Castellum AB (publ)

Good morning everyone and welcome to this presentation of Castellum's Q3 report. My name is Kristoffer Strømbeck and I'm head of investor relations here at Castellum since the beginning of this year. Please feel free to contact me at any time should you have any questions. There will be a Q&A session at the end of the webcast and if you would like to ask a question by phone please dial pound key five on your telephone keypad and ask your question. It's also possible to ask questions in the chat function. Please keep the questions few and brief so that everyone has a chance to ask. Let's start. Please go ahead Joakim.

Thank you Kristoffer. Hello everyone and good morning. This is Joakim Sjöberg, I'm CEO of Castellum. First, Let me give you a very brief introduction to those of you who don't know us that well. We are one of the largest listed property companies in the Nordic region. We're a fully integrated company with local hands-on presence where our assets are located. The property portfolio is in attractive growth regions in the Nordics. And we're exposed to the robust market in Norway by Entra, which is an associated company. You can see on this map the location of our property portfolio. As of last September, our asset value sums up to 155 billion SEK, including our share in Entra. Of those 155 billion, over 74% is located in the Nordic metropolitan areas, meaning urban areas with at least 1 million people. And the remaining is in growing regional cities in Sweden. We have a yearly contract value of approximately 9.5 billion SEK. So summary of the year so far, we have an overall stable result. Our net operating income is up 3.9% and the income from property management is up 11.7%. We will look into these figures in more detail later in the presentation. Our net leasing for the period is negative after two quarters with positive net leasing. The net leasing does not include the net leasing of 45,000 square meters logistic project in Gothenburg, which we are developing in a joint venture with the harbor of Gothenburg. We own the joint venture 50-50 and hence it will not be included in our consolidated figures. We have continued to sell non-strategic properties. The proceeds will be used for new investments. We will also come back to this, but I want to highlight that this should be seen as a streamlining of our portfolio and not strengthening of the balance sheet in particular. So some recent events. In August Moody's announced strengthening our credit rating when adding a positive outlook to our BAA3 rating. The change to positive outlook reflects the continued good operation and the financial performance that we have been very focused on. over the last quarters. On the back of Moody's positive outlook, we decided to re-enter the euro bond market with a new bond of half a billion euro. We had a very strong interest, the largest demand ever for a Nordic real estate company, according to our advisors. And the maturity was six and a quarter years. And the credit margin was 175 basis points. We also bought back Eurobonds with shorter duration, with a total nominal value of 186 million euros. Sustainability is at the core of everything we do. And earlier this year, we reached our target of 100 solar panel systems. which was intended to be reached by 2025, so we reached it two years in advance, and now we've set new targets, being an installation of a further 100 solar panels by 2030. As mentioned, one of our leasing activities is the signing of a rental agreement with OneMed for a logistic project in Halvorseng in Gothenburg. This is the joint venture with Gothenburg Harbor that I mentioned earlier. And we have the capacity to develop further projects at the same location. Briefly about our tenants. Our tenants represent a cross-section of Nordic business and authorities and our exposure to individual tenants is very low. Our 10 largest tenants represent less than 15% of our total contract value and no tenant generates more than 2.5%. We have a strong tenant base and many of our larger tenants being publicly funded operations. 25% of our total contract value stems from public sector tenants, and the largest is the Swedish Police Authority. And as of last September, the remaining average length of our contract was 3.7 years. So very briefly, our P&L Jens will cover this in greater detail, but from a helicopter perspective, the total income increases, the divestments affect our income negatively, we have reduced property costs, we have reduced admin costs, we have a lower debt volume, thus lower interest costs. Summing up, we report income from property management up 11.7% compared to last year. So Jens, we'll walk you through this on the following slide. Over to you Jens.

Hi everyone and thank you Joakim. Stable quarter with no significant changes or new one-off effects. Vacancies are still increasing, however, at a slower pace compared with the first two quarters. Transactions continue to boost loan-to-value, though reducing NOI growth still 3.9% for the period. Looking at development of operating income during the period and excluding the insurance compensation in Finland, the life-for-life portfolio income increased by 78 million, equivalent to 2.8%. The change in the Light for Light portfolio is mainly driven by indexation amounting to 303 million or 5.3%. For the Light for Light portfolio, the direct property cost decreased by 30 million equivalent to minus 1.9% of which electricity cost decreased by 115 million. As many of you already know, this is due to unusually high electricity costs earlier last year. Excluding one-off effects, the electricity costs like-for-like increased by 7%, equivalent to 83 million. Tariff-bound costs for water and heating continue to increase, though passed on to our tenants to a large extent. Regardless, we keep a strong focus on our energy projects. Central administrative costs were reduced by 101 million, excluding 63 million in one-offs from last year. The remaining 38 million is due to a reduced headcount and general and continuing cost review. Renegotiations corresponding to an annual rent of 293 million, which translates to 15.5% of total e-stock up for renegotiation, were conducted during the period, with an average positive change in rent of 1%. Additionally, contracts with an annual rent of almost 1.2 billion were extended during the period with no change in terms, equivalent to 63%. Looking at leasing activity, we are reasonably satisfied with the gross leasing in extent the effort to create new business, though the high termination rate hit us harder than earlier and resulting in a negative leasing of minus 10 million for the period. Economic occupancy rate only down with 0.1 point during the quarter and for office unchanged since March. Bankruptcies, still low, 22 million for the period. And tenant quality is deemed to be very stable and outstanding receivables are low and decreasing compared to the same period last year. Looking at rental income and net leasing, this is an old slide, but it's worth to mention it again. And when we look at net leasing of a longer time period, it continues to be volatile on a quarterly basis. Income, on the other hand, is much more stable and increasing over time. However, affected negatively by two years of divestment and the general slowdown in the economy. I've said this before, but it's worth mentioning again. It is clear that we have been holding back on new projects since 2022, hence net leasing mainly derives from existing properties rather than new projects, which has been a strong driver of net leasing in the past. Joakim will tell you more on the topic of new projects later in the presentation. Looking at property values during the period, Castellum has written down property values with approximately 1.6 billion, equivalent to 1.2% minus. The value changes during the period is mainly driven by cash flow expectations. However, only looking at the third quarter, the change in property values were close to neutral, perhaps a signal that property values have bottomed out. Valuation yields is still in line with year end at 5.62% and also seems to have stabilized. Property sales continue to confirm our book values. Jumping in to highlight Financing for the third quarter, loan-to-value now at 36.6%, down by 0.8% during the year, despite a slight downward pressure on property values. ICR at 3.3, expected to be relatively stable around this number going forward. Average interest currently at 3.4% up by 0.4% during the quarter. Increase during the third quarter is driven by expiring interest swaps with low fixed coupon. And also the new Euro bond issue at 4.1% combined with a tender of a short European bond running at the fixed interest rate of 0.75%. And as Joakim mentioned, we have also received a positive outlook from Moody's, which is very positive for us. jumping into depth maturity structure and also already mentioned by Joakim because it's very important for us that the euro bond market has opened up at reasonable terms and we will come back and issue more euro bonds next year and it's also very comforting to see that we can reach and issue bonds with an expiry of six years from now. No bank loans refinanced during the quarter, though terms continue to improve regards price and offering of longer duration. Close to 29 billion of cash and unutilized credit facilities available at the end of the quarter, and we will gradually reduce the RCF volume going forward. All in all, a very good financial position for Castellum. Over to you Joachim.