Olav Thon Eiendomsselskap ASA

Welcome to the webcast in connection with the presentation of our report for the second quarter and the first half of 2005. At Ninkurie, we also compete in terms of attention this time with the Central Bank's interest rate decision, which this time was published in Arndal. We are sorry that our quarterly report does not have the same interest as the interest rate decision, but I think, in contrast to the Central Bank, we have some changed figures, and we may have a little more content than the Norwegian Bank this time. So, stay tuned. The agenda is the fixed posts. This time we have also taken into account the number of property markets in 2025, because it has been an interesting journey in ups and downs. Otherwise, it is the fixed posts with financial development, financing, the property portfolio and macro. Financial development and stock information are so popular in this week of Arndahls, and trilling charts. We have seen a pussy-phenomenon with charts, because charts like Per Def are random. But let's stick to the usual interpretation, that it gives character. So we should be so self-explanatory and say that this time we mean that our... is not equal to six, maybe four is our assessment. A little bit of a reflection, a slightly weaker rental market for office owners, and a little bit of market turmoil in connection with Liberation Day at the beginning of the month. But as I really want to point out, there is life in the rental business, and Scuta is doing quite well. If I were to go into a more concrete description, we would characterize the result as satisfactory, not particularly good, but the decline in the value of financial instruments and increased equity costs reduces the surplus. We will come back to the welfare costs, but these are costs that we spend in connection with welfare projects in existing units. The result before the tax was 357 million, an increase from last year. The value changes this time were negative, with 171 million. There are financial instruments that fall in value due to interest rates. The key number we like to focus on most is the result before taxes, value changes and currency. It also increases to 544 million kroner and is quite OK, especially if we consider an increase in equity costs of tens of millions. We are well over 550 million kroner, almost 600 million kroner, which is a new level for our results before tax returns and looking at quarterly basis. We have a solid financial foundation, also after a record exchange rate. We divided 7.25 kroner in the exchange rate in May. This, of course, affects the single capital. But our single capital is still well over 50%, 50.5%, while the loan rate is 36.6%, far below our own target of 45%, and well within very conservative levels. The liquidity reserves are held at a fairly high level, just a little lower than last quarter, but 7.4 billion is the reserves per 30.6. In the second quarter, we had a The share exchange rate has risen by 13% and the exchange rate has increased by 3%. In the last 12 months, the share exchange rate has dropped by 34%, including the exchange rate. We are very pleased with this. The retail turnover continued to increase. The retail turnover in the shopping centres in the second quarter was 3.6% higher than in the same quarter last year, and is higher than in the KPI period as well. Here is a list of numbers. I would like to concentrate on the column to the right, which shows the numbers for the first half year. where we initially had a growth in rental income of 4%. The next point we can focus on is the interest rates, which are 3% lower than in the same period last year. The result before taxes increases by 24%, and the central concept of the result before tax values and currency increases by 5%. The market value of the units has increased by 3 billion, and the interest rate in gold has increased by 700 million. The interest rate has gone back over 3%. We will come back to this later, when we are at the peak level and use decimals, we see that there is a marginally pleasant development there as well. The liquidity reserves are 7.4 billion and the single capital. By the end of the first quarter, the share price was NOK 2.93, which is 79% of the long-term substance value, which is one of the highest in a number of years in the Olatone real estate company. As we were initially a bit disappointed when we got the first figures, because they went down, not from the same period as last year, but from last quarter, so we have dipped a bit. We see that in the first half of the year, the changes are 4.2%. A difference with an increase of 6.6% at the shopping centers and 4.4% down at the community services. What pulls the growth up is two new shopping centers that are consolidated from 1.1%, from 50% to 100%. So if you look at that, we have an organic growth of 2.5% and a low level of KPI, which we think is completely OK. On the negative side, there are several larger neighbourhoods that are upgraded, and this means a medium-term increase in liquidity in the portfolio to 4.6% per 36 years. When it comes to the quarterly rents in the Olatone property, there are quarterly variations related to the calculation of revenue-based rents, etc. Therefore, I do not think we should be too focused on in the single quarter, but if you look at it from a slightly longer perspective, you will see that in the graph to the left, that the interest rates go down a bit from time to time, after periods where they have risen a bit. But if you draw a line from Q2 2022 to Q2 2025, you can see that there has been an increase i første halvåret fra litt i underkant av 800 millioner til rett i underkant av 1 milliard. Det er også en viss glidning mellom segmentene i rapporteringen. The development of the stock exchange rate is actually even nicer than the development of the rental income. And I think we have a word to keep when we say that repricing has been found. In the last three years, for example, the stock exchange rate has given a drop of 92%, far above that of the Oslo Stock Exchange. Only in the last six months has the share exchange rate and exchange rate increased by 35 percent, which is far above the Oslo Stock Exchange rate. As I showed earlier, the share exchange rate 79% of substance value. So I think we will dare to claim that it is still a relatively reasonable share, but it gets a discount in relation to the underlying values. But in every investment decision, you have to point out that historical rejection gives no guarantee for the future. So I personally have no... an understanding of how the stock exchange course is going to develop, but read analyses where the price targets are approximately 325 and 340 from DNB and ABG. Some of the reasons we have had a pleasant course development