Stendörren Fastigheter AB (publ)

Hello and welcome to today's broadcast with Stendaren Fastigheter. This is the VD Erik Ranje and the economist Per-Henrik Karl who will present the report for the third quarter of 2024. After the presentation, a Q&A will be held. So if you call in and want to ask a question, press star 9 to turn off the hand and star 6 to activate the sound when you get the word. It is also good to write questions in the formular to the right. With that said, I leave the floor to you.

Thank you very much. And before we go into the presentation, I can just take a break on this nice picture that shows one of the properties in Uppsala that we bought here a short time ago. But we go into the presentation and before I go into what has happened during the quarter, we can still make a little description of what kind of company we are. Some know us well, but others may not know us very well. So Stendaren, we are a stock-noted property company operating within the law, logistics and light industry. Our assets are located in and around the Stockholm war, so in Stockholm, Stockholm and in the upper Mälardalen. We even have a third of our assets in Stockholm. We have properties for, after these acquisitions, among other things, that we have made on about 13 billion with a high disposal, a direct disposal of about 6.5 percent, long deals and a loan rate of about 50 percent. We have not only, so to speak, a yielding property, but we have a large building portfolio as part of our potential. If we compare that with our standing assets at about 800,000 square meters, we have a building portfolio at about 640,000 square meters, which is a part of the potential of the company. We have been around for 10 years, founded in 2014 as a branch of another property company. The company's development was very business-driven the first year, and then when I joined the management around 2020, we have continued on the established growth path with business, but also, above all, accelerated our development activities. We have built about 8,000 square meters, as an example, in the last 12 months, and have about 50,000 square meters of ongoing projects with a net of about 70 million crowns. Then we have also increased the sales rate, in that we notice that we have added some new markets, the same type of situation, namely a growing macro. The big cities, Oslo, Copenhagen, Helsingfors, in urban micro-situations, preferably. The main potentials in the stone door, and what makes the stone door interesting from an investment perspective, we have a strong and stable cash flow, it is the core of our business. We are in a high-end segment, namely the law and logistics industry. We have long agreements, as you saw in two pictures before, so we have about four years left, through our rental agreements, and we have a diversified rental guest list. Since October 1, our biggest rental guest is the fortification company, with about 9% of our rental flow. The next biggest rental guest is at 2%, and that is a very granular rental guest list, apart from the fortification company, namely the Swedish state. And it is not just that we have many rental guests, that is, about 800 rental guests, they also come from different industries, so a very strong, stable cash flow, with visibility in the long agreements. At the same time, we are a growth company. Our properties are occupied, as I said, and we have about a third of Stockholm's city, and about, very roughly, another third of the rest of Stockholm, and another third of the rest of Mälardalen. Then we have 5%, our property is the outskirts of Oslo, Copenhagen, Helsingfors. But we are occupied, where there is an economic and population growth, and that drives the rents in our property, which means that we can, in a negotiation, beyond the inflation indexing, which is constantly increasing rents at the rate of decline. Historically, we have often been able to increase rents on those we say are for remittance, with 20-25%, so there is a underlying rent potential in the property. Then we are also a growth company, and notice that we have a large building portfolio, as I mentioned earlier, we have 640,000 square meters of buildings, and we have a building right to compare our existing property at 815,000 square meters. The fact is that we can grow within existing property with about 80%, and these are building rights that are there, it is planned, when we find a rental, we can start building within a short period of time. I would say that the land that can be built in large-scale regions is the ultimate resource in the property sector, because it is very important, so it is an economically and strategically important resource. If we then go into what has happened during the quarter, we have had, during the report period, that is Q2, Q3, we have had a nice underlying growth in our drift network at 8.4%. When I say underlying, we have adjusted for a insurance income that we got in Q1 last year, that is, it was a one-time event, and then we have also made a return in the beginning of the year of an estate in Bordskyrka. But the underlying growth in the comparable portfolio is at .4% for the first three quarters, which we think is a good figure. We have had a relatively strong return, I think, and we have negotiated a number of agreements, and they have increased the income on those agreements by 6%. The vacancy is essentially unchanged. I think it has decreased a little, but with a 7% vacancy, given the economic, a little tougher conditions that have been out there, we think it is a good figure. We have also had a positive net return during these three quarters, and especially in Q3, we have a positive net return on over 7 million, which is also good, and I think it indicates that there is perhaps a certain light out there with the increased demand from our tenants. Our surplus rate has been stable at 79%, so it will get a much lower level. But then, at 79%, we were