Pandox AB (publ)

Thank you very much. Welcome everyone to this presentation of Pandox Interim Report for the second quarter and first half year 2025. I'm here together with Liano, our CEO, and Anneli Lindblom, our CFO. And today we also have the pleasure of having both Alex Robinson, Director at STR, and Henrik Karlsson, Business Development Manager at Benchmarking Alliance with us. and Alex and Henrik will provide a hotel market update on Europe and Nordics respectively. As you know, 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. And we offer these presentations as a service to Pandox stakeholders. And as always, Alex and Hendrik's presentations will be held after we have completed our formal earnings presentation, including the Q&A. So we start with Leah and Anneli's business update and financial highlights for the second quarter 2025, followed by the Q&A session. Yes, and with that, I hand over to Leah.

Thank you, Anders, and good morning and welcome everyone. The second quarter was all in all stable with growth in both business segments supported by acquisitions. Total revenues increased by 2%, net operating income increased by 3%, and cash earnings increased by 5%. Cash earnings per share decreased by 1%. Generally, demand remained stable while average daily rate declined slightly. The business segment leases had a stable performance with revenues, net operating income and profitability in line with last year. Acquisitions contributed positively, including Pullman Cologne Hotel, which was taking over on April 1st, as well as the new lease for Numa Brussels Royal Galleries. Like for like, revenues and net operating income was unchanged. In the business segment owned operations, both revenue and profit increased with contributions from acquisitions made in the UK in the second half of 2024. Demand was stable, but lower average daily rates affected REBPAR negatively. Like for like, revenues and net operating income decreased by three and 4% respectively. This quarter, we had a tough comparable quarter in 2024. We had both the UEFA European Championships in Germany and Taylor Swift's Erastool. This was extra visible in our own operations hotels in Berlin and Dortmund, which were host cities during Euro 2024. Moreover, we also had a slight negative Easter effect versus last year, as well as a one-off revenue of 22 million in Q2 2024 relating to Cologne Bonn Airport. So all in all, tough comps. The business outlook for the coming quarter is, however, stable. End of quarter our loan to value was 46.7% and we have large financial capacity for new acquisitions and investments in the existing portfolio. Unrealized changes in values for the whole portfolio amounted to 180 million krona and the weighted yield decreased by three basis points to 6.25%. On June 3rd, Pandox and Eindhofsbar announced a possible offer for the Dalata Hotel Group. The Irish takeover rules restrict what we are permitted to communicate at this stage. The proposal, which has been rejected by Dalata's board of directors, essentially involves a cash offer of Euro 6.05 per ordinary shares in Dalata, which values its company at around 1.3 billion euros. On June 20, Pandox acquired approximately 2.2 million shares in Zalata, equivalent to around 0.8% of the issued share capital, for a price of EUR 6.30 per share. By 5 pm Irish time on 15 July, The consortium must either announce a binding intention to make a bid for Dalata in accordance with Article 2.7 in the Irish Takeover Rules, or to announce that it does not intend to make a bid for Dalata, whereby this announcement under the Article 2.8 in the Takeover Rules will be considered as a statement of intent not to make an offer. Our business is to own, improve, and lease hotel properties to strong hotel operators under long-term revenue-based leases. We do this through three principal value activities, property management, property development, and portfolio optimization. Our ultimate goal is value creation, which we achieve through distinct activities in our business segments, leases, and own operations. Leases build upon long-term revenue-based leases with skilled operators where we share risk and upside and have a joint incentives to improve the hotel product. Our own operation is an important tool for acquiring, repositioning, and transforming hotels. The optionality is important for us. We can sign a new lease, divest the property or keep it in the segment as long as it's the best option from a value perspective. Here we have compounded annual growth rates for the markets we are currently active in. This is based on market data from SDR over the period 2016 to 2025 year to date. Against them, we have also plotted the portfolio market value as of June 30th. Obviously, our portfolio has changed quite a lot over this period, but it shows our current exposure to different markets against their historical growth patterns. As you can see, Norway has had the highest growth with 4.9% new growth and Finland the lowest by 1.1%. Growth in the largest markets, Germany and Sweden, has ranged between 3.2 and 1.5%. And these growth numbers are not adjusted for the pandemic. They are as is. The numbers on the map on the left side of the rolling 12-month rev pour in local currency, just to give you a feeling for the current absolute differences between markets. Here we would like to illustrate a few different yield spreads as an indication of our value creation over time. Starting from the bottom, we have the average cost of debt, followed by the blended yield on our portfolio, both at the end of the period, i.e. June 30th this year. The next two boxes are the average yield on investments. The first one is unadjusted for the year 2020 drop during the pandemic, while the second one excludes it. The underlying assumptions are outlined on the right-hand side of the page. The 10-year period is 2015 to 2025, for which we have aggregated investments, net of divestments, and the incremental increase in the net operating income. We have then divided the aggregate incremental increase in net operating income by the investments to derive an average yearly yield or return over the period. It ranges from 7.4 to 11.7%, depending on if you were just for the year 2020 drop in net operating income during the pandemic. The yield spread range from already a strong, healthy 240 basis points to 780 basis points. This quarter, I want to highlight two examples of recent investments that represents our way of working. We show our targets, our actions, and the results achieved. The key levels are RevPath, incremental net operating income, and return on investment. We start with Leonardo Hotel in beautiful Galway in the leases business segment. Together with our partner, Leonardo, we decided upon a full renovation of rooms, bathrooms, and public spaces. The renovation, which was completed in 2024, well exceeded the targets, with the REVPAR increase of 27%, instead of the target assumption of 13%, thus resulting in a return on investment of 22%. The total investment landed on 4.2 million euro, of which Pandoc's share was approximately 2.7 million, or approximately 64%. and the property market value uplift was 12%. Another example is Scandic Park in central Stockholm. Here we converted existing spaces into new hotel rooms, renovated existing rooms and public spaces, as well as we created a new meeting and F&D concept. After completing the project in two phases due to the pandemic, the results have been strong with a report increase of 23% and a 20% increase uplift in the property value. The total investment amounted to 38 million SEK, of which Pandoc's share was approximately 20 million or 53%. In coming presentations, we'll try to further explain our investment methodology with more cases. Here we have a breakdown of the performance for a selection of countries, regions and cities versus 2024. We show average daily rate on the vertical axis and occupancy on the horizontal axis. Thus, Origo is the point corresponding to 2024 on both ADR and occupancy. In the boxes, we indicate how much higher or lower REBPAR is compared with the corresponding period 2024. Year-to-date, REBPAR increased in the 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 six months took place in Nordic regional markets, with Norway as a strong leader. Oslo, Copenhagen and Hannover were strong city markets. However, several important markets for Pandox were slower in the period, most notably Brussels, Stockholm and London. Alex Robertson from SDR and Henrik Karlsson from Benchmarking Alliance will talk more about the underlying trends in the hotel market later in this course. We have a strong and well diversified hotel property portfolio consisting of 163 hotel properties with more than 36,000 rooms in 11 countries and 90 cities with a property market value of 76 billion krona and an average yield of 6.25%. Please note that we have yet to formally finalize the acquisition of Elite Hotel Frost in Kiruna, which is expected to be completed in the third quarter. And also after quarter end, we divested quality win Gothenburg for 57 million krona. We are divided into two mutually supportive and reinforces business segments, leases and owned operations. Leases where we own and lease out our hotel properties stands for 80% of our property market value. In our own operations, we transform and run hotels in properties we own. Own operations makes up for 20% of our property market value. And the focus of our portfolio is still 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. We also have one of the strongest network of brands and partners in the hotel property industry. And this ensures efficient operations and revenue management, which maximize cash flow and property values under continuous flow of business opportunities. And also a relatively large part of the investments in leases is shared with the tenant, which lowers our risk. And with that, I hand over to Amelie Lindbom, our CFO.

