Heba Fastighets AB (publ)

Hello and welcome to us at H-EBA. We have released our report for the first half of the year, 2024, and we thought we would present the result for the half of the year here today. With us we have Patrik Ikemanen, our CEO, and Hanna Flansén, our CFO, and my name is Eva Varsjöb, I work as a communication manager. Patrik, I think you should 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. Although all others in the market are going a little fast, we deliver and are strongly prepared for a turn in the market.

And that is what we will hear more about, then we have actually bought and sold here on the same market. Can you comment on that a

little? Yes, but we talk a lot about buying and selling on the same market, but I think that is a strong advantage if you can do that. Then we have exploited that we have our own attractive stock, but 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 acquire to much better levels compared to how the market looked a few years ago. This is a part of a strategy we have had since 2018, which also very clearly shows that we deliver better than ever, despite the fact that we have less rental income because we have sold quite a lot. I do not think many have understood the effect of the fact that we are actually getting a little less effective all the time and can keep up with a very nice management result. But I think it also builds a lot on the fact that we have an attractive stock that has still been able to sell at very good levels, despite the fact that the market has been quite dead when it comes to transactions.

And now let's see the sustainability area, what are we doing there?

Yes, we have always done a lot in the sustainability area, since we have put a lot of effort into taking a position in that area. But now we see ahead of us that we can keep up with the fantastic key words we have in all parts of the business, and at the same time go into the new regulations and a huge challenge to get our greenhouse gases down, which affect the environment negatively. So there 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 in the fall when we have put all parts in place.

Exciting. And Hanna, I thought we could take a look at the capital market again. Yes, but it

is exciting even there, I would say. And very positive price development in general, if we start with the CERTA, the short money we borrow, we have seen a price drop of 30 points since the year shift, which has made us emit more CERT during the spring, and we want that, so we see that we will be able to increase that during the fall. And in the obligation market, it is actually the same there. You now feel that the investor is back, we have seen a lot of emissions from the competitors. We have received proposals, but have not really felt that we here under Q2 now had the need for the liquid. But we think that the price curve that is now very interesting, and it will definitely challenge the banks with traditional financing, now that we are in the refinancing situation in the fall. So it feels great, 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 there is something dangerous to be on that market, but if you have a good balance between your financing forms, we absolutely want to be there. We see it as a very strong one. Yes,

really exciting. But then Patrick says.

Yes, that's right. Yes, we were going to make a summary picture, since it has moved a lot in the stock market. But here you can see that we are in 12-13 municipalities with a strong concentration in Stockholm. We have 58 properties and we now have 12 social properties. The export area is 258,000 square meters, 3,148 housing, 354 premises and we are 43 employees. So we have also adapted the size of the organization during this year, which has now gone down in volume in a very effective way. Yes, if you summarize the period January-June, that is, the half-year, then we can still see that the management result increases the interest rates of our JV companies and that the total result is still minus the devaluations, but the devaluations came in the first quarter, so now we think it stabilizes to meet an increase in our estimate. And as I said, during the year we have acquired three nice old buildings, one in Täby, where we did everything recently, and two in Tyresø. And then we have sold two smaller housing properties, as we see, have a coming need for renovation. So it is properties that are quite low-cost, but we would have to invest in them, and then we don't really think we have the space. We have received an upgraded rating, triple B with stable outlook, and we have carried out our updated framework, which is also now in sustainability, very offensive framework. We have completed our largest renovation project, we have built almost 400 housing properties in Huddinge and, as I said, a new home. So that sums up the first half-year at a slightly over-reaching level.

Yes, well, the half-year result after taxes and everything is a minus, but not so 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 is still a strong improvement. The minus result is driven by the value changes, as you can see further down, it is the average 51 million for the half-year, and it corresponds to 0.4 percent minus. We have had seven quarters of decline, including Q1 this year, and now when we came into Q2, it was actually a zero value change, so these 0.4 were already detected in Q1. So there is a big difference in value changes now compared to a year ago. The management result, we come out with almost 113 million, and as Patrik mentioned, we have had BRF-earnings last year from our JV-business, and that is a form of entry-post. So when we compare to the year, we remove these BRF-earnings when we had the first half-year last year, and then we see an improvement in the management result by 10 percent, which we think is very strong compared to the If you also look at our surplus, we now come out with a very nice 71.6 percent surplus, compared to the year before, when we had 69.8. So despite all, when you sum up, you really have to weigh in that we have sold properties, we have lower income and operating surplus, but an improved surplus, so therefore, the economic power is still very strong in our management. And you

can see this if you look back a year, you can see significantly higher rents, but significantly lower management results. We are a much more effective company with a much higher surplus.