a number of years ago at 66%, and have continued to increase to 79%. Then, above all, during this quarter, during Q3, we have increased the growth strongly in the company. We have made a number of acquisitions, six acquisitions, at 740 million kronor, and we have also started a larger project in Q3, in Bromma, where we rent out. We have signed a contract with a new rental company of 3,700 square meters, and that corresponds to an investment of 821 million, these acquisitions and this project. And if we count on what it is throwing away, if the exploded construction world, which we take into account, then it is also a waste of over 7% and increases our drift network by 8.5%. So, during the quarter, we have accelerated growth and see very good expansion opportunities in the future. We have 53,000 square meters in ongoing projects in different fields, we will go into that a little later, but more than drift network and potential of about 70 million. So that is what has happened during the quarter, during the reporting period. We found a little longer, historically, and if we look back a few years, we have had a drift network and growth in the company at about 13% per year, which we are very proud of. And we have then succeeded in achieving that without taking in additional capital from the stock market, which many of our competitors have done in different ways in recent years. And without that, we have managed to reduce the vacancy by a lot, as you can see in the graph, down to the right, or rather, we have increased the degree of continuously, but also the degree of surplus. Then we have also acquired our own resources, but also completed projects, and that is what has given a nice drift network and growth at 13% in recent years. A little bit on the financial side, what I think is worth mentioning is that there are financial markets that have become incredibly much stronger compared to what they have been during the last years. We have sometimes refinanced an obligation of 600 million by giving out a new obligation of 800 million, where we lowered the margin from 93 to 290. This is a very strong capital market, but it has been as strong as the bank market, but we see a very good access to financing from both capital and the banking market, and even the banking market has the margins have dropped. For those who have followed us for a long time, you know that we have had a very good hedging portfolio, a portfolio of insurance during the last few years, and one of our better, or one of the swaps we have with low capital costs has run out, which means that our share has dropped somewhat, so we have 64% pension and our pensioners' debt when we go out of the quarter, out of Q3, and then have a corresponding rate of 1.6%, which is no less in a significant lower than the actual rate, so we still have a very good share of insurance, and we are looking at a very good capital cost with the corresponding relatively low interest rate. Looking at our key points, when we are in some way on the toughest period, both financially and financially, we have actually managed to keep our financial defensive target with a solidity of 35% and the pension is clear on two times, which I think feels very comfortable and strong. If we go a little deeper into how we have expanded during the quarter, we have then, as I said, made a number of acquisitions. The acquisition, as you can see in the picture here, is summed up to 140 million, and we have acquired them on a yield of 7.1%. Then we have made an investment decision on this project, the Båglampan 25, as you can see in the upper right corner. It is an investment, exclusively in the proportion of the construction value of 83 million. We are counting on the disposal of exclusively the construction value, but just looking at the driftnet and divided with capex, that is, money out, then it is a disposal of 7.7%. So this expansion, which total sums up to 820 million approximately, has a total disposal of 7.2%, which if you compare with the financial costs, it is isolated is a very good and fine disposal level, but in relation to the financial costs, it gives a very fine calculation. We have, during the last six quarters, completed and then I take in a little bit for Q4 here, if you look down in the upper corner, so I include these numbers, we will complete the project Stenvrät in Enköping, but if we take these six quarters, including this quarter we are in now, then we will have completed 37,300 square meters, mainly logistics, to almost 90% of the total, and this is as I said, completed project of very high and fine quality, which is very good. When we add here, that this is existing building rights that I have taken in the language of the project, and if you think financially, that the value-making that happens in the project is allocated to the actual book-bidding building value, and is added to the building value, then these building rights would actually have been worth two and a half times more than the book-bidding value of our building rights, and I think this is an important number to point out, because this shows both the commercial and financial value of our building rights portfolio when we complete a project. Then it is also the case that there is a strategic value in our building rights portfolio, so the market is hardly close to Stockholm, and this building rights portfolio makes it possible to build to customers -to-sneak solutions. The building rights potential is large in the company, this is an overview of what we call future projects, where we are not out on the market every day, and where we do not have concrete project ideas yet. But we see here that this is in the nearby municipalities of Stockholm, it is within the logistics and light industry, in the detailed areas, that is, these are actual building rights that we find customers and customers can use to build a project. So we can actually start the project at once. And if we focus