Olav Thon Eiendomsselskap ASA

Welcome to this webcast, in order to present the third quarter report for Olav Thun Ownership. It is very nice that you are here, because this is Super Thursday, where we compete with attention from both Sweden's Riksbank, Norway's Bank and afterwards also the USA. But it is nice that you prioritize and look at our progress. Vi har en agenda som består av de faste påstående med finansiell utvikling, finansiering, renteutvikling, eiendomsportefølje. Vi tar en liten makrosving på slutten. Etter at jeg har begynt har jo... We have a question and answer session at the end, so if you have questions along the way, please contact us via the e-mail we have provided. Let's go straight to the core areas, financial development and stock information. Vi vil si at det er en stabil utvikling i leieintekter og at egnomsverdier bidrar til et godt kvartalsresultat. Vi synes at Welcome to this webcast, in order to present the third quarter report for Olav Thun Ownership. It is very nice that you are here, because this is Super Thursday, where we compete with attention from both Sweden's Riksbank, Norway's Bank and afterwards also the USA. But it is nice that you prioritize and look at our progress. We have an agenda that consists of you fixed positions with financial development, financing, interest development, business portfolio. We take a little macro swing at the end. After I have started, We have a question and answer session at the end, so if you have questions along the way, please contact us via the e-mail that we have provided. Let's go straight to the core areas, financial development and stock information. We will say that there is a stable development in rental income and that property values will contribute to a good quarterly result. We think that a result before a tax of around 0.5 billion, slightly above 0.5 billion, both before and after the change in value, is a good quarterly result. Contrary to some journalists who call it drudgery, we think this is OK. A good result. In the quarter, we have also strengthened our financial position. The equity share has increased by 51%. The loan rate has been reduced by 36%. The liquidity reserve has increased by 9.2 billion. A little monster liquidity reserve. We came back to the background for that. We still have a significant drop in shares, both this year and the last 12 months. In the third quarter, the share price was flat, both on the share exchange rate and on the income. What has not been flat is the retail turnover in the shopping centers, which then increased significantly with a decline in Q3. We will also come back to that. But we have a growth of 1%, and per third quarter it was 2.8% from the same period last year. If we briefly go through the main figures for the quarter, we compare to the left with the rental revenues from the previous quarter. And then we have accumulated per 39 all the way to the right. We see that compared to the previous quarter, the rental revenues were stable, increased and trended the same. We see that the valuation of financial instruments increased. The difference is that in the second quarter, We had to write down the earnings while in the third quarter we wrote them marginally up. This means that our bookkeeping result for tax exceeds 0.5 billion towards 286 in the previous quarter. If we correct for tax, earnings and currency, as we often do, we see that it is very stable with over 500 million in the quarter. The market value of the properties has increased marginally, while the interest rate is much lower, because we have relatively low investments in the quarter. The loan rate is therefore also reduced. The interest rate is unchanged at 2.9, and the liquidity reserves increase to 9.2. The share price was stable, and the share price increased from 5 kroner to 355 kroner. If we then look at how the result development has been from the interest rate increase that began in 2001, we see that we have had a result growth despite quite large increases in interest rates. Brutal income is, if we compare per third quarter 2024 with per third quarter 2021, back in the old days when there was low interest and everyone was happy, Then we have increased our rents by 600 million, the interest rates by 300 million. In summary, this will give an increase in the result before the tax on 1.6 billion against 1.5 in 2021, so we have an increase of just under 100 million. It is interesting to note that the value of substance per share has now become higher than three years ago, Our reward rate is at the same level as three years ago. So we think we have made use of the period with the so-called interest rate shock. This is also reflected in the share exchange rate, where we see that in the last 5 years, the share exchange rate and the share exchange rate have given a total drop of 80% in YOLA 2.0 in relation to the 6D index. We see now that in all periods that we set up, we have a positive development that is better than Oslo Børs. So when the