Overview from the CEO

Well positioned
for the next phase

The year just ended was dominated by major changes in the macroeconomic climate. This naturally also had a significant impact on the property market, in the form of higher interest rates, tighter financial markets and a fall in the value of all types of property. Despite this, Public Property Invest (PPI) is well positioned for the next phase of development.
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Establishment of the sustainability-linked bank facility of NOK 3.32 billion, which was entered into in spring 2023 with Nordea and Danske Bank.
Financial confidence
Both in Norway and abroad, property companies are encountering a more demanding and cautious market. This makes it all the more satisfying to be able to confirm that PPI enjoys the trust of the financial markets and has good relations with our banks and finance providers. This is illustrated, for example, by the sustainability-linked bank facility of NOK 3.32 billion arranged with Nordea and Danske Bank in spring 2023.
Economic outlook
At the time of writing, the market is pricing in six interest rate cuts for 2024, while Norges Bank’s interest rate path, which indicates that interest rates have peaked, is only signalling one interest rate cut. PPI expects this to result in lower financing costs and increased property values.

In September 2024, our bond loan of NOK 2.1 billion will mature. This is the company’s absolutely highest priority. The board of directors is working closely with our banks and bondholders to find an optimal solution and is making good progress in identifying various options to weigh against each other.
Valuation of commercial property
In 2023, the group’s properties developed in line with the rest of the commercial property market. The market proved challenging throughout the period and there were few transactions. Following a valuation peak from Q1 2022 of 8% above the cost price, at the end of the year Newsec and Cushman & Wakefield published independent valuations with a combined value of 14% under the cost price. However, we also know that commercial property values are closely linked to the interest rate market. Assuming expected developments, there are grounds to believe that the market will stabilise moving forward and that valuations will gradually rise.
ESG and sustainability
PPI regards ESG and sustainability as a key tool for enhancing shareholder value. We have already shown that it is possible to source better financing through sustainable borrowing. In addition, this type of funding also commits us to modernising and updating our properties to meet future requirements and standards.

In 2024, we will launch a programme to help us meet the commitments we have made, which in turn will increase the attractiveness and value of our properties. Most importantly, it will reduce long-term operating costs, for both PPI as owner and our tenants. I am also proud to be able to announce that PPI was certified as an Eco-Lighthouse just before the year-end. This means that we are now accredited as a sustainable company, which will give us a further competitive edge when it comes to public-sector tenants. You can read more about sustinability and environmental certification in a separate section on page 26.
PPI was certified as an “Environmental Lighthouse” just before the turn of the year.
Leasing and development opportunities
In 2023 we achieved an occupancy rate of 95% for our available leased area of approximately 307 000 square metres. Some of our property leases expire in the coming years and we are taking active measures to either continue existing relationships through renegotiations or source new tenants. However, we have also identified major potential for rezoning and developing buildings and/or unoccupied spaces in some buildings. To this end, we are continually developing various strategies to reduce risk and optimise shareholder value. Our most important projects in this area are discussed in a separate section on page 30 of the annual report.
Key social actor
PPI was established in 2021 with a longterm strategy of owning, operating and developing socially beneficial property in Norway in a sustainable manner. The strategy is designed to attract reliable, long-term institutions with public-sector financing and the security that this brings. The portfolio mainly comprises socially beneficial property with public-sector tenants, in key cities in Norway. These buildings house socially critical functions such as police stations, law courts, public-health institutions and other public-sector offices.

Developing and running a large property company such as PPI is demanding. This makes us wholly reliant on professional and efficient organisation in all stages, from financing and leasing through to day-to-day operation of our buildings. Here I would in particular like to mention our excellent and productive partnership with Arctic and Arctic Real Estate Management.

At the end of the year, the group owned 48 properties and had established itself as a major player in Norway, with more than 110 public-sector tenants in 25 cities. With 15 police stations and other important public-sector tenants in our portfolio, many of our properties are in operation 24/7. Each day, hundreds of service providers go out of their way to ensure that our tenants can fulfil their important social mandate. In total, we estimate that more than 18 000 people work in or visit our buildings each day. To conclude, I am delighted to be able to confirm that PPI is well positioned for the next phase in our development.
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Morten Kjeldby | CEO
Continue reading the Annual Report
At the end of the year, the group owned 48 properties and had established itself as a major player in Norway, with more than 110 public-sector tenants in 25 cities.