Heba Fastighets AB (publ)

Welcome to Heba. We have released our report for the first quarter of 2024, and we thought we would tell you a little bit about the results of the previous period. With us we have Patrik Emanuelsson, our CEO, and we have Hanna Fransén, our CFO. My name is Eva Wase and I work as a communications manager. Patrik, I think you can start by summarizing the period.

I can summarize it by saying that we continue to deliver strong results in the areas that we ourselves can rely on. Strong administrative results, financial stability, division, even within the sustainability area, where we have recently released our sustainability-linked framework. So it is ongoing strong, as usual.

As usual, yes. Can you tell us more about the sustainability area? What else are we doing within sustainability?

Yes, we have sustainable rental contracts. We have a project where we install charging poles on all of our parking spaces. We reduce our energy consumption, continue to reduce from a very low level. We are working on our own environmental certification system for our buildings in operation. Yes, there is as much as possible within the sustainability area.

I have a question for you, Eva. We have published a new website that you have been working with.

Can you tell us a little more about that? Yes, I can. We have been working with our brand for a few years here and worked with building stone after building stone. And now we have connected the bags as we have launched a new website. There are actually two pages, one for residents and one for investors. We have strived to make it clear so that you can easily get an insight into our business. Go in and have a look. Yes, go in and have a look, really. Well then, let's get started. Please, Patrik.

If we make a summary, then we can state that the administrative result, compared to the real estate income for the corresponding period last year, is stronger. When we look at the total result, it is better than last year, but we have still seen a small negative effect on the devaluation of our property values. We have also acquired two older residents. We have received an upgraded rating, the new sustainable and green framework. We have also completed our largest renovation project with almost 400 apartments and, as we mentioned, a completely new website. So that's a concentrate of the quarter.

Yes, and if we look at the figures, the share price result after the tax is minus 40 million. And as Patrik said, it's an improvement compared to the previous year when we had minus 187. And these minus 40 million are mostly affected by the depreciation of our properties, almost 53 million this quarter. and in percentage it is 0.4%. So, one year ago it was minus 1.7%, so we see an improvement here. And what about the administrative results? We sold 19 properties last year, and they had rental income of about 93 million. So, of course, our rental income goes down by some 5% compared to Q1 last year. And then we also have to add that we have now received a raise for the rental increases that have occurred here in Q1. The turnover also decreases, but only by 1%. So here we think that we really show this effective administration that we still have, that we can keep this high turnover despite the fact that we have sold these 19 properties. And the administration result increases by 17%. And this underlying calculation, as Patrik said, is that in Q1 last year we had BRF revenues from this collaboration project that we had in Bredäng. Then we got about 27 million PGRF income. We don't have that now, so we want to compare apples to apples. If we clean away these 27 million, we see that the management result increases by 17% and it ended up at 54.6 million per quarter.

And we can also comment, if I remember correctly, that there are seven quarters now with decreases. Yes, that's right. Even if it plans out now. But what we see, as we have a very big upside from Heba, is that during this two-year period or these quarters, you have not taken into account the situation. Normally, when you evaluate a property, you talk about low, low, low. But we haven't seen any improvement during this period. We have received as many decreases and sometimes even a little more than what other property owners have received. But when the market turns, we will see an improvement with low, low, low. So we are hopeful now, maybe later during the spring and the beginning of the summer, to start seeing these rent reductions that we have started to talk about.

I agree.

