Fabege AB (publ)

Welcome to our presentation of Q1 2025. As usual, I have our CFO also Bergström with me and after our review there will be, as usual, the opportunity to ask questions. So first slide please, or next slide please. As you know, we have a modern portfolio with focus on Stockholm. I don't have to repeat that too much, I think. What's new on this slide is that we only have 99 properties. Since we have been in this. But then the property value of almost 80 billion and what's important here is that all the focus on the Stockholm areas are the sub-areas. So next slide please. With all this happening in the world, with all the turbulence, from day to day you don't know really what will happen. We said that we thought we were coming from a tough 2024 or we really had a tough start of the 2020s. We thought maybe it could be a brighter 2025 and we were quite optimistic until maybe a couple of weeks ago when we saw the turbulence. But we all know what's happening in the world right now. So what we're doing, we're really focusing on what we can impact and we can impact our our areas, we can impact or have close relations with our tenants, we can focus on nothing and the daily work. And we can focus on Stockholm. We really believe and I like to say that we believe, continue to believe in Stockholm. Stockholm as a growth area of Sweden. It is the engine of the Swedish economy. It's a more volatile one, you have a struggling economy. But both Swedish and international companies have many of the main quarters or the Nordic headquarters here in Stockholm. So I'm convinced that Stockholm will continue to be Sweden's largest growth region for the foreseeable future. But like any all metropolitan areas, there are challenges and the potential for improvements but it's also there of course and we work with that. Next slide please. We also continue to believe in the future of the office. The trend is that the office occupancy is increasing. Companies increasingly perceive the value of having a dynamic workplace where employees can collaborate and develop. It's becoming increasingly clear that the role of the office is a meeting place, more of a meeting place and a gathering point. And it's very important, extremely important as well. If the economy cycle returns to more or less normal or we can see as a normal state, we would have, we think and I think, maybe two, three years of very favorable development ahead of us. But with that said, still the world is challenging. We also continue to believe in the future of the office. The trend is that the office is even more important for the companies. Not maybe only as a working place but as a meeting place where you can meet, you can collaborate and you can develop. And we think this has been increasingly clear over the last years after the pandemic. Maybe you're working from home one day or two days a week but the office is important. And if you see, if you see the economy cycle returns to more or less normal state, I think there can be a, there can be a favorable development of offices ahead of us.

Thank you, Stefan. Rental income for the first quarter amounted to 865 million, just below the period of last year. On the -for-like basis, income decreased by 20 million, equivalent to minus 2.7 percent, which mainly related to relocations as a result of the previous year's negative net letting. Occupations in completed projects were partly offset by reduced income related to divested properties but the net was plus 18.6 million. Property expenses includes a non-recurring item of 7 million. Other deviations mainly relate to somewhat higher maintenance costs and higher property tax. The surplus ratio thus amounted to 69 percent. Adjusted for non-recurring items, it was 70 percent. As no projects were completed in Birgerbostad, no turnover was reported. Birgerbostad's gross profit amounted to minus 6 million, all related to administration costs. And central administration amounted to minus 33 million. This cost is front-loaded as Q1 includes the annual bonus payment. Net interest income expense ended up in line with the previous year. Higher debt early in the year was offset by slightly lower average interest expense. The result in associated companies amounted to minus 24 million and related to the period's capital contribution to Arena Bolaget. Shares of profits in other associated companies only amounted to minor amounts. This meant a profit from property management of 285 million compared to 329 million in the previous year. The changes in value turned negative again after two quarters with essentially unchanged valuations. Unrealized changes in the value amounted to minus 565 million. I will come back to this very soon. Realized changes in value of minus 37 million related to the sale of Yngvungen. The property was valued according to IFRS at the sales value of 960 million in the Q4 accounts. The negative result that was now recognized in connection with vacation of the property related to deductions for