ICA Real Estate

The right properties in the right locations

ICA Real Estate continued in 2013 to operate in line with the established strategic priorities: a strong brand, developing the company’s marketplaces and strengthening the customer offering, improving operational efficiency, constantly developing and broadening competencies within the company and a strong commitment to improving environmental efficiency.

ICA Real Estate is one of the largest commercial real estate firms in the retail segment in the Nordic region. The overall mission is to meet the Group’s long-term need for appropriate properties in the right locations in Sweden and Norway. The business idea is based on acquiring, developing, managing and in some cases selling properties and marketplaces adjacent to existing or planned ICA and Rimi stores. ICA Real Estate is also responsible for managing the Group’s rental agreements with external landlords.

In addition to operations in Sweden and Norway, ICA Real Estate also jointly owns two companies – Ancore Fastigheter and Långeberga Logistik – with the pension company Alecta, both companies holding an equal share. Ancore Fastigheter acquires and owns store properties in Sweden with long leases and where ICA is the main tenant. ICA Gruppen’s influence over the marketplaces therefore sometimes continues even after they have been partly divested. Långeberga Logistik was formed in 2013 for the purpose of acquiring, expanding and subsequently assuming long-term ownership of ICA’s warehouse property in Helsingborg. The company is reported as a subsidiary of ICA Gruppen.

The entire Flottiljen Shopping Centre will be certified as a Miljöbyggnad (Green Building) for its use of state-of-the-art solutions for energy consumption and waste disposal, among other things.

Sales and income growth

At year-end 2013 ICA Real Estate owned 202 store and warehouse properties. Net sales, primarily in the form of rental income, amounted to SEK 2,255 million (2,252). Operating income excluding non-recurring items amounted to SEK 519 million (649). The decrease is mainly due to increased depreciation as a result of the market valuation (see below). New establishments, including the acquisition of the warehouse property in Helsingborg, made a positive contribution to earnings.

In total, ICA Real Estate invested SEK 1,731 million (856) during the year. These investments included Långeberga and Flottiljen Köpkvarter in Barkarbystaden. At the time of ICA Gruppen’s acquisition of the remaining shares in ICA AB on March 2013, an external market valuation of the property portfolio was carried out in connection with preparation of the purchase price allocation. ICA Real Estate’s wholly-owned properties, excluding Ancore Fastigheter, were valued at SEK 13,000 million, which is the book value. Since the book value is higher than the book value recorded by ICA Real Estate prior to ICA Gruppen’s acquisition, property depreciation for 2013 has increased by SEK 129 million compared with the previous year.

During the year ICA Gruppen’s Board reassessed the reporting of properties which are sold but at the same time leased back in order to lease them to non-consolidated ICA retailers. This resulted in a change of accounting principle.

The change has been applied retroactively and opening balances as at 1 January 2012 have been recalculated. As a result of the changed accounting principle, ICA Real Estate’s operating income has been reduced by SEK 314 million for 2013 and by SEK 336 million for 2012. For further information see Note 1, Accounting principles.

Financial key figures    
  2013 2012
Net sales, SEK m 2,255 2,252
Operating income excl. non-recurring items, SEK m 519 649
Operating margin excl. non-recurring items, % 23.0 28.8
Other key figures    
  31 December 2013 31 December 2012
Book value of properties owned, SEK billion 14 7
Number of employees 75 74
No. of properties owned 202 190
No. of square metres owned 814,000 750,000
No. of external tenants, % 15 15
No. of agreements with external landlords 1,108 1,090
Total number of square metres of retail space leased from external landlords 1,900,000 1,900,000
Vacancy rate, % 3.3 3.5
Investments, SEK m 1,731 856
Divestments, SEK m 611 1,254