Heba Fastighets AB (publ)

Hello and welcome to us at HEBA. We have released our report for the third quarter and will present the results today. We have with us Patrick Imanelsson, CEO at HEBA, Hanna Fransén, CFO and I am the communication manager at EVA Faset. Patrick, can you start by summarizing the results? It

will be a bit of a hassle, but I usually say that it is a strong management result. We are very proud of the result. You have to remember that we sold off rents last year with 93 million. And if you look at our colleagues' development, we actually kept a very good result last year. Many of our colleagues lost their development results. So that makes it extra strong that we continue to push forward in a positive way. So we feel very happy.

Stable? Very

stable.

But if we look at what is currently happening now and a bit forward. What

is particularly relevant is that we have put a long period behind us to achieve new goals. Which are linked to sustainability, but also new financial goals. And we will present this during the day. So we look forward to that a lot. It is a very big and extensive change for us to make these new sustainability goals and implement them.

If we stay a bit behind in sustainability, if we look a bit more specifically, what are we doing?

One part of this change we are facing is that we will achieve a documented control of our properties in real time. This means a rather extensive conversion to be able to show the world and the market that we have it. The other part is very much about how we affect the environment, i.e. the environmental pollution. And there we have two big offensive things. One is how we will reduce our energy consumption and reduce emissions there. And the other part is how we will reduce the emissions in the new production. And that is the big challenge that we all are facing as a housing company.

That's right. With that said, I think we should start the presentation. Yes, I think so. We will get back to this. We will get back to this. Here you

go. If we summarize the activities that have happened throughout this year, it is just as Patrick said that the selection result is increasing. We choose to present the exclusive BRF-info from JV-Bolag, which came in last year. So in order not to compare the Pärn and Äpplon, we have chosen to clean them away. And then we see an improvement of 3% for the first three quarters. The total result is still negative, not much. And a very big difference from the previous Q3 last year. But still a minus. And that is strongly driven by negative value changes. We have acquired three elderly residents during the year. Two on Tyresø in March and one in Tebbipark now in September. We have also sold two housing properties in Midsommarkransen, which had the need for further renovations. We have issued new green obligations for 350 million in September. It was a while since we issued new ones, so it feels extra fun to do it now. And also under the new green framework. And we have also started building 128 housing properties in Kjellberga. There was a spade here recently. So that is a project we have had for a while, but now it is great that it has started. The numbers. As I said, we are negative on the final round, with minus 8 million. But as you can see, we had one year ago, over minus 650 million. The administration result is 3% better. And this is still very strong, just as Patrick Inglede said. Even if the rents are reduced by 4% and also the tax revenue, we will still get even stronger. We have sold 19 housing properties last year, so of course that will have an effect on the total numbers. But it is great that it will still get plus 3%.

And you can see that if you compare our rentable area from what we had six or seven years ago to today, we have doubled the administration result. So we have made a very big change to make the business economy more effective. Yes,