are stable and increasing exchange payments. Our exchange policy sets 30-40% of the annual exchange rate. We paid out 7.25 in May. That was 39 percent, in the upper part of the interval we have defined. We believe that it is an exchange that balances the view of both the shareholders and the credit market in an OK way. Financing and interest development are also exciting areas. We have a financial policy, and without further ado, we assess that we have strong and stable thresholds, which defends a solid rating, which is BAA2, with positive outlooks from Moody's. Without going into all the details here, I would like to highlight the interest rate. As we can see, last year it was 2.96. It is a little further up, and we hope that it will go further up as well. It is on a comfortable level. A little of the reason for that is that is that the interest rates have been stable despite the increase in interest rates. A part of our financial policy is to have a longer duration on the loan portfolio. We have seen an increase from 3.3 to 3.7 in the previous year. This is an overview of the interest rate development in the last five years, and I underline the point I made earlier, that the quarterly interest rates have now reached the top level, and are stable, around 260 million kroner per quarter. The further development will depend on how the development takes place. In relation to last quarter, the interest rate has increased by 0.17 percent. For those of you who think we have had a super crash, I can reveal that. The situation with P1.33, which we also meant to undercut that time, was that we had a very large share of short-term certificate loans, P1.33. We have that from time to time. Most often within the quarter, then we have the upper quarter. From 2036, compared to 2033, the short-term certificate loan, which has a lower nominal interest rate than the bank loan, is reduced from 3 billion to 900 billion. This explains the decrease from last quarter. If we look at the increase from last quarter, the decrease from the same time last year is 0.32%. We have seen that the financing markets have been attractive also in the second quarter, and the share of bonds has increased. In the capital market, we have now drawn 70% of the yield, while if you include the unused credit balance of 7.3 billion, it is roughly 50-50. We have a liquidity reserve of 7.4 billion kroner, which is enough to cover all interest rates up to 1.312 kroner in 2027, provided that we do not take up a single new loan, which I consider to be a relatively unrealistic assumption. where we are solid and robust. In the second quarter, we have entered new long-term loan agreements of 3.3 billion, in addition to short-term certificate loans of 550 Norwegian and 400 Swedish million. The portfolio and investments. Per halvår har egnisporteføljen økt noe i verdi. Kjøpsenterporteføljen utgjør fortsatt 75 %. while the approach value is 25%. There is a fairly stable development in the value of ownership during this period. We once again underline that the top 20 centres, which is our primary target group when it comes to shopping centres, now account for 57% of the total value of the shopping centre. Almost 60% of the shopping centre value is among Norway's top 20. The market value at the centers has, compared to the situation three years ago, increased by 46.4, while the rental income level has increased by 600 million. This shows that the yield has increased considerably when it comes to our shopping centers since 2022. We now have 5 of the 7 largest centers in the country and 11 of the top 20. We are so self-satisfied that we use the good old Freyja No one on either side in Norway says that we have good evidence for the claim that we are a sovereign market leader, with a focus among the 20 largest. We see here that our large centres have also had a very good development in the first half of the year. We are a leading real estate agent in Oslo, with 65 real estate agents, divided by trade, office, logistics and hotel. The market value is lower than two or three years ago, while the rental level is increasing. So the same situation here with increased yield, which gives lower market value, even if rental revenues increase. Our investment strategy is to buy, develop and own. Ownership and projects under implementation is what is in the pipeline. We have invested about 10 billion in the last 7-8 years. Last year it was 1.8 billion, and this year it is 740 billion. It is a level that is somewhat lower than what we ideally would have wished for, but we do not see it as a crisis-low investment. We have larger N-projects under implementation that have been discussed earlier. We have several projects under planning that we will probably launch in the next 60-12 months. We have two larger upgrade projects in the Oslo Center. They are at Vika Atrum and Koppgården on Stortorvet 2. We have high expectations for these two monumental units in the future. We have rehabilitated PT, among other things, the atrium in Vika atrium, as you can see down to the left, and we have also rehabilitated everything in the internal joint area on Stortorvet 2. The biggest investments related to these projects are in P&T. A lot of it will be out of the books, at least in the fourth quarter. What will come now is costs related to tenant arrangements, but then we must first have these tenants. We have good faith that we will be able to get them rented out. in the course of a year and a half, even though we have to be honest and say that a slightly heavier outlay market has contributed to us That this took longer than we had hoped for, but that these pearls in Oslo Centrum will be able to get new buyers at competitive prices, I am completely aware of that, and I look forward to them being completed in the next year with the buyers. In 2025, we have included a chapter on that. The transaction market, and we have received a course from Wakefield to develop this for us. This is one of the sharpest heads in the business market that has made it for us, and we are very happy with the conclusions, and therefore I quote them almost incorrectly. If you look at the transaction market, it was a slow start this year and still a self-sufficient market, but a sense of optimism towards the summer with a transaction volume of 40 billion. We have been involved in some investment rounds where we have been surprised by the price level on central good units. The largest share of the volume is the housing segment. Some of the reasons why the transfer market has improved over the past half year is an obvious improvement in the foreign capital market, and we see that there is good access to credit for good projects and good customers. In spite of that, it is the single-capital actors who have been the most dominant