Continued Real Revenue Growth
An overview of the key operating figures for the first quarter of 2025 reveals encouraging trends for Heimar hf.
Financial Highlights
In the initial three months, Heimar reported operating revenues of ISK 3.7 billion, marking a 4.3% increase in rental income when compared to the previous year.
- Real growth in rental income from a Like-for-Like portfolio stood at 1.2% year-on-year.
- EBITDA reached ISK 2.45 billion, an uptick of 3.2% compared to the same period last year.
- Net profit recorded was ISK 1.4 billion, though this showed a decrease from ISK 3.9 billion in the same period of the previous year.
- Investment properties were valued at ISK 194 billion.
- The fair value variation of investment properties was about ISK 1.5 billion for Q1.
- Cash and cash equivalents totaled ISK 5.1 billion at period-end.
- Interest-bearing debt totaled ISK 119.7 billion, with specific bank loans connected to 2026 having been refinanced.
- The leverage ratio hovered around 62.8% while the equity ratio was at 31.9% at the end of the quarter.
CEO Insights
Halldór Benjamín Þorbergsson, CEO of Heimar, expressed satisfaction with the operational advancements, indicating that the company continues to execute its ambitious growth plans amidst a robust commercial real estate market. The demand across Heimar's core areas remains strong, validating the increase in rental income.
Year-on-year revenue growth experienced some reduction due to property sales outside the core focus areas; however, real revenue growth within the Like-for-Like framework stands firm at 1.2%.
Strategic Moves
Heimar consistently evaluates potential opportunities for divestments and external investments, witnessing a slight contraction of nearly 2% in portfolio square meterage since the end of 2022 due to strategic asset sales. Notably, in 2024, the company successfully sold assets valued at ISK 3.3 billion, averaging over 10% more than the book value.
The refinancing strategy remains pivotal, as Heimar has successfully extended its bank loans maturing in 2026 to 2031, ensuring there are no debt maturities looming in the next two years, save for an ISK 1,240 million bond series that is maturing soon.
Shareholder Value Focus
Aligning with shareholder interests, Heimar is determined to continue its share buyback program as long as market valuations stay beneath the book value of equity and deferred tax liabilities. Enhanced profitability is crucial for investment decisions, and the management aims to improve competitiveness by concentrating on development within core sectors.
Looking ahead, the portfolio is expected to expand with the anticipated addition of Gróska, which is set to boost the total asset base by around 25,000 square meters.
Market Positioning
Heimar stands out as an attractive investment opportunity for those interested in the Icelandic economy. The diverse mix of CPI-linked and turnover-linked cash flows from various tenants provides financial resilience, with nearly half of revenues derived from public entities and listed companies.
In anticipation, management is excited about the upcoming months and sees significant potential for value creation for stakeholders.
Operations and Performance Analysis
The operating revenues for the initial quarter registered at ISK 3,686 million, with rental income making up ISK 3,486 million. This reflects a rise of 4.3% from the prior year.
When divested properties are taken into account, the net increase in rental income adjusts to a notable 5.9%, signifying a real growth rate of about 1.2% year-on-year. The EBITDA of ISK 2,449 million further signifies a healthy performance, denoting a 3.2% year-over-year increase.
Asset Evaluation
Heimar's investment properties, excluding leasehold assets, are valued at approximately ISK 190,729 million, spread across 94 properties and covering about 365,000 square meters. The occupancy rate remains robust at around 97%, reflecting operational efficiency.
Acquisition Activities
The company recently announced the acquisition of Gróska ehf., a property boasting significant potential as a vibrant innovation community in Reykjavík, further expanding its footprint in Iceland's commercial real estate landscape.
Additionally, in a separate agreement, Heimar aims to acquire 100% of Tryggvagata ehf., which holds two prime properties in Reykjavík, including a four-star hotel.
Future Projections
Throughout Q1, Heimar successfully signed 24 lease agreements, covering nearly 7,770 square meters, maintaining consistency with the previous year’s figures.
Demand for Space
Management has identified strong demand for commercial space, with many new tenants occupying properties across Heimar's core locations. Significant leases have been established, including agreements with various entities for new developments.
Construction projects are underway, such as the renovation of Smáralind into modern office spaces and the anticipation of a new office building scheduled to welcome tenants by summer 2025.
Sustainability Commitment
Heimar prioritizes sustainability in every operational facet, focusing on enhancing their real estate portfolio's performance. Several properties are currently undergoing BREEAM certifications, and electric vehicle charging stations have been installed to promote eco-friendly practices.
Strong Financial Position
The financial metrics confirm Heimar's robustness, maintaining a strong equity ratio of 31.9%, comfortably above covenant requirements.
With access to cash reserves of ISK 5,113 million and undrawn credit facilities, the company is positioned for future opportunities and growth.
Upcoming Events
To accompany the Q1 earnings preview, Heimar will hold an open investor presentation, welcoming stakeholders to engage with the management about performance and strategies.
Contact Information
For questions and further communication, Halldór Benjamín Þorbergsson, CEO of Heimar, is reachable at +354 821 0001.
Frequently Asked Questions
What were the operating revenues for Heimar hf. in Q1 2025?
The operating revenues amounted to ISK 3.7 billion.
How much did the net profit decline compared to last year?
The net profit was ISK 1.4 billion compared to ISK 3.9 billion the previous year.
What steps is Heimar taking for sustainability?
The company is working toward BREEAM certifications and has installed electric vehicle charging stations.
Is Heimar acquiring new properties?
Yes, Heimar announced acquisitions including Gróska, a prominent property in Reykjavík.
Who can be contacted for more information?
Halldór Benjamín Þorbergsson, CEO of Heimar, is available at +354 821 0001 for further inquiries.
