Swedish Logistic Property AB

Then we welcome you to the presentation for the first six months of 2024 for Swedish Logistics Property. My name is Tommy Ostrond and I'm the CEO of the company and by my side I have Matilda Olsson, who is the CFO of the company and she will present the financial development of Pembroke. We have an agenda with some highlights from the first six months before we deep dive into the properties and of course the financial development. We have yet another very good quarter behind us. We are very satisfied with the development of the company, not least considering the challenging macro environment we live in with high interest rates and challenging economic environment. We continue to deliver in the daily work both within portfolio management but also within other parts of the company as financing and sustainability. We can see that the property costs are on the same level as of the same period last year even though we have a substantial bigger portfolio now. We have administrative costs that doesn't grow. We have even lower margins on our loans and our green transition delivers in the bigger part of share of certification and that we increase from 25% at the beginning of the year to 50% at the outcome of the second quarter. We have also heavily increasing shares of green sustainable loans from 53% at the start of the year to 72% at the end of Q2. We increase our rental income with 19%, of course partly explained by acquisitions but also the CPI of .5% that we got from 98% of the rental contracts. And of course the work that is driven in the property management on a daily basis. We increase our profits from property management with 26%. Despite increasing interest costs for the three months' STIBER part, we have managed to keep big parts of the increase in NOI in our result. As of Q2, we have a loan to value of approximately 46% and an equity ratio of 45%. And we deliver on our NME growth of 7%. Our interest covers ratio where we have a financial restrict of 2.5 times landed on strong three times for the first six months. We have managed to have good negotiations with the banks regarding margins and efficient processes within the company. We continue to acquire properties with development potential. We have taken ownership of five properties during the last quarter and keeping our pace of one transaction a month in average. And we see good opportunities to continue to grow the company with new acquisitions of logistic properties with development potential. We have successfully grown the portfolio. We're now up to 105 properties with a property value of approximately 12 billion. We see still a big demand for logistic areas, which is proven by our 95% occupancy rate. We have a long remaining tenancy period of six years, which of course is very good in the discussions with our banks when you want to borrow money for two or three years. And we deliver on our two overarching goals of growth of NME per share with 15% and increased results from property management with 15% per year. You have to take into consideration that we have used the equity rates that we raised in last year in new development, new property, new production investments, which is not shown in the P&L yet. Matilda will come back to this a little bit later in the presentation. One important part of the strategy is acquisitions. And the acquisitions that we are interested in needs to be, there needs to be some kind of a development potential in the acquisitions. So we don't focus that much on yield day one. We are more interested in what we can do when we are finished with the property in form of filling up vacancy, lowering energy costs, adding add-on projects and so on and so on. We will continue to do new transactions during 2024. We have taken possession of five properties during the last quarter and in total seven properties during the first six months. The same pace since the last five years, one transaction a month in average. As I said, acquisitions of properties with development potential is important for us and one basis to be able to reach our overarching goals. This is a picture which shows you how we like to see of our property portfolio, where we divide into two segments, one property management and one property development. The property management includes properties that we are ready with. There is not much potential left to increase the value. They are almost 100% let out. The property costs are quite low. We have a net operating income from this portfolio of 721 Swedish kronor per square metres. And if you compare that to the property development section, there is an NOI per square metre with 568 Swedish kronor. It means that there is potential of approximately 150 SEK per square metre to increase the values in the properties. This is relevant for about 50% of the portfolio. We have a couple of ongoing projects which I will come back to a little bit later. Then we have potential in building rights. Approximately 200,000 square metres can be built on the building rights that we have with an estimated investment cost of 2.3 billions. As of Q2, we have three bigger projects ongoing. It's the same projects that we presented in the Q1 presentation. There is an investment total of 1.2 billions where approximately 400 remains to invest. All of the projects will be ready at the year end. They will be shown in the P&L for the first quarter of 2025. All the projects have 100% letting rates. We don't build anything on speculation. These big investment projects are of course very important for us, but as important as them are all of the smaller projects that we work with on a daily basis. They are an important explanation of how we can deliver positive value changes in our properties quarter after quarter. They are identified with the active dialogues that we have with our tenants. Where we find out that there is a big need for different kinds of development projects as ventilation systems, solar cells, shorting systems, conversions projects and so on. We have invested approximately 51 million in energy projects during the first six months and 124 million in other investments. We have to be aware that the return of these investments are significantly higher than on the current G-Lock requirements. Coming into our tenants, we have a broad and strong mix of tenants. They represent some branches that are a little bit bigger than others, which would be food, beverage and transportation. As I said before, we experience a high demand from our tenants. This is explained in quite detail with the two commercial property managers that on a daily basis focus on our tenants. Meet them and have discussions with them to see if there is any need for them to invest in the property in the form of solar cells, shorting systems, add-on projects and so on. This is a big part of how we can continue to deliver positive value changes quarter after quarter. We have a strong net rental income, 22 million for the first six months and a six years remaining tenants period. It's very good that our ten biggest tenants have almost nine years in duration as well. Looking back at the high inflation that we have had during the last years, it's very good that we have 98% of the rental contracts linked to CPI, which means that we've got an almost 11% increase in rent for 2023 and a rent increase of .5% for 2024. We continue to take big steps in our sustainability work. During the quarter, we have delivered on yet two of our sustainability goals. We have reached 50% certified area and 70% sustainable financing. Earlier, we have already reached our goals of installing the effect of solar cells and charging infrastructure. Related to this high goal fulfillment before schedule, we will set new goals, which we will come back to you with during 2024 and starting with 2025. As already stated, here we can see that way before time schedule, we have managed to deliver 72% sustainable financing, which was set from the beginning to 2025. We are of course not satisfied with this level and will continue to work with this on a daily basis and hopefully increase this level going forward. Then I will leave over to you Mathilda on the financial development.

