Cibus Nordic Real Estate AB (publ)

Good morning, everyone. Welcome and greetings from a very summer empty Stockholm today. And we're talking to you live. And my name is Christian Frederiksen. And I am joined here as always by the company's long term CFO, Tia-Lena Olafsson. So let's move into summary of the period. Rental income up 3%, and net operating income up about 9%. But that includes a one-off insurance payout for a burnt-down property in Finland of about 1.8 million euros. And without this one-off income point, then we have a stable increase in net operating income of about 2%. The profit period is about 2.2 million and the property values increased by about 4.4 million in the quarter through acquisitions and through FX rate movements. But in that figure, we have an unrealized change in value of about minus 8.3 million euros, which is 0.5 minus. And then, moving on to the favourite slide, Seabus, with our slogan, and we love our slogan because it says exactly what we do. We create value for our stakeholders by investing in daily goods properties, so creating food into yield, that's what we like to do, and are continuing in doing. And this is a slide many of you will remember and recognize. I think our mantra, of course, converting food into yield. And I thought I'd like to share a story with you from earlier this year when we had a company kickoff, when I, ahead of the kickoff, asked one of those AI songbots. or song apps to write a song about seamless Nordic real estate. And the lyrics were actually great. So hats off to the bot. And the song was titled Supermarket Love. That's not going to be our new slogan. I think converting food for yield does the job fine. But it's amazing to see how AI can help in the creativity and moving along. So the lyrics were great. The beat was terrible, so I won't play the song for you, and we're sticking to our slogan, converting food into yield. On the map to the right, I'm happy to show you the five red dots, which are our new acquisitions in Sweden, coming back to those a bit later. But otherwise, things are pretty much the same. We aim to create stable cash flows. We focus purely on daily goods properties. Listed since June 2021 on the Stockholm Mid Cap. We're the sole listed pure daily goods real estate vehicle in the Nordics. We have a semi-peer now through a listed Prisma Properties, which owns about 20% grocery assets, but they're more of a development company than we are. but it's great to have a peer also in the market. We've grown from our Finnish supermarket portfolios into Pan Nordic Pure Grocery player and we pay monthly dividend to our shareholders. So this is our expansion timeline established 2018 in Finland moving on to 2020 when we entered into Sweden and then entered into Norway and then entered into Denmark in 2022. So looking at our properties at the end of the last quarter, we now have 455 assets, which is up from 451 as we did the acquisitions. We'll be adding one more asset soon as we take possession of the last asset shortly. Our property values are up 4.4 million euros, as mentioned, and for the fourth consecutive quarter, our earnings capacity has increased, and that's about 3% up quarter on quarter. And then our letterable area has also increased by 9,000 square meters, which is from the acquisitions. On the tenant side of things, no change. We still have, of course, the largest daily goods players in the Nordics, as are tenants. So moving on to a bit more about the asset we carried out in this quarter. We acquired six grocery stores in Western Sweden in an area called Värmland. The assets are 88% daily goods in rental income. The rest, which is not daily goods, is in the property in Bengtsfors, which is the Ica property there up to the top left of the six photos. Where the other, which is not daily goods, is the Swedish state monopoly for alcoholics beverages, which is sustainable. There's a restaurant and an IT store. The agreed property value was 87.5 million Swedish, approximately 7.6 million euros. And the price per square meter paid was about 9,800 kronor per square meter, which is about 855 euros per square meter. And worth pointing out that that's about half or less or less than half of what it costs to reinstate a supermarket property in Sweden right now. So we think we've done a very nice deal in acquiring these properties, which fit well in our portfolio and give us increased cash earnings per share. Looking at the assets, there's one ICA store that has a low OCR. OCR, of course, being occupancy cost rate. And that's one of the key metrics when looking at supermarket stores. What's the share of rent towards turnover in the store? And this store has a very low OCR. Very happy about that. The rest of the other five assets are leased to a company called Pecos. Pecos is a discount grocery brand, present only in Värmland. They have 15 stores. After this transaction, we own seven of these. They were acquired by Coop Varmland in 1999 and Tecos is doing very, very well. They've been growing steadily throughout the last years to 8% in last year, 2023, and 12% up in 2022. And they have very healthy margins. We're very happy about this tenant. There's an ongoing project in Hartfors, which is the asset up to the top right. That's the