Fastighets AB Balder (publ)

Good morning and welcome to Balder's presentation for the year-end report. Presenting today is me, Eva Wasberg, CFO, and Erik Selin, CEO at Balder. After the presentation, we will have a Q&A session. And on that note, I hand over to you, Erik.

Thank you, Eva, and welcome to Balder year-end figures. The big picture is we have a real estate value that stands at 212 billion. 96 occupancy the equity ratio is or the leverage rate on net debt is 50 and we continue to have a high liquidity of almost 18 billion and nav year-end stands at 85 kronor per share Over the long time, we had a good increase in NAB at 28%, if you look back in time over the longer period. And we have primarily Nordic exposure, roughly half residential and half commercial properties. Looking at Q4 specifically, compared to last year, the rental income increased 10%, as well as the operating income. Profit from property management saw a smaller decrease and that comes from higher financing cost. But otherwise it was very stable and increasing rent and NOI. Like for like, rental growth was 4.9% and debt to assets 50%. Looking at the property portfolio, this has been looking more or less the same for many years, but the focus is on larger cities in the Nordics. So capital cities and Gothenburg. So we have Helsinki, Gothenburg, Stockholm, Copenhagen dominating the portfolio. and looking at the categories residential is by far the biggest of roughly half of the portfolio and then it's diversified between office retail hotel warehouse and other properties we also have some property development this has been decreasing for a while due to the market situation with higher building cost and higher financing cost and also slower market for condominiums. We have two categories, one that we build and keep for the long term, and we also have development that we sell to consumers primarily in Sweden. So right now this is a declining part of the balance sheet. We are very careful in starting new projects and we don't see any building starts for ESSI this year. And the commercial projects is soon to be finalized. So this is an interesting part of the business for the long run. Right now it's decreasing, but we will keep working on zoning plans and other things for the long term value creation. um otherwise we are focused on cash flow or what we call profit from property management and that been for the whole 23 more or less the same as 22. um so but this is our long-term goal to over time increase this figure of course the long-term value of the company is the present value of the future earnings and that's why we have to increase earnings At the same time we want to have financial stability so looking at these charts you can see that the net debt to assets gone up slightly the last years and that is because values are coming down a bit but we have a good resilience because we have strong cash flow and so we have earnings that partly can meet these lower values and occupancy been very stable around 95-96% for many years. We also have this slide called earnings capacity where you can see basically what is the running rents and cost and so on on a 12-month basis. This is not a forecast so it's just a you can see the status as a specific date or a quarter and so at year end this stands at 5.8 billion earnings compared to last quarter was 5.7 and obviously it's financial costs going up a bit and then rents going up that offset the increased financial costs And this is also in quarterback water can be a bit affected by currency moves as well.

Yes, and here you can see an overview of our framework for sustainability, which is based on the international goals of Agenda 2030 and our commitments. There are no changes made to our goals. Here are some points that we would like to highlight regarding our ESG work. We are adapting our sustainability report for 23 to EU's new directive, and we are affected by the new requirements in January 24, that is for the sustainability report for next year. But we have started the transition early on in order to prepare and implement changes. We hope this will make it easier for our stakeholders to get access to requested ESG data going forward. We have also implemented a new digital reporting system for sustainability reporting. With increased reporting requirements, the ambition is for the system to facilitate data collection, auditing, internal control and contribute to resilience. During the autumn, we carried out a double materiality analysis in line with ESRS to prioritize material sustainability issues, and it was approved by the management and board during the fourth quarter. Balder works actively to manage the risk that follows by climate change. And this work includes, among other things, climate risk analysis of the property portfolio. At year end, large parts of the property portfolio had undergone climate risk screening. Let's go over to some financial figures. The available liquidity as of year end is a little less than 18 billions. And maturities of interest bearing liabilities coming 12 months is 12.3 billion, which means that available liquidity covers maturities for the coming 12 months with about 1.4 times. When you look only at maturing bonds coming 12 months, which for us is more relevant since our bank debts are rolled forward continuously, we cover the maturities with over three times. We will continue to maintain a conservative profile of liquidity risk in the company through a long maturity structure and a large reserve of liquidity and financing lines. And this level of liquidity will be kept as long as we think the markets are strained. Here you can see our ratio of secure debt to total assets, which is still low. And as of year end, it's 22%. which is a large headroom to the 45% we have as a financial covenant. Net debt to total assets is a little bit higher than last quarter due to decrease in values. As of year end, 74% of the loans are hedged with interest rate swaps and fixed rate loans, which is a little bit higher than in Q3 when we had 70%. This is due to an increase in interest rate swaps made in the fourth quarter when we took advantage of lower long-term interest rates. Here you can see the split between financing sources as well as the split between unsecured and secured finance. Butler is and will be a significant issue on the bond market and we want to have a financing structure that provides stability to operations over business cycles. To the right, you can see the interest refixing structure where the average interest rate for 24 includes the margin for the floating part of the debt portfolio. The average interest rate as of year end was 2.9. And regards to the goals, all financial targets are in line with our goals and the new financial targets of debt to EBITDA of 11 times has come down to 12.3 from 13.4 of last year. This change is a combination of increased net operating profit and decreased net debt. Here you can see an overview of the debt maturity for bank loans, bonds and commercial paper. For 24, the debt maturities amount to 12.3 billion. Of this, maturing bank loans amounts to a little less than 6 billion. Outstanding commercial papers, 1 billion. And maturing bonds in 24 amounts to 5.4 billion. And if you look at the maturing bonds, which we think is the most relevant since maturing bank loans will be extended, you can see available liquidity, covered bond maturities for 24, 25 and a large part of 26. Maturities for those three years amounts to 19.7 billion in relation to available liquidity as of year end, which was a little bit less than 18 billion. The remaining slides are more as information for you. So this was all from us for now and we will open up the Q&A session. So thank you very much for listening in.