2019 - Norwegian Property ASA
Content Side 1
Annual report
Lille Grensen 7, Oslo
2022
NORWEGIAN PROPERTY ASA
Annual report 2022 - Norwegian Property ASA
Content Page 2
Content
Business concept, vision and values
Page 3
The property portfolio
Page 4
CEO summary
Page 5
Directors’ report
Page 7
Annual group accounts
Page 16
Annual accounts of the parent company
Page 50
Declaration by the board of directors and the CEO
Page 62
Independent auditor’s report
Page 63
Key figures
Page 68
EPRA Performance Measures
Page 71
Corporate governance
Page 75
Sustainability report
Page 83
Risk and risk management
Page 97
Presentation of the directors
Page 110
Definitions
Page 111
Sources and references to Scenario analysis
Page 114
Contact
Page 116
Annual report 2022 - Norwegian Property ASA
Business concept, vision and values Page 3
Business concept, vision and values
BUSINESS CONCEPT
Norwegian Property will create sustainable growth in value through
managing, developing and investing in property located in central growth
areas where we have a comparative advantage. The tenant portfolio will
have a good mix, contributing to the creation of meeting places and
relationships which encourage engagement.
VISION
We will create meeting places and relationships which encourage
engagement
VALUES
Annual report 2022 - Norwegian Property ASA
The property portfolio Page 4
The property portfolio
Norwegian Property is a property group with its head office in Oslo.
We are a focused and fully integrated real estate specialist, with holdings located primarily in the Oslo area,
and we own, develop and manage our properties. We concentrate on developing attractive environments
with a mix of offices, retail outlets, services and culture.
Our philosophy and base values are founded on a passion for the property business. To us, this is about
creating meeting places which encourage engagement and provide fertile soil for growth and relationships
between people and their surroundings.
We have identified four drivers for long-term value creation: marketing and letting, property development,
operation and management, and transactions and finance.
Our property portfolio breaks down into three areas: Oslo’s central business district (CBD), the Nydalen
district and Fornebu. In addition, the property portfolio includes one retail property at Hasle (Other).
The group also has a major investment related to a 42.5 per cent share in the residential development company Nordr,
with a land bank of approx. 14,500 units and 1,881 units under development on a 100 per cent basis (2,350 units
including tenant owned units). In Stavanger, the group has a joint venture with Base Bolig for a development project of
250 residential units and approx. 3,000 gross lettable area (GLA) on a 100 per cent basis.
Annual report 2022 - Norwegian Property ASA
CEO summary Page 5
CEO summary
After what seems like endless months of covid
restrictions, 2022 was the year we intended to
open society again. Oslo was still shut down at the
beginning of the year, but restrictions were
withdrawn by the end of February. Even then,
dark clouds hung over parts of Europe, and
regrettably the attack on Ukraine became a fact.
The world showed us once again that we should
not take anything for granted. We are learning to
deal with lots of uncertainty every day, and
business affairs need to adapt to these un-
certainties. Interest rates have risen for much of
2022. Inflation figures have been very high – even
by Norwegian standards – and the central banks
also began to raise their interest rates.
Uncertainty in the credit market has also resulted
in higher credit margins. These apparently drive
up financing costs, which also gradually affect
property values. Our company has a low loan-to-
value ratio and a long, fixed interest rate, so we
are well-equipped for the changes. We also have a
good rapport with several relationship banks in
the Norwegian market that provide us with good
refinancing terms in an otherwise challenging
market. In 2022, NOK 1,889 million was due for
payment on bond loans, and NOK 2,130 million in
bank loans and credit facilities. This was
refinanced with new credit facilities amounting to
NOK 1,890 million, new bank loans of NOK 935
million and a roll-over of existing facilities
amounting to NOK 1,130 million. However, this
does not mean we do not need to face these
changes blindly. We believe uncertainty and
unrest will continue in 2023. Our company must
adapt to the times ahead, and we are well
underway with that.
At the beginning of 2022, we said that we had
further ambitions for company growth. We never
managed to buy more property that year. We
were unable to find projects that matched our
ambitions for growth at prices we were willing to
pay. Growth therefore took place through more
focus on operations. We have a very efficient
organization with hands-on employees who are in
touch with our tenants, our building custodians
and property managers who maintain, install and
adapt technology in our buildings every single day
and work with tenants to find potential for
improvement. We also expanded our project and
development department last year, which almost
always shows immediate results. We acquired the
3 properties at Gjerdrums vei 1-5 in Nydalen in
2020 and 2021. A rezoning of these properties
into offices was a great start. We aim to bring a
potential new 15,000 GFA of floor space to the
market when the zoning changes are completed.
Our portfolio in Nydalen then grew to about
100,000 GFA, strengthening our office cluster in
Nydalen.
The strong rental market reported in various
analysis reports has also been reflected in our
activity and rental income. We signed new leases
worth more than NOK 200 million during the year.
Our total revenues for 2022 again surpassed NOK
1 billion, up from NOK 920 million in 2021. Last
year also gave us our first major government
tenant at Fornebu. Interest in Fornebu has
increased throughout 2022 and continues in 2023.
Tenants are tempted by good office space in rural
and seaside areas with good public transport and
adequate parking facilities.
Annual report 2022 - Norwegian Property ASA
CEO summary Page 6
We have continued working with Breeam or
Breeam-In-Use certification for our real estate
portfolio. We aim to have 100 per cent of our
portfolio certified as "very good" or better by the
end of 2025, and we are well on track with that
work. We also held meetings in all our
departments last year where we got input into
further work on our sustainability strategy. The
focus has been on double materiality, and both
aspects were discussed in detail. Norwegian
Property’s stakeholder and materiality analyses
were revised as part of that work. The Board
adopted the updated guidelines for employees
and ethical guidelines for our suppliers with an
emphasis on compliance with human rights and
decent working conditions in line with the
Transparency Act. Guidelines and new routines
have subsequently been implemented at our
organization, such as due diligence and measures
vis-à-vis suppliers.
CBD turnover has returned to 2019 levels despite
strict restrictions at the beginning of the year. We
find that both our office users, residents and
visitors value activity in the central business
district, just as our vision of creating attractive
meeting places that engage our customers adds to
that goal. This vision applies to Nydalen and
Fornebu as well, and we have come a long way in
planning how to realise this. Our vision is achieved
as always with our core values: Interaction, Brave,
Enterprising and Listening. I am deeply impressed
by our staff. We are a small organization with a
strong work ethic, and everyone likes to have fun
at work. There are lots of initiatives for
professional development, improvements and
social gatherings. In this year's customer
satisfaction survey, Norwegian Property was
named the company with the highest CSI growth
in the last 12 months. When our financial key
figures also express this, I look forward to
continuing our work in these areas. I think 2023
will be an exciting year for us.
Annual report 2022 - Norwegian Property ASA
Directors’ report Page 7
Directors’ report
About Norwegian Property
The commercial real estate company Norwegian
Property ASA owned 29 commercial properties in
Norway as at 31 December 2022. All of them are
located in the Oslo region.
The market value of the group’s property portfolio
was NOK 25.2 billion as at 31 December. These
properties primarily comprise office premises with
associated warehousing and car parks as well as
retail and restaurant space. The group has a major
investment in the residential development
company Nordr. Norwegian Property also has a
joint venture with Base Bolig which is related to a
development project in Stavanger.
The business is organised in the parent company
Norwegian Property ASA with subsidiaries. With
its head office at Aker Brygge in Oslo, the group
had 62 employees as at 31 December 2022. Of the
employees, 36 are employed in the commercial
real estate business and 26 are caretakers and
other operational staff at the properties.
Norwegian Property’s business purpose article
states: “The Company operates in management,
acquisitions, sales and development of real estate
and infrastructure, including participation in other
companies and through trading and investment in
interest/units and securities as well as businesses
which are related to such.”
The business in 2022
Market and letting
LETTING MARKET
Office vacancy
Office vacancy in the Oslo market was 5.9 per cent
overall at the start of the year, 9.1 per cent in
Nydalen and 4.3 per cent in the city centre. There
has been an increase in the number of office
employees in Oslo throughout the year and a low
supply of new office space. Office vacancy in Oslo
at the end of the year was 5.5 per cent overall,
11.1 per cent in Nydalen and 4 per cent in the city
centre.
The decline in overall vacant space is expected to
slow down going forward. The supply of office
space is expected to be limited in 2023 and 2024,
Highlights in 2022
Norwegian Property's rental income is growing
significantly and the group continues to deliver
strong results from its operations
• Rental income increased by 10 per cent
compared with last year and exceeded NOK 1
billion in 2022.
• Total annual rental income (run rate) from the
company’s property portfolio increased by 7.4
per cent during the year.
• Profit before income tax, value adjustments
and joint ventures improved by 12 per cent.
• Nordr is expected to realise the large income
potential in the land bank for the coming
years.
• Norwegian Property’s financial position is
sound, with a high equity ratio and a relatively
low loan-to-value ratio.
• Several refinancing activities were successfully
completed in 2022.
• Dividends totalling NOK 514.9 million were
paid out in 2022 (NOK 0.80 per share ).
Norwegian Property will continue its efforts to
further expand and develop the business
• The property portfolio has been significantly
expanded through acquisitions in recent years.
• Norwegian Property will continue its efforts to
expand and develop its business through
additional acquisitions and by pursuing long-
term development opportunities in the
existing portfolio.
Annual report 2022 - Norwegian Property ASA
Directors’ report Page 8
but significantly new office space will be added
during the next few years.
Office vacancy at Fornebu has been reduced from
15.4 per cent to 9.4 per cent in 2022.
Office rents
Office rents have increased in 2022 for all areas
where Norwegian Property operates. The main
drivers for the increase are limited access to office
space, growth for office-intensive businesses and
high inflation levels.
Retail
Over time, physical retail has faced challenges
related to e-commerce, from both domestic and
international platforms. Norwegian Property’s
destination at Aker Brygge in Oslo has a significant
element of restaurants (half of the ground floor
run-rate) in addition to retail and has had a more
positive development than the general retail
market. Turnover based rent related to the
company’s retail and restaurant tenants at Aker
Brygge was increasing pre-COVID-19, driven first
and foremost by restaurant revenues. The positive
development for these segments has continued
post-COVID-19. At the end of 2022, the retail and
restaurant industry faces new challenges from
increased interest rates, high energy costs and
inflation as well as expectations of generally
reduced consumer consumption.
The retail and restaurant businesses at Hasle has
been established during the COVID-19 period. The
turnover shows significant growth.
LETTING ACTIVITY
The net letting for 2022 was at a record of NOK
171 million. New leases with a total annual rental
income of NOK 67 million (NOK 78 million) were
signed in 2022, while the existing leases totalling
NOK 145 million (NOK 49 million) were extended.
Expired leases totalled 41 million (NOK 38 million).
Therefore, the net increase for the year in annual
rents from leases was NOK 171 million (NOK 89
million).
New and renegotiated lease agreements in the
year have in addition to the KPI adjustments
resulted in a substantial revenue uplift. Total
annual rental income (run rate) from the
company’s property portfolio increased during the
year, and was NOK 1.136 billion by the end of the
year (NOK 1.058 billion).
Reported rental income has increased from year
to year in recent years and the increase from last
year amounts to 10 per cent.
Overall financial vacancy in the property portfolio
totalled 5.9 per cent as at 31 December 2022 (5.5
per cent), which was largely related to the
properties at Snarøyveien in Fornebu and
Sandakerveien 138/140 in Nydalen. Norwegian
Property signed its first major public tenant at
Fornebu (Snarøyveien 36) in 2022. The premises
are now being refurbished, and will be finalised in
2024. Additional tenants are now contemplating
to move to Fornebu, and this might further reduce
the overall vacancy. The weighted average
remaining duration of the leases was 4.9 years
(5.1 years).
Financing
FINANCING MARKET
The liquidity in the bond market is very limited for
property companies at the end of 2022. On this
basis, most companies choose the bank market
for financing. Liquidity is available, but most banks
are much more restrictive on volumes in 2022
compared to previous years.
The 10-year swap interest rate went from 1.9 per
cent at the beginning of the year to 3.3 per cent at
the end of the year. Inflation is high, and the
central banks have hiked interest rates, both in
European countries and in the US. The energy
costs have also been very high in 2022.
FINANCING ACTIVITIES
The group’s net LTV ratio related to the fair value
of investment properties and investments in joint
ventures is 43.4 per cent (42.1 per cent). Bonds
accounted for 50 per cent (66 per cent) of its
borrowings at 31 December 2022. This was in
addition to 29 per cent related to bilateral loans
(30 per cent) and 21 per cent related to bank
facilities (4 per cent).
A number of financing activities have been carried
out in 2022. The NOK 1,030 million bond loan
(NPRO 11), which matured in November, was
refinanced with withdrawals on the existing
Annual report 2022 - Norwegian Property ASA
Directors’ report Page 9
facilities in banks. Norwegian Property has
entered into a number of new bank facilities and
several facilities have been prolonged during
2022.
Floating interest rates have increased in 2022 and
there is also upward pressure on interest margins.
Average interest rates increased from 2.81 per
cent to 3.48 per cent and average margins
increased from 1.33 per cent to 1.36 per cent
during the year. As at 31 December 2022, 70.1 per
cent (71.2 per cent) of the group’s interest-
bearing debt was covered by interest-rate hedges
with an average term of 5.6 years (6.3 years).
Interest-bearing debt in the balance sheet totalled
NOK 12,185.7 million as at 31 December 2022
(NOK 12,004.8 million), with non-current interest-
bearing debt accounting for NOK 10,351.6 million
and current interest-bearing debt for NOK 1,834.1
million. Current interest-bearing debt as at 31
December 2022 relates to facilities up for
refinancing during 2023.
The company is listed on the Oslo Stock Exchange
for a NOK 6 billion portfolio of bonds.
Property transactions
TRANSACTION MARKET
The level of activity in the transaction market has
been high over several years, with many property
deals in various segments at sharp yield levels. In
the second half of 2022, geopolitical tension, high
inflation and increasing interest rates has slowed
down the property transaction market, after a
more active first half of 2022.
The prime yield for the Oslo CBD at the end of
2022 is by various analysts estimated to be in the
interval from 3.75 per cent to 4 per cent.
TRANSACTIONS CONDUCTED
Norwegian Property has a strategy to strengthen
the portfolio of properties in its main priority
areas in the Oslo region, both by the acquisition of
additional properties and by further developing
the existing property portfolio.
The strategy to strengthen the portfolio is flexible
to adapt to market opportunities as they arise. In
2022, Norwegian Property has not completed any
property transactions. As the yield levels are
increasing, Norwegian Property waits to carry out
transactions until the market has adapted to new
yield levels.
Investment in Nordr
Norwegian Property owns Nordr as a joint venture
together with Fredensborg and Union Real Estate
Fund III. At the end of 2022, Nordr had 1,881 flats
under construction (2,358 including tenant owned
units) and a land bank of about 14,500 units in
Norway and Sweden. The land bank is mainly
located in the largest Norwegian and Swedish
cities, with an emphasis on eastern Norway and
the extended Stockholm capital region in Sweden.
Nordr’s business consists of both wholly owned
and partly owned plots and projects.
The large income potential in the land bank is
expected to be realised in the coming years.
Norwegian Property’s share of the net profit
relating to Nordr was NOK 35.2 million for 2022.
During 2022, sales agreements were entered into
regarding 688 residential units. The construction
started on 1,002 units, and a total of 956 units
were delivered. A total of 1,004 residential units
are expected to be completed during 2023.
Norwegian Property’s share of net assets in the
balance sheet as at 31 December 2022 was NOK
1,061.7 million. Independent appraisers have
valued all the plots in the portfolio of Nordr, and
there has been a substantial increase in the values
compared to the values at the time of the
acquisition in 2020. The NOK 1.1 billion value
uplift increases the EPRA NAV metrics for
Norwegian Property, but does not affect the book
value of the investment.
Strategic goals
Competitive return with balanced risk
Norwegian Property has a goal of paying 30-50
per cent of its ordinary profit after tax, but before
fair-value adjustments, as a dividend to its
shareholders. Before a dividend is determined, an
assessment will be made of the group’s financial
position and prospects, including the possible
increased capital requirements when investing in
properties and changes to the income base when
properties are sold.
Annual report 2022 - Norwegian Property ASA
Directors’ report Page 10
High tenant satisfaction
Norwegian Property’s vision is to create meeting
places which encourage engagement and provide
favourable conditions for developing
interpersonal relationships. The group works to
ensure a high level of tenant satisfaction, which
contributes in turn to a good reputation and
which is important for retaining existing tenants
and attracting new ones.
Environmental improvements in line with the
best in the industry
Corporate environmental and social responsibility
is broadly defined and includes clearly defined
targets for measures to protect the environment
as well as high aesthetic standards for buildings
and outside areas in the local environment. The
group’s strategy and goals are outlined in the
report on corporate social responsibility.
Investment strategy
Norwegian Property has an investment strategy
with the emphasis placed on the following main
parameters:
- leading player for office and associated
commercial property in selected areas of
the Oslo region
- prioritise properties close to public
transport hubs, and seek to create
natural property clusters in the group’s
priority areas
- seek to have 5 to 15 per cent of the
portfolio’s area under development over
time
- active management of the portfolio
through transactions, including the
purchase of properties with value
development potential.
Financing strategy
Norwegian Property’s ambition is to deliver a
competitive return over time with a balanced
financial risk profile. The main parameters of its
financial strategy are:
- a goal that the LTV ratio will be a
maximum of 45-55 per cent of the total
value of the group’s investment
properties over time
- to base borrowing on long-term
relationships with banks and other
players pursuing a long-term strategy in
the Norwegian property market
- to seek to diversify funding sources and
the maturity structure to reduce
refinancing risk
- an ambition to achieve a stable
development in cash flow which requires
a relatively high level of interest-rate
hedging, where such hedging will be a
minimum of 50 per cent of the group’s
interest-bearing debt, with the term of
the hedging weighted against the term of
the leases while also being spread over
the period to avoid excessive exposure at
specific points in time.
Risk and risk management
Through its activities, Norwegian Property
manages major financial assets which are exposed
to substantial risk factors, such as development
projects, interest rates and the letting market. The
management model is based on an appropriate
delegation of responsibility for profits, clearly
defined operational parameters and internal
control.
Overall targets are established and further refined
through the continuous updating of the group’s
strategy. On the basis of this strategy, the values
and the ethical guidelines, an overall management
instruction has been established with the
specification of authorities for delegating
responsibility to defined roles in the organisation.
Guidelines have, furthermore, been established
for managing and handling risk in the most
important risk areas, such as operations and
finance. Based on these overall guidelines,
governing processes and routines have been
established for the day-to-day management of the
group. The board regularly reviews the group’s
formal documents.
The administration prepares periodic reports
which are reviewed at board meetings. These
reports are based on the management reviews of
the various parts of the business, and they contain
an update of the status in relation to targets,
important operational conditions, financial
conditions and a description of the status of risk
areas. Quarterly financial reports are also
prepared and then reviewed by the audit
Annual report 2022 - Norwegian Property ASA
Directors’ report Page 11
committee ahead of the board meeting. In
connection with the presentation of the interim
and annual financial statements, the executive
management prepares estimates and makes
assumptions about the future. The accounting
estimates are subject to uncertainty. Estimates
and assumptions with the greatest potential
effect on book values in future periods are related
to investment property.
The group has taken out insurance with an
insurance company for the directors and officers
of all group companies for their possible liability
to the company and third parties. The sum
insured amounts to NOK 100 million per claim and
in total during the year.
Norwegian Property assesses risk on an ongoing
basis as part of the daily operations. A
comprehensive annual review of the risks
associated with the group is carried out in
collaboration with all the relevant levels of the
organisation. Each risk factor is described and
presented with possible negative outcomes. The
analysis of the risk factors includes the following
main groups of risks.
Financial risks
The group’s financial risks primarily relate to
changes in equity as a result of adjustments to the
value of the property portfolio, the effect of
interest-rate changes on profits and liquidity,
liquidity risk and profit effects when refinancing
debt and implementing major projects.
Efforts are made to manage the effect of interest-
rate changes on profits and liquidity through
hedging. As at 31 December 2022, 70.1 per cent
(71.2 per cent) of the group’s interest-bearing
debt was covered by interest-rate hedges with an
average term of 5.6 years (6.3 years). Fluctuations
in short- and long-term market interest rates will,
therefore, have a limited impact on the group’s
interest expenses before changes in the value of
derivatives. All the group’s interest-rate swaps are
used as economic hedges. Hedge accounting is
not applied.
The group’s credit facilities incorporate financial
covenants related to the interest cover ratio and
the LTV ratio. Norwegian Property was in
compliance with these and other conditions in the
credit agreements related to its liabilities as at 31
December 2022.
Market risk
Norwegian Property is exposed to changes in
market rents, vacancy in the portfolio, turnover-
based rents and the rate of inflation. The group
has a significant proportion of long-term leases.
The commercial property leases provide fixed
revenues over their term. The majority of the
leases are fully adjusted for changes in the
consumer price index (CPI).
Increases in market interest rates can lead to
increased yield levels for the group’s properties,
which in turn can affect the valuations of the
properties.
Project risk
Generally speaking, major construction projects
may involve risk relating to such aspects as the
future letting ratio and level of rents for
converted areas, cost overruns on procurement
and planning, delays, delivery shortfalls and
market developments.
Credit risk
Norwegian Property’s portfolio of office
properties is characterised by high quality, central
locations and a financially sound and diversified
set of tenants. Bad debts have been limited in
recent years. Tenants of the group’s office
properties normally pay rent quarterly in advance.
In addition, most leases require security for rent
payments in the form of either a deposit account
containing a sum equivalent to three to six
months of rent or a bank guarantee. The group
checks the credit rating and history of new
tenants. As a result, the risk of direct losses from
defaults or payment problems is limited and
primarily relates to the re-letting of premises.
Liquidity risk
The group’s goal is to have sufficient liquidity and
drawing rights to meet its obligations, including
existing development projects. It also seeks to
maintain a sensible level of liquidity to meet
unexpected commitments. The financing strategy
aims to maintain flexibility in the market and to
cope with fluctuations in rental income. Liquidity
should be secured by unused revolving credits and
overdraft facilities rather than bank deposits.
Annual report 2022 - Norwegian Property ASA
Directors’ report Page 12
Norwegian Property has a high level of hedging
against fluctuations in market interest rates,
which reduces the need for liquidity to meet
unexpected commitments in these areas. Other
liquidity risk relates first and foremost to servicing
instalments on and redemption of loans. The
group generates a positive cash flow from
operations.
As at 31 December, the group had an interest-
bearing debt of NOK 12,185.7 million (NOK
12,004.8 million). The remaining term of the debt
was 3.8 years (4.4 years). Debt maturing and
instalments due during 2023 are recognised as
current liabilities in the consolidated balance
sheet as at 31 December 2022. At the same date,
the group had a liquidity reserve including
undrawn borrowing facilities of NOK 1,157 million
(NOK 1,800 million).
The group seeks at all times to maintain a liquidity
buffer tailored to the redemption profile of its
debt and the ongoing short-term fluctuations in
its requirements for working capital as well as the
requirements which follow from current and
planned projects being pursued by the group at
any given time.
Social and governance risk
Social and governance risks are related to the risks
related to human rights, decent working-
conditions, equality and non-discrimination
among employees, non-discrimination of people
with disabilities in properties and outdoor areas
and corruption.
The group has worked to uncover risks within the
social and governance areas of sustainability.
These are described in more detail in the
corporate governance report and the
sustainability report.
Climate risk
Physical climate risk is, for example, related to
increased precipitation and higher sea levels.
Climate transition risk is related to the demand for
environmentally-friendly premises, environmental
requirements from investors/banks, insurance,
technological risk, reputational risk and increased
CO
2
taxes.
Climate risks are described in more detail in the
sustainability report and the risk and risk
management overview.
Risk associated with ongoing crises and events
In addition to the main risk areas discussed
hereinabove, risks can also arise from ongoing
crises and events such as the effects of the COVID-
19 pandemic and the war in Ukraine.
Group accounts
The consolidated financial statements have been
prepared in accordance with the International
Financial Reporting Standards (IFRS), and
consistent accounting principles are applied to all
the periods presented.
Going concern assumption
Pursuant to the requirements of the Norwegian
Accounting Act, the board confirms that the going
concern assumption is realistic. The financial
statements for 2022 have been prepared on that
basis.
Income statement
Revenues
Total rental income amounted to NOK 1,014.4
million for 2022, which is up from NOK 919.6
million in 2021.
Operating expenses
Property-related operational expenses totalled
NOK 73.8 million (NOK 64.3 million). Other
property-related expenses came to NOK 68.8
million (NOK 60.1 million). Administrative owner
expenses were NOK 62.1 million (NOK 59.2
million).
No costs related to research and development
activities were recognised in the financial
statements for either 2022 or 2021.
Share of profit in joint ventures
The share of profit from joint ventures was
positive at NOK 33.8 million (NOK 74.9 million),
mainly related to Norwegian Property’s share of
the net profit for Nordr.
Operating profit before fair-value adjustments
Operating profit before fair-value adjustments
was NOK 843.5 million (NOK 810.8 million).
Annual report 2022 - Norwegian Property ASA
Directors’ report Page 13
Net realised financial items
Financial income, which consists largely of interest
income, totalled NOK 17.2 million (NOK 15
million). Financial expenses, primarily interest
expenses and other costs related to the group’s
financing, were NOK 375.6 million (NOK 346
million).
Profit before income tax and value adjustments
Profit before tax and fair-value changes came to
NOK 485.1 million compared with NOK 479.7
million for 2021.
Fair-value changes of investment property and
interest-rate derivatives
Negative fair-value changes to the group’s
property portfolio of 0.6 per cent totalled NOK
154.7 million in 2022 (positive change of NOK
1,365 million), related to increased yield levels for
the company’s properties. The negative changes
are somewhat offset by improved market rents as
well as new and improved leases.
Long-term market interest rates increased in
2022, and the fair-value adjustment for interest-
rate derivatives showed a positive change of NOK
172.2 million (NOK 150.2 million).
Net profit
Profit before tax was NOK 502.5 million (NOK
1,994.9 million). NOK 206.6 million in tax expense
(NOK 421.8 million) is recognised in the 2022
accounts. As a result, net profit for the year was
NOK 295.9 million (NOK 1,573.1 million).
Cash flow
Net cash flow from operating activities was NOK
457.4 million (NOK 447.1 million). Operating profit
before tax and fair-value adjustments came to
NOK 485.1 million in 2022. The difference
compared with net cash flow from operating
activities relates to the profit from joint ventures
and to changes to working capital items.
Net cash flow from investing activities was
negative at NOK 258.9 million (NOK 409.7 million).
The capital spendings in 2022 related to the
tenant adaptations for new and renegotiated
leases as well as ongoing operational investments.
Net cash flow from financial activities in 2022 was
negative at NOK 327 million (NOK 389.7 million).
The net increase of interest-bearing debt came to
NOK 187.9 million. Dividend payments totalled
NOK 514.9 million.
The net reduction in cash and cash equivalents
was NOK 128.5 million (NOK 352.3 million).
Balance sheet and liquidity
The carrying amount of the group’s total assets in
the balance sheet was NOK 26,910.8 million (NOK
26,780.7 million), with investment property
accounting for NOK 24,859.1 million (NOK
24,801.3 million) and properties used by the
owner for NOK 108.8 million (NOK 106.7 million).
Non-current receivables amounted to NOK 233.1
million (NOK 234.9 million), related to the rental
guarantee provided by the seller of the property
at Snarøyveien 30. Investment in joint ventures
was NOK 1,061.7 million (NOK 1,084.8 million).
The group held NOK 185.1 million (NOK 313.5
million) in cash and cash equivalents. In addition,
the group had unused drawing rights of NOK
1,157 million (NOK 1,800 million).
Total interest-bearing liabilities in the balance
sheet came to NOK 12,185.7 million (NOK
12,004.8 million), with non-current interest-
bearing liabilities totalling NOK 10,351.6 million
(NOK 9,583 million) and current interest-bearing
liabilities amounting to NOK 1,834.1 million (NOK
2,421.7 million). Current interest-bearing debt as
at 31 December 2022 related to facilities maturing
in 2023.
The average interest rate for the group’s loans
(including payments for interest-rate derivatives)
amounted to 3.48 per cent as at 31 December
2022 (2.81 per cent), while the interest-rate
margin averaged 1.36 per cent (1.33 per cent).
The remaining term to maturity for interest-
bearing debt was 3.8 years (4.4 years). Financial
derivatives related to interest hedging accounted
for a net asset item of NOK 145.3 million (net
liability of NOK 26.9 million). The remaining term
to maturity for the derivatives was 5.6 years (6.3
years).
Equity as at 31 December totalled NOK 12,562.1
million (NOK 11,836.6 million), representing an
equity ratio of 46.7 per cent (47.9 per cent).
Annual report 2022 - Norwegian Property ASA
Directors’ report Page 14
Carried equity per share was NOK 19.52 (NOK
19.95).
Valuation of the properties
The group’s valuation process is based on
quarterly external valuations, supplemented by
internal analyses where the group makes an
assessment and determines whether the external
valuations provide an accurate picture of the fair
value of the investment properties. Based on this
process, all the properties were valued on 31
December 2022 by two independent professional
specialists. Cushman & Wakefield and Akershus
Eiendom have each prepared a valuation of all the
properties. An average of these valuations is used
as the basis for recognising the investment
properties at fair value as at 31 December 2022.
The valuation models used for these assessments
are based on discounting cash flows related to
existing leases and the value of market rents after
the expiry of existing leases. Individual
assessments of current expenses, upgrading costs
and the risk of vacancy are made on a property-
by-property basis.
The executive management and the board have
made independent assessments of parameters
which affect the value of the group’s properties,
including developments in interest rates, market
rents, occupancy, the yield level on property
transactions and the quality of the properties. The
conclusion is that the external valuations can be
used as a basis for assessing the fair value of the
properties. Total market value of the group’s
property portfolio was NOK 25,201 million as at
31 December 2022 (NOK 25,143 million).
Events after the balance sheet date
In accordance with the mandate from the AGM in
2022, the board resolved on 2 February 2023 that
a dividend of NOK 0.125 per share will be paid on
the basis of the accounts as at 31 December 2022.
No other significant incidents since 31 December
2022 provide information concerning the
conditions which existed at the balance sheet
date.
Parent company accounts and allocation of
net profit
The parent company, Norwegian Property ASA,
made a net profit of NOK 144.7 million in 2022
(net loss of NOK 52.9 million).
The board proposes that the net profit of NOK
144.7 million and the provision of NOK 80.4
million for the dividend are allocated to and from
the share premium respectively as presented in
the annual accounts.
Corporate social responsibility and corporate
governance
The group has prepared a sustainability report
pursuant to section 3-3c of the Norwegian
Accounting Act. The presentation appears on page
83 of this annual report, and it also includes
reporting duties pursuant to Norway’s Gender
Equality and Discrimination Act as well as the
Transparency Act.
The EU taxonomy is a classification system,
establishing a list of environmentally sustainable
economic activities. A new Act on Sustainable
Finance was introduced with effect from 1
January 2023. Expected effects of the EU
taxonomy and the new legislation is also
commented on in the sustainability report.
A separate presentation on corporate governance
has also been prepared to cover the group’s
principles and practice in this area, pursuant to
section 3-3b of the Accounting Act. The
presentation appears on page 75 of this annual
report.
The 2022 AGM
The annual general meeting was held on 22 April
2022. All resolutions were adopted as proposed in
the notice of the meeting. The AGM elected Bjørn
Henningsen as the chair of the board. Kathrine
Astrup Fredriksen, Cecilie Astrup Fredriksen, Lars
Erich Nilsen and Lars Buin were elected as
directors. All of them were elected for two years
until the AGM in 2024.
The auditor rotation requirements have been
introduced in Norway and EY was elected as the
Annual report 2022 - Norwegian Property ASA
Directors’ report Page 15
new auditor for the company. PwC has held the
position of auditor for the previous 10 years.
Shareholders
As of 31 December 2022, the company has a share
capital of NOK 324,912,798 divided into
649,825,596 shares, each with a par value of NOK
0.5. Norwegian Property ASA owns 6,250,000
treasury shares. Geveran Trading Co. Ltd. owns
the remaining 643,575,596 shares in the
company.
Outlook
Norwegian Property manages modern and flexible
properties located in attractive clusters near
public transport hubs. The company has delivered
strong and stable results from its operations and
from fair value changes for its properties over a
long period.
The company has three clusters for commercial
properties - Oslo CBD, Nydalen and Fornebu - in
addition to the investment in the residential
developer Nordr.
Norwegian Property has a strategy for growth in
its core commercial property business as well as
an ambition to consider opportunities in other
property segments. Norwegian Property will
continue its efforts to expand and develop its
business through additional acquisitions and by
pursuing several interesting long-term
development opportunities in the existing
property portfolio.
Property values have risen significantly in recent
years, which have been characterised by low
interest rates, high demand for office space and
rising rent levels. The property values in the
second half year of 2022 show a negative
development in a more troubled market with
rising interest rates, high energy costs and a
worrying international geopolitical development.
There is a risk of further negative development in
property values going forward.
Norwegian Property’s financial position is sound,
with a high equity ratio and a relatively low loan-
to-value ratio. The company has a highly
diversified portfolio of tenants in both the public
sector and various private business segments. This
contributes to the company being well positioned
in order to handle the uncertainty and challenges
ahead with a continued focus on the strategy of
expanding and developing the business.
Oslo, 23 March 2023
Norwegian Property ASA
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 16
Annual group accounts
Consolidated income statement 1 Jan-31 Dec
Notes 1 to 28 are an integral part of the consolidated financial statements.
Consolidated statement of comprehensive income 1 Jan-31 Dec
Notes 1 to 28 are an integral part of the consolidated financial statements.