indeed. And the value changes. We now see a little weak positive trend. We have still accumulated minus .3% this year compared to minus .4% last year. So it is absolutely better. There is a small plus number on the quarter, but still the same as minus 0.3. And then it will be 33 million SEK compared to over 1 billion we had a year ago. And we have put the new long goals, but we still have these goals left, which are the shorter goals that we set for the period of 2023-2025. So for this year 2024, it is still these goals that matter. And then we have the new long goals that Patrick will tell you more about later. And we have said that we will have a administration result that exceeds 200 million SEK for the rentable property tax. And we see that we will be able to do that by 2024. We will not have a salary rate that exceeds 50%. We close the quarter at 44%. We will have a surplus rate of over 70%. And we are actually at 72.5 now, which is one of the higher grades that HEPA has had. And we will increase the share of social property tax net. And then we have not had any percentage set in these short goals, but today we have 28%. And then the distribution will be at least 40% of the administration result adjusted for tax. And that was also what we delivered when we did the distribution in May this year. And the significant event under Q3 is as we said, we are adding this social property in Näsby Park. 54 apartments in an elderly home. And we now have a significant share of the budget is social property. 13 of 57 properties are social property. And we are removing these two small, smaller housing properties. Energy use is record low again. I feel like I have said this a few times, but now it is 79 kilowatt hours per square meter. So that feels really good with the coming challenges we also have. CSRD work has been going on for a while. We have looked a lot at which data points we are entitled to report on. And also this double recent analysis. So we have come a long way in that work. That also feels good. And actually 100% of our recent suppliers have signed this implementation code. So that is something we have also worked on for a while to achieve. During the new production we have had a construction start on the project in Källberga. And then in July a little later, after the last report, we signed another agreement for a project in Hägersten. Which is 48 housing properties. And we have planned to finish that in 2026. So the same end of the year as the Källberga project. And the numbers for Q3 are the same. There we have a management result of 56 million. To compare with 60, which we had Q3-23. So it is a slight decline of 4 million. And that is strongly driven by the deductions we made last year. Plus on the result of the part-time job. Feels good. Also stands the difference from the negative result we had last year at minus 265. And a positive value change. So even if it is .1% only these 19 million. Then we see this weak trend now upwards. On the financial side we have our housing loans at 4.1 billion. And now green obligations on 1.450 billion. Compared to these 350 that we now did during the September month. And we emitted them at a margin of 1% plus Q3. And then we have the certificate at 315. So 5.9 billion in debt. And an average rate of 2.95%. The net salary has also gone down a bit. And the same as the salary from the latest report. And we have .2% in the salary rate. The rating has not changed since last year. Triple B, stable outlook. And in the diagram you see the change in our debt and average rate. The tax liability if we look at moving loans and short term losses. Moving obligations and certificates. And if we take off our whole black portfolio. Then we have 1.3 billion in moving exposure. Which means that we have a 78% insurance of the debt. The tax liability is 3.4 years. And in the lower part of the diagram you see how this tax liability is distributed over the year. And we have worked hard, as we have also told earlier. To have this even distribution both in the decline in volume and over the year. For an effective handling also internally. The capital binding we have a high of 650 million in bank loans. Which falls within one year. The rest or only half is in spring. And then the rest comes at the end of next year. And then we have an obligation, 350 million in May. And certificate. And we have the intention to refinance the whole sum of 1.3 billion. And if that would be a problem, we have always been in the debt. Fall back on 1.9 billion. And the bond settlement of the property is still unchanged at 35%. So there we also have space to pay them more if we want. Capital binding time, 3.5 years. We think it is a good year for us. And also a even distribution in this table below. Which is also a deliberate and stable control over that.

Yes, we have a pretty nice project portfolio. We are both in our own management and in our partnership with Åke Sundvall. And as Hanna has now told us, we are actually in the process of the first project. And have signed a contract to start project number two. In our own portfolio. And if you look at our collaboration, it is the Wårdbergs Topp. The one that is going on, where we have had influence in the first property. And the second property will be in June next year. A total of 300 apartments. And that project is also sold. And if you look at our really big joint project, which is in Stora Gjundal. I count on, before the next report, I think we will have a approved detailed plan. Which means that we can start planning the work and start that project. So a lot of focus on a very nice own portfolio in good condition. Which we will soon see necessary to actually start the new production with full force. Yes, so here it looked. Four happy people who made spades in Kjellberga.

In Nynäshamn actually. Which is not in Hägersten as far as I know.

And it will be a fantastic project. Where our 128 apartments will be an entry in the area. With a very varied design and so on. So it will be a real pearl in our portfolio.

Indeed.

Yes, then we thought we would go into our new sustainable goals. And one can summarize it with that. That one part has ended that we have been under these years. Now when we have been down a little weak. Have focused a lot on how we meet when things start to move. And then we have worked very actively with the above all to prepare us for the sustainability requirements. Which are coming and now they come in a very high speed here. It is both the requirements that are set from EU in the form of taxonomy. CSR is that, but it is also SignSpace Target and it is our own requirements. And the sum of all this and the sum of that we also have to report in a more structured way. And actually very comprehensive way. That has set very big requirements on how we have looked at how we will meet these new needs. And at the same time, then, keep everything that is very, very good. We have a very effective management, we have very nice key statements. We have very happy guest guests. And the sum of this, then, we will boil down in our new goals. Where we will implement this, including the big green transition. So that is actually what marks the content of this. And then you should not forget that if you are a company on the stock market, you should also have a certain growth. And that is what we have worked with now. Because now it is still. We made the judgment that we will enter a new period of stability from 2025. And we think that is very much what we are talking about. That we have a new stable platform, if one on another level than we had before. So that is an important part. And then you can just summarize what we will show towards the end. To manage all this with the Bible, high efficiency, it is very much about taking the digitalization as a help. To take this step that we in the property industry have not done. Actually, as many other industries or most other industries have done. Yes, shall we start by looking at the financial parts?

