annual report
this is
atrium ljungberg
Atrium Ljungberg is one of Sweden’s largest listed real estate com panies.
Our business concept is to own, develop and manage principally retail and office properties.
Our ambition is to develop our areas into full-service environ ments that are sustainable in the long-term and that remain attractive over time. We create full-service environments by combining retail areas and office workplaces with residential units and various service and social functions. Our property portfolio therefore also contains housing and activities within the cultural, service and educational sectors.
The Group includes the wholly-owned subsidiary company TL Bygg – a profitable building contractor specialising in all types of renovation, extension, new construction and building services work.
Atrium Ljungberg is listed on the Nasdaq OMX Stockholm Exchange since 1994.
our business
Atrium Ljungberg adopts a long-term perspective to property owner- ship. We create value growth in the company by developing and improving both new and existing properties and development rights.
We are planning within the next five-year period to invest SEK 5 billion in new construction, extension and renovation work in our own development projects.
We lead and run the whole business process – from acquisition, the creative process and concept development, through planning and construction to leasing and management of the property. This contributes to high profitability and creates added value for our customers. Our development projects provide a long-term yield that is higher than the acquisition alternative.
our locations
Atrium Ljungberg is present in growth locations in Sweden, prin cipally in Stockholm, Malmö and Uppsala. We have retail centres in all these regions, while our office properties are
primarily concentrated to strong subsidiary markets in Stockholm.
Our residential properties are integrated in the city district of Ärvinge in Kista, Stockholm and in the Mobilia area in Malmö.
Our property portfolio also includes a number of major develop ment rights and these are an important constituent part of the portfolio.
facts
Number Of PrOPertIes 47
VaLue Of PrOPertY seK 18,617 million tOtaL LettINg area 808,000 m2 cONtracteD aNNuaL reNt seK 1.6 billion LettINg rate 93 per cent
Stockholm väSteråS
halmStad
malmö
uppSala öSterSund
2009 2008
Net turnover, seK million 1,980 1,855
Profit before changes in value,
seK million 667 537
Profit for the year, seK million 187 –402
Investments, seK million 1,087 1,540
cash flow from operating activities,
seK million 608 593
Letting rate, % 93 94
equity ratio, % 42.4 42.2
gearing ratio, % 45.6 43.8
average rate of interest at end
of period, % 3.8 4.7
Interest coverage ratio, % 3.0 2.5
earnings per share, seK 1.44 –3.09
Profit before changes in value after
estimated tax, seK per share 3.78 2.97
Dividend, seK per share (proposed for
2009) 2.25 2.00
share price as per 31 December, seK 67.00 62.50
equity per share, seK 64.66 65.27
KeY ratios
Stockholm other 54%
Uppsala Mälardalen 11%
Stockholm city centre 27%
Sweden other 8%
CONTRACTED ANNUAL RENT PER REGION
the Year in brieF
❯ The company’s net turnover totalled SEK 1,980 million, of which rental income amounted to SEK 1,656 million. Net operating profit from property management was SEK 1,052 million. Profit before changes in value totalled SEK 667 million.
❯ The rate of development has continued to be high. Just over SEK 1,080 million has been invested, principally in projects in Sickla and Farsta Centrum in Stockholm, Gränby Centrum in Uppsala, Mobilia in Malmö, Port73 in Haninge, Kvarteret Igor in Västerås and Mittpunkten in Östersund.
❯ Several development projects have been completed and opened. These include the new construction of M7 Kunskapsgallerian in Sickla, the expansion of Sickla Galleria and the modernisation of Mittpunkten in Östersund.
❯ Work on improving the property portfolio and concentrating ownership and man agement has continued through the sale of retail properties in Borås, Växjö, Kalmar, Eskilstuna, Motala, Södertälje and Botkyrka.
Retail 51%
Office 31%
Residential 4%
Other 14%
CONTRACTED ANNUAL RENT PER TYPE OF PREMISES
q1
•
Opening and start of operations in M7 Kunskapsgallerian in Sickla.•
Start of construction of new retail destination in Handen, Haninge munici- pality. Lease contracts signed with JULA, Intersport, KappAhl, Lindex, Deichmann and Apoteket.•
Opening of new 9,000 m2 shopping centre section in Sickla Galleria.•
New opening of PUB’s floor level PUB.01.•
Opening of new phase with a further five new retail stores in Gränby Centrum.•
Several new office leases principally in Hammarby Sjöstad and in Norra Stationsområdet.q2
•
Anna Hallberg and Johan Ljungberg are elected to the Board of Atrium Ljungberg.•
Tieto, which has its head office in Ärvinge, Kista, announces that it intends to co-locate its operations at Värtahamnen. Vacation of its current premises will take place in autumn 2010.•
Start of construction of new office building for Atlas Copco in Sickla.q3
•
Sale of seven retail properties in Borås, Växjö, Kalmar, Eskilstuna, Motala, Södertälje and Botkyrka.•
Mittpunkten in Östersund is reopened after extensive modernisation.Over 20 new retail stores are opened.