property which we haven't taken possession of yet. We're waiting for the project to finalize. But I was reading in the media that Pecos, they're investing about 1 million euros in that asset. And you can do the maths. by ourselves there, kind of figure out what we've paid for these various assets on average. So I think that shows how important these stores are and stores in general are for the grocery players. They invest heavily in the stores and therefore are long-term in many stores, even though the world may say something else. So happy to have got that acquisition under our belt during Q2. And then moving on back up to the top level, what do we mean by creating stable cash flows? Well, if you look at the left part of this slide as an income statement or a profit and loss, we try and create stable cash flows on every single line of the income statement. So starting from the top line, we focus only on daily goods properties, create stable income, it's strong tenants, as you know, it's a story well told. It's also a very non-cyclical daily goods business, of course, proven to be resilient in all times of economic volatility. People might need to buy food in all terms of the market, up and down term. 84% of our rental income is from daily goods tenants, and 97% of our 455 properties are anchored by daily goods tenants. And when we say anchored, we often that means the only tenant. As you see, our average property size is 2,200 square meters. And what we have there is, in effect, a single standalone supermarket. A standalone could be in a building with residential on top, etc. But the tenant is 100% in most properties, a daily goods tenant. Looking further down the P&L then, we protect our growth through having 99% of our rents linked to CPI, and that's worked very well throughout this high inflation season. We have a steady vault. It's now come up from 4.8 in the last quarter up to five years again, and PLN will tell you a bit more about that later. And one of the most important things also is, of course, store location stability, which is prevalent in supermarkets the store locations are very important for the grocery chains they need to make sure that people can find the store get into the store purchase things and and leave in easy accessible places very important for the chase for the chains often many decades in one place and a unique characteristic of supermarkets and daily goods assets is that if a chain or grocer decides to move out often one sees that there's someone else banging on the door ready to take over. Maybe one of the other chains or maybe a more local or independent player working on a small one to two shop basis. But what is important is that sometimes there are vacancies in supermarkets. Some locations do become obsolete. It cuts through competition among the grocers. Perhaps the infrastructure changes or demographic changes in the region, which means that a store is obsolete. That's a natural part of of our business and what's important to remember is to have a very big portfolio otherwise risks can be big if you only own a few supermarkets but only 455 assets in four countries where they're all very small means that we have a great diversification of our income stream um well again um we have 90 net property increases. So on the cost side, we try through these lease structures that we get the increase in but have a stable cost basis. We also want to make sure we have stable income when it comes to the bottom line. So we are 97% interest rate hedged and we use diverse funding sources. Next slide, please. Thank you. Earnings capacity, as mentioned many times before, is one of our key metrics and drivers. And I'm very happy to share with you that for the fourth consecutive quarter, we've now managed to increase our earnings capacity per share. So in total, since the dip in Q2 or the 1st of July 2023, we've now increased the earnings capacity per share by 7%. And this quarter, what has happened? What are the main changes? Well, we have the top-line indexation growth coming through in certain of our regions. In Sweden, for example, indexation only comes through once a year. But in other countries, it comes through on a rolling basis. So we can see that we're top-line invitation growth. We've done a couple of rent renegotiations. What's also coming through is the outcome of the bond refinancing that we've carried out and told you about earlier. And then the acquisition in Sweden also helping earn capacity for share. Looking at our share price performance and the traded volumes, it's a very liquid share, about 60 million Swedish kronor of turnover per day, about 2,400 transactions per day, which is a very high number of liquidity for a company of our size. And so I'm happy that we have the liquidity in the market. Looking at our shareholder list, You will recognize many of these names. It's a very stable shareholder list, and we're proud of our shareholders. Many are well-known and professional investors, but we also have a very large number of smaller investors. And looking at the number of shareholders we have now at the end of the quarter, it's about 51,000 shareholders, which is up 3,000 shareholders since the end of last quarter. And handing over to Bea-Elena for the financial overview.