on our ongoing project in the table that you see at the top, we have a number of projects ongoing, where construction is ongoing, most of the projects are already completed, with completion both under Q4, Q1 and Q2 and Q3 next year. Then we have a number of projects where we are already more in the construction rights, where we have construction rights, but we have not found a guest yet and we do not want to start a project before we have a guest. But these ongoing projects that are under construction or we have construction rights are actively out on the market, with a total of about 50,000 square meters. Some of the larger logistics projects here, for example, in Almnes, 523 in the upper table, where we have a building block of 70,000 square meters, if we find a guest, we can actually start building within a short time, we have actually seen a contract with a builder also on site. If we find a guest, we can start within a very short time. And these ongoing projects have a drift network potential of about 70 million, in the process of completion and completion. But a relevant part of them is already being developed, and the construction is ongoing. And actually the same information, here are some pictures of the ongoing projects. And it is easy industry and logistics, of very good quality in very good conditions. I usually show this one as a little, to really understand what it is we do. This is an area in Almnes, a case study, an area in Almnes outside Södertälje, which we bought from PIAB a few years ago, where the engineering troops were guest guests earlier. When I joined, the vacancy was high, at 35 percent, the operating temperature in the area was low, 27,500 square meters of accessible surface, and very low rents. Here we are now driving a development where we have already built and rented out about 18,000 square meters. And fully exploited, where we increase the operating temperature, we can go from 27,500 square meters to 8,000 square meters, from a low rate of rent to a high rate of rent, with at least twice the rent. So here we can increase the operating temperature by seven times. And this is something that we do not just think that we should do, that we have built 12,000 square meters of logistics and speculation, which is fully exploited. We have built two light industry bodies of about 2,500 square meters, a little low. Fully exploited, and built on speculation. So we have completed about 18,000 square meters of logistics and light industry, which is fully exploited, and we have now started another building of 2,000, 2,000 to 3,000 square meters. So this is something that we simply do here and now, and this takes on incredibly good potential. A little about sustainability, we have a continued good progress in energy saving and energy intensity per square meter, and hydroxide release per square meter. We have also increased the amount of renewable energy sources in our total energy consumption. I think we'll jump over that and talk a little about what we do on the project side. We work in many ways with sustainability. Partly we work with solar cells, but we also work with reuse. In the project that I mentioned earlier in the purchase of the rental homes in Advania, in the project that we are completing now in Q4, we are reusing a lot of building material from our own property, where we do rental housing adjustments and we use a lot of steel mats and other things in this new project. We work with wood, both the projects that we started in Alvnäs, but also in Upplandsbrod, we build with wood, to take an example. We work with mountain heating and have an energy consumption that is about 80% under the housing industry building rules, which is a very strong number. A little bit about the future. We have communicated in the last quarter that we have the intention to increase the growth rate in the company. It was partly a consequence of the solution of the COOP holiday, which COOP left us at our biggest property in late September, and the fortification agency moved in. When we have solved it, in the course of building a project pipeline and have managed to refinance and secure a good capital cost and good liquidity, we have increased the growth rate of the company during Q3. We will continue to maintain a high growth rate. It is about continuing on the paved road and doing the kind of business we have done in Q3, that is, we buy single assets on the sales side, or small portfolios in off-market transactions, preferably in Stockholm and the other Mälardalen. We have, during the last few years, had a hard time growing in Stockholm's city, which we would like to do, but then we are a little too small on our new markets, so we would like to prioritize our new markets to achieve a critical mass there. Before we leave the sales side, we see, if we look at the sales that we have done on a direct sale of .1% in relation to financial costs, which are now beginning to decrease with an incredibly good access to capital, I have not in many years, in any way, seen such good opportunities to make good sales. So we will continue to do that. We think that we see a little light on from our tenants with increased demand. We had, as I said, a nice positive net payment during Q3. And many projects in Bygglov, where we have Bygglov, and if not, we have at least concrete ideas, so we would like to build more and develop our building portfolio to complete management facilities. So we will do that with full capacity. Then we also see within our management activities, we have a underlying rent growth in our estate, since it is properties in Stockholm and Mälardalen with a positive rent growth and we will be a little more offensive on negotiations from above, because we see that there is a rent potential long-term that we must take into account. So that's really what I have to say about the company's future direction. And in general, I will not say so much more until I get to thank you

