Stendörren Fastigheter AB (publ)

Hello and welcome to today's show with Stendörn Fastigheter. We have with us the CEO, Erik Ranje, and the economy director, Per-Henrik Karlsson. If you call in and we ask questions, it's good to press star 9, press up with your hand and then star 6 to turn on your sound when you are asked the question. It's also good to write in written questions, so we take up everything during the Q&A. And Mere Saxe leaves the floor to you. Thank

you very much. Before we start the report period and the whole year 2024, I would like to give a short overview of what we are for companies and what makes Stendörn interesting from an investment perspective. We are a stock-owned company, operating in the logistics, logistics and electricity industry. We have properties of more than 14 billion and a loan rate of about 50%. We are in a high- rate segment with long deals. We have the potential, among other things, that we have an extensive building portfolio that we exploit in large numbers in relation to our existing, Then our properties are almost exclusively located in the growth region of Stockholm and Mälardalen. We even have a third of our existence, almost a little less, in Stockholm. We have been around for about 10 years. Since the company started, the growth has been very competitive. Since I joined the company about five years ago, we have been able to continue the business- business growth journey, broadening our geographical scope to have more growth markets to work on. But above all, we have started to develop our extensive building portfolio. We have completed the last four quarters, so during 2024, about 18,000 square meters and have about 40,000 square meters in ongoing projects. With a potential on the drift network of about 55 million of what we have in the ongoing. What makes Stendörn interesting from an investment perspective. At the bottom of the pyramid, we are a company with a very strong cash flow. We are in a high-emission supply chain, .4% direct delivery, long term contracts, recurring run-time well over four years and a very diversified rental guest list. It is even difficult that the only large rental guest we have is the fortification company, namely the Swedish state, which represents 8% of the rental flow. The next largest rental guest represents 2% of the rental flow and the third largest 1% of the rental flow. So strong cash flow with long transparent contracts with a very diversified rental guest list. It is also the case that the rental guests come from beyond that. We have the Swedish state as a rental guest, we also have a number of municipal rental guests, we have a workshop, for example, industry services such as Tellur AB, we have a life science company in Baktegård, we have international companies such as Unilever, so very granular and diversified total 800 rental guests. But beyond that, the transparency and the strong cash flow, we also have a growth company. We have almost all our stock in Mälardalen, which is the region in Sweden and perhaps even in the Nordic region, with the strongest growth both population-wise and economically. And of course, this affects our rental development. Then there is a special dynamic in this approach to urban conditions. Sometimes it is converted away from the workplaces in the most urban areas, for example, housing. I usually use the Lugnets industrial area, which once became a resort city. This means that the supply is not growing, maybe even shrinking, while the demand increases, and it is long-term growth in our stock. Then we develop some logistics and have some storage space in our existing stock, and there we have e-commerce as a growth generator. On the third point, we have a building portfolio that is extensive at 640,000 square meters, in comparison to what is today an affordable space at about 860,000 square meters. This means that we can grow our stock by about 75% within the existing stock, with a very nice growth potential and a very nice demand. Then we have a stable capital source. We work with the Nordic banks, which are the bulk of our financing, and as a complement we use from time to time, and in a varied range, we have a capital market-based financing, and the capital market-based financing is a small capital source from time to time, so having the stable Nordic banks as the main capital sources is positive. If we go a little more into the report period, both Q4 and the whole year 2024, I have let Fräsja put it in a broader context. We have had a very nice drift network and development over the past few years. We have increased our drift network by about 13% per year, the last five years. We have succeeded without paying with our own stocks or taking in money from the stock market, apart from the fact that we actually did a new investment here in October, but that does not explain the nice growth of the last few years. The growth has come through higher-level re-examination, through a lower vacation. We see the graph further down, we have increased the rate of exposure over time, we have increased the rate of surplus very strongly from -60-79%, so it is a work with the top line within the administration, but also on the cost side. We have, for example, lowered the cost of energy per square metre by about a third. We have grown the company with unchanged number of employees, despite the fact that we have insourced a part of the administration, because a part of our existence was outsourced a few years ago. So these are operational improvements within the administration. We have also completed a number of projects. I mentioned what we have completed in the last, in 2024, with Blicka Vänner, a little further back, we have completed about 37,300 square metres of new construction, up to 95%, which has naturally added to our growth. We have acquired a part as well. So that explains the recent, I think, strong development of 13% of the energy grid and increase per year, despite both the pandemic and the subsequent financial turbulence. But if we go to the report period, we have increased the energy grid by 11% in Q4 and 7% in the whole year. A strong and good figure that we are proud of. We have been able to achieve this by accelerating the growth from, one might say, the second