Olav Thon Eiendomsselskap ASA

Welcome to this presentation of the 3rd quarter report for 2025. This time we have chosen an excerpt from one of our widunglige buildings located in the center of Oslo. It is not the castle on top of Karl Johan, but another building a little further down on Karl Johan. Agendaen følger en kjent mal. Bildet til venstre viser en gammel trave i ny drakt, nemlig Vika Atrium, som vi nå har brukt betydelig midle på å oppgradere til dagens standard. We will go through financial development, stock information, financing, interest rate development, the property portfolio, the property market. We will also quickly go through some macro, and in the end there will be a Q&A, and it is possible to ask questions both during the presentation and at the end. So, welcome! Financial development and stock information. If we sum up the third quarter with a few key points, we can say that the results are satisfactory, with stable value for money. The result for the tax is around 0.5 billion, 486 million, on the level of last year. This year, the value adjustment was reduced, resulting in an increase of 559 million kroner, an increase from 518 million kroner last year. We have a solid financial foundation, also after what we called a record exchange here last summer. And we have a one-capital share of 51%, the loan rate is 36%, and we have significant liquidity reserves. The share price development was weak in the third quarter, with a decline of 3%. If we include the exchange rate, which was paid in the second quarter, we have had a drop so far this year, including the exchange rate of 25%. We are pleased with that. What we also see is that the turnover on the shopping centers continues to increase compared to last year, with 4.5% growth in the third quarter. This is exciting, and we will get back to that in a moment. Here is a slightly heavy overview of the details in the forecast. I'm not going to go into detail on this, I'm just going to draw your attention to change 2025, accumulated, where we see that gross income has increased by 4%, we see that interest rates have gone down by 3%, The result before taxes increased by 15%. The result before taxes and value changes is our central result goal. It increased by 6%, which we are very pleased with. The market value of the properties increased, and the interest rate also increased a little, but much less than the market value of the properties. And the loan rate is then... unchanged at 36%, as mentioned. The key figures that we are concerned about, both we and the rating agency and the market in general, is the interest rate, or ICR, as it is called in the ringing new Norwegian, which is now increasing to 3.1 from 2.9 in the same period last year. There are probably a number of other companies that are looking at an interest rate of a little more than 3, so we are pleased with that. We also have solid liquidity reserves this quarter. We have a share price at the beginning at 2.73 and a substance value at 3.75, so that the share price now accounts for 73% of the substance value. That is also 9 percentage points better than a year ago. Let's dive into the central elements of the accounting system, namely the rents. Where we see bruttolage quarterly. Swinged down in the previous quarter and a little up in this quarter. If we look at accumulated this year, we have a growth of 4.4%. Not that bad. Organic growth was 2.6%. Also completely OK. We have two new shopping centres, where the share price increases from 50 to 100 per year, which affects the rental growth in total. What is decreasing is what was in the previous quarter as well, that several larger businesses are upgraded, and the liquidity in the portfolio in total is stable, with 4.7% at the beginning of the quarter. If we look at the changes in the year versus last year, divided by segment, we see that in the shopping center segment, there is a growth of almost 11% with 6.5%, while the neighborhood management is going back, due to the neighborhood management we talked about last quarter, which we will also talk about today. Kursutviklingen i det tredje kvartalet var svak. Den har vært ganske volatil hittil i år, er vel riktig å si. Som sagt, 7% ned i tredje kvartalet. While so far this year it is 26%, which is far above the Oslo Stock Exchange. And not to mention all the periods thereafter, including two, three and five years, where the share price has overperformed, as it is called in fine Norwegian, the index for all periods. It is nice to know for shareholders that if you bought the share for Two years ago, there was a discount of 74%. Five years ago, if you were one of those who quickly got some shares after the pandemic, in the pandemic, there was actually a 120% discount. And I think it's nice to be able to convey that to our shareholders, who probably have noticed that themselves as well. So we appreciate that. Financing and interest rate development is very central to the corporation. Our financial policy is almost like a bible to understand. We have strong and stable key figures that defend our solid rating on BAA2 with positive outlooks from Moody's. It has been confirmed in October. I'm not going to go into all the elements here, I'm just going to wander around