deferred tax and sales costs. The valuation of derivatives portfolio followed long-term interest rates which during the quarter measured on the last of March. The surplus value increased by 27 million. And finally the tax expense which related to deferred tax only amounted to 141 million of which plus 128 million related to a reversal of deferred tax in connection with the sale of Yngvungen. Next slide please. In the quarter we have once again independently valued a large proportion of the portfolio just over 50 percent and the rest of the portfolio has been internally valued. Yield requirements leveled off and have been essentially unchanged since the last quarter. The average yield increased by 0.01 percentage points to 4.55 percent. And as I mentioned earlier the changes in value were negative in the quarter minus 565 million. This was mainly related to the fact that values now expect longer vacancy periods and slightly lower rent levels primarily in Solna where we have some vacancies. In addition we anticipate longer implementation periods for future projects opportunities in Flemingsberg and we have thus written down the value of the older existing properties including existing building rights. The total property value thus amounted to 77.8 billion. In addition there is a property value of the development property portfolio in Birje of 860 million. And next slide please. Reported equity amounted to 122 crowns per share like at the year end of 2024. Long-term EFRA NRV amounted to 146 crowns per share. The equity asset ratio was unchanged at 46 percent and the loan to value ratio was also unchanged at 43 percent. Both of these scheme performance indicators confirm our continued strong balance sheet. The interest coverage ratio amounted to 2.5 on the rolling 12-month basis which is also in line with the previous year. Next slide please. The access to and pricing of financing is still very good. This applies to both the capital market and banks. Both the commercial paper market and bond market are continuing to function well. In early March the Ynglingen property was vacated and we received almost one billion in cash. In connection with this we settled the bond maturity and we have also slightly reduced the outstanding volume of commercial paper. In March we issued a total of 400 million in new bonds and in connection with this almost 300 million of bonds that mature in the autumn of 2025 were repurchased. The new issues were made for two and three years respectively and at margins of 74 and 97 points. Falling market interest rates after the Riksbank cut in January and lower margins have meant that we are now reported an average interest rate of just 2.91 percent at the end of the quarter. And undrawn revolving credit facilities totaled six billion at the end of the quarter. 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 now of 1.8 billion during the second half of 2025. We intend to refinance our bond maturities with new bonds whereas the bank facilities are continually refinanced through extensions. Next slide please. Of the loan portfolio 52 percent is now 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 seven billion which are still running. Straightforward interest rate derivatives run with fixed interest rates between 0.11 and 2.18 percent and the callable interest rate derivatives run with an interest rate between 1.82 and 2.5 percent. The average fixed term amounts to 1.7 years and adjusted for the estimated maturity of the callable swaps the fixed rate term increases to 2.5 years. Our interest rate strategy provides predictability with fixed rate terms that offer protection against rising market interest rates. At present we see greater uncertainty about inflation and the economic cycle and the Riksbank has paused its interest rate cuts although the market is now expecting further rate cuts ahead. Long-term interest rates have risen and we have held off on entering into new fixed rate terms. The levels that we have managed to fix that both for straightforward interest rate swaps and for the callable swaps are levels that we think work even in the longer term. 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 146 million all else unchanged and a corresponding reduction in the market interest rate by one percentage point will result in a reduced interest expense of 72 million. During the quarter we have continued the sustainability work in line with our environmental and sustainability targets. The main targets are energy consumption maximum 70 kilowatt hours per square meter 100 percent renewable energy 100 percent environmental certification of investment properties and new construction 20 percent circularity index during conversions and 35 percent lower co2 scope 3 emissions during new construction for new projects and also sustainability audit of suppliers. We have also initiated the work on upgrading our green framework and like before we will obtain a second party opinion from S&P and with that I leave back to Stefan.

