The first quarter of 2017 is soon coming to its end and it’s time to give you a quick recap of what we’ve been up to.
In terms of Q1 roadshows we visited London, Paris, Amsterdam and Brussels having meetings with 24 investors. Here are some of the themes that we discussed during the meetings.
Q: How does Sponda’s development pipeline look like?
We are currently running two major development projects – Ratina shopping centre in Tampere and an office and retail building in Tikkurila, Vantaa. Both of these are expected to be completed in spring 2018.
The total investment of Ratina shopping centre is EUR 240 million of which EUR 104 million has been invested by the end of 2016. Ratina is located in the heart of Tampere and will be the biggest shopping centre in the city with 53,000 sqm of leasable area – it will change Tampere’s city centre and also bring new shops and brands to the city. 55 per cent of the shopping centre is pre-let and of the total complex 45 per cent.
The Tikkurila project has a leasable area of 9,500 sqm, and the location is ideal – in the proximity of a busy railway station and main roads. Of the total investment of EUR 31 million, EUR 6.5 million was invested by year-end 2016 and the pre-let stood at 65 per cent.
In our priorities for 2017 we have set a target to start at least one development project this year. We have zoned land areas which offer good possibilities to start a new office development project when the pre-let reaches a good level. The land areas are in good locations, e.g. along the Ring Road I, in Pasila and Aviapolis and Tikkurila in Vantaa.
Q: What is the current sentiment in the Finnish economy and how does it affect Sponda’s rental operations?
In 2016 the Finnish economy grew by 1.4 per cent – after several years of recession and almost zero growth this can be considered as an important milestone in the right direction. Also the prospects for the next two years look better than earlier – the economy is expected to grow by 1.5 per cent in 2018 and by 1.3 per cent in 2019. (Source: Bank of Finland)
The economic growth should also impact Sponda’s rental operations as business becomes more active and companies grow but, traditionally, being a late-cycle company means that we can see the impact with a bit of lag. Also it’s worthwhile to point that the growth numbers are still rather low, and historically we have seen that the economic growth should be at least 2 per cent to really have a significant impact.
Q: How is the CDB area performing?
The Helsinki Central Business District office market is performing well – the market vacancy rates have decreased somewhat and the market rental level has increased slightly. At the moment there seems to be good demand for prime properties whereas the demand for secondary properties is still struggling. (Source: Catella Property)
Q: Can you tell us about the Forum integration?
We were able to successfully complete the Forum integration during 2016. We were able to get immediate positive impact by lowering the maintenance costs by about 20 per cent. Also, the shopping centre is fully let and we have had positive development on the office letting, too. All in all, Forum block was perfect fit to our portfolio and we have been able to raise the cash yield to above 5 per cent from the time of the purchase.
Annual General Meeting & Dividend 2017
The key highlights from the Annual General Meeting, which was held on 20 March 2017, are the decision on the dividend payment as well as dividend authorisation, and the selection of the Board of Directors.
The AGM decided on a dividend of EUR 0.08 per share to be paid. With this decision the total dividend for 2016 sums up to EUR 0.20 per share considering the two dividend payments from August and December 2016.
We will continue paying dividend more than once a year – the AGM authorised the Board to decide on paying a dividend of up to EUR 0.12 per share in two tranches until the AGM 2018. After the AGM the Board already decided that the possible dividends would be paid in August and December 2017.
Read more about the decisions of the AGM and the Board decisions in stock exchange release here.
Writer is Sponda’s Senior Vice President, Corporate Planning and IR. Blogs amongst other things in connection with Sponda’s financial reporting. Close to the hearth properties and golf. Curious about the future and digital solutions.