the interest rate coverage, where we see that it is calculated in the form of return on investment results before deductions in the last 12 months over net interest rates. We see that at the end of the year it was 2.96, at the end of the year it was 3.05, and now it is up to 3.12. It is important to get two decimals here, where we go through the financial policy, because in the key figures we only round off to one decimal, and then it looks flat, but it is not. It goes absolutely in the right direction, and with a lower interest rate, we have faith that it will be further strengthened next year. Our interest rate is now lower than last quarter, has actually gone down to 0.34. There are two reasons. The first is that the share of short-term certificate loans is the type of loan that gives the lowest nominal interest rate. It has increased significantly in the quarter, and that is a short-term effect. What is much more long-term is the nine-year interest rate, which has fallen a good deal through the third quarter. Much of our real interest is set up every third month, and in June it was just before the surprising cut in interest from the Norwegian Bank, so that we have brought with us a slightly higher Nibor quota throughout Q3. But now everything is going a lot better than Sali wanted. Now we have a lower interest rate, and we will take it further into Q4. We also see and experience that the financial markets are attractive and offer us very competitive margins. And in the third quarter, we have been active. I'll come back to that. If you look at the distribution now, we are in the capital market with a low yield. So it's 60%, while the bank market is 40%. So for everyone to follow the trends properly, we put in some small Here we have a little bit of the numbers, so the distribution is not correct. It will of course be updated in the version that is released on the stock exchange. But we can see that most of it is in the capital market, while if you include unused credit frames, the distribution is more normal. This view is not covered. Here we can see our fantastic Stortorget 2 on the left. It is a beautiful building with a facade facing Karl Johan, Kirkegaten and Stortorget. It is in a nice, upholstered state. But if we go to today's text, we see that the liquidity reserves have increased to 9.4 billion, and we have yield decline in the next two months at 6.2. This means that we are well covered. The financing agreements in the third quarter We have made long-term loans in the capital market in Norway, 815 million, and we have been very active in the short-term certificate markets, both in Norway and Sweden. Then we will go over to the property portfolio and our investment portfolio. This is the property portfolio per 39. Where we, without going into details, want to show that our shopping centers within the top 20 account for 57% of the shopping center values. In total, the shopping center ownership accounts for 75% of the company's total ownership values. We are absolutely sure that we are Norway's leading shopping center with a focus on the largest centers. 56 units in the balance now. The market value is 47.2, increased from 46 by the end of the year, and our rental income has also increased significantly from the end of the year. We have five of Norway's top seven and eleven of the top twenty. In addition, the concert's sister company, Tone Holding, also has two or three in this league. You can see that the yield is unchanged. from the change of year, while the retail turnover is not unchanged. It has grown by 4.4% in the third quarter, and accumulated, it is 3.4% growth, which is well above the consumer price index, and we are very pleased with that. We have the portfolio on the side, which accounts for 25% of the leading business actors in the business sector in the Oslo area. There is a certain liquidity per time. Of the 65 businesses, it is divided into trade, culture, logistics and hotels. The market value is in the meantime increased through the years, and also the rental level is marginal. The ID is unlimited. Our investment strategy is mainly about purchase of property and property projects that are under implementation. In the last seven years we have invested 10 billion. Last year we invested almost 1.8 billion. And so far this year we have invested 1.5 billion. So it is a relatively active investment activity at the moment. One of the biggest buyers was not Kjaskvelter. I would say that we increase our ownership rate from 60 to 100 percent in a nice shopping center in the region of Bergen. But we have used some funds for it. This is a fantastic center that I have been to own for a year. Sartor was number 11 in Norway last year, with a turnover of 2.5 billion kroner, and the rental income was 150 million kroner. A well-managed shopping center in an interesting part of the Berges region, and in the middle of our core area number 1. So we are very pleased that we got this in place. Vi har noen prosjekter som vi tuttler med. Noen av de er nå blei ferdigstilt. Vi lager et logistikkbygge på Gardermoen Park, Bragsvei 3. 10.500 kvadratmeter som blei ferdigstilt i tredje kvartal. We have Lagunens Storsenter, Norway's largest shopping center, which is expanded with a total of 17,500 square meters. There is a grand opening next Thursday, so a warm welcome to all Bergensers and others for enjoying the new building and Norway's largest shopping center. A warm welcome to you all. In addition, we have housing projects in Asker, we have construction at Gjessheim, and we have both new buildings and rehabilitation in Kristiansand. Refer to our website, olt.no. We have, as we have done a few times, upgraded the Oslo Center. We went to Atrum and Koppgården, Stortorvet 2, which are the two biggest. And then it's nice to be able to show the picture that now the completion of the two buildings is approaching. Now we are basically waiting for some lucky tenants who are allowed to move in to a competitive tenant. They will probably come soon. The property market in 2025 has been a bit up and down. If we start with the transaction market, Is it right to say that we have now received a description of the real estate market from one of our suppliers, Cushman & Wakefield Royal Credit. They are responsible for valuing our portfolio equally. They are a competent company. We use it a lot to get a description of the market. If we look at the transaction market, we would characterize it as slow and selective. A relatively low volume of transactions, 50 billion this year. The largest share is the housing segment. We see a clear improvement in the foreign capital market, with a lower bank margin and credit spreads. Good access to credit applies to more people than us. We experienced it many times, but it applies to absolutely most of the actors. And then you have the foreign capital actors, who are still active buyers of their core products. If you look at the yields, they have developed quite sideways. And relatively low yield gaps contribute to dampening the transaction activity. To briefly discuss the different segments, I will start with the office. We see that weak growth in the employment setting within the office district of Oslo, dampens the right question and leads to relatively low signage volume this year. On the other hand, the rental price growth has been quite strong, with a 6% annual growth. This is largely driven by quite high building and rehabilitation costs. And what draws up is attractive buildings in good locations that are upgraded. If we look at rental price growth among rental contractors without essential adjustments with ASIS, it is somewhat more moderate. If we look at the liquidity, the office liquidity has stabilized at around 7% and is on its historical average. Trade. We see that real estate growth and interest cuts have given a boost in consumption, especially goods consumption, which has increased. The conclusion can be drawn to the fact that the businesses still believe in their own economy, and the sentiment is lifted by a solid working market and a good wage growth. The shopping centres have also developed well in the market, not just ours. A turnover growth of 3.7% this year. And the number of visitors has also increased significantly so far this year. If we split up into branches, stores in houses and homes have had the highest turnover growth, along with service companies. So we use money to renovate our homes, both with new furniture and painting and rehabilitation, so that's good. Hotel has been a good year for the travel industry so far. Increase in both accommodation and reasonable room price means that the number of guests has increased by 11% from last year to this year. What drives the growth is mainly the holiday segment and the excursions. with a significant growth of 12 months. Foreign countries have a growth of over 20%. We see that there is relatively little capacity coming into the market. Combined with a strong demand, this leads to increased prices. In the next six months, we believe that the transaction activity will rise from the low levels today, both because there is a lot in the market, and investors experience that the financial market is good, and the investor sentiment is also positive. When it comes to the yield, we believe in a somewhat sideways development, but if the interest rates do not come down a little from the daily level, there is a risk on the upside here. The rental market continues in the two-part where the rental price growth for new buildings and totally rehabilitated offices in the Oslo area is good, while in a broader part of the market it becomes a little more moderate. We also believe that a slightly better demand and low supply of new buildings makes the office leadership stabilize on a daily level. And now it is not so long until the fantastic rainy quarter is completed, and in the long run, the department's move will probably press the office leadership a little more up. In goods trade, we see that high interest rates still give good growth in real available income, despite the fact that interest rates are a little lower than they were previously assumed. On the other hand, we have already received two interest rates this year, and that was probably something more than some of the most pessimistic macroeconomists had foreseen. Combined with the fact that the unemployment rate will continue to be moderate, even if it increases, the consumer confidence rate will continue to increase. As the savings