world's most boring share has such a drop, we are very pleased with that. We also have, with the exception of 2020, where the pandemic fell over the country, had a yearly exchange rate and had a good growth in that. The exchange rate policy states that we should have a yearly exchange rate of 30-40%. For 2023, the company divided out 7 kroner, which made 36%. The next exchange for 2024, the board proposal will be presented in connection with the next quarterly report in February 2025. I think we can expect the exchange to balance different views, as it has done in recent years. Then we will go straight to financing and interest development. Our financial policy has contributed to that we show stable and strong key figures that defend the solid rating. We have now, in relation to earlier, chosen to tighten the financial policy on the loan rate on property, which we have now said should be max 45% over time, towards earlier 45-50%. We think that this is a reasonable approach to a target, which we have been very far away from in recent years. We believe that this is positively reflected in both the credit market and the stock market, that we have further financial discipline. If we then look at the current key figures per 39, then they are not very much changed through 2023. We have a decline in the balance rate by 1 percentage point. We have a decline in the interest rate. We have a decline in liquidity reserves, while the duration of the loan portfolio is increased significantly. This has given us a credit rating on... BAA2 from Moody's with stable outlooks, and the rating has been unchanged for almost five years. There is a rare gap in the Scandinavian stock market, where we have a completely unchanged rating for the last four years. If we then go over and look at the interest rate development, then to the left we have set up our interest rate for the last five years, where we fortunately see a little dip, now right at the end, on the blue curve, which is the interest rate of the companies, including Magin, Nibor and Tidjørs Swopperente, which was set up in the same graph, is reasonably without Magin. So, We see that we may have surpassed the interest rate. If we then divide the interest rates per quarter, we see that we have corrected a periodization change, which is listed in the quarter report for those who are particularly interested. we see that the interest rates fell well in Q3, and we hope that we will be able to have stable or falling interest rates also in the future. But this depends of course on the market interest rates as well, and we will get back to that in a moment. Vi har en svært god til tilgang på finansiering. Vi er i nærheten av å kunne kalle det særdeles god, for det er stor rettsspørsel til våre lån i kreditmarkedet, og i bankmarkedet er det også en stor iver etter å låne oss penger til stadig yndstere vilkår, og det er vi takknemlige for, og takke for det. We are concerned about having a mix, both between the bank and the capital market, as we can see from the table below. Where we see that the yield we have drawn, there is almost 70% now in the capital market, while if we take with us unused credit frames of 9 billion, 9.1, then we are around 50-50. This is a distribution that we think is quite reasonable in length. We have, as I said, a very high liquidity reserve now, which is far above the yield declines we have in the next two or three years. And that is because, in addition to the fact that we always like to have good liquidity, considering the opportunity to exploit the investment opportunities that are coming, we are not as happy as we would like to be. But the main reason is that there has been a short-term loan agreement in the capital markets for almost 3 billion kroner. in the quarter, they are priced in a way that makes it advantageous for us to use those offers and rather pay down on flexible credit frames. So this is part of reducing the financial costs for the corporation. Then we will move on to the portfolio and investments. A short overview of the total portfolio now shows that the shopping centers in Norway within the top 20 make up 41% of the portfolio. In total, the shopping center makes up three-quarters of the portfolio in terms of value. From the part that is not a shopping center, there is a spread on offices, housing, trade, ex-shopping center, no logistics, no hotel, and has a total value of 15.2 billion kroner. This is included in the rented property. The property portfolio has a total value per 39 for a little over 60 billion kroner. We get a lot of questions about how the value changes in the portfolio have been since the top. Our top was June 30, 2022. A temporary top, I would say, because we will be stumbling past it for a while, already by next year. What we see is that our individual discount requirements have increased from 4.9% to 6.1%, with 1.2% points. When we go back and look at our quarter report for the second quarter, 2022, the sensitivity analysis showed that a yield