-generating investments. We have established a platform to create value going forward and we have a tailwind of strong underlying market trends.
Stockholm, February 14, 2024
Ylva Sarby Westman, CEO