• Income from operations amounted to ISK 2,135 million
  • Operating profit before changes in value and depreciation amounted to ISK 1,326 million
  • Total loss amounted to ISK 235 million
  • Net cash from operations amounted to ISK 976 million
  • The book value of investment properties amounted to ISK 95,619 million
  • The book value of assets for own use amounted ISK 4,078 million at the end of the period
  • Changes in value of investment properties was negative by ISK 771 million
  • Interest bearing debt amounted to ISK 59,511 million at the end of the period
  • Equity ratio was 31.5%.
  • Loss per share was ISK 0.07

The quarterly financial statements of Eik fasteignafélag hf. for the period 1 January to 31 March 2020 were approved by the Company’s Board of Directors and CEO on 29 April 2020. 

Attached is a quarterly report which contains quarterly financial statements for the first three months of the year along with more detailed information on the Company’s operations than are included in the announcement.

Company operations

The Company performed well in the first three months of 2020 and the quarterly results were in line with management’s original forecasts. Operating income for the period amounted to ISK 2,135 million. Of this amount, rental income was ISK 1,861 million. Operating profit before changes in value and depreciation amounted to ISK 1,326 million. Loss before income tax amounted to ISK 271 million and total loss for the period amounted to ISK 235 million.

On 25 March 2020 the Company published announcement at Nasdaq Iceland that the earnings forecast for the year 2020 no longer applies due to uncertainties regarding economic effects of the COVID-19 pandemic.

The Net Operating Income (NOI) ratio (i.e. operating profit before revaluation and depreciation as a ratio of lease income) was 71.4% for the first quarter of 2020, compared to 72.2% for the first quarter of 2019.

The Company's investment properties are valued at fair value in accordance with International Financial Reporting Standards (IFRS), based in part on the discounted future cash flows of individual assets. Changes in fair value are recognised in changes in value of investment properties, which were negative by ISK 771 million in the period.

Balance Sheet

The Company's total assets amounted to ISK 102,363 million as at 31 March 2020. Of this, investment properties valued at ISK 95,619 million, consist of real estate leased to tenants amounting to ISK 92,770 million, leased assets (property utilisation rights) of ISK 2,066 million, real estate in development of ISK 321 million, building rights and lots of ISK 448 million and pre-paid street construction fees in the amount of ISK 13 million. Assets for own use amounted to ISK 4,078 million. The Company's equity amounted to ISK 32,271 million at the end of March 2020 and its equity ratio was 31.5%. Total liabilities amounted to ISK 70,092 million as at 31 March 2020, of which interest-bearing debt was ISK 59,511 million and deferred tax liabilities ISK 7,216 million. 

Economic occupancy rate

The Company's economic occupancy rate was 94.3% at the end of the quarter and decreased by 0.6% from year-end 2019.

Share buybacks

On 10 March 2020 the Company announced that the Board of Directors had approved a buyback plan, which was based on an authorisation which was granted at the Company’s shareholders' meeting on 12 December 2018 and Kvika banki hf. was engaged to execute the plan. The buyback plan was enacted on 12 March 2020 but on 25 March 2020 the Company announced that the Board had decided to end the buyback plan. The Company purchased own shares of ISK 7.5 million nominal value in the quarter for a total of ISK 46.2 million, but the plan had assumed purchase for up to ISK 500 million.

The Company’s own shares were ISK 50,117,000 at the end of the quarter, but were ISK 42,617,000 at the end of 2019. Outstanding shares thus amount to ISK 3,415 million.

Outlook and effects due to COVID-19

At this time it is unclear what economic effect the COVID-19 pandemic will have on Eik fasteignafélag for the short or long term. The Company benefits from having a diverse asset portfolio, has sizeable cash position, is well within covenants in loan agreements and has diverse tenants, as there are over 400 legal entities and individuals paying rent to the Company.