change of 1.2%, that this would contribute to a value fall of 11.9 billion, so 12 billion, 20% of the portfolio. This is of course a lot, but not enough to take the nightmare from Olatone and Amselskap. In the meantime, the rental growth has in the same period dampened the value fall significantly. I think that the rental growth has dampened the value of around 5.5 billion, around 10% in that period. Purchasing center ownership is, as I said, our largest segment, and we apologize to all kind competitors, but we think we have a word to keep, and we call ourselves Norway's leading purchasing center actors. We have a focus on the largest centers. We own 60 of them. Market value, made by quarter change, 45.2, down from the top at 1.2, in addition to that we have bought centers for 1.3. That is because the yield has increased from 5.3 to 6.5 percent from the top in 2022. We find it interesting that the rental income level has increased by 500 million since 2022, so that we have the same revenues, we earn more money on them, but they are less valuable. We live quite well with that. This is a good old overview in a new dress with a little less colors to dampen the impression of our market position. In the meantime, it is enough to see that we have a solid position within the 20 largest. It says in the quarterly report that the revenue increase in the third quarter was still 1%. If we split up the months that we think are meaningful, we see that there was a good development both in July and August, and a relatively weak development in September. We don't know what caused it, but it is possible to believe that it was either very hot weather, which we can ask the meteorologist about, which affects the trade figures. In addition, perhaps equally important, then there are fewer trading days in September this year than there were last year. If I correct myself for that, then the trend is at zero. So we choose to see it that way, that this was a medium-term fall, but that the long-term trend is somewhat weaker than what we have seen in the previous quarters. We are very excited about both the Black Week turnover and the Christmas market this year. What we are happy with in the meantime is that regardless of how the turnover numbers go, we see that the rental income development is positive. Nutrition. Here is a picture of... Maybe our most central property, Karl Johan Skatte 25, in front of the Tostrupgård castle. We have 65 properties spread over the segments listed. The same picture here, with market value lower than two years ago. while the rental income level increases. So higher rentals and lower values live well with that too. The yield has increased by 1 percent, 1.1 percent, also in this segment, which also includes 500 rental homes. Then we will start to get closer to the investment strategy, which is summarized in the good old words, the acquisition, development, ownership. They summarize that there is a purchase of property primarily for further development and property projects under implementation that we invest in. The last six years we have invested 8 billion kroner. So far this year we have invested only SEK 700 million, which is 1.8 million from last year. We hope to be able to carry out several larger investments in the future, but we have nothing new to come up with now. We have some larger projects that are in production. We have Lagunen, which has been expanded with 17,500 square meters. Elverum with 4,500. In addition, we are working to renew the shopping center in Moss. We are expanding a warehouse on Gardermoen Park with 10,000 square meters. We have a housing project in Asker, which we will return to, in addition to that we have under implementation a new building and rehabilitation of Sandens shopping center, the office of Sandens in Kristiansand. So many blocks will become a big river, and we will contribute to these together with a few hundred million in the quarter in investments. We have several projects under planning, which we will also return to. Heggedal Hage is a residential project located in idyllic surroundings, 7 km from Asker Center, a short way to the train station, which takes you to Oslo Center within 20 minutes. It is a project that is placed in rural and idyllic environments, and a good combination of beautiful nature and a relatively short way to the big city life in Oslo. That is, the most optimal, where you live between nature and culture, in the middle of Asker, not the center, but the Asker municipality. It is a housing project of 118 apartments, a total of 7100 B.R.A., We had a sales start in September. We have sold 35 of 60 on the first sales training. Because of that interest, we have decided to start the project now. We expect a project start already in the first half of 2025. If you are interested in housing in the idyllic Heggedal garden, I would recommend to run and buy. The prices will rise. Gunnerus-kvartalet er et prosjekt som vi har jobbet med, ikke jeg personlig, men noen andre, helt