Yes, it feels really fun that we have been able to take these goals forward now. And put them, and they partly remind us of the goals we have had, but also with a different direction. So if we start with the first one, then the management result. In average, 5% is improved every year. And with that we mean that it would be able to be a little under 5% for some year. And some years it could go over. It is somehow that we have put in the assumption in these models. We are not sure about both income and costs, how it will affect. And we will make a purchase, we will finish our own projects. It is not possible to say exactly which date everything is done. So with that said, we want this tension, that it can be average during these years, improved by 5%.

Yes, and it becomes an important thing to be able to have the financial stability. That we do not have to chase annual things, but we can let it balance out over time. And then we get a nice controlled plan.

Yes, there are also parameters that we do not completely control.

No. Like the interest

and others.

No, and some that we control. Yes,

exactly. No, and in terms of the reward, we say the same thing there actually. That in average, not exceed 45% and never over 50%. So it is the same there. It could be something then, could be soon under or soon above. This is still controlled by half of the external values ​​of our market value. So it is not affectable and therefore said, it could then be a little above or below. We also want an excess rate of over 70%. And just recently I said that we had 72.5. We have delivered many quarters above 70. So you might wonder why you did that. But we are highly aware of this and we feel that we say 70. Both ways that there are estimated costs and others that we do not completely control. And we know that we are facing challenges also within the energy sector and we will make it effective. So we want this little span then. The market value of the properties will rise by 20 billion. And there we have escaped from the market value we have today. We think that we will finish the project we have in our own portfolio. Even those who are not built started, as Patrik talked about earlier. We also see that we will do procurement during this period. And of course we are thinking of a positive value change. And we do not know today where it will be. We know that it was on average just under 7% annually before the market situation became tougher. Now it has been something else for two years. And we have made the assumption a little careful, if it is 3% during this period. So we can not say exactly what the assumption is that we have done. Then we say that at least 20% of the power grid will come from social properties. We have not chosen to put any roof, but rather look at a floor. Today we have 28%. And to put a roof would also be difficult, given that we have our own projects that we want to finish. And that is often within the housing. Then we do not know what procurement we should do. So we think it is much more logical to talk about a floor and at least 20% will come from social properties.

We do not want to end up in a situation where we have to give up a good deal just to miss the target. Or that we would be hunted down in this. We want full control of this. Therefore it becomes more natural to turn on this and have a floor.

And finally, the distribution, which during the period should be at least 50% of the procurement result adjusted for tax. The goals that HEPA had earlier, if we look back a little longer, have been 70%. And we have often had a distribution around that too. Then in the short goals we had 40% and now we chose 50%. And there are two different reasons for that. The one is that we see that the gap, if we had taken 70% or 50%, is that the money should be used for energy investments. We see a great need to do that in the future. Then we think it is a good thing to use the money for. And then we should not forget that we see an increase in the procurement result. It will increase and it has increased over many years. So 50% tomorrow is much more in money than 70% was a few years ago. So you must not forget that when you just look blindly at this percentage.

Do

you remember everything?

Exciting. I want to be part of this. We

go on.

