Pandox AB (publ)

The Pandocs Q1 presentation for 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 Head of IR and Communication Anders Berg. Please go ahead.

Thank you. Good morning and welcome to this presentation of Pandocs Interim Report for the first quarter 2025. I'm here together with Lian Hu, our CEO, and Anneli Lindblom, our CFO. And today we also have the pleasure of having both Alex Robinson, Director at STR, and Rasmus Kjellman, Managing Director at Benchmarking Alliance with us. Alex and Rasmus will provide a hotel market update on Europe and Nordics respectively, which is particularly interesting given the current geoeconomical changes around the globe. STR and Benchmarking Alliance are both leading independent research firms dedicated to the hotel market, and the views they express are completely separate from Pandox. The presentations are offered only as a service to Pandox stakeholders. Anne-Alex and Rasmus' presentations will be held after we have completed our formal earnings presentation, including the Q&A. So now we start with Lea and Anneli's business update and the financial highlights for the first quarter 2025, followed by the Q&A session. Yes, Lea, please go ahead.

Thank you, Anders. And good morning and welcome, everyone. The first quarter was stable with continued earnings growth for the group. Total revenues increased by 1%, net operating income by 5%, and cash earnings in total increased by 10% and by share by 4%. Taking into account the one-off revenue last year of 40 million, then total revenues increased by 4%. The business segment leases saw a stable performance, again adjusted for a one-time revenue of 40 million kronor for Kölnborn Airport and a one-time cost of 38 million for business development in the comparable quarter. Revenue and net operating income increased by 6% respectively. I also want to say that note that an additional final 22 million or one of revenue related to Bonn Airport came in in the second quarter last year. Own operations was negatively affected by slower demand, particularly in Brussels, and also some negative renovation effects. The first quarter is always smaller because of seasonality and slower demand can have an unproportional big impact on profitability in owned operations. The business outlook for the coming quarters in owned operations is positive. One thing to note is that the Swedish krona appreciated in the value quite strongly towards the end of the first quarter. This resulted in large negative translation effects for properties denominated in foreign currencies, which in turn explains the full decrease in EPR per share in the quarter. Unrealized changes in values for the whole portfolio amounted to a positive 40 million kronor, and the weighted yield was more or less unchanged at 6.28%. And also our average interest rate came in at 3.9%, giving us a solid positive yield spread of close to 240 basis points. During the quarter, our business tempo was high with the acquisition of Hotel Pullman Cologne in Germany and Elite Hotel Frost in Kiruna in Sweden, which I will come back to later in this presentation. We also signed a new lease in Brussels for Hotel Hubert with German hotel operator Numa, which came into force 1st of April and the hotel property was reclassified to leases also 1st of April. These new lease agreements will lead to a tangible value uplift for the hotel property in the second quarter. In the quarter, our loan-to-value was 45.7%. And if we include the paid dividend and the finalized acquisition in Germany, both in April, the loan-to-value was 47.4%. The world is a turbulent place. We focus on the data and the things we can affect in our business every day. And our financial position is solid. Here we have a breakdown of the performance for a selection of countries, regions and cities versus last year, 2024. We show average daily rate on the vertical axis and occupancy on the horizontal axis. Thus, Orgo is the point corresponding to 2024 on both ADR and occupancy. In the boxes, we indicate how much higher or lower REVPAR is compared with the corresponding period 2024. As you can see, in the first quarter, REBPAR increased in a majority of our markets, mostly driven by increased occupancy, while average prices were more varied. In terms of REBPAR, the greatest relative improvements in the first quarter took place in Nordic regional markets, with Norway as a really strong leader. Oslo, Copenhagen and Hannover were also strong city markets. However, several important markets for Pandox were slower in the first quarter, and most notably Brussels, where there has been a lot of new capacity coming in. Alex Robertson from SCR and Erasmus Kjellman from Benchmark Alliance will talk more about the underlying trends in the hotel market later in this call. We have a strong and well-diversified hotel property portfolio. consisting of 162 hotel properties with approximately 36,000 rooms in 11 countries and 90 cities, and with a property market value of close to 74 billion krona, with an average yield of close to 6.3%. And please note that the Hotel Pullman