Fabege AB (publ)

Good morning and welcome to FABG's Year End Report 2025. My name is Bent Øvstad. I'm the CEO of FABG and I'm lucky to have with me the experienced CFO Åsa Bergström here today. We run through the report. quite well-known structure on the report today. And just to start with Fabergé in brief, we have a modern portfolio. We focus on Stockholm. We own, we develop, and we manage our properties. We focus on attractive working places and good living in superb locations in Stockholm. And as you all know, Sweden is the capital of growth region in the Nordics. If you distribute the rental value of 4.3 billion to different segments, office stands for 84% of the portfolio. That's office in the broader definition, including also educations. Industry, logistic, 4%, retail, 4%, hotel, 4%, and other segments, 4%. If you allocate square meters into the same segments, office is 72%, and industry and logistic up to 9%. The others more or less the same. And the market value of the portfolio, 78.5 billion. 37% to the inner city and that also explains the differences from the rental value on the square meters because a lot of the properties are in central locations in Stockholm and there the rents per square meter are quite substantially higher than rest of the city. Solna stands for 48%, Hammarby Sjøstad 10% and Flemingsberg 4%. If you try to summarize the fourth quarter, 25, rental income came in at 899 million, up 4.4% from last year. Profit from property management ended at 371 million, up 11%. And the surplus ratio was 75% for the quarter. And as we have commented on the report, quite lucky with the weather, at least at the end of the year. So that's why we had a quite good surplus ratio. Profit from residential development came out at 35 million in the quarter, 23% margin. Shouldn't expect that high margin going forward, but close to 20% is something you can count on. Value changes, net value changes of 711 million downwards and earnings before tax then came in at 293 million. Net lettings for the quarter was 33 million, ending the total year at plus 36 million. And we see increased activity in the leasing market. I will get a bit back to that later on. Large projects enter the management portfolio during the quarter, also coming back to that, and large refurbishments are ongoing. That's how we try to secure also future value creation for the total portfolio. The quarter has proven our capability to capitalize on Birger Bostad's business model. We are then converting our residential land bank into shareholder return, and we will have more reporting on that also going forward. The last point, not on the summary slide, is the board has requested or has proposed a dividend per share of 2 SEK and 20 EUR per share. So, to that, hand over to you, Åsa. Thank you, Bent.

Yes, I'll go through the income statement. Rental income, as you can see here, amounted to almost 3.5 billion, a little uptick from last year. We had a negative impact in the identical portfolio of minus 3.2%, mainly due to the negative net lettings of the previous year. We also sold one property that impacted on the negative side, but on the other hand we have several projects that have been finalized during the year and that are now producing income for us. Property expenses a little bit higher than last year. We have an uptick in property tax, but as Bent also said, there were lower winter-related costs. Very good both beginning of the year and end of the year. And thus we had a surplus ratio in property management of 74%. This year we also had positive impact from Birje Bostad's residential development. They have finalized just over 100 apartments during the year and produced an income of 280 million and a result of plus 55 million which is included in the gross profit as you can see here. Net interest expense was slightly lower than last year. We have borrowed roughly the same amount during the year, but the average interest rate has come down from 2.98 to 2.82 during the year. The share in profits in associated companies increased. The majority of this, or all of it roughly, is related to our share in Arenabolaget. There was a one-off included in this figure of 63 million, where we have taken down the value of the shares that we have in Arenabolaget. So that's 63 million of the 130 is more one-off item. So, all in all, profit from property management increased by roughly 5.5% to 1.4 billion. The impairment development properties relates to the Bostad future project. future potential projects. And the realized changes in value is related to the sale of Ynglingen in the first quarter. So that's the same figure as in the first quarter. Unrealized values came at 1.7 billion for the full year. I will come back to that a little. And then changes in the derivatives were positive in the fourth quarter, but all in all over the year, a little negative number. And so we have a result before tax of minus 508 million, and then a positive tax impact, 160 million of which 128 million relates to the sale of Ynglingen in the first quarter. We have externally valued roughly 50% of the portfolio this quarter, and the property value came at 78.5 billion, as you can see here. There's been a shift upwards in the average yield from 4.55 in the first quarter to 4.59 in the fourth quarter. And this next slide gives