Eastnine AB (publ)

Hello and very warm welcome to EAST9's year-end report for 2025. My name is Kastuti Sasnowskas. I'm CEO of EAST9. And with me is Britt-Marie Nyman, Deputy CEO and CFO. Together we will guide you through the report today. And do not forget, please post your questions during our presentation and we will take them once we're finished with the formal presentation. So, looking at the last quarter, we continue on the strong growth path, delivering 24% growth in the rental income, in comparable portfolio up 2%, profits from property management up 15% and per share is up 8%. This is for the quarter. We have minor negative unrealist value changes, net letting positive for the quarter. However, occupancy ratio somewhat down, but we're coming from very high level of over 96%. So this fluctuation quarter to quarter is very natural. Surplus ratio somewhat down as well, but remains on a very high level, close to 93%. During the quarter, we recruited Adela Chodakovic as a new CFO, starting from June. And we also extended and prolonged one of our key leases with one of our key tenants, Vinted, in Vilnius. If we look over the year, growth has been even more impressive, up 49% in the rental revenue. Comparable portfolio also very strong, up 4%. Profit from property management up 40% and per share was up 28%. Unrealized value changes, 21 million euro plus, so over the year this is a significant increase. Net letting slightly negative, but again coming from very high levels of lease-out ratios. If we look on the surplus ratio, it was 93.4% over the period. We also refinanced a number of loans preparing for accumulating cash for further acquisitions. And we established our Polish organization during the year. So if you look at these nine at a glance, we have 272,000 square meters of visible area, closer to a billion in assets, 96% occupancy. We are purely office companies, so this is a very, very high level today. Rental income of 62 million euros, portfolio yielding approximately 6%, loan-to-value 47%, and average interest of 4.3%. If you look over the share performance over the last 10 years, we have outperformed basically all indexes, including Warsaw Index, over the same period of time. So if you look on our targets, we always strive to create sustainable, attractive return. And if you look over the year period, the total share return was around 10%. If you look over five-year period, that is 60% annually. Growth in property portfolio, approximately 3% over the year. We didn't acquire anything during this year, but we're actually preparing for larger acquisition to come. Growth in property portfolio overall over a five-year period is 23% per year. So it's been an enormous, fast build-up over the years. Return on equity at 9% over the year, 8% over the longer period of time. And if you look on the dividend proposal, dividend is up 7%. That will come later during the presentation. Loan-to-value again 47% and interest coverage of 2.4%. So looking back a little bit over the last five years, we more than doubled our portfolio. But our profit from property management per share actually almost tripled. So closer to tripling. So this is an amazing result over the year. And why is it so and why we believe into this so much is actually the long-term trends. Poland is one of the fastest growing economies in Europe, even globally, but also followed by the two small economies, Lithuania and Latvia, where we are existing today with our portfolios. And this region continues to actually evolve. And it's not only if we talk about country development and country growth, but actually if we look over the last five years to the fastest growing cities in Europe, actually among 20 fastest growing cities in Europe, 10 of them are Polish. And we present in all of them. And actually both Vilnius and Riga are among these cities as well. And they grow twice the pace, at least twice or three times the pace of 170 city average in Europe. So we are in a very vibrant, very fast growing, very fast evolving part of the European economy. We also are in the markets yielding the highest yields combined with lowest rents. And this gap over time should somehow shrink or merge. And in any case whether the yields go down or rents go up it will have a positive impact on the property value. So this is why we believe it's a very very exciting opportunity. If we look on the prime development of the prime office rents, actually, we have seen a relatively flat development to 17 to 20. But actually, after COVID, we see still a very positive development with strongest growth in Vilnius, followed by Warsaw, Riga and Poznań. And this is actually what we see in our portfolio as well. If we look on the yields, yields have stabilized, but they are up 150 to 100 bps from the bottom levels. Of course, the biggest correction happened in Warsaw, but it's coming from absolutely lowest yields in the market prior to increase in interest rates. Vacancies are stabilizing. We see actually relatively strong dynamics in a prime segment. This is the total market statistics. But if you look even for Warsaw, actually total market vacancy is going down. There was a lower supply coming into the market in general. And despite quite significant supply in Vilnius, vacancies are at reasonable levels. If you look for the prime segment, those are... those are actually even lower in certain cases. If you look on our portfolio, our actually occupancy has remained very stable. Of course, when we hit the highs of 97, 96%, it's very natural that we step down a little bit to 95%. But even today, if you look on our portfolio, We don't even have some vacancy in Poznan now. If we have some vacancy in Vilnius, there's basically very, very little that is marketed externally because all of those vacancies are almost signed up or very close to being signed. So this graph will gradually sort of fluctuate upwards again once tenders start to move in. We also saw positive dynamics in terms of rental revenues. We see a nice increase in Vilnius. We see a nice increase in Poznan based on the main contracts that have been renegotiated. We didn't have anything to renegotiate in Warsaw. So our Warsaw contracts, that's why the curve actually stayed without any values over 2025. If we look at our portfolio, it remains with Vilnius being our largest market, followed by Warsaw and Poznań. 96% of all floor space is office, so goes for our rental revenues as well. So very, very focused operation primarily on prime office. If you look at our tenants, actually, we are exposed to a very exciting part of the economy that is growing. And I think here I would like to comment a little bit on our two biggest extensions over the year. In the beginning of the year, or mid-year, we actually extended with Rockwool, both we extended the contract, the size of the contract, and the length of the contract. And we see very clearly that actually the biggest tenants are still in the active mode phase. And just before year-end, we extended with Vinted. Again, we extended the size of the contract by approximately 30% space growth and the length of the contract. So the key tenants, actually, the normal tenants is they continue actually growing. continue growing in a relatively fast pace. You can see our property portfolio still remaining Retaining the modern portfolio, we didn't add any properties during the year. And still, so there's no change on this slide, basically. And if you look on sustainability, today we have 100% of our portfolio sustainability certified. We have 97% of our revenue taxonomy aligned over 2025. 88% of green financing. We received five stars in GRESP with 91 points. And we are among top 20% of the participants in terms of ranking. Total energy use is down 0.9%, somewhat slower compared to previous years, but we're actually seeing a very positive trend of people returning to the office. And, of course, when there's more people, there is more energy used in the building. So, in a way, we're very happy for these statistics. And energy use, including tenant electricity, is down almost 4%. So over to Britt-Marie, more into financial figures.