•
New lease contract signed with Axfood for establishment of Willys in Rotebro.•
Several new lease contracts signed for office premises. A number of major leases are also renegotiated and extended for office premises, including with the software company Oracle in Ärvinge.q4
•
Furniture store Svenssons i Lammhult opens in Sickla.•
Opening of first stage of renovation and expansion project for Farsta Centrum. Over ten new retail stores open up.•
40 new apartments in the property Bohus 7 at Mobilia in Malmö are ready for new tenants.•
Reopening of renovated section of the former Arosian retail centre in Västerås, which changes its name to Kvarteret Igor at the same time.•
Further new lease contracts signed for office premises in Norra Station.•
Lease contract signed with interior store R.O.O.M. for a new retail store in PUB.signiFicant eVents
During the Year
“ We create living meeting places
for people, for the retail sector, and for businesses”
cONteNts
operations
2 manaGInG dIrector’S Statement
4 BuSIneSS concept, vISIon and StrateGIeS 5 GoalS and Goal FulFIlment
6 our BuSIneSS model 7 our SucceSS FactorS
8 BuSIneSS and proJect development 10 proJect portFolIo
16 market poSItIon 19 InveStor market 20 retaIl market
22 oFFIce market In Stockholm 26 our propertY portFolIo 28 BuSIneSS area retaIl 42 BuSIneSS area oFFIce 48 tl BYGG aB
50 corporate SocIal reSponSIBIlItY 54 our emploYeeS
57 opportunItIeS and rISkS
60 Share InFormatIon and ShareholderS 62 Board oF dIrectorS
63 SenIor manaGement, 2010 64 remuneratIon
65 corporate Governance report 70 deFInItIonS
71 keY ratIoS
72 FIve-Year overvIeW other
74 propertY portFolIo lISt 78 GrI Index
“We have a well-filled project portfolio and many opportunities.”
2009 was characterised by the international recession and the global financial crisis. We have seen a continu ation of the downturn in consumption and a general uncertainty in regard to the future. However, the recession has impacted differently on the various geographical regions of Sweden. The Greater Stockholm and Mälardalen region has coped best.
Stimulus measures and record low interest rates have meant at the same time that many people have more disposable income. We began to notice a clear increase in consumption in the autumn and the 2009 Christmas trade set new records.
the past Year
We stated before the start of the year that Atrium Ljungberg should have plans in place to meet differ ent future scenarios and be in a position to adjust the pace of operations to market conditions. We have put a number of investment projects on hold due to the market situation – but also accelerated the pace of other projects significantly. Despite the recession, we have invested around SEK 1 billion during the year in our own development projects with a good yield.
This is in line with our declared long-term goals. By investing in sound projects in strong locations, it is still possible to invest during difficult trading conditions – and we have shown this.
In summer 2009, we sold seven retail properties for just over SEK 1 billion. This was an important part of our strategy to concentrate our portfolio geographically and focus on long-term strong growth markets. This sale allows us greater opportunity to continue to maintain a high rate of investment and to strengthen our position further in priority subsidiary markets.
Profits from operating activities totalled SEK 667 million, which can be compared with the previous year’s figure of SEK 537 million. I am very pleased that we have been able to deliver such strong figures under the prevailing market conditions.
oVer seK 1 billion inVesteD During the Year At the start of the year we completed and opened M7 Kunskapsgallerian in Sickla, a location for learning which is unique in Sweden.
We also extended Sickla Galleria not far from Kunskaps- gallerian, and thus Sickla has become one of Swe den’s largest and most complete retail centres.
We have also invested in our other regional retail centres and full-service environments.
At Mobilia in Malmö, the first steps in our work to create a city district can be seen and at Gränby Centrum in Uppsala the major renovation and expansion work has been completed successfully. Gränby Centrum has now become established as the strongest regional retail centre in Uppsala.
The major focus to develop Farsta Centrum into one of Stockholm’s most important meeting places and hubs has commenced. The first phase of renovation was begun in the autumn.
We have also invested significantly in our retail centres in Haninge, Västerås and Östersund. We make extensive changes here in order to create new modern shopping environments.
With regard to our offices we have completed our invest- ment in Hammarby Sjöstad and the construction of a new head office for Atlas Copco in Sickla is progressing as planned.
In summary, our investments in our projects during the year will provide a sound long-term yield.
rental anD propertY sale marKets
The recession has undoubtedly affected the rental market.
The decision-making process has become longer; prospective tenants are reviewing their costs and few of them are willing to take on new risks.
Rental levels for offices in Stockholm have fallen in overall terms, but subsidiary markets have been affected to differing degrees.
Rental levels in Södermalm have remained stable while rents have fallen in Kista for example. The vacancy rate in general has continued to rise.
Anders Nylander Managing Director We see clearly that the demand for retail premises has
fallen in overall terms. This means that property in certain locations is very difficult to rent out, while it is still possible to obtain favourable rents in strong locations such as Sickla, Farsta, Gränby and Mobilia.
There have been few transactions in the property market during the year and the yield requirement has increased in general. The increased yield requirement has entailed a write-down of property values for Atrium Ljungberg in 2009.
However, on the other hand the value of our development projects has increased. The total write-down for the year is SEK –523 million.
The Swedish stock market has recovered during the second half of the year. The property index has seen a signi- ficant increase of 22 per cent. Atrium Ljungberg’s share price has increased by 7 per cent in 2009.
operations anD strategY
I believe that Atrium Ljungberg is a property company that is different to most other companies in our sector. We adopt a long-term approach in our business relations and in regard to our property holdings. By creating additional value for our customers, we also create business opportunities and growth within the company. Our operations are always based on a clear concept about what we wish to achieve and we strive to find new solutions that are adapted to the unique conditions of each location. Atrium Ljungberg adopts a free-thinking approach and seeks to define the soul of each project. This approach makes us a rather unconventional property com- pany.
Working towards long-term sustainable development is a natural objective for us. This work includes our membership of Global Compact and our support for its principles. It is also becoming increasingly evident how important sustaina- bility issues are for our customers and partners. Working with them, we can plan and adopt the correct focus in regard to content, accessibility, construction methods, energy issues etc.
Such cooperation also opens up new business opportunities.
outlooK For the Future
We are prepared for various different market situations and will thus manoeuvre accordingly.
