Samhällsbyggnadsbolaget i Norden AB (publ)

Good morning to you all and I wish you all a very welcome to our quarterly earnings for the first quarter of 2024. My name is Helena Lindahl and I'm the Treasury Director at SBB. The presenter this morning will be myself and our CEO Leif Synnes and Finance Director Daniel Telberg. Leif will share the strategic and financial highlights during the quarter and also give you an overview of the performance of our business unit. Daniel will guide you through our financial statement and I will discuss the state of our financing. We will end the call with a summary and also a Q&A session. Over to Leif, please go ahead.

Thank you Helena. I will walk you through our key financial metrics, our execution on the strategy, as well as on some points of the new group structure. It's our ambition to give a transparent view of our financial position and strategic direction, even though it might be a bit complex. As always, we value your questions and are happy to receive them during the Q&A session. Looking on the highlights from the quarter, I think we continue to execute on the strategy and we have implemented a lot of measures that will improve the financial position over time. We have continued our work with improving financial stability of the group and also the liquidity. In the past 21 months, we have reduced debt with close to 39 billion in order to reach the financial stability that we want to have. We understand that we need to continue to reduce that. I think the operations is steady as usual. We continue to increase the rents and we continue to lift the operating. And I think we will continue to do so in the following quarters. And we also benefit from a low cost on the majority of the debt. We have 2.2% in funding costs on the interest in billing debt, which I think is low and good. I think the proper valuations will start to flat out and over time will continue to be at a higher level. On short term, we saw a further deduction of property values with 2.8% for the quarter. But as I said, we believe that we are now close to the end of this business cycle and a new business cycle will occur and with that comes higher property valuations. in the quarters to come. That is my expectation. If you look on the strategy, we have created three business areas. It's community, residential and education. And if we start with the community, We are structuring all the assets into one vehicle that owns all the assets in the community. And one part of that is in turn owned by a company called PPI, which we successfully listed on the stock exchange in Norway. And it's good to see that we now have access to growth capital in that part of the operation. In the residential area, we continue to take steps, good steps in . We continue to dissolve small joint ventures and to make the structure less complex. And we have decided to dissolve one large joint venture, which we have with Riksbyggen, and we will continue to to solve other structures in order to make the company structure as easy to understand as possible. The goal is to have only fully owned companies in the CFR data structure, and the goal is to raise capital in that entity during 2024. In education, we see a lot of improvement. Most of our assets are in the entity Nordicus, which we part on together with Brookfield. The next step for that company is to get an investment grade rating, and with that rating being able to raise attractive funding. One other thing we did during the first quarter was to buy back bonds. which resulted in a gain of close to 3 billion SEK. We have, in total, an exposure to the real estate business of 104 billion SEK. And it's, as I said, divided into three areas, residential, community, and education. residential we have a total exposure of 37 billion where of 28 is direct ownership and 9 billion is through different collaborations and in community we have an exposure of 47 billion and then in the indications we have 21 billion and the goal here is to create a structure which is transparent and also a structure that enables attractive funding over time. And also I think the last thing is important that we will have a management in each of the area with dedicated focus to improve their part of the operation. If we move on to residential, most part of the assets are placed in Sveafastheter. In Sveafastheter we aim for an IPO or a strategic partnership in 2024. We have elected a new CEO, Erik Hevermark. We have also elected an independent board. and we're taking a lot of steps to improve the operations. I think when we have a dedicated management with the sole focus of improving the financials for Sveafas theater, I think we will be able to increase the rents faster and reduce the cost in a better way than what we have done in the previous years. One example is that we believe that the occupancy rate of 95% will be increased going forward. And also the good thing with residential is the strong fundamentals and also the secure place it is to have regulated rents in Sweden. We believe that over time we will be able to have a faster rental growth and inflation. And if we go on to the community, as you know, community properties are government funded tenants. We have a minimal risk of rent loss. It's a leading platform. It's a scalable platform. And it's a good opportunity for us to develop the business going forward. The rental income is close to 100% inflation linked. The largest part of the assets is elder care with 31% of the properties. In this area and also in the other areas of the business, we focus on sustainability. And as I said earlier, it's the biggest sector for us with 47 billion of assets, directly or indirectly owned. Since last year, we on slightly less than 50% of a large company called Nordicus. This is the main part of the education holdings. I think it's very good for us to have our partner in Brookfield. They are very skilled and they have a lot of capital and I think we will continue with them and develop the business in a good direction. We see the underlying operation in Nordkust developing very well. And we believe that we can continue to build on Nordkust, which is the leading platform in Europe for public education property. And as I mentioned earlier, we strongly believe that we will end up with an investment grade rating in this part of the operation. in 2024.

Thank you, Leif. Let's go more into detail on the financial statements. On a like-for-like basis, rental income for Q1 compared to the corresponding quarter last year increased by 3.9%. Likewise, net operating income increased by 3.0%. As you can see, because of our strategy, the net operating income is increasingly coming from our partly owned business like Nordicus. And as we prepare Svea Fastiheter for an IPO or a new partnership, we can expect this trend to continue. This is a significant achievement, given the challenging market conditions. Quickly looking at our yield and occupancy rates, we can see that our yield stands at 4.9% during the first quarter. Our occupancy rates remains high at 94% for the first quarter. A number that together with who our tenants are give us confidence regardless of where we are in the economic cycle. This puts us in a competitive position for when market conditions improve further. Let's look at some key takeaways from the income statement. During the quarter, net operating income was protected like for like despite reduced income from divestments. There was a decrease in property value following higher yields and we are now seeing greater signs of decreasing valuation leveling off. An increasing number of experts and institutions believe in decreasing rates this year we successfully conducted the repurchase of bonds in march which resulted in a profit of nearly 800 millions and improving in equity with additional nearly 2 billion with that said let's switch over to financing thank you daniel um financing