(Amounts in NOK million)
Note 2022 2021
Rental income for commercial property 15, 16 1,014.4 919.6
Revenues 1,014.4 919.6
Property-related operational expenses 18 (73.8) (64.3)
Other property-related expenses 18 (68.8) (60.1)
Total property-related expenses (142.6) (124.4)
Administrative expenses 18, 19 (62.1) (59.2)
Total operating expenses (204.7) (183.7)
Share of profit in joint ventures 8 33.8 74.9
Operating profit before value adjustments 843.5 810.8
Change in fair value of investment property and rental guarantee 6 (154.7) 1,365.0
Operating profit 688.8 2,175.8
Financial income 9, 17 17.2 15.0
Financial expenses 9, 17 (375.6) (346.0)
Net financial items (358.4) (331.1)
Change in fair value of interest derivatives 9, 10 172.2 150.2
Net financial items (186.2) (180.9)
Profit before income tax 502.5 1,994.9
Income tax 14 (206.6) (421.8)
Profit for the year 295.9 1,573.1
Profit attributable to non-controlling interests - -
Profit attributable to shareholders of the parent company 295.9 1,573.1
Basic earnings per share attributable to parent company shareholders (amounts in NOK) 21 0.46 2.44
Diluted earnings per share attributable to parent company shareholders (amounts in NOK) 21 0.46 2.43
(Amounts in NOK million) 2022 2021
Profit for the year 295.9 1,573.1
Value adjustment of owner-occupied property 6 3.4 10.4
Income tax related to value adjustment and depreciation of owner-occupied property 14 (0.7) (2.3)
Other comprehensive income that will not be reclassified to profit or loss, net of tax 2.7 8.1
Share of foreign currency translation reserve in joint ventures 8 (58.3) (28.1)
Other comprehensive inc. that subsequently may be reclassified to profit or loss, net of tax (58.3) (28.1)
Total other comprehensive income for the year (55.6) (20.0)
Total comprehensive income for the year 240.3 1,553.1
Total comprehensive income attributable to shareholders of the parent company 240.3 1,553.1
Total comprehensive income attributable to non-controlling interests - -
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 17
Consolidated balance sheet as at 31 Dec
Notes 1 to 28 are an integral part of the consolidated financial statements.
Oslo, 23 March 2023
Norwegian Property ASA
(Amounts in NOK million)
Note 2022 2021
Financial derivative instruments 3, 9, 10 161.6 16.5
Investment property 6 24,859.1 24,801.3
Owner-occupied property 6 108.8 106.7
Other fixed assets 7 31.5 35.4
Investment in joint ventures 8 1,061.7 1,084.8
Receivables 11 233.1 234.9
Total non-current assets 26,455.8 26,279.6
Financial derivative instruments 3, 9, 10 1.9 0.8
Receivables 9, 11 268.0 186.7
Cash and cash equivalents 3, 9 185.1 313.5
Total current assets 455.0 501.1
TOTAL ASSETS 26,910.8 26,780.7
Share capital 20 324.9 324.9
Treasury shares 20 (3.1) (3.1)
Share premium 3,280.0 3,280.0
Other paid-in equity 7,563.3 7,563.3
Retained earnings 1,397.1 1,671.7
Total equity 12,562.1 12,836.6
Deferred tax 14 1,893.3 1,685.8
Financial derivative instruments 3, 9, 10 18.2 36.2
Interest-bearing debt 9, 13 10,351.6 9,583.0
Other liabilities 9, 12 2.0 2.7
Non-current liabilities 12,265.1 11,307.8
Financial derivative instruments 3, 9, 10 - 7.9
Interest-bearing debt 9, 13 1,834.1 2,421.7
Other liabilities 9, 12 249.5 206.6
Total current liabilities 2,083.6 2,636.2
Total liabilities 14,348.7 13,944.1
TOTAL EQUITY AND LIABILITIES 26,910.8 26,780.7
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 18
Changes in the group’s equity
Notes 1 to 28 are an integral part of the consolidated financial statements.
(Amounts in NOK million)
Total equity 31 December 2020 324.9 (3.1) 3,280.7 7,562.5 395.9 11,560.9
Profit for the year 20 - - - - 1,573.1 1,573.1
Other comprehensive income for the year 20 - - - - (20.0) (20.0)
Total comprehensive income for the year - - - - 1,553.1 1,553.1
Paid dividend 22 - - - - (273.5) (273.5)
Share issue 20 - - (0.7) - - (0.7)
Employee share-option scheme 20 - - - 0.7 - 0.7
Exercised share-option schemes 20 - - - - (3.8) (3.8)
Total contributions by and distributions to owners of the parent - - (0.7) 0.7 (277.3) (277.3)
Total equity 31 December 2021 324.9 (3.1) 3,280.0 7,563.3 1,671.7 12,836.6
Profit for the year 20 - - - - 295.9 295.9
Other comprehensive income for the year 20 - - - - (55.6) (55.6)
Total comprehensive income for the year - - - - 240.3 240.3
Paid dividend 22 - - - - (514.9) (514.9)
Total contributions by and distributions to owners of the parent - - - - (514.9) (514.9)
Total equity 31 December 2022 324.9 (3.1) 3,280.0 7,563.3 1,397.1 12,562.1
Note
Share
capital
Share
premium
Treasury
shares
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 19
Consolidated cash flow statement 1 Jan-31 Dec
Notes 1 to 28 are an integral part of the consolidated financial statements.
(Amounts in NOK million) Note 2022 2021
Profit before income tax 502.5 1,994.9
Paid taxes 14 (0.1) (6.3)
Net financial items 9, 17 186.2 180.9
Interest received 17 17.2 15.0
Interest paid 13, 17 (356.9) (339.6)
Interest income on guarantee receivables (7.7) -
Depreciation of tangible assets 6, 7 6.5 5.4
Change in fair value of investment property 6 154.7 (1,365.0)
Profit from joint ventures 8 (33.8) (74.9)
Change in rental guarantee receivables 6 60.5 85.9
Change in current items (71.8) (49.1)
Net cash flow from operational activities 457.4 447.1
Payment for investment in investment property 6 (257.6) (383.1)
Payment for investment in other fixed assets 7 (1.3) (2.8)
Payment for investment in joint ventures 8 - (23.8)
Net cash flow from investing activities
(258.9) (409.7)
Repayment of interest-bearing debt 13 (1,890.6) (1,812.5)
New interest-bearing debt 13 2,078.5 1,697.0
Share issues - (0.7)
Paid dividend 22 (514.9) (273.5)
Net cash flow from financial activities (327.0) (389.7)
Net change in cash and cash equivalents (128.5) (352.3)
Cash and cash equivalents at 1 January 3 313.5 665.8
Cash and cash equivalents at 31 December 3 185.1 313.5
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 20
Notes and other explanatory information
NOTE 1: General information
The Norwegian Property ASA property group
primarily owns commercial properties in the Oslo
region. Norwegian Property also owns a share
(joint venture) in the residential development
company Nordr. Nordr’s business consists of both
wholly owned and partly owned plots and
projects. Calculated on the basis of the ownership
share in the projects, Nordr has 1,881 residential
units under construction (2,358 including tenant
owned units) and a land bank of approx. 14,500
units in the largest Norwegian and Swedish cities,
with an emphasis on eastern Norway and the
extended Stockholm capital region in Sweden.
Norwegian Property also has a joint venture with
Base Bolig related to a development project at
Forusbeen 35 in Stavanger.
The holding company, Norwegian Property ASA, is
a public limited company with its headquarters at
Bryggegata 3, Oslo (Norway).
The financial statements were adopted by the
board on 23 March 2023 for final approval by the
AGM in 2023.
NOTE 2: Summary of significant accounting
policies
The principal accounting policies applied in the
preparation of these consolidated financial
statements are set out below. These policies have
been consistently applied to all the years
presented, unless otherwise stated.
2.1 - Basis of preparation
The consolidated financial statements of
Norwegian Property ASA have been prepared in
accordance with the International Financial
Reporting Standards (IFRS) as adopted by the EU
and effective as at 31 December 2022, and
additional requirements pursuant to the
Norwegian Accounting Act as at 31 December
2022.
The financial statements have been prepared on a
historical cost basis, except for certain financial
assets and liabilities (including derivative
instruments), certain classes of property, plant
and equipment and investment property
measured at fair value (see note 4).
Preparation of financial statements in accordance
with the IFRS requires the use of certain critical
accounting estimates. It also requires
management to exercise judgements in the
process of applying the group’s accounting
policies. Areas involving a higher degree of
judgement or complexity, or areas where
assumptions and estimates are significant for the
financial statements, are disclosed in note 5.
No significant changes have been made to
accounting policies compared with the principles
used in the preparation of the financial
statements for 2021.
No new or amended standards effective as of 1
January 2022 have had a material impact on the
Group. The group has not carried out the early
adoption of any standard, interpretation or
amendment that has been issued but that has not
yet been made effective. The Group is currently in
the process of determining the impact of the
amendments to IAS 1 and IFRS Practice Statement
2 regarding the disclosure of accounting policies
that become effective on 1 January 2023. No
other new or amended standards not yet effective
are expected to have a material impact.
2.2 - Consolidation policies
A) BUSINESSES
Businesses are all entities (including structured
entities) over which the group has control. The
group controls an entity where the group is
exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability
to affect those returns through its power to direct
the activities of the entity. Businesses are fully
consolidated from the date on which control is
transferred to the group. They are deconsolidated
from the date that control ceases.
Purchases of single-purpose entities owning only
property, with no employees, management or
recorded procedure descriptions, are not
considered as the acquisition of business (IFRS 3
Business Combinations is not applicable). The cost
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 21
of such purchases is capitalised as part of the
acquisition price.
The acquisition method of accounting is used to
account for the acquisition of businesses by the
group. The acquisition cost is measured as the fair
value of assets used as consideration; equity
instruments issued as well as the liabilities
incurred at the transfer of control. Direct costs
related to the acquisition are expensed in the
income statement at the date of acquisition.
Identifiable assets acquired as well as liabilities
and contingent liabilities are recognised at fair
value at the date of acquisition, irrespective of
any minority interest. The excess cost of
acquisition over the fair value of identifiable net
assets acquired is recorded as goodwill. If the cost
of acquisition is less than the fair value of the net
assets of the subsidiary acquired, the difference is
recognised directly in the income statement on
the date of acquisition.
Intercompany transactions, balances and
unrealised gains on transactions between group
companies are eliminated. Unrealised losses are
eliminated, but they are assessed as an
impairment indicator in relation to the transferred
asset. Accounting policies of subsidiaries have
been changed where necessary to ensure
consistency with the policies adopted by the
group.
B) JOINT ARRANGEMENTS
The group’s share of the joint venture’s net profit
is presented in accordance with the equity
method on a separate line in the consolidated
income statement, and the investment is similarly
recognised on a separate line under fixed assets in
the balance sheet. The group’s share of gain and
loss from the transactions with the joint venture
are eliminated. Accounting policies in the joint
venture are changed when necessary to achieve
conformity with the accounting policies applied by
the group.
2.3 - Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to
the chief operating decision maker. The chief
operating decision maker, responsible for
allocating resources and assessing the
performance of the operating segments, has been
identified as corporate management. See note 15.
2.4 - Foreign currency translation
(A) FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the financial statements of each
of the group’s entities are measured using the
currency of the primary economic environment in
which the entity operates (the functional
currency). The consolidated financial statements
are presented in NOK, which is the parent
company’s functional and presentation currency.
(B) TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into
NOK using the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of such
transactions and from the translation at year-end
exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised
in the income statement.
2.5 - Classification of balance-sheet items
Current assets and liabilities generally comprise
items which mature in less than one year from the
balance-sheet date. Other items are classified as
non-current assets/liabilities.
Financial assets and liabilities are offset and the
net amount is recognised in the balance sheet
when there is a legally enforceable right to offset
the recognised amounts and there is an intention
to settle on a net basis or realise the asset and
settle the liability simultaneously.
2.6 Investment property
Property which is held for long-term rental yields
or for capital appreciation, or both, is classified as
investment property. Investment property is
initially measured at acquisition cost, including
the related transaction costs. After the initial
recognition, investment property is carried at fair
value pursuant to IAS 40. The fair value of
investment property reflects, among other things,
the rental income from current leases and the
assumptions about rental income from future
leases in the light of current market conditions.
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 22
Changes in fair value are recorded in the income
statement under change in fair value of
investment property.
Subsequent expenditure is charged to the asset’s
carrying amount only when it is probable that
future economic benefits associated with the item
will flow to the group and the cost of the item can
be measured reliably. Other repair and
maintenance costs are charged to the income
statement during the financial period in which
they are incurred. Costs related to the termination
of leases are capitalised if the main purpose of the
termination is linked to a further development of
the property and are expensed if the main
purpose of the termination is purely a change of
tenant.
Assets under construction for future use as
investment property are recognised in the
construction phase as investment property at fair
value at the completion date minus the remaining
construction costs.
Tax compensation related to the acquisition of
investment properties (single-purpose entities) is
recognised in the period after the acquisition as a
value adjustment to investment property.
Classification as an investment property held for
sale assumes the anticipated realisation within
one year from the balance-sheet date. Investment
properties held for sale are recognised at fair
value as other investment properties.
2.7 - Property, plant and equipment and owner-
occupied property
(A) PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment are stated at
historical cost less depreciation and write-downs.
Historical cost includes expenditure directly
attributable to the acquisition of the item.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate
asset, as appropriate, only when it is probable
that future economic benefits associated with the
item will flow to the group and the cost of the
item can be reliably measured. All other repairs
and maintenance are charged to the income
statement during the financial period in which
they are incurred.
(B) OWNER-OCCUPIED PROPERTY
If an investment property is used by the group, it
is reclassified as owner-occupied property unless
the internal use is insignificant. Fair value at the
date of reclassification is the property’s
acquisition cost. An owner-occupied property is
accounted for at revalued value less accumulated
depreciation and amortisation. An evaluation of
fair value for such properties is carried out in the
same manner as described for investment
properties. An increase in the value of owner-
occupied property is not recognised in the income
statement, but it is recognised as a change of the
revaluation reserve in comprehensive income. A
reduction of the value is recognised against the
revaluation reserve, related to the revaluation of
the specific building. If a reduction exceeds the
revaluation reserve, the remainder is recognised
against the income statement.
2.8 - Impairment of non-financial assets
Assets which have an indefinite useful life are not
subject to amortisation and are tested annually
for impairment. Assets which are subject to
amortisation or depreciation are reviewed for
impairment whenever events or changes in
circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is
recognised with the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s
fair value less the selling costs and value in use.
For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there
are separately identifiable cash flows.
2.9 - Financial instruments
(A) GENERAL PRINCIPLES AND DEFINITIONS
Recognition and derecognition
Regular way purchases and sales of financial
assets are recognised on the trade date, being the
date on which the group commits to purchase or
sell the asset. Financial assets are derecognised
when the rights to receive cash flows from the
financial assets have expired or have been
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 23
transferred and the group has substantially
transferred all the risks and rewards of ownership.
On the initial recognition of a financial asset or
liability, it is measured at fair value with the
exception of trade receivables, which are
measured at the transaction price with a provision
for expected bad debts on the initial recognition
to the extent that such bad debts have arisen
from the letting business, and where no
significant financing element is included in the
transaction price.
Classification
The group classifies financial instruments in the
categories at fair value through profit and loss and
at amortised cost. The classification depends on
the purpose of the instrument, and the group
assesses the classification of financial instruments
on their acquisition.
(B) FINANCIAL INSTRUMENTS AT FAIR VALUE
THROUGH PROFIT AND LOSS
Financial instruments at fair value through profit
and loss include derivatives unless they are part of
hedging. See note 2.10 related to interest-rate
swaps and forward exchange contracts.
The group’s financial instruments at fair value
through profit and loss also include non-current
receivables related to rental guarantees provided
by the seller of a property, where the seller
guarantees an agreed level for rent and common
cost coverage of vacant premises for an agreed
period. The value of the receivable is calculated as
the discounted value of expected payments under
the rental guarantee. Payments under the
guarantee are accounted for against the
receivable and the receivable will be updated with
any changes of the initial estimate.
(C) FINANCIAL INSTRUMENTS AT AMORTISED
COST
The group’s financial instruments at amortised
cost primarily comprise borrowings and bank
deposits as well as receivables and payables
arising from regular operation.
Borrowings
Borrowings are recognised initially at fair value,
net of the transaction costs incurred. Borrowings
are subsequently stated at amortised cost using
the effective interest method. Any differences
between the proceeds (net of transaction costs)
and the redemption value are recognised in the
income statement over the duration of the
borrowings.
Cash and cash equivalents
Cash and cash equivalents are classified at
amortised cost. They include cash on hand, bank
deposits and other current highly liquid
investments with original maturities of three
months or less. Bank overdrafts are included in
borrowings in the balance sheet under current
liabilities.
Trade receivables and other financial assets
Trade receivables and other financial assets are
classified as financial assets measured at
amortised cost. Interest is ignored if it is
insignificant. The group applies the simplified
approach in IFRS 9 to measure the loss allowance
at lifetime expected credit losses. A provision for
bad debt is determined by estimating the
expected credit losses with reference to the past
default experience of the debtor and an analysis
of the debtor’s current financial position, adjusted
for factors that are specific to the debtors, general
economic conditions of the industry in which the
debtors operate and an assessment of both the
current as well as the forecast direction of
conditions at the reporting date.
There has been no change in the estimation
techniques or significant assumptions made
during the current reporting period. Any
subsequent payments received against accounts
for which a provision has previously been made
are recognised in the income statement. Trade
receivables and other financial assets are
classified as current assets, unless they are due
more than twelve months after the balance sheet
date. If so, they are classified as non-current
assets.
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 24
Trade payables and other non-interest-bearing
liabilities
Trade payables and other non-interest bearing
liabilities are classified as financial liabilities at
amortised cost, and are measured at fair value
upon initial recognition, and subsequently at
amortised cost using the effective interest rate
method. Interest is ignored if it is insignificant.
2.10 - Derivatives and hedging
All the group’s interest-rate swaps are used as
economic hedges. Hedge accounting is not
applied.
Derivatives are initially recognised at fair value on
the date the derivative contract is entered into
and are subsequently recognised continuously at
their fair value.
Change in fair value of interest derivatives are
recognised in the income statement under change
in fair value of interest derivatives.
2.11 - Inventory (residential property)
The inventory related to homes under
construction is valued at the lower of acquisition
cost and net realisable value. Acquisition cost
includes all expenditures for purchase and
construction as well as other expenses incurred to
bring the inventory to its present condition.
Construction costs include direct expenditures on
the construction of the property as well as the
indirect fixed and variable costs incurred during
development and construction. Borrowing costs
are included in the acquisition cost until the
properties are ready for sale. Capitalisation of
borrowing costs begins when the property has
received planning permission. Capitalisation of
other directly attributable costs begins when it is
more likely than not that a project will be realised.
The net realisable value is the estimated sales
price in the ordinary way of business, based on
the market price at the reporting date and
discounted for the time value of money, less the
estimated costs for completion and sales. When
properties are sold, the carrying amount is
recognised as a project cost in the profit and loss
account for the same period as the associated
revenue is realised.
2.12 - Share capital, treasury shares, share
premium and share options
Shares are classified as equity when there is no
obligation to transfer cash or other assets. Costs
directly attributable to the issuance of new shares
or options are shown in equity as a deduction, net
of tax, from the proceeds. Treasury shares are
deducted from the share capital in the financial
statements.
Employee options represent rights for employees
to subscribe for shares in the group at a future
time at a predetermined subscription price
(subscription right). Exercise requires continued
employment. The fair value of employee benefits
received in exchange for the granting of options is
calculated as an expense. The total amount to be
expensed over the vesting period reflects the fair
value of the options granted measured at the
grant date. On the balance-sheet date, the group
revises the estimates of the number of options
expected to be utilised and changes in estimates
are recognised in the income statement over the
remaining vesting period with a corresponding
adjustment of equity. The strike price after the
deduction of possible transaction costs is credited
to share capital and the share premium when the
option is exercised. Employer’s tax is accrued on
the balance sheet date as an expense in the
accounts on the basis of the market value of the
options (i.e. the difference between the market
value and the strike value of the shares).
2.13 - Deferred income tax
Deferred income tax is calculated in full on all
temporary differences arising between the tax
basis of assets and liabilities and their carrying
amounts in the consolidated financial statements.
However, the deferred income tax is not
accounted for if it arises from the initial
recognition of an asset or liability in a transaction
other than a business combination which at the
time of the transaction affects neither accounting
nor taxable profit or loss. Deferred income tax is
determined using tax rates and tax laws which
have been enacted or substantially enacted as at
the balance-sheet date, and which are expected
to apply when the related deferred income tax
asset is realised or the deferred income tax
liability is settled.
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 25
Deferred income tax assets are recognised to the
extent that it is probable that future taxable profit
will be available against which the temporary
differences can be utilised.
Deferred income tax is provided on the temporary
differences arising from investments in
subsidiaries and associates, except where the
timing of the reversal of the temporary difference
is controlled by the group and it is probable that
the temporary differences will not reverse soon.
Pursuant to the exception in IAS 12, deferred tax
is not recognised when buying a company which is
not a business. A provision for deferred tax is
made after subsequent increases in the value
beyond the initial cost, while a fall in value below
the initial cost will only reverse previous
provisions for deferred tax. Furthermore, an
increase in the temporary differences related to
tax depreciation will give grounds for a
recognition of deferred tax.
2.14 - Revenue recognition
Revenue consists of rental income and other
income related to operations. A gain on the sale
of investment property is included under change
in fair value of investment property in the income
statement.
Operating income encompasses the fair value of
the consideration received for services in the
ordinary business. Revenues are presented net of
VAT, discounts and rebates.
The lease agreements include certain services
offered to tenants including common area
maintenance services as well as other support
services. The consideration charged to tenants for
these services mainly includes fees charged based
on total costs incurred in relation to the
percentage of the rented space. These services
are specified in the lease agreements and
separately invoiced. The group arranges for third
parties to provide for a significant part of these
services to its tenants. The group does not act as a
principal in relation to these services as it does
not control the specified services before
transferring them to the customer. The group
records revenue on a net basis. Therefore, the
operating revenues do not include service charges
invoiced to tenants. Accrued service charges are
recognised in the balance sheet together with
payments on account from tenants and,
therefore, do not affect profit beyond an
administrative mark-up recognised as income. The
settlement of service charges is made after the
balance-sheet date.
(A) RENTAL INCOME
The group earns rental income through operating
leases. Rental income is recognised on a linear
basis over the rental period. Lease incentives in
the form of rent rebates, compensation payments
or the like are distributed over the duration of the
lease so that the income is recognised on a linear
basis. The accrued amount is presented under
other receivables in the balance sheet. Upon a
tenant’s termination, the renegotiated remaining
cash flows are recognised over the remaining
period until the premises are vacated.
Norwegian Property’s rent related to retail and
restaurant leases are partly revenue-based. Such
lease agreements typically contain a minimum
rent and a turnover-based rent. The minimum
rent is recognised on a linear basis over the rental
period. Turnover-based rent is recognised as
income on the basis of the tenant’s reported
turnover for the period. Estimates are used as a
basis for the revenue recognition when the
reporting is received subsequent to year-end.
Other variable revenue related to the marina
business, outdoor areas and the energy centre at
Aker Brygge is recognised when the goods or
services are transferred to the customer, at the
transaction price.
(B) OTHER OPERATING INCOME
Other income is recognised as it is earned. Income
is earned when the product or service is delivered.
The income is often earned at the same time as
the transaction. Recognition is delayed for income
not earned at the same time as the transaction,
and that is brought forward for income earned
before the time of the transaction.
2.15 - Dividend distribution
Dividend distribution to the shareholders is
recognised as a liability in the financial statements
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 26
in the period in which the dividends are approved
by the shareholders.
2.16 - Interest expense
Interest expenses on borrowings are recognised
under financial costs in the income statement
using the effective interest-rate method.
General and specific borrowing costs directly
attributable to the acquisition, construction or
production of qualifying assets, which are assets
which necessarily take a substantial period to
complete for their intended use, are added to the
cost of those assets until the assets are
substantially ready for their intended use.
2.17 - Pensions
Norwegian Property ASA operates a defined
contribution plan for all employees. A defined
contribution pension scheme is an arrangement
whereby the group pays fixed (defined) amounts
to a separate legal entity. The group has no legal
or other obligations to pay further amounts.
Contributions are recognised as an employee
benefit expense when they fall due. Prepaid
contributions are capitalised as an asset to the
extent that cash refunds or reductions in future
payments are available.
2.18 - Operating expenses
Property-related expenses include administrative
costs related to the management of the
properties as well as operating and maintenance
costs.
Other property expenses include income-related
costs associated with leasing, marketing and so
forth of the properties, the owner’s share of
service charges for the properties and project-
related property costs.
Administrative expenses relate to costs not
directly related to the operation and letting of
properties, and include costs related to overall
ownership and corporate functions.
NOTE 3: Financial risk management
The group’s activities imply exposure to a variety
of financial risks: market (including foreign
exchange, interest rate and price), credit and
liquidity. The group’s overall risk management
programme focuses on the unpredictability of
financial markets and seeks to minimise the
potential adverse effects on the group’s
profit/loss and equity. The group uses hedging
instruments designed to mitigate certain risks.
Hedge accounting is not applied.
Risk management for the group is managed by a
corporate treasury department in accordance
with guidelines approved by the board.
Management identifies, evaluates and hedges
financial risks in close cooperation with the
group’s operational units. The board provides
written policies for overall risk management and
written guidelines for specific areas, such as
foreign exchange and interest-rate risk.
3.1 – Market risk
FOREIGN EXCHANGE RISK
The group has no lease agreements with tenants
in foreign currencies, and all the operational costs
are, in practice, in NOK.
In 2020, Norwegian Property acquired a share
(joint venture) in the residential development
company Nordr. Nordr has operations in both
Norway and Sweden. The investment is accounted
for in accordance with the equity method on a
single line in the income statement and balance
sheet. The book value in the balance sheet as at
31 December 2022 amounts to NOK 1,061.7
million (NOK 1,084.8 million). The group’s share of
Nordr is partly exposed to SEK, and its share of
translation differences recognised under the
equity method is presented within other
comprehensive income.
PRICE RISK
Rental income is exposed to changes in market
rents, revenue-based rent and changes in the
consumer price index (CPI). The group prefers
long-term leases. The weighted average duration
of rental contracts as at 31 December 2022 was
4.9 years (5.9 years).
Rental agreements for the commercial properties
primarily give a fixed revenue during the lease
term. Most leases (99 per cent) have a full CPI
adjustment clause allowing the group to adjust
rents in line with CPI changes. The group seeks to
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 27
incorporate clauses providing for such regulation
in all new leases. CPI regulation in 2022 was 7.5
per cent for leases regulated in October and 6.5
per cent for leases regulated in November, which
increased the annual rental income as at 31
December 2022 by NOK 76 million. Rent related
to the shopping centre at Aker Brygge and Hasle
in Oslo is partly revenue-based.
INTEREST-RATE RISK
The group is subject to interest-rate risk related to
floating rate loans. Norwegian Property’s overall
guidance pursuant to current loan agreements is a
hedging ratio of at least 60 per cent related to
outstanding floating-rate loans. As at 31
December 2022, 70.1 per cent (71.2 per cent) of
such loans were hedged (see note 13).
To manage interest-rate risk, the group had
entered into interest-rate swap agreements
totalling NOK 4 billion as at 31 December (NOK 5.2
billion). The average credit margin on floating-rate
borrowings as at 31 December 2022 was 136 basis
points (133 basis points). The average basis rate of
the loan portfolio as at 31 December 2022 was
3.48 per cent (2.81 per cent). The average
remaining maturity of hedging agreements was
5.6 years (6.3 years). Notional principal amounts
and the maturity structure for the group’s total
portfolio of interest-rate hedges as at 31
December are specified in NOK million in the table
below (see also note 10).
According to the specifications in note 13, the
company’s average interest rate was changed by
approx. 0.70 per cent in 2022 and 0.10 per cent in
2021. Based on this, a sensitivity analysis has been
prepared. If the average interest rate for the
group had been 70 (10) basis points higher/lower
as at 31 December and all other variables were
constant, this would have constituted a change in
annual interest expense on the unsecured lending
portfolio and a change in the value of interest-rate
swaps as follows.
Increases in market interest rates can lead to
increased yield levels for the group’s properties,
which in turn can affect the valuations of the
properties.
3.2 - Credit risk
The majority of the group’s rental revenues come
from solid tenants. Tenants are preferably large,
solid companies and public institutions, which
reduces the risk related to leases. New tenants
are checked with credit rating agencies for an
acceptable credit history. Most tenants have
provided bank guarantees or made deposits of
sums equivalent to three months of rent. Rents
are generally invoiced quarterly in advance. Credit
loss has historically been limited. The group’s
trade receivables at the balance-sheet date are
entirely in NOK.
3.3 - Liquidity risk
The group aims to ensure that liquidity/credit
facilities are sufficient to meet its foreseeable
obligations. In addition, it will have a reasonable
capacity to meet unforeseen obligations. The
funding strategy aims to maintain flexibility and
withstand fluctuations in rental income. One goal
is that the liquidity reserve should consist as far as
possible of available revolving credit and overdraft
facilities, rather than cash and cash equivalents.
The group’s liquidity reserve as at 31 December is
specified in the table below.
Year 2022 2021
< 1 yea r (500.0) (1,220.0)
1-2 years
(1,050.0) (500.0)
3-5 years
(600.0) (1,650.0)
Over 5 years (1,800.0) (1,800.0)
Notional principal amount (3,950.0) (5,170.0)
(Amounts in NOK million)
2022 2021
Average interest rate increase (per
cent)
0.70 0.10
Change in financial expense
(25.2) (2.8)
Change in fair value of interest
derivatives
78.4 14.4
Change in profit before income tax 53.2 11.6
Average interest rate decrease (per
cent)
(0.70)
(0.10)
Change in financial expense 25.2 2.8
Change in fair value of interest
derivatives
(78.4) (14.4)
Change in profit before income tax
(53.2) (11.6)
(Amounts in NOK million) 2022 2021
Cash and cash equivalents
185.1 313.5
- of which restricted cash and cash
equivalents
(6.5) (3.3)
Available cash and cash equivalents
178.6 310.3
Unused credit and overdraft facilities
1,157.0 1,800.0
Liquidity reserve
1,335.6 2,110.3
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 28
As described hereinabove, the group has a high
level of hedging against changes in market
interest rates, reducing the need for liquidity
reserves to meet unforeseen obligations related
to these areas. The group has generated positive
cash flows from operational activities in both 2022
(NOK 457.4 million) and 2021 (NOK 447.1 million).
Additional liquidity risks primarily relate to
servicing instalments and the maturity of
liabilities. The maturity structure of liabilities for
the group is specified in the tables below. The
classification is based on the maturity specified in
the contracts. The figures in the tables specify the
timing of repayment of the principal amounts as
well as the annual interest payments.
2022
1
:
2021
1
:
1
The difference between the carrying amount and expected cash flow
for interest-bearing debt reflects capitalised costs and estimated
interest costs based on the average interest rate as at 31 December.
A number of financing activities have been carried
out in 2022. The NOK 1,030 million bond loan
(NPRO 11), which matured in November, was
refinanced with withdrawals on the existing
facilities in banks. Norwegian Property has
entered into a number of new bank facilities and
several facilities have been prolonged during
2022. The share of bank facilities has increased
from 4 per cent at the beginning of the year to 21
per cent at the end of the year.
Interest-bearing debt in the balance sheet totalled
NOK 12,185.7 million as at 31 December 2022,
with non-current interest-bearing debt accounting
for NOK 10,351.6 million and current interest-
bearing debt for NOK 1,834.1 million. Current
interest-bearing debt as at 31 December 2022
relates to facilities maturing in 2023, which will be
refinanced during the year.
3.4 - Capital risk management
The group’s objectives relating to capital
management are to ensure continued operation
in order to provide returns for shareholders and
benefits for other stakeholders. To achieve this,
the aim is to maintain a capital structure which
helps to reduce the cost of capital.
Norwegian Property’s goal is to pay a dividend to
its shareholders amounting to 30-50 per cent of
its ordinary profit after tax payable but before
fair-value adjustments. The dividend can be
higher in times with good cash flow. Before a
dividend is determined, an assessment is made of
the group’s financial position and prospects,
including the availability of attractive investment
opportunities.
Capital management seeks to maintain a good
balance between debt and equity. The group must
have a satisfactory equity ratio, but where the
main focus relates to the loan-to-value (LTV) ratio.
The latter is calculated as gross debt less cash and
interest-bearing receivables divided by the gross
property value. The group’s goal is to have an LTV
ratio of 45-55 per cent. The LTV ratio as at 31
December is specified in the table below. A
condition of the group’s overdraft facilities is that
the LTV ratio should not exceed 75 per cent.
Agreed requirements related to the LTV ratio in
the loan agreements were met with a good
margin as at 31 December and at the interim
reporting dates for 2022 and 2021. To change the
capital structure, the group may adjust the level
of dividends paid to shareholders, return capital
to shareholders, issue new shares or sell assets to
redeem debt.
(Amounts in NOK million)
Interest-
bearing debt
Other
liabilities at
amortised
cost
< 1 yea r
2,226.9 209.1
1-2 years 2,929.9 -
3-5 years 4,689.3 -
Over 5 years 3,850.2 -
Expected cash flow 13,696.3 209.1
Book value 12,185.7 209.1
(Amounts in NOK million)
Interest-
bearing debt
Other
liabilities at
amortised
cost
< 1 yea r 2,737.9 167.5
1-2 years 676.4 -
3-5 years 6,163.9 -
Over 5 years 3,906.5 -
Expected cash flow 13,484.7 167.5
Book value 12,004.8 167.5
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 29
1
Applies to the book value of the investment in Nordr (joint venture),
adjusted for the EPRA-revaluation of the investment.
NOTE 4: Assessment of fair value
The consolidated financial statements have been
prepared on a historical cost basis except for
investment property and some financial assets
and financial liabilities (including derivative
instruments), which are recognised at fair value
through profit and loss.
4.1 - Investment property
According to the group’s valuation process, the
finance and investment department is responsible
for the preparation of valuations of investment
property for use in the financial statements. The
department is responsible for a quarterly
valuation of the group’s investment properties at
fair value. The group’s valuation process is based
on external valuations, supplemented by internal
analysis where the group makes an assessment
and determines whether the external valuations
give an accurate picture of the fair value of the
investment properties. Inspections and technical
reviews of all the properties are performed
regularly. The valuations are reviewed quarterly
as a key part of the audit committee’s quality
assurance of the interim and annual accounts.
Based on this valuation process, all properties
were valued by two independent professional
appraisers as at 31 December 2022. Cushman &
Wakefield and Akershus Eiendom have prepared a
valuation of all the properties. The group has
concluded that an average of the valuations may
be used as the basis for the accounting of
investment properties at fair value as at 31
December 2022. See also note 5 for critical
accounting estimates and judgements.
4.2 - Financial instruments and derivatives
The estimated fair value of the group’s financial
instruments is based on market prices and
valuation methods as described below.
INTEREST-BEARING LIABILITIES
The group recognises interest-bearing liabilities at
amortised cost. Notes to the financial statements
(see note 13) provide information on the
estimated fair value of interest-bearing liabilities.
Bonds are valued at the market price as at 31
December and bank loans at the estimated fair
value where account is taken of the estimated
difference between the current margin and
market conditions.
TRADE RECEIVABLES/OTHER RECEIVABLES AND
TRADE PAYABLES/OTHER LIABILITIES
In principle, these items are recognised initially at
fair value and measured at amortised cost in
subsequent periods. However, discounting is not
normally assumed to have a significant effect on
this type of receivable and liability.
