Summary

FERD REAL ESTATE – 2018 SUMMARISED

MAIN FEATURES

  • Return of NOK 315 million (12%) in 2018
  • Invested in a major residential property development project in Moss
  • Project to extend Swix’s multi-use building in Lillehammer

Ferd Real Estate develops high-quality environmentally friendly real estate projects that are compatible with their surroundings and support Ferd's vision to create enduring value and leave clear footprints.

Return

At the end of 2018, the equity value of the portfolio was NOK 2.58 billion, while the property value was NOK 4.73 billion. The portfolio generated a return on equity for 2018 of 12%.

Market

2018 proved to be another busy year for transactions in the commercial property market, with a large number of transactions and total volume in line with 2017. The persistently high level of demand for real estate and the expectation that rental prices will increase going forward appear for the time being to be counteracting the impact on prime yields of higher interest rates and the outlook for further increasing interest rates.

There are still regional differences in the commercial property market where areas with many oil-related companies still experience higher office vacancy rates and stronger downward pressure on rental prices than other areas such as Oslo’s central business district. There were signs of an upward trend for office rental prices over the course of 2018 in central Oslo in particular, but other areas of Oslo and Oslo's west corridor also showed a marginal increase. As in 2017, this was partly due to the supply of office space being limited by conversions of office buildings to residential use and a low increase of new office construction in central areas.

Following the weak performing residential market in 2017, particularly in the second half of the year, prices largely returned in 2018, particularly in the Oslo area (up 6.3% over the year). There was also an increase in demand for residential real estate and a record-high number of transactions, even though the supply of new housing has increased.

ORGANISATION

Ferd Real Estate has nine employees and is organised into the areas of development/projects, investment/finance, markets/rental and property management.

Residential real estate development portfolio

  • Tiedemannsbyen, Ensjø:
    The Tiedemannsbyen project has a development potential of approximately 1,600 residential units, and will be developed over a period of around 15 years. The first 660 units are being developed by Tiedemannsbyen DA, while Tiedemannsfabrikken AS will develop the next 700 units.

    Tiedemannsbyen DA is owned 50/50 by Ferd Real Estate and Skanska Bolig, while Tiedemannsfabrikken AS is owned 50/50 by Ferd Real Estate and Selvaag Bolig. The remaining areas are 100% owned by Ferd Real Estate.

    The Utsiktskvartalet project, was the first sales phase for 258 units was launched in the autumn of 2015, has now sold out, and the final units will be handed over to buyers in the first six months of 2019. This will mean that all 660 units built on behalf of Tiedemannsbyen DA will have been completed and handed over to their end-customers.

    Virtually all of the 158 units in the first area (area F) of the Tiedemannsfabrikken development, which was launched in spring 2016, have now been sold, with the units handed over to buyers in the final quarter of 2018.

    The sales process for the 222 units that form the second area (area E) of the Tiedemannsfabrikken development has been launched, and construction has started. The first units in this area are due to be handed over to buyers in late 2019/early 2020.

    Ferd Real Estate and Selvaag Bolig agreed in 2017 to extend their collaboration to include developing a further 330 units in the next area (area G) of the of the Tiedemannsbyen development. This project has been granted building permission and a building contract has been negotiated with Veidekke under which the sales process is expected to be launched in 2019.

    A total of 54 residential units were sold in Tiedemannsbyen in 2018 as compared to 109 in 2017.
     
  • Bråtejordet, Strømmen:
    Ferd Real Estate is developing a residential area in collaboration with Mestergruppen in Bråtejordet, adjacent to Strømmen station. The project will comprise approximately 400 townhouses/detached houses/apartments.

    The first sales phase was launched in the autumn of 2014 and construction work on the first 40 units started in the summer of 2015. The first 123 units were handed over to buyers in 2017 and 2018.

    The next area to be developed (B7) is now in the detailed planning phase, and sales are expected to start in the first half of 2019.
     
  • Ski:
    Ferd Real Estate is involved in two large residential development projects in the centre of Ski, representing total potential of around 500 units in addition to retail/commercial premises and parking spaces.

    Planning of the area development process and detailed planning approval is now underway for the areas known as Skolekvartalet and Trekantkvartalet. Skolekvartalet is owned 50/50 by Ferd Real estate and Ski Sentrum AS, while Trekantkvartalet is 100% owned by Ferd Real Estate.
     
