Management’s Review

Freja left 2019 with a profit for the year before tax of DKK 23m (2018: DKK 876m). Proceeds from sales came to DKK 93m. The profit was generated by 24 property transactions that included sales of 15 properties and 9 partial sales, resulting in total revenue of DKK 272m (2018: DKK 1,343m).

In 2019, Freja could ascertain ongoing risk appetite in the property market and as a result, agreements for sales, investment and development properties were concluded. In terms of outcome, 2019 was a modest year compared with the previous year, however, the figures cover a change between the two annual results. The profit for the year should be seen in the light of the number of sales completed by Freja in 2019 that are conditional on the adoption of municipal and regional development plans in several places around the country. As soon as these municipal and regional development plans as expected have been adopted in the first half of 2020, these conditional sales will be concluded and then recognized as income.

In 2019, the Danish Parliament decided to change the Budget Guidelines so that, in principle, Freja is responsible for the sales of all state-owned properties. This decision is expected to result in an increase in the number of contributions of new properties. Since 2013, Freja has furthermore had the opportunity of also developing and selling the hospitals of the regions, and in 2019 this agreement was extended to include also other types of properties than just hospitals from the regions.

This extended supply chain and the opportunities this may generate in conjunction with the ambition of an annual return of DKK 500m has resulted in our development in 2019 of a new five-year strategy that was approved by the Board of Directors in December.

The preparation of the strategy involved the whole organization and constituted a big organizational and managerial focus point in 2019. This strategy gives the direction for how Freja is to ensure sufficient contribution of properties to realize the return target and to achieve quality in our development work, efficient sales and strong returns. Furthermore, Freja has ambitious sustainability targets, and the strategy also focuses on how Freja can succeed in retaining and recruiting employees who can realize the strategy.

The Ministry of Finance has a strengthened focus on encouraging a sustainable climate and environment development, and therefore it is only natural that sustainability also plays a significant role in Freja’s fiveyear strategy. This strategy identifies four of the 17 UN Sustainable Development Goals that are particularly relevant for Freja’s area of activity (Nos. 3, 11, 12, 13), and it is considered that especially No. 11, ‘Sustainable Cities and Communities’, is the goal which Freja’s work can best support.

Development Projects 2019 was significantly marked by the efforts towards preparing the development of Freja’s property at Vasbygade 10-14 in Copenhagen which accounts for 8 hectares of the Rail Freight Network. This area is included as a new development area in the Municipal Plan 2019 and constitutes Freja’s most important development asset in the years ahead. In 2019, this area was named ‘Jernbanebyen’ (‘The Railroad Town’) by DSB (the Danish National Rail Company) and Freja.

The approval of the total Municipality Plan 2019 was originally expected in December 2019 but following an extra consultation round concerning a number of amendments proposed, the plan is now expected finally approved in early 2020.

In cooperation with the Municipality of Copenhagen, Metroselskabet (the Copenhagen Metro), Banedanmark (Rail Net Denmark) and DSB, Freja has worked intensively on outlining the development potential of the area and on screening the area for technical and environmental challenges. On the basis of this initial work the area is now part of a new area of urban development. Taken as a whole, ‘Jernbanebyen’ amounts to more than 500,000 sq.m. The other development area is owned by DSB.

In April 2019, Freja received the properties Vridsløselille Prison in Albertslund and the Jonstrup Camp in Ballerup. Both properties have a large development potential and are situated in popular residential municipalities. Several co-operation activities with the municipalities have been established, and dialogues with citizens, association and potential investors have been launched.

In Ballerup, the former military camp is located in a scenic rural area close to Hareskoven forest and the village of Jonstrup. The Municipality of Ballerup contributes to crea - ting a planned framework for the development of a new residential area, which will be integrated in an existing residential area, and will be benefiting from the proximity to Hareskoven forest. About 250 citizens participated in the visual inspection of the camp as well as in the presentation of preliminary plans on a Sunday in November 2019, and additional citizen arrangements were announced to be held once the plans have been implemented.

In Albertslund, there has been a long-standing desire to be able to launch the development of the area of Vridsløselille Prison because it represents a great potential for the development of the very central area near S-train station, town hall and shopping mall, just as it also constitutes an important part of the story of Albertslund – not least because of the iconic status achieved via the Olsen Gang criminal comedy film series. Just like in Ballerup, the citizens of Albertslund have also engaged in the process. Thus, on a Sunday in December, 200 citizens participated in a tour of the area for which new housing is being planned and innovative ideas developed as to how the existing prison may be included in future scenarios.

In Frederiksberg, a regional development plan proposal has been prepared in 2019 for the property of ‘Rolighedsvej Bycampus’ (the Frederiksberg City Campus at Rolighedsvej) which previously housed Copenhagen University and DTU (Technical University of Denmark). Additional to the Frederiksberg Strategy, an adopted regional development plan will bring about the development of student residences, sports centres, school and park. In total well over 40,000 square metres of floor space that will also open to the public – not least regarding sports arenas and parks. At present, the regional development plan is in public hearing.

Sales In 2019, Freja completed 24 final sales.

The range of the sales is extensive: from everything at Nuuks Plads situated on top of the new metro station at Nørrebro in Copenhagen to three campsites on the West Coast of Jutland.

Some of the sales were completed without conditions, others have been tied to a number of conditions that had to be clarified in cooperation. What they all have in common is that previously they have been state-owned and now have been given a new lease on life in the private market.

2019 showed a continuing great interest in our development properties. Freja has concluded significant agreements with investors conditional on changed regional development plans. Consequently, a number of development cooperation agreements have been concluded in 2019.

Furthermore, several structured investor meetings have been held with a view to finding investors and cooperation partners for large projects such as i.a. the Jonstrup Camp, Vridsløselille Prison and ‘Jernbanebyen’. The meetings attracted considerable interest from both Danish and foreign investors and from private as well as institutional investors. The continuation of the low interest rates, the attractive mortgage market and continued investment needs thus drive the interest in large projects.

To an increasing extent, Freja has cooperated with external business mediators in connection with large and long, structured sales processes in 2019. Thus, it has been possible to focus on communicating transparently and unambiguously to many stakeholders in several stages, and for Freja to have the fullest attention on development and the final pricing of the property.

In the provinces, Freja’s properties attracted decent attention, and so great interest is seen in Cortex Park in Odense which constitutes one of Freja’s greatest provincial assets. To a greater extent, both private and institutional investors focused on the opportunities in ‘Vidensbyen’ (the City of Knowledge), Cortex Park at SDU (Southern University Denmark) and the coming new university hospital.

With among others the Tax Administration as a tenant, Freja sold the Toldbodgade Warehouse in Randers. This property was developed as an investment property where the options from the Tax Administration and other tenants for furnishing and fitting-out were incorporated and carried out. The property was sold with rental agreements to an investor.

Outlook 2020 We expect that some sales from 2019 conditional on the municipality and regional development plans adopted in a number of places in the country will be finally implemented in early 2020.

Because of the changed budget guide which allows that, as a starting point, Freja will carry out the sales of all state-owned properties, we expect a continued good supply of state-owned properties in 2020. Therefore, we expect our portfolio of development properties to grow in 2020. Furthermore, we are looking forward to continuing the constructive cooperation with the regions that so far resulted in development projects and subsequent sales of a number of hospitals originally purchased exactly by the regions.

To a great extent, 2020 will be characterized by the implementation of our five-year strategy, and therefore the work carried out in this connection will involve a strategic main focus for the management and other parts of the organization.