Prisma Properties AB (publ)

Welcome to Prisma Properties Q3 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. 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 CEO Frederick Masing and CFO Martin Lindquist. Please go ahead.

Good morning everyone and thank you for joining today's presentation of our Q3 report where Mårten and I will take you through the key events and financial highlights. This quarter we continue to have strong momentum. Our strategy keeps delivering results and we're growing in both in size and profitability. Let's go through the key highlights. Yesterday, we communicated updated financial targets where we have adjusted our net LTV target to 55%. The decision is part of our strategy to increase investment capacity and create long-term shareholder value, which reflects our transition from a build-up phase to a more capital optimized growth phase. Our goal is to double our portfolio from 8 to 16 billion by the end of 2028, driven by profitable development projects, acquisitions and asset contribution deals, while still maintaining financial stability. I'm proud to share that our earnings capacity is up 46% compared to last year, a result of strong operational performance and disciplined capital allocation. During and after the quarter, we have communicated several acquisitions in both Sweden and Finland. So far this year, we have signed and closed acquisitions of a total amount of approximately 1.3 billion SEK. I would like to highlight the recent acquisitions of two new Ecomaxi stores, properties that will align very well with our modern portfolio and further increase our exposure to the grocery segment. Since the IPO, we've shown that we can not only deliver profitable development projects, but also identify and execute on attractive acquisitions. In Q3, we continue to see strong rental income growth, up 25% year over year. Rental income reached 123 million compared to 98 million last year. This growth was driven by acquisitions, completed projects, and CPI adjusted leases. Net operating income increased by 24%, reaching 109 million compared to 88 million in Q3 24. Profit from property management increased to 61 million, up 32% year over year. The property valuation yield remained fairly unchanged, but we're seeing an increased interest and improved sentiment for our segment, which makes us confident that we will see improvements in the coming quarters. This quarter, we continue to sign several new long lease agreements. Net lefting this quarter amounted to 19 million, which was driven by many new signed leases in Denmark. Prisma has delivered positive net lifting every quarter since the metric was introduced in the beginning of 2023. This quarter our world decreased from 8.3 to 7.8 years and our occupancy rate declined slightly to 98.3, an effect of the recent acquisitions we have made in the quarter. Martin, would you like to make a comment on the cash position?

Yeah, it's important to note that the cash position is affected by the temporary depositions that we've made. They are booked as a receivable in the balance sheet. They relate to the acquisition we closed on October 1st for Jakobstad and Seinejokke, but also to projects in Aarhus and also in Denmark. Aarhus will start in Q4. So adjusted for the deposition,

This quarter we have made some adjustments to better highlight the strength and stability of our rental income. Instead of showing all tenants individually, we now present our top 10 tenants at group level. We also refined the category split to make us more comparable to peers and to better reflect our high share of grocery related income. The previous grocery category is now renamed grocery and daily goods. And this quarter includes income from top money oil across all markets. This provides a more accurate representation of how we view tenants such as dollar store, top money, big dollar, who in many ways complement or even partly compete with traditional grocery chains. I'm also glad to share that Kesko have entered our top 10 list, a tenant we aim to continue to further expand with in Finland. We continue to have a high vault of 7.8 years, but due to the recent acquisitions, we now have more lease agreements expiring the coming years. We will do our utmost to defend them and maximize our vault. And our property management team have already started the work of extending leases that added during the quarter.

Property portfolio. The property value now is above 8 billion, continuing to trend up. The yields, as we mentioned, are very stable since Q2. and the assets that we have added now is the MP3 acquisition together with projects in Trosa, Haderslev, Hylvieska and miners and miner divestment of an asset in Randers in Denmark. The unrealized value changes in the quarter amounted to 56 million and mainly related to project profits.

This quarter we have finalized three projects and added four new ones. Currently we have nine ongoing projects with an expected average yield on cost of 7.7%. We are ramping up our development activity and we're confident that we will soon reach our target of an annual run rate of 1 billion SEK. New projects that have been added this quarter include two projects in Haderslev in Denmark, where we have started the construction of a Netto store, Big Dollar and a QSR restaurant, with an expected completion in the end of Q2 26. In Trusa, Sweden, we have started the construction of a Rusta and a Jysk, with an expected completion in Q2 26. And lastly, in Ylvieska, Finland, we will have started a construction of a K-city market and a rusta with an expected completion in Q3 26. Our development organization continues to deliver and all previously announced projects have been started. This quarter we have added another four new projects to the list. Projects that is set to start from Q2 26 and forward. In Tiep, we are planning to develop 10,000 square meters of grocery and discount retail. We have two projects in Umeå, where we are planning to develop a grocery store and a QSR restaurant. And in Värnamo, where we are planning to develop a QSR restaurant, where we have signed a 20-year lease with KFC. New projects will continue to be added to the pipeline over the coming quarters.

