Neobo Fastigheter AB (publ)

Welcome to Neobo Q2 Report 2025. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Ilva Sarbi-Westman. Please go ahead.

Thank you and good morning everyone and welcome to the presentation of Neobo's Interim Report January to June 2025. My name is Ylva Saarby Westman and I'm joined here today by our CFO Maria Strandberg. Despite a turbulent global environment, we have remained focused on our core business, creating attractive, sustainable living environments where people can thrive and feel secure. And it's rewarding to see our efforts paying off and that we are on the right track. Profit from property management increased by 50% in the first six months of the year, despite seven properties being divested last year. Rental income in the Like4Like portfolio increased by 4% and net operating income improved by 12% in the Like4Like portfolio as a result of both higher rental income and lower property management costs. We are reporting positive unrealized value changes in the property portfolio of 11 million as a result of stabilized yield requirements and increased net operating income due to investments being made in the portfolio. The property portfolio now has a value of 13.8 billion, comprising 8,300 apartments, and residential properties account for 95% of the total value. Rent negotiations for 2025 are completed with an average increase of 4.8% in the residential part of the portfolio. We continue to create value through strategic improvements and since the start of the year we have invested 109 million to improve the attractiveness and safety of our properties. Residential vacancies increased by 27 apartments during the quarter. However, currently around 30 apartments are being renovated in areas with good occupancy rates, meaning we are optimistic about the vacancy trend in our portfolio going forward. As we have previously communicated, the lease agreement with the Swedish Prison and Probation Service in Sollentuna will enter force on the 1st of September. And in conjunction with occupancy, the commercial vacancy rate in Neobo will fall by 2.9 percentage points. We continue our work towards achieving our long-term sustainability goals. And here you can see some examples of value-creating sustainability activities that we have carried out. As part of our efforts to reduce our environmental footprint, we have launched a pilot project in Nyshamn, where we have installed an innovative water recycling system that connects directly to the washing machines, enabling the reuse of both water and energy, while filtering out microplastics that will otherwise enter the wastewater system. The transaction market continues to show signs of improvement, with volumes up by 27% compared to last year. Yesterday, we signed an agreement to divest a building right in Solentuna to Svea Fastigheter, allowing for the development of approximately 80 student apartments. And the sales price of 19.5 million is just over the most recent external valuation of the building right. Closing will take place once the property subdivision gains legal force, which is anticipated during autumn. I have already commented on the results, but I would like to highlight a couple of items. Total property management costs decreased by 18 million year on year. And the decrease was attributable to cost saving measures in property operation and energy, as well as a milder winter compared to the preceding year. With increased NOI and high rental income, the surplus ratio reached 56% on a rolling 12-month basis and 65% for the quarter. Both central administration and net financial items are in line with the corresponding period last year. The earnings capacity reflects an increase in rental value of 2 million as a result of revenue-enhancing investment, which is offset by a slightly higher vacancy rate. Net financial items improved by 7 million due to a lower policy rate and refinancing. Other items are in line with the previous quarter. Our property values have now stabilized with unchanged yield requirements in the valuations over the past five quarters. We are maintaining a stable financial situation and the average interest rate decreased to 3.4%, attributable to a lower policy rate and refinancing. The average fixed rate period increased from 2.3 to 2.7 years during the quarter, and we have a high rate hedge ratio of 83%. The ICR was 1.8 times over the past 12 months and 2.2 times for the quarter, the highest levels since NioBo was established. To increase the predictability of future cash flows and mitigate the financial risk, we employ interest rate derivatives. And at the end of the period, the aggregated nominal value of active swaps was 5.9 billion. And here you can see our largest shareholders as of the end of June. And in total, we now have 91,000 shareholders. And finally, some key takeaways. We are on the right track by maintaining focus on increased profitability and due to strong commitment from our employees, profit from property management grows by 50%. We see the highest quarterly levels of surplus ratio and ICR since Neobo was founded, divestment of a building right in Sollentuna and the price is just over the most recent external valuation. stabilized property values with unchanged yield requirements in the valuations over the past five quarters. And sorry, I think it was some problem with changing slides. This is the slide of the largest shareholders. And here we have the summary, the key takeaways. Sorry for that. But with this, I would like to open the floor for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. There are no questions at this time, so I hand the conference back to the speakers for any written questions.

Yes, thank you. We have one question. Any guidance on apartment renovation for the year?

Yes, we have really tried to increase the pace and hopefully we will renovate around 100 apartments or so during the year. So that's the estimation.

Yes, and we have another one. What explains the drop in property administration in Q2?

If we look at the central administration, I think it's better to analyze the first six months of the year since the costs will occur in different... Some costs in the first quarter and some in the second quarter. uh the property management costs sorry sorry okay i i thought it was uh it was the central administration uh in in property management costs it is a cost saving activities that we have working very very hard with since the start of neobo so it is uh both um in in the management of the properties that we have been able to to to lower the costs but it's also energy efficiency due to value creating investments that are paying off thank you that was the last one okay so thank you everyone for listening in and have a great summer