Cologne is not included since the transaction was closed 1st of April, and that we have yet to formally finalize the acquisition of Elite Hotel Frost in Kiruna, Sweden. We are divided into two mutually supportive and reinforcing business segments, leases and own operations. In leases where we own and lease out hotel properties stands for 79% of our property market value. In own operations, we transform and run hotels in properties we own. Own operations makes up for 21% of our property market value. And the 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 of the hotel market cycle is in. We also have 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, relatively large part of the investment in leases is shared with the tenant, which lowers our risk. Numa from Germany is our most recent partner addition, and we would like to wish them a warm welcome to the Pandox ecosystem. Including Elite Hotel Frost in Kiruna, which will be finalized later in the second quarter, we have acquired six hotel properties with a total value of some 5.5 billion kronor over the past eight months. These are well-performing city hotels with strong brands and distribution while offering some additional improvement potential. I will present the two most recent additions on the following slides. On April 1st, we finalized the acquisition of Hotel Pullman Cologne in Germany. It's a well-positioned city center hotel, which is operated by Core Invest under a fixed lease, which expires end of 2026. We acquired it for 66 million euros at an initial yield of 6.5%. We see potential to further increase the return and reach a higher stabilized yield. Cologne is an interesting market, which is gradually attracting more leisure demand on top of the more traditional business and trade fair demand. And we now have four hotel properties in Cologne with a total of 995 rooms. And this is beautiful Elite Hotel Frost in Kiruna, Sweden, which we entered into an agreement to acquire in March. It's newly built hotel, which will be operated by elite hotels under revenue-based lease with minimum guaranteed rent. We expect the transaction to be finalized towards the end of the second quarter when the hotel also opens for the first time. The acquisition price is 347 million kronor and we expect it to reach a stabilized yield of 7%. The acquisition is well aligned with our view on the northern part of the Nordic area as an attractive region with growing demand from both domestic and international leisure travels looking for unique nature experiences. 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. Own operation is an important transformation tool. It gives us flexibility in acquisitions and enables us to drive change at a high speed. And perhaps most important for us, optionality by itself. It's a key value driver, and we work actively to maximize it, all with the objective to create continuous value growth And on the following slides, I will show you a few examples of recent investment projects in our standing portfolio. The first project is a comprehensive upgrade of Leonardo Royal Hotel Baden-Baden, which featured a new spa area and renovation of both rooms and public areas. The project was completed in the first quarter. Baden-Baden is an iconic wellness destination in Germany dominated by leisure demand. The new product has been very well received by guests and the hotel property belongs to the business area leases. The second project is a room, bathroom and technical upgrade of Leonardo Royale Frankfurt. Rooms and bathrooms were completed also in the first quarter 2025 and technical investments will be completed in the second quarter this year. Frankfurt is a strong business meeting and trade fair destination with mostly business demand. Also here, the new product has been very well received by guests. And the hotel property is also part of the business area leases. The third project is a spa area development on two floors at the Villmarks Hotel at Kolmården in Sweden. In addition, the hotel's energy systems have been completely upgraded with heat pumps. And the project was also completed in the first quarter of 2025. Kolmården House is Sweden's largest animal park and is a strong leisure destination, particularly in the summer season. With the development of the spa, Vilmakshotellet will improve its possibilities to capture more demand also during seasons when the animal park is closed. The hotel property is again part of the business area leases. The fourth project I will present here is the refurbishment of the Hotel Brussels, which includes a mini spa on the top floor, renovation of rooms and the addition of five new guest rooms. The spa was completed again in Q1 this year, while room upgrades will be finalized during the summer. Brussels is one of the most international hotel markets in Europe. It has traditionally been dominated by EU, non-government organizations and business demand. But in recent years, leisure demand has steadily increased. The hotel property is part of the business area own operations. And with that, I hand over to Anne-Lillie Lindbom, our CFO.