Swedish Logistic Property AB

Then we welcome you to the presentation of the first quarter 2024 for Swedish Logistics Property. My name is Tommy Åstrand and I'm the CEO of the company. By my side I have Matilda Wilsor who is the CFO of the company. She will introduce you to the financial development of Esselpää. We have an agenda with some highlights from the period. A little bit short about what Esselpää is for a company before we deep dive into the property portfolio and of course the financial development. We have yet another good quarter behind us. We are very satisfied with the development of the company, not least considering the challenging macro environment that we live in with high inflation and high interests. We continue to deliver in the daily work both within portfolio management but also in other parts of the company as in financing and sustainability. We can see that in our administrative costs that doesn't grow even if we grow the property portfolio significantly. We have even managed to get lower margins of our loans in our discussions with the banks and our green transition delivers in the fact that we have increasing portions of certifications from 25% of the properties to 34% at the end of the period and also an increasing share of sustainable loans from 55% to 65%. We also see this in the property management by prolongation of leases, energy project, extensions of existing buildings and so on and so on. And we see it from our tenants where we reach 74% customer satisfaction in our first survey with our tenants. And if you look at the numbers, we increase the rental income with 24%. We increase the profit from property management with 29%. So a big part of the rental income increases stay within the P&L. We have quite a balanced loan to value ratio of 42.7%. We are on track with the NAV creation per share with 3% for the first period. We continue to do transactions. We have taken ownership of two properties during the first quarter. And as I mentioned before, continue to increase the sustainability financing up to 65%. And a good level of 3.1

in interest covers rate shock. But before

we go into too much of the details, just a couple of words around SLP. We are quite a young company. It started about five years ago. The focus is to invest in logistic properties in the south of Sweden, logistic properties that we can create some kind of value within. And with value creation, we mean that there are some vacancy, there are high costs, there are the possibilities to extend the property or conversion possibilities within the property. So some kind of possibility to grow the NOI in the property. We're going to do this with sustainability and financing in focus. It should be active supporting processes. And we will come back to that later in the presentation. We have successively grown the portfolio. We're now at 100 properties with a property value of approximately 11 billion Swedish krona. We see a big demand for logistic areas. We have a 90% to 95% economic ratio apart, which I think is a stable level that we have had now for quite a long time. We try to create a long cash flow. We have 6.3 years remaining tenancy period, which is the same level that we had a year ago. And we have two overarching goals that we're going to create 15% NAV growth within our share and 15% growth within property management, which Mattila will come back to a little bit later. An important part of the strategy is acquisitions. We have been very active in the transaction market during these five years that we have been driving the business. We have made 60 separate transactions, so on average one transaction a month. We have basically only acquired properties, almost not sold anyone during these five years. We have made a lot of off-market transactions through brokers, through the network that we have within the business. I would say about 20 to 25 sale or lease-back transactions with users that own the property, they have sold the property to us and continue to lease it from us. We try to avoid to buy big portfolios. We find that it often tends to be quite expensive and often you will get some kind of property that you don't like and doesn't really fit into the strategy. We love to do the transactions in an amount of 100 to 200 million per transaction. Those transactions we find that there are less competitive buyers. It's too small for the bigger players and it's too big for the small players. The focus is on logistic properties where you can actually create some kind of a value. Not that much focus on day one yield or more what we can actually do with the property. We love vacancy, we love high energy costs and we like to create new square meters within the property, for example. We have continued to do business during 2024. We have taken ownership of two properties during the quarter and announced yesterday another new transaction. As I said acquisitions of properties with some kind of possibility to drive value is important for us. It's a baseline to deliver on our financial goals. To try to give you a picture of what the potential could be in the portfolio, we have divided the property portfolio into two sectors. One is the property managed portfolio which we see as they are developed as far as we can develop them. There are cash cows which can generate a higher NOI and you can also get a higher loan to value with a bank from these kind of properties. These financing is then used to invest in the property development portfolio. This is the segment where we see the potential to continue to drive value through three investments or through negotiations. If you see the difference in the NOI between these two sectors it's 150 Swedish kronor per square meter higher NOI in the property management portfolio than in the property development portfolio. We have some ongoing projects which I will come back to and also have some potential in building rights. These are not something that we have bought standalone. They are almost always part of an existing property where we have identified the possibility to extend in some way with some square meters on the property. Going back to the project, we have a lot of projects going on in the company. I would say more than 100 different projects ongoing. We communicate the details of the ones that are bigger than 25 million. At the moment, at the end of Q1, we have four ongoing bigger projects. Three are new construction projects. For example, the new warehouse building for Alsell, which we're building in Hallsberg, of approximately 60 000 square meters. But also an extension project in Glingskaftet 1, which is a property in Malmen, where we have actually added 2200 new square meters on an existing property. All of the projects are 100% let out already. These projects are of course important for us. But I would say at least important is the smaller project that we are running in the property management department. We have identified a lot of high yielding projects like the change of ventilation, fence, solar system, charging systems, conversions and

so on. If we take a look at the tenant

list, we have a broad and strong mix of tenants. We have approximately 300 tenants, which represent a lot of different industries. We don't have any focus on specific industries, but if you look at what our tenants are working with, it's mostly food, beverage and transportation. We see a continued strong demand from our tenants. We have two commercial managers that spend their days meeting with our tenants to understand their needs and try to get them in place with investments in the property in the form of a lead system, solar cells, other types of investments that could decrease the energy costs in the property. We have a continued strong net rental income in the quarter for approximately 20 million Swedish krona. We are very keen on continuing to drive the remaining tenants period, which is 6.3 years in the end of the quarter, which is actually the same level as we had a year ago. I don't think anyone has missed that there's a big inflation level in Sweden for the last couple of years. You could say that we have some kind of a hedge within our portfolio for the interest risk that we have within the portfolio that 98% of the contracts are linked to KPI, which meant that we got a .9% increase in rent for 2023 and an increase of 6.5 in rent for 2024. Looking into the sustainability work, we continue to take big steps in the sustainability work within SLP. As we have mentioned before in earlier audio costs, we have a lot of different certification processes ongoing. These processes take some time due to the fact that it should be evaluated if the activities that should be done and if it makes sense from a financial perspective to do this transaction and if the transaction would lead to refinancing and so on and so on. What we see now is that a lot of these processes are in the end process, which means that we have increased the certification part from 25% to 34% in the first quarter. We have still a lot of processes running, so we're quite comfortable with delivering on our goal of at least 50% certified area until 2025. For some of the goals that we put up last year regarding sustainability, we have already reached the targets. We have reached the 15 megawatt installed effect in solar systems and we have also reached the goal of 50% charging infrastructure within the properties. And all of these energy related sustainability goals are of course linked to the 70% sustainable financing that I will come back to a little bit later. So related to this high goal fulfillment before schedule, we will set up new goals for 2025 from sustainability perspective, which we will come back to later during here. And here we can see the effect of the positive development we have had related to the energy related to the goals that I just mentioned. We have increased our portion of sustainable financing from 53% from the start of the year to today's 65%. Now we are comfortable that we will reach our goal of 70% sustainable financing long before our community indicator goal in 2025. Yes, now handing over to you, Matilda, for the financial development.

On the left here, we can see the outcome against our two overarching objectives, which is that we should generate an average annual growth in net asset value and profit from the management per share of at least 15%. Looking at the net asset value, we are moving well towards the 15% on an annual basis where we have a net asset value per share of 25.95 per share compared to 25.26 crore per share at the turn of the year, which is an increase of 3% in the first quarter. Now we'll get back to what this increase is due to. The growth in profit from property management per share amounts to 4% compared to the same quarter last year. Here we have to bear in mind that we increased the number of shares significantly in 2023 with the two new share issues amounted to 1.1 billion kronor and that the issue proceeds have mostly been used for the acquisition of project properties where the project is still ongoing. This means that we don't see any result from the projects in the income statement. In other words, there will be a lag before we see the effect from the new share issues here. We expect all the major ongoing projects to be completed by the turn of the year and then add close to 80 million kronor in net operating income on an annual basis. On the right we see our financial risk limitation and the outcome, which show a continual stable financial position as we see it. As we have communicated earlier in the year, the risk limitation regarding the loan to value ratio and asset equity ratio have been revised from 2024. The loan to value ratio at the end of the period amounted to .7% compared to the risk limitation of a maximum of 55%. And the asset to equity ratio amounted to almost 48% compared to the risk limitation of at least 40. We have a continuous strong interest cap ratio of 3.1 times compared to the 2.5 times

that we have the risk limitation. Here we see our earning capacity,

which reflects the company's earnings ability on a 12-month basis as of April 1st. The earning capacity is based on contracts that run for April 1st and therefore it does not take into account the fact that we have major ongoing projects that will be completed during the year with a net operating income of close to 80 million. Compared to one year ago, the rental income has increased by about 100 million in earnings capacity, which is close to 20%. The increase is due to acquisitions that we have completed new construction projects with moving due lettings and also the CPI indexation of .5% from the turn of the year. The rental income is impacted by rental discounts corresponding to approximately 6 million on an annual basis and these discounts are usually offered at the start of the lease and are gradually phased out. The property costs have increased by 5 million since one year ago, corresponding of about 5%. This has been driven by acquired properties but also decreased by our investments in developing the properties and energy saving projects in particular. Looking at the net operating income, it amounts to 557 million and has increased by 21% compared to one year ago. The central administration costs and property administration costs are still at the same levels as a previous earnings capacity and as we see it we are well equipped to continue growing with the current administration. We still have a strong liquidity at the end of the period with a cash balance of approximately 400 million which gives us financial incomes in this earnings ability and the financial costs amounts to 182 million based on our interest bearing lab evidence on

