Prisma Properties AB (publ)

Welcome everyone to today's presentation of our Q1 in 2025, where Martin and I will take you through the key events and financial highlights from this quarter. We kicked off 2025 with strong momentum. Our strategy continues to deliver results and we've grown in both scale and quality. If we look at our highlights, after closing the quarter, we'll enter into an agreement to acquire three properties from MP3 for a total of 463 million SEC, further strengthening our footprint in key regional cities with good growth, grocery and discount retail. In Q1, we continue to see strong rental income growth with 20% increase year over year. Our rental income reached 113 million SEC, up from 94 million. This growth was driven by acquisitions, completed projects and CPI adjusted leases. Net operating income increased with 16%, reaching 94 million compared to 81 million in Q1-24. Property costs were temporarily high in the quarter due to provision for bad debt, a minor non-core tenant and increased cost in our property in Häggvik in connection with a transition to in-house management. Adjusted profit from property management increased to 45 million, up from 25 million last year, an increase of 80%. Property valuation yield remained unchanged compared to December-24, an unrealized value change amounted to 56 million, reflecting the continuing strength of our portfolio. We made acquisitions of total 108 million during the quarter, and this involved five properties with dinners as tenants and the acquisition in Lycksele. This quarter we have continued to sign several new long lease agreements, strengthening our presence in both Sweden and Denmark, and netletting this quarter amounted to 17 million. WALT decreased slightly from 8.7 to 8.4 years, and our occupancy rate remained strong at 99%. In February we successfully renegotiated approximately 70% of our loan portfolio as communicated earlier. This would strengthen our financial position. We have also this morning communicated that ABG has been appointed as our liquidity provider, effective as of today. Currently we have 136 properties with a total valuation of 7.4 billion SEK. We have added six properties this quarter, five properties strategically located along the highways with dinners as tenants, and a property in Lycksele, where we have already started the construction of a new village store. There have been no major changes among our top tenants and rental income split, but we continue to grow with villas, and combined with the city gross, Exfood now represents 15% of our total rental income. Our property management team continues to maximize our WALT by renegotiating all these agreements that expired before the end of 2028.

Property values increased with the acquisitions that Fredrik mentioned earlier in Lycksele and the dinners portfolio, 108 million. We have an investment in the portfolio in projects of 63 million, which is a low number if you compare to the forecast of 1 billion per year or 250 million per quarter. There's no red flag here, it's just that we finalized a lot of projects in Q4 and we have started up a number of new projects in Q1, so there's no reason for alarm here, but the Q1 number on the investments is on the soft side. Unread has changes in value, 56 million with underlying stable market yields, so this is basically all project profits and also partly a positive revaluation of the acquisitions that we made in Q4 in Gothenburg. We have quite a substantial currency effect with the SEK strengthening quite dramatically in the end of the quarter, which also affects partly the financial net and the earnings capacity. We come back to that. When

it comes to our ongoing projects, this quarter we have started another four projects. Currently we have seven ongoing projects with an expected average yield of 7.8%. The new projects that we've added this quarter is in Lycksele, where we have an ongoing construction of Avillis with an estimated completion during 2025. In Gothenburg, we have already started the construction of a dollar store with an estimated completion by the end of the year. And in Mora, we have started construction of approximately 5000 square meters with Lidl, Tehancen and Jysk as tenants. And lastly in Görring in Denmark, we have started construction of a new store, Lager 157 on 2500 square meters. When it comes to our upcoming projects, our development organization continues to perform. All announced projects have been initiated this quarter. We continue to ramp up and add some new projects that we plan to start the coming quarters. We can look at Vagn Herad, where we are planning to start a construction of 3500 square meters of discount retail. In Jönköping, we will start a construction of fast food in Torsvik in Q4. In Karlskrona, where we currently are in an ongoing zoning process, we are planning to construct a hub of fast food restaurants on 1000 square meters. In La Holme, a project concerning groceries, we are also there in an ongoing zoning process that we plan to start construction in Q in 2026. We have taken away a fast food project in Värnemul that we mentioned in the Q4 report. We aim to start that project, but the timeline has not yet been set. We are planning to start that project sometime in 2026. We are going to continue to include new projects to the list the coming quarters.

