Fastighets AB Balder (publ)

Good morning, everyone. Welcome to Baldur's conference call for the second quarter 2025. Today will be Eric Schelin, CEO, presenting and myself, Jonas Eriksson, Head of Investor Relations. And I'll hand the word to Eric to show us a few slides and then we will open up for questions.

Thank you, Jonas. Balder at a glance. We are a Nordic property company to 226 billion of portfolio value. So it will be flat rating. We have 95% occupancy and NAV per share right now is at 91.2 kronor. and that is an interesting figure and from the beginning 20 years ago we have managed to compound at an annual rate of 25%. The portfolio is a bit over 50% resi and slightly below 50% commercial and the commercial is very diversified. Looking at the Q2 figures we have a rental income increase of 7% and the NOI increase of 9% and profit from property management 6% better than Q2 last year. Maybe more interesting is to look at the earnings capacity that is now 10% better than one year ago per share. So hopefully we are on the way to a bit stronger increase in the earnings trend. And like for like rental growth on the whole company is 2.9 percent. Looking at current earnings capacity, it is up 200 million from the last quarter. And you can see two components. We have a slightly higher NOI and we have slightly lower net financial cost. And financial cost is, of course, a bit lower interest rates from the central banks that will have an effect on us. And you can see at the bottom of this slide earnings per share that is now 555 and actually the best figure we had so far. As I said previously, the very diversified portfolio. If you look at geography, it's dominated by the largest cities in the Nordics, Helsinki, Stockholm, Gothenburg and Copenhagen. And if you look at property types, Resi 53% and then it's very diversified. We have office, retail, hotel, industry, logistics and so on. We have no single category or geography that can make a huge impact on the whole company. So the diversification gives a good stability on the top line. Looking back, you can see here our earnings, cash flow earnings, profits from property management, where we have had a good increase if you go back in time. But we have two, three years, maybe four. were sort of a flattish development and that is only because of higher financing cost the underlying income before financing cost is on an increasing trend and has been all the time and obviously if interest rates goes doubles it will have an effect and maybe later on if rates go down you will have the strong effect at the other on the other side but as said earnings capacity now stands 10 better than a year ago and all the other metrics at the same time have it been stable or slightly improved occupancy very flat around 96 or this quarter is 95 but it's not the percent it's actually tenths of a percent that can make this figure be rounded up or down. And also leverage slightly under 50.

Looking at the financing, it's a fairly stable development, as you would expect. We continue to have about 53% of our financing in bank loans. And you may notice that we have a little bit more available liquidity this quarter compared to last. That's just a matter of planning for upcoming maturities. We have some more maturities than usual in the next 12 months, so it's simply an effect of that. The interest rate fixing and hedging ratio is very stable. As you would expect, it doesn't change too much from quarter to quarter. As you can see here, and this is largely effect of obviously our secured bank funding, but our encumbrance ratio has been more stable now, obviously came up during the years when we increased the bank loans. But now it's at 23.9%. We've said before that we think it will be around this level, 23 to 25% over time. And the current mix of funding is largely where we want to be as well. We've talked in the past quite a lot about trying to smooth out our maturity structure on the bond side. As many of you know, the Swedish bank financing is typically quite short, even though we have bank financing in other countries as well. But it still means that we would like to have a fairly smooth maturity structure on the bond side. And we have one year left in 2027 with clearly more maturities. And then other than that, we're trying to top up with new funding in the longer maturities to maintain sort of lower than 10 billion maturities per year, if we can do that. We have not done any large issuance this quarter, a few taps in the SEC market. And then we have also, we obviously did our Euro bond in Q1. So that's a large one we've done this year. Going forward, we will continue our path of issuance in the Swedish market. We updated our green framework recently. So the next longer maturity bond issuance in Sweden will probably be under that new framework, a green one. And then we will look to come back to the Eurobond market late this year, early next year, around that time. And this is more of sort of a structural overview of the funding and capital side. I think it's interesting just to look at where we are in terms of NetDevTA and some of the other metrics on an earnings capacity level rather than trailing 12 months. And as you can see, we're following the same trend as we have before with earnings before interest rate expenses growing quite a lot more than our indebtedness. And that's what we want to see in order for the net debt EBITDA to come down towards our target. And the trends are continuing largely in the same direction as we've seen before as well. Here, just a note that the convertible bond obviously is part of our maturity structure. When that is converting, assuming that we are above the strike price, that will obviously have a very positive effect on the indebtedness numbers as well. In terms of funding strategy, there's really no change compared to previous quarters. We continue to have the same long-term view. and continuing to issue in SEC where we can and when there is demand. We've also been quite careful in only issuing in the established public nodes or the ISIN codes that we have in public deals in SEC to maintain sort of liquidity as good as we can. And that's the way we continue to work in the Swedish market. And here's just an overview of how the long-term development is of our net asset value, profit from property management and the share price. I think I'll stop there and we'll go to questions.