SUMMARY ment, which thus generates cash flow, comprised 138,250
handed over to the buyer once the usual commercial con-
m² and amounted to DKK 1,934.2 million at 31 January
ditions have been met, including those relating to project
2014, of which investment properties accounted for DKK
construction and letting. The selling price is based on a re-
308.5 million. The annual net rent from the current leases
turn requirement of 8.5 %. The retail park will be built in two
corresponds to a return on the carrying amount of 6.7 %.
phases. Construction of the first phase of about 7,500 m²
Based on full occupancy, the return on the carrying amount
was completed in March 2014.
is expected to reach 7.9 %. The timing and phase-out of the discontinuing activities are The operation of these properties is generally proceeding
subject to major uncertainty. The phase-out is progressing,
satisfactorily. Chain stores are managing satisfactorily,
and the risk exists that these activities may be phased out
while local tenants are generally recording difficulties. Over-
at a value lower than their carrying amount.
all the footfall and centre revenue are developing positively. In 2013 more than 16 million customers visited the Group’s six shopping and outlet centres, which corresponds to an index of 102 relative to 2012.
MARKET CONDITIONS In Management’s opinion, the market conditions are improving for the Group, which expects to see financial growth and rising consumer confidence in its markets, although levels
In February 2014, after the reporting date, TK Development conditionally sold its 75 % stake in the Fashion Arena Outlet
will vary from country to country. Private consumption is expected to continue increasing.
Center in Prague, the Czech Republic. The outlet centre has been sold to Meyer Bergman, and the selling price for the
In this phase of the business cycle, where economic growth
whole property amounts to EUR 71.5 million. The sale is con-
is on the rise, some uncertainty, although diminishing, per-
tingent on final financing, which is expected to fall into place
sists in the property markets, and the decision-making pro-
in April 2014. This sale generates a minor profit compared
cess of tenants, investors and financing sources remains
to the carrying amount, reduces the balance sheet total by
lengthy and carefully considered.
about DKK 400 million and makes a substantial contribution to the Group’s free cash resources.
Access to project financing, which has remained difficult for a prolonged period, poses the greatest challenge to the
DISCONTINUING ACTIVITIES
property sector. The Group is now experiencing an easing
The results before tax of the discontinuing activities
in project finance restraints. The options for procuring fi-
amounted to DKK -38.9 million in 2013/14 against DKK -53.7
nancing vary from project to project, depending on the type,
million in 2012/13, of which DKK -13.3 million derives from
location and status of the properties concerned, including
current operations, DKK -1.0 million from losses recognized
letting and sales. When granting project finance credits, the
on completed sales, and DKK -24.6 million from impairment
banks continue to require relatively high borrower equity,
losses and value adjustments of remaining assets.
but there also appears to be some relaxation of these requirements.
At 31 January 2014 the balance sheet total for the discontinuing activities amounted to DKK 367.7 million against
FINANCIAL ISSUES
DKK 425.4 million at 31 January 2013, a decline of 13.6 %.
At the Company’s Annual General Meeting on 22 May 2013,
DomusPro Retail Park in Vilnius, which has been sold in ad-
the Board of Directors was authorized to carry out a capital
vance, accounted for DKK 92.9 million of the balance sheet
increase with gross proceeds of about DKK 210-231 million.
total at 31 January 2014.
The capital increase was implemented in September 2013.
In 2013/14 TK Development sold two of the Group’s German
A substantial portion of the proceeds from the capital in-
investment properties: a minor investment property was
crease has been used to reduce the debt to credit institu-
sold in June 2013, and in September 2013 another German
tions and project finance loans granted by a number of the
investment property was sold at a price of DKK 43.8 million,
Company’s major shareholders and members of Manage-
corresponding to the carrying amount.
ment.
In August 2013 TK Development announced that a Group
TK Development has a general agreement with the Group’s
project, DomusPro Retail Park in Vilnius, Lithuania, had been
main banker about operating and project credits. The agree-
conditionally sold to BPT Baltic Opportunity Fund, which is
ment has been extended until mid-2015.
managed by BPT Asset Management. The project will be
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