a bit more transparency to unrealized value changes over the year. We can say that during the first half year, the negative value changes were mainly related to increased yield and lower expected cash flows, longer vacancy periods expected from the external valuers, and also a write-down of building rights, mainly in Flemingsberg. In the second half of the year, we saw increased yield requirements in suburb location, a little decrease actually in the most central CBD location. And we also took a write down on the building rights in Flemingsberg since the land allocation agreement with Huddinge has expired at year end. But what you can also see in this slide is that actually the projects have contributed on the positive side in all the three first quarters. Key ratios, we landed at 119 Swedish crowns per share and an EPRA NRV of 145 per share. Total return of the properties after the write-downs amounted to plus 1.1. The surplus ratio, as I mentioned before, 74. Equity ratio and loan-to-value ratio remains on the strong side. And as you can see here, the debt ratio has actually improved as well as the interest coverage ratio. So we feel that we are still in a strong position going forward. Financing has been on the positive side all over the year, maybe getting even more positive during the second half of the year. We see continued strong access to financing both from banks and from the capital market. We have some ongoing refinancing with banks that will hopefully be finalized during the first quarter. We have done some refinancing for maturities in 2026 already. We did bond issues of 850 million during January, short of three years, and as you can see here on margins of 89 and 84 basis points. Those are maturing in November 2028. And we still have the undrawn facilities of 6 billion, which provides safety and security going forward. There has not been any change in fixed rates. As I said, the average interest rate cost has come down during the year. Approximately 47% of the portfolio is fixed and with an interest rate fixation of 1.5 years. And if we include the callable swap, it increases to 2.1 years. So we have some safety for increasing rents or increasing interest rates should that happen. Although it seems that the opposite now is more likely at least in the near term. This is also a new slide that we just wanted to show how rental income and results have developed over the last 10 years. You can see that rental income and gross profit from property management has increased, while the profit from property management, including interest rate, interest cost is more variable depending on the level of the market interest rates. The surplus ratio is fairly stable. We still have the target to reach 75%. And what this figure shows most apparently is the occupancy rate, which has come down, and we will come back to that a little later. Also finally from me a few words on sustainability. We keep working very hard in order to reduce energy consumption. We're now very well below the target of maximum of 70 kilowatt hours per square meter with the outcome which was in 2025 only 65. also of course due to very mild winter conditions over the year, but nevertheless a target and a result which we are very proud to present. And we also achieved the goal to reduce CO2 by 35% in comparison with 2018. And finally, the FabG share is again confirmed green by Nasdaq Stockholm, which I believe is also a good sign for all the work that we are doing on the sustainability side. So that's from me, and back to you, Bent.

Thank you. The work done in the sustainability department is very important for us, and it reduces our costs, so keep up the surplus ratio for the companies very well. If you look at the occupancy rate, it has increased up to 14%, as we said. That's driven by the two previous projects, Accorded One and Pauson One, that have now been transformed into the management portfolio, increasing the vacancy. And as the one of you that's really following us, you know that some tenants are moving into a quarter this spring. For instance, Atea, moving from Kista to our property. So it will start to increase again. We also have the improvement portfolio, not part of the occupancy rate. There we have a total of 156,000 square meters, of which 127,000 is let. That's future potential projects for us. and are on short-term lease contracts without any right to possession when it expires. If we go a little bit more into the net lettings and the renegotiations for the whole year, the net lettings came in at plus 36 million. It's new lettings of 236 million and terminations of 200. That's in our historical view on the lower side for us. And it also shows that we have a year without any major new lease agreement signings. So that's a goal for 2026. The renegotiations in total 618 million, decline in rents of 0.3% with 2 million downs for the whole year as a whole. That also shows more stability in the leasing market. And bear in mind, 360 million of maturities in 26 and onwards has now already been renegotiated and are part of these figures. So the tenants are forward looking. That's great news for us. If you dive a little bit deeper into the renegotiations, I said 618 million. You can divide that into 341 million extended on unchanged terms and 277 million with a 0.7% decline. So