The

list of owners as of March 31st, basically unchanged both in terms of large owners and the rate that the Prisma key employees hold. Some financial numbers. Sorry, I need to back up one. There we go. Healthy growth continues as we talked about in the beginning. 20% growth year over year in the quarter. Surplus ratio is on the soft side in the quarter. We do stand by our ambition to have 90% surplus ratio in standing assets if we exclude the Huddinget property segmented, where we provide the numbers separately in the report. But even with that, the number is soft in this quarter and that is due to the temporary effects that Fredrik mentioned in the beginning, mainly coming from bad debt provision from a non-core tenant and also some maintenance repair connected to the takeover of Häggvik property in own management. So this is not a cost that should be extrapolated into the future. Looking on the profit from property management, we are up from 25 to 45 million. The central administration is front heavy in the year. So it's 12 million in the quarter versus the 40 million provided in the earnings capacity of 1st of January in our previous report. Again, that number is the current state of the central administration, the organisation that has been built up at that date. So it's not really a budget, but you should not assume any huge increases in that number either. So the fact that it's 12 in the quarter is more due to the due to the fact that the 40 is front heavy. And as you see in the earnings capacity later, we have increased it by two and that is a strengthening of the organisation in the M&A function. Looking on the financial net, we have two small items that are on the burdening side. It's the Danish crown weakening or the CX strengthening that we have assets that are revalued at approximately 1 million hitting the financial net. And with the low investments in the quarter, we are not able to allocate linearly the number that we plan for the full year for the allocation to the project. So that hits the P&L instead. But those are not large numbers and it's rather temporary. On the capital structure, this is basically exactly in line with what we have already provided in the statements surrounding the renegotiation about the ODS Web Bank. So the average interest rate is 443. But it will also include the reset of the variable rates as per 31st of March, it's also down to 435. The debt maturity has now been increased as previously communicated to 3.2 years and we're happy to see the ICR or the interest coverage coming up and it should continue to go up going forward. The earnings capacity. If we look sequentially from Q4, the rental value has come up with the inclusion of dinners, with inclusion of the Røsta project in Erkjø, and the inclusion of the project in Juustal, and the Dollarsdorpprojekt in Beksjø. But we also have a negative component with a Danish crown weakening or the SEK strengthening that hits the rental value from the Danish part of the portfolio with quite a substantial amount, and that is .5% difference versus the Q4 number. And as I mentioned, the central admin is up slightly due to the strengthening the organization on the M&A file. With that operator, we go into Q&A.

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. The next question comes from David Flemich from Nordia. Please go ahead.

Thanks. Good morning. I have a couple of questions. I can start off with just to confirm, do you expect any of the temporary costs we saw in Q1 to spill over into Q2, for example, the increased costs in Heggvik? No. That's clear. And do you have an update on the Segment 1 project? If I remember correctly, you said in conjunction with the Q4 conference call that your aim was to communicate additional news before the summer. Do you still believe you will be able to do so?

We aim to do that. But we're currently starting the zoning process together with the municipality. And we aim to communicate this before the summer or it could be also in Q3, but we aim to do it before the summer.

Okay, that's great. And in terms of the value changes, I think you mentioned in the report, it's a split between projects, acquisitions, etc. Could you elaborate on the split, how much of the value change attributes to projects so we can get a sense of the return on investments on your project investments? The

majority is the product profit, but it's quite a slice of the investments or the acquisitions made in, so let's say 60-40. From the acquisitions 40 and the project profits 60 or 70-30, somewhere there.

Okay, great. And on that note, I calculated the yield on cost on the project in Mora to 6.5%. It is a split between discount retail and grocery retail, but is that sufficient to achieve above 15% return on investment?

Did you go for the yield on cost? Yeah, we

followed our requirements when it comes to profits from projects,

yes. So that means about -5.6 yield upon completion in Mora and Lycksele. Yes, it's higher than that.

We achieved the profit margins that we require, so 50% grocery and 20% discount retail.