DERIVATIVES
The fair value of financial derivatives, including
interest-rate swaps and currency forward
exchange contracts/swaps, is determined by the
net present value of future cash flows, calculated
using quoted interest-rate curves and exchange
rates at the balance-sheet date. The technical
calculations are generally performed by the
group’s banks. The group has checked these
valuations and tested them for reasonableness.
RENTAL GUARANTEE RECEIVABLES
Rental guarantee receivables relate to rental
guarantees provided by the seller of properties,
where the seller guarantees an agreed level for
rent and the common costs of vacant premises for
an agreed period. The valuation is based on an
internal assessment. The value of the receivable is
calculated as the discounted value of expected
payments under the rental guarantee. Payments
under the guarantee are accounted for against
the receivable, and the receivable will be updated
with any changes to the initial estimate.
(Amounts in NOK million) 2022 2021
Long-term interest-bearing liabilities
10,351.6 9,583.0
Short-term interest-bearing liabilities
1,834.1 2,421.7
Interest-bearing receivables
(110.2) (109.6)
Cash and cash equivalents
(185.1) (313.5)
Net interest-bearing liabilities
11,890.5 11,581.7
Market value of property portfolio
25,201.0 25,143.0
Market value of investment in joint
ventures
1
2,181.0 2,342.8
Market value of property portfolio
and investment in joint ventures
27,382.0 27,485.7
Net loan to value (per cent)
43.4 42.1
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 30
NOTE 5: Critical accounting estimates and
judgements
Estimates and judgements are continually
evaluated, and are based on historical experience
and other factors, including expectations about
future events which are believed to be reasonable
under current circumstances.
Management makes estimates and assumptions
concerning the future. The resulting accounting
estimates will, by definition, seldom equal the
actual figures. The estimates and assumptions
which involve the greatest risk of causing a
material adjustment to the carrying amounts of
assets and liabilities in the next financial year are
outlined below.
5.1 - Fair value of investment properties
Investment property is valued at its fair value
based on a quarterly valuation update.
Procedures for determining fair value for
investment properties are described in note 4. In
line with these policies, the portfolio of
commercial properties is valued every quarter on
the basis of external valuations.
Properties are valued by discounting future cash
flows. Both contractual and expected cash flows
are included in the calculations. Therefore, the
fair-value assessment of investment properties
largely depends on assumptions related to market
rents, discount rates and CPI adjustments. Market
rents are based on individual assessments of each
property and on segmentations of different areas
within the properties if relevant. To the extent
that a specific development potential is associated
with a property, an assessment is made of
whether this supports or influences fair value.
Updated macroeconomic assumptions for
interest-rate levels, inflation expectations and so
forth are applied in the calculations. Inflation
expectations are based on consensus views from
banks and public statistical agencies. Based on an
assessment of the properties, tenants and
macroeconomic conditions as at the balance-
sheet date, cash flows are discounted using
discount rates based on individual assessments of
each property.
Observed ranges for key variables in the individual
property valuations from the external valuations
are as follows, related to both investment
property and owner-occupied property.
1
Variables used as a basis in the valuation of the individual properties
by the two appraisers.
2
Average amounts from the two valuations based on total cost and
market rent for the individual property in relation to the total number
of sqm for the property.
The sensitivity of the fair-value assessment of
investment properties depends on assumptions
related to yield, interest rates, market rents and
operating costs for the properties. The table
1
below presents examples of how changes related
to each of these variables influenced property
values as at 31 December 2022, assuming all other
variables remained constant (amounts in NOK
million).
1
The calculations have been performed by Cushman & Wakefield in
connection with the valuations at 31 December 2022.
5.2 - Fair value of financial derivatives
The group’s financial derivatives include interest-
rate swap contracts and currency forward/swap
contracts. The procedures for valuation are
described in note 4. The calculations are
performed by the group’s banks. The group has
checked these valuations and tested them for
reasonableness. The valuations involve a small
degree of discretionary assessments, and the
company’s internal assessments deviate to a very
small extent from the external valuations.
Class of Property Fair Value 2022 Fair Value 2021
Investment property (NOK mill.) 24,859.1 24,801.3
Owner-occupied prop. (NOK mill.) 108.8 106.7
Variables Range 2022 Range 2021
Exit yield (per cent)
1
3.8 - 6.0
3.3 - 5.9
Discount rate (per cent)
1
4.0 - 8.0
3.5 - 7.5
Operating costs (NOK per sqm)
2
100 - 300 100 - 300
Market rent (NOK per sqm)
2
1,700 - 5,900 1,400 - 5,200
Variables
Changes of variables Value change
Exit yield + 0.25 per cent
(846)
Discount rate + 0.25 per cent
(744)
Operating costs + NOK 25 per sqm
(969)
Market rent + 10 per cent
2,386
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 31
5.3 - Fair value of rental guarantee receivables
Rental guarantee receivables relate to rental
guarantees provided by the seller of properties.
The procedures for valuation are described in
note 4. The valuation is based on internal
assessments. The value of the receivable is
calculated as the discounted value of expected
future payments under the rental guarantee.
Therefore, the fair-value assessment largely
depends on the assumptions related to future
rentals, discount rates and CPI adjustments.
Management’s rental expectations are the basis
for the assessments, together with a discount rate
of three per cent and comparable inflation
expectations as used in the valuation of
investment properties.
5.4 - Climate risk in the accounts
Climate risk can represent financial risk that must
be reflected in the accounts.
Further information on climate risk is provided in
the declaration of corporate social responsibility
as well as in the table in the risk and risk
management section of the annual report.
Climate risk is linked to both the impact of climate
change on the company and the impact the
company’s activities has on the climate. Both of
these factors can be financially significant for the
company, and the materiality assessments are
often referred to as double materiality. Climate
risk can be linked to physical risk where there is a
risk of assets being damaged or shortened in life
as well as to transitional risk due to changes in the
market and regulatory conditions.
Climate risk can affect future cash flows and thus
the valuation of assets and liabilities in the
accounts. The most important assessment for
Norwegian Property is how climate risk affects the
valuation of investment property.
VALUATION OF INVESTMENT PROPERTY
Physical risk associated with the properties is first
and foremost related to the extent to which
conditions such as warmer climates, increased
water levels, more extreme weather, etc. affect
the properties.
Transition risks are divided into market and
regulatory components.
Market risk includes the risk for increased
demand for more environmentally-friendly
premises, more demanding environmental
standards from investors and banks, increased
insurance premiums if damage from climate
change becomes extensive, technology risk
related to new energy solutions and building
standards and reputational risk as climate-related
awareness spreads.
Examples of regulatory risk are government
requirements and permits in such areas as
building standards, traffic and infrastructure.
Taxes could rise in line with increased public
spending.
Norwegian Property has had a scenario analysis
carried out by external experts (CEMAsys) in the
field to analyse the risk elements related to the
company’s real estate portfolio. No critical factors
have been identified that obviously have a
material impact on the market value of the
properties.
In preparing the external valuations of the
company’s properties, it has been assessed with
the valuers to what extent climate risk affects the
valuation. The assessment is that so far there are
no significant factors related to climate risk that
affect the market’s pricing of the property
portfolio. It is assumed that this assessment will
change over time as the risk elements to a greater
extent may affect future cash flows for the
properties, including the following examples of
relevant risk areas:
- Increased demand for more
environmentally-friendly premises can
affect rental income.
- Environmental measures on the
properties could lead to greater
development and adaptation costs.
Keeping abreast of technical
developments for energy solutions and
building standards will be important.
Opportunities also exist for more energy-
efficient solutions with new technology.
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 32
- Environmental standards from banks and
investors will become stricter. At the
same time, however, green loans offer
opportunities for lower margins and a
larger investor base.
- Government requirements and permits in
such areas as building standards, traffic
and infrastructure are expected to
become stricter, and taxes could rise in
line with increased public spending.
- Insurance premiums can increase if
damage from climate change becomes
extensive.
NOTE 6: Investment property, owner-
occupied property and guarantee receivables
6.1 – Development in carrying amounts
Changes to the balance-sheet items of investment
property, owner-occupied property and
guarantee receivables are specified in the table
below. Changes in the market value of investment
property and guarantee receivables are
recognised on a separate line in the profit and loss
statement.
2022:
(Amounts in NOK
million)
Invest-
ment
property
Owner-
occupied
property
Guarantee
receiva-
bles
Total
Book value at 1
January
24,801.3
106.7
234.9
25,143.0
Disposals
-
-
-
-
Additions
263.4
-
-
263.4
Payments related
to the rental
guarantee
-
-
(60.5)
(60.5)
Fair value
adjustment
recognised in profit
and loss
(205.6)
-
50.9
(154.7)
Interest income
recognised in profit
and loss
-
-
7.7
7.7
Fair value
adjustment
recognised against
the revaluation
reserve
-
3.4
-
3.4
Depreciation
recognised in profit
and loss
-
(1.3)
-
(1.3)
Book value at 31
December
24,859.1
108.8
233.1
25,201.0
2021:
(Amounts in NOK
million)
Invest-
ment
property
Owner-
occupied
property
Guarantee
receiva-
bles
Total
Book value at 1
January
23,087.6
97.6
264.8
23,450.0
Disposals
(0.5)
-
-
(0.5)
Additions
397.3
-
-
397.3
Payments
related to the
rental guarantee
-
-
(85.9)
(85.9)
Fair value
adjustment
recognised in
profit and loss
1,316.9
-
48.1
1,365.0
Interest income
recognised in
profit and loss
-
-
7.9
7.9
Fair value
adjustment
recognised
against the
revaluation
reserve
-
10.4
-
10.4
Depreciation
recognised in
profit and loss
(1.3)
(1.3)
Book value at 31
December
24,801.3
106.7
234.9
25,143.0
Rental income and property expenses related to
investment properties are stated in the income
statement. The maturity structure for non-
cancellable leases related to investment property
is specified in note 16.
As at 31 December 2022, financial vacancy for the
investment properties was 5.9 per cent. Operating
expenses for vacant space and the owner’s share
of service charge expenses totalled NOK 35.5
million for 2022 (NOK 32.1 million).
Apart from covenants in loan agreements, no
restrictions apply to the timing of the realisation
of investment properties or how the revenue
from any sale can be used.
Apart from adjustments for lessees and ongoing
operational investments, the group had no
significant contractual obligations for construction
contracts related to investment properties as at
31 December in 2022 or 2021.
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 33
6.2 - Fair-value assessment
The following table shows the fair-value
assessment of properties when using different
types of inputs.
2022
1
:
(Amounts in NOK million)
Investment
property
Owner-
occupied
property
Guarantee
receivables
Given market value for
corresponding assets and
liabilities (level 1)
-
-
-
Other significant
observable input (level 2)
-
-
-
Other significant non-
observable input (level 3)
24,859.1
108.8
233.1
Total estimated fair value
24,859.1
108.8
233.1
2021
1
:
(Amounts in NOK million)
Investment
property
Owner-
occupied
property
Guarantee
receivables
Given market value for
corresponding assets and
liabilities (level 1)
-
-
-
Other significant
observable input (level 2)
-
-
-
Other significant non-
observable input (level 3)
24,801.3
106.7
234.9
Total estimated fair value
24,801.3
106.7
234.9
1
Level 1: valuation based on quoted prices in active markets for
identical assets. Level 2: valuation based on observable market
information not covered by level 1. Level 3: valuation based on
information not observable under level 2.
The group’s policy is to recognise transfers into
and out of fair-value hierarchy levels at the date
of the event or change in circumstances which
caused the transfer. There were no transfers
between the levels during 2022 or 2021.
NOTE 7: Other fixed assets
Changes in other fixed assets are specified in the
table below.
The group uses linear depreciation. The economic
life of the assets is set at four years for IT
equipment, five years for licences, cars and
furnishings and seven years for other equipment.
It is set at 20 years for the energy centre at Aker
Brygge.
NOTE 8: Joint ventures
In 2020, Norwegian Property acquired Nordr
together with Fredensborg and Union Real Estate
Fund III. While Norwegian Property and
Fredensborg are equal partners, each holding 42.5
per cent of the preferred shares (A-shares), Union
owns 15 per cent of the preferred shares (B-
shares). Only preferred A-shares have voting
rights in the general meeting of the company. The
preferred A and B shares have a pre-emptive right
to payments from the company. C-shares are
entitled to payments from the company only after
a certain return on invested capital has been
achieved. C-shares are earmarked for senior
executives in Nordr, and at the end of 2022
represent an ownership interest of 0.3 per cent.
(Amounts in NOK million)
Other
fixed
assets
Energy
distri-
bution
system
(Aker
Brygge)
Total
Acquisition costs:
At 31 December 2020
51.2 43.1 94.3
Additions 2021 0.3 1.3 1.6
At 31 December 2021 51.5 44.4 95.9
Additions 2022 0.7 0.6 1.3
At 31 December 2022 52.2 45.0 97.2
Accumulated depreciation:
At 31 December 2020 43.4 13.0 56.4
Additions 2021 1.9 2.2 4.1
At 31 December 2021 45.3 15.2 60.5
Additions 2022 3.0 2.2 5.2
At 31 December 2022 48.3 17.4 65.7
Book value:
At 31 December 2021 6.1 29.3 35.4
At 31 December 2022 3.8 27.7 31.5
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 34
Norwegian Property owns 42.4 per cent of all
shares in the company.
Norwegian Property has shared control in Nordr
through contractual arrangements. The joint
venture is regulated by a shareholder agreement
which reflects joint control in all areas related to
the management of the business. Norwegian
Property and Fredensborg own an equal share of
preferred shares with voting rights. There are five
board members in the holding company of Nordr.
The two main owners have two representatives
each and the position as chair is rotated between
the two of them every two years.
Nordr has residential units under construction and
a substantial land bank in Norway and Sweden.
The land bank is largely located in the largest
Norwegian and Swedish cities, with an emphasis
on eastern Norway and the extended Stockholm
capital region in Sweden. Nordr’s business
consists of both wholly owned and partly owned
plots and projects. Entities over which Nordr has
control are fully consolidated in the accounts for
the Nordr group. Nordr’s share of joint venture’s
net profit and net equity is presented in
accordance with the equity method in the
accounts for the Nordr group.
At the year end of 2020, the property at
Forusbeen 35 in Stavanger had been reregulated
from a commercial building to a property with a
combined residential and commercial purpose.
Norwegian Property sold a 50 per cent share in
the project to Base Bolig, and thus owned the
project as a joint venture from 31 December
2020.
The changes for the year in the balance-sheet
item on net investment in joint ventures are
specified in the table below.
1
Currency risk associated with Nordr’s business in Sweden is not
hedged.
The group’s share of income in joint ventures is
specified in the table below.
2022:
2021:
(Amounts in NOK million) 2022 2021
Book value 1 January 1,084.8 1,013.6
Acquisition of joint ventures - 23.8
Share of profit and loss 33.8 74.9
Currency changes
1
(58.3) (28.1)
Profit for intercompany transactions (3.1) -
Reduction in receivables 4.5 0.6
Book value 31 December 1,061.7 1,084.8
(Amounts in NOK million) Nordr
Forus-
been 35
Tota l
Revenues 3,270.6 1.5 3,272.0
Project cost from sale of residential units (3,246.8) - (3,246.8)
Other operating expenses (253.7) (5.1) (258.9)
Share of profit in joint ventures 354.0 - 354.0
Operating profit 124.1 (3.7) 120.4
Net financial items (85.4) - (85.4)
Profit before income tax 38.7 (3.7) 35.0
Income tax 44.4 0.8 45.2
Profit for the period 83.1 (2.9) 80.2
The group's share of profit for the period 35.2 (1.4) 33.8
The group's share of gain from sale for the
period
- - -
The group's share of profit and gain from sale
for the period
35.2 (1.4) 33.8
The group's share of other comprehensive
income for the period
(58.3) - (58.3)
The group's share of total comprehensive
income for the period
(23.1) (1.4) (24.5)
(Amounts in NOK million) Nordr
Forus-
been 35
Tota l
Revenues 3,058.1 1.8 3,059.9
Project cost from sale of residential units (2,669.9) - (2,669.9)
Other operating expenses (355.2) (3.3) (358.5)
Share of profit in joint ventures 183.0 - 183.0
Operating profit 216.1 (1.5) 214.6
Net financial items (11.5) - (11.5)
Profit before income tax 204.5 (1.5) 203.0
Income tax (14.7) 0.3 (14.4)
Profit for the period 189.8 (1.2) 188.6
The group's share of profit for the period 75.5 (0.6) 74.9
The group's share of gain from sale for the
period
- - -
The group's share of profit and gain from sale
for the period
75.5 (0.6) 74.9
The group's share of other comprehensive
income for the period
(28.1) - (28.1)
The group's share of total comprehensive
income for the period
47.4 (0.6) 46.8
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 35
The group’s share of equity in joint ventures is
specified in the table below.
2022:
2021:
NOTE 9: Financial instruments
Financial assets represent contractual rights for
the group to receive cash or other financial assets
in the future. Financial liabilities correspondingly
represent contractual obligations for the group to
make future payments. Financial instruments are
included in several accounting lines in the group’s
balance sheet and income statement, and they
are classified in different categories in accordance
with their accounting treatment.
The carrying amount of financial instruments in
the group’s balance sheet is considered to provide
a reasonable expression of their fair value, with
the exception of interest-bearing debt. The fair
value of interest-bearing debt is described in note
13.
A specification of the group’s financial
instruments is presented below.
(Amounts in NOK million) Nordr
Forus-
been 35
Tota l
Investment property
-
20.7
20.7
Other fixed assets
30.2
- 30.2
Investment in joint ventures
1,537.1
- 1,537.1
Land bank and residential projects
9,054.2
100.2 9,154.4
Receivables
587.1
0.1 587.2
Cash and cash equivalents 600.4
0.3 600.6
Deferred tax
(403.5)
1.1 (402.4)
Interest bearing liabilities
(7,127.9)
- (7,127.9)
Shareholder debt
1
- (126.0)
(126.0)
Other liabilities (1,785.3) (0.5) (1,785.9)
Equity (2,492.1) 4.0 (2,488.1)
The group's share of equity (1,061.7) - (1,061.7)
(Amounts in NOK million)
Nordr
Forus-
been 35
Tota l
Investment property
-
17.3
17.3
Other fixed assets 31.2
-
31.2
Investment in joint ventures 1,373.6
-
1,373.6
Land bank and residential projects
8,690.8
92.0
8,782.8
Receivables 935.3
0.9
936.1
Cash and cash equivalents 1,005.9
0.2
1,006.1
Deferred tax
(396.7)
0.3 (396.4)
Interest bearing liabilities (6,340.7)
-
(6,340.7)
Shareholder debt
1
-
(108.4)
(108.4)
Other liabilities (2,752.8)
(3.5)
(2,756.3)
Equity
(2,546.6)
1.1
(2,545.4)
The group's share of equity (1,084.8) - (1,084.8)
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 36
2022
1
:
2021
1
:
1
Accounting items not specified in the table above, but included in the group’s financial statements, do not contain financial instruments.
(Amounts in NOK million)
Financial assets:
Non-current derivatives 161.6 - - 161.6
Non-current receivables 233.1 - - 233.1
Current receivables - 131.4 136.6 268.0
Current derivatives 1.9 - - 1.9
Cash and cash equivalents - 185.1 - 185.1
Financial liabilities:
Non-current derivatives 18.2 - - 18.2
Non-current interest-bearing liabilities - 10,351.6 - 10,351.6
Other non-current liabilities - - 2.0 2.0
Current derivatives - - - -
Current interest-bearing liabilities - 1,834.1 - 1,834.1
Other current liabilities - 209.1 40.4 249.5
Profit/loss related to financial instruments:
Financial income - 17.2 - 17.2
Financial cost - (375.6) - (375.6)
Change in market value of financial instruments 172.2 - - 172.2
Gain/loss recognised in comprehensive income:
Recognised in comprehensive income - - - -
Total
Non-financial
assets and
liabilities
Financial
instruments at
fair value through
profit or loss
Amortised cost
(Amounts in NOK million)
Financial assets:
Non-current derivatives 16.5 - - 16.5
Non-current receivables 234.9 - - 234.9
Current receivables - 107.0 79.7 186.7
Current derivatives 0.8 - - 0.8
Cash and cash equivalents - 313.5 - 313.5
Financial liabilities:
Non-current derivatives 36.2 - - 36.2
Non-current interest-bearing liabilities - 9,583.0 - 9,583.0
Other non-current liabilities - - 2.7 2.7
Current derivatives 7.9 - - 7.9
Current interest-bearing liabilities - 2,421.7 - 2,421.7
Other current liabilities - 167.5 39.1 206.5
Profit/loss related to financial instruments:
Financial income - 15.0 - 15.0
Financial cost - (346.0) - (346.0)
Change in market value of financial instruments 150.2 - - 150.2
Gain/loss recognised in comprehensive income:
Recognised in comprehensive income - - - -
Amortised cost
Total
Financial
instruments at
fair value through
profit or loss
Non-financial
assets and
liabilities
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 37
NOTE 10: Derivatives
10.1 - Specification of derivatives in the financial
statements
The group is subject to interest-rate risk related to
floating rate loans. The general policy in
accordance with the applicable loan agreements is
that at least 60 per cent of the group’s interest-
bearing debt at any time will be hedged.
Derivatives are carried at fair value. A
specification of the derivatives in the balance
sheet as at 31 December is shown in the
following.
2022:
2021:
Changes for the year to net derivatives in the
balance sheet are specified in the table below.
10.2 - Interest-rate derivatives
A specification of principal amounts per currency
for the group’s interest-rate derivatives as at 31
December is presented below. The maturity
structure for the derivatives is specified in note 3.
The floating interest rate is three-months Nibor
for all contracts.
Gains and losses for hedge accounting contracts
are recognised in other comprehensive income
until the underlying hedged loan is repaid.
10.3 - Fair value of derivatives
Fair value is established on the basis of the
following methods:
- Level 1: valuation based on quoted prices
in active markets for identical assets.
- Level 2: valuation based on observable
market information not covered by level
1.
- Level 3: valuation based on information
not observable under level 2.
All financial derivatives in the balance sheet relate
to interest-rate swap agreements, where fair
value is determined in accordance with level 2.
The group’s policy is to recognise transfers into
and out of fair-value hierarchy levels at the date
of the event or change in circumstances which
caused the transfer. No transfers were made
between the levels in 2022 or 2021.
NOTE 11: Receivables
11.1 - Current receivables
Current receivables in the balance sheet as at 31
December are specified in the table below.
1
Entirely related to the receivable on the joint venture for the
property at Forusbeen 35.
(Amounts in NOK million)
Assets Liabilities
Interest rate hedging contracts 161.6 18.2
Exchange rate hedging contracts - -
Derivatives, non-current
assets/liabilities
161.6
18.2
Interest rate hedging contracts 1.9 -
Exchange rate hedging contracts - -
Derivatives, current assets/liabilities
1.9 -
Total derivatives
163.5 18.2
Net financial derivatives in the
balance sheet
145.3
(Amounts in NOK million) Assets Liabilities
Interest rate hedging contracts 16.5 36.2
Exchange rate hedging contracts - -
Derivatives, non-current
assets/liabilities
16.5 36.2
Interest rate hedging contracts 0.8 7.9
Exchange rate hedging contracts - -
Derivatives, current assets/liabilities 0.8 7.9
Total derivatives
17.3 44.2
Net financial derivatives in the
balance sheet
(26.9)
(Amounts in NOK million) 2022 2021
Net book value of derivatives, 1 January (26.9) (177.1)
Net fai r va l ue adj us tments of deri vati ves
during the year
172.2 150.2
Net book val ue of deri va tives , 31
December 145.3 (26.9)
Currency 2022 2021
Notional principal
amount
NOK 3,950.0 6,070.0
(Amounts in NOK million) 2022 2021
Accounts receivable 31.2 17.9
Provision for impairment of receivables (10.0) (7.5)
Net accounts receivable 21.2 10.4
Loans to joint ventures and deferred
settlement on sale of properties
1
110.2 96.6
Public duties 5.0 13.6
Other current receivables 131.7 66.1
Total other current receivables 246.8 176.3
Total current receivables 268.0 186.7
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 38
11.2 - Non-current receivables
Non-current receivables as at 31 December are
specified in the table below.
NOTE 12: Other liabilities
12.1 - Other current liabilities
Other current liabilities as at 31 December are
specified in the table below.
12.2 - Other non-current liabilities
Other non-current liabilities as at 31 December
are specified in the table below.
NOTE 13: Interest-bearing debt
The table below presents an overview as at 31
December of the group’s interest-bearing debt,
including share of the interest exposure hedged,
average interest rate and remaining duration.
1
All interest-rate swaps and loans with fixed rate which had
commenced at the balance-sheet date.
Group interest-bearing non-current and current
debt as at 31 December is specified in accordance
with the type of debt in the table below.
2022:
2021:
1
The fair value of bonds is based on given market values for corre-
sponding assets and liabilities (level 1). The fair value of bank bor-
rowings are based on other significant non-observable input (level 3).
Level 1: valuation based on quoted prices in active markets for
identical assets. Level 2: valuation based on observable market
information not covered by level 1. Level 3: valuation based on
information not observable under level 2.
The group’s policy is to recognise transfers into and out of fair value
hierarchy levels at the date of the event or change in circumstances
which caused the transfer. There were no transfers between the
levels during 2022 or 2021.
(Amounts in NOK million) 2022 2021
Rent guarantee receivables (see note 6)
233.1 234.9
Total non-current receivables 233.1 234.9
(Amounts in NOK million) 2022 2021
Trade payables 50.5 39.2
Public duties 11.0 6.4
Accrued salaries 6.9 7.0
Accrued interest 96.9 72.6
Lease liability (see note 7) 0.7 1.6
Prepaid income 22.5 25.7
Accrued cost and other debts 61.0 54.0
Total other current liabilities 249.5 206.6
(Amounts in NOK million) 2022 2021
Leas e li abi li ty (s ee note 7) 0.1
0.7
Pension liabilities (see note 19)
1.9
2.0
Total other non-current liabilities
2.0
2.7
2022
2021
Total interest-bearing debt (NOK
million) 12,185.7 12,004.8
Of which hedged (NOK million)
1
8,547.0 8,547.0
Share of the interest exposure hedged
(per cent)
70.1 71.2
Cash and cash equivalents (NOK million)
185.1 313.5
Interest bearing receivables (NOK
million)
110.2 96.6
Unutilised credit facilities (NOK million) 1,157.0 1,800.0
Average interest rate (per cent)
3.48 2.81
Average interest margin (per cent) 1.36 1.33
Remaining time to maturity for interest-
bearing debt (years)
3.8
4.4
Remaining time to maturity for interest
hedge agreements (years)
5.6 6.3
(Amounts in NOK million)
Long-term Short-term Tota l
Bonds 5,640.0 400.0 6,040.0
Bilateral loan
3,542.0 - 3,542.0
Bank borrowings (loan facilities) 1,174.5 1,434.5 2,609.0
Total interest-bearing debt
10,356.5 1,834.5 12,191.0
Accrued financial items (4.9) (0.5) (5.3)
Total book value interest-bearing debt 10,351.6 1,834.1 12,185.7
Fair value of bonds
1
5,640.7 403.2 6,043.9
Fair value of bank borrowings
1
1,166.3 1,430.9 2,597.2
(Amounts in NOK million)
Long-term Short-term Tota l
Bonds 6,040.0 1,889.0 7,929.0
Bilateral loan 3,542.0 - 3,542.0
Bank borrowings (loan facilities) 0.6 531.6 532.2
Total interest-bearing debt 9,582.6 2,420.6 12,003.2
Accrued financial items 0.5 1.2 1.6
Total book value interest-bearing debt 9,583.1 2,421.8 12,004.8
Fair value of bonds
1
6,044.2 1,914.5 7,958.7
Fair value of bank borrowings
1
0.6 531.4 532.0
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 39
The total fair value of interest-bearing debt
consists of bonds valued at their market price as
at 31 December and bank loans at estimated fair
value, where account is taken of the estimated
difference between the current margin and
market conditions.
Changes for the year to interest-bearing debt in
the balance sheet are specified in the table below.
2022:
2021:
The maturity structure of the group’s long-term
interest-bearing debt as at 31 December is
specified in the table below (short-term interest-
bearing debt falls due within one year from the
balance-sheet date).
The carrying amount of group assets pledged as
security as at 31 December is specified in the
table below.
1
Properties with a carrying amount of NOK 265 million as at 31
December 2022 were not pledged for interest-bearing debt (NOK
263.6 million).
A portfolio of bonds totalling NOK 6 billion are
secured by properties and listed on the Oslo Stock
Exchange. A bilateral loan of NOK 3,5 billion is not
listed. None of the bonds have running terms
related to financial covenants. All the bonds have
change of control clauses, and the requirement of
a maximum of 65 per cent LTV on the mortgaged
building at the time of borrowing.
The security for bank facilities is shared with the
bondholders. The bank facilities are subject to
annual renewal. The most important terms for all
these facilities are a minimum interest-rate hedge
ratio of 50 per cent, interest cover of at least 1.4
and a maximum LTV of 75 per cent. Agreed
requirements in the loan agreements were met at
year-end 2022 and 2021 as well as all quarterly
interim reporting dates in 2022 and 2021.
(Amounts in NOK million)
Long-term Short-term Tota l
Interest-bearing debt as of 1 January 9,582.6
2,420.6
12,003.2
New debt
2,078.5 - 2,078.5
Repayment of debt - (1,890.6) (1,890.6)
Reclassification of debt (1,304.6)
1,304.6 -
Interest-bearing debt a s of 31 December 10,356.5 1,834.6 12,191.0
Accrued financial items
(4.9) (0.5) (5.3)
Book value of interest-bearing debt 10,351.6 1,834.1 12,185.7
(Amounts in NOK million)
Long-term Short-term Tota l
Interest-bearing debt as of 1 January 10,717.2 1,401.5 12,118.7
New debt 1,697.0 - 1,697.0
Repayment of debt (411.0)
(1,401.5) (1,812.5)
Reclassification of debt (2,420.6) 2,420.6 -
Interest-bearing debt as of 31
December
9,582.6 2,420.6 12,003.2
Accrued financial items 0.5 1.2 1.6
Book value of interest-bearing debt 9,583.0 2,421.8 12,004.8
(Amounts in NOK million)
2022 2021
Due in 2023 (2022) 1,834.6 2,420.6
Due in 2024 (2023) 2,615.0 400.6
Due in 2025, 2026 and 2027 (2024, 2025
and 2026)
4,199.5 5,640.0
Due after 2027 (after 2026) 3,542.0 3,542.0
Total 12,191.0 12,003.2
(Amounts in NOK million)
2022
2021
Investment property
1
24,936.0 24,909.2
Total 24,936.0 24,909.2
Liabilities secured 12,191.0 12,003.2
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 40
The group's loan facilities as of 31 December 2022 are specified in the table below.
NOTE 14: Deferred tax and income tax
Changes for the year to deferred tax appear as follows:
(Amounts in NOK million)
Security (property) Due (year)
Drawn amount
Short-term loan Long-term loan
Undrawn amount
Bond NPRO07
Fondbygget 2024
500.0
- 500.0
-
Bond NPRO08
Fondbygget 2024
450.0
- 450.0
-
Bond NPRO09
Drammensveien 60 2024
400.0
- 400.0
-
Bond NPRO14
Kaibygning I 2026
350.0
- 350.0
-
Bond NPRO15 Kaibygning I 2024 300.0 - 300.0 -
Bond NPRO16 Bryggegata 9/Støperiet 2024 505.0
-
505.0 -
Bond NPRO17 Lille Grensen 7 2024
460.0
-
460.0
-
Bond NPRO18
Verkstedhallene 2023 400.0 400.0
-
-
Bond NPRO19
Verkstedhallene 2025 975.0 -
975.0 -
Bond NPRO20
Terminalbygget
2025 700.0
- 700.0
-
Bond NPRO21
Snarøyveien 36 2026
650.0 -
650.0
-
Bond NPRO22 Kaibygning I 2026 200.0
- 200.0 -
Bond NPRO23
Terminalbygget
2026 150.0
-
150.0 -
Bilateral loan Smarøyveien 30 2030 3,542.0
- 3,542.0
-
RCF SEB
Property portfolio 1
2025 579.2
-
579.2 14.0
RCF Swdbank Property portfolio 2 2025 595.3 -
595.3
-
RCF DNB
Property portfolio 3
2023 654.0
654.0
- -
RCF DNB/SEB
Verkstedhallene 2023 250.0
250.0
- 208.0
Term loa n SEB
Kaibygning I 2023 530.0
530.0 -
-
Term loa n SEB Kaibygning I 2026 - -
-
500.0
Term loan Swedbank/SR-Bank Sandakerveien 138/140 2026 -
-
- 435.0
Other 2023
0.5 0.5
- -
12,191.0
1,834.5
10,356.5 1,157.0
(5.3)
(0.5) (4.9)
12,185.7
1,834.1 10,351.6
Total interest-bearing debt, 31 December 2022
Accrued financial items
Book value of interest-bearing debt, 31 December 2022
(Amounts in NOK million)
Investment
property
1
Gain and
loss
account
Carry
forward
losses
Carry
forward
interest
deductions
Financial
derivatives
Other Total
2
Total at 1 January 2021 1,707.7 27.8 (426.7) (380.3) (38.9) (1.9) 887.7
Not capitalised at 1 January 2021
3
- - - 380.3 - - 380.3
Book value at 1 January 2021 1,707.7 27.8 (426.7) - (38.9) (1.9) 1,268.0
Recognised through profit and loss in 2021 373.2 (3.6) 12.5 - 33.0 0.4 415.5
Recognised through comprehensive income
in 2021
2.3 - - - - - 2.3
Change of calculated deferred tax in 2021 375.5 (3.6) 12.5 - 33.0 0.4 417.8
Total at 31 December 2021 2,083.2 24.2 (414.2) (380.3) (5.9) (1.5) 1,305.5
Not capitalised at 31 December 2021
3
- - - 380.3 - - 380.3
Book value at 31 December 2021 2,083.2 24.2 (414.2) - (5.9) (1.5) 1,685.8
Recognised through profit and loss in 2022 (39.0) (3.0) 213.5 - 37.9 (2.7) 206.8
Recognised through comprehensive income
in 2022
0.7 - - - - - 0.7
Change of calculated deferred tax in 2022 (38.2) (3.0) 213.5 - 37.9 (2.7) 207.5
Total at 31 December 2022 2,045.0 21.2 (200.8) (380.3) 32.0 (4.2) 1,513.0
Not capitalised at 31 December 2022
3
- - - 380.3 - - 380.3
Book value at 31 December 2022 2,045.0 21.2 (200.8) - 32.0 (4.2) 1,893.3
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 41
1
The tax value totalled NOK 8.6 billion as at 31 December 2022. Theoretical deferred tax in the event that all the properties are sold at fair value
amounts to about NOK 3.7 billion. The difference from estimated deferred tax for investment property reflects the recognition exception in IAS 12.15
for the purchase of assets.