We expect that interest rates will rise in the near future and that there will be a delay before rental levels also rise.
We know that Atrium Ljungberg has a solid position in an uncertain market. The sale of property last year also pro- vides major opportunities to make new acquisitions and to develop new projects. The property disposals, though, mean that we are entering 2010 with lower rental income. This will be compensated by our well-founded projects which will be completed successively during the year and the full effects of these will be seen towards the end of 2010 and in 2011. Our presence in growth markets and our policy of developing full- service environments that meet many different needs means that the long-term prospects for our properties are sound.
We have a well-filled project portfolio and many oppor- tunities. We will invest step by step with caution, but also offensively. Atrium Ljungberg has a solid financial platform which includes a low gearing ratio. This provides us with the opportunity to develop our projects and to expand through acquisitions. We intend to do this at the right opportunity.
A major challenge in the near future will be to continue to be the real estate company which is best able, on a pro f- itable basis, to look after its customers, its meeting places and its properties. I also see a challenge in continuing to make profitable investments in the right locations, in the right manner and at the right time as well as exploiting the busi- ness opportunities that will open up in the future.
Everything we do is based on our fundamental values:
building long-lasting partnerships and keeping our promise.
And we also dare to think unconventionally. I am certain that our customers value this approach.
I would like to thank all our employees, customers and partners for a most satisfactory 2009, and I look forward with confidence to the opportunities and challenges of 2010.
❯busINess cONcePt, VIsION aND strategIes
“We create
living meeting places for
people, the
retail sector and businesses.”
Through long-term ownership, develop- ment and management, we will offer our customers attractive retail, office and full-service environments in strong sub- sidiary markets. Using our own in-house expertise and an holistic approach, we will generate added value for our customers and partners and generate growth in value within the company.
our business concept
our strategies
retail – oFFice – Full-serVice Atrium Ljungberg shall focus on developing environments for retail and office purposes. In this way, we will build competence and be competitive within these sectors. This combination will also allow us to spread risk, which will make us stronger through the full economic cycle.
We shall, where possible, supplement our retail and office environments with residential, service, cultural and educational elements. By so doing we will create attractive and sustainable environments.
strong subsiDiarY marKets in groWth toWns in sWeDen
We shall be present in strong subsidiary markets in growth towns in Sweden where the conditions exist for long-term value growth. This is required in order to achieve long-term profitability for us and our customers.
improVement anD DeVelopment oF properties anD DeVelopment rights We shall create value growth within the company through providing added value for our customers.
We will do this by developing and improving both new and existing properties and development rights. Our development projects shall provide a yield that is higher than the acquisition alternative.
major plaYer
Atrium Ljungberg shall be a significant player with large-scale and rational units in the respective sub- sidiary markets so that we can lead and influence development and create working, sustainable full- service environments. At rational units we can also carry on customer-oriented property manage- ment with our own on-site personnel. This gives us knowledge of the local conditions and creates business opportunities.
long-term cooperation
We shall have close and long-term cooperation with our customers and partners so that we can meet their requirements and build well-adapted environments for them.
oWn competence
We shall carry on and manage the whole business process in-house and with internal competence.
Our customers and partners will then be met by high commitment and willingness to assume responsibility at all phases, from acquisition, the creative process and concept development, through planning and construction to leasing and manage ment of the property. In this way, the final product will have greater chances to satisfy both the customer’s requirements and those of the company.
❯gOaLs aND gOaL fuLfILmeNt
goals goal fulfilment
OPERATING PROFIT SHALL INCREASE BY 10 PER CENT PER YEAR.
Operating profit increased by 12.5 per cent despite the sale of properties.
INVESTMENTS IN OUR PROJECTS SHALL BE SEK 1 BILLION PER YEAR OVER A FIVE-YEAR PERIOD.
Investments in own properties totalled SEK 1,087 million.
No acquisitions were made during the year.
THE EqUITY RATIO SHALL BE AT LEAST 30 PER CENT.
The equity ratio continues to be high and was 42.4 per cent on the balance sheet date.
THE INTEREST COVERAGE RATIO SHALL BE AT LEAST 2.0.
The interest coverage ratio increased to 3.0 during the course of the year.
THE DIVIDEND SHALL CORRESPOND TO AT LEAST 50 PER CENT OF PROFITS.
The profit refers to the profit before realised and unrealised changes in value, and after tax unless investments or the company’s financial position otherwise justifies deviation from this.
The Board proposes a dividend of SEK 2.25 per share, which equates to a dividend of 59.5 per cent of the profit figure on which dividends can be based.
-5 0 5 10 15
2009 2008 2007
% 14.1
–0.6 12.5 OPERATING PROFIT
0 10 20 30 40 50 60
2009 2008 2007
%
SOLIDITET
45.5 42.2 42.4
0 1 2 3
2009 2008 2007
times
INTEREST COVERAGE RATIO
3.0 2.5
3.0
%
40 50 60 70
2009 2008 2007
DIVIDEND
59.4 67.3
59.5 700
800 900 1,000 1,100 1,200 1,300
2009 2008 2007 SEK million
947
1,223 1,087 INVESTMENTS OWN PROPERTIES
❯busINess mODeL
our business model
atrIum LjuNgberg’s busINess mODeL is focused on creating profitability and value growth in the company through the continual improvement and management of properties. We achieve this by managing and implementing in-house all the elements of the business processes where development work plays a significant role. the business model is characterised to a high degree by internal cooperation between our employees within the business development, project implementation and management divisions. Our way of working is also based on close cooperation with customers, local authorities and other interested parties.
acQuisition
Atrium Ljungberg will acquire new properties if we can achieve strategic benefits or a very good yield can be obtained by developing the prop- erty. Acquisitions will primarily be properties in the right locations with high development potential. The acquisition process is managed by our business development division and the Board makes the decision to acquire a property.
concept anD Vision
When a requirement or an opportunity arises, a concept is developed for the content and design of the project. This concept is based on thorough analysis of the commercial aspects and surrounding environment of the property.