Absolutely.

If you look at our short financial goals, which we set here to be clear against the market, we will deliver a management result of over 200 million, which is in line with the housing rights income, our salary should be below 50 percent, we will have an surplus of over 70 percent, and then, as I said, not a fixed goal, but we will increase the share of drift networks that come from social properties, and today, the year-end effect on the purchases we have made now will be 28 percent and the increase to next year, and the distribution will be at least 40 percent adjusted, management results adjusted for tax. If you look at our growth strategy, which is currently, we say that when it comes to purchases, we focus first of all on social properties, we see this window now where there has been the opportunity to do good business and there has been an availability of social properties that have not been there in recent years. We have a very nice own project portfolio that we focus on, masses to make it as good as possible now when we can start building again. We are happy to buy construction rights that are a little further ahead and we also believe in the JVN if we have strong economic partners, and as I said, we have a modern existence and that is where we want to be, we only have 98 apartments left to renovate, so that is our strategy. If you look at our own project portfolio, you can remember how it looked last quarter, you see a change here, and you can see it clearly that we have now taken over the Kjellberga project itself and have written an entrepreneur agreement, so that the spade goes to the ground here after the summer, which means that we build during the period of 2024 to 2026 and then the property should be finished. 128 apartments in Kjellberga, Nynäshamn, and then the board has today made a decision that we can also start another project, where we will build such a filling 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 late in the autumn, maybe November, we will put the spade in the ground and we will be finished in 2026, and then the other two projects are a little further ahead in time, a total of about 400 apartments. Yes, and this is the project I talked about, the property to the left that we complete with our existing housing. And if you look at the projects we have in our partnership with Åker Sundvall, the influence in the first property in Vårdbergstopen is actually now on the rise, and then we will start the completion of stage two here after the summer and it will be completed in June 2025, a total of 300 apartments, and we have sold that project to Svenska Bostäder, where Svenska Bostäder will participate in the first stage in September. And then we put a lot of time, as I said earlier, to mass our important projects in Stora Sköndal, among other things, which will be completed a little later here in 2027-2034 somewhere, so we have a good, nice portfolio in the areas where it will still work and build housing sites, and I have written to my CEO that it is quite difficult to build in areas where there is not a large demand for support, but our projects as you see here, they are in the right areas with the right conditions. If you look at specific events during quarter two, yes, we have acquired an old house in Näspislottpark, I would like to assume that it is perhaps one of the country's finest elderly residents that we have found there, a real pearl in our stock, and this now means that a substantial part of the stock is made up of social properties, to volume or number it is a little over 20%, but to driftnet it is 28%, and as we said earlier, we have sold two housing properties with renovation needs. We still have a very low energy expenditure, we are at 80 kilowatt hours, and then we put a lot of time into making the last preparations to be able to enter the CSRD report, and we will be done with this during the autumn so that we can get in the sharp value from January to be able to report in 2025, but we are very good at being 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 have our delivery chains in check, and there we invited our most important suppliers here in early June to join us in having the same view of sustainability and good employment conditions, and now 91% of our most important suppliers have signed our executive code, and in this there is also the idea that we should make a revision on ourselves and ensure that we deliver up to these requirements in the executive code. I think this is an area that we will see a lot of work in the coming years, the importance of actually having a look at all our supplier chains.

And

then the new production, that we, after a few years, took over the project in Kjellberga and have signed an entrepreneurial agreement, so it feels great that we are now in the process of the project, we have been stamping for a couple of years.

The numbers, if we just look at quarter two, we have lower rents and therefore a lower risk surplus, linked to the same reasons as I said earlier that we have sold, but we also have lower rent costs, so that means that we will come out strong on a management result of 58, and if we clear away the benefits we had last year in quarter two, we still have a management result that is improved by 2%, and a very nice surplus of 74, that is probably all-time high I would say, and compared to 73% in quarter two last year. It is very fun that the year-end result, the total result after tax, is positive, we have not seen it for a while now, unfortunately, for all negative value changes, but now it is a plus, even if a little, 17.5 million, and the value change as I said in percent is zero, but on the paper also a small plus number of 1.3 million. Financial status then, one year ago when we stood here, we had a total debt of just under 7 billion, so we have had the opportunity to amortize a lot, given these savings, and the property loan is for the dry 4.4 billion, green obligations 1.1 and then we have a certificate, and during the quarter now we have amortized the obligations with 92 million and increased the certificate. We also have a average rate of 2.81, it is slightly higher than when we stood here in Q1, and that is primarily linked to the fact that we have taken up a loan for the acquisition in Tyre Sö, and then we have amortized 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 does its annual review, we now have triple B with a stable outlook.

