Pandox AB (publ)

Now I will hand the conference over to Head of IR and Communication Anders Berg. Please go ahead.

Thank you very much and we would like to welcome all of you to this presentation of PANLOC's Interim Report for the third quarter 2025. I'm here together with Leonor, our CEO, and Anneli Lindblom, our CFO. And today we also have the pleasure of having both IFA, Roche, vice president at STR, and Rasmus Kjellman, CEO at Benchmarking Alliance, with us. IFA and Rasmus will provide a hotel market update on Europe and Nordics, respectively. And STR and Managed Marketing 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. Please note that IFA and Rasmus' presentations will be held after we have completed our formal earnings presentation, including the Q&A. So we start with Lia and Anneli's business update and financial highlights for the third quarter 2025, followed by the Q&A session. So with that, I hand over to Lia.

Thank you, Anders, and good morning and welcome, everyone. The hotel market improved in the third quarter, supported by a good event calendar and active leisure travel. Together with the profitable contribution from completed acquisitions, this resulted in increased earnings in both our business segments. In the leases business segment, demand improved but varied across markets. The Nordics developed the best with good rent growth in Sweden, Norway and Denmark, while Finland remained weaker. Overall development in Germany and the UK was stable. Both revenue and profit increased in the own operations business segment. Demand improved while comparisons with the corresponding quarter last year eased with a gradual diminishing effect of the UEFA European Championships in Germany in 2024 as the quarter progressed. Total revenues increased by 5%, net operating income increased by 8% and cash earnings increased by 6%. Cash earnings per share increased by 1%, but adjusted for the financial net of 37 million related to the ongoing acquisitions of Dalata Hotel Group, the increase was 7%. In the quarter, several important steps have been taken towards completion of the acquisition of Dalata, which is expected to take place at the beginning of November this year. Financially, we start on a strong base going into the completion of the acquisition. Adjusted for the ongoing acquisition, the loan to value was 46.4% compared to 46.7% at the end of the second quarter. This will enable us to also continue to make profitable investments in our existing portfolio. We expect the acquisition to contribute to revenue and NOI already in the fourth quarter, with full effect on the revenue and cash earnings for the full year 2026. However, there will be a negative effect from transaction cost accounted for in the fourth quarter. On this page, we summarize some basic facts on Pandox. We are active in Europe, the world's largest hotel and tourism market, with strong structural growth drivers. We only invest in hotel properties and create value through active and engaged ownership. We have a long-term revenue-based leases with a vault of 14 years and good guaranteed minimum rent levels with skilled operators. Our portfolio has an average valuation yield of 6.24% and a yield spread of 240 basis points. We invest in climate change projects in our portfolio with good returns based on our FPTI validated targets. And we have a strong cash flow and strong financial position, which enable us to drive continuous profitable growth through acquisitions of new properties, as well as value accretive investments in our existing portfolio. We have a strong and well-diversified hotel property portfolio consisting of 162 hotels with approximately 36,000 rooms in 11 countries and 90 cities with a property market value of approximately 76 billion kronor and a blended average yield of 6.24%. We are divided into two mutually supportive and reinforcing business segments. Leases and own operations. Leases where we own and lease out our hotel properties stands for 80% of the property market value. And in our own operations, we transform and run hotels in the properties we own. And own operations makes up for 20% of our property market value. Our portfolio is upper mid-market hotels with mostly domestic regional demand, which is the backbone of the hotel market, regardless of which phase the hotel market cycle is in. We have one of the strongest networks of brands and partners in the hotel property industry, which ensures efficient operations and revenue management, which maximize cash flow and property values and continuous flow of business opportunities. And also importantly, a relatively large part of the investment in leases is shared with the tenant, which lowers our risk. I will later in this presentation share some data on what the portfolio will look like after the acquisition of Dalata as well. 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 distinctive activities in our business segments, leases, and own operations. Leases build upon long-term revenue-based leases with skilled operators, which share risk and upside and have joint incentives to improve the hotel product. And in owned operations, an important tool for acquiring, repositioning and transforming hotels, where also the optionality is important for us. We can sign new leases, we can divest the property or keep it in a 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 also plotted the portfolio market value as of 30th of September. Obviously, our portfolio has changed quite a lot over this period, but it shows our current exposure to different markets against the historical growth patterns. As you can see, Norway has had the highest growth with 5.3% and Finland the lowest by 1.1%. Growth in our largest markets, UK, Germany and Sweden, has ranged between 3.3% and 1.2%. and these growth numbers are not adjusted for the pandemic, they are as is. The numbers on the map are on a rolling 12-month rev bar 