Q3-2023 Report (936.8 KB

Quarterly report 2023

Schweigaards gate 15, Oslo

Entra third quarter 2023

Highlights

Rental income of 833 million (788 million)o CPI growth and finalised projects
Net income from property management of 319 million (406 million)o Higher interest costs
Net value changes of -2,197 million (-3,823 million)

1. Net yield up 78 bps from peak valuations in Q1 2022
Loss before tax of 1,894 million (3,430 million)
Net letting of 29 million (6 million)

Rental income

+44 mill.

Rental income (NOKm)

1000			872	854	833
	788	806
800


600
400
200
0	Q3 22 Q4 22 Q1 23 Q2 23 Q3 23

Property management

EPRA NRV

-87 mill. -14 %

Net income from PM	EPRA NRV
(NOKm)	(NOK per share)

500				220	210	207	207
406		391		200
	350				192
400	320					181
			319
300				180
			160
200
			140

100				120

0				100	Q3 22	Q4 22	Q1 23	Q2 23	Q3 23
Q3 22	Q4 22	Q1 23	Q2 23	Q3 23

Entra third quarter 2023

Key figures

All amounts in NOK million	Q3-23	Q3-22	YTD Q3-23	YTD Q3-22	2022	2021	2020
Rental income	833	788	2 559	2 352	3 158	2 508	2 353
Change period-on-period	6 %	23 %	9 %	28 %	26 %	7 %	1 %
Net operating income	763	723	2 347	2 163	2 895	2 274	2 142
Change period-on-period	6 %	24 %	9 %	30 %	27 %	6 %	0 %
Net income from property management1)	319	406	1 060	1 283	1 603	1 534	1 451
Change period-on-period	-21 %	1 %	-17 %	12 %	5 %	6 %	-1 %
Net value changes1)	-2 197	-3 823	-4 712	-1 535	-2 046	5 264	5 705
Change period-on-period	-43 %	-581 %	207 %	-163 %	-139 %	-8 %	192 %
Profit/loss before tax	-1 894	-3 430	-3 703	-260	-467	6 825	7 274
Change period-on-period	-45 %	-388 %	1323 %	-107 %	-107 %	-6 %	95 %
Profit/loss after tax	-1 573	-2 857	-2 956	-369	-569	5 373	5 696
Change period-on-period	-45 %	-407 %	701 %	-113 %	-111 %	-6 %	77 %
Market value of the property portfolio1)	72 047	78 866	72 047	78 866	78 571	67 547	56 746
Net nominal interest-bearing debt1)	39 111	40 312	39 111	40 312	40 578	26 594	20 930
EPRA LTV1)	54.7 %	52.1 %	54.7 %	52.1 %	52.8 %	40.6 %	37.0 %
Effective leverage1)	51.6 %	49.4 %	51.6 %	49.4 %	50.1 %	38.4 %	36.4 %
Interest coverage ratio - last 12 months1)	1.90	2.97	1.90	2.97	2.48	3.68	3.50
Average outstanding shares (million)	182.1	182.1	182.1	182.1	182.1	182.1	182.1

All amounts in NOK per share	Q3-23	Q3-22	YTD Q3-23	YTD Q3-22	2022	2021	2020
EPRA NRV1)	181	210	181	210	207	218	189
Change period-on-period	-14 %	3 %	-14 %	3%	-5 %	15 %	23 %
EPRA NTA1)	179	208	179	208	205	216	187
Change period-on-period	-14 %	3 %	-14 %	3%	-5 %	15 %	23 %
EPRA Earnings1)	1.26	1.64	4.21	5.19	6.45	6.07	5.73
Change period-on-period	-23 %	3 %	-19 %	15 %	6 %	6 %	-1 %
Cash Earnings1)	1.74	2.21	5.77	6.90	8.63	8.32	7.83
Change period-on-period	-22 %	1 %	-16 %	11 %	4 %	6 %	-2 %
Dividend2)	0.00	0.00	0.00	2.60	5.10	5.10	4.90
Change period-on-period	0 %	0 %	-100 %	4 %	0 %	4 %	4 %

Reference

Refer to section "Alternative performance measures" for calculation of the key figure
Entra has a policy of semi-annual dividends. Given the current situation in the property and interest rate markets, the Board's focus is to strengthen the company's balance sheet. Consequently, the Board has decided to not use the authorization to pay out semi-annual dividend for the first half of 2023. Entra's dividend policy remains unchanged. The Board will continue to monitor the situation and provide its recommendation for the full financial year of 2023 to the General Assembly to be held in April 2024.