half of the year, or from the middle of 2024. We saw nice sales opportunities, we experienced that the housing prices dropped. We also saw very good financing opportunities and felt that it was in a position to expand again through sales, despite a period without sales, and we have not felt that the market has really been profitable. So we have acquired about 1.2 billion since the middle of 2024, to a direct drop of 7%. And if we add on some completed projects, we have expanded to about 1.45 billion total in investments, both for acquisition and projects, to a drop of 7.2%. Which is a very attractive figure, I think. We also have a little more outlook, where we have started a third project during the year, which means that we have 41,000 square meters in ongoing projects with a drift net potential of about 57 million. The surplus rate continued strong at 79%, coming from a much lower level historically at 66%. We have also had a good lead in our expansion activity. We have also re-executed some projects, which means that 6% higher rents are being paid for the agreements that we have re-executed. The vacancies have been reasonably strong, or rather stable, even though they have increased a few percent in recent years. But given the light of what we are, 7% vacancy feels like a completely okay figure. And especially in the whole year 2024, we have had a pretty strong positive net profit of 29 million, and especially in Q4, a net profit of 24 million, which is actually the strongest net profit figure we have ever had in the company, which is very pleasing. And gives a certain feeling that we may see a cognitive improvement here. If we look at some financial key figures, we can see that during the last few years of financial turbulence and pandemic, we have kept our financial goals, which we are proud of. We have succeeded, among other things, thanks to the fact that we have been very much insured for what it was three and a half years ago. We have about 60% of our debt-bearing debts continued to be paid, with a steady and responsible .6% over the long term. We can also see that we have seen the possibility of making good purchases again, the financial market has really come back. We made a senior and secured obligation, in September 2024, at 800 million on a margin of 290 points, which is the largest obligation we have made in the finance law to the lowest margin we have ever made. So the financial market has really come back. We can say that the corresponding development has been seen on the banking market, where the banks have been very willing to give us good conditions with growth capital. But then we made a directed emission here in October to finance future growth, which also took advantage of the market. We managed to expand our business base with some very nice new institutional names. Here are some examples of our purchases. We have, at the beginning, in the middle of 2024, made a total of seven purchases, 11 properties, for 1.2 billion, to a 7% deduction. And given the financing costs, it is a very good deduction that we have received on these business. And that is partly in Sweden, of course, but we have also acquired in our new markets, which we are keen to prioritize to build a critical mass in both Oslo, Helsingfors and Copenhagen. If we look at our completed projects, it is 17,700 square meters, reasonably evenly distributed between logistics and the lighting industry. If we look at the number of deductions that I think is most relevant, namely the driftnet and divided by capex, that is, money out, then it is .3% deduction, which is incredibly attractive. As I said earlier, if we add up to another few historical quarters, and look at the last six quarters, then we are actually up to 37,700 square meters, finished to 95% deduction. I also think this is remarkable. We have a construction portfolio that is valued at about 1.5 billion. I can say that when you discuss the stone door investor, it is a bit too low in value. It has strategic value, because we own properties or buildings in very urban areas, where there is generally a shortage of land. We have very low competition, you could say, in offering nice projects to new and existing tenants in these areas. So that's a strategic question. But then in terms of value, if we add the project profit, or allocate it to the building value itself, and evaluate the building rights, including the entire project profit, then we see that the building rights are actually worth double what we have in our books. 2.1 is down there in the upper corner. It's just a financial way to reduce the potential in the building portfolio. And the building rights we have in Mälardalen. This is an overview of our upcoming projects. It is in Mälardalslägen. It is an internal, so to speak, existing plan, so it is rare for us to operate a plan. It is in both logistics and the light industry, in total 640,000 square meters. These are things that we are marketed for all the time, to build health on a pre-light basis, to build for an existing, or we start building for an existing customer. Selectively, we also start with speculation, but then it is light industry. And overview of our upcoming projects. About 40,000 square meters, with a drift net potential of 57 million. About half of them are, in the number, an upcoming project, and for all of them we have building permits. Of those that we have not yet started building. Some examples of projects that are ongoing, but it is mainly light industry properties, in a rather -go-side position, in general. One of them, which we are building at 3,700 square meters, is in Bromma. Light industry for an existing guest. To further clarify a little bit what we do in our projects, project development. This is an area that is located in the outskirts of Södertälje, which is called Alvnäs. This is a property that we bought from PIAB a few years ago, 2015. When I started the company, Q4 2019, I actually started in January 2020, but just before that, this whole area had an accessible surface, 27,500 square meters, with very high vacancy, there were properties and houses in very poor condition, with very low rents. This is one of the areas that we are developing, where we have completed almost 20,000 square meters per day. