ALM Equity AB (publ)

Hello and welcome to AlmEquity's presentation of the third quarter of 2025. My name is Mattias Karlsson and I will be moderating today's broadcast. With me in the studio is CFO John Sjölund. Welcome, John.

Thank you, Mattias. It's nice to be here.

And before we start, I just want to remind you that you can ask questions in the chat. We will take them after John's presentation together with my own questions. So with that, here you go, John.

Thank you very much. It's very nice to be here again, I say. So I'm going to do our quarter three presentation, AlmEquity. And I'm going to start by telling you a little bit about how I experience the market. We will move on to the most exciting event of the quarter, where we have a new CEO and a new CEO of AlmEquity, Tomas Carlsson, who has joined us. And how we work forward with Tomas, who is new to the business, and Joakim, who will focus on the acquisition of new building rights through his role as working board chairman. Then I will comment on the quarter and the figures and a little bit of what I see ahead in the company. We have had Joakim with us, who has written the words of the quarter, because he has been the leader during the entire Q3 and Thomas took over on the first of October. So it is me and Joakim who will be responsible for this quarter, and then Thomas and I will be back when we get into Q4. If we start with the market situation, I think it's a repetition of what Alma Equity focuses on, an image of the world, why we focus on the Stockholm market that we have focused on. We think that Stockholm is a good market. We feel that we know the market well. There are many different micro-states that you can focus on. We have chosen to focus on the structural part of Stockholm's housing market, where we have a very large share of single and couple households. At the same time, the entire housing estate of about one million residents in Stockholm, where a large part of the estate is adapted to accommodate households with three or four people in the household. This means that when we reach the smaller, more efficient housing, we get products that compete with the old stock. Both when it comes to the housing market and when it comes to the real estate market. But the most important thing is how our business looks like. Does it work with today's market? Not so long ago, it was an incredibly tough market situation when inflation and interest rates and everything was at stake. It was like you had to stand with both feet on the brake. Then I will try to divide it into three parts. I will start with the development business on our left side and simplify the world a bit. You need access to be part of the development business. You need building rights, you need capacity on the entrepreneurial side and you need funding. And then you can produce housing that you either release on the administrative market or on the private market and make real estate out of. If we look at the building rights side, we feel that there is a good access to building rights right now. When we started this year, it was a pretty positive image and we felt that many who were on wanted to buy new buildings. And that was an increased competition there. But after Liberation Day, it became a much more cautious market, and it became a little anxious and worried, which was actually good for the opportunity to buy building rights. And we see that we will have a good window for a while. Then as long as it remains, it will remain to be seen. Then we can continue with new building rights. Then we sit on a portfolio of building rights that actually works for both the rental market and the housing market, which is a good foundation in some way to be able to do business. If we look at the entrepreneurship side, then we have about a year ago, very stable entrepreneurial prices and no costs that occur. We are on a level that is perhaps 10-15% higher than it was before the war in Ukraine started and before Covid and so on. So we are on a higher level. So with the same expenses, we have a heavier entrepreneurial burden to bear in some way when we see the whole deal. If we look at the final investment in financing, we are currently in a very good cash flow. We have a collaboration with Airmont, which also wants to invest in new building rights. If we look at the equity side, if we look at the debt side, the market is very attractive right now. You can get a lot of loan capital if you want. There are many actors who are open to lending out money, both to Almequity and to the administration of properties, to the development of properties. So that market has repaid itself because it has been quite cold. So on the cost side, we see that the situation is quite okay. If we look at the income side of the development business, we have the housing rights market, which I find surprisingly weak. I have looked at some business colleagues who have released reports recently, and they also experience that the housing rights market is weaker than one might have expected. There are some positive signals that the interest rates have gone down. You see easing on amortization rules that hopefully come forward. But so far, the buyers are quite cautious. i minnet egentligen vad som hände när räntorna drog och inflationen drog och de som satt här skuldsatta de blev väldigt hårt drabbade och därför kommer man vara försiktig ett tag framåt. Så egentligen vårt största fokus är på hyresmarknaden där vi ser att vi har en bra affär givet hur omvärlden ser ut. Vi har bra förutsättningar för att göra hyressätter givet vår modell. Vi bygger väldigt yteffektiva bostäder som gör att den The actual monthly rent for the single or couple or the small family becomes low. And in the rental market, you have been able to compensate for these higher entrepreneurial costs. If you look at the housing market, you probably haven't got the compensation for the higher entrepreneurial costs, because that's where the market is stumbling. Hopefully it will look better in the future. We have a model where we can switch between these markets perhaps a little faster than other actors. If we were to get a shift forward, we could have even better conditions. But right now we have an okay environment. make our products and make our businesses. Moving on to the entrepreneurial side, there are actually two parts that are important to us. It is implements, what happened on that side. During Covid, it was quite difficult to do good business there when the prices went up, which made it possible to get into a bit of a rift between entrepreneurs and customers. Right now, we don't see any problems at all. There are good implements and good subcontractors to work with. There is good capacity on the market. However, the activity is very low. It is not built that much. So we have been very good at finding new external entrepreneurial projects during the time that it has been a tough market. We will come back to that later. We hope that these components can result in new external and internal entrepreneurial initiatives for us. We have a number of building rights from the development side that we are ready to start in the beginning of next year. So there are good conditions to start it. The last part of the market side, I look at our administration business. There, the housing side has been compensated for increased cost levels by the fact that the rents have been able to increase quite a lot, especially in the new production. There, we have received very good compensation. But we are dependent on having a good location and a good function in those homes, so that you are not affected by vacations or have problems at the levels you can actually set. So we see that there is a general concern on the market and the location and the actors who end up wrong. But we feel that our model works quite well. Den sista komponenten som egentligen styr hur bra förvaltningsmarknaden är och det är tillgång på kapital mot de aktörer som kan tänka sig köpa den här färdiga förvaltningsbostäder. Jag ser i vår regi så är ju det, de här förvaltningsbostäderna en tillgång som kommer ligga under en period men sen när vi kommer till rätt läge så kommer de att växlas över till likvida medel och investeras i nya. new building rights and new assets. That's where the capital has started to flow in. There are more and more actors who want to buy rental properties. Right now, it feels like the capital is quite selective in what types of assets it buys. When everything is right, so to speak, you have the right environmental classification, you have the right location, you have the right product, then you pay quite well for the rental properties. And we feel that we have that type of product. Then we feel that this may continue to develop even better in the future. But at least it makes the conditions for a good administrative business feel okay. Now I'm blending in the wrong direction. It's more exciting. Yes, what has happened here during the third quarter, which you may have some questions about, is that we have a new CEO in the group, Thomas Carlsson. And we have Joakim Alm who has taken the role as the working board chairman. Our former board chairman, Maria Wideroth, is still the vice-chairman. And I'd like to talk a little bit about the background of Thomas. Thomas has been in our group for a very long time. He was involved in founding two enterprises, which initially were just an organisation to help Almec with the sale of enterprises, when he started in 2015. In 2017, we bought a company called SMOA, which had a fairly large organization for its own entrepreneurship. Thomas took over that organization and started developing it. We started our own enterprises for the projects we ran in our own management or together with different GV partners. And most of all, we had about 3,000 homes in production via two enterprises. And when the market started to swell and we had to press the brakes, Thomas managed to find a lot of external customers who were very good at maintaining a good level and had a very good control over the business. We've had really good margins in the business, even though it has been tough times. So he has done this in a super good way. Thomas will focus on our business plan. We will get the project started in production. We will make sure that the entrepreneurship company continues to take part in external contracts and can deliver the internal projects we want to use. And that we get an effective administrative business. And focus on the coordination between these different parts of the business working well. Joakim will focus on new businesses, new building rights or companies that include building rights to the business. So it's a pretty clear part that he runs that is side-oriented from the operational business that he will actually be responsible for in the future. And then we will collect the activities in our office in Sundbyberg to facilitate the collaboration there. I will try to summarize it all and look at what has happened during the quarter, so I can go in a little bit on the financing side, where we under the quarter refinanced an obligation loan of 500 million. So now we have a total of 1 billion in outstanding population debts, all of them long, so there are no defaults in front of our feet, which feels very good and pleasing. We are then actually done with everything we need to do to be able to get our business going in the best way. We are in a good cash position and we have a ... ... ... A negative result is to continue to work on the cost side and reduce it a little bit, but above all to get the project going in production and follow up with new building rights. So Thomas will be a very important component in getting these projects going and rolling, while Joachim will make sure that we have more building facilities in our warehouse that we can put into the machinery and get speed on the business forward. So there will be focus on these two sub-areas, getting speed on our building development machinery that creates good effects on the rest of the business and then fills up with new resources. I don't think I'll stop there in my review and hope that both Mattias and the rest of the listeners have some exciting questions.

