Eik fasteignafélag hf.: Interim results for the first three months of 2024

The Interim Consolidated Financial Statements of Eik fasteignafélag hf. for the period 1 January to 31 March 2024 were approved by the Company’s Board of Directors and CEO on 2 May 2024

The main results are as follows:

• Income from operations amounted to ISK 2,709 million
  • Thereof, rental income amounted to ISK 2,365 million
• EBITDA amounted to ISK 1,700 million
• Total profit amounted to ISK 2,051 million.
• Net cash from operations amounted to ISK 1,011 million.
• The book value of investment properties amounted to ISK 135,656 million. 
• The book value of assets for own use amounted to ISK 5,956 million
• Change in value of investment properties amounted to ISK 2,734 million.
• Cash and cash equivalents amounted to ISK 1,623 million.
• Interest-bearing debt amounted to ISK 77,191 million.
• Equity ratio was 35.0%.
• Profit per share was ISK 0.6.
• Economic occupancy rate was 93.8%
• Weighted indexed interest was 3.33%.
• Weighted unindexed interest was 6.26%.

Attached is an interim financial report which contains Interim Consolidated Financial Statements for the first three months of the year 2024 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.

Group‘s operations

The Company's operations went well in the first three months of 2024, and the performance was in line with the Company's management expectations. The Company's operating revenues for the first three months of 2024 amounted to ISK 2.709 million, of which rental income was ISK 2.365 million. Operating expenses were ISK 982 million, and impairment of trade receivables was ISK 27 million.

The operating profit before valuation changes and depreciation amounted to ISK 1.700 million, compared to ISK 1.760 million for the same period in the previous year. Profit before income tax was ISK 2.564 million, and the total profit for the first three months of 2024 was ISK 2.051 million.

The net operating income (NOI) ratio (i.e. operating profit before valuation changes and depreciation as a percentage of rental income) was 71.0% for the first three months of 2024, compared to 73.6% for the same period in 2023.

The Company's investment properties are valued at their fair value in accordance with international financial accounting standards (IFRS), taking into account the present value of future cash flows of individual assets. Changes in fair value are reflected in the valuation changes of investment properties, amounting to ISK 2.734 million in the first three months of the year. The main factors contributing to the increase in the value of investment assets are inflation, new contracts, and lower discount rates on future cash flows. The main factor contributing to the decrease in value is an increase in capitalization rates.

Financial Position

The Company's total assets amounted to ISK 145.984 million on March 31st, 2024. Of this, investment properties were valued at ISK 135.656 million, which consist of real estate leased to tenants amounting to ISK 124.861 million, investment assets in development amounting to ISK 4.394 million, building rights and land of ISK 3.716 million, pre-paid street construction tax of ISK 13 million, and lease assets with a value of ISK 2.673 million. Assets for own use amounted to ISK 5.956 million, and development assets was valued at ISK 1.084 million. The Company's equity amounted to ISK 51.074 million at the end of the period, with an equity ratio of 35.0%. At the Company's annual meeting on April 11th, 2024, it was approved to distribute a dividend to shareholders for the 2023 fiscal year in the amount of ISK 2.540 million, which was paid to shareholders on April 30th, 2024. The equity position as of March 31st, 2024, does not reflect that payment.

The Company's total liabilities amounted to ISK 94.910 million on March 31st, 2024. Of this, interest-bearing liabilities were ISK 77.191 million, and income tax liabilities were ISK 13.016 million. The loan-to-value ratio of the Company, i.e. the net position of interest-bearing debts against the value of real estate and building rights, was 54.1%. The Company refinanced non-indexed loans with variable interest rates with indexed loans with variable interest rates during the period. The proportion of indexed loans was approximately 93% at the end of the first quarter of 2024.

Asset Portfolio

The Company has purchased a preschool building located at Rettarheiði 45 in Hveragerdi, and it is estimated that it will be taken into use later this year. The building is an extension to the existing preschool in Hveragerdi, and negotiations have been conducted with Hveragerdi Municipality for a long-term lease of the preschool.

Furthermore, the sales process for Raudararstigur 27 in Reykjavík is about to commence, as plans to convert office space into apartments on the 2nd to 4th floors of the building are being finalized. It is expected that the sales process will be completed this summer when the Ministry of Foreign Affairs moves out of the building.

Economic occupancy rate

The Company's economic occupancy rate was 93.8% at the end of the quarter, decreasing by 0.5% from the beginning of the year.

In the Company's annual report 2023, it was mentioned that the Company estimates that the economic occupancy rate will be 95% by the end of 2025 including around 10,000 square meters that were classified as development properties at year-end 2023. Upon publication of the financial statement of the first quarter 2024 the Company has leased around third of those square meters.

The Company’s journey towards a 95% economic occupancy rate is therefore well underway and ahead of schedule.

The Company’s journey will be covered in more detail at the online meeting.

Withdrawal of voluntary takeover offer

On July 6th, 2023, the shareholders of the Company received a voluntary takeover offer from Reginn Ltd. with plans to present such an offer a month in advance. The offer was made in accordance with the provisions of the Takeover Act No. 108/2007, which, among other things, prohibited the Company's board from making decisions that could affect the offer without obtaining prior approval from a shareholders' meeting. On April 29th, the board of Reginn Ltd. announced the withdrawal of its merger notification to the Competition Authority regarding the voluntary takeover offer to the shareholders of Eikar, which was presented on July 6th, 2023. In parallel, Reginn intends to seek permission from the Financial Supervisory Authority of the Central Bank of Iceland to withdraw the offer. The Company's board welcomes the conclusion of this long process, which has taken about 11 months and has had a detrimental effect on its operations. With the withdrawal of the offer, the Company has the freedom to take independent and strategic decisions as a self-sufficient Company with a strong asset portfolio and a promising future.

Online meeting
An online open meeting will be held on Friday the 3rd of May 2024, at 8:30. Garðar Hannes Friðjónsson, CEO and Lýður H. Gunnarsson, CFO, will present the results and respond to questions following the presentation.

Registration of the meeting is through the following link:

https://vimeo.com/event/4268666/29bdd79fb0

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

Market participants can send questions before or during the meeting to the e-mail address fjarfestatengsl@eik.is. Management encourages marketers to submit questions prior to the meeting so that answers can be prepared, if needed. Questions will be answered after the presentation.

Financial Calendar

Following is the planned dates for the publishing of quarterly and annual results:

Quarterly result – 2 quarter         15. August 2024
Quarterly result – 3 quarter          31. October 2024
Annual results 2024                     13 February 2024

Publishing of the financial will be done after the closing of market.

For further information, please contact:

Garðar Hannes Friðjónsson, CFO, gardar@eik.is, s. 590-2200

Lýður H. Gunnarsson, CEO, lydur@eik.is, s. 820-8980

Attachment

• Q1 2024 Condensed consolidated interim financial statement

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