2
Deferred tax assets and liabilities are presented net when the group has a legally enforceable right to offset current tax assets against current tax
liabilities and when the deferred taxes relate to the same taxation authority. All group limited companies are included in the tax group and registered
in Norway.
3
With effect from 2019, amendments were made to the rules on limiting interest deductions under Norwegian tax legislation. The limitation has been
extended to include external interest payments for taxpayers in a group. The change affects Norwegian Property, which has a foreign controlling
shareholder.
The table below specifies the income tax for the
group on payable and deferred taxes,
respectively, and the calculation of income tax
expense based on income before tax.
1
Applies primarily to deferred tax assets related to investment
property, which is not recognised in the balance sheet when the fair
value is greater than the taxable value but lower than the cost for the
group.
Changes for the year to net deferred tax are
specified as follows.
NOTE 15: Segment information
Operating segments are reported in a manner
consistent with the internal reporting provided to
the chief operating decision maker CODM). The
CODM, who is responsible for allocating resources
and assessing the performance of the operating
segments, has been identified as the senior
management team.
Norwegian Property’s primary business is the
ownership and management of commercial
properties in the Oslo region. In the third quarter
of 2020, the company made an investment in 42.5
per cent of the preferred shares in the residential
development company Nordr. The Forusbeen 35
property at Forus in Stavanger was reregulated
from a commercial building to a property with a
combined residential and commercial purpose in
2020. Norwegian Property owned the project as a
joint venture from 31 December 2020.
The segmentation of operating profit, excluding
the administrative owner costs, reflects the
division into commercial property and residential
property segments. A similar division has also
been made for all balance sheet items apart from
those related to group functions, financing of the
group and tax positions.
For investment property, discrete financial
information is provided on a property-by-property
basis to members of executive management, who
collectively comprise the CODM. The information
provided is on a net rental basis (including gross
rent and property expenses), valuations
gains/losses, profit/loss on disposal of investment
property and share of profit from the joint
ventures. Group administrative costs, finance
revenue, finance costs and income taxes are not
reported to the members of the executive
management team on a segment basis. There are
no sales between segments.
(Amounts in NOK million) 2022 2021
Payable tax (0.1) 6.3
Deferred tax 206.8 415.5
Income tax 206.6 421.8
Profit before income tax: 502.5 1,994.9
Income tax calculated at 22 per
cent 110.6 438.9
Other differences
1
96.2 (23.4)
Deferred tax 206.8 415.5
Payable tax (0.1) 6.3
Income tax 206.6 421.8
(Amounts in NOK million) 2022 2021
At 1 January 1,685.8 1,268.0
Recognised through profit and loss 206.8 415.5
Tax charged to comprehensive
income
0.7 2.3
At 31 December 1,893.3 1,685.8
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 42
Segment information related to the income statement items for 2022 is specified in the table below.
Segment information related to income statement items for 2021 is specified in the table below.
1
The largest customer for the commercial property business is Telenor Real Estate AS, which is a tenant of the property at Snarøyveien 30 and annual
rental income amounts to NOK 169.7 million for 2022 (NOK 171 million). No rental income from other individual customers constitutes more than 10
per cent of total revenue.
2
Excluding depreciation which is specified separately.
Segment information related to balance-sheet items as at 31 December 2022 is specified in the table below.
(Amounts in NOK million)
Commercial
properties
Residential
properties
Group Tota l
Revenue
1
1,014.4 - - 1,014.4
Total property-related expenses
2
(140.4) - - (140.4)
Administrative expenses
2
- - (59.9) (59.9)
Depreciation (2.2) - (2.2) (4.4)
Share of profit in joint ventures (1.1) 34.8 - 33.8
Change in fair value of investment property and rental guarantee (154.7) - - (154.7)
Operating profit 716.0 34.8 (62.1) 688.8
Financial income 17.2 17.2
Financial expenses (375.6) (375.6)
Change in fair value of interest derivatives 172.2 172.2
Profit before income tax (248.3) 502.5
Income tax (206.6) (206.6)
Profit for the period (454.9) 295.9
(Amounts in NOK million)
Commercial
properties
Residential
properties
Group Tota l
Revenue
1
919.6 - - 919.6
Total property-related expenses
2
(122.2) - - (122.2)
Administrative expenses
2
- - (57.2) (57.2)
Depreciation (2.2) - (2.1) (4.3)
Share of profit in joint ventures (0.4) 75.3 - 74.9
Change in fair value of investment property and rental guarantee 1,365.0 - - 1,365.0
Operating profit 2,159.7 75.3 (59.2) 2,175.8
Financial income 15.0 15.0
Financial expenses (346.0) (346.0)
Change in fair value of interest derivatives 150.2 150.2
Profit before income tax (240.1) 1,994.9
Income tax (421.8) (421.8)
Profit for the period (661.9) 1,573.1
(Amounts in NOK million)
Commercial
properties
Residential
properties
Group Tota l
Investment property 24,967.9 - - 24,967.9
Other fixed assets 29.3 - 2.1 31.5
Investment in joint ventures - 1,061.7 - 1,061.7
Receivables 501.1 - - 501.1
Cash and cash equivalents - - 185.1 185.1
Deferred tax - - (1,893.3) (1,893.3)
Financial derivative instruments - - 145.3 145.3
Interest bearing liabilities - - (12,185.7) (12,185.7)
Other liabilities (115.3) - (136.1) (251.4)
Total equity (12,562.1) (12,562.1)
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 43
Segment information related to balance-sheet items as at 31 December 2021 is specified in the table below.
NOTE 16: Contractual rental income
Norwegian Property’s operating income in 2021
totalled NOK 1,014.4 million (NOK 919.6 million).
The group’s commercial properties are located in
the Oslo region. They primarily consist of office
premises with associated warehousing and
parking space. Some of the properties include
space for letting as retail outlets and restaurants.
Offices account for the bulk of all the larger
properties. At Aker Brygge in central Oslo, the
properties are located by the sea with a small
associated marina business, outdoor areas and an
energy centre which uses seawater for the
heating/cooling of the properties.
Total revenue is distributed as follows in the
various areas described hereinabove.
Tenants comprise commercial companies and
public-sector institutions of different types and
sizes. Rental income is based on leases of varying
lengths, where income based on the leases is
recognised on a linear basis over the duration of
the lease. Rental income is generally invoiced
quarterly in advance with 30 days to pay. Income
from the marina relates to rental charges by the
season, by the day, for events etc. Income for the
energy centre is invoiced to the tenants who are
connected to it.
The group’s lease-based rental income is
distributed as follows, where the figures are given
as lease values without index adjustment for
leases entered into as at 31 December.
Service charges are recognised net as an agent of
the tenant. Therefore, the operating revenues do
not include service charges invoiced to the
tenants. Accrued service charges are recognised in
the balance sheet together with payments on
account from tenants-, and, therefore, do not
affect profit beyond an administrative mark-up
recognised as income. The settlement of service
charges is made after the balance-sheet date.
Service charges invoiced to tenants in 2022
amounted to NOK 178 million (NOK 124 million),
and the administrative mark-up recognised as
income amounted to NOK 8.9 million (NOK 6.2
million).
(Amounts in NOK million)
Commercial
properties
Residential
properties
Group Tota l
Investment property 24,908.0 - - 24,908.0
Other fixed assets 32.6 - 2.8 35.4
Investment in joint ventures - 1,084.8 - 1,084.8
Receivables 421.7 - - 421.7
Cash and cash equivalents -
- 313.5 313.5
Deferred tax - - (1,685.8) (1,685.8)
Financial derivative instruments - - (26.9) (26.9)
Interest bearing liabilities - - (12,004.8) (12,004.8)
Other liabilities (110.9) - (98.4) (209.3)
Total equity (12,836.6) (12,836.6)
(Amounts in NOK million) 2022 2021
Income relating to fixed lease
payments for commercial
properties
963.4 881.3
Income relating to variable lease
payments from retail and
restaurant customers for
commercial properties
11.0 5.0
Other variable income retalted to
the marina, outdoor areas and
energy centre at Aker Brygge in
Oslo
40.0 33.3
Total revenues 1,014.4 919.6
(Amounts in NOK million) 2022 2021
Within 1 year 1,097.0 1,034.9
Between 1 and 2 years 1,046.6 956.6
Between 2 and 3 years 802.2 861.9
Between 3 and 4 years 647.9 625.8
Between 4 and 5 years 521.1 510.1
Later than 5 years 2,758.6 2,518.1
Total 6,873.3 6,507.4
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 44
NOTE 17: Net realised financial items
The table below presents a specification of the
income statement item on realised net financial
items.
NOTE 18: Operating expenses
A specification of the operating expenses in the
income statement is provided below.
18.1 - Property-related operational expenses
Property-related expenses include the
administrative costs related to the management
of the properties as well as the operating and
maintenance costs.
18.2 - Other property-related expenses
Other property-related expenses include income-
related costs related to leasing, marketing etc.,
the owner’s share of service charges, project-
related property costs and depreciation related to
the properties.
18.3 - Administrative owner expenses
Administrative expenses relate to costs which are
not directly related to the operation and leasing
of properties, and include the costs related to the
overall ownership and corporate functions.
NOTE 19: Payroll costs and remuneration of
executive officers and auditor
The tables below present a breakdown of payroll
costs and remuneration of directors, senior
executives and auditors.
19.1 - Payroll costs
Payroll costs for the year are as follows.
Pursuant to the Norwegian Act on Mandatory
Occupational Pensions, Norwegian Property ASA
is required to operate certain pension plans. The
group has plans which satisfy these requirements
(defined contribution plan for all employees).
The group has a controlling interest in Bryggedrift
AS (see note 24), which has an individual defined
benefit pension obligation of NOK 1.9 million to a
former employee funded from operations.
(Amounts in NOK million) 2022 2021
Interest income on bank deposits and
recei vabl es
9.5
7.1
Interes t income on gua rantee recei vabl es
(see note 6)
7.7
7.9
Total financial income
17.2 15.0
Interest expense on borrowings
(375.6) (346.0)
Total financial expenses
(375.6) (346.0)
Net financial items (358.4) (331.1)
(Amounts in NOK million) 2022 2021
Administrative management costs 12.2 11.4
Operating and maintenance costs 61.6 52.9
Total property-related operational
expenses
73.8 64.3
(Amounts in NOK million) 2022 2021
Rental, market and other income-
related expenses
33.4 28.0
Owner's share of service charge
expenses
35.5 32.1
Total other property-related expenses 68.8 60.1
(Amounts in NOK million) 2022 2021
Payroll expenses (see note 21) 88.5 81.2
Depreciation 2.2 2.1
Other operating expenses 20.4 22.7
Costs allocated to property costs (49.0) (46.7)
Total administrative expenses 62.1 59.2
(Amounts in NOK million) 2022 2021
Salaries and remuneration 73.3 72.6
Employee share-option scheme (see
note 22.4)
- 0.7
Social security costs 20.5 12.9
Pension costs for defined
contribution plans
3.2 2.7
Other employee expenses 1.8 1.6
Total payroll cost
98.8 90.5
Number of employees at 31
December
62 61
Number of full-time equivalent
positions in the financial year
62 61
Average number of employees in the
financial year
62 56
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 45
19.2 - Directors’ fees
Fees to directors in 2022 are presented in the
table below.
1
Reported benefits paid in 2022 (amounts in NOK). In addition to
that are the employer’s National Insurance contributions (14.1 per
cent).
2
Amount expensed in the accounts for 2022. No options have been
exercised in 2022.
Fees to directors in 2021 are presented in the
table below.
1
Reported benefits paid in 2021 (amounts in NOK). In addition to that
are the employer’s National Insurance contributions (14.1 per cent).
2
Amount expensed in the accounts for 2021. See note 20.4 for
information about the options exercised in 2021.
19.3 - Auditor’s fee
Fees paid to the company’s elected auditor
1
are
shown in the table below.
1
Fees to PwC and affiliated companies as well as EY and affiliated
companies. EY took over as auditor of all group companies from PwC
on the AGM in 2022. The fees are net of VAT (amounts in NOK).
19.4 - Remuneration of senior management
Remuneration of senior management in 2022 is specified in the table below.
1
Applies to salary for 2022 and bonus for 2021 paid in 2022 (amounts in NOK). In addition to that are the employer’s National Insurance contributions
(14.1 per cent).
2
Amount expensed in the accounts for 2022. See note 20.4 for information about the options exercised in 2022.
Name
Remune-
rati on
1
Share based
payment
expens e
2
Bjørn Henningsen, chair 22.04-31.12 and
deputy chair 01.01-22.04
637,500 -
250,000 -
250,000 -
250,000 -
187,500
-
175,000 -
62,500 -
62,500 -
Tota l
1,875,000 -
Carl Erik Krefting, director 01.01-22.04
Anders Buchardt, director 01.01-22.04
Lars Erich Nilsen, director 01.01-31.12
Merete Haugli, chair 01.01-22.04
Cecilie Astrup Fredriksen, director 01.01-31.12
Kathrine Astrup Fredriksen, director 01.01-31.12
Lars Buin, director 22.04-31.12
Name
Remune-
ration
1
Share based
payment
expense
2
700,000 -
450,000 -
250,000 -
250,000 -
250,000 20,922
250,000 -
250,000 -
Tota l
2,400,000 20,922
Kathrine Astrup Fredriksen, director 01.01-31.12
Carl Erik Krefting, director 01.01-31.12
Lars Erich Nilsen, director 01.01-31.12
Merete Haugli, chair 01.01-31.12
Bjørn Henningsen, deputy chair 01.01-31.12
Cecilie Astrup Fredriksen, director 01.01-31.12
Anders Buchardt, director 01.01-31.12
Type of fees 2021
EY PwC PwC
Statutory audit 832,500 932,375 1,441,000
Other certification services - - 42,000
Tax/VAT a dvice - 996,572 508,000
Other services - - 3,873,000
Total 832,500 1,928,947 5,864,000
2022
Name
Title Salary
1
Bonuses
1
Share based
payment
expense
2
Other
benefits
1
Pension/
insurance
benefits
3
Bent Oustad CEO 4,097,999 2,700,000 3,826 14,391 104,182
Haavard Rønning CFO 2,783,228 1,332,533 - 9,157 103,821
Bjørge Aarvold EVP property management 2,097,241 576,100 - 130,392 116,172
Ellen Cathrine Kobro EVP sales and marketing 2,225,361 647,000 - 10,838 104,155
Sindre Kornrud EVP projects 1,882,687 548,400 - 4,392 102,544
Vidar Stokkeland
4
EVP development 783,333 - - 5,229 43,134
Thomas Weeden EVP business development and strategy 2,001,718 400,000 - 4,392 101,569
Total 15,871,567 6,204,033 3,826 178,791 675,577
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 46
3
Contribution paid to defined contribution pension plans and employee insurance in 2022 (amounts in NOK).
4
Started 1 August 2022.
Remuneration of senior management in 2021 is specified in the table below:
1
Applies to salary for 2021 and bonus for 2020 paid in 2021 (amounts in NOK) In addition to that are the employer’s National Insurance contributions
(14.1 per cent).
2
Amount expensed in the accounts for 2021. See note 20.4 for information about the options exercised in 2021.
3
Contribution paid to defined contribution pension plans and employee insurance in 2021 (amounts in NOK).
4
Started 31 October 2021.
NOTE 20: Share capital and shareholders
The table below specifies the average number of
shares in the past two years, the group’s largest
shareholders and the shares owned by the
directors and senior executives as at 31
December.
20.1 - Changes in share capital and average
number of shares
20.2 - The group’s main shareholders as at 31
December
At year-end 2022 and 2021, the company has a
share capital of NOK 324,912,798 divided into
649,825,596 shares, each with a par value of NOK
0.50. The company owns 6,250,000 treasury
shares. Geveran Trading Co. Ltd. owned the
remaining 643,575,596 shares in the company
both at the end of 2022 and 2021.
20.3 - Shares held by senior executives and
directors as at 31 December
The directors Cecilie Astrup Fredriksen, Kathrine
Astrup Fredriksen and Lars Erich Nilsen are related
to Geveran Trading Co Ltd, which is the company’s
sole proprietor at the end of 2022 and 2021.
20.4 - Share options
Share options are granted to the CEO. Each share
option entitles the holder to subscribe for a share
in Norwegian Property ASA. The option
agreement with the CEO was entered into in 2017
and entitles him to subscribe to a total of
5,750,000 shares as follows.
As an alternative to delivering shares, the board of
Norwegian Property may opt to settle the profit in
cash. The agreement otherwise contains normal
conditions on such matters as continued
employment and adjustment of share prices and
so forth as a result of corporate events.
Name
Title Salary
1
Bonuses
1
Share
based
payment
expense
2
Other
benefits
1
Pension/
insurance
benefits
3
Bent Oustad CEO 3,915,188 2,625,000 703,344 4,392 94,128
Haavard Rønning CFO 2,657,422 1,297,500 - 7,831 93,883
Bjørge Aarvold EVP property management 1,916,644 561,000 - 124,392 104,165
Ellen Cathrine Kobro EVP sales and marketing 2,132,951 630,000 - 7,392 93,198
Sindre Kornrud EVP projects 1,775,167 534,000 - 4,392 92,757
Thomas Weeden
4
EVP business development and strategy 487,500 - - 1,098 24,464
Total 12,884,872 5,647,500 703,344 149,497 502,595
2022 2021
Average number of shares
(1 000 shares)
649,826
649,826
Number of shares issued at
31 December (1 000
shares)
649,826 649,826
Earliest exercise date No. of shares Subscr. price (NOK)
01.01.2019 1,000,000 10.00
01.01.2020 1,250,000 11.50
01.01.2021 1,500,000 12.50
01.01.2022 2,000,000 14.50
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 47
The total fair value of share options granted in
2017 was NOK 11.2 million (excluding the
employer’s National Insurance contribution). The
fair value is calculated by external valuers based
on the Black-Scholes model. In calculating fair
value, volatility in the period was set at 27.43 per
cent and the risk-free interest rate at 0.97 per
cent. The share price at the grant date was NOK
10.45.
An option agreement with a director was entered
into in 2018 and entitled him to subscribe for a
total of 500,000 shares. The options were
exercised in 2021. The NOK 3.8 million profit was
settled in cash.
Outstanding options related to the CEO option
agreement:
1
The options have been exercised in 2022 for settlement in
accordance with the option agreement the following year.
20.5 - Revaluation reserve
A revaluation reserve of NOK 39 million (net
profit) related to owner occupied property is
included in retained earnings as at 31 December
2022 (NOK 37.2 million).
NOTE 21: Earnings per share
Basic earnings per share are calculated by dividing
the net profit attributable to shareholders with
the weighted average number of ordinary shares
outstanding during the year.
1
Both at the end of 2022 and 2021, the group owned 6,250,000
treasury shares.
2
The diluted number of shares has been adjusted for options granted.
NOTE 22: Dividend per share and dividend
policy
Norwegian Property’s goal is to pay a dividend to
its shareholders amounting to 30-50 per cent of
its ordinary profit after tax payable but before
fair-value adjustments. The dividend can be
higher in times with good cash flow. Before a
dividend is determined, an assessment is made of
the group’s financial position and prospects,
including the availability of attractive investment
opportunities.
The board has a mandate from the group’s AGM
to make quarterly dividend payments. A dividend
of NOK 0.125 per share was approved by the
board meeting on 2 February 2023.
NOTE 23: Related-party disclosures
Parties are related if one party can exercise
significant influence over the group in making
strategic or operating decisions. Significant
influence is normally obtained by ownership,
participation in decision-making bodies and
management or by agreements.
Balances and transactions with subsidiaries (which
are related parties of Norwegian Property ASA)
are eliminated in the consolidated financial
statements and are not covered by the
information given in this note. Financial
relationships related to the board and senior
management are described in notes 19 and 20.
Employee options
Number of
options
Weighted
average
excercise
price (NOK)
Outstanding 1 January 2021 5,750,000 12.54
Awarded - -
Exercised - -
Terminated - -
Outstanding 31 December 2021 5,750,000 12.54
Earned 1 January 2022 5,750,000 12.54
Outstanding 1 January 2022 5,750,000 12.54
Awarded - -
Exercised
1
-5,750,000 12.54
Terminated - -
Outstanding 31 December 2022 - -
Earned 1 January 2023 - -
2022
2021
Net profit attributable to shareholders
(NOK million)
295.9 1,573.1
Weighted average number of
outstanding shares, exclusive treasury
shares (million shares)
1
643.6 643.6
Weighted average number of diluted
outstanding shares, exclusive treasury
shares (million shares)
2
647.1 647.1
Basic earnings per share (NOK per
share)
0.46
2.44
Diluted earnings per share (NOK per
share)
0.46
2.43
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 48
A management fee of NOK 1.7 million has been
expensed in 2022 from a company related to the
shareholder Geveran Trading Co. Ltd.
No other agreements or significant transactions
with related parties were carried out in 2022.
NOTE 24: Contingent liabilities and assets
The group has a liability if it is committed to giving
up financial resources to another party at a future
date. An uncertain liability is a liability of
uncertain timing or amount. A contingent liability
is a category of uncertain liabilities, where the
possible obligation depends on whether some
uncertain future events occur which the group
cannot fully influence. Similarly, a contingent
asset relates to the possible rights for the group to
receive financial resources at a future date.
Guarantees relating to the sale of properties and
companies
The seller normally issues guarantees relating to
the sale of properties because of formal, physical
and suchlike conditions related to the transferred
properties and/or companies. The guarantees
typically include conditions related to legal status,
ownership of shares, validity of financial
statements and tax issues, contractual issues,
liens, environmental matters, insurance coverage,
assessment of defects etc. The seller must
typically cover the financial losses incurred by the
buyer from any errors or omissions which may be
linked to the guarantees.
Norwegian Property has issued this kind of
guarantee to buyers in relation to the sale of
properties/companies since the group was
established. As at the end of 2022 and 2021, the
assessment is that there are no circumstances
which entail an obligation for Norwegian Property
and a need to make provisions.
NOTE 25: Events after the balance-sheet date
Events after the balance-sheet date are events,
favourable or unfavourable, which occur between
the balance-sheet date and the date when the
financial statements are authorised for issue. Such
events can be events which provide information
on the conditions existing at the balance-sheet
date, thereby resulting in adjustments to the
financial statements, or events which do not
require such adjustments.
In accordance with the mandate from the AGM in
2022, the board decided on 2 February 2023 that
a dividend of NOK 0.125 per share will be paid for
2022.
No other significant events have occurred after 31
December 2022 which provide information on the
conditions existing as at the balance-sheet date.
NOTE 26: Group companies
The consolidated financial statements of
Norwegian Property ASA comprise the following
wholly-owned subsidiaries as at 31 December
2022:
Aker Brygge AS
Aker Brygge Business Village AS
Aker Brygge Energisentral AS
Aker Brygge Marina AS
Aker Brygge Marina Drift AS
Aker Brygge Uteareal AS
Bryggegata 9 AS
Bryggetorget Invest AS
Bryggetorget 3 AS
Bydel Aker Brygge Forvaltning AS
Dokkbygningen Aker Brygge AS
Drammensveien 60 AS
Fondbygget AS
Forusbeen 35 AS
Gardermoen Næringseiendom AS
Gardermoen Næringseiendom KS
Gjerdrums vei 10 G AS
Gjerdrums vei 5 AS
Gjerdrums vei 8 AS
Gjerdrums vei 14-16 AS
Gjerdrums vei 17 AS
Gjerdrums vei 3 AS
Grensen Investment AS
Gullhaug Torg 3 AS
Gullhaugveien 9-13 AS
Hasle Linje Bygg 01 AS
Nye Hasle Linje Bygg 01 Næring AS
Kaibygning 1 AS
Kaibygning 2 AS
Lille Grensen 7 Andel AS
Lille Grensen 7 ANS
Annual report 2022 - Norwegian Property ASA
Annual group accounts Page 49
Lille Grensen 7 AS
Norwegian Property ASA
Npro 1 AS
Npro 2 AS
NPRO Drift AS
NPRO Holding AS
NPRO Invest AS
Nydalsveien 15-17 AS
Sandakerveien 130 AS
Snarøyveien 30 AS
Snarøyveien 36 AS
Stranden AS
Støperiet AS
Terminalbygget Aker Brygge AS
Tingvalla AS
Verkstedhallene AS
All subsidiaries have the same business address as
Norwegian Property ASA (Bryggegata 3, NO-0250
Oslo, Norway).
In addition to its wholly-owned subsidiaries, the
Norwegian Property group has a controlling
interest in Bryggedrift AS (business address
Støperigata 1, NO-0250 Oslo, Norway), which is
responsible for certain operating services and
management of condominiums at Aker Brygge in
Oslo. Bryggedrift AS is a facility management
company without significant assets. All
condominiums at Aker Brygge are shareholders in
Bryggedrift AS, and Norwegian Property - as a
participant in the condominiums - had a
controlling interest in Bryggedrift AS at 31
December 2022 on the basis of the ownership
structure of the condominiums. Norwegian
Property is represented on the board of
Bryggedrift AS by two of the five directors.
Norwegian Property owns Nordr together with
Fredensborg and Union Real Estate Fund III. While
Norwegian Property and Fredensborg are equal
partners, each holding 42.5 per cent of the
preferred shares, Union owns 15 per cent of the
preferred shares (see note 8).
Norwegian Property also owns a 50 per cent share
in the property at Forusbeen 35 together with
Base Bolig (see note 8).
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 50
Annual accounts of the parent company
Income statement 1 Jan-31 Dec
(Amounts in NOK million)
Note
2022 2021
Management and service fee from group companies 3 53.3 50.9
Total operating revenue 53.3 50.9
Payroll costs 4 (92.8) (81.2)
Depreci ati on 8 (0.9) (0.8)
Other operati ng costs 4 (24.5) (25.5)
Total operating cos ts (118.2) (107.5)
Operating profit (64.9) (56.6)
Financial income 5 892.7 460.8
Financial expenses 5 (648.8) (369.7)
Net financial items 243.9 91.1
Profi t before tax 179.1 34.5
Income tax expens e 6 (34.4) (87.4)
Profi t for the year 144.7 (52.9)
Proposed allocations:
Dividend distribution to shareholders (80.4) (273.5)
Transferred to/from other equity - (30.1)
Transferred to/from share premium 64.2 (296.3)
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 51
Balance sheet as at 31 Dec
Oslo, 23 March 2023
Norwegian Property ASA
(Amounts in NOK million) Note 2022 2021
ASSETS
Non-current assets:
Deferred tax a ssets 12 166.8 423.1
Financial derivative instruments 7 161.6 16.5
Tangi bl e as sets 8 2.1 2.8
Investments in subsidiaries 9 6,200.2 4,986.8
Total non-current assets 6,530.8 5,429.1
Current assets:
Financial derivative instruments 7 1.9 0.8
Intercompany balances 3 8,556.0 9,720.8
Other recei va bl es 2.3 2.9
Cash and cash equivalents 12 159.7 290.9
Total current as sets 8,719.9 10,015.4
TOTAL ASSETS 15,250.6 15,444.5
EQUITY AND LIABILITIES
Equity:
Share capital 321.8 321.8
Share premium 2,521.6 2,698.7
Other paid-in equity 0.0 0.0
Total equi ty 10 2,843.5 3,020.5
Non-current liabilities:
Financial derivative instruments 7 18.2 36.2
Interest-bearing debt 11 10,350.7 9,582.5
Other long-term debt 0.1 0.2
Total non-current liabilities 10,369.0 9,618.9
Current liabilities:
Financial derivative instruments 7 - 7.9
Interest-bearing debt 11 1,834.4 2,420.2
Provision for dividend 10 80.4 273.5
Other current liabilities 12 123.2 103.4
Total current liabilities 2,038.1 2,805.1
Total liabilities 12,407.2 12,423.9
TOTAL EQUITY AND LIABILITIES 15,250.6 15,444.5
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 52
Cash flow statement 1 Jan-31 Dec
(Amounts in NOK million) Note 2022
2021
Ordinary profit before tax 179.1 34.5
Paid taxes 6 -
(3.2)
Net financial items 5 (243.9) (91.1)
Interes t received
5 720.5
310.6
Other fi na ncial i ncome recei ved 5 0.1 0.1
Interes t paid 5 (626.6)
(343.4)
Other financial expenses paid 5 (10.4) (19.9)
Depreci ati on of tangi ble as sets
8 0.9
0.8
Changes in other current items 1.5 30.1
Net cash flow from operating activities
21.2
(81.5)
Purchase of tangible assets 8 (0.3)
(1.5)
Capital increase in subsidiaries 9 (8,000.0)
-
Repayment of intercompany balances 3 8,173.3
141.8
Net cas h fl ow from inves tment acti vi ties 173.0
140.3
Repayment of interest-bearing debt 11 (1,889.0) (1,811.0)
New i nterest-bea ri ng debt 11 2,078.5 1,697.0
Dividends paid 10 (514.9)
(273.5)
Share issue 10 - (0.1)
Other financing activities
10
-
(3.8)
Net cash flow from financing activities (325.4)
(391.4)
Net change in cash and cash equivalents (131.2)
(333.3)
Cash and cash equivalents 1 January 11
290.9 624.2
Cash and cash equivalents 31 December 11 159.7
290.9
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 53
NOTE 1: General information
The Norwegian Property ASA real estate group
primarily owns commercial properties in the Oslo
region. Norwegian Property also owns a share
(joint venture) in the residential development
company Nordr. In Stavanger, Norwegian
Property has a joint venture for the development
of a property with a combined residential and
commercial purpose.
The holding company, Norwegian Property ASA, is
a public limited company with its headquarters at
Bryggegata 3, Oslo (Norway).
The financial statements were adopted by the
board on 23 March 2023 for final approval by the
AGM in 2023.
NOTE 2: Summary of significant accounting
policies
The financial statements are prepared in
accordance with the Norwegian Accounting Act
and Norwegian generally accepted accounting
principles.
The principal accounting policies applied in the
preparation of these financial statements are set
out below. These policies have been consistently
applied to all the years presented, unless
otherwise stated.
2.1 - Classifications
Assets held for sale or for use in the ordinary
business cycle, or owned mainly for trade, or
expected to be realised within 12 months, or
representing cash and cash equivalents are
classified as current assets. All other assets are
classified as non-current assets. Liabilities which
are expected to be settled in the ordinary course
of business, are mainly held for trade or are
expected to be settled within 12 months are
classified as current liabilities. All other liabilities
are classified as non-current liabilities.
2.2 - Subsidiaries
The cost method is applied to investments in
other companies. The cost price is increased when
funds are added through capital increases or
when group contributions are made to
subsidiaries. The received dividends are initially
taken to income. Dividends exceeding the portion
of retained equity after the purchase are reflected
as a reduction in purchase cost. The
dividend/group contribution from subsidiaries are
reflected in the same year as the subsidiary makes
a provision for the amount. Dividends from other
companies are reflected as financial income when
it has been approved.
2.3 - Tangible assets
Impairment tests are carried out if there is an
indication that the carrying amount of an asset
exceeds the estimated recoverable amount. The
test is performed on the lowest level of fixed
assets at which independent cashflows can be
identified. If the carrying amount is higher than
both the fair value less cost to sell and value in
use (net present value of future use/ownership),
the asset is written down to the highest of fair
value less the cost to sell and the value in use.
2.4 - Trade receivables
Trade receivables and other receivables are
recognised initially at par, less provision for
impairment. Provision for the impairment of trade
receivables is based on individual assessments of
each receivable.
2.5 - Cash and cash equivalents
Cash and cash equivalents include cash on hand,
bank deposits, other current highly liquid
investments with original maturities of three
months or less and bank overdrafts. Bank
overdrafts are shown under borrowings in current
liabilities in the balance sheet.
2.6 - Share capital, share premium and share
options
Shares are classified as equity when there is no
obligation to transfer cash or other assets. Costs
directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of
tax, from the proceeds. Treasury shares are
recognised at par.
Employee options represent rights for employees
to subscribe for shares in the company at a future
time at a predetermined subscription price
(subscription right). Drawing requires continued
employment. The fair value of employee benefits
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 54
received in exchange for the granting of options is
recognised as an expense. The total amount to be
expensed over the vesting period reflects the fair
value of the options granted. On the balance-
sheet date, the company revises the estimates of
the number of options expected to be utilised and
changes in estimates are recognised in the income
statement over the remaining vesting period with
a corresponding adjustment of equity. The value
of allotted shares after the deduction of directly-
linked transaction costs is credited to share capital
and share premium reserve when exercisable
options are exercised.
2.7 - Borrowings
Borrowings are initially recognised at fair value,
net of the transaction costs incurred. Borrowings
are subsequently stated at amortised cost using
the effective interest method. Any differences
between the proceeds (net of transaction costs)
and the redemption value are recognised in the
income statement over the duration of the
borrowings.
2.8 - Interest expense
Interest expenses on borrowings are recognised
under the financial costs in the income statement
using the effective interest-rate method. This
method is used to allocate amortised cost on
financial assets and financial liabilities as well as
the correct accrual of interest income and interest
expense. The effective interest rate allocates
future cash flows throughout the duration of the
loan and indicates the real net value of the
financial asset or liability.
When calculating the effective interest rate, the
group estimates all contractual cash flows related
to the financial instrument (such as terms of
payment) but does not take future loss into
account. When calculating the effective interest
rate, all the fees are included and distributed over
the relevant period (term to maturity).
2.9 - Management fees and other operating
revenue
Management fees charged to subsidiaries relate
to property management, managing customer
centres and financial management. Management
fees are recognised when they are earned.
2.10 - Derivatives
The group is exposed to interest-rate risk related
to floating rate loans. The company uses forward
rate agreements to reduce interest-rate risk.
Unrealised profits/losses related to these
contracts are recognised in the income statement.
2.11 - Pensions
Norwegian Property ASA operates a defined
contribution plan for all employees. A defined
contribution pension plan is a scheme where the
group pays fixed (defined) amounts to a separate
legal entity. The group has no legal or other
obligations to pay further amounts if the entity
has insufficient assets to make all the payments
due to employees under rights earned in current
or previous periods. Contributions are recognised
as an employee benefit expense when they fall
due. Prepaid contributions are recognised as an
asset to the extent that cash refunds or
reductions in future payments are available.
2.12 - Income tax
Tax in the income statement consists of tax
payable and changes in deferred tax. Deferred
income tax is calculated at the applicable rate
based on the temporary differences between the
tax bases of assets and liabilities as well as their
carrying amounts in the consolidated financial
statements and the tax loss carried forward as at
31 December. Tax increasing or reducing
temporary differences which are reversed or can
be reversed in the same period are offset.
Deferred tax assets are recognised to the extent
that it is probable that future taxable profit will be
available against which the temporary differences
can be utilised.
2.13 - Use of estimates
The preparation of the income statement in
accordance with the generally accepted
Norwegian accounting principles requires the use
of estimates and assumptions which affect the
income statement and the valuation of assets and
liabilities as well as the information related to
contingent assets and liabilities as at the balance-
sheet date.
