Eik fasteignafélag hf.: Interim results for the first nine months of 2022

Income from operations amounted to ISK 7,387 million.
Operating profit before changes in value and depreciation amounted to ISK 4,875 million.
Total profit amounted to ISK 7,234 million.
Net cash from operations was ISK 3,042 million.
The book value of investment properties amounted to ISK 118,270 million.
The book value of assets for own use amounted to ISK 4,186 million at the end of the period.
Change in value of investment properties was ISK 9,888 million.
Cash and cash equivalents amounted to ISK 1,734 million.
Interest-bearing debt amounted to ISK 68,626 million at the end of the period.
Equity ratio was 34.1%.
Profit per share was ISK 2.12.
Economic occupancy rate was 94.0% at the end of the period
Weighted indexed interest was 3.03% at the end of the period.
Weighted unindexed interest was 6.52% at the end of the period.

The Interim Financial Statements of Eik fasteignafélag hf. for the period 1 January to 30 September 2022 were approved by the Company’s Board of Directors and CEO on 27 October 2022

Attached is an interim financial report which contains Interim Financial Statements for the first nine months of the year together with further information on the Company’s operations than are included in the announcement.

In case of any discrepancy in the English and the Icelandic versions of this announcement or the Financial Statements, the Icelandic version shall prevail.

Company operations

The Company performed well in the first nine months of the year 2022 and the results were in line with management’s forecasts. Operating income for the first nine months of the year 2022 amounted to ISK 7,387 million. Of this amount, rental income was ISK 6,275 million. Operating profit before changes in value and depreciation amounted to ISK 4,875 million and increased by approx. 15% between years. Profit before income tax amounted to ISK 9,006 million and total profit of the Group for the first nine months of the year 2022 amounted to ISK 7,234 million.

The Net Operating Income (NOI) ratio (i.e. operating profit before changes in value and depreciation as a ratio of lease income) was 74.6% for the first nine months of the year 2022, compared to 72.7% for the same period in 2021.

The Company's investment properties are valued at fair value in accordance with International Financial Reporting Standards (IFRS), based in part on the discounted future cash flows of individual assets. Changes in fair value are recognised in changes in value of investment properties, which were around ISK 9,888 million in the first nine months of the year.

Balance Sheet

The Company's total assets amounted to ISK 126,089 million on 30 September 2022. Of this, investment properties valued at ISK 118,270 million consist of real estate leased to tenants amounting to ISK 114,216 million, lease assets ISK 2,457 million, investment properties under development ISK 1,137 million, building rights and lots ISK 448 million and pre-paid street construction fees in the amount of ISK 13 million. Assets for own use amounted to ISK 4,186 million and assets under development amounted to ISK 671 million. The Company's equity amounted to ISK 42,977 million at the end of September 2022 and its equity ratio was 34.1%. At the Company’s Annual General Meeting on 5 April 2022 a dividend payment to shareholders due to the operating year 2021 amounting to ISK 1,740 million was approved which was paid on 28 April 2022.

The Company’s total liabilities amounted to ISK 83,111 million on 30 September 2022, of which interest-bearing debt was ISK 68,626 million and deferred tax liability ISK 10,451 million

Economic occupancy rate

The Company's economic occupancy rate was 94.0% at the end of the period but was 94.2% at the beginning of the year. Possession of the property Lónsbakki in Hörgársveit was transferred to the Company from Húsasmiðjan on the expiration of long-term lease. This property is now classified as investment property under development.

Outlook

Based on the consumer price index for financial indexation in November 2022 the Company expects that EBITDA for the year will be between ISK 6,430–6,690 million at a fixed price throughout the year.

Effects due to COVID-19

The effects of COVID-19 on the Company’s operations have been fast decreasing and were considered non-existent at the end of the third quarter. Based on unchanged situation of the pandemic, the Company expects this to continue. The Company estimates that the effects were negative by ISK 40–45 million on EBITDA in the first half of the year. Furthermore, effects of COVID-19 on value of the Company’s investment properties have in most part disappeared.

Company Portfolio

During the year, ownership of four properties in the capital region was transferred to the Company: Sóltún 24, Skeifan 5, a part of Pósthússtræti 2 and now at the end of September Smiðshöfði 9, which total 2,968 sqm. The Company has sold and delivered three properties during the year, Hjalteyrargata 4 in Akureyri and Höfðasel 2 and 4 in Akranes, which total 3,911 sqm and booked sales profit in the third quarter amounts to ISK 362 million.

As reported in the Company’s announcement on Nasdaq Iceland on 15 September, negotiations regarding the Company’s possible purchase of Lambhagavegur 23 ehf. and Laufskálar fasteignafélag ehf. have been terminated.

The Group owns just over 110 properties which total almost 314,000 sqm. of rental space in just over 600 units. Total number of tenants is over 400. The Company's principal properties in the capital region are Borgartún 21 and 21a; Borgartún 26; Suðurlandsbraut 8 and 10; Mýrargata 2-16; Pósthússtræti 2 (Hótel 1919); Smáratorg 3 (Turninn); Smáratorg 1; Álfheimar 74 (Nýi Glæsibær); Grjótháls 1-3 and Austurstræti 5, 6, 7 and 17. The Company’s principal property outside the capital region is Glerártorg. The Company’s largest tenants are Húsasmiðjan, Flugleiðahótel, Ríkiseignir, Landsbankinn, Sýn, Össur, Míla, Deloitte, Síminn and VÍS.

The largest part of the Company’s real estate portfolio is office space, or 41%, followed by commercial premises (24%), warehouses (14%), hotel (9%), health related operations (7%) and bars and restaurants (3%). Around 93% of the Company's real estate are in the capital region, of which 38% is in financial and business districts of Reykjavík (mainly within postal codes 105 and 108), 17% in the Reykjavik city centre and 19% in Smárinn-Mjódd. 7% of the portfolio is located outside the capital region, whereof around 6% is in Akureyri.

Electronic presentation

An electronic presentation will be held on Friday 28 October 2022 at 8:30 am. Garðar Hannes Friðjónsson, CEO and Lýður H. Gunnarsson, CFO will present the results and respond to questions following the presentation.

Registration to the meeting is here:

https://us02web.zoom.us/webinar/register/WN_qQhwBndkSMyhL3DmJjcIsw

Following registration, participants will receive an e-mail with further information.

Financial Calendar

Following are planned dates for publishing of interim and annual results:

Management accounts 2022 and 2023 budget 6 February 2023 2022 Annual Results 28 February 2023

Financial information will be published after closing of markets.

For further information contact:

Garðar Hannes Friðjónsson, CEO, gardar@eik.is, tel. 590-2200 Lýður H. Gunnarsson, CFO, lydur@eik.is, tel. 820-8980

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