Heba Fastighets AB (publ)

Hello and welcome to us at Heba. We have released our report for the first half of the year, and we thought we would present the results for the first half of the year here today. With us we have Patrik Immanuelsson, our CEO, and Hanna Plansén, our CFO. My name is Eva Wars, and I work as a communications manager. Patrik, I think you can start by summarizing the period.

Yes, it has been an intensive period, but we have pushed on and we are still very strong with a strong management result, so we continue to deliver. Despite the fact that everyone else in the market is going a little faster, we deliver and are strongly prepared for a turn in the market.

As we will hear more about later, we have actually bought and sold here on the same market. Can you comment on that?

Yes, but you talk very little about buying and selling on the same market, but I think it is a strong advantage if you can do that. Then we have used that we have our own attractive existence. Some properties that have had some renovation needs, we have been able to sell them to good levels and then we have been able to purchase to very good levels if you compare how the market looked a few years ago. And this is part of a strategy that we have had since 2018, which also very clearly shows that we deliver better than ever, even though we have lower rental revenues because we have sold quite a lot. I don't think there are many who have understood this effect of that we actually become a little more effective all the time and can to keep up a very good administrative result. But I think it also depends a lot on the fact that we have an attractive stock that has still been able to sell at very good levels, even though the market has been quite dead when it comes to transactions.

And in the sustainability area, what are we doing there?

Yes, we always have a lot going on in the sustainability area because we have put an enormous effort to take a position in that area. But now we see ahead of us that to be able to maintain these fantastic key figures we have in all parts of the business and at the same time go into the new regulations and an enormous challenge to get down our greenhouse gases that negatively affect the environment. So we are in an incredibly intensive work where we are preparing ourselves now to do this in a very effective way. But we will come back to that a little bit, but I think we will come back even more during the autumn when we have put all the parts in place.

Exciting. And Hanna, if we take a look at the capital market. It's exciting even there. Very positive price development in general.

If we start with the Z, the short money we borrow, we have seen a price drop of 30 points since the change of year. which has meant that we have emitted more CERT during the spring, and we want that, so we see that we will be able to increase that during the autumn. And on the obligation market, it is actually the same there. You now experience that the investor is back, we have seen a lot of emissions from competitors. We have received proposals, but have not really felt that we here under Q2 now had the need for liquidity. But we think that the current price curve is very interesting and it will definitely challenge the banks with traditional financing now that we are in the refinancing phase in the fall. So it feels really good and we want to be on the capital market as we have said before.

And it seems to be a discussion that has been that it is something dangerous to be on that market. But if you have a good balance between your forms of financing, then we absolutely want to be there. We see it as a great strength.

Yes, really exciting. But then said Patrik.

Yes, that's it. We are in 12-13 municipalities with a strong concentration in Stockholm. We have 58 properties and now 12 social properties. Expensive area of 258,000 square meters. 3148 households, 354 premises and 43 employees. We have also adjusted the size of the organization during this year, which has now decreased in volume in a very effective way. Summarizing the period of January-June, i.e. the half-year, we can still see that the administrative results are increasing in terms of GDP from our JV companies. And that the total result is still negative, but the negative values came in the first quarter, so now we think that it stabilizes to meet a rise over our understanding. And as I said, during the year we have acquired three nice retirement homes, one in Täby, where we recently did, and two in Tyresö. And then we have sold two smaller housing properties, which we see have a future need for renovation. These are properties that is quite low, but we would need to invest in it, and we don't really think we have the space. We have received an upgraded rating, triple B with Stable Outlook, and we have implemented our updated framework, which is also now sustainable, a very offensive framework. We have finished our largest renovation project, almost 400 apartments in Huddinge, and as I said, a new home. So that summarizes the first half of the year on a slightly higher level.

The half-year result after tax is a minus, but not that big, but still minus 23 million. And here we see the comparison to the same period the year before, then it was minus 387. So it's still a strong improvement. The minus result is driven by the value changes. As you can see further down, they are approximately 51 million for the half year. And that corresponds to 0.4 percent minus. We have had seven quarters of decline, including in Q1 this year. And now when we come into Q2, it was actually a zero value change. So these 0.4 were already discovered in Q1. So there is a big difference in the value of the change compared to a year ago. As for the administrative results, we are almost at 113 million. And as Patrik mentioned, we had BRF revenues last year from our JV companies. And that is a kind of one-off. So when we compare against the year, we take away these BRF revenues from the first half of last year. And then we see an improvement of the administrative results by a whole 10%. Which we think is very strong, given these extended properties. As I said, we sold 19 properties last year. And that's why we also have lower rental revenues. The properties we sold generated 93 million revenues. So it's not completely unexpected that the rental revenues will go down this year. And the turnover has also gone down by 2%, but not as much. And if you look at our surplus rate, we are now at a very nice 71.6% in surplus rate compared to the year before when we had 69.8%. So despite everything, when you sum this up, you really have to weigh in that we have sold properties, we have lower income and surplus, but an improved surplus rate. Therefore, it is still a very strong economic force in our administration.