Contingent losses which are probable and
quantifiable are recognised as they occur.
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 55
2.14 - Cash flow statement
The preparation of the cash flow statement is
based on the indirect method.
NOTE 3: Related-party disclosures
All transactions, agreements and business
relationships with related parties are made on
normal commercial terms.
Financial relationships related to the board and
senior management are described in notes 4 and
10.
A management fee of NOK 1.7 million has been
expensed in 2022 from a company related to the
shareholder Geveran Trading Co. Ltd.
Income-statement and balance-sheet items
related to group companies are specified in the
table below.
NOTE 4: Payroll costs and remuneration of
executive officers and auditor
The payroll cost for the year is as follows.
Pursuant to the Norwegian Act on Mandatory
Occupational Pensions, Norwegian Property ASA
is required to operate certain pension plans. The
company has plans which satisfy these
requirements (defined contribution plan for all
employees).
Remuneration to the auditor is specified in the
table below.
1
1
Fees to PwC and affiliated companies as well as EY and affiliated
companies. EY took over as auditor of the company from PwC at the
AGM in 2022. The fees are net of VAT (amounts in NOK).
Fees to directors in 2022 are presented in the
table below.
1
Reported benefits paid in 2022 (amounts in NOK). In addition to that
are the employer’s National Insurance contributions (14.1 per cent).
2
Amount expensed in the accounts for 2022. No options have been
exercised in 2022.
Fees to directors in 2021 are presented in the
table below.
1
Reported benefits paid in 2021 (amounts in NOK). In addition to that
are the employer’s National Insurance contributions (14.1 per cent).
2
Amount expensed in the accounts for 2021. See note 10.4 for
information about options exercised in 2021.
(Amounts in NOK million) 2022
2021
Income s tatement:
Management and service fee, group companies
53.3
50.9
Rental cost, subsidiaries (4.3) (5.1)
Interest income from group companies (note 5) 104.1 156.4
Ba lance sheet:
Investments in subsidiaries (note 9) 6,200.2 4,665.4
Current assets, intercompany balances 8,556.0 10,149.5
(Amounts in NOK million) 2022 2021
Salaries and remuneration 69.2 65.4
Employee share option schemes 0.0 0.7
Social security costs 19.2 11.8
Pension costs (defined contribution
plan)
2.8 2.4
Other employee expenses 1.6 0.9
Total payroll costs
92.8 81.2
Number of employees at 31
December
52 51
Number of full-time equivalent
positions in the fiscal year
49 48
Average number of employees in the
fiscal year
52 51
Type of fees 2021
EY PwC PwC
Statutory audit 295,000 121,850 476,000
Tax/VAT advice - 201,820 308,900
Total 295,000 323,670 784,900
2022
Name
Remune-
rati on
1
Share based
payment
expens e
2
Bjørn Henningsen, chair 22.04-31.12 and
deputy chair 01.01-22.04
637,500 -
250,000 -
250,000 -
250,000 -
187,500
-
175,000
-
62,500 -
62,500
-
Tota l
1,875,000 -
Carl Erik Krefting, director 01.01-22.04
Anders Buchardt, director 01.01-22.04
Lars Erich Nilsen, director 01.01-31.12
Merete Haugli, chair 01.01-22.04
Cecilie Astrup Fredriksen, director 01.01-31.12
Kathrine Astrup Fredriksen, director 01.01-31.12
Lars Buin, director 22.04-31.12
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 56
Remuneration of senior management in 2022 is specified in the table below.
1
Applies to salary for 2022 and bonus for 2021 paid in 2022 (amounts in NOK). In addition to that are the employer’s National Insurance contributions
(14.1 per cent).
2
Amount expensed in the accounts for 2022. See note 10.4 for information about the options exercised in 2022.
3
Contribution paid to defined contribution pension plans and employee insurance in 2022 (amounts in NOK).
4
Started 1 August 2022.
Remuneration of senior management in 2021 is specified in the table below:
1
Applies to salary for 2021 and bonus for 2020 paid in 2021 (amounts in NOK). In addition to that are the employer’s National Insurance contributions
(14.1 per cent).
2
Amount expensed in the accounts for 2021. See note 10.4 for information about the options exercised in 2021.
3
Contribution paid to defined contribution pension plans and employee insurance in 2021 (amounts in NOK).
4
Started 31 October 2021.
Name
Title Salary
1
Bonuses
1
Share based
payment
expense
2
Other
benefits
1
Pension/
insurance
benefits
3
Bent Oustad CEO 4,097,999 2,700,000 3,826 14,391 104,182
Haavard Rønning CFO 2,783,228 1,332,533 - 9,157 103,821
Bjørge Aarvold EVP property management 2,097,241 576,100 - 130,392 116,172
Ellen Cathrine Kobro EVP sales and marketing 2,225,361 647,000 - 10,838 104,155
Sindre Kornrud EVP projects 1,882,687 548,400 - 4,392 102,544
Vidar Stokkeland
4
EVP development 783,333 - - 5,229 43,134
Thomas Weeden EVP business development and strategy 2,001,718 400,000 - 4,392 101,569
Total 15,871,567 6,204,033 3,826 178,791 675,577
Name
Title Salary
1
Bonuses
1
Share based
payment
expense
2
Other
benefits
1
Pension/
insurance
benefits
3
Bent Oustad CEO 3,915,188 2,625,000 703,344 4,392 94,128
Haavard Rønning CFO 2,657,422 1,297,500 - 7,831 93,883
Bjørge Aarvold EVP property management 1,916,644 561,000 - 124,392 104,165
Ellen Cathrine Kobro EVP sales and marketing 2,132,951 630,000 - 7,392 93,198
Sindre Kornrud EVP projects 1,775,167 534,000 - 4,392 92,757
Thomas Weeden
4
EVP business development and strategy 487,500 - - 1,098 24,464
Total 12,884,872 5,647,500 703,344 149,497 502,595
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 57
NOTE 5: Net financial items
Net financial items for the year are as follows.
NOTE 6: Deferred tax and income tax
The tax expense for the year in the income
statement and deferred taxes in the balance sheet
are as follows.
NOTE 7: Derivatives
7.1 - Derivatives in the annual accounts
The company is exposed to interest-rate risk
related to loans with floating interest rates, and
interest-rate hedge agreements have been
entered into in order to reduce the interest-rate
risk. Unrealised gains/losses associated with such
agreements are recognised in the income
statement.
The fair value of derivatives is determined by the
net present value of future cash flows, calculated
using quoted interest-rate curves and exchange
rates as at the balance-sheet date. The technical
calculations are generally prepared by the
company’s banks. The company checks and tests
the valuation for reasonableness. The fair value of
the company’s derivatives as at 31 December is
specified in the table below.
2022:
2021:
7.2 - Interest-rate derivatives
The majority of Norwegian Property’s floating-
rate loans are hedged with interest-rate hedges.
Norwegian Property has a policy of hedging a
minimum of 70 per cent of the interest-bearing
debt outstanding at any given time. Despite the
hedging positions, the company’s financial assets
and cash flow will be exposed to fluctuations in
the applicable market interest rate. Because of
these fluctuations, the interest-rate cost will vary.
Notional principal amounts for the company’s
interest-rate hedges as at 31 December are
specified in the table below. The maturity dates
are broken down in note 11.
(Amounts in NOK million) 2022 2021
Financial income:
Interest income from group companies
104.1 156.4
Other interest income
616.4 154.1
Changes in value of financial derivative
instruments
172.2 150.2
Other financial income
0.1 0.1
Total financial income
892.7 460.8
Financial expenses:
Interest cost on loans
(638.4) (349.8)
Other financial expenses (10.4) (19.9)
Total financial expenses
(648.8) (369.7)
Net financial items 243.9 91.1
(Amounts in NOK million)
2022 2021
The tax expense for the year is
distributed as follows:
Tax payable - 3.2
Changes in deferred tax 34.4 84.2
Income tax expense 34.4 87.4
Calculation of the tax base for the year:
Profit before tax
179.1 34.5
Permanent differences (22.8) (3.4)
Changes in temporary differences
- 351.6
Group contribution 1,008.5 156.0
Tax base for the year 1,164.7 538.8
Specification of temporary differences
and deferred tax:
Tangible assets (3.9) (10.8)
Financial derivative instruments 145.3 (26.9)
Provisions 12.8 (2.2)
Tax loss and interests carried forward (912.5) (1,883.1)
Basis for deferred tax (758.3) (1,923.0)
Deferred tax in the balance sheet 166.8 423.1
Reconciliation of tax expense and
calculated effective tax rate:
Calculated tax expense on profit before
tax (22 per cent)
39.4 7.6
Permanent differences (5.0) 76.6
Tax payable - 3.2
Income tax expense
34.4 87.4
Effective tax rate (per cent) 19.2 253.2
(Amounts in NOK million) Assets Liabilities
Interest-rate contracts 163.5 18.2
(Amounts in NOK million) Assets Liabilities
Interest-rate contracts 17.3 44.2
Currency 2022 2021
Notional principal
amount
NOK 3,950.0 6,070.0
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 58
NOTE 8: Tangible assets
Changes in tangible assets are specified in the
table below.
The company uses linear depreciation. The
economic life of the assets is four years for IT
equipment, five years for licences, cars and
furnishings as well as seven years for fixtures.
NOTE 9: Investments in subsidiaries
Investments in subsidiaries as at 31 December
2022 are specified in the table below. The
companies own the group’s properties (single-
purpose entities).
1
Voting ownership interest is identical to ordinary ownership.
Changes in the book value for the year are as
follows.
NOTE 10: Equity
10.1 - Change in equity
Changes in the balance-sheet items for equity are
specified in the table below.
1
The share capital of NOK 324,912,798 consisted as at 31 December
2022 of 649,825,596 shares, each with a par value of NOK 0.50.
2
The holding of treasury shares as at 31 December 2022 was
6,250,000 shares.
10.2 - The company’s largest shareholders at 31
December
As year-end 2022 and 2021, the company has a
share capital of NOK 324,912,798 divided into
649,825,596 shares, each with a par value of NOK
0.50. The company owns 6,250,000 treasury
shares. Geveran Trading Co. Ltd. owned the
remaining 643,575,596 shares in the company
both at the end of 2022 and 2021.
(Amounts in NOK million)
IT-systems
and other
intangible
assets
Fixtures
and
equipment
Total
Acquisition cost:
At 31 December 2020 2.6 1.5 4.1
Additions 0.9 0.6 1.5
At 31 December 2021 3.4 2.1 5.6
Additions 0.2 0.1 0.3
At 31 December 2022 3.6 2.3 5.9
Accumulated depreciation:
At 31 December 2020 1.5 0.6 2.1
Depreciation and impairment
for the yea r
0.3 0.5 0.8
At 31 December 2021 1.8 1.0 2.8
Depreciation and impairment
for the yea r
0.4
0.5 0.9
At 31 December 2022 2.2 1.5 3.7
Book value:
At 31 December 2021 1.7 1.1 2.8
At 31 December 2022 1.4 0.7 2.1
NPRO
Holding AS
NPRO
Invest AS
Npro 1 AS
Acquired/established Date 17.01.07 26.09.13 23.11.20
Business office City Oslo Oslo Oslo
Share
1
Per cent 100.0 100.0 100.0
Book value NOK mill. 6,199.9 0.1 0.1
(Amounts in NOK million) 2022 2021
Book value at 1 January 4,986.7 4,665.4
Investments in subsidiaries 8,000.0 -
Dividends (6,000.0) -
Group contribution recognised
against shares in subsidiaries
(786.6) 321.3
Book value at 31 December 6,200.1 4,986.7
(Amounts in NOK
million)
Share
capital
1
Own
sha res
2
Share
prem-ium
Other
equity
Total
equity
Equity at 31
December 2020
324.9 (3.1) 3,204.8 33.2 3,559.8
Paid dividend - -
(209.2) - (209.2)
Share issue - -
(0.7) - (0.7)
Empl oyee s ha re
options
- - - 0.7 0.7
Settl ement of sha re-
option schemes
- - - (3.8) (3.8)
Dividend
appropriation
-
-
(243.4) (30.1) (273.5)
Transactions with
shareholders
- - (453.2) (33.2) (486.4)
Profi t for the yea r - -
(52.9)
- (52.9)
Profi t for the yea r - -
(52.9)
- (52.9)
Equity at 31
December 2021
324.9 (3.1) 2,698.7 0.0 3,020.5
Paid dividend - -
(241.3) - (241.3)
Dividend
appropriation
-
-
(80.4) - (80.4)
Transactions with
shareholders
- - (321.8) - (321.8)
Profi t for the yea r - -
144.7 - 144.7
Loss for the yea r -
-
144.7 - 144.7
Equity at 31
December 2022
324.9 (3.1) 2,521.6 0.0 2,843.5
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 59
10.3 - Shares held by senior executives and
directors as at 31 December
The directors Cecilie Astrup Fredriksen, Kathrine
Astrup Fredriksen and Lars Erich Nilsen are related
to Geveran Trading Co Ltd, which is the company’s
sole proprietor at the end of 2022 and 2021.
10.4 - Share options
Share options are granted to the CEO. Each share
option entitles the holder to subscribe for a share
in Norwegian Property ASA. The option
agreement with the CEO was entered into in 2017
and entitles him to subscribe for a total of
5,750,000 shares as follows.
As an alternative to delivering shares, the board of
Norwegian Property may opt to settle the profit in
cash. The agreement otherwise contains normal
conditions on such matters as continued
employment and adjustment of share prices and
so forth as a result of corporate events.
The total fair value of share options granted in
2017 was NOK 11.2 million (excluding the
employer’s National Insurance contribution). The
fair value is calculated by external valuers based
on the Black-Scholes model. In calculating fair
value, volatility in the period was set at 27.43 per
cent and the risk-free interest rate at 0.97 per
cent. The share price at the grant date was NOK
10.45.
An option agreement with a director was entered
into in 2018 and entitled him to subscribe for a
total of 500,000 shares. The options were
exercised in 2021. The NOK 3.8 million profit was
settled in cash.
Outstanding options related to the CEO option
agreement:
1
The options have been exercised in 2022 for settlement in
accordance with the option agreement the following year.
NOTE 11: Interest-bearing debt and financial
risk management
11.1 - Interest-bearing debt
The table below presents an overview as at 31
December of the company’s interest-bearing
debt, including hedging ratio, average interest
rate and remaining term to maturity.
1
All interest-rate swaps which had commenced at the balance-sheet
date.
The company’s interest-bearing non-current and
current debt as at 31 December is specified in the
tables below.
Earliest exercise date No. of shares Subscr. price (NOK)
01.01.2019 1,000,000 10.00
01.01.2020 1,250,000 11.50
01.01.2021 1,500,000 12.50
01.01.2022 2,000,000 14.50
Employee options
Number of
options
Weighted
average
excercise
price (NOK)
Outstanding 1 January 2021 5,750,000 12.54
Awarded - -
Exercised - -
Terminated - -
Outstanding 31 December 2021 5,750,000 12.54
Earned 1 January 2022 5,750,000 12.54
Outstanding 1 January 2022 5,750,000 12.54
Awarded - -
Exercised
1
-5,750,000 12.54
Terminated - -
Outstanding 31 December 2022 - -
Earned 1 January 2023 - -
2022 2021
Interest-bearing debt (NOK million) 12,185.2 12,002.6
- of which hedged (NOK million)
1
8,547.0 8,547.0
Interest hedging ratio (per cent) 70.1 71.2
Cash and cash equivalents (NOK million) 159.7 290.9
Unutilised credit facilities (NOK million) 1,157.0 1,800.0
Average interest rate (per cent) 3.48 2.81
Average interest margin (per cent) 1.36 1.33
Remaining time to maturity for interest-
bearing debt (years)
3.8 4.4
Remaining time to maturity for interest
hedge agreements (years)
5.6 6.3
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 60
2022:
2021:
All bonds are secured by properties and a NOK 6
billion portfolio of bonds are listed on the Oslo
Stock Exchange. None of the bonds have running
terms related to financial covenants. All the bonds
have change of control clauses, and the
requirement of a maximum of 65 per cent LTV on
the mortgaged building at the time of borrowing.
The security for bank facilities is shared with
bondholders. The bank facilities are subject to
annual renewal. The most important terms for all
these facilities are a minimum interest-rate hedge
ratio of 50 per cent, interest cover of at least 1.4
and a maximum LTV of 75 per cent. Agreed
requirements in the loan agreements were met at
year-end 2022 and 2021 as well as all quarterly
interim reporting dates in 2022 and 2021.
Maturities for the company’s non-current
interest-bearing debt as at 31 December are
broken down in the table below.
The carrying amount of assets pledged as security
for debt as at 31 December is as follows.
1
Shares in property companies owned by other group entities are
also pledged as security for the corporate facilities in Norwegian
Property ASA. See also note 13 to the group’s financial statements.
2
Properties owned by the subsidiaries have been pledged as security
for bonds.
11.2 - Financial risk management
The company’s activities imply exposure to a
variety of financial risks: market, credit and
liquidity.
Market risk
Market risk for the company is primarily related to
the interest-rate risk. The company’s revenues
relate entirely to management fees from
subsidiaries.
The company is exposed to interest-rate risk
related to floating rate loans. To manage interest-
rate risk, the group has entered into interest-rate
swap agreements. Notional principal amounts and
the maturity structure for the company’s overall
portfolio of interest-rate hedges as at 31
December are specified in NOK million in the table
below.
Credit risk
The company’s receivables mainly relate to
intercompany balances, where credit risk is
considered low.
Liquidity risk
The company aims to ensure that liquidity/credit
facilities are sufficient to meet its foreseeable
obligations. In addition, it will have a reasonable
capacity to meet unforeseen obligations. One goal
is that the liquidity reserve should consist as far as
possible of available revolving credit and overdraft
(Amounts in NOK million)
Long-term Short-term Total
Bonds 5,640.0 400.0 6,040.0
Bilateral loan 3,542.0 - 3,542.0
Bank borrowings (loan facilities)
1,174.5 1,434.0 2,608.5
Total interest-bearing debt
10,356.5 1,834.0 12,190.5
Capitalised borrowing cost
(5.8) 0.4 (5.3)
Total book value interest-bearing debt 10,350.7 1,834.4 12,185.2
(Amounts in NOK million)
Long-term
Short-term Total
Bonds 6,040.0 1,889.0 7,929.0
Bilateral loan 3,542.0 - 3,542.0
Bank borrowings (loan facilities) - 530.0 530.0
Total interest-bearing debt 9,582.0
2,419.0 12,001.0
Capitalised borrowing cost 0.5 1.2 1.6
Total book value interest-bearing debt 9,582.5
2,420.2 12,002.6
(Amounts in NOK million)
2022 2021
Due in 2024 and 2025 (2023 and 2024) 5,464.5 3,015.0
Due in 2026, 2027 and 2028 (2025, 2026
and 2027)
1,350.0 3,025.0
Due after 2028 (after 2027) 3,542.0 3,542.0
Total 10,356.5 9,582.0
(Amounts in NOK million)
2022 2021
Investment in subsidiaries
1
6,200.2 4,986.8
Total
6,200.2 4,986.8
Liabilities secured
2
2,608.5 530.0
Year 2022 2021
< 1 yea r (500.0) (1,220.0)
1-2 years
(1,050.0) (500.0)
3-5 years (600.0) (1,650.0)
Over 5 years (1,800.0) (1,800.0)
Notional principal amount (3,950.0) (5,170.0)
Annual report 2022 - Norwegian Property ASA
Annual accounts of the parent company Page 61
facilities, rather than cash and cash equivalents.
The company’s liquidity reserve as at 31
December is specified in the table below.
1
Subsidiaries’ deposits in the parent company’s group cash pool
system are included as cash and cash equivalents in Norwegian
Property ASA.
As described hereinabove, the company has a
high level of hedging against changes in market
interest rates, reducing the need for liquidity
reserves to meet unforeseen obligations related
to these areas. Liquidity risk primarily relates to
servicing instalments on and maturity of liabilities.
The table below specifies the company’s liabilities
in accordance with the maturity structure. The
classification is based on the timing of maturities
specified in the contracts. The amounts in the
table specify the timing of the repayments of
notional principal amounts (NOK million).
2022
1
:
2021
1
:
1
The difference between the carrying amount and expected cash flow
reflects the capitalised and estimated interest cost based on the
average interest rate as at 31 December. The difference between the
carrying amount and expected cash flow for other liabilities relates to
provision for hedge contracts.
NOTE 12: Other current liabilities
Other current liabilities as at 31 December are
specified in the table below.
NOTE 13: Contingent liabilities
Norwegian Property ASA has no substantial
contingent liabilities through guarantees or other
circumstances arising in the ordinary course of
business.
NOTE 14: Events after the balance-sheet date
Events after the balance-sheet date are events,
favourable or unfavourable, which occur between
the balance-sheet date and the date when the
financial statements are authorised for issue. Such
events can be events which provide information
on conditions which existed at the balance-sheet
date, resulting in adjustments to the financial
statements or events which do not require such
adjustments.
No significant events have occurred after 31
December 2022 which provide information on the
conditions existing as at the balance-sheet date.
(Amounts in NOK million)
2022 2021
The company's own accounts and net
balance in the group accounts
4,583.7 6,355.0
Intercompany net balance in the
group accounts
1
(4,424.0)
(6,064.1)
Cash and cash equivalents
159.7 290.9
Restricted bank deposits
(5.6) (2.7)
Available cash and cash equivalents 154.2 288.2
Unused credit and overdraft facilities
1,157.0 1,800.0
Liquidity reserve 1,311.2 2,088.2
(Amounts in NOK million)
Interest-
bearing
debt
Other
liabilities
< 1 year 2,226.3
123.2
1-2 year 2,929.9
3-5 year
4,689.3
Over 5 year
3,850.2
Expected cash flow 13,695.7 123.2
Book value 12,185.2
123.2
(Amounts in NOK million)
Interest-
bearing
debt
Other
liabilities
< 1 year
2,736.3 103.4
1-2 year
675.8
3-5 year
6,163.9
Over 5 year
3,906.5
Expected cash flow
13,482.5
103.4
Book value
12,002.6
103.4
(Amounts in NOK million) 2022 2021
Public duties 8.4 4.6
Accrued salaries 6.2 6.3
Accrued interest 84.5 72.6
Trade payables 1.1 2.1
Other payables 23.1 17.8
Total other current liabilities 123.2 103.4
Annual report 2022 - Norwegian Property ASA
Declaration by the board of directors and the CEO Page 62
Declaration by the board of directors and the CEO
The board and the chief executive have considered and approved the directors’ report and the annual
consolidated and parent company financial statements for Norwegian Property ASA as at 31 December
2022. The consolidated financial statements for the year have been prepared in accordance with the IFRS as
approved by the EU and associated interpretative statements as well as the additional Norwegian
information requirements pursuant to the Norwegian Accounting Act and which were to be applied as at 31
December 2022. The parent company financial statements for the year have been prepared in accordance
with the Norwegian Accounting Act and Norwegian generally accepted accounting standards as at 31
December 2022. The directors’ report for the group and the parent company accords with the requirements
of the Accounting Act and good Norwegian accounting practice (NRS 16 directors’ report) as at 31 December
2022.
To the best of our knowledge, we hereby confirm that:
• the consolidated and parent company financial statements for 2022 have been prepared in
accordance with the applicable accounting standards.
• the information in the financial statements provides a true and fair picture of the overall assets,
liabilities, financial position and financial results of the parent company and the group as at 31
December 2022.
• the directors’ report for the group and the parent company provides a true and fair view of the
development, financial results and position of the group and the parent company as well as of
the most important risk factors and uncertainties facing the group and the parent company.
Oslo, 23 March 2023
Norwegian Property ASA
Annual report 2022 - Norwegian Property ASA
Independent auditors report Page 63
Independent auditors report
Annual report 2022 - Norwegian Property ASA
Independent auditors report Page 64
Annual report 2022 - Norwegian Property ASA
Independent auditors report Page 65
Annual report 2022 - Norwegian Property ASA
Independent auditors report Page 66
Annual report 2022 - Norwegian Property ASA
Independent auditors report Page 67
Annual report 2022 - Norwegian Property ASA
Key figures Page 68
Key figures
Financial highlights
Annual report 2022 - Norwegian Property ASA
Key figures Page 69
Key figures funding
Annual report 2022 - Norwegian Property ASA
Key figures Page 70
Key financial figures and APMs
The table below shows a summary of key IFRS figures from the annual group accounts as well as alternative
performance measures (APMs). The financial information for Norwegian Property is prepared in accordance
with IFRS. The company also reports on supplementary financial alternative performance measures (APMs).
1
The IFRS figures appear in the annual group accounts.
2
APMs which do not derive directly from the IFRS group accounts and explained in the overview of definitions at the end of this report.
3
When calculating the APMs and IFRS measures per share, the figures related to the profit and cash flow have been divided by the average number of
shares for the period, and those related to the balance sheet by the number of shares at the end of the period. The number of shares excludes treasury
shares.
4
The calculation of the EPRA APMs is specified in the separate EPRA performance measures section of this report.
Profit and loss measures Meas ure
Units
2022 2021
Revenues
IFRS
1
NOK mill.
1,014.4
919.6
Operating profit before administrative expenses
APM
2
NOK mill.
871.8
795.1
Operating profit before value adjustments
IFRS
1
NOK mill.
843.5
810.8
Profit before income tax, value adjustments and joint ventures
APM
2
NOK mill. 451.3
404.8
Profit before income tax and value adjustments
APM
2
NOK mill.
485.1
479.7
Change in fair value of investment property and rental guarantee
IFRS
1
NOK mill. (154.7)
1,365.0
Profit before income tax
IFRS
1
NOK mill. 502.5
1,994.9
Profit after income tax
IFRS
1
NOK mill.
295.9
1,573.1
Balance sheet measures
Meas ure Units
2022 2021
Market value of property portfolio
APM
2
NOK mill. 25,201.0
25,143.0
Market value of joint ventures
APM
2
NOK mill.
2,181.0
2,342.8
Gross interest-bearing debt
APM
2
NOK mill. 12,185.7
12,004.8
Net interest-bearing debt
APM
2
NOK mill. 11,890.5
11,581.7
Net LTV
APM
2
Per cent 43.4
42.1
Total equity
IFRS
1
NOK mill. 12,562.1
12,836.6
Equity ratio
APM
2
Per cent
46.7
47.9
Pre-tax return on equity
APM
2
Per cent
4.0
16.4
Cash flow measures Mea sure Units
2022 2021
Net cash flow from operating activities
IFRS
1
NOK mill.
457.4
447.1
Cash and cash equivalents (year end balance)
IFRS
1
NOK mill.
185.1
313.5
IFRS measures; per share Meas ure Units
2022
2021
Number of shares outstanding, end of the period Mill. shares
643.6
643.6
Average number of shares in the period Mill. shares
643.6
643.6
Profit before income tax (IFRS)
APM
3
NOK
0.78
3.10
Basic earnings per share (EPS)
APM
3
NOK 0.46
2.44
Net cash flow from operating activities (IFRS)
APM
3
NOK 0.71
0.69
Gross interest-bearing debt
APM
3
NOK 18.93 18.65
NAV, book value
APM
3
NOK 19.52 19.95
EPRA performance measures
Meas ure Units
2022
2021
EPRA Ea rnings
EPRA earnings, per share
APM
4
NOK
0.53
0.48
EPRA NAV metrics
Net Reinstatement Value (NRV), per share
APM
4
NOK 24.26
25.17
Net Tangible Ass ets (NTA), per sha re
APM
4
NOK 23.94
24.84
Net Disposal Value (NDV), per share
APM
4
NOK
21.26
21.87
EPRA net initial yield
EPRA Net Initial Yield (NIY)
APM
4
Per cent 4.13
3.89
EPRA “Topped-up” NIY
APM
4
Per cent 4.23
3.95
EPRA vacancy rate -
EPRA vacancy rate
APM
4
Per cent 5.01 5.56
EPRA cost ratio
EPRA cost ratio, including direct vacancy cost
APM
4
Per cent 20.42
20.13
EPRA cost ratio, excluding direct vacancy cost
APM
4
Per cent 17.96 17.89
EPRA LTV
EPRA LTV ra tio
APM
4
Per cent 50.7
50.0
Annual report 2022 - Norwegian Property ASA
EPRA Performance Measures Page 71
EPRA Performance Measures
EPRA (European Public Real Estate Association) is an association for the publicly traded European real estate
sector. EPRA was founded in 1999 as a not-for-profit association. It has several hundred members, covering
the whole spectrum of the listed real estate industry (companies, investors and their suppliers). EPRA’s
mission is to promote, develop and represent the European public real estate sector through the provision of
better information to investors and stakeholders, active involvement in the public and political debate,
promotion of best practices as well as the cohesion and strengthening of the industry. For further
information, see www.epra.com.
EPRA has issued Best Practices Recommendations Guidelines on areas of reporting that are the most
relevant to investors and where more consistent reporting across Europe would bring the greatest benefits
in the overall transparency of the sector.
Norwegian Property report on the following EPRA Performance Measures.
EPRA Earnings
EPRA Earnings is a key measure of the underlying operating performance of the property portfolio and an
indication of the extent to which current dividend payments are supported by earnings. EPRA Earnings is
calculated based on the IFRS Earnings for the commercial property portfolio adjusted for changes in the
market value of investment properties, changes in the market value of financial derivative instruments and
the related tax effects.
1
Earnings from the Nordr joint venture (JV) are adjusted for as it is related to the development of residential properties for sale, and they are not
relevant for the measurement of the performance of the commercial property portfolio.
EPRA NAV Metrics
The EPRA NAV set of metrics make adjustments to the NAV per the IFRS financial statements to provide
stakeholders with the most relevant information on the fair value of the assets and liabilities of a real estate
investment company under different scenarios.
EPRA earnings 31.12.2022 31.12.2021
IFRS earnings NOK mill. 295.9 1,573.1
Adjustments to calculate EPRA Earnings:
Change in market value of inv. property and rental guarantee NOK mill. 154.7 (1,365.0)
Change in market value of financial derivative instruments NOK mill. (172.2) (150.2)
Share of profit from JVs
1
NOK mill. (35.2) (75.5)
Income tax NOK mill. 100.4 326.7
EPRA earnings NOK mill. 343.6 309.1
Average outstanding shares (million) Mill. shares 643.6 643.6
EPRA Earnings per share NOK 0.53 0.48
Annual report 2022 - Norwegian Property ASA
EPRA Performance Measures Page 72
EPRA Net Reinstatement Value (NRV)
The EPRA NRV metric assumes that entities never sell assets and it aims to represent the value required to
rebuild the entity.
Investments in JVs are revalued based on an estimated fair value of such investments. The fair value on
financial derivatives and deferred taxes on investment properties are excluded. Property transfer taxes do
not normally apply to Norwegian transactions and, therefore, such taxes are not included in the NRV
calculation. The fair value of financial instruments, which are used for hedging purposes where the company
has the intention of keeping the hedge position until the end of the contractual duration, is excluded. Under
normal circumstances, the financial derivatives that companies use to provide an economic hedge are held
until maturity and so any fair value movements will not crystallise.
EPRA Net Tangible Assets (NTA)
The EPRA NTA metric assumes that entities buy and sell assets, thereby crystallising certain levels of
unavoidable deferred tax.
Investments in JVs are revalued based on an estimated fair value of such investments. Norwegian Property
has adopted the second option in the EPRA BPR guidelines to adjust for deferred tax, estimating the real tax
assets and liabilities based on how the company has previously carried out transactions and otherwise
utilised the existing tax positions. The fair value of financial instruments that are used for hedging purposes
are excluded.
2
Estimated fair value of deferred taxes where the estimated fair value of the tax asset related to carry-forward losses are greater than the estimated
fair value of relevant tax liabilities. The calculations assume that carry-forward losses can be utilised over the next 5 years with a discount rate of 5 per
cent. The real tax liability related to the gains/losses accounts is estimated on the basis of the annual depreciation rates in the Norwegian tax
legislation and a discount rate of 5 per cent. The estimated fair value of the deferred tax liability related to the temporary differences of properties as
at 31 December 2022 has been calculated to 3.6 per cent based on a discount rate of 5 per cent and the assumption that properties outside Aker
Brygge are realised over the next 50 year period in transactions structured as the sale of companies in which the tax discount is 5.8 per cent.
EPRA Net Reinstatement Value (NRV) 31.12.2022 31.12.21
IFRS equity NOK mill. 12,562.1 12,836.6
Revaluation of investments made in JVs NOK mill. 1,119.3 1,258.0
Net Asset Value (NAV) at fair value NOK mill. 13,681.4 14,094.6
Deferred tax on properties and financial instruments NOK mill. 2,077.1 2,077.4
Net fair value on financial derivatives NOK mill. (145.3) 26.9
Net Reinstatement Value (NRV) NOK mill. 15,613.2 16,198.9
Outstanding shares at period end (million) Mill. shares 643.6 643.6
NRV per share (NOK) NOK 24.26 25.17
EPRA Net Tangible Ass ets (NTA) 31.12.2022 31.12.2021
IFRS equity NOK mill. 12,562.1 12,836.6
Revaluation of investments made in JVs NOK mill. 1,119.3 1,258.0
Net Asset Value (NAV) at fair value NOK mill. 13,681.4 14,094.6
Reversal deferred tax liability as per balance sheet NOK mill. 1,893.3 1,685.8
Adjustment for estimated fair value of deferred tax
2
NOK mill. (19.7) 182.1
Net fair value on financial derivatives NOK mill. (145.3) 26.9
Net Tangible As sets (NTA) NOK mill. 15,409.7 15,989.5
Outstanding shares at period end (million) Mill. shares 643.6 643.6
NTA per sha re (NOK) NOK 23.94 24.84
Annual report 2022 - Norwegian Property ASA
EPRA Performance Measures Page 73
EPRA Net Disposal Value (NDV)
The EPRA NDV metric represents the shareholders’ value under a disposal scenario, where deferred tax,
financial instruments and certain other adjustments are calculated to the full extent of their liability, net of
any resulting tax.
Investments in JVs are revalued based on an estimated fair value of such investments. Financial liabilities are
valued at the estimated fair value, net of deferred tax.
3
The fair value adjustment related to financial liabilities is related to the valuation as shown in note 8 to the interim financial statement, where the
estimated difference between the current margins and the market conditions are taken into account as well as changes in the fair value of listed
bonds. Tax is taken into account with 22 per cent.
EPRA Net Initial Yield
EPRA Net Initial Yield (NIY) and EPRA “Topped-up” NIY
The EPRA Net Initial Yield metrics presents annualised rental income based on the cash rents passing as at
the balance sheet date, less non-recoverable property operating expenses, divided by the market value of
the property and increased with estimated purchasers’ costs. The EPRA NIY is a comparable measure for
portfolio valuations.
The EPRA “Topped-up” NIY metric incorporates an adjustment to the EPRA NIY in respect of the expiration of
rent-free periods or other unexpired lease incentives such as discounted rent periods and step rents.
