Castellum AB (publ)

Good morning and welcome to this presentation of Castellum's Q1 report. My name is Christoffer Strömbäck, Head of Investor Relations. There will be a Q&A session in the end of the webcast. And if you'd like to ask a question by phone, please dial pound key five on the telephone keypad and ask your questions. Please keep the question few and brief so that everyone has a chance to ask. Let's start. Go ahead Joakim.

Thank you, Kristoffer. Good morning everyone and welcome to this presentation of our Q1 results. As you are fully aware of the last months, the financial markets have once again been more volatile and following larger uncertainty with regards to global trade, the US tariffs and subsequent countermeasures from Chinese tariffs. It is difficult to predict how this will translate into the Nordic economies and more specifically into our tenants. But we are humble, also optimistic. As you may have noticed, we are very active on the leasing market and have announced some significant contracts. More on that later. We have a strong financial position and have capacity to invest in attractive opportunities. So far, we have invested in our existing portfolio and increased the pace within project development but also increased our position in Entra. During the quarter, we have announced that we are starting the Infinity project in Hagastaden in Stockholm, where we are developing some 20,000 square meters top-class office space in one of the most vibrant areas of Stockholm. During the quarter, we have also decided to start a logistics project in Bruna outside Stockholm with a total investment volume of 229 million. After the end of the period, we have also announced an investment of 200 million in Jönköping, coupled with a good 20 year lease with the hotel chain Scandic. In Jönköping, we will also invest more in Verket and have signed a 7,700 square meter contract with the Swedish police. And in Gothenburg, we have signed a lease agreement with Nitec Group. We also concluded the mandatory offer for Entra and have bought shares in the market and managed to increase our position at a very attractive price. During the first quarter, we printed a large SEC bond in the beginning of March. That's 4 billion SEC. Good timing and very good terms. And after the period, we have updated our climate target. It has been validated by the science-based targets initiative. More on that later. As usual, we have this short overview for those of you who do not know us that well. We are one of the largest listed property companies in the Nordic region with a property value of 154 billion SEK, including our share in associated companies that is Entra and Halvorsen. We focus on three segments, office, which is our largest segment, logistics, which includes warehouses and light industry, and public sector properties. The property portfolio is located in attractive growth regions in the Nordics. We have a yearly contract value of approximately 9.3 billion SEK. We're a fully integrated company with local hands-on presence where our assets are located. In all our four markets, we have boots on the ground. Customer activities such as leasing, tenant improvements, relationships, et cetera, are all done locally. With the backbone of Castellum supporting regional business with centralized functions, we create synergies and utilize economy of scale. Over to our portfolio. It is located in the Nordic growth regions. Some 74% is located in Nordic metropolitan areas, meaning urban areas with at least 1 million people. And the remaining 26% is in growing regional cities in Sweden. The largest market measured by property value is Stockholm, followed by Gothenburg and Malmö. In addition, we have a decent portfolio in Copenhagen and Helsinki, as well as a very well positioned and profitable portfolios in a number of Swedish regional cities, including Västerås, Örebro, Uppsala and Linköping, Norrköping. Our regional markets have proven strong resilience and even rental growth during the downturn. We have a solid market position in our regional markets where we are number one, two or three in each of them. That makes us relevant for tenants and for the city's councils. This is our fully owned and consolidated portfolio. As mentioned, we have also a 35% stake in Norwegian Entra. And our share of Entra's portfolio is approximately 20 billion SEK. And Oslo would be our third largest market if we added our share of Entra. We will come back to Entra later in this presentation. Castellan tenants represent the 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, with no tenant generating more than 2%, 2.6%. The strong tenant base with many of our tenants being publicly funded operations. 26%, as I mentioned, of our total contract volume stems from public sector tenants. The largest tenant is the Swedish Police Authority with 2.6% of our contract value. And we have them as tenants in 12 different cities in our portfolio. The remaining average length of our contract is 3.6 years. Those of you with a sharp eye and a good memory have noticed that Northvolt is not longer on this list. Reason is, of course, that Northvolt is in bankruptcy. We will comment more on Northvolt later in this presentation. The results compared to the same period last year is negatively affected by the fact that we have sold standing or yielding assets during last year, as well as slightly higher vacancies. In addition, income from property management is negatively affected by higher financial costs. We will look into these figures in more detail later in the presentation. A disappointing figure is the net leasing of minus 184 million. It is a large figure. A large part of it is the bankruptcy of Northvolt. And we are confident to be able to rent those premises to someone else, either through someone actually acquiring the business or through the signing of a new lease. We have continued quite stable property value, although slightly negative on the margin. About half of the negative revision comes from the Northvolt properties. Occupancy rate stands at 90.6%. We have made some investments of net 358 million. and we have continued to reallocate proceeds from divestments into new investments, in line with what we have said before. Short term, it is punishing our income growth, but long term, we are convinced that this asset rotation into more high quality projects and properties will be positive for Castellón. As already mentioned, total income decreases and investment divestments affect income negatively. We have good cost control, reduced property costs, admin costs also reduced. Summing up, we report income from property management minus 7.3%. Jens will cover this in greater detail. Over to you, Jens.