total 618. As said, they're dominated by several small and medium-large tenants. We don't have any of the really large ones this year. And for the total 2025, we only had six tenants with a yearly base rent above SEK 10 million a year. And actually, two of these six were concluded in Q4, both with an unchanged rent level, and one in Arenastaden and one in the city portfolio. So that shows also for us, even though there are a small number of renegotiations, that it's stabilizing in our view. If you distribute the new leases above 10 million, 45% are in the office, 35% in the education, and 20% in the hotel. And if you take all the renegotiations per area, 72% are in the inner city, 25 in Solna, two in Hammarby and one in Flemingsburg, just to give you a little bit more flavor on the figures. So rental development for the existing leases and existing contracts we have put in place. So it's definitely not a forecast, but that's what we have secured so far. And as you see, all numbers a little bit better than last quarter. And that's kind of more or less reflected by the positive net lease in the last quarter. I really like this heading, stable customers. What we are talking about is high-quality customers with long lease contracts. And just to remind you, we have in total around 700 customers in our portfolio. It's a lot, and it's important work for us. If you look on the right side, the 10 largest tenants, they stand for 30% of the total rent. And the 10 largest tenants have a vault of 9.2 years, which is very, very good as a base for the whole company. And if you go further into it, the 25 largest customers have close to 50% of the total rent, meaning 670 customers more or less stand for 50% of the rent. So that also takes down the big risk of many of those customers. They are more or less flexible customers, also when it comes to better market conditions and to adjust the portfolio to what the larger tenants also would like to rent to us. In total, the average lease contract length is 5.1 years. And we're happy to welcome two new tenants on the top 10 board during 2025. The subcontracts is the second largest one, and Alfa Laval are in place number nine there. It's very nice to see. Also, we have seen in several quarters some questions about the parking business. We have increased our parking business. We have specialized personnel taking care of that for us in our company. We have a total of 12,500 parking spaces, approximately. It can be 501, I'm not quite sure. which 2,700 have a separate charging station for electrical vehicles. And we see that as a key factor for some of the larger customers we have. It's important for them to have access to parking spots. We see increased demand for day-to-day permits instead of monthly agreements, and that also increased the flexibility in the portfolio for us as a company. It's easier to book a spot up to 120, maybe 130% when you have day-to-day permits instead of monthly reservations. So in total for 2025, approximately 210 million in parking revenues. So if we look a little bit at the completed projects, I think they're well known for most of you. But in May, Alfa Laval took occupancy in their premises in Flemingsberg. Very nice property. And in September and November, Saab took occupancy in Nøten 4 in Solna Strand. Also a nice property, even though I'm not allowed to go into that property yet. So I haven't seen it from the inside, but it's very nice. As I said, Accord 1 and Posen 1 tenants have gradually moved in during the last quarter as well. And some more tenants will move in during spring 2026. And that's also the reason why the vacancy in the management portfolio have increased slightly this last quarter. If you look at the ongoing projects, we have the Faro Cairo. We have also talked about that earlier. For me, Arenastaden as a whole is a sweet spot. This is the sweet spot in the sweet spot, 20 meters from the metro station. We have... We have board approval for investments up to 613 million. We have dismantled the existing buildings and we are doing ground and foundation work and also preparation for construction works these days. And so why are we doing this right now? This was more or less decided 10 years ago when we entered Arenastaden. So now Solna municipality are doing their last work on all the roads, the infrastructure in this area, and then to be cost efficient for us, we do this work on the plots at the same time. So being ready for that. It's an interesting spot, and we have a lot of interest in that spot, but as of today, we haven't concluded any leases on it so far. We also have Ormtraske 10, the Vennergren Center. Investments approved for up to 609 million. Rental value in this part will be approximately 58 million. And it's pre-let 20%. That's a little bit down from last quarter. And it's due to when we started the construction work there or the refurbishment. We had to move out all the tenants to other buildings we have in the neighborhood. Some of them are very satisfied in the new locations. They have signed new leases there instead of going back to this one. And someone has even found other premises in our portfolio, other places in Stockholm. So right now it's 20% lead. We are starting the marketing toward end of second quarter 2026 on this building. And it will enter the market one year from now or between first and second quarter 2026. Each floor plan is 400 square meters, so it's a little bit early for us to be in the market already. But we see good interest. We have also completed and have some ongoing projects in Birger Bostad, a residential company. Haga Nordau, the Block 5 up there, is processing according to plan. It's in total 288 units. Completed in 2025, we had a BRF Alma, which is a cooperative apartment. 