Pandox AB (publ)

Thank you very much and welcome everyone to this presentation of Pandoc's Interim Report for the fourth quarter and full year 2024. I'm here together with Leanne Oh, our CEO, and Anne-Lille Lindblom, our CFO. And as always, we also have Thomas Emanuel, Senior Director at STR with us. Thomas represents a leading independent research firm focused on the hotel market. and he will share STR's view on the market. And the views expressed by STR are completely separate from Pandox, and the presentation is offered only as a service to Pandox stakeholders. And also note that, as we usually do, Thomas' presentation will be held after we have completed the formal earnings presentation, including the Q&A. But before we go to that, Leah and Anneli will present the business update with financial highlights for the year and the fourth quarter 2024, followed by the Q&A session. So with that, I hand over to Leah.

Thank you, Anders. And good morning and welcome, everyone. 2024 was a good year for Pandocs. During the year, we continue to execute on our strategic agenda to improve the earnings quality of the portfolio through acquisitions and investments. This was enabled by a strong cash flow, some recycled capital from divestments, strong support from our shareholders, and most important, a super strong team of Pandox making a difference every day. Thank you all. Before we move into the numbers, I would like to do a quick recap of the key investment highlights for Pandox. We are active in Europe, which is the world's largest hotel market with strong structural growth drivers. Travel and tourism is one of the largest industries in the world, accounting for almost 10% of global GDP and a substantial share of new jobs created. We only invest in hotel properties. We are the largest listed pure hotel property owner in Europe with a unique portfolio of high quality assets. We are an active owner with deep hotel expertise. We work with all operational models and are focused on creating value across the whole value chain. We have attractive long-term revenue-based leases with strong and skilled operators. This gives us upside and alignment with our operators. It also gives us inflation protection as the inflationary costs are borne by the operator. We own high yielding properties and have a solid yield spread of more than 200 basis points, relatively independent of the interest rate environment. We have ambitious ESG targets, including a substantial climate transition program with high ROI, And we have a solid growth platform based on strong cash flow and a strong financial position, which enable us to drive profitable growth through acquisitions of new properties and investments in existing properties. Our business is to own, to improve and lease hotel properties to strong hotel operators and long-term revenue-based leases. We do this through three principal value activities, property management, property development, and portfolio optimization. We are an active and engaged owner based on sustainable and deep hotel expertise. Including Reddison Blue Hotel Tromsø, we have acquired five hotel properties with a total value of some 4.5 billion kronor to our portfolio in 2024. Taken together, we expect these to add some 350 million in net operating income on an annual basis. They are well-performing hotels in strong locations with some additional improvement potential. Here is Radisson Blu Hotel Tromsø in Northern Norway, which we entered into an agreement to acquire in the fourth quarter. It's a highly profitable and well-performing hotel in one of the strongest markets in Norway and perhaps in Northern Europe. The transaction was closed 1st of January this year. We have a strong and well-diversified hotel property portfolio consisting of 161 hotel properties, excluding Tromsø, which we acquired 1st of January, with approximately 35,700 rooms in 11 countries and 90 cities, and with a property market value of 76 billion kroner and an average yield of 6.29%. We are divided into two mutually supportive and reinforcing business segments, leases and own operations. In leases, where we own and lease out our hotel properties, it stands for 79% of our hotel property market value. In our own operations, we transform and run hotels in properties we own. Own operation makes up for 21% of the property market value. And our focus of our portfolio is upper mid-market hotels with mostly domestic demand, which is the backbone of the hotel market, regardless of which phase the hotel market cycle is in. And we also have one of the strongest networks of brands and partners in the hotel property industry. This ensures efficient operations and revenue management, which maximize cash flow and property values and a continuous flow of business opportunities. Also, a relatively large part of investment in leases is shared with a tenant, which lowers our risk. Our business tempo remained high in the fourth quarter, and we continued to deliver on our strategy, with one acquisition and active business development across our portfolio. The fourth quarter, which is seasonally weaker due to the Christmas holiday, still benefited from a busy event calendar, active leisure travel, and a continued pickup in business demand. All in all, this translated into a positive earnings development for us with growth in both business segments. Yields were largely stable in the quarter, while our average cost of debt decreased somewhat, which has further strengthened our yield spread. We ended the year with an LTV of 45.2% and with a stable ICR of 2.7 times annualized. Including Reds and Blue, Teltromse, the LTV was 45.7%. In the fourth quarter, total revenues and net operating income increased by 3% and 8% respectively, of which a significant part is explained by growth from larger completed investments, for example, Scandic Nubes Central and Scandic Go St. Ericsgatan 20. For the full year, total revenues and net operating income increased by 4% and 7% respectively. Cash earnings per share increased by 23% in the quarter and growth in APRA NOV annualized with dividend added back and proceeds from the share issue deducted was 10%. For the full year, cash earnings per share increased by 10%. Anneli will talk more about tax later in this presentation. The board will also propose an increase of our dividend to 4.25 kronor per share, a total amount of 827 million. This corresponds to an increase of approximately 6% compared to last year. Here is the RevPod development level for our business segment leases compared with 2023. The numbers are on a comparable basis and at fixed currency. In the fourth quarter, RevPod decreased by approximately 1% like for like, with a marginal decrease in both occupancy and average price. The decline is largely explained by geographic exposure within countries, with Gothenburg as one factor. Here we have a breakdown of the performance for a selection of countries, regions and cities versus 2023. We show average daily rate on the vertical axis and occupancy on the horizontal axis. Thus, OREGO is the point corresponding to 2023 on both ADR and occupancy. In the boxes, we indicate how much higher or lower REVPAR is compared with the corresponding period 2023. In the fourth quarter, the hotel market, with some variations, developed positively. Red bar increased in most markets, mostly driven by increased occupancy, while average prices were more varied. In terms of red bar, the greatest relative improvements in the fourth quarter took place in Finland regional and Helsinki. Both Norway Regional and Oslo continue to perform very well. Sweden Regional improved somewhat, but will continue to struggle due to the great capacity inflow in Gothenburg. Thomas Emanuel from SDR will talk more about the underlying trends, including supply, in the European Hotel Market update later in this call. I earlier touched on our value activities. We focus on maximizing the value of each individual hotel property. We do this by creating attractive hotel products and properties based on the uniqueness of each property. Our own operations is an important transformation tool. It gives us flexibility in acquisitions and enable us to drive change at a high speed. And perhaps most important for us, optionality in itself is a key value driver, and we work actively to maximize it, all with the objective to create continuous value growth. During 2024, we invested some $1 billion into our standing portfolio. Supported by a number of larger transformational investments, such as Scandic Nuremberg Central, Citibox Brussels, Scandic Go! Sankt Irisgatan 20, DoubleTree by Hilton Brussels City, and Quality Hotel Luleå. We are on track to add an additional plus 300 million in net operating income by the year 2026 on an annualized basis, starting from 2023 as the base year. During 2024, we estimate that some more than 100 million was realized already. We are also, of course, adding new projects to the pipeline continuously. Most recently, Quality Hotel Luleå and Leonardo Hotel Christchurch. For 2025, some 1.1 billion kronor is expected to be invested in a standing portfolio. And with that, I hand over to Anneli Lindbom, our CFO.

Thank you, Lia. So good morning. We are happy to report good numbers for the fourth quarter and for the full year.