Ferd Real Estate is an active real estate investor, involved both in developing real estate projects and managing a portfolio of commercial property investments. In 2009, the business area continued work on the program of refocusing and expansion it launched in 2007. Ferd Real Estate’s long-term objective is to increase the scale of its activities threefold or fourfold over the next few years. However, the pace of expansion will also take into account the conditions prevailing in the real estate market.
- Commercial rental market: The number of people employed in office jobs in the Oslo area showed a small increase in 2009. The increase in vacancy rates for office premises was therefore less than had been feared, but did nonetheless reach 8.1% over the course of the year as round 140,000 m2 of new space was completed without any notable increase in demand. The increase in vacancy rates was also apparent in areas immediately adjacent to the centre of Oslo such as the Ensjø district, where a significant proportion of Ferd Real Estate’s commercial property portfolio is located. Rental levels for properties in the warehousing and logistics market held up relatively well in 2009, even though this sector was initially expected to show a decline.
- Purchase and sale of commercial property: The trend of falling prices in the market for purchases and sales of commercial property continued in 2009, but showed signs of slowing towards the end of the year. Ferd Real Estate continues to monitor the market to identify new investment opportunities.
- Residential real estate: The market for sales of new apartments showed some signs of recovery towards the end of 2009 following a virtual stop in 2008. The market for sales of existing residential properties was surprisingly strong in 2009.
Ferd Real Estate generated operating revenue of NOK 206 million in 2009 as compared to NOK 199 million in 2008. Operating profit for 2009 was NOK 149 million, as compared to NOK 59 million in 2008.
Real estate management, operation and maintenance
Ferd Real Estate is committed to being a “hands-on” real estate investor, and manages its own properties. The operation and maintenance of the portfolio proceeded in accordance with the planned program in 2009, and no major problems were experienced.
Ferd Real Estate is currently in a strategy period which started in 2008 and covers the period to and including 2010. A main feature of the change from the 2005-2007 strategy is that the business area intends to increase its exposure to real estate from around NOK 1 billion to around NOK 3 billion over the course of the current strategy period. Other significant changes are a focus on joint venture projects where appropriate, and expanding the scope of the business area to include investing in international real estate.
Ferd Real Estate continued its program of work over the course of 2009 to adapt the business area’s structure, staffing and work processes for the expansion of its activities. As part of this process, Knut M. Tolo joined the team as Project Manager. The business area intends to recruit a project co-ordinator and a real estate analyst in 2010.
COMMERCIAL PROPERTY PORTFOLIO
Commercial development: In 2009, Ferd Real Estate acquired a 270,000 m2 site at Vestby, which has scope for a number of industrial units with warehousing/logistics space totalling 100,000 m2. The site has planning approval and building work will start in pace with the agreement of leases with new tenants.
The 133,000 m2 site at the Gardermoen Industrial Park is strategically located for both the Oslo Gardermoen Airport and the most important traffic routes in the area. Ferd Real Estate intends to construct one or more industrial units offering around 40,000 m2 of warehousing/logistics space. The old barracks building has been demolished, and most of the gravel deposits have been extracted and sold. The site already has planning permission, and construction work is due to start in 2011.
Construction work on an industrial unit offering up to 14,000 m2 of warehousing with office space at Mastemyr in the Oppegård municipality is planned to start in 2010.
- Commercial rental: Ferd Real Estate’s commercial rental portfolio amounted to approximately 70,000 m2 at the close of 2009. The Tiedemanns site at Ensjø in Oslo accounts for around 55,000 m2 of the total. With effect from 2009, the existing buildings at this former factory site are defined as project properties, and this space will be rented out for periods that reflect the timetable for demolition as the development of this site proceeds. Development of the site is expected to take between 10 and 15 years. By the end of 2009, this space was almost entirely rented out for warehousing and light industry.
RESIDENTIAL REAL ESTATE DEVELOPMENT PORTFOLIO
- Tiedemanns site, Ensjø: Work on planning this residential project continued throughout 2009 in partnership with Skanska Bolig AS, which joined Ferd Real Estate as a partner for this project in 2008 with a 50 percent interest in the first four construction phases for around 680 units. Outline planning permission was approved by the City of Oslo authorities in December 2008 and planning application for the detailed design was submitted to the City authorities in January 2010. Off-plan sales are due to start in May 2010, and construction will start once sales have been agreed for a sufficient number of the 41 units in the first phase. The total project will involve around 1,400 apartments and townhouses, which will be constructed over a period of 10-15 years.
- Bjerke Panorama: The start of this project to develop 170 residential units has been deferred until market conditions improve. Ferd Real Estate owns 70 percent of this project, with the remaining 30 percent held by the construction company Realbygg AS. The business area will evaluate the possible sale of Ferd’s interest in Bjerke Panorama AS.
- Selvaag Pluss Eiendom KS: This company – in which Ferd Real Estate AS has been a partner since 2005 – achieved significantly better sales of apartments in 2009 than in 2008. The long-term prospects for the Selvaag Pluss concept are considered to be good, and the company is continually seeking new project opportunities.
INTERNATIONAL REAL ESTATE PORTFOLIO
Ferd Real Estate has invested EUR 25 million - equivalent to just over NOK 200 million - in the Harbert Europe Real Estate Fund II, which holds real estate investments in Sweden, France, Great Britain, Spain, Poland, Ireland and Germany. The fund took advantage of weak conditions in the real estate market in 2009 to make a number of major investments.
- Commercial property rental market: The decline in rental levels that followed the financial crisis is now past its low point, but some further increase in vacancy rates is likely given the number of projects due to be completed in 2010. Ferd Real Estate does not expect to see any major changes in vacancy rates for the business area's premises in 2010.
- Purchase and sale of commercial property: Ferd Real Estate has found it difficult over recent years to find attractive investments offering a return that satisfies the business area's requirements. However, forecasts suggest that more properties will come onto the market in 2010 than was the case in 2009, and the business area continues to work on identifying attractive new investment opportunities.
- Residential property: Work on the development of the Tiedemanns site in partnership with Skanska Bolig will be the most important task for Ferd Real Estate in 2010.