23 out of 20 are sold, as we have two showroom apartments there, and they are not for sale yet. And we have one that's not sold at the time being. We also finalized 78 rental apartments in Q4. That's what's reported in the numbers in Q4. And to be completed in 2026, 50 owner-occupied apartments, of which 44 are sold when we wrote this yesterday. And today it's 45, actually. So possession of this will be during Q1 this year. And we are coming with BRF Matilda and Inga Torge, also later on in 2026, in total 137 apartments, of which 35 are sold. And on the marketing during last Sunday, more than 17 interested parties showed up. So it's looking good for us. We also have the preparations underway for projects to start in the next phase in Haga Norran. So it's block four and block three, totally 132 cooperative apartments in block four, and 260 rental apartments and senior housing, plus a preschool actually in the block three. When it comes to the senior housing, the preschool and also grocery store, we have signed LOIs on those units already, but they are not signed contracts and not part of the net lease at this time. Remaining investment in that one is 860 million, completion in 28 and 29. And with that, we complete the residential buildings in Haga Norden. If you look at our building rights, commercial building rights of 550 million square meters, approximately 60% legal binding of those, and it has a book value of 7,000 per square meter. That's a little bit down from earlier quarters, and as Åsa mentioned, we have not, or it's been a termination of the land allocation in Flamingsberg. We haven't agreed on the terms with the Huddingen Kommune, but we have ongoing negotiations, have a positive tone, so we will report to the market when things changes. And we have 500,000 square meters of residential building rights in addition in our portfolio. So the last land location that we received is the Sveaplan. It was legally binding in January 2026, so preliminary possession date around mid-April 2026, and the building rights are approximately 8,800 square meter gross floor area, also taking into account the floor plans underground. Purchase price is 208 million SEK, should be index linked and start to be close to 230 million. And a plan moving during 2029 of this property. And that more or less completes one of our core areas in Sveaplan going forward. We will have 55,000 square meters of gross leaseable area in that area. having ground floor activities, including food and beverage, having high class conference centers, parking and other services to be a center for our portfolio that can have some extra services going forward. Project opportunities in the near term, as I mentioned, Faro Cairo with the commercial units coming in addition of approximately 500 apartments. And in phase one, we have 185 apartments there. We see apartments in this area is more or less bought or let by the larger tenants in this area. So it's very, very popular. And that's really give us a well-functioning urban area. So that's good for us. Haga Nora, as I said, already produced 519 units in production, 187, and decided to produce another 390 units already with LOIs on a lot of them. We have the Vestra Krungsormen, Tegelterrassen, it's 36,000 square meter office, partly demolition has started in January 2026. We don't have any lease contract in place, but the interests and the pipeline is quite good, quite promising. So there's a big ambitions for 2026. And we have the Solna Business Park. The Parkhuset is a land allocation for 22,000. That's in the purple line on the screen here. And we have Yrket next to it with 320,000 residential units and 2,200 square meter premises, more or less ground floor activities there. The last one, we already own and have in our books 60% of the land plot, but 40% is a land allocation from the municipality. So if you try to summarize our main short-term priorities, we are working every day, every night, every second, a two degrees vacancy in our portfolio. We have to continue to be the preferred partner for our customers. It's so good for me as a new CEO to come into this company, meeting a lot of the larger tenants and everyone talking good about the Fabege employees. That's very, very nice to hear. We have always to be available, accessible, and be solution-orientated. And in my view, we are that, and that's what I hear, so it's very good. We have to secure value creation in ongoing projects. We have to analyze value creation in our land bank. We have to be very exact about that going forward, both in the commercial and the residential land bank. And we have to continue to be active in the financing markets, which started well already first day in January. So that looks good. And as a company, we always have to search for opportunities and we are searching for opportunities to build a company and not to do a single transaction.