Fastighets AB Balder (publ)

Welcome to the Boulder Q1 Report 2024. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing £5 on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.

Good morning, everyone. Thanks for listening in to this presentation of Valder's Q1 results. My name is Jonas Eriksson, and with me I have Alex Selin, CEO, and Eva Vasberg, CFO. The full presentation is available on our website. In our introduction here, we'll focus on some of the key points of the financials for the quarter, and then we'll open up for Q&A. Please, Erik.

Thanks, Jonas. Yes, in the Q1 report today, we have a quite stable development. The rental income is 8% better than last year, same period. And the NOI is a bit even more, plus 8% increase compared to last year. But then looking at profit from property management, we have a decline of 8% and per share 10% due to more shares outstanding. And then the obvious explanation is higher financing cost since we have a good development in the NOI. And I think it's kind of interesting to look at one year. If you go back one year in time, you can see that the profit before interest costs is 800 million better. And we have roughly the same net debt. So the underlying performance is very strong in the portfolio and in the company, generating more returns before interest costs. So looking at earnings capacity, it's quite stable compared to last year and last quarter. It's slightly better compared to last quarter, but we have a few more shares outstanding. then we're basically flat from previous quarter and the same thing there that we have more money coming in but a bit higher financing costs. And looking at the other metrics like debt to asset and so on is kind of similar development. In different markets, not much happened last quarter, obviously, but in brief, you can say that Swedish resi is around 4-5% in the negotiations in general, a bit depending on geography and if it's new or old apartments and also small and big apartments can have different percentage changes. And on the commercial side, in our case, we have very stable performance in the quarter as well. In general, we think the office market is doing okay as well as hotel and retail. I think the only part of the market where you can see some pushback if you have the absolute highest rents and then had them indexed 20% since you wrote the contract, then you can have a risk of some pushback in rents. But in general, stable development and quite good demand in Stockholm Gothenburg. In Finland we have mainly residentials and as you all know they've been quite a big supply side for resis. We think that that is going to be better and we see some signs of that already but maybe we will do more so next year. We are at least back to positive light for like rental growth even if it's not big. But we think it looks promising and we have a big inflow of people to Helsinki region. So the underlying demand continues to be very strong and the forecast is less supply and a better market going forward. Denmark, we had small rental increases due to very low CPI and rents in Denmark is linked to CPI. But then if we write new contracts, when a contract is terminated, we get a bit better new rent than the incoming and outgoing rent. So actually in Denmark, a higher churn would be a bit positive for the income. But as you all know, Denmark is a strong economy and the Copenhagen region is performing very strong, both if you look at number of inhabitants and the business environment in general. It's also interesting to look at the cost for if you compare renting an apartment with actually buying, owning it and funding it with present interest rates. And now you have a big gap that is much cheaper to rent an apartment than to buy one. And that was long time ago we had this big gap if it ever was like that. And we think that that also points to a good market for rental apartments in Copenhagen region long term. NAV per share is slightly down but we also gave some detail in this report that is worth to just know the metrics of the convertible bond that we have. Because a bond is basically a loan and then we have warrant so to speak and if the share price go up that part is worth more and in our p l it turns out as a negative and it might be that you don't think about that so actually higher share price means lower lpv in the calculation so that's a bit funny and if you look at balder's derivatives this quarter is negative and that stands out but the explanation is that interest rate derivatives is positive and the part of the convertible that is a derivative is negative but that part will go to zero if it doesn't convert it zero and if it converts it don't longer exist we also made some extra information about that And we can also say a few words about the property development. As you all know, it's decreasing quarter by quarter. And if we go ahead a couple of quarters, there is very few development projects ongoing for us. Long term, we think the land bank is very interesting and promising, so we continue with zoning and preparing that obviously that we see no building start in Sweden this year. Our feeling is that sales in apartments in Sweden is picking up a bit. We see more interest and also more business being done so we think there's a better trend there. and looking at financing it's also getting much better in the bond market domestically so investors have better appetite and spreads are lower and long term we want of course to be in the bond market so this is positive for us and the banking system is also very well capitalized and open for business i would say and if you look at banks in general the loan books is flat year on year or even negative and that combined with very high return on equity makes it a very strong system and we think that is positive long term for the market and some more financing detail maybe eva you can go into that thanks eric