The first part of the Tiedemannsbyen residential project, with 199 residential units, was sold out during 2012
Lease contract signed and construction started on a new office building of 25.000 sq.m. for Aibel at Kokstad in Bergen
Ferd Real Estate is an active real estate investor, involved both in real estate development and asset management with particular focus on the market segments of residential development, office premises and warehousing/logistics facilities. Over the course of 2012, the business area continued the process of gradually increasing Ferd's exposure to real estate, and this included the two new major development projects: purchase of a residential development site at Bråtejordet in Skedsmo as well as site purchase and start of construction on a new office building for Aibel at Kokstad in Bergen.
Operations and Returns
At the close of 2012, the equity value of the portfolio was NOK 1.5 billion. The portfolio generated a negative return on equity for 2012 of 0.8%. The negative return was largely due to downward adjustment of valuations of development sites for warehousing/logistics facilities, partly because the process of planning permission for these sites is taking somewhat longer than anticipated and partly because market demand is for the moment somewhat lower than forecast when these investments were first made.
All the existing office premises and warehouse facilities in the portfolio are currently virtually fully let.
Commercial property rental market: Despite a large number of recently completed new office buildings, the combination of strong conditions in the Norwegian labour market, conversions of existing office buildings to residential developments and the temporary removal of office buildings from the market for rehabilitation has resulted in falling vacancy rates in the Oslo area and rising rental levels, particularly for office premises in central locations. Rental levels in the warehousing and logistics segment were stable in 2012. There were again relatively few new building starts for large warehouse facilities in 2012.
Completion of a new office building for Aibel at Kraglund Office Park, Asker
Purchase and sale of commercial property: 2012 proved to be a year with a high level of transactions activity, with a significant increase from 2011, despite more challenging lending market. Higher margins on property finance were to some extent offset by lower long-term interest rates. Prime-yield was approximately flat, but yields increased somewhat for properties in less central locations.
Residential real estate: Residential real estate prices again increased in 2012, with prices for apartments in Oslo rising by around 9%. There is still an imbalance between the supply of new residential units and demand, creating favourable conditions for sales of new units. There is a shortage of residential development sites in central locations, and land-prices have risen markedly over the last two years.
Ferd Real Estate has 7 employees and is organised into the areas of development/projects, property management, markets/rental and investment/finance. In view of the increasing volume of project activity, we intend to increase our capacity for the projects area in 2013.
Residential Real Estate Development Portefolio
Commercial Property Portfolio
In May 2012, we handed over the final phase of the Aibel office building at Hagaløkkveien 28 at the Kraglund Office Park in Asker to the building's tenant, Aibel. This building was developed by Ferd Real Estate as the project owner, and was completed in two phases with handovers in December 2011 and May 2012.
The total development represents approximately 28,000 m² of office space, storage and parking. The first phase achieved certification with energy efficiency class ‘B’ and the second phase achieved energy efficiency class ‘A’. The first phase achieved a BREEAM certification score of ‘Very Good’.
Ferd Real Estate has three sites intended for warehousing and logistic purposes at Gardermoen, Vestby and Mastemyr close to Oslo. In 2012, we also purchased 50% of Frogn Næringspark AS, which owns a site intended for warehousing of 95,000 m² at Måna, immediately adjacent the entrance to the Oslofjord Tunnel. These sites represent total development potential of around 180,000 m².
Ferd Real Estate’s commercial rental portfolio amounted to approximately 125,000 m² at the close of 2012. The Tiedemanns site at Ensjø in Oslo accounts for around 30,000 m² of the total, and this space is rented out for periods that reflect the timetable for demolition as the residential development of this site proceeds. At the end of 2012, this space was almost entirely rented out for warehousing.
International Real Estate Portfolio
Ferd Real Estate has committed EUR 50 million, to the Harbert Europe Real Estate Fund II and Fund III, which holds real estate investments in Western Europe. The fund has performed well, and the timing of its investments has been relatively favourable.