If you look back a year, you can see significantly higher rent revenues, but significantly lower administrative results. We are a much more efficient company with a much higher rate of turnover. Yes, if you look at our short financial goals, which we set here to be clear to the market, we will deliver an administrative result of over SEK 200 million, clean for housing rights, our reward rate will be below 50%, we will have a surplus rate of over 70%, And then, as I said, not a set goal, but we will increase the proportion of drift methods that come from social facilities. And today, the annual effect of the acquisitions we have made will be 28% and increase to next year. And the allocation will be at least 40% adjusted, the administrative result adjusted for tax. If you look at our growth strategy right now, then we say that when it comes to acquisitions, we first focus on social assets. We see this window now where there has been an opportunity to do good business and there has been an accessibility to social assets that have not existed in recent years. We have a very nice own project portfolio that we are focusing on, massing for it to be as good as possible now when we can start building again. We are happy to buy buildings that are a little further ahead and we also believe in JVN if we have strong economic partners. And as I said, we have a modern stock and that's where we want to be. We only have 98 apartments left to renovate. So that's our strategy. If you look at our own project portfolio, you can, if you remember how it looked last quarter, see a change here. And you can see it most clearly that we have now taken over the Kjellberga project itself and have signed an entrepreneurial agreement so that the spade goes into the ground here after the summer, which means that we will build during the period from 2024 to 2026 and then the property will be finished. 128 apartments in Kjellberga, Nynäshamn. Today the board has decided that we can also start another project where we will build an infill next to our other property in Hägersten. Another 48 apartments that will be a flagship for us to show how good we are at building and what qualities we can build with. And we will start with it also late in the fall, maybe November, then we put the spade in the ground and we will be finished in 2026. And then the other two projects are a little longer in time. In total, about 400 apartments. Yes, and this is the project I was talking about, the property to the left, which we complete with our existing housing. And if you look at the projects we have in our partnership with Åke Sundvall, we are actually now moving into the first property in Vårbergstoppen. And then we will start distributing the second stage here after the summer, and it will be ready to move in June 2025, a total of 300 apartments. And we have sold that project to Svenska Bostäder, where Svenska Bostäder will take part in the first stage in September. And then we spend a lot of time, as I said earlier, massing our important projects in Stora Sjöndal, among other things. that will be completed a little later here between 2027 and 2034, somewhere. So we have a good, nice portfolio in the areas where it will still work and build rental properties, which I think, and I have written to my CEO that it is quite difficult to build in areas where there is not a large demand. But our projects, as you can see here, they are in the right area with the right conditions. If you look at specific events during quarter two, yes, we have acquired an elderly resident in Näsby Castle Park. I would like to claim that it is perhaps one of the country's most beautiful elderly residents that we have found there, a real gem in our stock. This means that an essential part of the stock consists of social housing. In terms of volume or number, it is a little over 20%, but for Driftnet it is 28%. And as we said earlier, we have sold two housing properties with renewal requirements. We still have very low energy emissions. We are at 80 kilowatt hours. And then we put a lot of time into the final preparations to be able to enter the CSRD reporting. We are going to be ready for that in the fall so that we can get the sharp values from January to be able to report the year 2025. But we are very good at it and are far ahead in the preparations. And something that we are also very proud of, which is a major focus area in this, is that we want to keep an eye on our supplier chains. And there we invited our most essential suppliers here in early June to get them to have the same view on sustainability and good employment conditions and so on. And now 91% of our essential suppliers have signed our code of conduct. We also need to review ourselves and ensure that we really meet the requirements in the code. I think this is an area where we will see a lot of work in the coming years. The importance of having control over all of our supplier chains. And then the new production. After a few years, we took over the project in Källberga. and have signed an entrepreneurial agreement. So it feels great that we are now on the move with this project that we have been working on for a couple of years.

The figures then, if we just look at quarter two, we have lower rental revenues and therefore a lower turnover, linked to the same reasons as I said earlier, that we have sold. But we also have lower interest rates, so that means that we get out strongly on a management result of 58%. And if we clean up the BRF income we had last year in Q2, we still have a management result that is improved by 2%. And a very nice surplus rate of 74%. That is probably an all-time high, I would say, compared to 73% in Q2 last year. It's also very nice that the share price is positive. We haven't seen it for a while, unfortunately. But now it's a plus, even if it's small, 17.5 million. And the change in value, as I said, in percent is zero, but on paper also a small plus figure of 1.3 million. Financial status. One year ago, when we were here, we had a total debt of just under SEK 7 billion. So we have had the opportunity to be able to amortize a lot, according to these sales. And the property loan stands for approximately SEK 4.4 billion, green bonds SEK 1.1 billion and then we have a certificate. And during the quarter now, we have amortized the bonds with SEK 92 million and increased the certificate. We also have an average rate of 2.81. It is slightly higher than when we were here in Q1. This is primarily due to the fact that we have taken up loans for the acquisition in Tyresö. And then we have restructured swaps also here in two rounds during the spring. Loan rate 44.7 and net loan rate 44.5. And then in March, when our rating company NCR makes its annual Review, so har vi nu BBB med en stable outlook.

Nu kanske du ska kommentera just den här omstruktureringen.