Okay, and all of your ongoing projects fits that return requirement? Yes. And two more questions. The provision for a potential rental loss that you took in Q1, what was that attributable to?

That was Lulussushi in Mjölbyn, a tenant that is not a core tenant for us, and we aim to find a new tenant in Mjölbyn. And it's also a Mangal in Häggvik. They have vacated and we have also communicated that we have signed a new long lease agreement with Mr. York there. And we have set up a payment plan for the loss of revenues for Mangal. So they're planning to pay it back within six months. Potentially, upside down.

Okay, and was that included in the net letting in Q1 as well?

Yes, Mr. York was included, yes.

And last question. We've seen more acquisitions lately. What do you see on the transaction market in terms of opportunities to grow via acquisitions? All

the discussions that we have currently in Sweden is off market. There are some opportunities out there, and within all categories, both in grocery and discount retail. But we're in a moment where the sellers and the buyers are not, we can't agree on a certain figure. So, but we estimate that we will continue to do acquisition in the coming quarters. But we need to make sure that there is a perfect match with our current portfolio. So we want development projects or standing assets, which are modern long lease agreements and have the right tenant within discount retail.

Okay, fair enough. I can just add one question on that topic. So in Gothenburg, the project you started there implied a yield on cost of almost 12%. Is that the type of returns you see when developing on your acquisitions or on fill in investment, so to say?

Absolutely. It's extraordinary. We're going to add it's quite high. We've done even higher. And if you look back, but hopefully we can do even higher. But normally it's between 8 to 12. In this case, it was a good tenant. So sign a 12 year lease agreement with Dollar Store, 3000 square meters. We achieved good rent levels due to Gothenburg. So, yeah, it's a very good project.

Great, thanks. That's all from me. Thank you.

The next question comes from Albin Sandberg from Kepler. Please go ahead.

Yes, hi guys. Three questions for me. I just wondered if you could say in absolute terms how much higher were your property costs compared to your normalized yield in Q1? If

you exclude the segmented property, you get to 85% surplus ratio. And without the one-off effect, you should be able to assume 90. So the rest from 85% up to 90. So it's between five and six million.

Okay, perfect. Thank you. It looks

a bit dramatic on the key numbers, but in absolute terms, it's a small company and it's one quarter, so a few millions can make quite a dramatic impact on the numbers. But we're not worried for it.

And the segmented sort of situation, that will continue until you come up with any news on that?

Yeah, I would say that the segment that will continue as of now, as we communicate with basically a break even on the NOI with the income and costs basically the same, but it hits the key numbers and hits the margins, of course. So we have four million in Q1. But we also have revenue. And that, again, just to be clear, the segmented is not included in the earnings capacity projections.

Okay, perfect. And then just also on the, just trying to follow the ongoing projects. And I guess that during the quarter then, I just compare Q4 to Q1, Bytvan and Kleppa i Ekvogne used all respectively. So they were basically completed. I just wondered how much of rent they contributed to in Q1. It doesn't have to be exact, but is it half or was it moving end of quarter or early quarter?

The larger effects is Dinners is the largest and then you have Växjö. If we look on the earnings capacity, was it earnings capacity or was it ongoing project? You mean revenue or earnings capacity?

No, I was thinking on the actual rent value or rental income that came in from Bytvan and Kleppa because I guess they were completed during Q1. They're not no longer in the ongoing project. So

the effects of Ekvogne and Ljusdal, the effect of 6 million.

6 million in Q1?

No, in the earnings capacity.

Okay. And if I would just, what I'm trying to ask is just that the combined rental value of these two as per Q4 was around 6 million. As you mentioned, the question was just how much of the 6 million were recorded in Q1? I guess the tenant moved in early during the quarter or late in the quarter?

Ekvogne and Ljusdal, they were moved in in Q1. In Q1, let's see which dates it is. If you look on the revenue, it's 1 million basically from

them. So Ozan, I guess what I'm after is that there will be a sort of a catch-up effect in Q2 when we have the full annualized impact of these two projects.