The results of the year will mostly depend on how the Company's tenants will come through the pandemic and how quickly daily life will return to normal. The Company's tenants that are currently facing the most operational risk rely on tourism, since there is significant uncertainty on when restrictions on travelling will be lifted.

Some of the Company's tenants have encountered revenue loss and the Company has put emphasis on assisting the tenants to the best of its abilities. For instance, the Company went on the offence with its tenants in hotel and restaurant operations by producing marketing materials at the Company's cost where people are encouraged to utilise the services being offered. Furthermore, Deloitte was engaged to assist the Company in supporting the tenants needing assistance with achieving overview of the situation and going forward, i.e. in planning, which solutions are offered by the government along with Deloitte advising the Company with regards to solutions for tenants. The solutions are at this point mainly deferrals of lease payments for the tenants which have encountered significant revenue loss and have submitted documents to support that. Thus, it is likely that the balance of trade receivables increased in the coming months which could lead to impairment of trade receivables will increase between years. Collection of lease payments for April has been good considering the situation, as around 80% of issued lease income has been collected. No lease invoices have been issued related to turnover in April.

What the future holds in relation to assistance to tenants will become clearer when the progress of the pandemic will become clearer as well as economic development.

The Company has also taken several measures in order to ensure even stronger position of cash and cash equivalents:

  • The Company has secured a banking facility of ISK 1,400 million.
  • The Company's buyback plan was shortened and buyback amounted to ISK 46.2 million at the end of it, but the plan had capped the total amount of buyback for up to ISK 500 million.
  • The Company's annual general meeting was postponed due to a ban on gatherings and thus the Board's proposal regarding payment of dividend has not been discussed, but previous proposal for the annual general meeting was for ISK 800 million as dividend payment.

In addition to this the Company has an undrawn line of credit amounting to ISK 800 million and unpledged assets amounting to over ISK 4,400 million which the Company could use to secure further access to cash if needed. Furthermore, the Company has the opportunity to postpone certain projects which are subject to agreements with tenants.

Company Portfolio

Properties owned by the Group number just over 100 and total almost 310,000 m2 in 600 units. Total number of tenants is over 400. The Company's principal properties in the capital region are Borgartún 21 and 21a; Borgartún 26; Suðurlandsbraut 8 and 10; Mýrargata 2-16; Pósthússtræti 2 (Hótel 1919); Smáratorg 3 (Turninn); Smáratorg 1; Álfheimar 74 (Nýi Glæsibær); Grjótháls 1-3 and Austurstræti 5, 6, 7 and 17. The Company’s principal property outside the capital region is Glerártorg. Its largest tenants are Húsasmiðjan, Icelandair Hotels, Fasteignir ríkissjóðs, Rúmfatalagerinn, Landsbankinn, Sýn, Síminn, Össur, Míla and Deloitte.

The largest share of Eik's real estate portfolio is office space, or 45%, followed by commercial premises (24%), warehouses (13%), hotel (10%), health related operations (4%) and restaurants (4%). Around 91% of the Company's real estate is located in the capital region, of which 37% is in financial and business districts of Reykjavík (mainly in postal codes 105 and 108), 19% in downtown Reykjavik and 19% in the Smárinn-Mjódd shopping centres. Of the remaining, 9% is located outside the capital region, whereof almost 8% is in Akureyri.

Electronic presentation

An electronic presentation will be held on Thursday, 30 April 2020 at 8:30 am. Garðar Hannes Friðjónsson CEO and Lýður H. Gunnarsson CFO will present the results and respond to questions following the presentation.

The presentation will be accessible at:

https://eik.webex.com/eik/onstage/g.php?MTID=e316fce6bb915478b852c94943c690248

2020 Financial Calendar

  • Quarterly results Q2 2020                                                    27 August 2020
  • Quarterly results Q3 2020                                                    28 October 2020
  • Management accounts 2020 and 2021 budget            11 February 2021
  • 2020 Annual Results                                                               4 March 2021

For further information contact:

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

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

Attachment