siden 80-tallet. Nybygg og rehabilitering, kontor, handel og hotell, nå har vi endelig fått en regulering godkjent på en rehabilitering på 65 000 kvadratmeter. Den kommer til å komme tilbake til senere, og det vil jo ta litt tid med høringsinstanser, et cetera, før vi kan gå i gang med Men uansett, det er viktig å komme videre, og det er veldig positivt at vi nå har fått en regulering godkjent. La oss da gå over til dagens siste tema, makroøkonomi. Mens jeg står her, så antar jeg at Norges Bank har holdt rentene uendret, og gitt uttrykk for at, vel, kanskje neste år så kommer det noen renteoppgaver. What I learned before we went on the air, was that Sweden cut the interest rate by two times 0.25, that is a double interest rate cut, and the largest interest rate cut in ten years. We are lucky, so we have a lot of Swedish kroner, and we enjoy that interest rate cut well. Kort om siste prognosene fra Norges Bank. September føles jo ut som en evighetssiden, men det er bare to måneder siden. Jeg tenkte bare å kort gå inn på de to viktige parametrene for vår virksomhet, nemlig privatforbruk, hvor Norges Bank spår en økning fra 1,1 til 2,7 prosent vekst i neste år. Bra for kjøpscentrene. The housing investment, this is a change from last year, where they got a drop of 16%, that's a lot, this year to an increase of 4% in 2025. We also believe that the rent development will be able to contribute to an increase in this issue, also in relation to the housing investment. Styringsrenten vil, dette var det som var sagt i september, vil holde sig uendrett en stund til. Hva er en stund til? Det er jo en subjektiv opplevelse av tid. Hvis du spør et barn om hvor lenge det er til barnetidet begynner, så er det en stund. Det er definitivt ikke et halvt år. If you ask a Norwegian bank, it can be one year or two years. So time will show. What they expressed in September is that there is a need for a higher interest rate to bring inflation down to the target. The prognosis shows that it is most likely that the interest rate will remain at 4.5% out of the year. then it also says that where the crown is weaker, there may be a need for a higher interest rate. The prognosis indicates about three interest cuts in 2025. Now it has happened a little in the world since it was put forward in September, so we come back to that a little. If we have come forward to summaries, then what is undeniable is that the growth in the Norwegian economy, that it has become weaker through 2023, and that it is now quite low. Despite this, the unemployment rate is low and the wage growth is relatively high and significantly higher than in our neighbouring countries. The price growth has fallen a lot through 2024, but is still somewhat higher than the inflation rate. Vi drister oss til å si at Norge er mest sannsynlig på rentetoppen, men signaliserer seg at renten trolig vil bli holdt uendret ut året. Vi har liten tro på at renten blir hevet, selv om kronen skulle bli noe svakere. Vi er jo inne om noe geopolitisk usikkerhet i disse dagene med en ny president i USA som vi er litt usikre på hvordan vi slår ut med tanke på både renter og valuta. The protectionist measures that we have taken will contribute to a decline in trade, perhaps more expensive products, and will be negative for the world economy. But the company's market position and financial position will be able to contribute to still good operational result development in the future, in spite of higher interest rates and macroeconomic uncertainty. And we have a hope of reaching a slightly higher speed than the Norwegian speed. And it is still possible to imagine what this will look like when we set the speed, go up in the plan and go on. then we may get even higher results than 500 million in the quarter. We see many interesting opportunities in the future and believe that good result development, low interest rate and high liquidity reserves give us very good opportunities to use the investment opportunities that we see will come in time in the future as well. Da var jeg gjennom deg faste på standet, så da er vi over på spørsmålsrunden.

Ja, vi har fått inn noen spørsmål her. Vi kan starte her med første. Hvordan er temperaturen hos leietakerne med tanke på fremtidig belegg?

Belegg.

Occupancy. Åja.

We experience that there is a fairly stable development there, but perhaps better development on the office side than on the trade side. But stable development, and where some withdraw and cannot continue, new actors come in.

Are you thinking of reducing liquidity reserves in the future?

vanskeleg å svare på. Det kommer litt an på hvilket finansieringsbehov vi vil se for oss det neste halvåret.

Så er det et siste her nå. Hvordan har butikkomsetningen vært i oktober?

Det har jeg faktisk ikke sett noen tal på, så det må vi vente til det kommer via Kvare i løpet av noen dager.

Ja, det var siste spørsmålet.

Men da sier jeg tusen takk for fremmøtet, og jeg ønsker dere en fortsatt fin høst, og så ses vi 14. februar. Takk for meg.