The concept and vision process is managed by our business development division.
DeVelopment
The vision is developed with architects and acceptance for the design and content of the project is established with customers and partners. The development process is managed by employees from various functions within the company.
implementation
Implementation of the project commences after the decision has been made to invest in the project. An investment decision presup- poses a good yield and that the major part of the property is leased in advance. Our project division manages the whole implementation of the construction process in conjunction with staff from the management division.
ACQUISITION
CONCE PT AN
D VIS
ION D
EL EV MEN OP T PLE IM TAT MEN
ION AN M EM AG EN
T
CUSTOMERS LOCAL A
UTHOR ITIES PARTN
ERS INTER
ESTED PARTIES
management
Responsibility for the customer and the property is transferred to our management orga- nisation once the property is completed and customers have moved in.
❯success factOrs
our factors for success
atrIum LjuNgberg’s success factOrs are many. We have both a strong financial platform and a well-balanced project portfolio. We also have committed and competent employees who have a clear customer focus, and this means a lot for our success.
strong Financial platForm
Atrium Ljungberg has strong key ratios and a strong financial position, such as low gearing. This provides us with the platform for making favourable deals in different market situations.
large project portFolio
Our project portfolio is large and contains many current development rights. This means that we are able to grow organically at the rate that market conditions allow and with significantly better profitability than the acquisition alternative.
eXperience anD competence We have substantial experience and knowledge about how to create and manage attractive retail centres and office properties.
We also have substantial expertise within project development. This enables us to manage development projects in-house, which gives us many different advantages. A local presence provides us with valuable knowledge of the unique conditions in the local market and of the needs of customers and consumers.
Our subsidiary construction company, TL Bygg, is also a valuable asset in many complex projects.
customer Focus anD cooperation We work in partnership with our customers and the end consumers form the basis for everything we do. Close, long-term, stable and personal relations permeate all aspects of the company’s operations.
This applies to relations with both customers and suppliers, as well as with local authorities and other interested parties. By cooperating with these at an early phase of the development process, the end product will be the best for both our customers and for us.
emploYees With a passion
We have committed employees and we have a passion for what we do. Most important of all for us is to look after our customers, properties and surroundings so that together we can develop our properties for the future in the best possible manner.
baseD on FunDamental Values Our fundamental values of adopting a long-term view, cooperation, reliability and innovative think- ing are well-established with all our employees.
These values guide our daily work and our decisions and permeate all parts of the company.
“our handshake
is our word!”
❯busINess aND PrOject DeVeLOPmeNt
Development – an important part of atrium ljungberg’s business process
busINess aND PrOject development is a significant part of our business process. the improvement of our properties is an ongoing process and this often involves complex projects such as conversion, development, new construction and expansion.
The development work aims to create profitability and value growth. The objective is that Atrium Ljungberg’s development projects shall provide a yield that is 2–3 percentage points higher than the acquisition alternative.
We also wish to contribute to a positive urban development in the areas in which we operate. This concerns developing sustainable, attractive environ- ments that satisfy societal requirements in regard to work, living, shopping, service, culture and education.
See our project portfolio and read more about ongoing and planned projects on pages 10–15.
the Focus is on the Deal anD on the customer
Creating profitability in a deal but also basing the deal on the customer’s needs are primary and this permeates the whole development process.
We run the project from concept to completion in cooperation with local authorities, key customers and other interested parties. This ensures that the product is both commercially and long-term sustainable as well as attractive and accessible for the intended target groups, and that this boosts our customers’ business.
We strive in partnership to extend our own, and our customers’, consultants’ and subcontractors’ abil- ity to find new innovative solutions. This can be both the design and content as well as environmentally- friendly and energy-efficient solutions.
in-house proDuct DeVelopment giVes us competitiVe aDVantages:
•
We always have direct contact with our customers.•
An early commitment from the different functions in our organisation means that the vision and goals are followed right from the start of the pro- ject to its completion.•
A commercial approach is integrated into each part of the project.•
The mix of different areas of expertise within the company ensures that all aspects are considered and that both the product and the business deal are viewed from an holistic perspective.•
The holistic perspective creates the opportunity to design unique solutions, which is a necessity for a company that wishes to be at the forefront of development within the field.•
Short decision-making channels reduce lead times and enable the project to be completed at a high pace, which also helps to reduce costs.•
Planning and construction can be carried on simul- taneously. This gives greater flexibility and enables an earlier construction start and completion.•
We gain improved control of the construction process.Atrium Ljungberg runs and manages all aspects of the development work using the company’s own in-house competence.
Several functions within the company are involved in different ways and to different degrees depending on how far we have come in the project.
!
Participation in % 100
Acquisition, Concept/Vision,
Development Implementation Management
Time Business development Project
Management
A safe and peaceful area has been created in Ärvinge, Kista where residential units are integrated with workplaces, restaurants and local services.
❯PrOject POrtfOLIO
project portfolio
Atrium Ljungberg’s goal is to invest SEK 1 billion per year in its development projects. The yield goal shall be 2–3 percentage points higher than the acquisition alternative. The project portfolio is extensive and currently totals a project area of approx. 360,000 m2, divided into new construction, expansion and reno- vation work. The current project portfolio corresponds to a future investment of around SEK 5.5 billion.
The rate at which projects will be implemented is affected by the market situation and progress achieved in the detailed development plan work.