Thank you Joakim and good morning. Looking at development of income during the period, the like-for-like portfolio income decreased by 4 million, equivalent to 0.2%. The change in the like-for-like portfolio is mainly driven by indexation, but offset by higher vacancies. The direct property cost for the like-for-like portfolio decreased by CX 7 million, equivalent to 1.2%. Costs related to heating and snow removal are the key drivers. Central administrative and property administrative costs increased by 2 million, equivalent to 1%. However, the increase in administrative costs are lower than salary indexation due to ongoing cost review. On an aggregate level, NOI decreased by 46 million with divestments and vacancies as key drivers. Development properties add only 8 million due to reduced project investments during last two years. Looking at renegotiations corresponding to an annual rent of 73 million, which translates to 9% of total lease stock after renegotiation were conducted during the period with an average positive change in rent of 4%. Additionally, contracts with an annual rent of 447 million SEK were extended during the period with no change in terms. equivalent to 53% of total lease stock up for renegotiation. Looking at net leasing, we are starting the year with negative net leasing and we are far from satisfied with the outcome. At the same time, it reflects the cautious sentiment in especially our metropolitan areas. Gross leasing remains in line with previous years, but we are impacted by more and more lease terminations and in addition, more bankruptcies mainly related to Norfolk. However, rental losses are still at low levels and our outstanding receivables continues to be low. The economic occupancy rate, as already mentioned by Joakim, at 90.6%, a decline of 1%. The decline is attributable to an underlying increase in vacancy corresponding to 0.6%, as well as the effect of a general review of vacancy rents, which contributed an additional 0.4%. Looking at lease contracts during the quarter, no major lease contracts signed during the quarter. However, a good portion of medium-sized bread and butter leases. In Linköping, we have leased out to a gym operator, Friskis & Svettis, 2,000 square meters, a 12-year lease contract. We are very pleased to have a gym in the building where we have converted previously darkened all the mainly office areas. In Copenhagen, we have found a great tenant in Vips Mobile Pay, who have signed a 1,400 square meter office contract. In Stockholm, we have signed a new contract with Fremantle, 1,400 square meters, seven year contract. It's a fit out for office. Interesting to know that they are a production company that among others produce TV shows for TV4, a tenant which we have rented out our current headquarter to very recently. We have also signed a lease in Linköping, 1400 square meters, six year contracts, expansion with existing tenants that are increasing with 500 square meters. We've also signed a 2600 square meter contract for retail office and warehouse with all office Nordic. And the list goes on and on. In Västerås, we've signed a public sector tenant called Swedish National Agency for Higher Vocational Education, a five year lease, almost 1900 square meters. Looking at rental income and net leasing, as mentioned, negative net leasing during the period or due to larger lease terminations and an increased number of bankruptcies. Income, on the other hand, is more stable and increases over time, however, affected negatively by two years of divestments and a general slowdown in the economy. Ongoing and new projects will grow rental income over time. In addition, we continue to scout for acquisition possibilities in right locations. Joakim will tell you more on the topic of new projects later in the presentation. Looking at property values during the period, Castelm has written down property values with approximately 0.4 billion equivalent to 0.3%. The value changes is driven by the default of Norfolk and somewhat lower cash flow expectations in our valuations in the short term. The valuation yield is in all essence the same as the fourth quarter 2024. Our projects, in addition, continue to show stable positive value add. We also see a continued higher investment volumes in Sweden real estate sector and the transaction volume in Sweden ended up at 13.2 billion in the first quarter 25 compared to 6.4 billion the first quarter 24. All according to Newsec where buyers and sellers price expectations continued to align easier. However, the ongoing trade war have created uncertainty in the market, which might impact investment volumes in the coming quarters. Segueing into the financial side of the business, loan to value now at 35.3, very low. ICR currently at 3.2 times and average interest rate currently at 3.3%. We expect the average interest rate to be stable around 3.2-3.3% during 2025. We see a potential to reduce the average credit margin in our loan portfolio this year by refinancing secure debt on better terms and increase the use of commercial papers. During the quarter, costs related to SFX fixing of EMTRA have impacted the financial net by approximately 32 million, a direct effect of the historically high interest rate differential between Norway and Sweden. During the quarter, we've also received a BBB rating from Standard & Poor's, which we're very glad to have. In addition, we have a positive outlook from Moody's, one notch below. Looking at debt maturity, we are proceeding with our focus on extending duration, now reaching an average debt maturity of 4.6 years, expected to reach closer to five years in the second quarter. During the quarter, we have also issued green bonds with three different maturities, totaling SEK 4 billion. Average credit spread amount to 107 bps. The issue was the largest ever green real estate bond in the domestic market. In the second quarter, the bond market has been volatile and illiquid, but is gradually recovering. We expect to be active in the bond market going forward, but we see no need to rush back to the market when we have limited bond maturities in the short term and healthy liquidity. We plan to increase the volume of commercial papers, hopefully reaching 3 billion already in the second quarter to reduce funding costs further. We also expect to refinance 8 to 9 billion in secure debt during the second quarter, hopefully reaching 15, 20 bits lower credit margin. All in all, a very good financial position for Castellum. Over to you, Joakim.