4
Applies to the property Sandakerveien 140 (Gullhaugveien 9-13 building A-B).
EPRA Net Disposal Value (NDV) 31.12.2022 31.12.2021
IFRS equity NOK mill. 12,562.1 12,836.6
Revaluation of investments made in JVs NOK mill. 1,119.3 1,258.0
Net Asset Value (NAV) at fair value NOK mill. 13,681.4 14,094.6
Fair value adjustment of financial liabilities, net of tax
3
NOK mill. 2.0 (21.7)
Net Disposal Value (NDV) NOK mill. 13,683.4 14,072.9
Outstanding shares at period end (million) Mill. shares 643.6 643.6
NDV per share (NOK) NOK 21.26 21.87
EPRA Net Initial Yield 31.12.2022 31.12.2021
Investment property, wholly owned NOK mill. 25,201.0 25,143.0
Investment property, share of JVs NOK mill. 10.4 8.7
Total property portfolio NOK mill. 25,211.4 25,151.6
Less projects and land and developments
4
NOK mill. - (589.4)
Completed management portfolio NOK mill. 25,211.4 24,562.2
Allowance for estimated purchasers’ cost NOK mill. 101.5 97.5
Gross up completed management portfolio valuation NOK mill. 25,312.9 24,659.7
12 months rolling rent, including share of JVs NOK mill. 1,136.8 1,040.5
Estimated ownership cost NOK mill. (90.8) (81.5)
Annualised net rents NOK mill. 1,045.9 959.0
Rent free periods or other lease incentives NOK mill. 25.3 15.8
Topped up net annualised net rents NOK mill. 1,071.3 974.7
EPRA NIY (net initial yield) Per cent 4.13 3.89
EPRA "topped-up" NIY (net initial yield) Per cent 4.23 3.95
Annual report 2022 - Norwegian Property ASA
EPRA Performance Measures Page 74
EPRA Vacancy Rate
The EPRA Vacancy Rate is calculated based on the Estimated Market Rental Value (ERV) of vacant space
divided by the ERV of the whole portfolio, and it is a per cent measure of investment property space that is
vacant, based on ERV.
5
Assumptions based on the external valuations for the periods.
EPRA Cost Ratio
The EPRA Cost Ratio is calculated based on the administrative and operating costs (including and excluding
costs of direct vacancy) divided by gross rental income. It is a key measure to enable the meaningful
measurement of the changes in a company’s operating costs.
EPRA LTV
The EPRA LTV’s aim is to assess the gearing of the shareholder equity within a real estate company. The
EPRA LTV is calculated based on the IFRS reporting with certain defined adjustments. The adjustments
include, among other things, that the EPRA LTV is calculated based on proportional consolidation. This
implies that the EPRA LTV include the group’s share in the net debt and net assets of joint venture and
material associates. Assets are included at fair value and net debt at nominal value.
1
Related to the investments in Nordr and Forusbeen 35.
2
Properties held for sale is related to properties classified as inventory. The property inventory includes land, residential projects under development
and completed units for sale.
EPRA Vacancy Rate
31.12.2022 31.12.2021
Market rent vacant areas
5
NOK mill. 64.7 60.4
Total market rent
5
NOK mill. 1,293.2 1,087.0
EPRA vacancy rate Per cent 5.01 5.56
EPRA Cost Ratios
31.12.2022 31.12.2021
Operating costs NOK mill. (204.7) (183.7)
Share of joint venture expenses NOK mill. (2.6) (1.7)
EPRA cost (including direct vacancy cost) NOK mill. (207.3) (185.3)
Direct vacancy cost NOK mill. 24.9 20.6
EPRA cost (excluding direct vacancy cost) NOK mill. (182.4) (164.7)
Gross rental income less ground rent NOK mill. 1,014.4 919.6
Share of joint ventures NOK mill. 0.7 0.9
Total gross rental income less ground rent NOK mill. 1,015.2 920.5
EPRA cost ratio (including direct vacancy cost) Per cent 20.42 20.13
EPRA cost ratio (excluding direct vacancy cost) Per cent 17.96 17.89
Group as reported
Share of joint
ventures
1
Combined
Group as reported
Share of joint
ventures
1
Combined
Bond loans NOK mill.
9,582.1
-
9,582.1
11,474.0
- 11,474.0
Bank loans NOK mill.
2,603.6
3,641.9
6,245.5
530.8
3,768.1 4,299.0
Net payables
NOK mill. -
570.9 570.9
22.5
825.6
848.1
Cash and bank deposits NOK mill. (185.1)
(254.5)
(439.6)
(313.5)
(426.3)
(739.8)
Net debt NOK mill. 12,000.6
3,958.3
15,958.9
11,713.8
4,167.4 15,881.2
Investment properties NOK mill.
25,201.0
10.4
25,211.3 25,143.0
8.7
25,151.7
Properties held for sale
2
NOK mill. -
6,277.8
6,277.8 -
6,603.8 6,603.8
Net receivables
NOK mill. 16.5
- 16.5
-
-
-
Total property value NOK mill.
25,217.5 6,288.2
31,505.7
25,143.0 6,612.4 31,755.4
EPRA LTV Per cent 47.6 50.7
46.6 50.0
31.12.21
EPRA LTV Metric
31.12.22
Annual report 2021 - Norwegian Property ASA
Corporate governance Page 75
Corporate governance
Norwegian Property’s corporate governance is for
securing a clear and appropriate division of the
responsibilities between the shareholder, board
of directors and executive management as well as
ensuring control of the group and contributing to
a positive trust-based relationship between
Norwegian Property and the group’s bond
investors, shareholder and other stakeholders.
Good corporate governance will contribute to the
highest possible value creation over time to the
benefit of all stakeholders.
1 Presentation on corporate governance
Norwegian Property complies with the reporting
requirements specified in section 3-3b of the
Norwegian Accounting Act. The company was de-
listed in 2021, and the requirements for reporting
on corporate governance have, therefore, been
reduced. Where relevant, the company will
continue to report according to Oslo Børs Code of
Practice for IR published on 1 March 2021,
available on the Euronext Oslo Børs website, and
the latest version of the code of practice from the
Norwegian Corporate Governance Board (NCGB)
which was published on 14 October 2021. The
NCGB code is available at www.nues.no. These
recommendations go beyond the legal
requirements.
Below is the board’s presentation on the way
Norwegian Property has implemented the NCGB
code. Reference is made to this presentation in
the directors’ report for 2021, and it is available
on the group’s website. The presentation covers
the relevant sections of the code, and the possible
variances from the code are specified under the
relevant section.
The overall principles for corporate governance
have been drawn up by the board of Norwegian
Property. The board has also prepared a set of
formal documents which specify the guidelines,
instructions and policies intended to ensure
compliance in practice with good corporate
governance. The board regularly assesses the
group’s formal documents, most recently in
February 2023. Guidelines for ethics and
corporate social responsibility (CSR) as well as
principles for investor communication are
available under formal documents at
www.npro.no.
The group’s values base defines the important
principles for corporate governance. This base
rests on four core values, which form the
foundation for building a positive corporate
culture.
COLLABORATIVE
- We will be open and inclusive
- We will be generous and make ourselves
available
- We will have a personal commitment
COURAGEOUS
- We will think innovatively
- We will be ambitious
- We will challenge the established truths
PROACTIVE
- We will always seek to overcome
problems before they arise
- We will seek and discover new
opportunities
- We will present new ideas
ATTENTIVE
- We will build and retain relationships
- We will do what we promise
2 The business
Norwegian Property’s articles of association are
available on its website. Enshrined in article 3, the
group’s business purpose states:
“The Company operates in management,
acquisitions, sales and development of real estate
and infrastructure, including participation in other
companies and through trading and investment in
interest/units and securities as well as businesses
which are related to such.”
The business purpose was updated in the annual
general meeting held on 22 April 2022.
Within the framework of its articles, the group has
presented goals and strategies for its business in
the directors’ report.
Annual report 2022 - Norwegian Property ASA
Corporate governance Page 76
The board has adopted a sustainability strategy
stating that Norwegian Property is one of
Norway’s leading property companies on
sustainable growth, a better society and the
reduced consumption of resources through a
focus on complete solutions and a forward-
looking use of architecture, aesthetics, technology
and materials. The strategy and achievements of
the goals and targets are further described in the
sustainability section of the annual report.
The board has formulated guidelines for ethics
and CSR in accordance with the group’s values
base. In 2022, ethical guidelines for suppliers were
introduced as a measure to comply with the new
Transparency Act in Norway. Norwegian
Property’s guidelines are available at
www.npro.no. The core of the CSR guidelines is
the group’s responsibility for the people, society
and environment affected by its operations, and
they deal with human rights, anti-corruption,
labour conditions, health and safety,
discrimination and the environmental aspects.
More details are provided in the presentation on
CSR. These guidelines are subject to annual
consideration by the board, and they were
updated most recently in February 2023.
3 Equity and dividends
Equity
Consolidated equity as at 31 December 2022
totalled NOK 12,836.6 million. The equity ratio on
the same date was 46.7 per cent. The board
regards the equity ratio as satisfactory in relation
to the group’s goals, strategy and risk profile.
To secure good financial leeway, the group has a
long-term ambition for the relationship between
net interest-bearing debt and gross fair value of
the properties to be in the range of 45-55 per cent
over a business cycle. The group’s financial
flexibility is assessed at any given time in relation
to the group’s goals, strategy and risk profile. As
at 31 December 2022, the relationship between
net interest-bearing debt and gross fair value (net
LTV) was 43.4 per cent.
Dividend
Pursuant to the group’s dividend policy, a goal for
Norwegian Property is to pay competitive
quarterly dividends. It aims to pay a dividend of
30-50 per cent of its profit after tax payable, but
before fair-value adjustments. The dividend can
be higher in times of good cash flow or property
sales. An updated assessment by the board of the
group’s financial position and prospects are
carried out before any dividend is determined.
Dividends corresponding to 66 per cent of the
basis for calculating such payments have been
paid in 2022. The board has been mandated by
the general meeting to determine quarterly
dividends on the basis of the approved financial
statements for 2021. Net LTV as at 31 December
2022 was slightly below the range specified in the
group’s financial policy.
The dividend policy is also described in note 22 to
the consolidated financial statements in this
annual report and in the investor relations section
of the group’s website.
Board mandates
The AGM of 22 April 2022 mandated the board to
increase the group’s share capital by up to NOK
32,490,000, corresponding to just under 10 per
cent of the group’s share capital when the
mandate was awarded. The board mandate is
motivated by the desire to be in a position to
issue new shares in return for cash payment, as
settlement for property transactions and/or as a
component in fulfilling incentive schemes for
employees and/or directors. As a consequence of
these purposes, it was also resolved that the
board could decide to waive the pre-emptive right
of existing shareholders to new shares. In line
with the NCGB code, a separate vote was held on
each of the three purposes. The incentive scheme
for one of the directors, which has been exercised
during 2021, did not accord with the NCGB code.
This mandate had not been utilised on 31
December 2022.
In addition, the board was mandated to raise
convertible loans totalling NOK 840 billion. This
was because the board wanted to have the
opportunity to issue new shares in combination
Annual report 2022 - Norwegian Property ASA
Corporate governance Page 77
with additional debt, partly in order to optimise
the financing structure in Norwegian Property
ASA. This mandate had not been utilised as at 31
December 2022.
It was also resolved that the board’s overall use of
mandates to issue new shares awarded to it by
the AGM should not exceed 10 per cent of the
share capital.
The board was also mandated to purchase the
group’s own shares up to a total nominal value of
NOK 32,490,000. The grounds were that the board
could acquire the group’s own shares with the
intention of using them as settlement for property
transactions, the fulfilment of incentive schemes
for employees and/or directors, and/or in other
circumstances which are considered attractive for
the shareholders in general. In this case, separate
votes were also held for each purpose.
The board was mandated to determine the
payment of a dividend on the basis of the group’s
financial statements for 2022. This decision was
motivated by the desire to give the board the
opportunity to pay a dividend on a rolling basis if
it considered this to be appropriate in light of the
group’s position. Norwegian Property paid a
dividend of NOK 0.5 per share in 2022.
All board mandates remain valid until the group’s
AGM in 2023, but in any event not beyond 30
June 2023.
No provisions in the articles of association
authorise the board to decide that the group will
buy back or issue its own shares or primary capital
certificates.
4 Equal treatment of shareholders
Since 16 August 2021, Norwegian Property has
only one shareholder. Therefore, the code’s
article 4 regarding the equal treatment of
shareholders is not relevant.
Norwegian Property has only one share class, and
all shares have equal rights in the group. Its
articles of association impose no voting
restrictions.
The group’s share capital amounted to NOK
298,676,726.50 divided between 597,353,453
shares, each with a par value of NOK 0.5.
5 Shares and negotiability
Since 16 August 2021, Norwegian Property has
only one shareholder, and the company has been
delisted. Therefore, the code’s article 5 regarding
the free negotiability of the shares is not relevant.
6 General meetings
Notice, registration and participation
The 2023 AGM is scheduled to take place on 21
April. The group’s financial calendar is published
as a stock exchange announcement and in the
investor relations section of the group’s website.
Notice of the general meeting, along with
comprehensive documentation, will be distributed
no later than two weeks before a meeting takes
place. As the company is no longer listed, there is
no need for 21 days’ notice.
The general meeting elects the directors on the
board. In the work of assembling the board, it is
emphasised that the board functions optimally as
a collective body, that the legal requirements for
gender representation can be met and that the
directors complement each other in terms of their
background and expertise. Therefore, the general
meeting is normally invited to vote for a complete
board, rather than individual candidates as
recommended by the NCGB. As a result, no
opportunity has been provided to vote in advance
for individual candidates.
The minutes from a general meeting are
published as soon as practicable via the stock
exchange’s reporting system (www.newsweb.no,
ticker code: NPRO) and under formal documents
in the investor relations section of www.npro.no.
7 Nomination committee
In the extraordinary General Meeting on 20
August 2021, it was resolved that the company
will no longer have a nomination committee.
Annual report 2022 - Norwegian Property ASA
Corporate governance Page 78
8 Board of directors, composition and
independence
The group does not have a corporate assembly.
Pursuant to the articles of association, the board
of Norwegian Property will comprise three to nine
directors. The board currently has five
shareholder-elected directors. Directors and the
chair of the board have been elected by the
general meeting to serve until the AGM in 2023.
The board’s composition is intended to secure the
interests of the shareholders in general, while the
directors also collectively possess a broad
business and management background and an in-
depth understanding of the property market,
purchase and sale of businesses, financing and
capital markets. In addition, account has been
taken of the need for the board to function well as
a collegiate body. The background and experience
of directors are presented on the group’s website
and in the section of this annual report on the
presentation of the directors. The board has been
composed in such a way that it can act
independently of special interests. The group’s
executive management is not represented on the
board.
The composition of the board is in accordance
with the Public Limited Liability Companies Act §6-
11. Two board members are women and three
board members are men. There is also a good age
composition of the board members from 39 to 60
years. The company is working to establish
guidelines for board composition to ensure
equality and diversity in the future.
Two of the five directors are independent of the
group’s executive management, significant
commercial partners and substantial
shareholders, while three are related to the
shareholder. These are:
- Cecilie Astrup Fredriksen is an employee
of Seatankers Services (UK) LLP in
London, and a director of a number of
companies, including MOWI ASA.
According to Norwegian Corporate
Governance Code, these companies are
related to the largest shareholder in
Norwegian Property, Geveran Trading Co
Ltd.
- Kathrine Astrup Fredriksen is an
employee of Seatankers Services (UK) LLP
in London, and a director of SFL
Corporation Ltd and Axactor SE. She has
previously been a director of Seadrill Ltd,
Frontline Ltd, Golar LNG and others.
According to Norwegian Corporate
Governance Code, these companies are
related parties to the largest shareholder
in Norwegian Property, Geveran Trading
Co Ltd.
- Lars Erich Nilsen has been employed by
Seatankers Management Norway AS
since 2014. He serves as director of a
number of companies. According to
Norwegian Corporate Governance Code,
these companies are related to the
largest shareholder in Norwegian
Property, Geveran Trading Co Ltd.
10 board meetings were held in 2022.
9 Work of the board of directors
The board has overall responsibility for managing
the group and for supervising the CEO and the
group’s activities. Its principal tasks include
determining the group’s strategy and monitoring
its operational implementation. In addition, there
are control functions which ensure the acceptable
management of the group’s assets. Instructions
which describe the rules of procedure for the
board’s work and its consideration of matters
have been adopted by the board. Responsibility
for ensuring that the board conducts its work in
an efficient and correct manner rests with the
chair.
The board establishes an annual plan for its
meetings, which specifies the topics for board
meetings, including reviewing and following up
the group’s goals and strategy, budgets, reporting
of financial information, the notice for the general
meeting with associated documentation and the
board’s meeting with the auditor.
The board appoints the CEO. The division of
labour between the board and the CEO is
specified in greater detail in standing instructions
Annual report 2022 - Norwegian Property ASA
Corporate governance Page 79
for the latter. The CEO is responsible for the
group’s executive management.
The board has considered it appropriate to
appoint sub-committees to advise it. Pursuant to
the Norwegian Public Limited Liability Companies
Act, an audit committee of two directors has been
established to support the board in the exercise of
its responsibility for financial reporting, internal
control, auditing and overall risk management.
The responsibility includes ensuring the auditor’s
independence and monitoring the
appropriateness of the provision of non-audit
services to the audited entity. The audit
committee was also responsible for the election
of the company’s auditor. As at 31 December
2022, the committee comprised Bjørn Henningsen
(chair) and Lars Erich Nilsen. The members of the
committee are independent of the business, and
their work is governed by a separate instruction. A
compensation committee comprising two
directors was in operation until the General
Assembly 22 April 2022. Their task was to assist
the board over the employment terms of the CEO
and the strategy and main principles for
remunerating the group’s senior executives. This
committee comprised Merete Haugli and Carl Erik
Krefting. It was governed by a separate
instruction, and it consisted of members who
were independent of the group’s executive
management. After the election of a new board at
the General Assembly, it was considered that a
compensation committee was no longer
necessary.
A board evaluation of its own work and expertise
was conducted in 2019. This covered the
composition of the board as well as how the
directors’ function both as a group and
individually. A new evaluation was planned for
2022, but since several of the board members
were changed in April this was postponed. The
findings of the evaluation will be reported to the
shareholder. Guidelines on conflicts of interest are
included in the instructions for the group’s board,
and they ensure that the directors inform the
board if they have a significant direct or indirect
interest in an agreement being entered into by
the group. To avoid unintentional conflicts of
interest, the group has drawn up an overview
which identifies the various roles of its directors,
the offices they hold and so forth. This overview is
updated as and when required and in the event of
changes in the board’s composition.
Pursuant to the group’s ethical guidelines, no
employee must work on matters in which they
have a personal interest or where such an interest
could be perceived to exist. Ethical guidelines also
apply to directors when they represent Norwegian
Property. The board and the executive
management must ensure that transactions with
close associates (related parties) take place on an
arm’s length basis. Note 25 to the consolidated
financial statements details transactions with
close associates (related parties). Financial
relationships related to the directors and
executive personnel are described in notes 21 and
22.
10 Risk management and internal control
Risk areas and internal control environment
Through its business activities, Norwegian
Property manages considerable financial assets
which are exposed to substantial risk factors, such
as the money market and the letting market. Risk
associated with development projects was greater
a few years ago, but now it is considered to be
low. The group’s management model is based on
an appropriate delegation of profit responsibility,
clearly defined operating parameters and
effective internal control.
The overall goals have been established and the
group’s strategy is updated in annual board
meetings. On the basis of the strategy, the values
base, ethical guidelines and guidelines for
corporate social responsibility, the board has
established general instructions which specify the
authorisations for delegating responsibility to
defined roles in the organisation. Furthermore,
policies have been established for control and risk
management in the most important risk areas,
such as operations, project development, finance
and sustainability.
Operational risk related to the award of contracts
and renegotiation of leases, is followed up on in
accordance with the established guidelines and
Annual report 2022 - Norwegian Property ASA
Corporate governance Page 80
authorisations. Operational risk related to
property management is handled through
routines for day-to-day operation, compliance,
HSE work, energy efficiency and other climate-
related actions. Financial risk is managed in
accordance with the group’s financial policy.
Handling of sustainability risk is described in the
Sustainability report.
The board is responsible for seeing to it that the
business, financial reporting and asset
management are subject to reassuring controls.
Based on the overall policies, governing processes
and routines have been established for day-to-day
management. Steering documents, such as ethical
guidelines and guidelines for corporate social
responsibility are updated by the board on an
annual basis. A subsequent annual review on the
Web ensures that the content of the steering
documents is made known to all employees.
These documents also contain whistle-blower
routines to ensure that the board is informed of
any breaches of the guidelines or any illegal
action.
In connection with its annual review of the
group’s strategy, the board reviews the most
important risk areas faced by Norwegian Property
and the internal controls established to deal with
and minimise these. The board is also briefed on
developments in the risks facing the group on a
continuous basis through the operating reports.
Reporting
The administration prepares periodic reports
which are considered at the board meetings.
These reports are based on management reviews
of the various parts of the business, and they
contain an update of the status for setting targets,
important operational conditions, financial
conditions and a description of the status in risk
areas. In addition, quarterly financial reports are
prepared and reviewed by the audit committee
ahead of the board meeting.
Financial conditions are followed up on through
periodic accounting reports and regular updates
of annual budgets and forecasts. Reporting also
includes non-financial key figures related to the
various business areas. In addition, risk
management includes the preparation of longer-
term projections of financial trends, where
assumptions are made about profits, cash flow
and balance sheet development. These
simulations provide management and the board
with a basis for monitoring the expected trends in
the central key figures.
The group is managed on the basis of financial
targets related to aspects such as return on
equity. Special profitability calculations are made
when acquiring investment properties and when
launching development projects, based on
established routines and required returns.
A special review of the quarterly valuations of
investment properties is conducted by
management, and meetings are held with the
independent appraisers responsible for the
valuations where particular attention is paid to
market views and risk conditions. Separate
accounting documentation is prepared for
significant accounting items and transactions
which are not of a routine character. External
valuations of financial interest-rate derivatives by
the banks are quality-assured through the
preparation of monthly internal value
assessments. All other balance sheet items are
reconciled and documented on a continuous basis
throughout the year. Significant profit and loss
accounts and accounts related to direct and
indirect taxation are also reconciled on a
continuous basis.
The interim reports and annual financial
statements are reviewed by the audit committee
ahead of consideration by the board. Risk
management and internal control are also
addressed by the board’s audit committee. The
latter reviews the external auditor’s findings and
assessments after the interim and annual financial
audits. Significant matters in the auditor’s report
are reviewed by the board.
11 Remuneration of the board of directors
Directors’ fees are determined by the general
meeting. These fees have been based on the
board’s responsibility, expertise and time taken as
Annual report 2022 - Norwegian Property ASA
Corporate governance Page 81
well as the complexity of the business, and they
have not been related to the results.
Other directors have not undertaken special
assignments for the group other than their work
on the board. Board approval is necessary before
any director can be offered such special
assignments which lead to extra remuneration.
Further details on the remuneration paid to
individual directors are provided in note 21 to the
consolidated financial statements. An overview of
the shares owned by the directors and their close
associates is included in note 22 to the
consolidated financial statements.
12 Salaries and other remuneration of
executive personnel
As the company is no longer listed, the guidelines
for salary and other remuneration to leading
personnel which were adopted by the general
meeting in 2021 are not updated. The group’s
guidelines for the remuneration of senior
executives are described in note 21 to the
consolidated financial statements. This note also
provides further details about remuneration for
senior executives.
These guidelines specify the main principles for
the group’s executive pay policy, and they have
been formed with the aim of ensuring that the
interests of shareholders and senior executives
coincide. The CEO has a personal share option
scheme (see note 22).
Profit-related remuneration in the form of a
bonus programme is based on the attainment of
goals for the group or for a department or
company in which the recipient is employed. Such
goals may comprise the attainment of various
improvement measures or financial criteria,
including the development of the group’s share
price. A ceiling has been set on the size of profit-
related remuneration for those employees
entitled to receive this.
13 Information and communication
Through the group’s established principles for
investor communication, which are available on
its website under principles and guidelines, the
board has determined the guidelines for reporting
financial and other information. Based on
openness and the equal treatment of players in
the securities market, the guidelines also cover
communication with shareholders outside the
general meetings.
Reporting of financial and other information will
be timely and accurate, while simultaneously
being based on openness and the equal treatment
of the players in the securities market.
Information is published in the form of annual and
interim reports, press releases, stock exchange
announcements and investor presentations. All
the information which is considered to be
significant for valuing the group will be distributed
and published via Cision and the Oslo Børs
company disclosure system, and the group’s
website is available in both Norwegian and English
versions.
Information is made available simultaneously on
the group’s website, where it is also possible to
subscribe to announcements. The main purpose
of this information will be to clarify the group’s
long-term goals and potential, including its
strategy, value drivers and important risk factors.
The group publishes a financial calendar every
year with an overview of the dates of important
events, publication of interim reports and open
presentations. This calendar is made available as a
stock exchange announcement and on the group’s
website as soon as it has been approved by the
board. As there is only one shareholder, the date
of the AGM is not part of the Financial Calendar
being published.
Norwegian Property complies with the
recommendations of Oslo Børs concerning the
reporting of investor relations information, to the
extent relevant for a company with listed bonds.
The applicable recommendation for such
reporting is available at
https://www.euronext.com/nb/markets/oslo.
Annual report 2022 - Norwegian Property ASA
Corporate governance Page 82
14 Takeovers
The board has not prepared separate guiding
principles for responding to a possible takeover
bid since it wishes to be free, within the
constraints of the existing regulations, to react to
such an offer as it sees fit.
The group’s articles of association place no
restrictions on buying shares in the group. In a
takeover process, the group’s board and executive
management will seek to help ensure that the
shareholders are treated equally and that the
group’s business suffers no unnecessary
disruption. The board will give particular weight to
ensuring that shareholders have sufficient time
and information to be able to form a view of a
possible offer for the group’s business or shares.
The board does not intend to prevent or hamper
anyone from presenting an offer for the group’s
business or shares. It will take account of the
common interests of the group and the
shareholders in the event that possible
agreements with bidders are considered.
15 Auditor
An audit committee of two directors has been
appointed. This committee is intended to support
the board in the exercise of its responsibility for
financial reporting, internal control, auditing and
overall risk management. Its work is governed by
an instruction.
The auditor rotation requirements have been
introduced in Norway in 2022 and EY was elected
as the new auditor for the company. PwC has held
the position of auditor for the previous 10 years.
The group’s auditor, Ernst & Young AS (EY),
conducted the following work during 2022 and
2023 in relation to fiscal 2022.
- Presented the audit plan for 2022.
- Presented the additional report to the
audit committee of the audited entity.
This report covers the requirements in
the Auditors Act § 12-1, cf. regulation
(EU) No 537/2014.
- Attended board meetings considering the
annual report, reviewing the possible
significant changes in accounting
principles, assessing significant
accounting estimates as well as
considering all cases where possible
disagreements had arisen between the
auditor and executive management.
- Conducted a review, together with the
board, of the group’s internal control
systems, including the identification of
weaknesses and proposals for
improvements.
- Held a meeting with the board without
the presence of the executive
management.
- Confirmed that the requirements for the
auditor’s independence were fulfilled,
and they provided an overview of
services other than auditing which have
been rendered to the group.
EY attended three meetings with the audit
committee, which included reviewing the main
features of the plan for executing the audit for the
year and presenting results from the audit.
Pursuant to the instruction for the board’s audit
committee, the use of the auditor for substantial
assignments other than ordinary auditing services
must be considered and approved by the board.
The board reports annually to the AGM on the
auditor’s overall fees, broken down between audit
work and other services. The AGM approves the
auditor’s fees for the parent company.
Annual report 2021 - Norwegian Property ASA
Sustainability report Page 83
Sustainability report
The sustainability report includes information
about Norwegian Property’s work with both
environmental and social issues as well as
how these issues are governed.
Reporting frameworks
Norwegian Property is experiencing increasing
interest from investors and tenants in the
environmental, social and corporate governance
(ESG) area. Particularly climate issues are of great
interest, and investors and analysts are showing
interest in Norwegian Property’s strategy and
results from its efforts to reduce energy
consumption and carbon emissions. Tenants are
eager to report their own emissions and request
figures from the group. Norwegian Property has
the ambition to carry out its climate reporting in
accordance with the standard from the Taskforce
on Climate-related Financial Disclosures (TCFD). It
is also working to meet the future requirements in
the EU taxonomy for sustainable activities. The
group also reports to CDP.
Several new ESG reporting requirements have
been imposed in the legislation, and in 2022, the
Transparency Act came into force. The
sustainability report includes the group’s
reporting according to the Transparency Act and
the Equality and Anti-Discrimination Act.
Norwegian Property is also preparing for the
reporting according to the EU Taxonomy. The real
estate industry is eligible for the taxonomy, but so
far, the requirements are not clear as to what a
taxonomy-aligned building in Norway is.
However, the focus seems to be on the property’s
energy class and, therefore, Norwegian Property
has started to map all the properties’ energy
classes and make plans for how to improve the
energy class of each property. When it comes to
social conditions within the EU taxonomy, we
expect the requirements to be highly in line with
the requirements in the Transparency Act.
Overall guidelines
The guidelines for CSR are updated and adopted
by the board on an annual basis, most recently in
February 2023, and published at www.npro.no.
Their purpose is to ensure that CSR is exercised in
accordance with the approved base values and
ethical guidelines, the guidelines for corporate
governance and the group’s long-term value
creation for shareholders, employees, customers
and society. The guidelines apply to all the
employees of the group and to the directors when
they act on behalf of the group. As a consequence
of the Transparency Act, the board has also
adopted ethical guidelines for suppliers to the
group. The board is responsible for ensuring
compliance with all the guidelines. Any significant
breaches of the guidelines must be reported to
and followed up on by the board.
Sustainability strategy
The board adopted the current strategy in
February 2020. As part of the strategy, the group
wants to comply with the UN SDGs with particular
attention devoted to the following targets
towards 2025, with 2019 as the base year.
SDG 8: Decent work and economic growth was
chosen because it fits well with the group’s ethical
guidelines. Norwegian Property will work to
combat corruption, discrimination and social
dumping. It will help to ensure that more young
people secure apprenticeships and/or summer
jobs, both internally and with its suppliers, and it
will work to achieve an organisation with diversity
and without discrimination.
SDG 11: Sustainable cities and communities were
chosen because this accords very well with both
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 84
Norwegian Property’s business and its values. The
areas where it owns property must be secure and
accessible to all. The group will choose sustainable
solutions for operating and developing its
buildings, and it will make an effort to protect the
historical and cultural heritage by preserving its
historic and listed buildings.
SDG 13: Climate action to halt global warming is a
goal that Norwegian Property has actively
pursued since 2011. The group works
continuously to reduce energy consumption and
convert to cleaner energy sources in its buildings,
like the energy centre at Aker Brygge. It also
works on the degree of waste sorting in the
buildings. Climate-related risk management is part
of the group’s financial planning process and
cross-disciplinary risk management.
SDG 14: Life below water was chosen because of
the proximity of Aker Brygge to the fjord as well
as the Nydalen properties to the river. Therefore,
the group wishes to ensure there is clean water
around the buildings, marina and outdoor areas. It
wants to help reduce waste in the sea and
constantly studies how it can operate the most
sustainable possible marina.
Due to rapid changes in the laws and regulations
in Norway and within the EU, Norwegian Property
has addressed the need to update the current
sustainability strategy. The task of creating an
updated strategy has been an ongoing project
involving all the departments during 2022. The
process started with a full ESG day in which all the
employees were invited to a workshop. Everyone
took part in group work which was set up across
departments and they were given the opportunity
to brainstorm and put forward thoughts and ideas
regarding ESG matters. The outcome of the
workshop was then addressed in all the
departments and further used as the foundation
for a management ESG strategy seminar that took
place in October. The task is still a work in
progress and the group is looking forward to
publishing and implementing an updated
sustainability strategy in 2023.
Division of responsibility
The board has adopted the sustainability strategy
and has overall responsibility for establishing it.
Overall responsibility for implementing the
approved strategy throughout the organisation
and for ensuring compliance with it rests with
Bent Oustad, the group’s CEO.
The operations organisation – commercial
management, operation and maintenance
(CMOM), headed by Bjørge Aarvold – is
responsible for prioritising and implementing all
the measures related to energy consumption and
waste handling in the buildings which have
substantial significance for the group’s carbon
emissions. This also includes BREEAM-in-use
certifications.
The project department headed by Sindre
Kornrud and the development department
headed by Vidar Stokkeland are responsible for
ensuring that new buildings and major
renovations are pursued in accordance with the
group’s sustainability strategy.
Haavard Rønning, the group’s CFO, is responsible
for ensuring that routines and parameters that
ensure the group’s financial sustainability and
management are in place in the organisation.
Ane Grimsmo heads the group’s work on
sustainability, focusing on the sustainability
strategy, implementation of efforts across
departments and reporting.
Environment
Climate reporting (TCFD)
Norwegian Property has the ambition to carry out
its climate reporting in accordance with the
standard from the Taskforce on Climate-related
Financial Disclosures (TCFD). Where climate
change is concerned, Norwegian Property
considers that its biggest impact takes the form of
energy consumption in the buildings owned by
the group and the types of building materials used
in its projects. However, other important
considerations are the way the buildings are used,
how waste handling is organised and how tenant
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 85
employees travel to work in the group’s buildings.
Climate accounting is done according to the GHG
protocol.
Targets for reducing emissions
Norwegian Property has set some quantitative
targets for 2019-25:
a 30-50 per cent reduction in energy
consumption for renovated buildings
There have been no major renovations in the
strategy period.
a five to 10 per cent reduction in energy
consumption for the existing portfolio
It is an intensity target, measured as energy
consumption per square metre. Since 2019, the
energy consumption per square metre has
decreased from 278 kWh to 261 kWh, i.e. by 6.4
per cent.
When split on energy consumption in office, retail
and restaurant, the consumption per sqm has
increased for offices following the acquisition of
Snarøyveien 30 in December 2020. Consumption
in retail and restaurant has decreased since 2019,
but it is difficult to say how much of this reduction
is related to the lockdown.
a 10-20 per cent reduction in CO
2
equivalents
(CO
2
e) emissions
CO
2
e emissions per sqm have decreased from 14
kg per sqm in 2019 to 9 kg per sqm in 2022, i.e. 38
per cent in the strategy period. This is due to
more renewable energy in the buildings and
reduced emissions from energy sources such as
electricity.
a 60-65 per cent proportion for sorted waste
The proportion of sorted waste is slightly below
the target, with 59 per cent sorted in 2022. If we
include waste from projects, the waste sorting
reaches 60 per cent.
Developments in energy consumption per building
are measured and reported annually to the
board.
