Fabege AB (publ)

Welcome to the presentation of the year-end report 2024. As usual, after the presentation, there will be opportunities to ask questions. Let's start at slide number two, please. Most of you know that we are focusing on Stockholm. We only have 100 properties and a property value of about 80 million. a little bit more than one million square meters. So I think we go directly into the summary of the year and the next slide of the year report. We have stable property values for the last six months. We have growth in the rental income and then operating surplus and growth also in operating surplus in the identical portfolio. we had continued to have negative net letting even during the q4 we'll tell you more about that later we have as in now another stable financial position and we're looking forward to this year welcome some of the new tenants in the projects that will increase the the rental value with more than 300 million so with that please also give us a little bit more

about the figures yes thank you Stefan I will start with a summary of the fourth quarter in the fourth quarter alone we reported increased rental income and improved net operating income this was despite the fact that operating expenses in the quarter were charged with a provision for conventum of 29 million overall the changes in value were small slightly on the positive side In the valuations, we have taken account of discounts to conventum, which was offset by upward re-evaluations of projects and building rights where the plans have gained legal force. And net nettings were negative in the fourth quarter loans. Stefan will come back to this. Next slide, please. Rental income amounted to just over 3.4 billion, which was slightly higher than the previous year. A decrease due to property divestments last autumn was offset by index increases and the taking of possession in previous product properties. On a like-for-like basis, income increased by 4.5%. Adjusted for the conventum provision, operating expenses were in line with the previous year, and the surplus ratio for the entire period came in at 74%. BE Bostad's gross profit amounted to minus 21 million, as two smaller projects were completed and where the final recognition occurred. Excluding administration, the profit came in at plus 8 million. And central administration amounted to minus 93 million. With falling market interest rates, interest expenses decreased in the second half of the year. In total, net interest was in line with the previous year. Lower market interest rates that are gradually having an impact and our active work with interest derivatives have delivered good results. In addition, loans are now being refinanced at ever better margins. The result in associated companies amounted to minus 91 million, of which minus 102 million related to capital contributions to Arenabolaget, and 11 million, plus 11 million, related to profit from the JV residential project in Haganara. and we therefore reported profits from property management of just over 1.3 billion, approximately 100 million lower than the previous year. Impairment of development properties relates to change of value of residential building rights in the bostad. Unrealized changes in value amounted to minus 1.2 billion after we reported slightly positive value changes in the third and the fourth quarter. I will come back to this very soon. We also reported a small realized profit of 3 million, which related to a time lag from the transaction with NREP last autumn. The valuation of the derivatives portfolio follows long-term interest rates, which varied during the year. Overall, during the year, the surplus value in the derivatives portfolio decreased by 143 million. And finally, the tax expense which related to the deferred tax only amounted to minus 124 million. Slide six, please. In the fourth quarter, we have once again independently valued a large proportion of the portfolio, approximately 55%. The rest of the portfolio has been valued internally. Yield requirements leveled off and have been essentially unchanged since the second quarter. The average yield remained at 4.54%. As I mentioned earlier, the changes in value were slightly positive in the third and the fourth quarters. Total change in value for the entire period amounted to minus 1.2 billion, and we are now reporting a property value of 78.9 billion. In addition, there is the property value of the development property portfolio of 800 million. Next slide, please. Reported equity increased during the quarter by one crown to 122 per share, and the long-term EFRA NRV amounted to 148 crowns per share. The equity asset ratio was unchanged at 46%, and the loan-to-value ratio was also unchanged at 43%. Both of these key performance indicators confirm our continued strong balance sheet. The interest coverage ratio amounted to 2.5, which is in line with the previous year. And now, next slide, please. The access to and pricing of financing is still very good, This applies to both the capital markets and banks, even though the biggest improvement has taken place in the capital market with much lower margins. But banks are also now following. 