Return

At the end of 2019, the property value of the portfolio was NOK 5.4 billion and the equity value was NOK 3.0 billion. The portfolio generated a return on equity for 2019 of 17.6%.

Market

2019 proved to be another busy year for transactions in the commercial property market, with a large number of transactions and an increase in the total volume of transactions from 2018. The persistently high level of demand for real estate and the expectation that rental prices will increase going forward, as well as persistently low interest rates, counteracted the effect of greater uncertainty about global increases in prime yields.

There continues to be large regional differences in the office 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.

2019 saw rental prices increase, particularly in central Oslo, as well as marginal increases in other areas of Oslo and the western corridor. The higher rental prices resulted in an increase in new commercial property projects coming to market.

2019 was a year of stable and positive growth in residential real estate prices, which climbed 2.6% in Norway. Residential real estate prices had a higher increase in Oslo than in Norway as a whole, and in Oslo were up 5.5% in 2019 (6.3% in 2018). There continued to be a high level of demand and a large number of transactions in 2019, and Oslo stood out with higher demand and more transactions than the rest of Norway. Norges Bank raised its key policy rate by 25 basis points three times in 2019, but interest rates were still low by historical standards, and the increases had only a modest impact on the residential real estate market.

Organisation

FERD Real Estate has nine employees who cover the areas of development/projects, investment/finance, markets/rental and property management.

Residential real estate development portfolio

• Ensjø, Oslo:
  The Tiedemannsbyen project has a development potential of approximately 1,400 residential units, and is being developed over a period of around 15 years. The first 660 units were developed by Tiedemannsbyen DA, while Tiedemannsfabrikken AS is developing the next 700 units. Ferd Real Estate has a further 300 units in Ensjø in its sole ownership.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 final area to be developed by Tiedemannsbyen DA, Utsiktskvartalet, which comprises a total of 258 units, was launched in 2015, and the final units were handed over to buyers in 2019.

  All of the 158 units in the first area (area F) of the Tiedemannsfabrikken development, where the sales process for which was launched in spring 2016, were handed over to buyers in the final quarter of 2018.

  Nearly all the 222 units that form the second area (area E) of the Tiedemannsfabrikken development, where the sales process for which was launched in spring 2017, have now been sold. The first units in this area were handed over to buyers in the second half of 2019, with the remaining units set to be handed over in the first six months of 2020.

  Ferd Real Estate and Selvaag Bolig agreed in 2017 to extend their collaboration to include developing the next area (area G), which will comprise 322 units. The sales process for approximately half of these units was launched in spring 2019 and has progressed well, and construction is now underway.

  A total of 107 units were sold in Tiedemannsbyen in 2019 as compared to 54 in 2018, and fewer than 245 units remain.

• 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. 123 units were handed over to buyers in 2017 and 2018.The first sales phase for the next area to be developed (B7), which comprises 186 apartments and town houses, was launched at the end of 2019, and a total of 9 units were sold before the end of the year.
• Central 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 are 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. The planning processes for both projects are expected to be completed in 2020.
• 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 zoning plan was started. Approximately 800-900 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 transforming Høyda from what has been an industrial and trading area into a vibrant and attractive district of Moss.
• Vestre Billingstad, Asker:
  Ferd Real Estate collaborated 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 are envisaged. 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 a few years’ time, and Ferd Real Estate is planning a residential development project for 420 units following expiry of the lease.
• Høvik, Bærum:
  In 2019 Ferd Real Estate entered into agreements to purchase a number of properties near Høvik station in Bærum municipality. The area around Høvik station is well-suited for an attractive urban development once the new E18 eventually passes through a tunnel past Høvik.

Commercial property portfolio

• Development projects:
  Ferd Real Estate has several ongoing office projects.Construction of the Asker Tek building was completed in 2017. This is a multi-user 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 station. This development has been designed with a 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 new lease contract for space in this development was signed in 2019, and the office building is now nearly fully let.

  Østensjøveien 16 is a BREEAM-certified office building with an ‘A’ energy classification totalling approximately 14,000 m² that is centrally located in the Helsfyr/Bryn district of Oslo. The building was completed in the second half of 2019, with Sophies Minde as the largest tenant. Several new lease agreements were entered into for a total of approximately 3,800 m², and installation work for the new tenants is underway. The remaining space is expected to be leased out in 2020.

• 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 1,000,000 m² and represent a significant development potential intended principally for warehousing, logistics and combination facilities. In addition, some areas are intended for large item retail.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 140,000 m² with development potential of around 50,000 m². A plot totalling 110,000 m² was sold in 2019 to the logistics company DSV, which is constructing a new terminal and logistics building.

  The extension to the warehouse function of Swix’s mixed-use building in Storhove in Lillehammer was completed in the second half of 2019. The warehouse, which includes a new robotic warehouse, was expanded by approximately 5,000 square metres.

• Rental:
  With the exception of the remaining areas in the recently completed office buildings in Asker and in Bryn/Helsfyr, virtually all available space was fully let at the start of 2020. Ferd Real Estate’s commercial rental portfolio amounted to approximately 170,000 m² at the end of 2019.

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 outlook

The Norwegian mainland economy is expected to grow moderately in 2020, with the overall unemployment rate remaining consistently low, although with regional differences.

In the Greater Oslo Region, we think that the consistently low unemployment rate and the expectation that office rental prices will increase will result in a continued high level of activity in the office market.

Following the stable development in residential real estate prices in 2019 in Norway, we think that we will continue to see modest price rises in 2020. However, we think that Oslo, where the construction of new homes is expected to fall short of the level needed to match demand, may see higher residential real estate price increases than the rest of the country.

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.