The ownership structure, shareholders as of September 30th, basically no changes, same usual suspects in the owner list. I think that case, capital revolting has increased somewhat, but otherwise this is the same list as previous quarters. Financial update, the rental income up 25% year on year. NOI up 24% and the surplus ratio is 89% in the quarter if we exclude the segmented property which is up from 86% in Q2. The increase in the absolute NOI does not fully materialize on the income from property management and that is due to that we have very high interest income in the comparison period if you remember the very high cash position after after the IPO generated high interest income. And back then, Stiber was also higher. So the income, the rate for interest income was much higher. If we look on the rental income sequentially, rental income is up 5 million in a quarter sequentially from Q2. And that is, of course, increased by the inclusion of the MP3 portfolio and some project completions, minor project completions. but reduced also from the sale of the Uppsala asset and the small divestment in Randers and lower income from the segmented property. We also have slightly, may have been 1 million conservative on the income when we took in the final balances on the acquisitions, but should also... Capital structure, the net LTV is up from 35 to 38%. And the presence from new banks in the balance sheet is continuing to increase. The average interest is 406, continuing to trade down and is 402 with assuming that all rates would be fixed as of September 30. So basically, there's no material difference between the 406 and 402. So with a stable stiver, there's no point in really reporting this difference. And the ICR we see continuing steadily to climb up to 2.5 this quarter. Earnings capacity. includes the acquisition in Jakobstad and Seniocki per October 1st, as well as completed projects in Vännersborg, Göring and Östhammar. Otherwise, no major changes in the assumptions. And Fredrik, with that, we tie back to your initial comment. We are up 46% since one year ago in the earnings capacity. And with that, we open for 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 Staffan Bulow from Nordia. Please go ahead.

Staffan?

Good morning and thank you for the presentation. I have a couple of questions which I will ask one by one. Starting off with the new financial target. One of the targets was to double the property value from 8 to 16 billion. I'm just wondering how did you arrive at that target and should we expect that this target implies that you will significantly increase the acquisition pace going forward.

As a listed company, we need to be much, much bigger. And so currently we're on 8.1 billion SEK. We see a possibility to increase up to 16 billion within three years, including if you look at the pipeline we have in both projects and developments, but also in the future, look at asset allocation deals. That is an assumption we made and we believe that is achievable, 16 billion.

All right thank you and in terms of acquisition opportunities where do you see the best opportunities and what yields would you like to acquire at for you to evaluate the acquisition?

So currently we see the best deals in Finland. Now we've entered Finland, but we need to build up a critical mass in the portfolio to be able to grow in that market. So currently Finland, but we also see some possibilities in Sweden also. When it comes to development, we see the main focus is Denmark and Sweden.

Okay and in terms of yields in the project that you have ongoing you have a yield and cost of 7.7 percent and do you think that you can maintain that level going forward in the project?

Absolutely. We can be transparent and say, okay, if you look at the Q2, we had a yield on cost of 8%. Now we have 7.7%. But this is based on that we have more grocery projects. So we still get our profit margins, but the yield on cost will in general be lower when we're developing grocery compared to discount retail.

And on acquisitions, the acquisitions that you have announced so far they have been on relatively high yields but reading real estate consultants reports and so on you sense that yields are coming down and the competition for example grocery retail is increasing should we expect that the future acquisition that you will do that it will be on slightly lower yields

I mean, the benefit of doing developments and acquisitions is that we can do the transition. So we will do acquisitions as long as we find attractive deals. In the future, if the yields are going down, it's good for the company, but then we'll focus more on developments. So market-wise, Sweden is the market with the highest competition within the grocery segment. It's also a high competition in Sweden and Denmark, or Finland and Denmark, but especially in Sweden. So therefore, we've put more focus on the Finnish market at the moment. And if you look at that, we made it plus seven. So depending on which category we focus on, if it's grocery or it's a discount or QSR, so the years can spread between seven up to nine. But the most important new acquisition is that it's aligned with our current portfolio. So it's modern, long lease agreements and the right tenants.

Another question on the financial target, the target to grow NAV 15% annually. Do you still have that target or has that been replaced with the new property value target?

It's still in place.

Okay. And when it comes to an acquisition you announced a couple of months ago, the properties in northern Sweden, which you acquired from MP3 in the press release, you said that you will access those properties in Q3. I'm wondering, could you say which month in Q3 it was? Was it October, November, or sorry, I mean, August or September or something like that?

The MP3 was in July.

In July. In July. All right. And one final question from me when it comes to the earnings capacity, if I look at the reported central admin, it's a bit above the level which is indicated by the By the earnings capacity, do you think it will continue to be so for a couple of quarters before you reach the central admin in the earnings capacity in the actual reported numbers?

We have 11 in central admin in the quarter and we have 44 in central admin in the earnings capacity. So I would say that's in line.

Yeah, okay. That's right. Okay, but those were my questions.

Thank you. 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.

Thank you for joining today's presentation. We wish you all a great day and a nice weekend ahead.