Projects are normally divided up into phases connected to the letting situation. The company’s prudence concept is applied to investments. This means that no new investments are made without a satisfactory yield being assured through lease agreements that are already signed.
The complete project portfolio is summarised in the tables below.
.major ongoing/approVeD inVestment projects
Project /property Location reno-
vation New con-
struction Premises
type Project area, m2, local area Inv.
seK m com-
pletion % letted COMPLETION 2010
mobilia, etapp 1, bohus 7 malmö x retail /
parking 6,000 100 Q1 2010 91
farsta centrum, etapp 2, storö 21 stockholm x x retail 17,000 350 Q4 2010 74
Kvarteret Igor, Igor 8 Västerås x x retail 14,000 300 Q4 2010 88
Port73, söderby Huvudgård 2:43 Haninge x x retail 13,000 200 Q4 2010 81
Total 50,000 950 84
COMPLETION 2011
rotebro, rotundan 1 sollentuna x retail 16,000 100 Q1 2011 54
mobilia, etapp 2, bohus 8 malmö x retail /
parking 17,000 1) 150 Q1 2011 80
HK atlas copco, sicklaön 83:22 Nacka x Office 14,000 400 Q2 2011 95
Total 47,000 650 78
1) gross area 17,000 m2, of which local area is 2,100 m2 of office space and the remaining area in a multi-storey car park
potential DeVelopment projects – completeD DeVelopment plan
Project /property Location reno-
vation New con-
struction Premises
type Project area,
m2, gross area Inv.
seK m Possible start
gränby, brillinge uppsala x retail 60,000 2010
rådhuset, Dragarbrunn 19:1 uppsala x x retail 4,000 2010
Port73, söderby Huvudgård 2:43 Haninge x x retail 15,000 2010
farsta centrum, etapp 3, storö 21 stockholm x retail 7,000 2010
sickla, sicklaön 83:32 Nacka x Office 10,000 2010
sickla, sicklaön 115:1 Nacka x Office 2,000 2010
sickla, etapp 2 och 3, sicklaön 83:22 Nacka x Office 20,000 2010,2011
sickla, sicklaön 346:1 Nacka x x Office 15,000 2015
Total 133,000 2,000
potential DeVelopment projects – change to DetaileD DeVelopment plan reQuireD
Project /Pproperty Location reno-
vation New con-
struction Premises
type Project area,
m2, gross area Inv,
seK m Possible start
gränby centrum, etapp 2, gränby 21:4 uppsala x retail 12,000 2010
gränby centrum, etapp 3 och 4, gränby 21:4 uppsala x retail, etc. 25,000 2011
mobilia, etapp 3 och 4, bohus 8 malmö x x retail, etc. 30,000 2011
rotebro, rotundan 1 sollentuna x retail 10,000 2011
Halmstad, stormarknaden 1 Halmstad x x retail 10,000 2011
sickla, sicklaön 117:17 Nacka x Office 10,000 2011
sickla, sicklaön 87:1 Nacka x Office 5,000 2011
Kista, land regulation stockholm x Office 26,000 2011
Total 128,000 2,500
“The project for our head office in Sickla is a fine example of our close cooperation with Atrium Ljungberg. On the basis of a clear but comprehensive strategy, Atrium Ljungberg invited us at an early phase to discuss how our requirements could be met. Only then were the details chiselled out.
My experience is that Atrium Ljungberg stands for a long-term and consistent policy. There is also a high degree of community of values between our two companies – we share many fundamental values.”
Hans Ola Meyer, Chief Financial Officer Atlas Copco AB
❯PrOject POrtfOLIO
project
Farsta centrum
Atrium Ljungberg is working actively with the City of Stockholm and other interested parties on the further development of the Farsta district. Farsta’s role as a hub in south-east Stockholm shall be boosted and the objective is that Farsta Centrum shall become one of Stockholm’s most important meeting places and centres.
The further development of Farsta Centrum was commenced in 2008. The aim is to reinforce and high- light Farsta Centrum’s qualities, diverse offering and history and the area shall be given a new and exciting content.
The ongoing renovation and expansion project covers a total area of approx. 17,000 m2. Roughly 4,500 m2 of this is new retail space and the remainder concerns renovation of existing retail area. Around 200 new parking spaces are also being created.
The first phase was opened in autumn 2009 when over ten new stores opened their doors (approx.
4,000 m2).
The remaining area will be completed and opened in autumn 2010. Farsta Centrum will then have around 20 new retail stores, 200 parking spaces and new entrances, and with a sound platform for continued development.
At Kvarteret Igor (formerly Arosian in Västerås), Atrium Ljungberg is carrying out a total transformation of the former shopping centre. Igor shall resume its position as the most attractive retail location in Västerås city – a modern and inspirational fashion destination spiced with media, food and drink elements.
With the Igor project, we will help to join the various city districts of Västerås together and boost city centre trade in conjunction with the City of Västerås and other property owners.
The shopping centre’s new profile is already clearly visible in the form of renovated façades and a new, light and spacious interior. Retail area has been increased from 10,000 m2 to around 14,000 m2 with the construction of a new basement level and a part of the upper parking level.
Retail trade has been limited during the year due to the extensive rebuilding work that is being undertaken in the property. Coop, Systembolaget and Clas Ohlson opened up their new premises in time for the 2009 Christ- mas season and several new stores will open successively in the course of 2010. When the centre is opened in September 2010, Igor will consist of around 40 stores and
project Kvarteret igor, Västerås
ONGOING PROJECT FARSTA PrOject area 17,000 m2 INVestmeNt seK 350 mILLION
LettINg rate 74%
cOmPLetION Q4 2010
ONGOING PROJECT VäSTERåS PrOject area 14,000 m2 INVestmeNt seK 300 mILLION
LettINg rate 88%
cOmPLetION Q4 2010
project sickla/the atlas copco office building
Atrium Ljungberg acquired Atlas Copco’s property holdings in Sickla in 1997. Atlas Copco had carried on industrial operations in the area for almost a century until then.
