Fastighetsbolaget Emilshus AB (publ)

Hello and welcome to today's broadcast with Emelshus, where the VD Jakob Fyrberg and CFO Emil Jansbo will present the report for the first quarter of 2024. After the presentation we will hold a Q&A. If you call and we ask a question, you will press star 9 to raise your hand and then star 6 to enjoy. If you, on the other hand, have sent in a question in writing, we will read it up later during the Q&A. With that said, I leave the floor to you.

Hello and welcome to the presentation of Emelshus' report for the first quarter of 2024. We are here with Emil Jansbo, CFO and Jakob Fyrberg, VD. Emelshus, how are you? We have developed very well over the past few quarters. We have a very strong hiring base, which pays the rent and is in good conditions in the southern part of Sweden, especially in Småland, but also in Östergötland and Halland. We have also made larger acquisitions during this quarter. We have also made acquisitions in places that have a strong development and where we will act long-term and continue to grow. We have also managed to do these acquisitions because we have a strong financial and operational strength in the company. We still have a very high rate of cast on our properties, which we will show. We have a very good cash flow. We have a strong financial position with a low debt rate and a high rate of rent. This gives the company stability and strength. We also have a high rate of eviction, which is at 95%. We have long rents over five years. Summary, it goes well, the business is stable, we deliver good cash flows and a profitable company. In the period of January-March 2024, the revenues increased by 6%. Then we come to the important result of the vote. The result of the vote is 15%. The result of the administration increases by 19%. The cash flow from the running business increases by 26%. This is how it should look in the unit. We will deliver according to the goals we have set. We will do that. We think this quarter is in line with what the company should do. We will look at our real estate. We are still in the important categories of light industry, industry service, professional trade, and then external and daily goods trade. We have also made a purchase. We will come to that in a moment. We are in the quarter of 7.5 billion. This is not a dramatic increase from the last quarter. This is a radical change to the next quarter. But it is an increase from the last quarter. And also increased by 656 million. Our properties are located in the areas where we are and will be. The important thing is that we have our local residents. We are located in the area close to our house and our guest. We will come to that later. But this is long housing numbers and very strong cash flows. We were talking about our housing and you can feel that. We are in Småland and we have strong offices. We are also in Jönköping Växjö. We are in the Navin area in Småland. We are in Östergötland and we grow in Linköping. The rate of export is still very good. The rate of export is 95%. The return on export is over five years. This is something that we will continue to work on. We will also show that we grow in Östergötland and in the strong municipalities in Småland. We will also show that we grow in Halland. This is the return on export that we have done in the first quarter of 2024. We have almost bought for 900 million. This is big for Emil's house. We have made the return on big cities in Småland and Östergötland. This is important for us to grow and be in the strong municipalities. We have also bought a number of houses, which we think are good. They are not big units. But it is a good house in good conditions with good tenants. This is also buying on sales that is very good in today's market. It is a good management result for the company. We have also formed very strong administrative units. We are the big players in Jönköping, Växjö and Linköping. We are strategically good for the company that will benefit from the cash flow and that it is good paying tenants with good contract situations. We have been looking at our rent and we have been looking at how our tenants are doing. The net rent is negative in this quarter. The net rent is linked to two contests, namely the paddle activity. We did not expect this in the company. These two paddle activities were in the larger sales that we did in 2021. The sales were very good. We got two paddle activities that did not show good payers. We are also doing a lot of new newspapers, including Hemtext, Hansen and Securitas. We have had a good quarter on the publishing side, but it is affected by the contests that we are preparing. But it is a long-term activity that we do not want to have in the company. The fall structure of the rent is still very good. It has been in the company for over five years. We are looking at the rent guests and how big good payers are. We are not worried about that part.

