Akademiska Hus Annual Report

OPERATIONSProperty valuationSlight increase in risk premiums in cost of capitalThe fair value of Akademiska Hus investment properties as of the yearend2007 was SEK 48,389 million (48,454). The unrealised change invalue for the year was negative and amounted to SEK –684 million(1,818). The fair value per square metre is SEK 14,713 (14,695). Thefair value has been set following an internal property valuation.Property valueSEK m SEK/m 260,00018,00050,00015,000valuations. The cost of capital is on average 7.3 per cent (7.1). Theletting level/level of vacant space and rent levels have only changedmarginally. Several property companies reported a positive changein value in 2007 as result of major holdings in Central Business District(CBD) locations in Stockholm, Gothenburg and Malmö. Thesecomprise commercial premises, stores and shopping centres whichhave experienced a growth in rents by up to 10 per cent. In 2006, thepositive change in value was SEK 1,818 million and can be explainedby falling direct yield requirements.The total yield for 2007 was 4.6 per cent (9.8), of which the directyield was 6.0 per cent (6.0) and the fall in value was –1.4 per cent (3.8).40,00012,000Changes 200730,0009,000Apart from unrealised changes in value, investments have been20,00010,0006,0003,000made totalling SEK 1,123 million, of which SEK 435 million referredto Stockholm. Kärnhuset in Linköping was acquired during the yearfor SEK 15 million. Sales for the year amounted to SEK 504 million,02003 2004Fair value, SEK mFair value, SEK/m 22005200620070of which the largest is the sale of Vanadishus AB in Stockholm forSEK 380 million, the sale of the Van der Huff 8 property in Stockholmfor SEK 90 million and the sale of the Kommandantsängen 8:8 propertyin Gothenburg for SEK 20 million.Change in value 2007The change in value during the year was negative and amounted toSEK 684 million, which is equivalent to a decrease of 1.4 per cent(increase of 3.8) of the fair value. The decrease in value for AkademiskaHus is due almost entirely to an increase in the cost of capitalas a result of the fact that the risk premiums have increased in theChange in value, %20Change in the property holdings during 2007SEK mAssessed fair value, December 31, 2006 48,454+ Investments in new construction and redevelopment 1,108+ Acquisitions 15– Sales –504+ Unrealised change in fair value –684of which increase in value due to increased cost of capital (–720)of which decrease in value as a result of increased propertyadministration (–193)of which increase in value as a result of increased marketinterest rates (169)of which other change in value (60)Assessed fair value, December 31, 2007 48,38915The general upturn on the property market came to a halt during102007.5During the first part of 2007 the market was characterised by arecord number of transactions and to some extent continued yield0compression. This applied largely to properties in CBD locations inStockholm and Gothenburg. Akademiska Hus decided during the first–52004200520062007half of the year not to adjust the direct yield requirement or the cost ofcapital, the reason being that our properties were not in the mostsought after locations. After summer 2007, however, the marketchanged. A number of reports were received that the market for com-36 Akademiska Hus Annual Report 2007 | Property valuation