Wihlborgs is strong a contender in the Stockholm market and will also embark on a major joint venture in Malmö
Consolidation in the Swedish property markets has seen the popularity of quoted company Wihlborgs increase. With the buy-outs of Balder and Diligentia leading the pair to leave the stock market, only Wihlborgs and Drott have a significant exposure to the heady Stockholm markets. This has not gone unnoticed by analyst Alfred Berg, part of ABN Amro. “We believe that their growth potential, together with their size and liquidity, should mean that these companies have a valuation premium over the sector.”
Wihlborgs is one of Sweden’s largest property companies, concentrating on the growth regions of Stockholm and Øresund, which now takes in Copenhagen and Malmö. The majority of Wihlborgs’ Øresund activities tend to be on the Malmö side of the Øresund water which separates Denmark and Sweden.
The book value of the company’s portfolio stands at SKr20.3bn in residential, offices, retail, industrial and hotels. This gives an annual rent roll of SKr2.3bn.
At June 2000, 45% of the company’s portfolio was in Stockholm, 46% in Øresund and 9% in other regions. Sector-wise, the portfolio breaks down to 35% residential, 41% offices and shops and 24% hotels and industrial.
The company is well-positioned to take advantage of the high levels of demand, falling vacancy and rising rents of Stockholm. On the residential side, Wihlborgs has also seen good rental increases for its housing portfolio, with around 2.5% in Malmö and 1.95% in Stockholm.
One of the company’s prime assets is the Klara Zenit on Drottninggatan and Mäster Samuelsgatan in Stockholm, at the heart of the Swedish capital’s city centre. The 64,000m2 complex will be completed in 2002 and has already secured a 9,500m2 letting with Baugur, which will open a franchised Debenhams department store.
With properties around the Klara Zenit being bought off yields of between 3% and 4%, Alfred Berg has increased its surplus value on the property, adding SKr0.5 per share to its NAV estimate of SKr19.1.
Wihlborgs continues to focus its operations through property sales and investments in its key regions. In the first six months of this year, it sold 60 properties, raising SKr827m, yielding a profit of SKr70m. The majority of these properties were residential.
The company also invested SKr338m in property acquisitions and SKr484m in its existing properties and projects. Investment in its existing properties includes the Styckjunkaren 3 project in Solna. Of this 18,000m2 project, 12,000m2 is offices which have been prelet by telecom company MCI Worldcom.
On the development front, Wihlborgs has teamed up with Peab and residential developer JM to develop 225,000m2 of residential and commercial space in the Kranen area of Malmö.
Investment company Bergaliden is the main shareholder in Wihlborgs with a 30.5% stake. It increased its holding earlier this year when it bought construction company Peab’s 5.7% share. Other major investors include AMF Pension with 4.5%, SPP with 4.3% and other foreign investors making up 6.2%.
|
SKrbn |
30 June 2000 |
30 June 1999 |
|
Property assets |
20.35 |
19.32 |
|
Rental income |
1.11 |
1.09 |
|
Operating surplus |
0.67 |
0.65 |
|
Pre-tax profit |
0.257 |
0.203 |
Wihlborgs Fastigheter
Box 955
Sollentunavägen 15
191 29 Sollentuna
Sverige
Tel 46 8 623 69 00
Fax 46 8 623 10 33
info@wihlborgs.se