Entra third quarter 2023

Financial development

Results

Rental income

Rental income was up 6 per cent from 788 million in Q3 2022 to

833 million in Q3 2023, and 9 per cent from 2,352 to 2,559 for the first nine months of 2023. The changes in rental income are

explained by the factors in the income bridge below.

	Q3-22	YTD Q3-22
All amounts in NOK million	Q3-23	YTD Q3-23
Rental income previous period	788	2 352
Finalised development projects	50	145
Vacated properties for redevelopment	0	-10
Acquisitions	0	18
Divestments	-33	-66
CPI growth	47	135
Like-for-like growth above CPI	-21	-28
Other	0	12

Rental income	833	2 559

Net contribution from development projects was 50 million compared to the same quarter last year. During the last 12 months, Entra has finalised several redevelopment and newbuild projects, contributing a total of 145 million on rental income compared to the same quarter last year. Divestments reduced rental income in the quarter by 33 million.

Compared to Q3 last year, rental income has been positively affected by an underlying like-for-like growth of 3.6 per cent (26

million). The CPI adjustment was 6.5 per cent (47 million). The

like-for-like growth is lower than the CPI adjustment due to reduced occupancy in the period. Near all of Entra's lease contracts are 100 per cent linked to positive changes in CPI. The annual adjustment is mostly made on a November to November basis, effective 1 January the following year.

Average 12 months rolling rent per square meter was 2,473 (2,329) as of 30.09.23. The increase in 12 months rolling rent over the last four quarters is mainly a result of finalised projects and CPI growth with higher income per sqm.

Rent (12m rolling) per sqm and occupancy rate

(NOK sqm)	(%)
2 700			99.0
2 500			98.0
		97.0

2 300			96.0
2 100			95.0
		94.0

1 900			93.0
1 700			92.0
		91.0

1 500					90.0
Q1-18Q2-18Q3-18Q4-18Q1-19Q2-19Q3-19Q4-19Q1-20Q2-20Q3-20Q4-20Q1-21Q2-21Q3-21Q4-21Q1-22Q2-22Q3-22Q4-22Q1-23Q2-23Q3-23
		Rent per sqm (NOK)		Occupancy (%)

Compared to the same quarter last year, the occupancy rate went down by 100 basis points to 95.6 per cent (96.6 per cent as of 30.09.22), in line with the occupancy rate as of 30.06.23 of 95.6 per cent. The market rental income assessment of vacant space as of 30.09.23 is estimated to 162 million on an annualised basis.

Entra third quarter 2023

Rental income development

The graph above shows the estimated development of contracted rental income based on all reported events, including income effect from acquisitions and divestments, development projects, net letting based on new and terminated contracts in the management portfolio, and other effects such as estimated CPI adjustments. CPI adjustment with effect for 2024 is estimated to 5.0 per cent, and 3.5 per cent in 2025. The graph does not reflect any letting targets on the vacant areas in the portfolio or on contracts that will expire, where the outcome of any renegotiation process is not known, i.e., not yet reported in "Net letting". The graph therefore does not constitute a forecast, but rather aims to demonstrate the rental income trend in the existing contract portfolio on the balance sheet date based on all reported events. There is upside in the above graph with regards to letting of vacant space and potential rent uplift on a relatively large share of tenant renegotiations in the period, but also a possible downside of up to 100 million in rental income for the period compared to the graph above if these leases are not renewed.

Operating costs

Total operating costs amounted to 70 million (66 million) in the quarter, and is split as follows:

All amounts in NOK			YTD	YTD
million	Q3-23	Q3-22	Q3-23	Q3-22
Maintenance	7	6	18	16
Tax, leasehold, insurance	17	18	53	54
Letting and prop. adm.	27	23	80	69
Direct property costs	19	19	61	51

Operating costs	70	66	211	189

The increase in direct property costs is mainly driven by increased vacancy. For areas occupied by tenants, the tenants are paying the full energy costs.

Net operating income

As a consequence of the effects explained above, net operating income came in at 763 million (723 million) in the quarter.

Other revenues and other costs

Other revenues were 18 million (21 million) in the quarter and other costs were 12 million (15 million). Other revenue and

other costs mainly consist of additional services provided to tenants and income and costs related to inventory properties

(properties in the Bryn portfolio which will be zoned for residential development and subsequently sold to a third party

at a predetermined price).

Administrative costs

Administrative costs amounted to 44 million (45 million) in the

quarter.

Attachments

Disclaimer

Entra ASA published this content on 18 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2023 05:23:30 UTC.