in the market. And then there is the fire sales, which the poachers have been sitting and waiting for enormous opportunities to arise. They have not come as far as anyone thought. And when it comes to the yield, they have developed sideways throughout the year. It is still primarily low compared to the interest rate. On the office market, low employment in Oslo is contributing to limited activity and lower resignation volumes. This is partly due to the fact that our excellent premises in Vika Atrium and Stortorvet 2 may have taken longer to rent than we had hoped. But in light of this, it is surprising that the rental price growth in Oslo has been quite strong, with 4% in the first half of the year compared to the first half of 2024. I do not think much of this has been cap-extraved, where high new buildings and real estate costs increase rental growth. The rent growth is particularly strong in the top segment and in the centre, with constant new examples of higher rents for new projects. The office rents in Oslo have stabilized by around 7%. This means that higher building costs make new buildings in the Rann zone demanding to clean up. When it comes to trade, private consumption is in a positive trend, even before the surprising cut in interest rates. The question of capital goods has been raised after a long period of stifling demand. Maybe all the TVs that were bought during the pandemic need to be replaced. Maybe the cars have become worn out, at least. At least, this has contributed to the fact that stores within houses and homes have a higher revenue growth in the shopping centres. There has been a solid development in Norwegian shopping centres in general as well, with a turnover growth of 3.5% in the first half year, and the number of visitors has also increased further, so we are very pleased with that. The hotel has also been a good half year, with some marginally increased accommodation. The room price has increased by 9%, and if you combine this, you have an average price increase of 12.7%. If you look at the segments, the holiday segment is the one that has increased the most, and of course also foreign hotel guests, doped off by the shameful low Norwegian kroner. So, what do we see in the future? We also believe that the transaction activity will increase in line with better investor sentiment. It is driven by still competitive foreign capital markets. and lower interest rates, and who knows, maybe some lower uncertainty in the railway economy. Maybe 12 will fall into place, who knows. When it comes to the yield, we believe that they will continue their side development. The interest rate decline is already priced in, as we see it. We believe in moderate interest rate growth for offices in the Oslo area. But in total, the statistics show a growth, because the top segment and the center increase rental prices. We also believe that the office capacity is stabilizing around today's level. Among other things, it follows that what is decreasing is moderate employment growth, but the low supply of new buildings is increasing. That is why we believe that it is stabilizing around today's level. The decrease in interest rates and relatively high interest rates gives good growth in real income and stimulates private use. We also believe that growth in the hotel industry continues, driven by an attractive and trendy Coolcation. When you burn up around the Mediterranean, many people think it's nice to come to Norway, where it's a bit colder. It's also snow-proof. In addition, there are a lot of natural experiences in this country that we are so fond of, as the weather usually says. The weak Norwegian crown stimulates growth. In addition, there is a fairly moderate increase in new room capacity. That is why we believe that growth in the hotel industry continues in the coming years. Then we move on to macroeconomy. I'm standing here with a blindfold on and don't know what's going on in Arndal, but if I bomb this, I'll do it. We assume that the interest rates have been kept unchanged. We also assume That the prognoses from June about one to two interest cuts in the number of years, that it stands by law, and I think that is a reasonable decision. Here are the prognoses from June, and they show, among other things, that private consumption will increase to 2.9% in 2025. We see that housing investments still fall with 6.4% from 2024, which again was a weak year. But folks, next year, 9.9% increase. Everything is much better, as long as we look ahead. The KPI will also go down from 3 to 2.2, and the control rate will also drop further in 2026. It is possible to argue that BNP will continue to develop at a fairly low rate of 1.4%. This should be a good amount to call the Norwegian economy a tiger economy, but it will continue to deteriorate at a relatively low rate. In June, what no one thought was going to happen happened. It was one of 140 income analysts who made a cut, and it actually happened. The first income cut in five years, hip hurrah. What they stated was that the time was coming for a careful normalization of the pension rate. We continue to say that there is greater uncertainty as to whether the economic outlook is normal. This is a formulation we have maintained for a long time. The prognosis indicates 1-2 interest cuts in the number of years 2025. The prognosis continues to show that the government's interest rate is cut to what they call 3% by the end of 2028. That is, moderate interest growth in the future, lower interest rates that will stimulate the real estate market and the housing market in a good way. Now I have come to the observation. The growth is still low, but we assume it will increase in the future. Low in employment, even if it increases, the wage growth is still high, but it is suppressed. Price growth has decreased a lot since the top of 2023 with 7%, perhaps the highest, but still lower than the inflation target, even though the Norwegian Bank's inflation target controls what inflation will be in two years. In recent months, price growth has been lower or in line with what the Norwegian Bank has expected. We were aware that the government's interest rate was lowered, and signalled that the interest rate would most likely be lowered further. In the Olatone real estate company, We expect that the company's solid market position and good financial position will be able to contribute to a good operational result development, even with a higher interest rate than it has had in some years, and still macroeconomic uncertainty. We believe that our strong result development, low interest rates and good liquidity reserves give us good opportunities to exploit the investment opportunities that we both see and know will emerge in the future. I think we have come to the question round.

