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Strategic operations in 2013

Sponda achieved its targets with respect to the economic occupancy rate of its properties as well as net operating income. Comparable net operating income increased, the economic occupancy rate was maintained almost at the previous year’s level, and cash flow remained stable. The operational focal points were maintaining a stable economic occupancy rate, selling non-strategic properties and refinancing loans.

Financial objectives

Sponda’s long-term goal is to maintain its equity ratio at above 40 per cent. The equity ratio was 41 per cent at the end of 2013 (2012: 40 per cent). Sponda’s aim is to pay a dividend of approximately 50 per cent of the cash flow from operations per share for each accounting period. Dividend payment takes into account the financial situation and the company’s development needs.

The company’s total revenue remained at the same level as in 2012 and the comparable net operating income increased slightly. Sponda’s total revenue in 2013 was EUR 264.3 million and the net operating income EUR 190.9 million.

Occupancy rates remained almost unchanged from 2012 despite the challenging market situation.

Implementation of growth strategy

Sponda owns a considerable amount of land and numerous properties in excellent locations with high development potential. The property portfolio was developed in 2013 by selling non-strategic properties. A new property development project that will begin in spring 2014 in the Ilmala district of Helsinki will increase the company’s strategic property ownership. The Ilmalanrinne office complex, with approximately 15,000 square metres of net floor space, is estimated to be completed for use by Sweco Finland in December 2015. In 2013, Sponda sold properties for a total of EUR 33.1 million in line with its strategy.

The implementation of the strategy was also supported by organisational changes in 2013. Additional resources were allocated to strengthen the leasing of business premises and property sales.

Sponda will continue to implement its new strategy in 2014 through property development and property acquisitions. Property sales will be used to finance the growth of the property portfolio in strategically important areas.

Strategic actions taken in 2013 and their impacts

Action

   

Strategic impact

Strategy revision

Sponda is planning to exit both the Russian market and the Real Estate Funds business in the next three to five years. The company is also planning to sell its entire logistics property portfolio as well as its property ownership in Turku.

   

The main goals are simplification of the business structure, more focused property ownership and profitable growth.

 

Sponda implemented organisational changes to support the strategy.

   

Strengthening leasing and property sales resources supports the implementation of the strategy.

Sold properties

Sponda sold the Business Center NRC and Inform Future office buildings in St. Petersburg.

   

The sales of properties that are of secondary importance for the new strategy will be used to finance strategic investments.

Sponda sold an office property located at Lönnrotinkatu 28 in Helsinki.

   

The sale of the property is part of the implementation of Sponda’s new strategy, which was published in September 2013.

Sponda sold an office property located at Linnankatu 18 in Turku.

   

The sale of the property is part of the implementation of Sponda’s new strategy. The sale decreases the company’s property ownership in Turku.

Sponda sold a logistics property located at Valuraudankuja 6, Helsinki.

   

The sale of the property is part of the implementation of Sponda’s new strategy. The sale decreases the company’s ownership of logistics properties.

Property development

Sponda develops an office property for Sweco in Helsinki’s Ilmala district. Construction on the three-building complex will begin in spring 2014.

   

The new low-energy buildings will increase Sponda’s property ownership in urban developing areas with excellent public transport links.

The renovation of the Citycenter shopping centre and business complex in Helsinki’s central business district was completed.

   

The development of the Citycenter property, which has good transport links, increases the proportion of shopping centres in Sponda’s property portfolio and boosts the company’s property ownership in a key strategic area. 

The construction of new business premises for Talentum Plc in Helsinki’s Ruoholahti district, at Itämerenkatu 23, was completed in early 2013.

   

The new office building, which benefits from the excellent public transport links in Ruoholahti, strengthens Sponda’s portfolio of energy-efficient properties in a key strategic area.

Sponda started a project to modernise an office building at Porkkalankatu 20 in Helsinki’s Ruoholahti district for use of Sanoma Magazines Finland Ltd and Sanoma Pro Ltd. The project will be completed in spring 2015.

   

Sponda will customise the premises located in a key strategic area to match the tenant’s needs while taking flexibility into consideration.

Refinancing and other financial arrangements

Sponda redeemed the remaining EUR 92.8 million of a hybrid bond with an original notional value of EUR 130 million. The bond was originally issued in 2008.

   

After the transaction, the company’s only outstanding hybrid loan is the EUR 95 million hybrid bond issued in December 2012.

Sponda signed an agreement on the five-year extension of a mortgaged loan of EUR 85 million with Helaba.

   

The agreement extended the loan, which was originally set to mature in spring 2014, until spring 2018.

Sponda issued a EUR 150 million senior unsecured bond. The bond carries a fixed annual coupon at the rate of 3.375 per cent. The bond was significantly oversubscribed.

   

The proceeds from the bond offering were used to repay existing debt and for the Group’s general financing needs.

Sponda signed an agreement with Danske Bank A/S, Helsinki branch, for an unsecured five-year credit limit of EUR 100 million.

   

The arrangement extended the credit limit, which was originally set to mature in June 2014, until December 2018.

Sponda signed an agreement with Nordea Bank Finland for a four-year unsecured loan of EUR 150 million.

   

The agreement extended the loan, which was originally set to mature in 2014, until December 2017.

Business development: the environment and the customer experience

Subcontractors’ processes were audited and reporting was developed as part of Sponda’s quality and purchasing process.

   

The customer experience is improved through the development of property services.

Sponda and Nordea Bank’s branch at Kaivokatu 12 in Helsinki signed a Green Lease agreement in 2013.

   

The common targets and compensation model stipulated by the Green Lease agreement promote environmentally friendly solutions and the reduction of energy consumption at the property.

Sponda obtained LEED® Gold Environmental Certification for its Ruoholahden Ankkuri office building, which was completed in spring 2013. The building received an especially good score for its efficient use of energy.

   

Sponda applies for international environmental certification for all new buildings and major renovation projects.

Three environmental certificates for existing buildings were updated during the year.

   

Environmental certificates for existing buildings are aimed at reducing the energy consumption and environmental load arising from the use of business premises.

At the end of the year, Sponda adopted new research tools to collect information on customer encounters through the various stages of the customer relationship.

   

The information collected by using the research tools can be used to develop Sponda’s own operations in order to improve the customer experience.

A CRM system development project was launched in conjunction with the company’s ERP project.

   

The CRM system development project will improve customer information management, which will support the development of customer service.