Thank you, Lia. And good morning, everyone. In the second quarter, group net operating income increased by 2% and revenue increased by 2% and group net income increased by 3%, driven by the acquisition and stable performance in the Leeds business segments. As Leah said, we had a tough comparable quarter in which both the Football European Championship in Germany and the Taylor Swift Tour took place. Own operations saw stable demand but lower average daily rates, mainly due to the strong comparable quarter, which affected the like-for-like figures. We are expecting continuous stable growth and for comparison figures to gradually become less challenging. Cash earnings and profitable changes in value increased by 5 and 4% respectively. Cash earnings per share decreased by 1%. Now a few words on currency. To reduce the currency exposure in foreign investments, Pandox aims to finance the investment in local currency. Equity is normally not hedged as Pandox strategy is to have a long investment perspective. Currency exposures are largely in form of currency translation effects. In the second quarter, currency was negatively measured on average rates, which we use for the income statement items. but it was positive measured on end-of-period rates, which we use for balance sheet items. In other words, the exact opposite compared to the first quarter. As you know, we have the main part of our hotel's properties outside Sweden and denominated in foreign currencies. This explains the positive effect on property values and EPRA NRV compared with the first quarter's figures. On this slide, we show the change in the main valuation parameters for the total property portfolio year to date. And please remember that investment properties are recognized at fair value. According to IFRS, unrealized changes in value for operating properties are only reported for information purpose and is included in the EPRA NRV. For the first six months, the total unrealized changes in value were a positive 194 million driven by lower yields. As I said earlier, changes in currency had a negative impact on balance sheet items for the period, with a decline in property values of approximately minus 2.3 billion in the period. In the quarter, we gained access to Hotel Pullman Cologne with a transaction value of 66 million euros. The formal acquisition of Elite Hotel Frosting Kirna is expected to be completed during the third quarter. End of period, the average valuation yield for investment properties decreased four basis points to 6.09%. And for operating property, it was 6.88%. The blended yield was 6.25%. Here we have the average yield, the average interest on debt and EPRNRV per share quarterly. In the period, growth in EPRNRV was a positive 4% measured on an annual basis adjusted for paid dividend and proceeds from the new share issue. Our LTV at the end of the quarter amounted to 46.7%, which puts us firmly at the lower end of our policy range. The ICR on a rolling 12-month basis was 2.7 times on a sequential basis. And cash and credit facilities amounted to 2.7 billion. And on top of that, we have unencumbered assets of some 2.3 billion, sort of as untapped reserve. During the quarter, the positive trend from last year continued with a constructive financing climate with lower credit margins. In the second quarter, we refinance loans of approximately 3.9 billion, which make it close to 20 billion over the last 12 months. End of quarter sustainability linked loans, including green loans accounted for 46% of total outstanding loans. Looking ahead, we have 2.3 billion of debt maturing within one year. We have strong and expanding bank relations across our markets and discussions on future financing and refinance are ongoing and positive. We also note an increasing appetite among banks outside the Nordic regions. At the moment, 58% of the net debt is hedged, which is a lower level than in previous quarters. And with that, I will hand back to Lia for some final remarks.