I will comment on the results during the quarter. The rents during Q1 were 158 million. Compared to 148 million in the corresponding quarter a year before, it has increased by 6%. The rents are explained by indexing. A large part of the contract is indexed. But also by the use of the rent. The property costs are at the same level as the previous year. This is a sign that we are cost effective. We have worked with energy efficiency projects, which is a result. We have also worked with our electricity price insurance strategy, which has also had a positive effect. This means that the drift network has increased by 8% during the quarter compared to the same period last year. The cost of the central admin is also in line with the previous year, despite the slightly larger costume. The finance network has decreased by a little less than the previous year. This is a result of the fact that we have worked actively with the debt and derivatives portfolio and the repurchase we have also done in our obligations. The value changes in the management facilities are up to 3 million. They will be returned later. On derivatives it is plus 29 million. This is linked to changes in long-term rents during the period. The cash flow in the world noted increases more than the management result does. This is also explained by the fact that we have a slightly lower tax compared to the management result compared to the corresponding quarter a year earlier. This is in turn an effect of the fact that we have worked with optimizing our tax returns. The income capacity is an overview of the company's result generating capacity. Given the property value and the debt portfolio we had on April 1, this means a management result of 274 million, corresponding to 2.32 crowns per share. This is an increase compared to the previous year. In absolute numbers, the management result has increased by 20%. Direct tax is .8% according to the income capacity. The rate of tax is up by 2.4 times. We have also adjusted the forecast. We communicated in connection with the fact that we had left the book closing communication. We have adjusted it to 10 million. Our revised forecast is that the management result is 280 million crowns for the whole year 2024. This is mainly an effect of the transactions we have made. The property value now goes up to 7.5 billion. Given the drift network we have reported, this means a direct tax on the income of 6.6%, which is in line with the value of 6.7%. In the crowns that the property value has increased by almost 200 million crowns, this is mainly an effect of the transactions we have made and that we have invested in existing properties. The value changes through the result calculation go up to 3 million crowns. The debt portfolio goes up to about 4 billion crowns, each of which is 3.5 billion crowns linked to the insurance bank loan. 577 million crowns are then related to our two existing obligations, which both fell in 2025. We have no debt falls apart from ordinary mortgages in 2024. The average income on 31 March is .7% and then about 75% of the income is secured with a derivative with a average income tax on 2.9 years. We have a low debt quota of 8.3 times and amortize, as I said, running, in total 100 million per year. And the rate of income for Q1 is 2.3 times. In short, about our financial goals and risk restrictions, we have a goal that our management result per share should increase by 15% per year. If we look at the period -Q1-24, the average has increased by 20%. We also have a goal of spending on our own capital, which should increase by at least 15% per year over a five-year cycle. If we look at the period -Q1-24, it has been 16%. And then we have two main financial risk restrictions. The net debt rate should not exceed 60% and per Q1 it rose to 52%. The rate of income tax should be at least twice and the rate of Q1 was 2.3 times.

If we look at the ownership, it is intact. It is the capital of the small country together with the larger real estate companies in Sagax and MP3, which is a field of larger Swedish institutions, a very good mix that we want to have in the company. Then you know that MP3 will share some of its income in the near future, which will be done in early May. But this ownership is good for the company and it has been very supportive in the growth journey we have made. We also feel that it gives it stability to be able to show this quarter after quarter that there are no major changes, but that it is stable, good and strongly supportive. In the future, there will be continued growth in focus, but it is always about profitability that is important. The important thing about profitability is that it is connected to our shares and that the management result is developed in a very good way. We have shown that during a difficult period that we can deliver results. It is based on the fact that it is a stable and good company. We will show in the near future that we are growing in volume, but it is not stopped there. We will continue this growth journey to become a bigger company. It is important to tell that we will become bigger, but we will never do that at the expense of our profitability in the company. There are a lot of good deals to do out there, and we want to show that with the two that we have done in the near future. Otherwise, we would not have done them. There is a lot for us to look at right now. Does that mean that there is an open market and that there will be a lot of closing? I'm not so sure about that, because it is a bit up and down right now in the market. But it is important to be close to it and find the deals that are good enough and strategically important to us. Then we will do them. So far, we have had the capacity to do it, which we are very happy about and satisfied with. We look forward to the coming quarter. We look forward to continuing to deliver stable results, but also to be able to show growth through volume growth. But also, as I said, that our management results will continue to grow. So we look forward to the future. And with that, Emil and I say thank you for listening and are open to questions.