so much. Thank you so much for the presentation. As I said, we will continue to Q&A. So if you call in and we ask a question, press star 9 to raise your hand and star 6 to activate your sound when you get the word. It is also good to send in questions in the form of this to the right. And the first question is the phone number that ends at 763. Please, you have the

word. Hello, David Flemmingkjart from Nord-E.

Hi.

How

are you? Good. I was going to start where you end a little on the future. You talked about that you want to continue on the road of investments. I was just going to ask about the balance you have as a risk- limiting goal that the long-term solidity should be above 35. Now we are at 35 per Q3. Should we see that as a inherent factor for short-term investments and that you have to consolidate a little in the near future? Or can you think of taking down the solidity a little in the short term to promote investments?

That is a goal as you say. We can go under that temporarily. We can also note that we have now increased the value of our properties. So of course you see such a development that the world of plastic is written up a little, so the solidity will be stronger. Basically we see uniquely good expansion opportunities. So when the capital structure or balance calculation is not inherent, there is good capital both in one way and the other. If we find good investment and expansion opportunities, we simply get the capital. Even if we should of course be able to temporarily go under the solidity, but in that case not necessarily under. But we will not go down to expansion opportunities or expansion strength. It should simply be high.

Yes, great. On that topic, precisely the yield of the world of plastic, I think that we see a lot of companies in the Swedish market and perhaps not least in the region of Stockholm that are on the buying side. You mentioned that you have had a hard time and maybe counting the home stores but with so many on the buying side I think that you are usually in yield conclusion. Is that something you have started to see in the market or do you think you can come forward to contribute to the higher world of plastic in your position so that you buy in the other geographies instead?

I don't know if I misunderstood you if you said it wrong. We have historically definitely been very competitive in Stockholm cities and the closest to Stockholm. Then we have not been so bad I would say in recent times. But generally I would say that it is very easy to count home with good business. And of course that has to do with the financing costs have gone down strongly since continuously during the high time but maybe above all the base interest, the five-year gap, for example, has fallen quite strongly over the summer and we have not come forward even if it has gone up a bit since then. we have not so the calculations look fantastic. We have not really seen an increased competition yet. At least not in any relevant range. But of course the market is liquidity-driven. Of course with access to capital there are several associated possibilities and if you are not cheap capital there are several who put their position to start buying. So it would be strange if not during a reasonable time the competition increases. It is reasonable. But we do not really see it yet.

Thank you. Then I would like to jump over to project opportunities. I interpret you as relatively optimistic about the demand situation, not least given the net release in the existing stock of 7.4 million in Q3. How do discussions with potential guest hosts looking at project opportunities look like? Have you seen that demand has increased there or number of requests? Or how does it look?

Yes, but I think so. And the fact is that if we have in the last six quarters if they include Q4 as we are now we have finished 37,300 square meters and a lot of what we have done we have done on speculation and then we still have a high of almost 80 percent of the output. We can say that those two we finished a third logistics facility. It was pre-lapped with the first two at 6,000 square meters in Brunna and 12,000 square meters in Alnes. When they started speculation, it was completely clear. Even the industrial properties that we built in Alnes are also completely clear. Then we have a vacation. The only thing we have not rented out yet is what is in Uppsala, Libro, Bäck and then we have about two thirds of vacations in what we built in Västerås Christmas tree. But in general, if we have finished, if we now finish at six quarters, 37,300 square meters with such a high output level, I think in general it has been a good question in my opinion. It is 89 percent of the output level that we have done. I think in general it has been a good follow-up to the project in a market position that has been everything else efficient with low co-inventory and quite large financial uncertainty. So my point of view is that it will get better and we also feel that the demand is starting to increase. That is why we dare to stand up and say that during a longer period, during normal conditions and normal circumstances, we see a project volume of 25,000 to 50,000 per square meter. Can we finish 37,300 square meters in six quarters during very tough conditions? Then it is a reasonable number. But I am optimistic there, that is the signal I want to

