Fabege AB (publ)

Good morning, and welcome to the presentation of our report for the first half of 2024. As usual, I've had our CFO and Vice-CEO, Åsa Bergström, here with me today. And after our presentation, of course, a good opportunity to ask questions. Next slide, please. In one way, it's difficult to summarize the first half of 2024, mainly because of the geopolitical situation we're also in. But what has been positive is that we see many of our markets developing in a positive way. For example, the transaction market in Sweden is more liquid today than it was a while ago. The financial market, we will tell you more about that, is absolutely much more healthy. But on the rental market where there are some more challenging, mainly also because of the struggling economy in Europe and in Sweden. But we'll tell you more about this later. What is positive for the quarter and for the first six months is that we're increasing our rental income. We have essentially unchanged gross profit. We have some during the Q4. to a very small write-down, so 80 million. And so we see, as you said, a stabilizing transaction market and value in the markets. And I will tell you more about that later on, too. What is negative, of course, is that our net lettings were weak. I will tell you a little bit more, we'll come back to this, both the net letting and the view of the market a bit later. But I will start by handing over to Åsa to go through our numbers in more detail. So please go ahead, Åsa.

Thank you, Stefan. Slide three, please. The first part of 2024 showed stable numbers with increased rental income and improved net operating income, despite the sale of two properties at the end of 2023. Rental income amounted to 1.7 billion, which is slightly higher than the previous year. A decrease due to property divestment in the autumn was offset by index increases and the taking of possession in previous project properties, of which Convendum's occupation in Hägen-Mindre was the largest one. On a like-for-like basis, income increased by 8%. Increased operating expenses were mainly due to increased heating expenses and higher administrative expenses. This is a class ratio came in at 73%. gross profit amounted to minus 5 million as one project was completed and where final recognition occurred during the first quarter, and the second quarter was only charged with administrative expenses. Central administration costs came in at 60 million. Interest expenses increased somewhat compared to the previous year, which was mainly due to a slightly higher average interest rate. The average interest rate was 3.17% at the end of June. After having increased during Q1, it fell back slightly during Q2. Our active work with interest rate derivatives have delivered good results. In addition, loans are currently refinanced at improved margins. The result in associated companies amounted to minus 38 million, of which 49 million, minus 49 million related to a capital contribution to Arianna Belaget, and plus 9 million related to a profit from the JV project in Haganora. We therefore reported profits from property management of 659 million compared to 703 million in the previous year. Unrealized changes in value amounted to almost minus 1.5 billion. I will come back to this very soon. We also recognized a small realized profit of 4 million, which was a time lag from the transaction with NRF. The surplus value in the derivatives portfolio, which increased during Q1, decreased again in Q2. Overall, the surplus value increased by 29 million during the first six months. And the tax expense, which related to deferred tax only, was positive and amounted to plus 137 million. Please turn to slide four. The yield requirements leveled off and were essentially unchanged during the quarter. The transactions in our markets during the period confirmed the yield requirements and property values in our portfolio. In the quarter, we have again independently valued a large proportion of the portfolio, just over 50% this time. The rest of the properties have been valued internally. The average yield requirement in our portfolio increased due to a sudden time lag by three basis points during the quarter to 4.54%. Since the value peaked in Q3 2022, we have now written down the property value by approximately 15% in total. And the total change in value amounted to minus 1.5 billion, and we are now reporting a property value of 77.6 billion. Slide five, please. The simulation here shows that we can withstand breakdowns of a further almost 15% based on today's market valuation without impacting our internal target. And the margin is even higher in relation to the covenants in our bank agreements. Next slide, please. Reported equity decreased during the quarter and amounted to 121 Swedish crowns per share, and the long-term net asset value, the EPRA NRV, amounted to 146 crowns per share. The equity asset ratio amounted to 46%, and the loan-to-value ratio was 43%. Both of these key performance indicators confirm our continued strong balance sheet. And the interest coverage ratio amounted to 2.4, only a small decrease of 0.1 since year end. Now, please turn to page seven. The access to and pricing of financing have continued to improve during the spring. This applies to both the capital market and banks, even though the biggest improvement has taken place in the capital market, where margins are currently competitive with or better than banks. The commercial paper market is continuing to function well. We have reduced the margin in a couple of steps and are now issuing three months commercial paper at 50 basis points compared to 70 basis points at the year end. As stated, the bond market is also functioning well. Overall, during the first six months, we have issued 3.7 billion, of which 1.2 billion to be settled early in July. The margins have continued to improve. In February, we issued a three-year bond at the margin of 148 basis points. And most recently, the corresponding margin was 110 basis points. And we also issued a smaller five-year bond at the margin of 135 basis points. Under all revolving credit facilities, a total of 6 billion. In addition, 1.2 billion will be received in proceeds from the latest bond issue which will be used for repayment of other loans. Overall, we have good preparedness for upcoming financing needs and refinancing. We have facilities in place to cover the upcoming bond maturities during 2024 and 2025. We intend to refinance our bond maturities with new bonds. Our bank facilities are continually refinanced through extensions. And now please turn to slide eight. Of the loan portfolio, 55% is fixed, mainly based on long-term maturities and mostly through straightforward interest rate swaps, supplemented by some fixed rate bonds. Approximately 40% of the current loan portfolio is matched by fixed rate terms beyond 2025. We have continued to work actively with callable interest rate swaps with the aim of reducing our interest expense. The average fixed term amounts to 1.8 years. Adjusted for the estimated maturity of the callable swaps, the fixed rate term increases to 2.8 years. Fixed term rates provide us with protection against rising market interest rates. In the short term, the higher market interest rates will thus have a more limited effect on our interest expenses. For a moving 12-month period ahead, an increase in the market interest rate will generate a higher interest expense of approximately 145 million per year, all else unchanged. And now back to Stefan.

A question also. That works both ways, doesn't it?