Thank you also. As also I told us the financial market the financing market has been good over the quarter and we have issued a lot some bonds are in very good margins. The transactions market has been in our view quite healthy not that many transactions in our market but at good levels. Some of them you see here some examples that have been in Haga staden at Lidingö for example and in the old town of Stockholm but I don't think we have a good the transaction that has been completed has confirmed our valuations well and as also said the yield is moving sideways. So next slide please. As we said this is probably the last time you see this property in our slideshow because it's Ynglingen at Östermalm and which we saw all over here left during the quarter. We consider to see transactions for as one of our value adding value pile. It's part of our business model to sell off from time to time some part of the property that we think or consider to be outside of our core areas and that we don't see that we see less potential for development. So next slide please. We also have during the quarter signed a letter of intent with the city of Solna to sell Solna Hörnan 1 property. The plan is to sell it from at latest 2028. As I said at latest you will have told us before is that we will if their plan is to that this property will become the Solna new city hall and Telenor who has it as a swiss headquarters that have been there since 2018 and so our ambition is to find a new solution for them so all three parties will be satisfied and that can take some time that's why we talk about 2028 as latest and the property is located as you know between Arenastaden and Solna business park and we don't think it's it will be a fantastic city hall for Solna so that's the main reason for selling. Next slide please. When we talk about the rental markets there are a little bit more question marks the Stockholm office rental market has been weak for several quarters now we have seen increasing vacancy rates in all the sub markets of the of Stockholm and especially this is true in Gsta where continuing to increase but also in the CBD in the CBD we can see it coming up but it's also an effect that we have had some what you could call hidden vacancies over the last year since some of the tech companies they rented more space than they needed some years ago they have contracts on that but now we also see we also see good demand in the CBD so this figure I think it will be many many companies see it as an opportunity to move into and to find new locations in the CBD and inner city. The number of increase in the office intensive industries in Stockholm and the Stockholm region has been flat for the last years and we can't see any rise in or any growth in that yet I think it will need some more better economy and a more a better macro economic situation before we see that. If you go to the next slide please we can see that the office supply of office is in the Stockholm is also flat since many years and that is what we have very new products are started I think very few are started on speculation there are some few in Skanska has one in at Kungsjorme for example but very very few more projects are finalized over the next right now but they also have signed many cases signed signed contracts. Next slide please. Our occupancy rate in the management portfolio have been coming down even further to 87 percent we have said that before that it will come down before it will get better this is an effect of what the net letting figures from 2023 and also 24 that's the effect we see right now but also during this year as you know we will have the finalized some of the projects that will have an impact for example SAB and Alfa-Loil but I will come back to that later. Please next slide. During the first three months of this year 2025 we had a positive net letting of six million and we have also renegotiated almost 90 million are extended on unchanged terms we have 60 million that we have renegotiated at minus five percent. We and also we have all some some contracts or that maturing in June 25th but we already have been renegotiated before in and the current agreement expires. We can say that we have and we said that also before that some contracts are thanks to the indexation over the last years maybe a little bit over rented and that's where the effect we see now is for the 60 million and five percent is very some special contracts especially one with a larger one with when in sauna that we have a building where we we all said that we knew it was a little bit over rented so this is not a surprise for us but I'm happy with that the net letting is again positive of the plus. So next slide please. This we we used to show you the rental development in existing lease portfolio. This is what we about this is based on what we know today and this year the the beginning of the year is an impacted as you said before over the net leasing figures for 2023 2024 and the third and fourth quarter this year and especially the first quarter next year is impacted by that in sauna we get the Saab moving in in the Möte and Alfa Laval are moving in in June the summer in in in so that will have a positive impact so we we're coming closer to 900 million in the beginning per quarter in the beginning of next year so next slide please. Now this this that we've been now being surprised in this list and it will be added with with the year with some of our new tenants or in the new products when talking about convent we can't say that much more than we said in the Q4 report or the presentation we will know more in a couple of weeks time when when they're called chapter 11 phase we will lower reconstruction phase or we will will be settled. We have said that we will have an agreement with them hopefully it will I think we will be a positive for both or they will be positive for them and making it giving them the opportunity to for during the first year to have a discount from us to be