Yes, as Tommy mentioned, we continue to deliver on our overarching goals. During the period, the net asset value per share increased by 7%, which means that we are well in line with our goal of 15% for the full year. The gross profit from property management per share amounts to 5% compared to the same period last year. Here we have to bear in mind that we increased the number of shares significantly during 2023 due to the two new share issues for a total of 1.1 billion. This issue proceeds have mostly been used for the acquisition of project properties where the projects are still ongoing, which means that we do not see any results from the issue yet in the profit from property management. As Tommy mentioned, we expect all the major ongoing projects to be completed by the end of the year and then add close to 80 million in net operating income on annual basis. To the right we have an outcome of our financial risk limitations, which shows a continued stable financial position. The -to-value ratio amounted to .8% at the end of the period compared to our risk limitation of 55%. The -to-asset ratio amounted to just over 45% and we also continue to have a strong interest-carriage ratio of three times compared to the 2.5 times that we have as a risk limitation. Moving on to the earnings ability, it reflects the company's earning capacity on a 12-month basis as of July 1st. The figure excludes our major ongoing projects that will be completed during the year, which currently have a net operating income of close to 80 million kronor. Compared to one year ago, the rental income increases by approximately 130 million in earnings capacity, which is close to an increase of 25%. The increase is of course due to the acquisition of new properties, but also due to completed new construction and extension projects and also letting of vacant spaces and of course the CPI indexation of .5% from the turn of the year. The property costs have increased by 2 million compared to a year ago, corresponding to about 2%. The costs have increased as a result of acquisition of new properties, but have been offset by reduced costs in existing holdings. This is due to investment in development projects and especially energy-saving projects. The net operating income here in our earnings capacity amounts to 640 million and is increased by 27% compared to a year ago. Our central administration and property administration costs are at the same level as our previous earnings capacity, and we see that we are well equipped to continue growing with the current administration. Due to the lower cash holdings than at the turn of the year, when we recently made a new share issue, we see a lower financial income here. The financial expenses amounts to just over 200 million and are increasing primarily as a result of the larger property portfolio. If we look at the income statement for the half year, the rental income increases by 19% and amounts to 335 million. The increase is mainly a result of a larger property portfolio, but we have also increased rental income as a result of movings in new construction and extension projects. This is due to the fact that 98% of the annual rent is indexed by CPI linked. The property costs are unchanged compared to the same period last year, despite a significantly larger property portfolio. We believe that this shows a good cost control in our property management, but also that investments in our existing portfolio and high yield compensates for the higher costs due to the acquisition of new properties. The net operating income increased by 23% and for the comparable holdings the increase is 8% compared to previous year. The costs for property administration and central administration are at the same level as last year. The financial net during the period amounted to 91 million and the higher financial costs are primarily due to new borrowing, because we have a larger property portfolio than one year ago. But despite this increased interest costs, we also see a significant increase in the profit from property management of 26%. All of our properties have been valued externally at the end of the quarter and we report positive value changes in investment properties of 270 million in the half year, of which 144 in the quarter. We have not yet reported negative value changes during the end quarter, and this despite the fact that the direct return requirement has increased from an average of 5.2 to .9% over a two year period. The positive value changes come from new lettings and renegotiations, new construction projects, energy projects and from deductions or deferred tax from our acquisitions. At the end of June our property value amounted to 11.9 billion Swedish kronor. The increase since the turn of the year comes from acquisition of approximately 800 million and from investments of about 700 million. And also of course the unrealized value changes of 217 million. And if we look at the major ongoing projects, there's about 450 million remains to be invested in these, which are not yet reflected in the property value at the end of June. We continue to work only with secured bank financing with the Nordic banks and think that the year so far has been characterized by a more positive tone from the banks and we still look positively to continue to grow with secured bank financing going forward. At the end of the period we had an average credit margin of 1.5, which is slightly lower compared to a quarter ago, and our average interest rate was 4.20%. That our average credit margin is decreasing is partly an effect of renegotiation when refinancing loans and a lower margin on new lending. But it's also a result from us continuing to increase the proportion of sustainable financing, which gives us a discount on the margin. During the quarter we reached our goal of 70% sustainable financing as Tommy mentioned, and that was set for the end of 2025. To reduce the interest rate risk, we hedged part of the loan volume through derivatives and at the end of the period 68% of the loan volume was hedged. And we had an average fixed interest period of 2.3 years and an average capital tied up amounts to 1.5 years. At the end of the period our interest bearing liabilities amounted to about 5.7 billion. And in addition to this loan volume we have approximately 1.2 billion in approved property credits and acquisition credits. And in addition our cash holdings of about 100 billion. We believe this gives us a stable financial position and also enables continued acquisitions and investments going forward. And here we see SLP's shareholders as of the end of June. The number of shareholders continues to increase and it can also be noted that the free float is increasing, something we believe could be positive for the liquidity of the share. With that I'll hand it over to you again Tommy to

wrap it up. Thanks, Mandela. To summarise, SLP stands strong. We have a very good result. We're especially proud that our property costs are on the same level as one year ago, even though we have a much bigger portfolio. That proves that the effect of our investment is shown in the P&L. We see a high demand for logistics area, which is proven by our high economic lending rate shown and high net rental income. We have a very strong financial position with 47% loan to value and a cash position and loan promises of 1.3 billion. Meaning that we are positive that we can be able to continue our journey with growing SLP with logistics properties with development potential. That was all for us. Please use our info mail for questions. Thank you.