Thank you very much for the presentation. I think we will jump straight to the questions. I would also like to note that if you have any questions you want to send in to us, you do so in the form to the right. But let's go ahead with the question. How have you managed to increase the drift network by almost 9% compared to the previous period? Are there any specific areas within the drift that have been particularly successful?

To start with, we have indexed the revenues. We have a high share of indexed contracts. And on the cost side, as I mentioned during the presentation, we have worked with cost-effectivizations. We have worked a lot with energy-effectivizations and have lowered the energy consumption in the concern by almost 6% during previous years. We have also seen some effects of our electricity price insurance strategy during Q1 compared to Q1 last year. And we have also seen our drift entrepreneur agreements. So it's those things combined. We are very focused on the cost side.

Thank you. How do you see your current portfolio of properties in light of the increasing demand and changing market conditions? Are there any specific areas or types of property that you see as particularly promising for future growth?

It shows in our acquisition that it is light industry that it is a strong and good demand. Then there is also a good demand for good malls. And we have also shown that in the news we have done in some of the larger cities. So it is primarily linked to light industry, law, but also good trade. There is a good demand. However, it should be emphasized that there must also be conditions in the house that are attractive. And that is what we are constantly striving to have properties in good conditions in the cities that we should be long-term active in.

Thank you. How do you see the long-term sustainability of your rent agreement and the over-reporting stability in the cash flow? Are there any specific measures in place to ensure a continued high degree of completion?

The completion rate is very important. It is at 95 percent and we will stick to that. Then it is important to have a close cooperation with the rent agent, to ensure that the rent agent has a good payment capacity. In today's situation, you should not stretch out too much on the rents. It is important to keep the rents, to have space to pay for rent. Then it is so that a large part of our rents on the industrial side, of the turnover, is 2-3 percent. So it is not decisive. But it is still necessary to be a good property manager and to be close to customers, so that you are a good partner to the rents, and that they thrive in the premises.

You mentioned that you had two contests in the PADL activities among your rent guests. How many more rent guests do you have who run PADL activities in the present situation?

Now we have no rent guests who run PADL in Emelshus. And as I said, this was nothing that we ourselves have taken in, but we got more acquisition than we did a few years ago. And as I said, we are satisfied with the acquisition, but unfortunately PADL activity has not been profitable, and that we do not want to have. As I said, we have none now either.

What specific measures have you taken to improve your existing property?

On the energy side, that is where the big effect is. And we have shown that during a period that we have reduced the costs. But it is about looking through the house, ventilation, energy, LED-lights, and then we can switch out and put on things that are simple, but it is possible to have a big effect on it directly. And it gives an effect both for the rent guests and for us as a company, which we have also shown on the cost side.

Thank you. You chose to increase your forecast with about 10 million, and Emil went in and talked a little bit about that. Could you tell us more about what is behind the decision to increase the forecast?

The forecast, unlike the income, the income is the property that we owned and contributed to on April 1, 2024. In the forecast, however, we have everything that has been agreed on, and then we have made this larger portfolio business in Jönköping, over 700 million. The cash flow from that portfolio is now reflected in the updated forecast, and it is important to note that it is not a whole year's cash flow that is reflected, but from the expected time of acquisition. So that is the main driver for the adjustment of the forecast, I would say.

Thank you, I understand. Finally, we have not received any more questions, what I can see. What should investors keep an eye on for the coming quarter when it comes to Emil's house?

Yes, we are safe on that. We are a company that should constantly deliver good cash flows, profitability, we should constantly increase our management results, but we also do that through, as Emil has been involved, to have control over the income on the cost side. But then it is also the acquisition that makes the company grow. We do not have a large project portfolio, but it is a good acquisition that completes the portfolio we have. So it is high-performance properties with good Y-s, so that is what can be expected from the company.

Thank you very much, we have not received any more questions here, so I would like to thank you for the presentation, because you took the time to answer my questions, and thank you to all of you who have watched.