able to to take the the business into positive figures and then prolong the contract a little bit and then but on existing terms so but more about this next later later this quarter. Ongoing products we invested a little less than 500 million this quarter 447 million we continue with the development of a quality in in Haganora is Fossab and Alfa Laval in Flemingsberg all those products will be finalized this year and it's fantastic project I must say you're so welcome to visit them. It's a residential development portfolio and we are moving on and we continue with the project at Haganora which is here down in the in the or in the middle of the fiction at the end at the back you have the the accorded but it's a fantastic Haganora will be a fantastic area. We are continuing with the investment in the residential we in the first phase the 23 apartments of with 19 or so they are right actually moving in right now you see it to the right it's a red corner it's a fantastic project in their own apartments we have now sold 39 and they are they will get the or sign contracts I should say and they will get access in end of this year rental apartments are being completed for occupancy during the autumn and then the next phase for for starting we will sell more of the next phases after the summer so it's closer to them to moving in but I think this is a really great project why we will start next slide please we as you know we have a little more than 700 about 700 thousand square meters of building rights where of 40 for the commercial uh portfolio where of about approximately 45 percent of legal binding it talking about the residential building rights more than half a million square meters where of 37 percent of legal binding as we said before we will not start any of the speculations but this is a potential for the future and for the development of exists on the areas where we actually next slide please what has been important during the quarter is that we have started in arena started with the road infrastructure in half of cairo we will invest about 200 million for preparing for future projects the opportunities in the future are to build about 70 000 square meters of bodies and a couple of hundred apartments we will not start the commercial the product before I've signed contracts so we are we we uh that was what we also working with to try to find the potential tenants for that fantastic projects in haganora we can continue to develop the residential but we also have a potential commercial product in haganora to continue to the develop that area next slide some other project opportunities in the future for the future are for example kungsalmen where we got the legal binding plan for for tegeltalasen or par is it and it's a little bit more than 35 000 square meters of offices or commercial area and it's also some residential and we right now discussing how to take back to the next step in solar business park yrket got a legal binding plan it's uh 20 more than 20 000 square meters of office and more than also 20 000 square meters for attention for us but maybe even more important is that mcc now can start to construct but rebuild the house for a swedish craft debt and i think that will be really important for the development of swanland business park and as you know we own most of the other properties in in that area we have some vacancies there sab will move in close to this area so i think it's really what's happening in the next years will be very positive and also an opportunity of us to to fill out the vacancies we have in so on so next slide please to the right you see what we expect to solar business park in five years time and where we are today in the middle it will as i said before the swedish craft net or the entity building is in the middle our potential projects are closer to that and i think this is really could be a great development for this area which is the second best commuting area or play center in stockholm you have the trains you have the subway you have a very good infrastructure so this i think the potential in this area is is really exciting in a tough world in a turbulent world in a challenging world we believe in our markets long term of course we are we are not by poor economy and the turbulent times but we see that we with the strong market positions we have in stockholm in sauna and with modern portfolio in good commuting locations i'll see also the long-term opportunities are there what we will have focus on now is of course to fill up the 16 buildings you have the goal target to increase the octopus rates to 95 percent we don't i don't think expected to go fast i think it will take a couple of years and we say that it would be at latest 2030 we will complete existing projects and as you said before the larger ones are uh and it will add a couple of hundred millions of new rental incomes for the next year we will continue to not start the new products but be able to when we find the timing right to stop you it will take to take the opportunities in the real world we will continue to do value transactions and of course we always have focus on the cost this the targets will that's of course the cash flow the growth of management profit per share and to be the total return the best property portfolio we are looking at the total return in the in the swede so um thanks for listening and questions

if you wish to ask a question please dial pound key five on your telephone keypad to enter the queue if you wish to withdraw your question please dial pound key six on your telephone keypad you as a reminder if you wish to ask a question please dial pound key five on your telephone keypad you there are no questions at this time so i hand the conference back to the speakers for any closing comments thank

you very much and thank you for listening and you as always you are welcome to give us a call and ask questions or have a dial so so please give us a call and i hope to see you soon bye have a nice day