Today, Sickla is a hub for shopping, work, cul- ture, service and education in a region experiencing very strong growth.
The ambition is to continue the positive develop ment of Sickla. In the near future this will be primarily about creating new employment opportunities and service activities, and developing communications and infrastructure in the area.
In January 2009, M7 Kunskapsgallerian was opened and activities commenced. The educational site covering 10,000 m2 contains a mix of secondary and tertiary educa tional institutions, research, companies and organisations, and is fully let.
The expansion of Sickla Galleria was also started at the beginning of the year and around 25 retail stores have opened in 2009. The new retail area covers 9,000 m2 and 300 new parking spaces have been added. Sickla Köpkvarter has thus become one of the largest shopping centres in Sweden.
ONGOING PROJECT SICKLA PrOject area 14,000 m2 INVestmeNt seK 400 mILLION LettINg rate 95%
cOmPLetION Q2 2011
❯PrOject POrtfOLIO
neW heaD oFFice For atlas copco
Work on construction of Atlas Copco’s new head office commenced in spring 2009 and is continuing at full speed.
Atlas Copco will gather all its different operations here which at present are housed in a variety of different build- ings in Sickla.
Atlas Copco’s lease covers 10,800 m2 of the building’s total letting area of 14,000 m2. The remaining area will be used by Atrium Ljungberg as its own head office. The building will also contain restaurant and café operations – an important component for creating a complete meeting place. The new office building will be ready for tenants to move into in spring 2011.
A productive and inspirational environment will be created for the around 800 people who will work in the building and for their customers.
The building is being constructed to very high require- ments for sustainability and it will also exceed the Green Building standards by a wide margin. The building is charac- terised by a high degree of generality in order to be able to adapt to future needs for change.
The new office building will provide Sickla with a clear new gateway and a new landmark. It will also help to boost Sickla as an area of employment and increase the opportu- nities for continued development. The future development opportunities are estimated to be around 60,000 m2.
❯PrOject POrtfOLIO
project
port73, haninge
Haninge is an expansive area in the Stockholm region and one of the local authority areas in Sweden that has the highest number of second homes.
We are giving a former shopping centre a new design and new identity – Port73.
The area has a very strong strategic location along route 73 (Nynäsvägen) and is currently one of Swe- den’s largest food destinations. The Haninge–Nynäs- hamn region is growing and Vegastaden, which is planned for around 10,000 people, will be built in close proximity to Port73. The location will be further boosted when the extension of route 73 is completed.
Port73 will be a strong regional shopping destina- tion where volume trade and errand-related shopping are united. The core values of the project are food, family, time and errands.
In the first phase which is already underway, Atrium Ljungberg will build 13,000 m2 of retail space. This will be opened in October 2010 when approx. 25 new retail stores will be opened.
The plan is to further develop the area in phases.
The existing detailed development plan allows develop ment of at least a further 15,000 m of retail
project mobilia, malmö
Atrium Ljungberg is working closely with the City of Malmö on a long-term project to transform the Mobilia retail centre into a city district where shopping, health care, service and housing are combined. The new city district will develop between between Dalaplan and Stadion gatan in Malmö where Mobilia forms the heart of the project.
In 2009, more than forty new apartments were com- pleted through the conversion of a former office building.
These have now been moved into. In February 2010, we will complete the construction of Bohus 7 where a number of new retail stores will open in the consumer electronic and white goods sectors in an area covering 6,000 m2. A new expansion of the southern part of Mobilia started in January 2010. This expansion covers new retail space of around 2,100 m2 and a multi-storey car park for 375 cars.
A detailed development plan for the rest of the area is expected to be approved in autumn 2010. This will enable the construction of buildings totalling approx. 30,000 m2, prima - rily for retail, but also for housing as well as parking spaces.
The location in the middle of Malmö in combination with a comprehensive focus on accessibility for pedes - trians, cyclists and public transport users means that the Mobilia city district of the future will be more accessible for everyone.
ONGOING PROJECT PHASE 1, MOBILIA PrOject area 6,000 m2 INVestmeNt seK 100 mILLION
LettINg rate 91%
cOmPLetION Q1 2010
ONGOING PROJECT PHASE 2, MOBILIA PrOject area 17,000 m2 INVestmeNt seK 150 mILLION
LettINg rate 80%
cOmPLetION Q1 2011
ONGOING PROJECT HANINGE
PrOject area 13,000 m2 INVestmeNt seK 200 mILLION
LettINg rate 81%
cOmPLetION Q4 2010
project gränby centrum, uppsala
Uppsala continues to grow. The projects being planned by the City of Uppsala include major changes in the immediate vicinity of Gränby Centrum. These plans include a major residential project and turning the transport centre, which is currently being constructed at Gränby Centrum, into a hub for the different types of public trans- port. There are also plans for several new sports facilities in the adjacent Gränby park and for an event arena.
The changes will create opportunities for the continued development of Gränby Centrum, not just as a regional shopping centre but also as a city district centre and as an important hub in the local authority area.
There will be a need for further retail and other types of service activity in the area – which we believe can also be included in a future expansion of Gränby Centrum.
A new shopping centre section covering around 10,000 m2 was opened in 2008, the latest in a series of several renovations and new constructions over the years. A further two phases have been
opened in 2009 and in total around 25 new retail stores have been added to Gränby Centrum in the 2008–09 period.