Then we are a little bit about how we should approach this. And as Hanna has also said, it is a lot about growth and rejuvenation of your own assets. It is about working with your own portfolio, which becomes a base plate in this growth. And then it is to look at the stock market. It can be newly produced rental properties, it can be social properties. We also say that housing rights, if it has anything else to add, that we get something more value if we work with housing rights. We will continue to focus on profitable procurement and remittances. Where we feel that this will be good for the company, there will be an effectiveness in the company. So we will be open to that. So it is pretty stable with this little touch on that we have created this floor around social properties that makes it a little clearer. But as I said, a lot is about meeting the market where the market is most preferred. That is where we will put our crown when it touches. Then you can say that the really, really big change that everyone who is actually on rentals and in certain housing properties, It is actually that you will need significantly higher rental levels than what we have seen earlier to get around the rental calculation, i.e. the construction calculation. And it is based on two things. We have production costs that have increased by 30% and we have increased rentals. The sum of that makes us need rentals that are approaching 2,700 SEK per year and up. And that makes it quite limited where you can be to ensure that there is a purchasing power in this. And a little sloppy, you can say that we go from 28 municipalities to 8 municipalities where we actually assess that we can work to get these rentals out. But even in the 8 municipalities we point out that it is AB or AC mode. So you have to be much more critical now during this period than we were in the previous period to get it together. And there is also no investment support left. And this will have a pretty dramatic impact on the whole country, not for us who are still in these areas where we can still take out real rentals. Then it is clear that we will have the opportunity to work with apartments where we have our own property and so on. Because that can significantly strengthen the value of what we already have in this. And when it comes to the elderly, the geography is not as sensitive because it is controlled by rents in a completely different way by an operator and so on. So it is primarily the housing that is affected by this. When it comes to our elderly or social properties, then we can still have the geography that we have had earlier. Yes, and then we have now also said even more clearly that this construction master role should also emphasize our work. This means that we already from the beginning to ensure a strong balance can plan for certain properties should not be maintained, even those we build or alternatively own property to ensure that we always have a strong financial position. But it also means that when we are well there, then maybe the market has changed in a way that makes us not need to sell because it still has a strong financial position. But that we have this with us as a plan already when we start a project, it will also create a good safe plan and stability to work on. So this is very much how we are going to achieve this 5% growth in the management result. And we have thought a lot about what goals we should have around this, but we have ended up in that it is important, we judge, to have clear goals and very transparent goals so that the market can follow how our development looks. And then some sustainability maybe, and not so little either for that part. We divide our sustainability into three areas. It is the environment, which in the US is very much about how we load the environment and how we achieve the goals. It is the social sustainability, which is really about how we work to make society better, come back to that. And as I said, what is needed for us to achieve this is a very competent and competent organization, the organization area. But we will go a little deeper around these. And this is what is our real big challenge. If you look at what is on the left with reduced energy consumption, it is very much about that the heating today is for a very large part of the emissions in the administration. And then it is so that if there are not new products that make it possible to reduce emissions in relation to heating, then we must halve a very very low energy consumption already to get down to levels so that we can be climate neutral 2030. And we have looked at that very carefully and we have made a theoretical assessment that we should be able to get down, that is to say halve the energy consumption from a already very very low level. As you understand, it is a huge challenge to do this, inevitably. And that also means that we will of course try every single project, every single change, every single one. So they should at least be defendable, even if not all of them will be fully profitable in the same way as we have done before, then they still have to be defendable. But our assessment is that we will achieve this during this period and then we can do it. And then it is on our own machine, so to speak. We do not need to take in other products such as carbon dioxide, capture and so on to get down to zero. Even if we believe and think that those products are important and will be a necessary complement for us all to reach the goal. Another demand picture that we see in front of us, but also that strengthens our own work, is that we want green properties, that is, all our financing should be green. And to do that, all our properties must be classified in energy class A to C. And today we have a number of properties that are from D to F. And within the framework for reducing this energy use, we will at the same time move our properties so that they come after 2030 from energy class A to C. And if you do that, then we manage to have 100% green financing and we also manage to have a green share. So here we have a lot of goals that cooperate, perhaps one of my colleagues would say that I counteract, but in our case, these cooperate which makes us get a fantastic leverage if we do all these things together. But we should not forget that it is a huge challenge to go from perhaps the lowest energy use in the industry when it comes to properties to halving it during a six-year period. And then where we actually have our biggest emissions today, and that is in our new production. And there we have decided with our own machine that all projects that are already being started in 2025 should have a halved load compared to the reference value of the housing industry. And that means that the projects that are being delivered from 2027 and forward should have a halved load. And here it is that we should be down to zero with our entire 2045 business, it should all be. And we also decide that if we now start to take the initiative to halve the emissions, then our colleagues will soon have to come to the cap and start doing the same thing. And then we decide that the market will adapt to products that actually have a significantly lower emissions.

The business colleagues.