the balance sheet date. In our income statement for the first quarter

of 2024, we can see a rental income increase by 24% compared to previous year, mainly as a result of having a larger property portfolio but also we have increased rental income as a result of moving in new construction projects, lettings of previously vacant spaces and CPI adjustment of lease agreements. Property costs increased by 8% compared to the previous year and it's driven by the fact that we have acquired new properties but also positively affected by the fact that we have invested in the development projects. Property costs normally vary with the seasons and during a normal year the first quarter has higher cost compared to other quarters, mainly as a result of cost for snow removal and heating. The NOI increased by 27% and amounted to 137 million for the period and for the comparable portfolio the net operating income increased by 9% compared to the previous year. The central administration cost and property administration costs are at the same level as last year and our financial net during the period amounted to 42 million. The higher financial costs are primarily due to new lending because of the bigger property portfolio and also that the three month cyber rate is higher than a year ago. Despite these increased interest costs we also see a significant increase in the profit from property management of 29%. During the quarter all our properties have been subject to an external valuation and we report unrealized value changes in the properties of 73 million and we have not yet had a quarter with negative value changes in the properties. The positive changes come from new leases, new construction projects, energy projects and also deductions for deferred tax and acquisitions. The average directors requirement in the external valuations amounts to .9% which is unchanged compared to the turn of the year. We also have unrealized value changes for derivatives amounted to 45 million which is due to higher

market interest rates. We continue to grow our property value which at the end

of March amounted to almost 10.6 billion Swedish kronor. The increase during the year comes from acquisitions of approximately 100 million, investment in our existing property holdings of about 300 million and also the unrealized changes in value of about 70 million. Looking at our major ongoing projects that Tomi mentioned before we have approximately 770 million remain to be invested in these which are not reflected in the property value at the end of March. We end the period with a stable liquidity of 470 million which is due to the new share issue that was carried out at the end of November and that gives us a loan to value ratio of .7% compared to our risk limitation of 55%.

At

the end of the period the net asset value per share amounted to .95% which corresponds to a decrease of 3% during the quarter which is in line with our overall objective of 15

% on an annual basis. We continue to work on the risk security bank financing

with Nordic banks. As we see it the beginning of 2024 have been characterized by a more positive tone from the banks and we are positive to continue to grow with secured bank financing. Both we and our banks are very happy about the fact that we have stable cash flows, high occupancy rate in the properties and also a high demand for our logistics basis and an average rental tenancy period as long as 6.3 years. At the end of the period we had an average credit margin of 1.52%. This is slightly lower compared to a quarter ago and we had an average interest rate at 4%. To limit our interest rate risk we use interest hedging through derivatives and we had 73% of the loan volume hedged at the end of the period and an average fixed interest period of 2.2 years. Our average capital tie-up amounts to 1.5 years and we aim for a capital tie-up of around two years to optimize our capital costs as well as use the refinancing opportunities for properties as we develop them. At the end of the period our interest bearing liabilities amounted to about 4.9 billion and in addition to the utilized loan volume we have about 1.2 billion in granted credits and that's about 1.6 billion if we also include the cash the liquidity holdings. As Tommy mentioned we see the sustainable financing as a proof that we have reduced the properties energy use and we are now starting to reach our goal of 70% sustainable financing in 2025 as we by the end of March have a share of sustainable financing of 65%. So all in all we see that we have a continued stable financial position and a good opportunity to continue to grow under

controlled conditions. And this is our shareholders as of

the end of March with the two new share issues during 2023 of each 550 million we've got several new owners. We are experiencing an increasing interest from the capital markets both from Swedish and foreign investors and with that I'll hand over to you again Tommy.

Thanks for that Matilda. Well to summarize SFA stands strong we see a high demand for logistics area which is proven by a high economic letting ratio and a high net rental income from the period. We have a strong financial positions with a quite low 42% loan to value a high cash position of 400 million and loan promises of 1.2 billion from our existing Nordic banks. That's why we see positively poor to continue to grow the company by acquisitions of logistic properties in the south of Sweden with some potential to increase wealth. That was all from us from the first quarter and we appreciate questions through our info.