Klövern AB (publ)

Interim report January – March 2020 - Seite 2

It remains to be seen how long this exceptional situation will last, but it is very probable that in 2020 unemployment will be considerably higher and the rate of growth in the economy sharply lower. Because of the uncertain state of the economy, Klövern’s board decided at the end of March to adjust the proposed dividend per ordinary share for the 2019 financial year from SEK 0.50 to SEK 0.26.

GOOD GROWTH IN A COMPARABLE PORTFOLIO
Development in a comparable portfolio continued to be very good during the quarter with an increase of income of 4 per cent and of the operating surplus of 8 per cent. The mild winter has contributed to positive effects on the cost side with lower costs than normal for, among other things, heating and snow clearance.

Net moving-in amounted to SEK –41 million during the quarter but to SEK 42 million during the past 12 months. We had known about a number of the quarter’s vacations for a long time and overall net moving-in was in line with our expectations. We are pleased that the goal for net moving-in of at least 1 per cent of the rental value was surpassed by a wide margin in 2019 with an accompanying effect on earnings during 2020.

A STREAMLINED PORTFOLIO AND A FOURTH PROPERTY IN NEW YORK
Work has been in progress for a number of years to streamline our property portfolio, both geographically and in terms of products. We have now substantially achieved our goal of
focusing the portfolio.

During the quarter, Klövern has acquired a 14-story residential building in a very attractive location on Park Avenue in New York. This is the fourth project property we have
acquired in Manhattan. The international portfolio accounted for 16 per cent of the total property value at the end of the quarter.

FOCUSED PROJECT DEVELOPMENT
Project development is an important part of Klövern’s business model. Due to the state of the economy, we have decided to postpone several planned projects. For example, the start of construction for Klövern’s project at 118 10th Avenue in New York has been preliminarily shifted from the second quarter of 2020 to the first half of 2021.

In all, project development, including development of building rights, contributed to increases in value of properties of SEK 97 million during the first quarter.

STABLE FINANCIAL POSITION
Klövern’s financial position was further strengthened in 2019, both through good development of earnings and strategic net divestment of properties. On 31 March 2020, the adjusted equity ratio was 41.4 per cent, which is above the goal of 40 per cent, at the same time as the leverage was 52