Atrium Ljungberg is now planning for the next expansion phase which will add a further 9,000 m2 of leasable retail area. This expansion includes a foyer building over four floors on the eastern side. The detailed development plan is expected to be approved in early 2010, with construction start scheduled for spring 2010 and opening in autumn 2011.
It is estimated that further construction phases could be commenced in 2011/2012. These include additional retail area of around 25,000 m2, multi- storey car parking and restaurant as well as service areas.
Atrium Ljungberg also owns a 10.5 ha site immediately north of Gränby Centrum. Infra- structure is in place for the site and a valid detailed development plan which allows buildings for infrequently-bought consumer goods and volumi- nous goods for a total area of approx. 60,000 m2.
❯PrOject POrtfOLIO
❯ marKet POsItION
market position
text and diagram: leimdörfer
atrIum LjuNgberg Is tHe tHIrD Largest listed property company in sweden in terms of market value and the only listed company to focus specifically on the development and management of retail properties. the company is also strongly positioned within the office property sector in the stockholm region.
atrium ljungberg – one oF sWeDen’s largest listeD propertY companies At the end of 2009, 17 Swedish property compa- nies with a combined market value of around SEK 75 billion were listed on the Nasdaq OMX Stockholm Exchange. In terms of market value, Atrium Ljungberg is the third largest company after Castellum and Hufvudstaden. Atrium Ljungberg’s market value was SEK 8.7 billion as of 31st December 2009, which corresponded to 12 per cent of the total listed property sector in Sweden. At year-end the company owned 47 properties with a total letting area in excess of 800,000 m².
concentration anD reFinement Atrium Ljungberg distinguishes itself as the only major listed property company in Sweden to focus specifically on the development and management of retail properties. The company’s total rental value at year-end amounted to SEK 1.7 billion, of
which retail property accounted for 56 per cent.
Catena has also focused on retail property but is significantly smaller and has a different tenant profile with large exposure to Bilia.
Atrium Ljungberg also has a high degree of geographical concentration with properties in the Stockholm region representing 77 per cent of the total rental value. The company’s geographical con- centration increased significantly in 2009 through the sale of seven retail properties in smaller towns to Niam Fond IV. With a rental value of SEK 1.3 billion attributable to the Stockholm region, Atrium Ljungberg, together with Fabege and Hufvud staden, is the largest listed property com- pany in this subsidiary market. Atrium Ljungberg’s property holding in Stockholm includes all of the company’s office properties with a leasable office area of approx. 212,000 m2. Some of the most well-known office properties are Glashuset at Slussen, Blästern 6, 11 and 13 at Norra Station, and Fatburen 1 at Medborgarplatsen.
Atrium Ljungberg
Wallenstam Kungsleden
Brinova
Diös Fast Partner
Wihlborgs Fastigheter
Fabege Hufvudstaden
Heba Castellum Klövern
Balder Catena
Sagax Corem
Exposure to Stockholm, % of rental value Exposure to retail property, % of rental value
2009 års diagram:
Concentration and refinement
Dagon
concentration anD reFinement 1)
1) as per 31-12-2009
Property companies with a high degree of exposure to the Stockholm market are shown to the right of the matrix and companies with a high degree of exposure to the retail property sector are shown in the upper half of the matrix.
Each company is represented by a circle whose size is propor- tional to the market value of the property holding.
❯marKet POsItION
retail properties
Atrium Ljungberg is one of the largest players in the Swedish retail property market with a leasable area in excess of 360,000 m2. The property port- folio includes several of Sweden’s largest retail centres, such as Sickla Köpkvarter and Farsta Centrum in Stockholm, Mobilia in Malmö and Gränby Centrum in Uppsala. In 2009 the size of the property portfolio decreased by around 95,000 m2, primarily as a result of the sale to Niam Fond IV. At the same time, new retail areas total- ling 16,000 m2 have been completed and opened during the year in existing retail centres.
The largest owner of retail property in Sweden is the UK property company Boultbee with a total letting area of approx. 550,000 m2. The company’s property holding includes ten shop- ping centres in the Stockholm region which were acquired from the City of Stockholm in 2007 (CentrumKompaniet). Other major internatio- nal owners of retail property in Sweden are the French-Dutch shopping centre company Unibail-
Rodamco and the Steen & Ström shopping centre company which is owned by French Klepiérre and Dutch APG, with a letting area of roughly 380,000 m2 and 260,000 m2 respectively.
The largest Swedish owner of retail property in Sweden is ICA Fastigheter with a letting area of roughly 530,000 m2. ICA Fastigheter primarily manages property which is used internally for the FMCG sector within the ICA Group. KF Fastig- heter, with a letting area of approx. 250,000 m2, is also an owner of property that is used primarily within its own KF Group.
Other players with large letting areas in Sweden include a number of property companies and insti- tutions that do not focus solely on retail property.
As examples of these type of companies can be mentioned the listed property companies Castel- lum and Kungsleden, and the property companies Vasakronan and Diligentia, which are owned by The First, Second, Third and Fourth AP Funds, and Skandia Liv respectively.