rate normalizes, we believe that the positive trend in household consumption will continue. The hotel market, I think, will continue to grow, driven by a good demand, especially from international guests, and a small new capacity that is added to the market. Then we are over to macroeconomics, which was a bit before that, because we also know that when it comes to the real estate market, they are connected. But we have to go directly to a Norwegian bank, that some 25 minutes ago communicated the interest rate for Hefolio. What the market sector called a non-event, with relatively little change both in the interest rate and in the forecasts. The semantics is probably that it is somewhat expected, And for this reason, no new prognoses have been made. So even though I don't know the result, we are quite sure that there have been no major movements. This means that the key statements from September are still valid, and they show in the scroll engraving 20-25% of private consumption increases well. The consumer price index is lower than private consumption. The annual income growth is significantly higher than the consumer price index, so the real income increases. And that looks like we will be watching over the next few years. That is of course positive. The housing prices will also increase positively. The housing investments, on the other hand, will continue to drop, at least this year, but In the later years, you are positive for next year. Next year, on the other hand, they will rise. But now you are rising from a very low level. If we look at the interest rates, the blue line is the prognosis. They say that there is still a need for a higher interest rate to bring inflation down to the target, which is 2%, over time. They say further, after they have cut the interest rate twice now, The prognosis shows that it is most likely that the interest rate will drop by one interest rate cut in the next three years to 3.25, before the beginning of 2028. But then there will be some formulations at the end, which I think you should pay close attention to. They say that there is uncertainty about the economic outlook in the future. Most of the people in the market agree with that. There are few macroeconomists who are very secure. What they also say is that the price growth will be able to change the prognoses. Higher price growth will contribute to the need for higher interest, vice versa. Lower price growth or weaker labor market. The interest rate can be set down faster than the prognosis shows. The interest rates in the Norwegian market mean that we have seen a lower price growth and some weaker labor market than what the banks laid to the ground. So it is interesting to see how they argue in December, given that this development continues. If we then come to the summary and our future outlooks, then growth in the Norwegian economy has been quite strong this year, but it is expected that we will decrease in the years to come. The workload will remain quite low, but despite that, a small increase is expected. The wage growth has dropped from last year, but is still relatively high. Price growth has decreased significantly since 2023, when we were up to 7%, perhaps. But it is still higher than the inflation target, which is at 2%. But we have to remember that the inflation target is how they evaluate inflation two years in advance. So, to put it mildly, there is some subjectivity in those targets. In recent months, the price growth has been somewhat in line with Norwegian Bank's prognoses, even though it ticked a little lower than in October. It will be interesting to see on Monday when the next KPI figures will be released. As I mentioned, in September, the Norwegian Bank cut the interest rate further from 425 to 4, and signals that the most likely interest rate will be lowered further during the next year. If you take that literally, it means that within September next year, the market will appreciate that there will be a cut in the first half of the year, 2026. At Olatone, we enjoy a solid market position and financial position in the medium term, and we believe that what we can contribute to is that we will be able to show good operational results also in the future, even with a rate level that we think is higher than we had hoped, and a lot of macroeconomic uncertainty. So we are still positive about the results in the future. That's what I had prepared myself for, so now it's open for questions. And there are often many good and interesting questions, so feel free.

Yes, for the moment it looks like everything has been clear and clear, so there are no questions. There is a question here. Do you see the benefit of investing more in housing in the future?

That's a very good question. The housing sector is a bit down right now, but on the other hand, we have some housing projects that we can pull forward from the shelf, and that we're counting on today. So, yes, maybe we'll get a little broader investment in housing sales, also in Olatone and Næringsselskap.

Ja, da ser det ikke ut som det er noen flere.

Nei, da benytter jeg bare anledning til å ønske alle en strålende novemberdag og førelsetid, og ha en fin førelsetid, så ses vi neste år klokken 10.00 den 12. februar. Så takk for meg.