Thank you very much, John. Absolutely. We don't have any questions on the chat yet, but I can start. What I thought stood out in Q3 was the negative brutto result and also the operative movement result. And if you look at the nine months, the results are negative 94 million. So I wonder a little bit, how do you see the development here and how are you going to take it from negative territories to positive territories?

Yes, we have a couple of components that we work with there. First of all, it comes from a period where we have done a number of larger structural businesses that have incurred a lot of costs. We were first with Svenska Nyttobestäder, and then we made a larger structure together with Aermont, which has incurred a little extra costs during the implementation period than the situation we are in now. We also come from a situation where we have had a higher debt volume than we have right now. So we will come down a little bit in terms of costs, but that is not the whole solution. We will not be able to slow down to a positive result. The main reason why we do not deliver positive results is that we have a project development organization that does not have the right to build in work. So we have come from a situation where we have had to slow down to a situation where we now have a large cash register where we want to start the business. Until we have this development business, the app Running has received a we will have to deal with this problem. So the most important thing is to get the development work going. We also hope that we can get some positive contributions from the content we have in the future. We have had quite a tough time. The values of developing companies on the stock exchange have not been very positive, but very good things are happening in both Klöver and Besköp. We have a good hope that they will contribute in the future, so that they will not burden the results, but rather contribute. So it's really those three components. The cost side, the development side, and then having a positive driving force.

And how does it look on the entrepreneur's side? Because that's what generates revenue today and gives a positive contribution to the gross profit. But I also note that the order stock on the entrepreneur's side is quite low, or on a very low level in that way.

That's true, but we have our own planned missions in the Archimedes project in Bromma, where we have quite a lot of facilities that are in the pipeline that we want to get started, that we need capacity to handle. And then there are a lot of external dialogues that can enable us to fill in So the key is really to get the development that also draws the entrepreneurial business to another level.

We'll get back to the stock market a little later, but first I thought I'd focus a little bit on the cash flow, because that's also something that som verkar vara en stor utmaning om man tittar på siffrorna. Om jag har räknat rätt så har ni de första nio månaderna 190 miljoner i negativt operativt kassaflöde. Och om inte någonting förändras i fjärde kvartalet drastiskt så räknar vi med ungefär 250 miljoner på helåret plus preferensaktieutdelningen på 130. Så vi kommer upp i 380 miljoner negativt. So it's a pretty big sum of money, and now you have a liquidity of almost a billion. But what do you think about the cash flow situation?

Well, some of the answers are the same as on the previous question, that we will work partly on the cost side, so that we do not draw lower costs, that we have lower financial costs. but above all that we get the development business going, which creates value. And then we will need to work all the time with the resources we have and the building rights we have, so that we have a good balance. We will need to have a small buffer to ensure that the project is carried out and completed and contributes to the cash flow, because the turnover rate is about one and a half years from from the development business, while the entrepreneurship business gives instant cash flows when you run the project. But we have a lot of opportunities to act when we are both on the content we have, we are on a cash flow that we can choose to dispose of for investments that can match the flows. So that's what we We need the cash flow to move forward so that we invest in the right pace and really get the production and the building rights we have started. And then we follow up with building rights that we can quickly convert to cash.

Because you have a liquidity of almost one billion and then you also have åtagande att investera 600 miljoner i Bridge. Hur går den processen? Hur går byggradsletandet och när kommer ni investera de här pengarna i det givet?

Jag hoppas att vi kan hitta någonting väldigt snart. Vi har ju stoppat Joakim ansvarig för den här förvärvsdelen och känner jag honom rätt så kommer han väldigt snart komma upp med någonting som är intressant att stoppa in i vår del. Sen i vilken takt vi kan hitta saker som fyller hela den här All these allocated amounts, it's a bit difficult to predict. There are a lot of ideas that we look at. Then we rate quite a lot that doesn't match what we think is good. The most important thing is that we have a good business, that we have good implements. If we buy in the wrong building rights and assets, we will have poor profitability later. So it's working very hard there, so that what's really being shaken up should be good acquisitions. So I hope that Joakim takes the challenge seriously and will very soon come back with a first part. But then everything comes after you do the investment. Should we invest all 600 million at once, then you always have to think, do we need to free liquidity somewhere else to have a large enough buffer? But we do not create a buffer for the case we would make the investment.

Okay. We have a question from Bertil Nilsson here. Speaking of acceleration and acceleration, how many buildings do you think AlmEquity will have in production by the end of 2026?