Now maybe I should comment on the amortization.

Yes, absolutely, it fits very well on this side, to do that, because all this with interest swaps and interest insurance is something that is always on our table and something that we have worked with very much. We almost stood overheadshed as they say, when we had amortized our debt, we had a too large derivative volume, a luxury problem, but still, so we have also worked with that and then we look all the time at how we should have a even distribution as you can see here in the lower part of the picture. Now our mobile exposure is just under 1.3 billion, if you look at mobile housing loans, mobile obligations and so on, and then you pull off our derivative portfolio. And that means that we have insurance 78% and that is also around where we will want to be, the rental time 3.6 years. And down there in this table, we had earlier quite large decline in these periods 1-2 years and 2-3 years, and that was a very large decrease in the amount of money that we have now seen with the restructuring, the benefits, 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 rent to pull it out over time because it will be even better in the future. Absolutely,

that's right. On capital binding, we have 1.7 billion that will fall within one year, and then we have housing loans, obligations, 350 million in May next year and the certificate. And these housing loans are now both later in the fall and at the beginning of next year. And a little also to connect to what I said here at the beginning, we still consider refinancing all this short debt. If it is against the bank or against the obligation when it comes to the first payment of housing loans, then we will see it now forward and take these decisions during the autumn, which choice it will be. But for us, the cost of rent is always very primary to always look at that post. So short for a fall of 1.7 billion, we see it refinance and if it would not go well, then we have our loan promise which today is unused, 1.9 billion. And we also have the opportunity to pay our households more since they are paid to 35%. Capital binding time, 3.5 billion. And in the table below you see these 3.7 billion which is up to one year. Then we can comment that these 950 million in the table 1-2 years, there are obligations 750 million of them. Otherwise we have a distribution that still goes far to 8-9 years.

Yes, and then we thought we would put a little extra time on some sustainability. So I have some complex pictures here that I will try to talk to. We are doing a lot of activities, concrete jobs that we do to be more effective and better when it comes to sustainability. But if you look at the graphs or the stacks to the right then that's where we see our great common challenge where it's about reducing the volume of greenhouse gases that affect the environment and the amount of carbon dioxide emissions. And if you look at the next challenge if you look at the lower part the two lower stacks that are scoop 1 and 2, a little beige, then it is that we have set as a goal in our green framework that the load should decrease by 50% by 2030, but we have also said that our management, our running activity should be climate neutral and we have a lot of work now that should be carried out, always from energy efficiency, in many cases also change the heat to mountain heat and so on. And we have a five-year period on us. In this is also of course that we actively look at the possibility of buying carbon dioxide capture. There is a little challenge how to count on that in relation to this. And if we look at the lower part, where it will be because it has been very little new production, there we all have a common goal that we should be zero by 2045 in the country and of course to get down maybe 10,000 tons of carbon dioxide to zero, that is a job that can not be expected, but it is a job that must be started now. And if you look at our shorter goal, we have said that all new production will be a huge challenge, because with the long lead times of new production 2025 is tomorrow. 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 a huge challenging job that we will put a lot of effort on, but that the whole industry must put a lot of effort on. If you take the next picture, then it is so to be able to do everything we do today by maintaining these key numbers that we have, and go into CSR, which at the brutal level is 1100 meters that you should be running, then there are various activities that we need to do in the company to prepare ourselves for this. And this is an example of that there are a lot of activities that are going on and a lot of work is being done, and a strong drive 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 to move forward to achieve these sustainable goals, but it is at least as big for our colleagues out there. But we are very far ahead and we feel very excited to do this too. Another little summary of this is that there is a lot now that indicates that we actually see a change in the market, that it is actually lightening up. That is what you can summarize a lot of this, even if you can say that the transaction market has not really come loose yet, but with a situation where more and more tax cuts are being made, and I am completely convinced that it is within the housing segment where we will see the big difference. The other segments now are starting to start to deteriorate a bit, the consequences of home work, the environment and so on, but housing in the Stockholm market can not be more right. So it feels very positive right now.

That was a very good summary, a very good summary. Thank you

so much for your time.