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 a margin of 40 basis points compared to 70 basis points at the previous year end. As stated, the bond market is also functioning well. We have been active through several issues since last spring. During the year, the outstanding bond volume increased by just over 2 billion. Falling market interest rates and lower margins meant that at year end, we reported an average interest rate of just under 3%. Undrawn revolving credit facilities totaled 6 billion at the end of the quarter. The sale of the property Ynglingen means that we will receive almost 1 billion in early March, which will be used to repay debt. Overall, we continue to have good preparedness for upcoming financing needs and refinancing. We have facilities in place to cover the upcoming loan maturities. In total, we have bond maturities of 2.1 billion during the second half of 2025. We intend to refinance our bond maturities with new bonds, whereas the bank's facilities are continually refinanced through extensions. Of course, what was also pleasing during the quarter was Moody's confirmation of our BAA2 rating and that the outlook was changed from negative to stable. Slide nine, please. Of the loan portfolio, 52% is fixed, mainly based on long-term maturities and mostly through straightforward interest rate swaps, supplemented by some fixed rate bonds. In addition, there are callable interest rate derivatives totaling 7 billion, which now look set to continue running. Straightforward interest rate derivatives run with a fixed interest rate between 0.11 and 2.80%. callable interest rate derivatives run with an interest rate between 1.82 and 2.5 percent the average fixed rate term amounts to 1.8 years adjusted for the estimated maturity of the callable swaps it increases to 2.6 years our interest rate strategy provides predictability Fixed rate terms provide protection against rising market interest rates. However, we now believe more in falling or stable market interest rates. The levels that we have managed to fix at both for straightforward interest rate swaps and for the callable swaps are levels that we are comfortable with. For a moving 12-month period ahead, An increase in the market interest rate of one percentage point will generate a higher interest expense of approximately 147 million, all else unchanged. A corresponding reduction in the market interest rate by one percentage point results in a reduced interest expense of 89 million. And the average interest rate was 2.98 at the end. Next slide, please. We achieved many of our goals regarding sustainability for the year. Perhaps what we are most proud of is that we achieved our energy target, reducing energy consumption to an average of 70 kilowatt hours per square meter. A target that felt much too tough after the cold winter and the somewhat hot summer, but which we still managed to achieve during strong efforts in the operations during the second half of the year. And just before Christmas, we also got the confirmation from Nasdaq, which confirmed our status as a green share according to Nasdaq Green equity designation with a second party opinion from S&P. And now back to you, Stefan.

Thank you. Thank you also. Next slide, we see some of the transactions that have been made in the final market. You can also tell that the financial market has been healthy during the end of the year, and better and better over the year. And also, I think the transaction market is relatively healthy. Good properties are finding good buys at good prices. And we can see some of the transactions that have been done here at the list. The latest one was score of 30 in Hagastaden, also called FELIX. We don't know exactly the price right now, but Hømlegården acquired it, and I think it has been prices that were more than well confirmed of valuations. We also saw, and we have discussed some of them, they are the ones on the list earlier. If you look at the next slide, we have earlier said that we have signed the agreement of Ynglingen at Östermalm, and the deal will be completed on March 4. And the cash, as also said, the cash payment, the cash will be used to reduce our debt. The office market, if the transaction market and the financial market has been relatively healthy over the last year, the office market and the rental market has been more challenging. Very little new at the end of the year, still a slow market, I think, and we see vacancies continue to grow a little bit in the whole of Stockholm. Mainly, for example, in Altenstien and some other suburbs, But I think that the CBD is still a relatively strong market. And we see also the trend is to continue to move to better locations. All the locations continue to be very important. On the next slide, there have been very few new products announced in the market. So we can't see that the total office space will increase. over the next years, rather the opposite, that there will be some small decreases. So the demand has been challenging. We expect it during 2025 to be better. But as we said, the quality of the office, the quality of the in location will be very important but or the supply we have the vacancies but there will be very little new supply so the next slide is as you know we have large financial strong customers what we maybe should comment on this slide is a reconstruction phase of a discussion with conventum which is not entirely completed As it looks today, the units in our two properties will probably remain, and we have good discussions with them about that. But as also mentioned, we've made a provision already for the rental losses for the last year of 29 million. The reconstruction is expected to be finalized in April, and before that we can't comment that much, but we have good discussions to renew a prolonged agreement with them. Next slide, please. The disappointment during the year was, of course, the net letting. It was a minus of 108 million, and it was also negative in all four quarters. It has been a tough market. We see a little bit more optimistic for 2025. I think that period of the decision making in the companies will hopefully be more stronger since we also hope we can see a better economy just to quantify. We have a goal even for this year of 80 million and as you can see