The business colleagues, we have to put these requirements together and when all colleagues put the requirements the materials and material suppliers will also adapt so that we will reach the goal. So it is super important that we get started with this work and the more people who get started, the faster it will go. And then in the administration, many of these things, if we are away from the new production, it is where everything should be generated and ensured that we fill it up. Not least to fill up the extensive report of CSRD, which in the worst case is 1101 points. And what we will do there to ensure that we have control of our properties all the time, one thing is that all our properties should be certified according to our sustainability system and all properties climate risk-analyzed. This we have done now, I think we have done it for three years straight, all our properties where we also have activities that make sure that we actually manage. We have weather games that are extreme, but maybe not what is defined as extreme weather, but also what is right below it. We should not get water intake in our facilities or in our garage when it rains heavily and so on. We should manage that. So here we have an active work that is actually on the go. So this is a one, we have to do this because the planet cannot handle the pressure we put on it. Two, this puts big demands on us to actually work in a different way. Yes, I think I will continue. Yes, if we look at social sustainability, then a goal that remains as we have had before is that when we measure in the active housing system, our safety index should be above 80. The latest we met was 87. This is an important security and important for the guest house guests to have a feeling that you feel safe in your home, even though it can be messy around. We will work even more than we do so far, with working to manage apartments for structurally homeless, with focus on exposed women and children. We know that there is a huge need out there that the municipalities themselves cannot solve. And then when it comes to our suppliers' value chains, here it is very much about that we actually have control that our suppliers behave as well as we do. And there we have started a work now, but from 2025 we will also review all the recent suppliers. It is not enough that they have written on our code, but we will actually review that they actually deliver up to what they have said they should do. And we will just continue with this and increase the speed in how many of our suppliers we have a look at. And

it is the recent suppliers? In

this case it is the recent suppliers that we will be done with by 2025. And then you look, as I feel actually extra proud of that we are now in, that we change the rules of execution so that even more people have the opportunity to get a home in our stock. And the new requirements are what is called the normal flow of the crown and the bird, where there is a normal flow where you have at least a little left when you have paid your rent. And it is about 6,000 SEK if you are single and then you are two, then it is 3,000 SEK more with children and so on. So this is an enormously important effort that we make in the social sustainability to increase the possibility for more people to get access to a home. And I hope that several of my friends out there in the other private companies will follow. Yes, and if we look at the organization, it is a lot about that we should have an equal organization. It should be equal to men and women. Of course, you can have plus or minus 10 percent, because it can also be natural in terms of size. We are very close here today. We will have a employee index that is on average an industry index. We have taken a decision to actually drastically increase the number of employees in the industry. We have also taken a decision to increase the number of training hours. I think that reaching the new goals and doing it in a good and strong way is education and knowledge the decisive factor. We have learned that a little during the five or six years we have worked with. The more we can, the more we know, the more knowledge we have in these areas, the more natural and easier it will be to make the right decision. So we will put a lot of time now and forward on that we should be well trained all together in the organization around what is important. And then we generally have a recruitment strategy. So within each recruitment, we look at what we need, what we need to strengthen to actually have as much diversity as possible within the company. Yes, my long explanation is starting to come together. But one can say that what became very natural when we finally had worked out what we needed to do and what we should do to achieve growth and this sustainable transformation is that we need to work in a more structured and systematic way to ensure that we have documented control of all our facilities in real time. And to do this, we need to take digitalization as a help. And digitalization when you have documented this, as I said, gives us a huge upside. We can do analysis from the desk, we can do analysis with the help of business intelligence and we can do analysis with artificial intelligence. The sum of this is that our facilities are there for 100 years, if you behave the same way they behave the same way back. So one house is a system and all houses are a system. And the sum of this is to look for deviations and become more and more effective in a structured way. As I said, we have a good starting position. All of our key statements look great. We have very good employees, but now we're going to take another big step here. And in the VD reports we have said that from 2030 we will also be an example within this area. Digitalization and how we have done it. The green transition. So, short and good.

It was quite a massive drag with the new goals and strategies. When HBA does something, we do it properly.

Yes, we have been preparing for this for a long time. When we got this down in black and white, it was a fantastic feeling that we had in the management when we had gotten it down. It was a full overview of what we needed to do and how we should do it.

It's very exciting. We're pumped. That was what we had for this time. And as always, you are very welcome to hear about it so that you have questions or thoughts about reality.