send. Great. Then the other side of the coin, given how large the building portfolio is, it would take between 10 and 20 years to work through the whole building portfolio you have. Is the portfolio so strategically important that it is not worth selling parts of the building to another party? How do you see it? Do you want to continue to be in control of the whole building portfolio over time or can you think about selling parts of it to allocate the capital in the supply that is being disposed of now? Yes,

that is something that we could think of. Do we get a good return on the sale of parts of the building portfolio? Then it would probably be economically smart to invest directly in the yielding properties. Even if the calculation is worse than buying properties on the market, then of course the shortest stretch from an investment to a disposing of it is to make it a yielding property. There are a few things that complicate the whole thing. There is a point in having control over certain large markets, for example at Odo Green Hub where we have about 400,000 of these 640,000 square meters. Then it is also that it can be very well ... so far we have built the largest in 18,000, 12,000 square meters. It is quite small, even if it is a small investment for logistics. We have a building contract and a -to-sale construction agreement on 17,000 square meters in Alnes in Södertälje. It is possible to think that we make a much larger construction on 40,000 or 80,000 square meters as one sector.

When

we talk about 50,000 to 50,000 square meters, then it is about the kind of business we have done. But it can also come ... Forget that we rented out 130,000 square meters about a year ago. It is possible to do that kind of business as

well. Yes, also top. Clearly. The last question, a little more detail question on the financial network in Q3. Does it include some extraordinary costs related to obligations, emissions and the like under Q3? I only react that the financial network was up 8 million sequentially and the swapp fall was September 18, if I remember correctly, so it should not affect Q3 in any greater extent.

When we were with double obligations we did not manage to buy back the old obligations that were refinanced. Then we have a solution cost of almost 2 million which is also related to the financial network per Q3.

Yes, well, top. Very good. That was my questions. Thank you

very much. Thank you very much for the questions there. Then we go on to some questions sent in that we have received. Which growth opportunities do you see in the future and is

it a good time to start? Yes, I would like to answer that already, but I think that in the near future it is probably more in demand. In relation to that, it is a time of life, project development, then we would find large guest houses now that want to make a bigger that wants us to build with a larger number, so it is usually a time for completion 12 to 15 months. So in the near future it is definitely in demand and I think also a little bit related to what we said earlier, the first question I got that it is incredibly good opportunities to make good demand right now and there is a risk that the competition increases quite quickly and powerfully, so it can be a window that is not wide open as long as it takes. So we see an opportunity to really take care of it and that is why it will be more growth in demand.

Thank you. You mentioned at the end of the presentation that it is a very strong financial market. Is there a big difference from last year?

Yes, there is a big difference. I think the

market will start to

grow

again. So there, we lost

some sound there. Let's see if we can get it started again there on Erik and Per Henrik.

Can you hear us now?

Now you are back. Yes, I am. Should I repeat the question or did you come out? I

heard the question. There is a big difference from last year. It was soon after last summer that the capital market went from not working to actually working. In September last year we made a significant security obligation at 525 points. Now we made a significant security obligation at a larger volume at 290 points. The one we refinanced was an old obligation that was at 390 points. So it is the most successful and cheapest security obligation that we have made. It is at 365 points. So 290 points for us is a large number, between 800 and 1 million. That is an incredibly strong number. So that is game changing I would say. We have seen maybe the amplitude of the changes in the banking markets is not as big but not less. Even the banking markets have become much better with lower margins and more access to capital.

Thank you. And finally, the last question. Will you be able to keep the same pace in the project development in the future?

Yes, we will. The ambition is to keep a higher pace. As I mentioned earlier 25 to 25 thousand square meters per year over a longer period without having to be given normal financial conditions. But the ambition is to keep a higher pace. Then, as I said, there is the possibility to do some very large projects so there can also be a lot of slag in that number. But a higher pace has been of course during the last years. If you remember where it is going, we look back on six quarters back, as I mentioned earlier. So the project starts are from the beginning of the year or ten quarters back. The projects, many of them that are completed in the beginning of these six quarters period, we have started them during the ongoing pandemic and then there has been financial worries and poor conditions. Nevertheless, we have managed to complete 37,300 square meters over six quarters. We see that all of these are going to be the same, the possibilities will be significantly better and then we will be able to keep up the

pace. Thank you very much to Stendörren and to everyone who has presented today. Thank you very much to everyone who has watched and sent in questions. We wish you a happy week.

Thank you very much.