Thank you. Okay, let's start with some significant events during this quarter. We had the AGM, the 15th of April, where the board was re-elected. The 1st of May, it was announced that the board had repurchased warrants of the 2020 program. It was conditional that the holders reinvested They repurchased consideration in Sibus shares using the retaining warrants and 1,396 new shares were striped. On the 28th of May, Sibus acquired six grocery anchored assets in Sweden for 87.5 million SEK that Christian talked about just a minute ago. And then on the 29th of May, CBUS announced that CBUS wanted to exercise the right to prematurely redeem its senior unsecured green bond loan 102. And it was made early July. On the 31st of May, CBUS announced that we had increased the total number of shares and votes due to the aforementioned exercise of the 2020 warrants. Here are some key figures for the quarter. Rental income was 30.4 million euros and net operating income also 30.4 million euros. Net financial items was minus 16.7 million euros and profit from property management 10.3 million euros. We do have items affecting comparability on several lines in the P&L, so let's look at the next page. In the second quarter, service income included an insurance compensation of plus 1.8 million euros for a fire damaged property in Finland. The property was subsequently sold in the second quarter. Debus reported a non-recurring expense of minus 1.1 million euros, of which minus 0.4 million euros was based on the resolution by the AGM to subsidize the option premium for the 2024 warrant program. And minus 0.6 million euros was based on the board's decision to repurchase the previous paid premiums for the 2022 warrant program. All warrants for the 2022 program were subsequently cancelled. Net financial items include a non-recurring expense of minus 3.6 million euros for tender offer when buying back bonds that mature 2024-2025. Net financial items also include a positive exchange rate change of plus 1.3 million euros. Profit from property management excluding non-recurring items and exchange rate effects amounted to 11.9 million euros. Unrealized changes of property value was minus 8.3 million euros. The negative change in value was mainly attributed to Finland and Denmark. Unrealized change in value of derivatives was minus 0.3 million euros. Our current earnings capacity shows a net operating income of 114.7 million euros. Property expenses is the same since the last quarter due to gains through energy efficiency in our ESG investments. Indexation and acquisitions have increased the rent. Profit from property management plus expenses from the hybrid bond was 52.7 million euros. Adding back non-cash items, profit from property management was 0.97 euros per share, which is an increase of 0.01 euros per share since the last quarter. Looking at the net operating income in a comparable portfolio, we see that the effects of indexation and other rent increases amount to plus 4.4%. Indexation going forward will increase the NOI and cash flow, while financial expenses are 97% capped. These segments are countries. Finland is the largest market with 70% in the second quarter. NOI this quarter is, however, somewhat inflated for Finland due to the insurance compensation. So without it, Finland would be contributing with 68% of the NOI, Sweden and Denmark 14%, and Norway 4%. Sybil's strategy is to give its shareholders strong dividends on a monthly basis. The AGM in April decided on unchanged dividends of 0.90 euros per share, divided into 12 payment locations. The dividend yield on the closing share price of 157.8 SEK at the end of the quarter was 6.5%. Looking at the balance sheet, property value was 1,768,000,000 euros. Secured debt was 889 million euros, giving a loan-to-value on secured debt of 50.3%. Unsecured bonds amounted to 241 million euros and this includes the loan 102 that we called and repaid early July. Also the other bonds that can be callable during 2024 are included. So if they were to be called, paying the cash that we have on hand, the bonds would amount to 192 million euros. Our net asset value was 676 million euros or 11.8 euros per share. Our remaining lease time was back at five years at the end of the second quarter. We have extended nearly 50 grocery and daily good leases during the quarter. Regarding funding, 77% is bank financing with a weighted average floating credit margin of 1.6% and an average weighted capital maturity of 1.5 years. All bank loans with remaining terms of less than 12 months are currently being refinanced. I would estimate that they will be all refinanced during the second half of 2024. Close to 21% of external funding was at the end of the second quarter unsecured bonds. Taking the called bond in July plus the callable bonds during 2024 out with the cash that we have on hand, unsecured bonds would be 17% of the funding sources. Our hybrid bond amount to 2.6% of funding sources and had first call in September 2026. Based on the earnings capacity and taking all interest rate hedges into consideration, an increase of the market interest rate with one percentage point would affect profit with about minus 0.5 million euros annually. An increase with two percent points would affect profit with about minus 1.1 million euros annually. Looking at some key metrics, LCV was 58.9% at the end of the second quarter. We continue to operate in the lower part of our internal policy range, between 55 and 65%. The covenants in the MTM program is an LTV of 70%. Interest coverage ratio was at 2.2 times and will continue to be stable even if we would get higher interest rates due to the high degree of hedging. The covenant in the MTM program is 1.5 times. As an alternative to the LTV, we look also at the net debt to EBITDA. We have high yielding properties and net debt to EBITDA was 9.8 times during the second quarter. Over to you.

Thank you, Elina. So looking a bit into the future now.