Note 3 Income

Rental value

The Group’s income totalled MSEK 6,004 (5,821). Rental income includes discounts of MSEK 119 (90) as well a lump sum of MSEK 16 (16) as a result of early termination of leases. Rental income consists of the rental value less the value of vacant premises during the year and service income. Rental value refers to income received and the estimated market rent of vacant premises. The rental value also includes supplementary charges for the tenant such as heating, property tax and an indexation supplement. Income for the year also includes MSEK 112 (104) from United Spaces, the co-working company acquired during the year. Castellum granted discounts of MSEK 14 in accordance with the government’s rent support package linked to COVID-19, whereby Castellum takes 50% of the cost. Accordingly, for reasons of simplification, rental income was reduced by a net amount of MSEK 7. Furthermore, MSEK 20 in non-recurring income was received during the year, which consists of a number of insurance cases that were settled.

Rental value in SEK per square metre for the different geographies and types of properties, as well as which areas contributed to the income trend, are shown in the tables below. Rental levels in the like-for-like portfolio increased 2% (4) year-on-year.

 

 

Offices

 

Public sector properties

 

Warehouse/Logistics

 

Retail

 

Light industry

 

Total

Rental value, SEK/sq. m.

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

Central

 

1,544

 

1,510

 

1,783

 

1,735

 

812

 

829

 

1,288

 

1,197

 

1,070

 

1,052

 

1,469

 

1,440

Öresund

 

2,127

 

2,077

 

2,244

 

2,190

 

842

 

835

 

1,522

 

1,500

 

792

 

750

 

1,667

 

1,659

Stockholm

 

2,424

 

2,251

 

3,168

 

3,020

 

1,242

 

1,216

 

1,537

 

1,584

 

1,250

 

1,294

 

1,901

 

1,834

West

 

1,815

 

1,760

 

1,360

 

1,337

 

821

 

808

 

1,278

 

1,375

 

873

 

851

 

1,191

 

1,181

North

 

1,632

 

1,521

 

1,492

 

1,485

 

 

 

 

 

 

 

1,499

 

1,487

Finland

 

3,120

 

3,660

 

 

 

 

 

 

 

 

 

3,120

 

3,660

Total

 

1,949

 

1,858

 

1,939

 

1,859

 

912

 

904

 

1,414

 

1,417

 

979

 

966

 

1,538

 

1,495

Earnings trend, MSEK

 

2020

 

2019

 

Change, %

Like-for-like portfolio

 

5,377

 

5,259

 

2.2%

Development properties

 

254

 

190

 

 

Transactions

 

261

 

268

 

 

Co-working

 

112

 

104

 

 

Income

 

6,004

 

5,821

 

3.1%

Renegotiation

Commercial leases, for which rents are paid quarterly in advance, are signed for a fixed period of time, which means that a change in market rents does not have an immediate effect on rental income. Rental levels can only be changed when the lease in question is due for renegotiation. Commercial leases include an index clause, which provides for an upward adjustment of the rent corresponding to a certain percentage of inflation during the previous year.

The lease maturity structure for Castellum’s portfolio is shown in the table below, where lease value refers to annual value. The relatively low proportion of contracts maturing in 2021 is primarily due to the fact that most contracts, owing to notice periods, have already been renegotiated. The most common terms for new lettings include a 3–5 year duration, with a nine-month notice period. The average remaining lease duration in the portfolio is 3.9 years (4.0).

Lease maturity structure

 

No. of
leases

 

thousand sq. m.

 

Lease
value, MSEK

 

Percentage
of value

Commercial, term

 

 

 

 

 

 

 

 

2021

 

1,612

 

297

 

384

 

7%

2022

 

1,516

 

751

 

1,124

 

20%

2023

 

1,245

 

780

 

1,140

 

20%

2024

 

788

 

567

 

854

 

15%

2025

 

226

 

293

 

496

 

8%

2026+

 

330

 

939

 

1,558

 

27%

Total

 

5,717

 

3,627

 

5,556

 

97%

Residential

 

446

 

34

 

42

 

1%

Parking spaces and other

 

5,911

 

5

 

101

 