Yes. All of them were quite late. We opened

up in Eksjö three weeks ago. And in Ljusdal, we opened up the same day, same timeline with Ljusdal. Approximately three weeks ago, we opened up both Jemmofix there also.

Okay, thanks. And the final question I have just on the numbers is, I look at your actual tax during the quarter, it's basically nil. I just wonder whether does that reflect an estimate for the full year or is it a specific thing happening for Q1? Maybe if it is not an estimate for the full year, what is the best guess on the actual

pay tax rate? Best guess for now, but we should expect some tax.

But quite low for the full year as far as you can see now. Okay, thank you very much. All for me.

Thank you, Albin.

The next question comes from Marcus Henriksen from ABG Sundal Collier. Please go ahead.

Thank you very much. Good morning, everyone. Good morning. First, the question on M&A. Has something happened with your ongoing M&A discussions, given the last three weeks macro turmoil?

No, it's demand. Yeah, we have to continue.

Okay. Then a bit on the rent losses. I heard five to six million in take and cost here. Did that include segmented as well or was that only the rent losses? What was the amount?

The five to six is excluding segmented and not all of it is the rent. A small part of it is the rental loss and its maintenance and repairs in the connection with the takeover in a week. But it's not something that could be extrapolated into coming quarters.

Okay, thank you. Then if we look at your project timeline, which I really appreciate, you have a lot of project starts here in Q2 and Q3. How certain are you about those upcoming project starts?

Q2 and Q3 would be. Yeah, we're quite certain, but it's still it's project. Sometimes we our project, we start earlier than expected and sometimes some project was to be started maybe a couple of. Sometime after expected. So it's all depends on if a project are we included in the zoning process or do we already have a zoning process and takes time about doing the tendering of the construction. But based on the presentation, this is the best guest today and we're quite certain the coming two quarters in Q2 and Q3 that we can start these projects. And also, like we want to mention that we're going to add up new projects to this list also.

All right. Thank you for that. Then do you see any change in tenant behavior? Anyone that is new in terms of growth ambitions for this year and next year? You mentioned Mr. York, for example, you have further ongoing negotiations with them. Any other one that stands out positively or negatively? Now,

we can look, we can discuss Mr. York. We have decided that at this moment we can do Mr. York if we have a vacancy. We're not planning to do any developments from scratch with Mr. York at the moment. We there will focus on the strongest retail tenants as McDonald's, KFC and other ones. But all these country retailers, all grocery tenants, especially builders and leaders are extremely interested in identifying new locations in Sweden. So and that concerns all tenants in all categories.

OK, thank you for that. Then last question a bit on net interest. You have in the earnings capacity, it's 125 million. You had 140 in Q4. The run rate here was 35. So we're at 140 million in run rate in Q1. If you could just help me out a bit with the discrepancy here between the Q1 actual figure, the earnings capacity you show here of 125 million, and the press release you sent out in February where you announced the savings annually of 15 million. And also you highlighted an interest rate of 4.7 percent. And now it's 4.43 percent. So just if you could share any details on financing that could help us going forward.

Yeah, the communicated the higher number 468 if I remember correctly. You should look on the forward number where we have also reset our paid variable interest costs, which is being set in the 15th in the month after the quarter close. So if we look in the Q4 presentation, we actually include that number with smaller digits below the correct or the formal numbers. So if you're looking forward at 440, that would communicate in Q4 or in connection with the refinancing is what you should go for in forward. That is the 443 we are reporting right now. And this discrepancy versus the Q4 earnings capacity is partly a small chunk of effects from the Danish weakening or the CX strengthening, but also that we cannot allocate as much costs, interest costs to the projects with the lower investments that we have had in Q1. So that is in the earnings capacity. It's an annual number and it's not fully linear over the year.

Thank you. Could you help us a bit on the project? What is the drop there? Q1Q or I guess that that will start to increase again as you start with more and more investments.

A couple of million coming back positively into the financial net. All other things like. OK, thank you for that. Those were my questions. Great.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

There

are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thanks for joining today's presentation and we wish you all a nice day. Thank you. Thank you.