Thank you. And please remember to post questions during my presentation. If we look at the income statement, we can see a substantial increase in both rental income and net operating income. And this is related to the two acquisitions in Poland in 2024. We can see a slightly less increase in percentage when it comes to the quarter. And this is because we took possession of one property in June 24 and the other one in the end of November. In a comparable portfolio we saw an increase of 2 percent during the quarter and 4 percent during the full year. And this was partly due to indexation and the other part was due to an higher occupancy in average during the period and the year. The acquisitions also increased the interest expenses, of course, since they were partly financed by new loans. But we also saw a decrease in the interest income since we used cash in the acquisitions. And the increase in interest expenses was partly offset by a lower interest rate level, both during the quarter and year, actually. And other financial income and expenses. This is not a big part of the income statement but still the change in percentage was high during the quarter. And this is mainly related to negative currency effect as part of these nine operations in other currencies than euro. Finally profit from property management increased quite a lot 15 percent during the quarter and 40 percent during the year. We saw only small changes in the earnings capacity during the quarter and they were mainly related to changes in the occupancy rate during the quarter, which affected both rental income and property expenses and thereby also the net operating income. The interest income increased due to a higher interest rate on bank accounts and the interest expenses decreased somewhat due to amortizations but also due to the lower average interest rate level. And we saw an increase in other financial income and expenses related to the new head office in Stockholm, which is bigger than the previous one. And this is budget figures. So that's why. On the bottom line, profit from property management slightly lower than previous quarter in the earnings capacity. We have a very very stable financing with a lot of banks on the other side financing us. We have refinanced early during 2025 due to good market conditions and we have barely anything to refinance in 2026. The LTV by the end of December is on the same level as by the end of September. Liquidity in total 51 million almost unchanged. The interest rate level down from 4.4 by the end of September. ICR slightly lower. Debt ratio also lower, which is good due to full 12 months NOI included. Share of fixed interest, same level as by the end of September, 83%, quite high figure. Capital tie-up period increased after refinancing and new financing. Oh, sorry, only, oh, both refinancing and new financing during the quarter. And fixed interest period, more or less the same. If you look at maturities, I said we had barely anything to refinance. You can see in 2026, it says 13. That includes amortizations. We have 7 million to refinance. A little bit more in 2027 includes the property Novrynyk D in Poznan. Almost nothing, 28 and a lot in 29 and 30. When we look at the fixed interest period, it's more or less the same amounts. And still the same banks and debt sources as before, five of them around 20% each. The property value increased by 3% during the year. up to 960 million. And this was more or less an effect from unrealized value changes. We had a little bit of investments also 6 million euros. But we saw mainly unrealized changes in value during the first quarter. And the yield requirements were unchanged in the fourth quarter. It's good to see that we have had a very positive share development during the year. We saw an increase in the share turnover of 19% when we include all markets. Number of shareholders increased by 21%, now above 7,000. NAV increased both in SEK and euro, a little bit more in euro. And total shareholder return up 10% during the 12-month period and 16% in average during five years. And this is a very high number compared to other real estate companies in average. On the Nasdaq Stockholm, it was 2%. And the board of directors proposed an increased dividend to 128 per share, split over four payments during the coming 12 months. That is an increase of 7% and it's 41% of profit from property management after current tax. So, thank you. We continue with questions. Any seasonal varieties affecting the NOI margin during the quarter? Or is the slightly lower NOI compared to Q4-24 only an effect of the lower occupancy rate? Of course, we are affected by seasonal effects as well as other real estate companies, but we don't talk so much about that. So we have a combination.