Yes, we set new financial goals here that were a bit shorter than before to make a clear mark against the market, what is happening during this period now when we are in a bit of instability and we have also sold a lot. We are going to have an administrative result that exceeds SEK 200 million for housing rights. Our reward rate should not exceed 50%. We are going to have a surplus rate of at least 70%. And then, the share of the driftnet collected from the social density will increase, as we have said. And we have not put any specific figures, but with these acquisitions now, we are over 25% that comes from social density. And then, during this period, i.e. 2023-2025, we will have a division that corresponds to at least 40% of the administrative result adjusted for tax. And our strategy for growth, if we work with acquisitions, we first look at social assets. When it comes to housing, we work with our own portfolio and the portfolio we have in our JV. We can also buy building rights if the building rights are not to be started in the near future. And we have no problems with running JV if we have strong economic partners. And then the last point is that we are basically through with our entire stock. We only have 98 apartments left to renovate, so now we are basically with a completely modern stock. Well, I've shown this before, so I'll just quickly say that we have 400 apartments in our own portfolio. And this is our latest project, which we might even be able to think of starting during the autumn. We have received a approved detailed plan, which has won Laga Kraft, which is a project in Hägersten, about 50 apartments, which we are completing next to our other property. And yes, with a little flow, we might get started there already during the autumn. And then, in our partnership with Åke Sundvall Byggnads AB, we have these projects, where the other project, Vårbergstoppen, is actually also a sale that we have done now during the first quarter to Swedish households. And here is a picture, a rendering of just Vårbergstoppen, or Kasvakten as it is called, which is two properties with a total of 300 apartments that are under construction. Each of the first is moved in June this year and the next is moved in June next year. Yes, if you look at the essential events during quarter one and the rest, then as I said, in the background here you can see Rådsbacken in Huddinge, which is our major project on almost 400 apartments that we have actually moved in all in. Everything is renovated. Within the sustainability area, as I said, we are now down to 80 kilowatt hours per square meter, further down the road. We completed our sustainability-linked green framework. Valued by an independent survey with the highest score. And acquired two social facilities. These two facilities are built together so that you can say that it is a unit of a total of 115 apartments. And, as I said, a significant part of our stock now comes from social security. Yes. During the quarter, we have increased the property loans in combination with the acquisition.

We have reduced our green obligations. We amortized 160 million under March. And then we have increased the amount of certificates. And we think that it feels very good that the certificate market is now in motion, that it is possible to issue. The price formation is better. And we can say about the obligation market as well, that we now see that there are more issuances and also a better price formation there. So for our part, when these obligations are to be refinanced, we see good opportunities to be able to do that. So it feels good. The average rate is 2.52. The loan rate is over 44, so we have a good margin against our goal of being below 50%. During the month of March, we also had our annual review with the rating company NCR, where we got our outlook adjusted to Stable. So now the rating score is BBB with Stable Outlook. In terms of interest, we have insured 73% and if you look at the movable loans, you can see that there are approximately 3 billion, the movable obligations and the certificate. And with regard to our derivative volume, it is approximately 1.5 billion that runs for one year. In the table below, you can see how the interest rate is divided over nine to ten years. We have worked on this during the quarter with restructurings. We had quite large declines in one to two years, so we have now restructured them. We have reduced the volume a little and also used the overvalue on the derivative and extended it. So the interest rate is in a total way increased since the change of year and we have a better spread now in these different year intervals. So the repayment period is 3.3 years. On the capital bond, which is short, within one year we have a property loan, which is at the end of this year and the beginning of next year. 92 million obligations that we will repay on Friday this week. And then we have our certificates. And when it comes to loans, we intend to refinance them. The capital binding period is 3.8 years and we have 1.9 billion in unused loans to be able to use when needed. Or we can choose to raise more loans on our properties so that they are up to 35%. And in the graph below you see these short ones. 918 million, and within 1-2 years, the 1.7 billion will be equivalent to approximately 1 billion. As I said earlier, we see opportunities to remain on the obligation market.

Yes, we have this expression, we say what we do and do what we say. And that is actually a recurring comment we get when we are out talking to investors and so on. And that can be considered quite obvious. But the fact is that we already in 2018 made a decision on new goals and a strategy. which we communicated clearly, we have kept to it and we have delivered. Then, when we entered this new inflation society with rapidly increasing interest rates as a result of the pandemic and war and other things, we also communicated very quickly and clearly how we would get through it, with still strong administrative results and a strong financial position. When we had completed that and came out with our statements and new conditions, we communicated new, more short-term financial goals. And what you can see now when you look forward is that we have delivered and we will deliver according to those goals. So if you summarize this, you can see that With transparency, clarity and a focus on what we do, we have delivered and we deliver all the time with continuous improvements. So it looks really, really good for Heba.

That was a nice conclusion. Is there anything else you feel you want to add? No. If you have any questions about HEBA and the business, you are always welcome to contact us.