  • Høyda – Moss:
    In the summer of 2018 Ferd Real Estate bought Rabekkgata 4 and 6 in the Høyda area of Moss, close to Melløs Stadium. The site is 55,000 square metres, and Ferd Real Estate intends to develop it primarily as a residential area . A parallel project involving four firms of architects was completed in the autumn of 2018, and in 2019 the formal process of developing the area plan will start. Approximately 800 residential units are expected to be built on the land for a range of different target groups. The project will make a big contribution to the transformation of the Høyda district from what has been an industrial and trading area into a vibrant and attractive district of Moss.
     
  • Vestre Billingstad, Asker:
    Ferd Real Estate is collaborating with a number of real estate owners on the zoning planning process for the western part of an area known as Billingstadsletta in Asker municipality where residential housing developments totalling up to 1,650 units will take place. Approval of the zoning plan for Vestre Billingstad was granted by Asker municipality at the end of January 2018.

    Ferd Real Estate owns the property at Bergerveien 12, which is currently leased by ABB. The lease contract with ABB is due to expire in some years' time, and Ferd Real Estate is planning a residential development project for 420 units following expiry of the lease.

Commercial property portfolio

  • Development:
    Ferd Real Estate has several ongoing projects in commercial property.

    Construction of the Asker Tek building was completed in December 2017. This is a multi-tenant office building totalling 16,300 m2 with Indra Navia as the largest tenant, and represents the third phase of Kraglund Kontorpark, which is located adjacent to Asker train station. This development has been designed with particular focus on the office solutions of the future, with a high degree of flexibility and emphasis on digital solutions. In addition, Asker Tek is a Breeam-certified environmentally friendly building with an 'A' energy classification. A further two lease contracts were signed in 2018, and Ferd Real Estate expects to agree leases for the remaining space over the course of 2019.

    Østensjøveien 16 will be an environmentally certified office building of approximately 14,000 m2 centrally located in the Helsfyr/Bryn district of Oslo. A lease contract for approximately 5,000 m² was agreed with Sophies Minde in 2017, and construction is now underway. The building is due for completion in the first half of 2019.
     
  • Warehousing/logistics:
    Ferd Real Estate, Veidekke and Fabritius are engaged in a joint collaboration to develop the sites owned by Ferd Real Estate and Veidekke in the Gardermoen Industrial Park, acting through the company FFV Gardermoen AS. Each of the parties owns 1/3 of FFV Gardermoen. The sites in question total approximately 360,000 m2 and represent a very significant development potential intended principally for warehousing, logistics and combination facilities. In addition, some areas are earmarked for retail of items with large space requirements.

    Frogn Næringspark AS, which Ferd Real Estate part-owns together with NHP Eiendom and Stiftsstaden, owns sites totalling approximately 110,000 m2 with development potential of around 40,000 m2.

    Ferd Real Estate also owns two sites intended for warehousing and logistics developments at Vestby and Mastemyr. The sites total approximately 240,000 m2 with development potential of around 100,000 m2.

    October saw the start of the construction work for the extension of the warehouse function of Swix’s mixed-use building in Storhove in Lillehammer. The warehouse, which will include a new robotic storage solution, is being expanded by approximately 5,000 square metres and is expected to be completed in June. In connection with this, we have acquired additional land plots to secure possible further future expansion for Swix, or for other users.
     
  • Rental:
    With the exception of the remaining areas in the recently completed office building development in Asker, and the office building currently under construction at Østensjøveien 16 in Bryn/Helsfyr, virtually all available space was fully let at the start of 2018. Ferd Real Estate’s commercial rental portfolio amounted to approximately 180,000 m2 at the end of 2018.

Financial investment portfolio

Ferd Real Estate continually evaluates financial investment opportunities both in Norway and internationally where the underlying asset is some form of real estate.

FUTURE PROSPECTS

The Norwegian mainland economy is expected to achieve good growth in 2019, with a small decrease in the overall unemployment rate, although with some regional differences.

In the Greater Oslo Region, we think that the stable low unemployment rate and rising office rental prices will result in a continued high level of activity in the office market, even though Norges Bank has announced that interest rates will probably increase moderately. Following the growth in residential real estate prices in 2018, we think that 2019 will show a marginal price growth even though the number of new homes on the market is expected to increase. A good second-hand market, particularly in Oslo, and high residential prices in general may reduce the difference between second-hand homes and new homes, which could help increase sales of new homes in 2019. However, any unexpected setback for the Norwegian economy and/or an unexpected sizeable increase in interest rates could potentially impact growth in a more negative direction.

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