0 100 200 300 400 500 600
KF Fastigheter Steen & Ström Diligentia Kungsleden Castellum Vasakronan Atrium Ljungberg Unibail-Rodamco ICA Fastigheter Boultbee
Leasable area, 1 000 m2 Swedish property owners
International property owners letting retail area in sWeDen 1) 2)
1) as per 31-12-2009
2) some figures are Leimdörfer’s estimates
0 0.5 1.0 1.5 2.0 2.5 3.0
Wihlborgs Fastigheter Klövern Balder Hufvudstaden Wallenstam Atrium Ljungberg Kungsleden Fabege Castellum
SEK billion Other
Office Retail
RENTAL VALUE PER USE rental Value per use 1)
0 0.5 1.0 1.5 2.0 2.5 3.0
Other Malmö Göteborg
Stockholm Wihlborgs
Klövern Balder Hufvudstaden Wallenstam Atrium Ljungberg Kungsleden Fabege Castellum
SEK billion RENTAL VALUE PER REGIONrental Value per region 1)
0 3 6 9 12 15
Market value, SEK million
Balder Klövern Wihlbor
gs Fastighet er Kungsl Fabegeeden Wallenstam Atrium Ljungber
g Hufvuds
taden Castellum
0 700 1,400 2,100 2,800 3,500
Letting area
SEK billion 1,000 m2
MARKET VALUE AND LEASABLE AREAmarKet Value anD letting area 1)
❯marKet POsItION
Fastighetsmarknaden text och diagram:
leimdörfer
gearing structure
Atrium Ljungberg has a high equity ratio in combination with a healthy interest coverage ratio compared with other Swedish listed property companies, which therefore means a relatively low financial risk. As per 30th September 2009, Atrium Ljungberg had an equity ratio of 41 per cent and an interest coverage ratio of 2.9. Of the other major listed Swedish property companies, only Hufvudstaden had a higher equity ratio. On the same date, Atrium Ljungberg had an average tied- up capital period of 2.7 years and an average fixed
interest term of 2.2 years. The corresponding figures for all listed property companies in Sweden were 4.4 years and 2.7 years on average. 2)
In summary, Atrium Ljungberg has a strong financial position and a loan portfolio with rela- tively low risk in comparison with other major listed Swedish property companies. The company’s average rate of interest on loans though is some- what higher than the average among all listed property companies, which is primary due to the fact that Atrium Ljungberg has a relatively small share of variable interest-rate loans.
25 20 30 35 40 45 50 55 60
1.0 2.0 3.0 4.0 5.0 6.0 7.0
Equity ratio, %
Interest coverage ratio, multiple Hufvudstaden
Wihlborgs Balder Wallenstam
Atrium Ljungberg
Castellum Kungsleden
Klövern Fabege
eQuitY ratio anD interest coVerage 1)
* Kungsleden’s high interest rate on loans is partly due to the fact that the company’s derivative portfolio is greater than the loan portfolio: seK 16.8 billion and seK 13.5 billion respectively.
1) as per 30-09-2009.
2) Information on tied-up capital is unavailable for certain companies.
0 1 2 3 4 5 6
Interest rate on loans
Fabege Klövern Wihlbor
gs Fastighet er Castellum Hufvuds
taden Balder Atrium Ljungber
g Wallenstam Kungsl
eden *
0 1 2 3 4 5 6
Fixed interest term, years
0 1 2 3 4 5 6
Tied-up capital
% Year
INTEREST RATE ON LOANS, FIXED INTEREST TERM AND TIED-UP CAPITAL interest rate on loans, FiXeD interest
term anD tieD-up capital 1) 2)
❯INVestOr marKet
investor market
text and diagram: leimdörfer
tHe gLObaL creDIt turbuLeNce and economic downturn continued to have a major impact on the swedish property market in 2009. activity in the transaction market was very low during the year, but some recovery was able to be discerned, first and foremost in Q4.
loWer sales
Turnover fell significantly in the Swedish property market in 2009 in the reverberations from the turbulence in the global credit markets and the weakened world economic situation. Transaction activity was very low, above all in the first half of the year, while some signs of recovery were able to be seen towards the end of the year. The total transaction volume in the Swedish property market in 2009 totalled just over SEK 40 billion, which corresponds to a fall of over 70 per cent compared with 2008.
The two largest property deals in 2009 were GE Real Estate’s part sale of public property under the Roxanne name, and the joint sale by the Baltic Group and Västerbotten-Kuriren of commercial property to the newly-formed property company Kuriren. The largest retail property deal in Sweden during the year was Atrium Ljungberg’s sale of seven retail properties to Niam Fond IV for just over SEK 1 billion.
In terms of type of property, the percentage of deals that were for office and retail property in 2009 fell to just under 40 per cent and 6 per cent respectively of total transaction volume. The corresponding figures for 2008 were just over 60 per cent and 10 per cent respectively. Other
clear trends during the year were that the average transaction size fell significantly and that Swedish investors were most active on the acquisition side.
more stable price trenD
The negative price trend in the property market, which could be clearly seen above all during autumn 2008, abated slightly in 2009. The yield requirement was relatively stable during the year, primarily for properties with low risk such as residential properties and commercial properties in prime locations and with long leases and public sector tenants. The limited transaction volume and a relatively low transparency contributed to continued price uncertainty, which however gradually subsided somewhat during the year. The current yield requirement in Stockholm CBD (Central Business District) is around 5.5 per cent for modern office properties in the best locations.
However, the price difference between modern property in a prime location and poorer property in secondary locations is relatively large.
Market interest rates remained at a very low level in 2009 which, in combination with a some- what higher yield requirement, has created an attractive yield gap1) for property investments.
%
YIELD REQUIREMENT FOR RETAIL AND OFFICE AND SWAP INTEREST RATE
2 3 4 5 6 7 8
5-year swap interest rate (SEK) Yield requirement office, Stockholm CBD Yield requirement retail, Stockholm CBD
2009 2008 2007 2006 2005 2004 2003 0 2002
20 40 60 80 100 120 140 160
Other Office Retail
2009 2008 2007 2006 2005 2004 2003 2002 SEK billion
TRANSACTION VOLUME PER PROPERTY TYPE
1) Yield-gap = yield – interest rate on loans