here in the chart, the net lending has fluctuated in recent years And that's mainly because of the large projects we have had. In 2023, for example, we had announced the Saab agreement. It was 160 million. And the years before was Anton Aval. And also in the past, we have had the project portfolio continue to develop. That is an important part of our business. Business, of course. Next slide. Occupancy rates. It's today at 88%, in my view, too low. Our long-term goal is coming back up to 95%. When they rent the work, over the next years, we'll have total focus on that. And we, so even for 2025, of course, our main focus will be the vacancies and to the rental work. and also to ensure that we can meet the change in needs of our existing customers. And of course, on top of that, we will continue to work on realizing the great potential we have in our big building right portfolio. And also, of course, we continue to develop our new opportunities in our areas. So as I said before, the net rental target for this year, 2025, is at least 80 million Swedish. Next slide, please. On this slide, I like especially to look at the fourth quarter, where we have the SAAB, both SAAB and Alfa-Alaban moved in, and the rental incomes will start to increase when the project portfolio will be more finalized. And we will come back. There are more and more over the next quarters. Next slide, you see the ongoing projects we have. In Haga Noram, in Sårlandstrand, the SAAR project. In Flemingsberg, Alfa Loar, we move into summer. And the textile project in Hammarby Sjöstad. We have signed some new contracts, especially in Påsen. and the occupancy rate in the project portfolio are now 87 percent. Next slide. Björn Bostad has the ongoing project in Haga Norra. It's in total almost 300 apartments. In the first phase, 23 apartments, of which today 18 are sold. They will start to move in in April. In the second phase, 50 apartments, of which 40 are sold. And they will start to move in at the end of the year. And also during the autumn this year, the rental apartments will be completed for occupancy. And in the next phases, we have already started to sell some apartments. apartments, and we will start the sale process during the spring. So, to summarize, we believe in Stockholm. It has been some challenging years with the pandemic, with the geopolitical situation, but Stockholm has a lot of strength. It's a unicorn factory. both in tech and in biotech. We are the capital of Sweden, and this can be long why we think Stockholm will have a very strong position for the future. On the next slide, we also believe in offices. We believe that the offices will be important for all companies. We believe that people are coming back to offices, but the offices will continue to develop. The office today doesn't look like the office some years ago, 10 years ago, 20 years ago. And our position to be number one in Solna, to be number one in Hammarby Worldstar, our strong position in CBD will be a long-term they'll also have a lot of opportunities for us. We are focused today, as you see on the next slide, to grow sustainable, of course, but without risking our strong financial position. The growth can be achieved by that we're completing existing projects. As we saw before, it will be a little bit more than 300 million over the next year. that we will work with increasing the occupancy rate, and the long-term goal, the target is 95%. We will continue to invest in new products, and it could be acquisitions, and also these investments that are creating value for us. And we should, of course, be cost-efficient. The main target is the growth of the management profit, and that it should be the best return in the portfolio of the listed companies. Part of that, to be successful with that, you have on the next slide, there are building rights of more than half a million commercial square meters. of which about 40% are legal binding. And residential also a bit more than half a million, almost 30% are legal binding. Opportunities in the near term, which you see on the next slide, is in Arreda and Staden, for example, for our Cairo. We will start the development with the ground during this year. But we would like to have a signed contract. We would not start a big project without signed contracts. In Hagenora, we have the next residential phase with another 130 apartments. Probably could be started in 2026, but we would like to be selling more in the first phases first. On the next slide, we also have Tegertarassan at Kungsholmen, which got legal binding. After 14 years, we got the decision some months ago. And the same in Sona Business Park, which is both residential and commercial opportunities. So we will hope to come back with some positive news during this year and next year. And on top of this, what we already have said, also the dividend this year are suggested by the board to two kronor per share and paid 40 times a year. And today I also announced that I will retire at the end of this year. I will be 66 during this spring. And so I think the timing is right for me to leave it over and also to have a more flexible daily life. But right now and for next year, it will be full focus on doing the business here and creating value. So to summarize, before we go over to the questions, As we said, in many ways this year we have increasing incomes in the identical portfolio. Even the interest rates are going right direction. Also the value changes are, during the second half, more positive. and but this is the net renting that we are now working very very hard to be able to decrease the vacancy rates and also to be able to use the opportunity to to to uh potential in our building right portfolio so uh questions please