Yes, we have received some questions. The first is, can you give a comment on the reduction in leases from Q1 to Q2?

We are back to the light picture, where it was explained with increased leadership in the office, or in the nearby segment, in addition to quarterly variations. Do you have any comments on that?

Next, can you say something about the validity of the rehabilitation projects in Vika and Stortorvet? When is it expected that the buildings will be fully expanded again?

We have a very good question. What I expressed is that we have now completed the joint areas, and then there is the external situation, which we will decide when we complete the projects in total. Let's hope that what will happen in the course of 62 months, but for God's sake, we must not perceive it as a prognosis, but that is our ambition.

How much of this is due to rehabilitation projects?

We say most of it, maybe 90%.

How does it look for the launch of new, larger development projects, such as Gunnerius? Are others on their way to being launched?

Gunnerius is a project that we have worked on for many years. It looks like we haven't worked on it for as many years before we can start it, but it is a long process, so I think we have to wait a few years before we can start it. As I mentioned, we hope to be able to start some larger projects within a year's perspective.

Then there were no more questions.

Then I take this opportunity to thank you, and now you also have the press conference with a Norwegian bank from Arndal, and then I can invite you back again to Webcast, November 6, 2025, at ten o'clock, to hear the third quarter report. Thank you for me, and have a nice day.