I dare not... A single forecast is a bit challenging, but we have the Archimedes project in Bromma, where we were allowed to build 357 homes here during the quarter. We hope that we will get a building permit for another 533 here at the end of the year and that we can start those projects. Then we have more building permits in Bromma. We have a large project in Häggvik where we can also start some part stages during next year. So if you I'm not going to say a budget, because then the development business will get in the way. But we have the ambition to have a significant amount of housing in production by the end of 2026.

How important are the market conditions? You're talking about rental rights now, but are you just going to keep going regardless of rental rights?

Market conditions are extremely important to have a business that works. We are now in a dual-track strategy, where we can reach both the rental market and the housing market in most of the projects we have. From the building rights we are in, we have a good rental market that we can build on. If the housing market became stronger during production, the 18-24 months we're talking about, the market conditions can be completely different at the end of that period. Then you can change the market for some of the homes and enjoy that rise. But we are not dependent on a stronger market to be able to start and build our homes.

We'll take another question here, in Norwegian. How does the structure of your preference stocks work? And what are the most important drivers for Arm Equity in the next 18 months? And that's the second question you've answered now, actually. But just preference stocks, how do they work?

It's quite a simple structure. It's like the preferential stocks that exist in the listed companies that still have access to them. We have a quarterly allocation that the board of directors makes decisions about in the coming years. And I see the assessment, can we give out money to our preferred shareholders? And then we make our shares quarterly. So we see it as a, or rather, our investors see it very much as almost a rent placement product, if I could interpret it that way.

Yes, definitely. Today we share 8.40 per share and with today's stock exchange rate it is approximately 10% in annual withdrawals if the issuance is long-term sustainable. So it is definitely an interesting value sheet. But it is the cash flow that is a bit of a concern in the sky.

When the preferential stock has a share against other shareholders, you would probably need to pause such a share during the journey, which some actors have done. Then they have a share on all processed shares that are not made before you can distribute money to the shareholders in the future. So they are in front of the shareholders in the future. i rätten till sin, vad man kallar den, kvartalsvisa utdelning. Om man då ska prata strukturellt hur den instrumentet fungerar.

And then I just wanted to get to the construction starters and Archimedes, because you talked about that you were going to start building 357 apartments now in the second half of the year. But I see now in this report that you have moved them to the second half of the year 2026. What happened?

What has happened is that after a deeper market analysis and analysis of the project, we thought it would be best to start what we call Archimedes F, which is a reconstruction project where we keep the concrete block from an existing office building. When it is fully developed, it will give a lot to the local area. If you go out and look there, it will feel a bit boring. So if we achieve that first, the micro level will be much better to do that. And then production-wise, it has an advantage to do it first. It differs quite a lot. It depends on different types of productions and different types of development projects. Here we are in a fairly large quarter where we are going to build many sub-stages, and it is about tinkering with these sub-stages in the best way possible, based on the fact that you will get the best pay in the end, that the product will be the best, that the production will have as low a risk as possible. So we saw that the total turnover will be better through that order, even if it involves a certain time delay. I myself was quite eager to get started with these 350 first, but Thomas, who is in charge of production, thought that there was a certain advantage to get started with.

Speaking of Thomas, from the 1st of October Thomas will be the CEO. In your opinion, what will be different now with Thomas at Rodret and Joakim as the working CEO?

Apart from the fact that the CEO is Karlsson, which has to be a success factor, we will have a person who will be 100% focused on the part that is the operational business and focus on the development business, the entrepreneurial business and the administrative business. We have had to put in an incredible amount of time and effort to help all the owners have the right financial structure, to have the right financial structure. and manage the financing. Now we are in a situation where we can put a lot of the issues behind us and focus on the development business and let the advantages that come when you get the business going also come to the other parts. Thomas has proven that he has been incredibly successful in the entrepreneurial side. Then he should include it in AlmEquity so we get our entire business to work very smooth. And we relocate and make it a little easier to get all the parts to work faster. Then the development team and the entrepreneurship team are there, it takes a few days to get to the start and you can make sure that you don't time in the wrong track. So he will do that. And Joakim will have his own little kindergarten in the form of acquiring new projects, where he will be very excited to fill that part. I think he will take the challenge and return shortly for something new and exciting.

Yes, it will be a very exciting constellation and we look forward to what Thomas will say in the next quarterly report. And to hear what he says. With that, I thank you, John, for the presentation and for this question time. So, thank you very much. And thank you very much to all of you who have listened. Have a good day. Thank you, Mattias.