Ja, absolut. Det passar faktiskt väldigt bra på den här sidan att göra det. För allt det här med ränteswappar och räntesäkring är ju något som är alltid på vårt bord och något som vi har jobbat med väldigt mycket. Vi stod ju nästan överhedgade som man säger. När vi hade amorterat ner vår skuld så hade vi en för stor derivatvolym. a luxury problem still, so we have also worked with that. And then we look at how we should have a uniform distribution, as you can see here in the lower part of the picture. So right now, our movable exposure is just under 1.3 billion, if you look at movable real estate loans, movable bonds and CERT, and then you subtract our derivative portfolio. And that means that we have a 78% interest rate, and that is also where we will want to be. The interest rate is 3.6 years. In the previous table, we had quite large declines in these periods of 1-2 years and 2-3 years. This is what we have now seen with these restructurings, where you take advantage of the value you have on the swaps, and then you can both halve and increase and decrease volumes and extend. So it is actually constantly in focus.

Yes, and that means that we have taken a little higher interest.

Yes, absolutely. Like consciously.

Yes, to take it out over time so that it will be even better in the future.

Absolutely, that's right.

Because it is a very active choice.

Yes. In terms of capital, we have approximately SEK 1.7 billion that will fall within one year. Then we have real estate loans, obligations of SEK 350 million in May next year and the certificate. These real estate loans are now both later this fall and at the beginning of next year. And also a little connected to what I said here in the beginning, We still intend to refinance the entire short-term debt. Whether it will be against the bank or against the obligation when it comes to the first loan, we will see. We will follow the price chart and make these decisions in the fall, which choice it will be. But for us, the interest rate cost is always very primary, to always look at that loan. In short, 1.7 billion SEK is what we plan to finance. If that doesn't go well, then we have our loan agreements, which today are unused, 1.9 billion SEK. And we also have the opportunity to loan our properties more, so that they are loaned to 35%. Capital binding time is 3.6 years. In the table below, you can see the approximately 1.7 billion, which is up to one year. We can comment that the 950 million in the 1-2 year table, there are obligations of 750 million. Otherwise, we have a spread that goes far to 8-9 years.

Yes, and we were going to spend some extra time on sustainability, so I have some complex pictures here that I will try to talk to. There are a lot of activities, concrete jobs that we do to become more efficient and better when it comes to sustainability. If you look at the graph or the stacks to the right, it is where we see our big common challenge, where it is about reducing the volume of greenhouse gases that affect the environment, or in this case a lot of carbon dioxide emissions. If you look at the two lower stacks, Scope 1 and 2, which are a little beige in colour, you can see that we have set the goal in our Green Framework to reduce the load by 50% by 2030. But we have also said that our administration, our running business, should be climate neutral. 2030. And this is an enormous work now that will be carried out, all from energy efficiency, certainly in many cases also to switch from remote heating to mountain heating and so on. And we have a five-year period on us. Of course, we are also actively looking at the possibility of buying carbon dioxide capture, where there is a little challenge in how to calculate it in relation to this. But then the really, really big stack here, which in 2023 is much smaller than it will be because there has been very little new production, There we all have a common goal that we will be zero by 2045 in the country. And it is clear that to get down maybe 10,000 tons of carbon dioxide to zero is a job you can't wait for, but it is a job you have to start now. And if you look at our slightly more short-term goals, we have said that all new production that we start from 2025 should have a halved load. Only that is a huge challenge. With the long lead times in new production, 2025 is long. And then we have said that by 2030 we will have halved the load in our renovations and new production by 2030. So this is an enormously challenging work that we will put a lot of effort into, but that the entire industry has to put a lot of effort into. If you take the next picture, which is even more moving, is to be able to manage everything we do today by maintaining the effective key numbers. And to go into CSR, which on a brutto level is 1100 measuring points that you are running to maintain, then there are various activities that we need to do in the company to prepare us for this. And this is an example of a lot of activities that and a number of activities that are to be started. And a strong driving force in this to facilitate our work will be an increased digitalization. So we are facing a very extensive change in our work. And I would say that it is a big change for Heba in the future that klarar de här hållbarhetsmålen, men den är minst lika stor för våra kollegor där ute. Men vi ligger väldigt långt fram och vi känner oss väldigt taggade på att göra det här också. Another summary of this is that there is a lot now that indicates that we actually see a turn in the market, that it is actually shining. That is where you can summarize a lot of this, even if you can say that the transaction market has not really come off yet. With a situation where even more interest rates are being advised, a stabilization of property values, there is a lot that points to us seeing a reversal. And I am completely convinced that it is within the housing segment where we will see the big difference. The other segments are now starting to falter a little bit due to the consequences of home work, contractually and so on. Men bostäder i Stockholmsmarknaden, det kan inte bli mer rätt. Så det känns väldigt positivt just nu.

Det var en väldigt bra sammanfattning, en väldigt bra avslut. Hanna, vill du tillägga någonting? Nej, det har Patrik gjort så bra. Som alltid så får ni jättegärna höra av er till oss om dels att ni har några frågor. Och med det så säger vi tack och hej. Tack så mycket.