The status for the current strategy period, from
2019 to 2022, is presented in the table below.
Reductions and increases are measured in relation
to the previous year.
Energy consumption includes all the consumption
of electricity, central heating and cooling, the
production of renewable heating and cooling in
the buildings as well as the use of propane. To
avoid double counting, the figures are net of the
electricity used for producing heating and cooling.
Total CO
2
e emissions include Scope 1, 2 and 3. The
increase from 3,038 tons in 2021 to 3,653 tons in
2022 are mainly a consequence of including more
categories from Scope 3 in the 2022 figures.
Without these categories, emissions would have
been only 0.8% higher than in 2021.
Climate accounting 2022 according to the
GHG protocol
NPRO’s climate accounts are in accordance with
the GHG protocol and have been prepared in
collaboration with Cemasys. The main conclusions
are presented in this document, while a more
thorough presentation of the figures can be found
in the company’s Climate Account, which is
available on the website.
The GHG protocol includes five main principles:
Relevance, completeness, consistency, transpar-
ency and accuracy.
Relevance
For a real estate company such as NPRO, the main
emissions originate from the energy consumption
in its buildings and from waste. In the work with
2022 2021
2020 2019
Total consumption (MWh) 107 128 105 923 55 652 61 022
sqm 426 433 410 157 234 152 219 143
Energy consumption
(per sqm)
251 258 238 278
Change from previous year
(per cent)
0- 9 -15 -7
Office (kWh per sqm) 210 214 171 191
Retail (kWh per sqm) 342 323 341 438
Restaurant (kWh per sqm) 693 610 630 854
Total CO
2
e-emission (tonne) 3 653 3 038 2 653 3 046
sqm 426 433 410 157 234 152 219 143
CO
2
e-emissions (kg per sqm) 9 7 11 14
Change from previous year
(per cent)
16 -35 -19 -15
Office (kg per sqm) 4 4 6 6
Retail (kg per sqm) 6 5 10 13
Restaurant (kg per sqm) 33 24 37 28
Proportion of waste sorted
(per cent)
59 60 58 56
Customer satisfaction index 84 78 79 78
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 86
the climate account, this has been the focus.
Consumption of energy is included in NPRO’s
scope 2, while waste is in scope 3. Scope 1
emissions are very low compared to Scope 2 and
3.
There has been little construction activity in the
company for some years, but it is expected to
increase in the coming years. NPRO has started to
prepare for reporting emissions from projects,
starting with the construction of the new climate-
friendly park in Nydalen which was included in the
climate accounting for 2022.
In 2022, the activities in the buildings were almost
back to normal after two years of lockdowns and
reduced activity. The total energy consumption
increased, mostly due to retail and restaurants.
Completeness
All the properties are covered by the climate
account in 2022. Electricity, central heating and
cooling as well as waste are considered to be
complete.
NPRO included several new categories for
emissions in 2022 compared to 2021. For
example, emissions from a project, emissions
from refrigerants in the Energy Center and
upstream emissions that are not included in scope
1 or scope 2 related to the production of fuel and
energy are included. Without these categories,
the emissions would have been 0.8% higher than
in 2021,. With the new categories, the reported
emissions are 21 per cent higher than the
previous year. These new emissions categories are
mainly scope 3.
Consistency
Acquisitions of properties, vacancies and, of
course, the lockdowns during the pandemic have
affected the consistency of the reporting. Another
challenge is that we are dependent on the tenants
to report their energy consumption, and the
reporting may vary from year to year. NPRO
measures the consumption per sqm and the
emissions per sqm from year to year, and for the
same categories from year to year. There may also
be variations in the number of sqm allocated to
each category from year to year, as there are
always some changes of the tenants. The method
for calculating the key figures is consistent from
year to year.
Transparency
NPRO publishes its climate account and the
sustainability report on the company’s webpage.
The company has reported to CDP every year
since 2011 and will continue this practice.
The method for calculating emissions is described
in the climate accounting document available on
the company’s webpage.
Accuracy
Cemasys assists NPRO in calculating the CO
2
e
emissions according to the GHG protocol. The
climate account for 2022 has been verified by
PWC.
NPRO’s energy production
Energy Centres at Aker Brygge
There are two energy centres at Aker Brygge.
They supply the buildings at Aker Brygge with
heating and cooling from seawater.
The newest energy centre became operational in
2014, and three of the buildings at Aker Brygge
are connected to this centre. In 2022, the centre
delivered energy corresponding to 323 per cent of
the energy input. The figure below shows the
developments in the share of produced energy
supplied to the buildings compared with the
energy input to the centre over the past four
years.
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 87
The energy centre is much more efficient for
cooling than heating. Therefore, the centre will be
more efficient if it is warm in summer, and less
efficient if it is very cold in winter. The year 2020
was characterised by a low level of activity in the
buildings because of lockdowns in the March-April
and October-November periods when heating was
required. Hence, overall efficiency was very high.
The years 2021 and 2022 were almost back to
normal activity. A very cold winter in 2021
contributed however to lower efficiency.
The centre generated and delivered 6,905 MWh in
2022 compared with 7,241 MWh in 2021.
In the older energy centre at Aker Brygge, which
was constructed in the 1980s, the produced
energy is estimated as 1.9 times the consumption
of electricity. It is not possible to measure the
amount produced.
A new heat pump was implemented in
Snarøyveien 36 in Fornebu. Energima has
calculated the production of heating and cooling
from the heat pump.
Actions for the environment and climate in
2022
Waste sorting
Waste accounted for 20% of emissions from
Norwegian Property's properties in 2022. Of this,
94% came from residual waste. It is therefore a
priority task to reduce the amount of residual
waste and increase the degree of sorting.
Waste sorting for the various areas is shown in
the table below:
A project to improve information to tenants was
initiated in 2022 and continued in 2023.
Various measures have been initiated in 2022 to
improve the sorting rate. Waste reports are
automatically sent to Energinet where it is easy to
follow up the sorting rate for each property
throughout the year. New signs in accordance
with the new Nordic standard for colors and
pictograms have been put up in 2022 and 2023.
Information brochures for tenants on how to sort
have been prepared and will be distributed to
tenants on an ongoing basis. The marketing
department has been made aware that space
must be set aside for waste sorting when a new
tenant is to furnish their premises.
After reopening of shops and restaurants there
was an increase in amount of waste from 2021 to
2022. Compared to pre-covid in 2019, the amount
of waste has been reduced. The increase at
Fornebu is due to the acquisition of Snarøyveien
30.
Clean water in the fjord
Given its proximity to the riverbanks in
Nydalen and shorelines at both Aker
Brygge and Fornebu, Norwegian
Property finds it important to keep the
nearby fjord and rivers clean. The group has a
financial interest to preserve the idyllic locations
close to the edge of the water and, in addition,
Proportion of waste sorting 2022 2021 2020
2019
Aker Brygge per cent 59 58 58 58
Other CBD per cent 62 72 62 92
Nydalen per cent 52 53 41 32
Vinslottet per cent 45 55 70 NA
Fornebu per cent 67 68 68 59
Sum from operations per cent 59 60 58 56
Projects per cent 64
Sum waste sorting per cent 59 60 58 56
Amount of waste
tons 2022 2021
2020 2019
Aker Brygge
tons 2 322
1853 1924 2661
Other CBD tons 66
80 38
29
Nydalen
tons 162
134 156 192
Vinslottet tons 116
109 132 NA
Fornebu
tons 436
384 47 63
Sum from operations
tons 3 102
2560 2297 2944
Projects tons
180
Sum waste sorting tons
3 282
2560 2297 2944
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 88
seeks to uphold the marina as a driver and
facilitator of environmentally friendly pleasure
boating.
The interest in the electric marina that was
established last year has continued to grow. In
2022, the group lengthened its contract with
electrical boat hire company Kruser, which is a
membership-based company providing an
electrically powered boat pool. They operate from
eight berths at the Aker Brygge Electric Marina
where members can hire environmentally friendly
and emissions-free boats that neither emit
exhaust nor harmful antifouling.
For several years, Norwegian Property has
collaborated with various projects and initiatives
on waste collection from the fjord, including the
Seabin project which has retrieved 5.5 tonnes of
floating waste at Aker Brygge Marina for the past
four years. However, due to maintenance issues
and difficulties retrieving spare parts, the group
invested in a new waste collector in 2022 –
CollecThor. The technology of waste collecting
from the sea has advanced rapidly and the new
collector can hold up to 16 times the amount of
waste as the Seabin. A report on waste collection
from CollecThor will be available for 2023. In
addition, NPRO established a collaboration with
the foundation “Marinreperatørene” in 2022. The
foundation is granted two berths at Aker Brygge
Marina which is important for their Marine
operations and activities in the Inner Oslo Fjord.
The collaboration is a measure to further expand
our waste collection initiatives, and in 2022, they
collected a total of 670 kg of waste from hard-to-
reach areas alongside the Oslo Fjord.
Biodiversity
The collaboration with the foundation
“Marinreperatørene” is also a measure to
increase biodiversity and marine life. The
foundation has a special emphasis on creating
habitats for red-listed species, species at risk of
going extinct. In 2021, the foundation was
appointed the research assignment of finding a
suitable area for lobster conservation by the City
Council of Oslo. In September 2022, their effort
resulted in an 8.8 km2 conservation area within
the Inner Oslo Fjord. Other efforts include clearing
the fjord of 1,100 kg of Pacific Oysters (an invasive
species in Norway that interrupts other marine
ecosystems), creating a development plan for a
regenerative aquacultural plant that will be put
into operation in 2023 as well as developing new
habitat elements that better adapt to various
kinds of marine life.
On-land Norwegian Property work with
biodiversity through pollination initiatives. At
Fornebu, the company continue to host beehives
where approximately 150,000 bees produced 85
kg of honey last year. To contribute to pollination
and the increase of bees and other endangered
insects the frequency of mowing was reduced to
allow meadows and flowers to grow on all
properties in 2022.
Climate-friendly Park in Nydalen
In 2022, Norwegian Property opened a new
outdoor park constructed with recycled building
materials in Nydalen. The project was a
collaboration with several vendors aiming to gain
knowledge on the circular economy and the reuse
of materials. Through a conscious choice of
solutions, vegetation and reused elements,
Norwegian Property saved the climate and
environment from 60% greenhouse gas emissions
when establishing the park. This corresponds to
100,000 kg of CO
2
equivalents. The impact was
calculated using a life cycle analysis (LCA)
developed by the project supplier Asplan Viak.
The result of the CO
2
figure from the analysis is
then compared with a conventional project to
measure the savings. The aim was to create a
green and accessible outdoor area for tenants,
residents and visitors. The park consists of an
outdoor gym, sculptures and elements decorated
by local artists. Bicycle parking is added to
encourage climate-friendly transportation to the
workplace for tenants.
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 89
Sustainable travel to work
Norwegian Property has concentrated the
composition of its portfolio in three clusters: Aker
Brygge including the CBD, Nydalen and Fornebu,
in addition to Vinslottet (Wine Palace) at Hasle.
The properties are all located close to public
transport. Those in the CBD, Nydalen and Hasle
are located close to bus stops and the metro. The
properties at Fornebu are next to existing bus
stops and to a new stop on the planned metro line
to this area. This provides opportunities for
tenants to take public transport to and from work.
The group also offers cycle parking and cyclist
changing rooms in several of its buildings as well
as charging points for electric bikes.
Investments are also being made in charging
points for electric cars. About 13 per cent of the
parking spaces at Snarøyveien 36 and in Nydalen
are now equipped with these.
BREEAM-in-use
The property Snarøyveien 36 was certified as
BREEAM-in-use Excellent in 2020, and the
Kaibygning 1 and Fondbygget (office) were
BREEAM-in-use certified Very Good in 2021. The
Snarøyveien 30 property is also certified as
BREEAM-in-use Very Good. The process of
certifying 1
st
floor (retail and restaurants) in
Fondbygget started in 2022 and was certified
BREEAM In-Use Very Good in Q1 2023. Both
tenants and investors are paying growing
attention to certified buildings, and Norwegian
Property will continue this work. The target is to
BREEAM in use certify all the properties within
2025. So far, 66 per cent of all office, retail and
restaurant space in the portfolio has been
certified either BREEAM or BREEAM in use.
Sustainability at Aker Brygge
Aker Brygge has been pedestrianised
for many years and this has helped to
make it an attractive area to visit for
the city’s residents and tourists. The
group also pays attention to accessibility for all
groups through universal walkways and snow
clearance.
Since 2017, the group has rented out facilities to
Microgreens, a project which pursues urban
farming and that provides the restaurants at Aker
Brygge with locally sourced sprouts, salads, herbs
and mushrooms. Some of the sprouts are grown
in a stand in the atrium of the Terminalbygget
which is accessible for visitors to see. As a
measure to inspire both tenants and visitors, they
were given the opportunity to have a pop-up shop
in Terminalbygget in 2022.
Social
Meeting places to encourage engagement
Norwegian Property’s vision of
creating meeting places and
relationships which encourage
engagement drives a continuous
commitment to provide secure and accessible
outdoor spaces for tenants and visitors. The
group’s buildings will primarily occupy central
BREEAM in use Office
Retail &
rest.
Total
Fondbygget 12,901 2,664 15,565
Kaibygg 1 20,825 20,825
Snarøyveien 36 40,658 40,658
Snarøyveien 30 144,717 144,717
BREEAM
Termi na lbygget 17,766 17,766
Adm.bygget 8,472 8,472
SUM 245,339 2,664 248,003
Total portfolio 337,606 40,485 378,091
Per cent certified 73 7 66
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 90
locations close to public transport hubs. Efforts in
providing accessible and engaging meeting places
during 2022 include:
ACCESSIBLE ART SPACE FOR EVERYONE AT AKER
BRYGGE
We have a dream/WHAD is a unique travelling art
exhibition by one of Sweden’s leading
photographers, Albert Wiking. The photo
exhibition portrays some of the world’s most
influential people alongside everyday heroes. The
common denominator is that they have used their
voice to create lasting change in society. More
than a hundred activists, peace prize winners,
artists, writers and politicians have chosen to
participate to inspire others to take on their
dreams and visions.
The exhibition at Aker Brygge included the
following portraits: Dalai Lama, Pussy Riot,
Gunhild Stordalen, Marina Abramovic, Quincy
Jones, Annie Lennox, Malala, Alek Wek, Richard
Branson and Ella Marie Hætta Isaksen.
The work has been carried out without support
from organisations and is unaffected by political
ideologies as well as its non-commercial
perspective. Norwegian Property contributed with
exhibition space at Bryggetorget at Aker Brygge in
the summer months of 2022. For the group, this
was an opportunity to create open and inclusive
art experiences for a wide audience which were
outdoor, free and accessible to everyone.
THE “LANGS AKERSELVA” FESTIVAL IN NYDALEN
“Langs Akerselva” is a newly established music
festival in Nydalen, Oslo. The festival is founded to
create awareness and responsibility around an
increasingly precarious and demanding climate
situation. NPRO recognises the concept as an
innovative arena for new sustainable solutions we
seek to be part of.
The festival also has a family and neighbourhood
dimension, and Sunday is, therefore, dedicated to
families. We encourage our tenants and
employees to participate in the festival by making
tickets available and sponsoring the event itself.
“SUMMERPLAY” – FORNEBU, SNARØYVEIEN 30
We want to make our properties available by
offering extra activities of various kinds without
the peculiarity of a commercial approach.
SummerPlay started as a low-threshold offer for
our tenants and nearby neighbourhoods last year.
It was built with climbing frames for children, and
we arranged for catering and various games. In
2022, we laid the foundations for a concept that
we want to keep alive in the future in line with the
development of Snarøyveien 30.
In 2023, the concept will be offered in an
extended form, especially aimed at families with
children.
VINSLOTTET AT HASLE – INVESTING IN THE
NEIGHBOURHOOD
The local shopping mall, Vinslottet, is home to
retail stores and restaurants. As a measure to
create free and accessible meeting places, NPRO
occasionally transforms the mall into a local
community centre for the day or evening. In
November 2022, the company invited local
activities and sports clubs to showcase the many
opportunities for children in the area. Families
were invited to enjoy a free meal and an evening
to get to know their neighbours and the
neighbourhood better. During December, families
were invited to enjoy a free Christmas storytelling
day, including a special visit from Santa.
FJORD OSLO
For the third year in a row, NPRO were a proud
contributor to the free art festival Fjord Oslo.
Fjord Oslo is an outdoor art event accessible to all.
It exhibits light installations alongside the harbour
of Oslo, including Aker Brygge. The festival is an
official green partner of Oslo European Green
Capital and takes measures for the environment,
including encouraging its audience to walk, bike or
use public transportation to get to the festival
area. This year’s exhibition took place in early
November and attracted an audience of 170,000
visitors (Telia CrowdInsight).
The contribution to the festival was part of an
effort to create safe and accessible outdoor areas
for tenants as well as the public.
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 91
Preservation of cultural heritage
Old buildings with historic value are
found at Aker Brygge, in Nydalen and
Vinslottet at Hasle. The group sees
the value of preserving the
architecture and communicating this
history when creating an attractive and engaging
area for visitors and tenants. That target conflicts
from time to time with climate-related goals,
since improving energy efficiency is hard when
windows and facades are old and of lower quality
than today’s standard.
Community Engagement
Norwegian Property is a proud
sponsor of the Zuccarello Classics, a
fundraising event hosted by the
Zuccarello Foundation. The
foundation’s main target is to ensure
that all children and teenagers are given equal
opportunities to participate in sports and physical
activity – regardless of their background,
ethnicity, place of residence or family income.
Sustainability Network
Due to the growing interest from our
tenants regarding sustainability
matters, Norwegian Property
established a network for our tenants
who work with or find an extra
interest in ESG matters. The aim is to create a
bridging of knowledge and exchange of
experience across different industries and add a
valuable network that inspires our tenants on ESG
matters that may lead to the implementation of
measures. The first meeting was held at Aker
Brygge in mid-August.
Targets for social conditions
This encompasses a number of targets which are
in line with Norwegian Property’s base values and
ethical guidelines for both employees and
suppliers.
• No personal injuries under our responsibility
• Responsible supplier management:
- environmental requirements
- responsible employment/employment
contracts,
- StartBANK membership for suppliers
- requirements for the use of apprentices
• Emphasise diversity in new hires
• Absence target for employees within 3%
Human rights and the Transparency Act
Human rights and decent working conditions
Norwegian Property has very clear guidelines for
human rights and decent working conditions.
Norwegian Property supports and respects
international human rights. Respect for the
individual represents a fundamental guideline for
the group. Norwegian Property follows
established working life standards and complies
with all the requirements laid down in the
relevant legislation. Norwegian Property strives
for working methods that ensure good working
conditions with high requirements for health,
environment and safety. Children will not be used
as workers if it can harm their education or
development. When offering job opportunities to
young people, this must be done within the
requirements of the Working Requirement Act.
No use will be made of forced labour.
Good working conditions
Norwegian Property is an expertise-driven
organisation and aims to be an attractive
employer where employees thrive. Active
provision will be made for further developing
personnel in order to collectively form a leading
professional team in the Norwegian property
sector. When recruiting staff, emphasis is put on
combining professional expertise and experience
in the property sector, while ensuring that
personal qualities contribute to a proactive and
efficient organisation.
TRAINING AND EDUCATION
Continuous efforts are devoted to knowledge
development in the form of tailored training so
that each employee can fully master their job and
develop in step with the changing requirements.
Employees are encouraged to participate in
courses and seminars that are relevant to their
work tasks. Backed by individual development
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 92
plans, employee progress and training
requirements are followed up through job reviews
and continuously during the year. Based on goals
for personal development, employees can apply
for financial support to pursue further or
continuing education. In 2022, one employee
benefited from this arrangement.
Contributions to a good working environment are
also sought through attractive premises, a
dynamic workplace and challenging assignments.
EMPLOYEE SATISFACTION SURVEY
Norwegian Property conducts bi-weekly employee
satisfaction surveys to determine how employees
regard the group as a workplace and to identify
the possible areas for development. The survey
has been ongoing among all the employees since
late 2019. The response rate for 2022 was 77.63
per cent, which is considered good. The results
show that job satisfaction is high, 8.3 out of 10 for
the organisation as a whole. Areas with the lowest
score are workload at 7.2 and internal information
flow at 7.5, but all the categories are still above
the general indexes. Autonomy and leadership
have the best scores both of which are at 8.6.
HSE
Norwegian Property observes the established
standards of working life, and it will comply with
all the requirements enshrined in the relevant
legislation. The group seeks to apply working
methods which ensure good working conditions
along with high standards of HSE. Day-to-day
operations take account of HSE considerations,
which are important for Norwegian Property
because the group is dependent on maintaining
high standards for the health and well-being of its
employees in order to succeed. Its strategy
involves zero tolerance for serious personal
injuries suffered in relation to Norwegian
Property’s properties and areas of responsibility.
One occupational accident that resulted in sick
leave took place in 2022. This has been followed
up on according to internal routines and legal
requirements.
Sickness absence is an important HSE indicator.
The total recorded for 2022 at Norwegian
Property was 3.1 per cent, while the target in the
group’s strategy is three per cent. With a
relatively low number of employees, however,
long-term sick leave will necessarily influence the
absence rate. Efforts to reduce sickness absence
include financial support for employees to
exercise and have massages, the possibility to
exercise during working hours as well as health
insurance and physiotherapy sessions to address
their seated posture. Opportunities for employees
to participate in determining their own working
day form part of HSE work. The practical follow-up
is conducted through the working environment
committee (AMU), where the representatives of
employees and management meet. The AMU
deals with current working environment issues
and future plans which could have substantial
significance for the working environment and so
forth.
The Transparency Act
In accordance with the Transparency Act that
entered into force on 1 July 2022, Norwegian
Property has taken measures to prevent and
mitigate any actual, or the risk of, adverse impacts
on human rights or decent working conditions in
the group’s operations, supply chain and other
business relationships. Measures have been taken
to cease, prevent and mitigate any such adverse
impacts. This includes mapping the company's
supply chain, establishing ethical guidelines for
suppliers and updating the purchasing routines as
well as supplier contracts and routines for
whistleblowing. Responsibility for follow-up is
delegated across relevant departments within the
group, and all the measures have been approved
by both the executive management and the
board; thus, accountability is embedded as per
the OECD guidelines.
As a property group with all its activities in
Norway, Norwegian Property does not face the
greatest human rights challenges in its everyday
operations. However, the suppliers it uses could
be subject to challenges, in part related to social
dumping. In the construction industry, the latter
could be associated with economic migrants
whose wages and employment conditions are
significantly worse than for national workers. The
greatest opportunities for Norwegian Property to
promote and respect human rights and help
prevent human rights abuses accordingly can be
found in being a responsible purchaser of goods
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 93
and services. Through its ethical guidelines and by
acting as a responsible purchaser, the group seeks
to ensure that suppliers apply key principles which
accord with those of Norwegian Property.
ANNUAL PROCESSES
Accountability with the board:
The board has adopted an annual plan to follow
up on the activity and reporting obligation that
follows from the Transparency Act. The annual
plan includes tasks such as risk assessment of the
supply chain, the proposal of measures to reduce
risk and evaluation of measures. The board will
receive reports annually on the results of the
activities and risk assessments. The CEO places
the responsibility to follow up on tasks relating to
the Transparency Act within the organisation.
Guidelines and internal communication:
Ethical guidelines and CSR guidelines are reviewed
and updated by the board on an annual basis.
Ethical guideline for suppliers was established in
2022 and purchasing routines, supplier contracts
and routines for whistleblowing were updated. All
employees are informed through an all-hands
meeting and an annual web-based review of the
ethical guidelines is distributed to all employees
to sign.
Systems for handling the obligation to provide
information:
An e-mail address published on the company
website is set up as a channel to receive enquiries
on information regarding the Transparency act.
Such enquiries will be distributed to the
sustainability department. The sustainability
department has the overall responsibility to keep
an overview of the routines, instructions and
guidelines and can collect the necessary statistics
or information required from the relevant
departments to conduct a reply. A reply must be
given within three weeks.
Mapping the supply chain:
To map the supply chain, a list consisting of
suppliers that have invoiced Norwegian Property
for the past two years is compiled. The suppliers
are then divided into industry categories, the
amount and the number of times they have
invoiced the group in order to get an overview of
the main suppliers and outline where the
company has substantial buying power.
Risk analysis:
A due diligence assessment of the group’s supply
chain is done by compiling knowledge of the
industries Norwegian Property buys its goods or
services. The company contacts various unions
related to the industries, Amnesty International,
the Norwegian Labour Inspection Authority and
other relevant organisations to map which
industries have the greatest risk of violation of
human rights and decent working conditions. This
forms the basis for priorities and gives an
understanding of how the company can cease,
prevent or mitigate any such risks.
The conclusion of the risk assessment was that,
since Norwegian Property operates in Norway, the
company is most likely not exposed to a very high
risk of violations of human rights or decent
working conditions. However, some of the
suppliers have employees with low education and
often with foreign origins and, therefore they are
not very familiar with Norwegian working
conditions. There are also examples of social
dumping in the construction industry. Norwegian
Property has, therefore, focused on measures for
suppliers within these industries.
Measures:
A law firm was engaged in conducting the
company’s ethical guidelines for suppliers and
supplier contracts to ensure all the relevant
legislation was in place and substantial enough to
guarantee the right to act if any occurrence of
violations of human rights or decent working
conditions is uncovered. In addition, buying
routines now include requirements that all
relevant suppliers are members of StartBANK– a
community developed by The Norwegian
Construction Industry Association (BNL) to meet
the increase in legislation and risk management
needs of construction and facility management
clients in Norway. The Sustainability department
in collaboration with the finance, KFDV and
development departments reviewed the
purchasing routines and divided responsibility to
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 94
follow up to ensure that memberships are in
place. KFDV is responsible for requesting
memberships when ordering goods or services,
and the finance and sustainability departments
are responsible for annual check-ups of suppliers
who have invoiced the company. By the end of Q1
2023, a total of 141 suppliers have committed to
the company’s ethical guidelines for suppliers and
a total of 296 suppliers are a member of
StartBANK.
Evaluation:
The relevant KPIs for measuring risks will be any
possible incidents and the number of times the
company may be given notice of breaches or
violations of human rights and decent working
conditions. The board in collaboration with the
management group must consider how to resolve
or possibly provide compensation if such risks
have occurred. If necessary, the company will
seek advice from advisers such as auditors or
lawyers. The company will conduct annual due
diligence assessments mapping the supply chain.
An overview of the risks will be obtained through
articles in the media, and input from
organisations, authorities and other relevant
sources. In addition, Norwegian Property will
assess best practices for the property industry and
how other large companies work to comply with
The Transparency Act.
No breach of human rights or decent working
conditions within Norwegian Property or its
supply chain was found in 2022.
The Equality and Anti-Discrimination Act
In accordance with the Equality and
Anti-Discrimination Act, Norwegian
Property has taken measures to
prevent and mitigate any actual, or
the risk, of discrimination. Where equal
opportunities and inclusion are concerned, efforts
are made to ensure that all employees receive the
same opportunities for personal and professional
development. New and existing personnel will be
treated equally regardless of their gender, age,
ethnic origin or possible disabilities. The group
does not accept any form of discrimination –
based on gender, pregnancy, parental leave, care
responsibilities, ethnicity, religion, philosophy of
life, disability, sexual orientation, gender identity
or gender expression.
Uncovering the risk of discrimination or other
obstacles to equality
The group invited employees to participate in the
activity and accountability committee (ARP-
utvalget) where the risk of discrimination or
violation of equality was mapped. The committee
had a meeting in the first half of the year with the
aim of identifying risks in all business operations.
This includes matters such as recruitment, pay
and working conditions, promotional and
development opportunities, efforts to facilitate
different needs, work-life balance, harassment,
sexual harassment, and gender-based violence.
The committee had representatives from HR,
sustainability department and market
department. The results of this risk assessment
were presented to the management team.
Reasons for identified risks
The results of the risk assessment were mainly
linked to the real estate industry being male-
dominated, and this is reflected a certain extent in
the figures for the number of women and men
among the employees.
Actions to prevent discrimination in 2022
Guidelines for CSR clearly state that the group
does not accept any form of discrimination –
based on gender, pregnancy, parental leave, care
responsibilities, ethnicity, religion, philosophy of
life, disability, sexual orientation, gender identity
or gender expression. All employees must review
the guidelines annually.
RECRUITMENT
In recruitment processes, diversity is encouraged
from top management. For example, this was
expressed in the review of the guidelines which all
employees had to complete.
SALARIES AND DEVELOPMENT
OPPORTUNITIES/TRAINING
Low-wage workers were given new tasks in 2022
to develop their competence and increase their
wages.
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 95
PROMOTIONS
Both female and male employees were given new
opportunities and promotions within the
organisation in 2022/first quarter 2023.
FACILITATION
Norwegian Property has adapted, among other
things, wardrobe facilities to recruit women to
male-dominated positions.
WORK-LIFE BALANCE
The company is clear on equal rights when it
comes to maternity/paternity leave and also gives
flexibility to work from home, if needed, which
contributes to a good work-life balance.
Equality statistics
The construction and property sectors are male-
dominated, which creates some challenges for
efforts to increase the female proportion in
certain posts. The group had 61 employees on 31
December 2022, compared with 57 a year earlier.
In total, that gives us 4 new employees in addition
to 1 employee who got promoted throughout
2022. Thirty nine of the group’s 61 employees are
male and 22 are female. Two of the females work
part-time. The executive management comprised
seven people as of 31 December 2022, including
one woman. The annual salary in 2022 excluding
the executive management team specified in the
annual accounts averaged NOK 858,020 for men
and NOK 703,003 for women. Maternity leave in
2022 amounted to 1.16 man-years in total for
three women, in addition to one man who had
0.21 man-years of paternity leave. Two females
are employed part-time. A total of 57.07 man-
years were performed in the group during 2022,
down from 61 in 2021.
On the date when the financial statements were
presented, the board comprised five directors –
three male and two female.
Governance
Combating corruption
Norwegian Property wants fair and open
competition in all markets, sets high standards of
personal and professional integrity, and does not
tolerate any form of corruption or bribery. Efforts
to combat corruption are pursued first and
foremost through the group’s work as a
responsible investor and owner, as a responsible
buyer and through implementing and following up
on ethical guidelines.
Norwegian Property personnel must not accept or
make gifts which could affect their own integrity
or decisions or those of others, or which could be
perceived to do so. Norwegian Property’s
employees must not work on behalf of the group
on matters where they have personal interests, or
where others could perceive such interests.
PROCUREMENT ROUTINES
Norwegian Property has prepared detailed
processes for procurement covering the whole
process from identifying a need to implementing a
purchase. They involve documented processes
and work-sharing intended to help limit
opportunities for corruption in connection with
procurement.
Suppliers are also required to have ethical
standards and attitudes comparable with those of
Norwegian Property. These companies represent
the group and, therefore, they must communicate
its core values. The following minimum standards
are set for suppliers and possible sub-suppliers:
• financial strength and the capacity to deliver
• a good history of compliance with the legal
requirements (business conduct, no use of
unregistered workers and so forth)
• satisfy requirements for health, safety and
the environment (HSE), internal control and
so forth
• commit to NPRO’s ethical guidelines for
suppliers
• membership of the StartBANK register for
suppliers, where relevant.
StartBANK is a joint supplier register used by
purchasers in Norway’s construction, public
administration, insurance and property sectors to
support serious suppliers and provide updated
and checked supplier information. With 8,200
suppliers evaluated on the basis of predetermined
approval criteria, StartBANK provides an
equitable, open and secure solution for selecting
reliable suppliers. This gives suppliers the
opportunity to compete on equal terms,
Annual report 2022 - Norwegian Property ASA
Sustainability report Page 96
contributes to the use of serious players and
creates new business opportunities for both
purchasers and suppliers. StartBANK is being
continuously developed to meet the increasingly
demanding legal guidelines and requirements for
risk management in the construction industry.
Norwegian Property found no evidence of fraud,
corruption or attempted corruption in its business
during 2022.
Prevent sanctions and money laundering
The company has conducted a risk assessment in
2022 of the tenant base in order to uncover the
risk that any of the tenants would be on a
sanction list in Norway, the EU, the US or the UN.
No such incidents were uncovered.
The real estate industry may be susceptible to
money laundering. This is not accepted in NPRO,
and we work with serious parties in both rental
relationships and property transactions.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 97
Risk and risk management
The group has reviewed the risks and opportunities which it is exposed to. The results of this review are
presented in the table below.
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
Financial conditions
Responsible: CFO
1. Fair-value changes for
the properties
ONGOING
The fair value of the
properties is crucial for the
group’s balance sheet
The strategy is to own
high-quality properties
centrally located in
selected clusters in Oslo.
Four value drivers have
been identified and
form the basis for
continuous work:
• letting
• management
• transactions
and finance
• development.
The share of the
portfolio under
development will
represent about five to
15 per cent of the space
over time.
The asset value of office
properties in Oslo
decreased slightly during
2022, mostly due to rising
interest rates. Low vacancy
(particularly in the CBD),
and rising inflation have
contributed to a good
market.
2. Interest-rate risk
ONGOING
Interest charges represent
a large proportion of the
group’s total costs.
Interest-rate changes will,
therefore, affect both
profits and liquidity.
Policy of fixed interest
rates on more than 50
per cent contributes to
predictability for the
interest-rate costs.
A sensible LTV ratio (45-
55 per cent) helps to
reduce the risk of very
high costs related to
possible interest-rate
increases.
Market interest rates
increased in 2022, and
there are indications that
they will continue to rise
because of higher inflation.
At the beginning of 2022,
the 10-year interest rate
was 1.9 per cent. It reached
3.3 per cent at the end of
December.
The hedging ratio in 2022
was approximately 70 per
cent, which helped to
reduce the risk to future
cash flow.
3. Access to external capital
ONGOING
Refinancing risk is the risk
that insufficient capital will
The strategy for
reducing risk associated
with refinancing is to
use various financing
Access to external capital
was quite good in the first
half of 2022, but in the
second half, both bond
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 98
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
be available when loans
expire.
Compliance with
covenants/terms is
important, and these must
be sufficiently tightly
drawn to secure financing
but also sufficiently
flexible to give the group
freedom of action.
The group’s main funding
source has changed from
bank loans to bonds in
recent years. The
refinancing risk in the
bond market could be
viewed as higher than in
the bank market.
sources, raise loans with
long terms and spread
their maturity structure.
Norwegian Property
seeks to have fixed and
predictable loan terms
which give it adequate
freedom of action.
Maintaining good
relations with the main
banks is important for
reducing the refinancing
risk.
The group was given an
official credit rating of
BBB- from Scope during
first half of 2022.
investors and banks were
more reluctant to lend, and
the margins increased.
Focus on good banking
relationships and diversified
funding sources were
important.
In 2022, a new bank
relationship was
established, resulting in a
loan in Q4 2002
Credit risk
Responsible: CFO
1. Risk of rental income loss
ONGOING
Leases are generally long
term and awarded for
several years at a time.