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 a portfolio, both at the end of the period. And in this case, it's 30th of September. The next two boxes are the average yield on investment. The first one is unadjusted for the 2020 drop during the pandemic, while the second one excluded. The underlying assumptions are outlined on the right-hand side of the page, and the period is 10 years 2015 to 2025, for which we have aggregated investments, net of divestments, and the incremental increase in net operating income. We have then divided the aggregated incremental increase in NOI by the investments to derive as an average yearly yield or return over the period. and it ranges from 7.5 to 11.5 depending if you adjust for the pandemic year. The yield spread range from already healthy 240 basis points to 780 basis points. Capital allocation is at the heart of what we do. Our focus is the expected and actual return, which is a product of many things rather than the property's location in a certain country or city. We evaluate each hotel property on an ongoing basis to ensure that each hotel property has an attractive yield potential. And we also analyze the effects on the property portfolio as a whole. We have an active acquisition strategy based on deep industry know-how, a long-term perspective, and the ability to act freely throughout the hotel value chain. Over time, we are net buyers. At the same time, divestments is an important tool to free up capital for acquisitions and investments with a higher return potential. In the third quarter, we made two smaller divestments and our expectation is that we will be more active on the divestments in 2026, particularly in the Nordics. Here we have a breakdown of the performance for a selection of countries, regions and cities versus 2024. You've seen this before. We show average daily rate, ADR, on the vertical axis and occupancy on the horizontal axis. Thus, orego 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. Year to date, REBPAR growth has been mixed across our markets. Occupancy has been stable or growing in most markets, while average prices have been more varied. In terms of REBPAR, the greatest relative improvements in the first nine months took place in the Nordic markets, with Norway as the leader and Sweden gradually picking up the pace. Oslo and Copenhagen were strong city markets. However, several important markets for PoundDocs saw only modest growth or declined, such as Germany, Brussels, and UK regionals. Yves Farage from SDR and Rasmus Kjellman from Benchmark Alliance will talk more about the underlying trends in the hotel market later in this call. As we now move closer to finalizing the acquisition of the Lata, we can share more details on the financial effects of it. In short, the end game is 31 investment properties with long-term based leases with an estimated market value of 16.7 billion krona, which will be added to the business segment leases with a net initial yield estimated to be 6.95%. Rent is estimated to be 1.2 billion per year with the profitability in line with our existing lease agreements in the UK and Ireland. Until the divestment to Scandic can be completed, the hotel operations is reported as profit from discontinued operations with no effect on own operations. No significant effect on earnings for pandas is expected to be reported under profit from discontinued operations. The balance sheet items excluded in the properties and related items are reported as assets and liabilities held for sale. There are several ways to think about this transaction from a value perspective. Here we illustrate the different value components in the transaction, starting from the left, from the purchase value, adding existing net debt in the target, adding estimated transaction cost and thereby deriving at an enterprise value, Then taking into account the divestment to Scandic for the operating platform and leased assets, adding value for assets under construction, and then deriving at an implied yield for the one properties, which we intend to keep of 8.4%. This compared to the estimated market value for the same 31 investment properties with long-term revenue-based leases with an initial yield of 6.95% or a market value of 16.7 billion when all steps have been completed in the transaction. The value is based on an estimated rental income of 1.2 billion krona with a similar NOI as in our other leases in the UK and Ireland. and an estimated average weighted yield of 6.95%. Compared, as I said, with an implied yield on the acquired properties of some 8.4%, we estimate tentatively a value uplift of some 3 billion krona. Here's the tentative timeline of the main remaining steps in the transactions. The key upcoming event is the court hearing in Ireland on the 29th of October, where the scheme hopefully will be sanctioned. This will allow us to take the final steps toward closing of the transactions, which we expect to take place early November 2025. And here we mapped out the 31 investment properties from the LATA, which we will add to the business segment leases in the fourth quarter. We apologize in advance if some of the cities have been marked out wrongly. 21 of the properties are located in Ireland and 10 in the UK. Dublin and London are the biggest cities markets with 11 and 5 hotel properties respectively. And all hotels are well established with leading commercial positions in the markets. And this is what our portfolio in the UK and Ireland will look like, including Dalata. In total, it will include 63 hotels, of which 12 in Dublin and 11 in London. In number of rooms, the UK will account for 20% and Ireland 12%. We thus increase our exposure to Ireland in particular, but also to the UK market. In terms of destinations, our exposure will increase somewhat towards international destinations and decrease somewhat from regional destinations. And with that, I'd like to hand over to Anna Liljenblom, our CFO.