It's a combination of both, I think.

The higher central admin cost during the quarter, is there any one of costs included in that? Or should it be viewed... as a new run rate given new recruitments. Not particularly one-off costs, but of course, since we are a growing company, from time to time, quarters can be affected by recruitment costs, and probably not affecting all of them, so part of it could be one-off costs, but nothing particularly. Did I understand correctly that you are currently in negotiations for a new property acquisition? Size-wise, should we expect 100 to 150 million euros acquisition?

I would not like to comment exactly the sizes of the acquisitions. Normally, I mean, if you look historically, we have acquired bigger properties. If you look on the way we are thinking, actually, is we want to grow much more in Warsaw, where we did our last acquisition. The properties, of course, are bigger in general, as the contracts normally that are signed in this market are bigger. and we are very picky in terms of choosing high quality properties so for us of course it will be it's natural that we can do bigger acquisitions probably going forward.

I have a question in Swedish. Can you give a clearer timeline of upcoming acquisitions and how the competition for potential acquisitions in Warsaw has developed in recent years?

I will answer that question in English. The question was how the competition is evolving in Poland and any comments on the time frame. Again, very difficult to give any comments on the time frame. Yes, we are working on acquisitions. We have been very clear about it. We are also accumulating higher cash levels in the company. refinancing our portfolio. And so I wouldn't exclude that something will come within a certain timeframe. I, again, do not want to give exact timeframes, but I can confirm, yes, we are working on further acquisitions. In terms of competition, we see that the number of transactions done on a sort of smaller scale transactions done up to 50 million euros is growing. We see that a number of players also looking into the market probably increase somewhat. However relatively few transactions still taking place. So, competition is somewhat maybe growing, but it's not at the levels or nowhere near to the levels that we've seen prior to interest rate increases.

Can you please comment on any material lease expiries the next 12 months, if any? Of course, we have some.

We have some expiries but we also have very clear plans for those and some of them we are happy about because it actually enables us to mitigate some other growth. But in the coming years, during 2026 at least, we see that even though maybe kind of economic occupancy might increase somewhat during Q1 still in paper, it's actually something that is done to manage the growth of our tenants. So it's basically the movement of some tenants that we need to do in order to facilitate growth for our growing tenants. On the contrary, I would say that today we lack space both in Poland and in Lithuania.

And perhaps it's also good to mention that when it comes to the biggest lease agreements, we have a dialogue long before they mature.

So just as a comment on the leases in general, I think it's important to know that approximately 16% of our stock of leases was renegotiated during this year. Out of it, 76% actually was prolongations. So we have a very tight and positive dialogue with our tenants. It's actually much more, it's very important for us that it's a very good kind of check of basically how we are performing as a landlord. And we are very happy that they choose to extend, prolong and extend in many cases. So this has been a very positive and we in general have very positive feedback from our tenants. So what will happen now is that, of course, we're gradually taking over operations in Poland as we have recruited the team and we still believe that it will bring a much more significant positive benefit for us going forward actually in those relationships.

I actually think that was all.

Very good. Thank you for your questions and thank you for listening to us and see you at the next quarterly report.

Thank you.

Thank you for today.