2%

Total

 

12,074

 

3,666

 

5,699

 

100%

Economic occupancy rate

The average economic occupancy rate during 2020 was 93.1% (93.8). Gross lettings (i.e. the annual value of total lettings) during the period was MSEK 644 (411), of which MSEK 258 (56) pertained to lettings in conjunction with new construction, extensions and reconstructions. Notices of termination amounted to MSEK 405 (435), of which bankruptcies were MSEK 9 (16). MSEK 17 (18) related to notice periods with more than 18 months left of the contract. Hence, net lettings for the year were MSEK 239 (–24). The time difference between reported net lettings and the effect in income is estimated to be 9–18 months.

 

 

Offices

 

Public sector properties

 

Warehouse/Logistics

 

Retail

 

Light industry

 

Total

Economic occupancy rate

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

 

2020

 

2019

Central

 

91.9%

 

91.4%

 

96.7%

 

94.4%

 

87.7%

 

92.4%

 

97.6%

 

97.2%

 

96.8%

 

96.9%

 

92.5%

 

93.1%

Öresund

 

92.0%

 

91.0%

 

98.7%

 

99.0%

 

90.2%

 

93.5%

 

90.2%

 

86.3%

 

94.0%

 

95.4%

 

91.4%

 

92.4%

Stockholm

 

90.4%

 

95.1%

 

97.2%

 

95.4%

 

94.9%

 

92.6%

 

94.9%

 

94.9%

 

95.5%

 

95.9%

 

91.6%

 

94.6%

West

 

92.5%

 

95.7%

 

90.4%

 

93.9%

 

96.9%

 

93.2%

 

96.9%

 

97.6%

 

95.8%

 

95.6%

 

90.7%

 

94.8%

North

 

98.4%

 

93.0%

 

95.3%

 

94.6%

 

 

 

 

 

 

 

94.6%

 

94.5%

Finland

 

86.2%

 

100.0%

 

 

 

 

 

 

 

 

 

86.2%

 

100.0%

Total

 

91.4%

 

93.2%

 

96.5%

 

95.3%

 

92.8%

 

93.0%

 

95.4%

 

94.8%

 

95.5%

 

95.9%

 

93.1%

 

92.6%

Risk exposure, credit risk

Castellum’s lease portfolio features a good risk exposure. The Group has approximately 5,700 commercial leases and 44 residential leases; their distribution in terms of size is presented in the table below. The single largest lease accounts for 2% of the Group’s total rental income, while the corresponding figure for the single largest customer is 3%, which means that Castellum’s exposure to credit risk from a single customer is very low.

Lease size, MSEK

 

No. of leases

 

Share

 

Lease value, MSEK

 

Share

Commercial

 

 

 

 

 

 

 

 

<0.25

 

2,777

 

23%

 

199

 

3%

0.25–0.5

 

922

 

8%

 

340

 

6%

0.5–1.0

 

831

 

7%

 

590

 

10%

1.0–3.0

 

795

 

6%

 

1,374

 

24%

>3.0

 

392

 

3%

 

3,053

 

54%

Total

 

5,717

 

47%

 

5,556

 

97%

Residential

 

446

 

4%

 

42

 

1%

Parking spaces and other

 

5,911

 

49%

 

101

 

2%

Total

 

12,074

 

100%

 

5,699

 

100%

The table below shows contractual future rental income.

 

 

Group

 

Parent Company

Future rental income for existing leases

 

2020

 

2019

 

2020

 

2019

Contractual rental income, year 1

 

 

 

 

 

 

 

 

Commercial leases

 

5,755

 

5,501

 

 

Residential

 

14

 

13

 

 

Contractual rental income between 2 and 5 years

 

12,730

 

12,315

 

 

Contractual rental income after more than 5 years

 

6,502

 

4,747

 

 

Total

 

25,001

 

22,576

 

 

Rent receivables

Rents are invoiced and paid in advance, which means that all of the Group’s rent receivables total MSEK 47 (70) after provisions/impairments of MSEK 33 (28) fell due for payment.

Parent Company

The Parent Company consists of only Group-wide functions and the turnover mainly consists of intra-Group services.