The risk exists that the
tenant could go bankrupt
during the tenancy period,
and that both income and
investments in the
premises could be lost.
All tenants must provide
a deposit or guarantee
for three to six months
of rent, and routines are
in place for approving
the financial institutions
which are to provide
guarantees.
Tenants are credit-
assessed at the
awarding of the lease,
and the total tenancy
costs as a share of total
turnover are analysed.
Extending a lease
beyond its term would
not be relevant for some
tenants, and some
leases could be
terminated early if the
rent is not paid.
No significant leases were
terminated because of
bankruptcy in 2022.
Generally speaking, the
number of bankruptcies is
growing in the retail and
restaurant sector owing to
the effects of the pandemic.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 99
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
Liquidity risk
Responsible: CFO
1. Risk associated with
refinancing debt and
access to external capital
ONGOING RISK
Property is a capital-
intensive sector, and
refinancing loans is a
continuous risk.
The group seeks to
reduce its refinancing
risk by:
- diversity of financing
sources
- lowest possible
instalments
- LTV at 45-55 per cent
- spread maturity
profile
- long loans
- RCF to cover part of
bonds maturing over
the next 12 months.
Liquidity in the capital
market was limited,
particularly in the second
half of 2022, and both
interest rates and margins
were rising.
However, in Q4 2022, the
company established two
new bank facilities.
2. Risk of delayed rent
payments
ONGOING RISK
Rents are paid quarterly in
advance. Interest on loans
usually falls due right after
rent payments. Were a big
share of rents to be
delayed, the ability to
service interest payments
and possible instalments
on debt could be at risk.
Reminders are issued
continuously.
The group will have
spare liquidity in the
form of NOK 300 million
in cash plus undrawn
credit and/or overdraft
facilities at any given
time.
Delayed payments,
particularly in the retail and
restaurant sectors, have
been one effect of the
lockdowns imposed to
combat COVID-19. The
revenue-based rental
income is slowly increasing
as tenants recover from the
lockdowns.
Market risk
Responsible: marketing vice
president
1. Changes in market rents
ONGOING RISK
When awarding new or
extending existing leases,
the market conditions at
the negotiation date
present a risk.
Opportunity: Market rents
are expected to increase
at Fornebu with the
completion of the new
metro line around 2027.
The strategy is to own
high-quality properties
centrally located close
to public transport hubs.
Attractive areas will
maintain high market
rents for longer than
properties in more
peripheral areas.
After the acquisition of
Snarøyveien 30, focus is
related to a long term
strategy for the property
The letting market was
good in 2022, and the
group achieved good rents
when the leases expired. It
is finding that the demand
for premises is particularly
good in Oslo’s CBD.
Construction of the new
metro to Fornebu started in
2020 and plans call for it to
be finished in 2029.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 100
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
Vacancy in the portfolio
ONGOING RISK
The property sector is
exposed to competition.
The risk of being unable to
let the buildings is higher
in an economic downturn.
New tenants often involve
higher costs than
extending the existing
leases.
The strategy is to own
high-quality properties
with central locations.
Attractive properties are
easier to let and also
have lower vacancy.
A good operations
organisation gives
tenants good service
and helps to enhance
their loyalty.
A competent marketing
team with experienced
personnel works on
letting.
The group has converted
several single-user
buildings to multi-user,
thereby reducing the
risk of large single-user
buildings remaining
vacant.
Expanded the Business
Village concept to cover
many categories of
tenants, increasing
flexibility in terms of
duration and size.
Norwegian Property is
seeking to achieve a
spread of lease expiries
and a differentiated
body of tenants.
The letting market was very
good in 2022. Norwegian
Property experienced
growth in all its core areas.
Good demand for the
group’s Business Village
concept.
The portfolio now has
fewer single-user buildings
which risk being left vacant
in the near future. The
vacancy has increased in
Nydalen, but it has
decreased in other areas
during 2022. In the next
years to come, rather few
rental contracts will
mature, so even if the
economy may show some
signs of cooling down the
effect on vacancy for the
group will be limited.
Turnover-based rents
ONGOING RISK
A number of the shops and
restaurants at Aker Brygge
have turnover-based
rents. This means that
rental income fluctuates
with sales by the tenants.
The challenges affecting
retail could result in lower
rents for shop premises.
The Aker Brygge quarter
actively develops and
markets the area to
attract customers.
Continuous efforts are
made to find the right
mix of tenants at Aker
Brygge who will attract
the greatest number of
visitors and increase
turnover. A relatively
high proportion of
In 2022, the group received
turnover-based rents for
the first time since the
COVID-19 lockdowns
started. The activity has
returned to pre-COVID-19
levels.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 101
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
restaurants makes Aker
Brygge less vulnerable
to competition from
online shopping, for
example.
Moreover, Norwegian
Property has leases
where minimum rents
are at good levels.
2. Inflation
ONGOING RISK
Most leases (99 per cent)
have full CPI adjustment.
This is regarded as an
opportunity to increase
income as the CPI rises.
All new leases awarded
in 2021 have full CPI
adjustment.
Inflation in 2022 was 7.4
per cent, which is high
compared to the level
aimed at by Norges Bank.
However, most leases in the
portfolio were adjusted
according to the 3.5 per
cent October CPI.
Project risk
Responsible: project and
marketing vice presidents
1. Uncertainty over the
future occupancy rate
WITHIN THREE-FIVE YEARS
When launching a
construction project, it is
unclear what the letting
market will look like at
completion.
The group does not
launch major projects
without having secured
a certain number of
leases for the completed
building.
One refurbishment project
was initiated in 2022 in
Gjerdrums vei 17, as well as
one major tenant
adaptation project in parts
of Snarøyveien 36.
The letting market
developed positively during
2021.
2. Cost overruns
WITHIN THREE-FIVE YEARS
Big projects will often have
an element of uncertainty
related to costs for both
procurement and design.
Through the pandemic,
the cost of raw materials
has risen, and in turn
increased the construction
cost.
The group makes
maximum possible use
of turnkey contracts for
its projects.
No large projects were
under way in 2022.
The construction costs
increased in 2021. Still no
signs of lower costs in 2022.
There are signs of flattening
with the possibility of lower
construction costs in the
future.
3. Delays
WITHIN THREE-FIVE YEARS
Project management is
important and is
followed up on by a
competent team.
No large projects were
started or ongoing in 2022.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 102
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
Late delivery carries a cost
in reduced income and
possible compensation.
Progress and capacity in
planning processes is an
increasing challenge in the
City of Oslo.
Turnkey contracts
reduce risk for the
group.
Challenges related to
zoning and infrastructure
demands might affect
progress and/or strategy for
development projects in
Nydalen.
4. Accidents
ONGOING RISK
The threat of project-
related accidents is
present, and in the worst
case could cause injury to
people. Material damage
could also impose costs on
the group.
Serious efforts are
devoted to HSE in every
project run by
Norwegian Property.
No large projects were
started or ongoing in 2022.
5. Demolition and recycling
ONGOING RISK, RISING
The latest trend is tougher
requirements for recycling
building materials.
Norwegian Property
expects it to become
harder to get permission
to demolish the existing
buildings.
Demolition will also get
more expensive down the
road because greater care
and accuracy will be
needed so that materials
can be recycled.
Norwegian Property is
making soundings for
major renovations in
order to see how these
can be implemented
cost-effectively in future
projects.
In collaboration with
new and existing
tenants, the group will
find solutions for re-
using materials, and rent
out premises with just
the necessary
adjustments. Where
tenant adaptations and
minor projects are
concerned, profitability
calculations are made in
each individual case.
This trend attracted
continued attention during
2022 and is likely to
increase.
A separate market for the
sale of recycled materials is
being established. Public
requirements and
regulations will most
probably be adapted to this
market in the future. The
circular economy will also
be implemented as one of
the targets in the EU
taxonomy.
Social and governance risk
Responsible: CEO and CFO
1. Risk of human rights
violations and decent
working conditions
ONGOING RISK
As a property group with
all its activities in Norway,
Norwegian Property does
not face the greatest
human rights challenges in
its everyday operations.
NPRO is seeking to be a
responsible purchaser of
goods and services.
Through its ethical
guidelines and by acting
as a responsible
purchaser, the group
seeks to ensure that
The Transparency Act was
passed in 2021 and took
effect from July 2022.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 103
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
However, the suppliers it
uses could be subject to
challenges, in part related
to social dumping. In the
construction industry, the
latter could be associated
with economic migrants
whose wages and
employment conditions
are significantly worse
than for national workers.
suppliers apply key
principles which accord
with those of Norwegian
Property.
Work is being done to
make expectations and
requirements towards
suppliers even more
explicit.
2. Equality and non-
discrimination among
employees.
ONGOING RISK:
In the construction
industry and in the real
estate industry, there is a
clear predominance of
male employees.
It is usually women who
work involuntarily part-
time in Norway, and there
are also generally lower
average wages for women
than for men.
Norwegian Property’s
ethical guidelines clearly
states that
discrimination is not
accepted.
All employees have to
go through the ethical
guidelines annually.
Most employees are
working full-time in
Norwegian Property, but
for those who want
part-time work, this has
been accepted.
The salary level for all
employees will be
reviewed, and
opportunities for skills
development and new
work tasks that can raise
salaries will be
considered for those
with low wages.
The Transparency Act was
passed in 2021 and took
effect from July 2022.
3. Non-discrimination of
people with disabilities
in properties and out-
door areas.
ONGOING RISK:
The focus is increasing on
the rights of people with
disabilities. There is a risk
that the reputation of the
company will be damaged
if it does not meet the
requirements for the
Universal design of the
buildings.
When doing
refurbishments of
buildings, the company
complies with the
Norwegian law and
requirements regarding
Universal design.
The media has run several
stories about the
discrimination of people
with disabilities.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 104
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
4. Risk of corruption
Corruption can be
devastating to the
company's finances and
operations.
NPRO aims to be a
responsible buyer and
investor. Ethical
guidelines that are made
known to all employees
contain rules to combat
corruption.
Climate risk
Responsible: project and
operations vice presidents,
CFO
A. Physical risk
1. Increased precipitation
ONGOING RISK, RISING
TOWARDS 2030
Rising precipitation will
lead to increased flooding
problems and a greater
risk of leaks. Facades will
become more vulnerable
since driving rain affects
more than just roofs.
This will also increase the
water levels in rivers,
which can flood cellars and
ground floors in nearby
buildings.
Norwegian Property
chooses materials and
solutions for
maintenance which will
be sustainable and
durable.
Attention paid to climate
risk increased in 2022.
A greater threat of flooding
from an anticipated
increase in precipitation has
led to stricter government
standards for construction
projects as well as
discussions on insurance
cost and coverage.
2. Higher sea level
WITHIN 20-30 YEARS
Properties at Aker Brygge
will be vulnerable in the
long term if the sea level
rises significantly as a
result of climate change.
According to the
Norwegian Mapping
Authority, the sea level
will rise 46 cm around
Aker Brygge. That will
not be critical for the
properties there.
These expectations did not
change in 2022.
B. Transition risk
1. Demand for
environmentally-friendly
premises
Tenants are seeking
energy-efficiency,
environmentally-friendly
solutions and certified
buildings. Some also want
information on material
choices. Tenants differ in
their requirements. Major
Norwegian Property
works to establish
energy-efficient
solutions in its buildings
and to convert to as
much clean energy as
possible. The seawater
pump at Aker Brygge,
The risk did not change
markedly in 2022. Large
tenants demand this in
their specifications.
The risk is expected to
increase.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 105
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
and international
customers are particularly
concerned about this.
Norwegian Property’s
property portfolio includes
several old buildings which
are listed as worthy of
preservation. There are
limits on how many
energy-efficiency
measures can be
implemented and which
ones. These buildings may,
therefore, become less
attractive in the future.
This could also be looked
upon as an opportunity
because tenants will be
positive insigning green
leases which will enable
Norwegian Property to
make investments in
properties which would
otherwise not be
affordable.
for example, is
important in reducing
CO
2
e emissions there.
Buildings are to be
certified to BREEAM or
BREEAM-in-use within
2025.
During 2022, the group
completed its BREEAM-
in-use certification as
Very Good of retail
premises of Kaibygning
1 and Fondbygget at
Aker Brygge.
Green leases mean that,
if an investment in
energy efficiency
measures lowers the
energy cost for tenants,
the capex will be
covered by increased
rent equal to the
reduced energy cost.
Green actions, such as
urban farming at Aker
Brygge and a green wall
of flowers, are measures
which have become
profitable because of
the positive interest
from tenants and
visitors.
2. Environmental
requirements from
investors
PRESENT, EXPECTED TO
RISE TOWARDS 2030
Investors in both bonds
and shares want more
information on climate
risk. Green bonds could
provide a broader investor
base and perhaps lower
financing costs than
normal bonds.
Norwegian Property
reports to the CDP,
produces an annual
climate report available
on its website and is
open about its
environmental strategy.
During 2021, the group
established a framework
for green bonds and
issued its first green
bond. In 2022 the
company presented its
first green bond report
The attention paid by the
financial community to
environmental
requirements as well as to
sustainability in general
continued to increase,
largely because of the EU
taxonomy. Some investors
have stated that they only
want to invest in green
loans.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 106
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
related to the
outstanding loan.
3. Environmental
requirements from
banks
PRESENT, EXPECTED TO
RISE TOWARDS 2030
Requirements for
reporting and climate
adaptations are growing.
Climate risk will probably
be linked more strongly to
loan terms and access to
financing. Growing offers
of green bank loans.
Norwegian Property
reports to the CDP,
produces an annual
climate report available
on its website and is
open about its
environmental strategy.
During 2021, the group
established a framework
for green bonds.
Norwegian Property will
also report directly to
each bank the required
information, such as
energy consumption or
energy label for each
property.
The banks have shown
growing interest in the
environment during 2022,
and the group sees that this
is beginning to provide
opportunities to reduce the
financing costs for green
purposes, but also risks if
the company does not have
a strategy in place to meet
the new requirements. The
banks are preparing to
report according to the EU
taxonomy and request
more climate related
information about the
properties they finance
than before.
4. Insurance
FUTURE
Growing damage to
property from increased
precipitation and more
extreme weather could
lead to higher insurance
premiums.
Norwegian Property
works continuously to
maintain its buildings
and selects good-quality
materials for this.
No developments occurred
in this area during 2022.
5. Technological risk
PRESENT
Failing to update solutions
for energy efficiency or
adapt to tomorrow’s
solutions today could
leave Norwegian Property
with an outdated building
inventory where
regulatory changes, bank
lending terms and
customer demand could
have a negative impact on
the group.
New technological
solutions, such as the
internet of things (IoT)
represent an opportunity
Norwegian Property’s
strategy is that all new
buildings will be
certified to BREEAM
Excellent as a minimum.
Older buildings will be
renovated when tenants
change, with modern
and cost-effective
technical solutions being
chosen.
An IoT project was
introduced in 2020 and
continued in 2021. This
will look at how the use
of sensor technology in
existing buildings can
boost operational and
energy efficiency. The
Technology is constantly
developing, including for
the property sector. The
trend with a growing
number of new property
technology companies
continued in 2022. New
solutions are also coming
for more climate-friendly
building materials and
products, such as concrete.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 107
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
for enhanced energy
efficiency and cost cuts.
aim is to be at the
forefront in terms of
technological risk for the
existing building stock.
6. Reputational risk
ONGOING RISK, RISING
TOWARDS 2030
Being perceived as a
reputable and by all means
assertive player on the
environment and the
climate will be important
in the future. That applies
both in relation to
investors and with an eye
to recruitment.
This image will influence
how attractive tenants
find it to choose Aker
Brygge.
Norwegian Property has
established a
sustainability strategy
which aims to meet the
requirements and
expectations of society.
Tenants are being more
involved in sustainability
thinking such as reuse of
building materials,
waste sorting and
energy efficiency efforts.
Given the increased
attention paid to the
climate by society at large
during 2022, reputational
risk increased over the year.
An increased number of
tenants show interest in
how they may contribute to
reduce carbon emissions.
Many tenants also ask for
input to their own climate
reporting.
7. Increased CO
2
taxes
FUTURE RISK
This relates to energy
prices and waste handling.
Considered high risk in
probability, but low risk
since the cost affects the
group indirectly.
Waste and energy prices
are passed to the
tenant, but the group is
working to reduce
discharges/emissions
because this could affect
how attractive the
buildings become.
The Norwegian government
has recently presented a
plan for increased taxes on
carbon emissions.
C. Regulatory risk
1. Government
requirements and
permits
ONGOING RISK, RISING
TOWARDS 2030
As society adapts to
climate change, official
demands for energy
consumption, building
standards, traffic,
infrastructure and the
development of
drains/sewers are likely to
call for higher taxes,
including on property.
There is increasing
pressure from politicians
and local authorities to
Norwegian Property
adapts to the laws and
regulations in force at
any given time, and
applicable building
standards are observed
in the projects. Where
new projects are
concerned, the goal is to
achieve BREEAM
Excellent certification.
Most leases contain
clauses that the tenant
pays the property tax.
No major property tax
changes during 2020.
The government decided to
increase taxes on carbon
emissions in 2020, and this
will probably affect energy
costs in the future. No
further changes in 2022.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 108
Risk/opportunity and the
responsible executive
Description and timing
Strategy/measures
Changes to developments
in 2022
impose stricter
requirements in regulation
etc. to reach the overall
climate goals.
2. Car-free city
ONGOING RISK
Aker Brygge is right on the
edge of the car-free zone
in Oslo, and the multi-
storey car park can still be
accessed. However, there
is no guarantee that the
zone will not be expanded.
Access to the multi-
storey car park is an
advantage for those
who work in Aker
Brygge and for those
visiting in their free
time.
However, the outdoor
areas in Aker Brygge
have been
pedestrianised for many
years, which helps to
make it an attractive
place to visit for shop
and restaurant
customers. Norwegian
Property has worked to
ensure that a growing
number of visitors will
come from the
immediate vicinity,
which helps to reduce
the vulnerability of
reaching Aker Brygge by
car.
The focus on car-free zones
in Oslo is increasing. The
city council is working on a
proposal to establish zones
where fossil-fuel cars are
banned.
Annual report 2022 - Norwegian Property ASA
Risk and risk management Page 109
Changes in the way of work
putting pressure on the
existing business model
Description and timing
Strategy/measures
Changes to
developments in 2022
The way of work is changing
and introducing risk to the
established conventional
business model as
companies have greater
uncertainty of their office
needs, hence demanding
more flexibility in their
leases.
The COVID-19 pandemic
forced increased
investments in digital
collaboration solutions as
companies were forced to
operate with a dispersed
workforce confined to
their homes.
As a result, most
companies are now able to
operate without all the
employees having to go to
an office, and employees
have gotten used to the
flexibility of choosing
where to work.
During 2022, most
countries are now open
and the “return to the
office” has happened.
Companies now choose
different strategies in
terms of flexibility for their
employees ranging from
100% in the office to 100%
autonomy for the
employee if they want to
work from home or the
office.
Most companies want
their employees to come
to the office and are
putting more emphasis on
the work environment in
the office. Higher quality
offices, more collaboration
space, office as a meeting
arena as well as
demanding more services
in the office.
NPRO is already operating
one serviced office and is
well positioned to grow
and integrate this offering
throughout the portfolio.
Flexibility from a business
model and physical
building aspect is being
evaluated and tested
throughout 2023.
More services are being
implemented either
directly from NPRO or
through third parties in
2023 and forward.
Technology is being tested
to effectively manage
flexibility and services fully
automated.
Focus on the design and
look and feel of common
areas are being evaluated
for all the relevant
buildings, and the company
is looking at the
standardisation of office
space with high and
environmentally friendly
quality that will be
introduced in areas
dedicated to flexibility.
The market is still
adapting to the changes
caused by COVID-19 in
the way of work.
It is expected that more
knowledge of
companies’ demands
regarding offices and
how they will use them
will emerge in the
coming years.
Operationally, it is
expected that tenants
will demand more from
their landlords, meaning
that landlords will need
to have a close look at
how to further develop
the business model and
operations.
However, the market is
still highly driven by the
traditional conventional
leases, but with more
focus on flexibility and
services on top than
before.
Annual report 2022 - Norwegian Property ASA
Presentation of the directors Page 110
Presentation of the directors
The board of Norwegian Property ASA comprised
the following directors as at 31 December 2022.
Bjørn Henningsen (chair)
Mr Bjørn Henningsen (born 1962), director since
10 October 2014, has an MSc in economics from
Heriot-Watt University and is a partner in Union
Gruppen AS, which he helped establish in 2005.
Henningsen has very long and broad experience in
real estate investment and development, banking
and finance. He was previously finance director
and managing director of Investra ASA, and he
also has extensive experience from banks and
financial institutions. Henningsen is director of
numerous companies in the Union group.
Cecilie Astrup Fredriksen (director)
Cecilie Astrup Fredriksen (born 1983), director
since 10 October 2014, obtained a BA in business
and Spanish from London Metropolitan University
in 2006. She is currently employed in Seatankers
Services (UK) LLP and serves as a director of
several companies, including Mowi ASA. She is
affiliated with Geveran Trading Co Ltd, which
owned all the shares in Norwegian Property ASA
as at 31 December 2022.
Kathrine Astrup Fredriksen (director)
Kathrine Astrup Fredriksen (born 1983), director
since 13 April 2016, studied at the European
Business School in London. She is currently
employed by Seatankers Services (UK) LLP and
serves as director in Mowi ASA, SFL Corporation
Ltd, Axactor ASA and Avance Gas AS. Fredriksen’s
previous directorships include Seadrill Ltd,
Frontline Ltd and Golar LNG. She is affiliated with
Geveran Trading Co Ltd, which owned all the
shares in Norwegian Property ASA as at 31
December 2022.
Lars Buin (director)
Lars Buin (born 1969), director since 22 April
2022, has a Bachelor in Finance with specialization
in Marketing from the Norwegian School of
Marketing (now BI, Norwegian Business School)
and has attended The Norwegian Shipping
Academy, specializing in ship broking and
chartering. He is partner and managing Director of
Pareto Offshore AS, which he helped found in
2004. Prior to that he worked in the rig and
offshore brokerage company Normarine Offshore
Consultants from 1997-2004. He also has previous
broker experience from residential and leisure
real estate sale. During 2010 -2021 he served in
the Board of Directors of Pareto Securities AS.
Lars Erich Nilsen (director)
Lars Erich Nilsen (born 1981), director since 26
April 2017, has been employed by Seatankers
Management Norway AS since 2014. He is the
general manager and chair of Seatankers
Management Norway AS well as a director of
Axactor Capital AS, Axactor ASA, Bulk
Infrastructure Holding AS, FP Bolig Holding AS and
FP Bolig AS. He has previously worked as an
analyst at Fearnley Advisors AS (2013-2014) and
Fearnley Fonds ASA/Fearnley Securities AS (2005-
2013, partner from 2007). Nilsen has a master’s
degree in business economics from the BI
Norwegian Business School. He is affiliated with
Geveran Trading Co Ltd, which owned all the
shares in Norwegian Property ASA as at 31
December 2022.
Annual report 2022 - Norwegian Property ASA
Definitions Page 111
Definitions
An explanation of the figures and terms mentioned in the annual report which are not derived directly from
the accounts is provided below.
Definition of financial APMs
Operating profit before administrative expenses
Revenues net of property expenses.
Profit before income tax and value adjustments
Profit before tax, adjusted for fair value adjustments to investment properties and financial
derivatives.
Profit before income tax, value adjustments and
joint ventures
Profit before tax, adjusted for share of profit in joint ventures as well as fair value adjustments
to investment properties and financial derivatives.
Market value of property portfolio
The market value of all the group’s properties regardless of the accounting classification
(investment property, owner-occupied property and rent guarantee receivable).
Market value of joint ventures
The book value of the investment in joint ventures, adjusted for the EPRA-revaluation of such
investments.
Gross interest-bearing debt
Book value totals for long-term and short-term interest-bearing debt, less the holdings of own
bonds.
Net interest-bearing debt
Gross interest-bearing debt, less interest bearing receivables and cash/cash equivalents.
LTV
Debt to asset ratio (loan to value).
Gross debt to asset ratio (gross LTV)
Interest-bearing debt divided by the fair market value of the property portfolio at the balance-
sheet date.
Net debt to asset ratio (net LTV)
Net interest-bearing debt divided by the fair market value of the property portfolio at the
balance-sheet date.
Equity ratio
Total equity divided by total equity and liabilities.
Pre-tax return on equity
Annualised pre-tax profit in the period divided by average total equity for the period in the
balance sheet.
Earnings per share (EPS)
Net earnings for the period divided by the average number of common shares during the
period. Diluted earnings per share takes into account the dilution effect of share options.
NAV, book value
Net asset value, the book value of total equity in the balance sheet.
Annual report 2022 - Norwegian Property ASA
Definitions Page 112
Definition of other financial and operational measures and terms
Run rate for annual rent
Contracted annualised rental income for the property portfolio as at the balance sheet date.
Weighted remaining duration of leases
Remaining contractual rent of current leases as at the balance sheet date divided by the total
contractual rent for the entire lease term.
Space vacancy/Office vacancy
Space vacancy is the total number of square metres available for rent divided by the total
number of square metres in the market. Similarly, office vacancy is the number of office square
metres available for rent divided by the total number of office square metres in the market.
Financial vacancy rate
Annualised market rent for space which generated no rental income at the balance sheet date,
divided by total annualised rent for total space (contract rent for leased space and market rent
for vacant space).
Gross yield
Gross yield on the balance sheet date for a property or portfolio of properties is calculated as
contractual annualised rental income divided by market value.
Net yield
When calculating net yield, maintenance and property-related costs are deducted from
contractual annualised rental income, which is then divided by the market value.
Prime yield
Yield for a fully leased property of best structural quality, with tenants in the best category and
in the best location.
Unutilised credit facilities
The difference between the total available credit facilities, based on the current loan
agreements, and the amounts as at the balance sheet date which are deducted and accounted
for as interest-bearing debt in the balance sheet.
Interest hedging ratio
The share of interest-bearing liabilities hedged at the balance sheet date.
Base interest rate
A weighted average of the fixed and floating average interest rates at the balance-sheet date.
The fixed average interest rate is calculated as the weighted average of the fixed interest rate
paid by the company in relation to outstanding interest-rate contracts and loans. The floating
average interest rate is calculated as the weighted average of the Nibor rate paid on interest-
bearing debt. The interest-rate base does not include accrued finance charges or margin.
Average interest rate
Weighted average interest rate on interest-bearing debt and fixed-rate interest agreements at
the balance-sheet date.
Average interest margin
The weighted average of the interest margin on the outstanding interest-bearing debt at the
balance-sheet date.
Remaining time to maturity for interest-bearing
debt
Weighted remaining period until maturity for interest-bearing debt at the balance-sheet date.
Remaining time to maturity for interest hedge
agreements
The weighted remaining period until maturity for interest hedge agreements at the balance-
sheet date.
Like for like
Change in rental income from one period to another based on the same income-generating
property portfolio, with rental income adjusted for purchases and sales of properties.
Independent appraisers
Akershus Eiendom and Cushman & Wakefield.
Oslo CBD
The central business district is considered the most attractive area for office space in Oslo. It is
usually restricted to the districts of Aker Brygge, Tjuvholmen and Vika.
Scope 1
Use of fossil energy sources and CO
2
e related to the operation of Norwegian Property as a
group. Covers transport for employees in working hours using cars leased or owned by
Norwegian Property, but also the use of oil-fired heating in the buildings.
Annual report 2022 - Norwegian Property ASA
Definitions Page 113
Scope 2
Covers energy consumption and associated emissions in the buildings – in other words,
distance heating, cooling and electricity.
Scope 3
Indirect emissions related to leasing or purchasing goods or services. Waste and tenant use of
propane as well as business travel by Norwegian Property’s employees are categorised as
scope 3.
CO
2
e
CO
2
equivalent. The group’s energy consumption and waste are converted to CO
2
e emissions
on the basis of a corporate accounting and reporting standard – an international standard
developed by the greenhouse gas (GHG) protocol initiative.
Annual report 2022 - Norwegian Property ASA
Sources and references to Scenario analysis Page 114
Sources and references to Scenario analysis
Afry. (2021). Future Cities. Retrieved from: https://afry.com/no-no/artikkel/hva-mener-de-unge-om-
fremtidens-byer
Regjeringen. (2021). A European Green Deal – Norwegian perspectives and contributes. Retrieved from:
https://www.regjeringen.no/contentassets/38453d5f5f5d42779aaa3059b200a25f/a-european-green-deal-
norwegian-perspectives-and-contributions-20.04.2021.pdf
Climate Scenarios. (2021). Climate Change Scenarios (SSP and RPC). Retrieved from:
https://climatescenarios.org/primer/mitigation/ Klima Oslo. (2020). Climate Change Vulnerability Analysis
for Oslo. Retrieved from: https://www.klimaoslo.no/wp-content/uploads/sites/88/2021/03/Climate-Change-
Vulnerability-Analysis-for-Oslo-short-version.pdf
Deloitte. (2020). Climate Scenarios and Consumer Business. (2020). Retrieved from:
https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/consumer-business/deloitte-uk-climate-
scenarios-and-consumer-business.pdf
Grønn Byggallianse og Norsk Eiendom. (2016). Eiendomssektorens veikart mot 2050. Retrieved from:
https://byggalliansen.no/wp-content/uploads/2018/11/Eiendomssektorens-veikart-mot-2050.pdf
Direktoratet for forvaltning og økonomistyring. (2021). Handlingsplan for økt andel klima- og miljøvennlige
offentlige anskaffelser og grønn innovasjon. Retrieved from: https://anskaffelser.no/sites/default/files/2021-
09/dfo_handlingsplan_2021_01.pdf
Intergovernmental Panel on Climate Change. (2021). 6th Assessment Report – Summary for Policymakers.
Retrieved from: https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_WGI_SPM_final.pdf
Intergovernmental Panel on Climate Change. (2014). 5th Assessment Report.
International Energy Agency. (2021). Net Zero by 2050 – A Roadmap for the Global Energy Sector.
International Energy Agency. (2020). World Energy Outlook 2020.
Finance Norway. (2021). Klimarapport Finans Norge. Retrieved from:
https://www.finansnorge.no/siteassets/skadeforsikring/klimarapporten/finans-norges-klimarapport-
2021_enkeltsider.pdf
Norsk Klimaservicesenter. (2021). Klimaprofil Oslo og Akershus. Retrieved from:
https://klimaservicesenter.no/kss/klimaprofiler/oslo-og-akershus
Klimaetaten, Oslo kommune. (2019). Ekstremnedbør Oslo: skadeomfang og kostnader. Retrieved from:
https://www.klimaoslo.no/wp-content/uploads/sites/88/2019/09/Rapport-Skadeomfang-og-Kostnader-
Ekstremregn-Oslo.pdf
Klimaetaten, Oslo kommune. (2019). Klimaendringer og klimautfordringer i Oslo mot år 2100. Retrieved
from: https://www.klimaoslo.no/wp-content/uploads/sites/88/2020/02/Klimatilpasning-Klimaendringer-og-
klimautfordringer-i-Oslo-frem-mot-2100.pdf
Klimaetaten, Oslo kommune. (2020). Klimasårbarhetsanalyse for Oslo. Retrieved from:
https://www.klimaoslo.no/wp-content/uploads/sites/88/2020/03/Klimasarbarhetsanalyse-for-Oslo.pdf
Annual report 2022 - Norwegian Property ASA
Sources and references to Scenario analysis Page 115
NVE. (2021). Langsiktig kraftmarkedsanalyse 2021-2040. Retrieved from:
https://publikasjoner.nve.no/rapport/2021/rapport2021_29.pdf
Opinion for Klimaetaten ved Oslo kommune. (2021). Klimaundersøkelsen 2021: Befolkningsdelen Oslo.
Retrieved from: https://www.klimaoslo.no/wp-
content/uploads/sites/88/2021/06/Klimaundersokelsen_2021_Hovedgrafikk_Befolkningen_Oslo.pdf
Opinion for Klimaetaten ved Oslo kommune. (2021). Klimaundersøkelsen 2021: Næringslivsdelen Oslo.
Retrieved from: https://www.klimaoslo.no/wp-
content/uploads/sites/88/2021/07/Klimaundersokelsen_Hovedgrafikk_Naeringslivet.pdf
Statistics Norway. (2020). Electricity prices.
Retrieved from: https://www.ssb.no/en/statbank/table/09007/
EU. (2020). Technical annex to the TEG final report on the EU taxonomy.
TCFD. (2017). Technical Supplement: The Use of Scenario Analysis in Disclosure of Climate-Related Risks and
Opportunities.
Annual report 2022 - Norwegian Property ASA
Contact Page 116
Contact
Norwegian Property ASA
Bryggegata 3
NO-0250 Oslo
PO Box 1657, Vika
NO-0120 Oslo
Norway
www.npro.no
Reception
Tel.: +47 22 83 40 20
Support centre
Tel.: +47 48 05 03 00
E-mail: kundesenter@npro.no
Investor relations
Haavard Rønning
CFO
Tel.: +47 40 02 00 19
E-mail: hr@npro.no
Sales and marketing
Ellen Cathrine Kobro
EVP Sales and Marketing
Tel.: +47 95 29 24 78
E-mail: ek@npro.no
5967007LIEEXZXGQFS442022-01-012022-12-315967007LIEEXZXGQFS442021-01-012021-12-315967007LIEEXZXGQFS442022-12-315967007LIEEXZXGQFS442021-12-315967007LIEEXZXGQFS442020-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXGQFS442021-01-012021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXGQFS442021-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXGQFS442020-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXGQFS442021-01-012021-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXGQFS442021-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXGQFS442020-12-31ifrs-full:SharePremiumMember5967007LIEEXZXGQFS442021-01-012021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXGQFS442021-12-31ifrs-full:SharePremiumMember5967007LIEEXZXGQFS442020-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXGQFS442021-01-012021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXGQFS442021-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXGQFS442020-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXGQFS442021-01-012021-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXGQFS442021-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXGQFS442020-12-315967007LIEEXZXGQFS442022-01-012022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXGQFS442022-12-31ifrs-full:IssuedCapitalMember5967007LIEEXZXGQFS442022-01-012022-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXGQFS442022-12-31ifrs-full:TreasurySharesMember5967007LIEEXZXGQFS442022-01-012022-12-31ifrs-full:SharePremiumMember5967007LIEEXZXGQFS442022-12-31ifrs-full:SharePremiumMember5967007LIEEXZXGQFS442022-01-012022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXGQFS442022-12-31ifrs-full:AdditionalPaidinCapitalMember5967007LIEEXZXGQFS442022-01-012022-12-31ifrs-full:RetainedEarningsMember5967007LIEEXZXGQFS442022-12-31ifrs-full:RetainedEarningsMemberiso4217:NOKiso4217:NOKxbrli:shares