Kapiteeli's Press Release: Interim Report January-September 2006

| Source: Sponda Oy Sponda Oy

Kapiteeli Plc has today published its Interim Report for January-September 2006. The report is also available on the Internet pages of Kapiteeli at www.kapiteeli.fi.
 
Sponda Plc
 
 
 
For further information please contact:
Kari Inkinen, President and CEO, tel. +358 9 6805 8202, mobile +358 400 402 653
 
 
Eclosures:
Enc 1: Kapteeli Plc's Press Release
Enc 2: Kapiteeli Plc's Balance Sheet and Income Statement for January-September 2006
 

Sponda Plc is a real estate company specializing in commercial properties in Helsinki metropolitan area. Sponda's business concept is to own and develop office, retail and logistics properties into environments that promote the business success to its clients. The fair value of Sponda's investment properties is 1.37 billion euros and the lettable area is 890 000 m². Sponda is the largest investment company listed on the Helsinki Stock Exchange.
 
 
Enc 1
 
KAPITEELI PLC
 
Interim report January 1 - September 30, 2006
 
Sale of hotel portfolio boosts Kapiteeli Group's profit
 
Kapiteeli's consolidated profit for the period January 1-September 30, 2006 rose to EUR 176.6 million (1.1.-30.9.2005: EUR 63.3 million*). The growth in the profit, EUR 113.4 million, exceeded the targets set for the company by a significant amount. This was in part due to a profit of EUR 82.2 million recorded on the sale of the hotel properties. The better financial performance by the rental and sales operations than in the comparative period and the positive effect of the change to the fair value of financial instruments also contributed to the increase.
 
The main points from the period under review, January 1-September 30, 2006, including both continuing and discontinued operations:
 
  •          Investment properties' value was EUR 840 (980, 31.12.2005: 1,030) million.
  •          A change of EUR 17.0 (17.8) million was recorded in the value of investment properties.
  •          The value of sales properties was EUR 199 (272, 31.12.2005: 235) million. Write-downs of EUR 13.4 million were recorded on sales properties in June.
  •          The operating profit was EUR 189.2 (79.6) million.
  •          Net rental income came to EUR 69.5 (65.6) million.
  •          The net rental yield was 7.6 (7.2) per cent.
  •          A profit of EUR 126.3 (8.2) million was made on sales and disposals.
  •          The return on equity was 32.9 (12) per cent, 16.0 (-) per cent for continuing operations.
  •          The return on invested capital was 22.1 (8.3) per cent, 10.9 (-) per cent for continuing operations.
  •       The occupancy rate of the lettable area was 82 (81) per cent.

    * The comparative information is for the equivalent period in 2005 unless otherwise stated.
    •  
     
    In a sale executed on August 31, 2006 Kapiteeli sold its hotel portfolio to the Norwegian Norgani Hotels ASA at an unencumbered price of EUR 306 million. The fair value of the properties determined on the basis of the present value of the cash flows in Kapiteeli's balance sheet on August 31, 2006 was EUR 221 million. On September 19, 2006, Kapiteeli paid the Finnish government an additional dividend of EUR 200,070,000 from the funds received from the deal.
     
    On October 20, 2006 the Finnish government signed a binding agreement on the sale of Kapiteeli's entire share capital to Sponda Plc at an approximate price of EUR 950 million. The Finnish Competition Authority approved the deal on November 16, 2006 and the deal is scheduled for conclusion by the end of 2006.
     
     
    Prospects for the rest of the 2006
     
    According to President and CEO Ossi Hynynen, the occupancy rate of office and retail properties owned by Kapiteeli is expected to remain unchanged during the final part of the year. Rents and the net rental income are expected to remain at least at the level of the early part of the year.
     
    No major investments are expected in the final part of the year. Sales of properties incompatible with the investment strategy exceeded targets in the review period, and annual targets are also expected to be exceeded.
     
    Kapiteeli's performance is expected to improve in the final part of the year. In spite of the sale of the hotel properties, net rental income for the entire year is expected to increase on 2005. The downward trend in the vacancy rate of the Office and Retail Properties Unit is expected to continue.


    Further information available from President and CEO Ossi Hynynen, tel.+358 (0)20 431 3314, +358 (0)400 701 030, ossi.hynynen@kapiteeli.fi
     
     
    Enc 2
     
    The interim report has been audited.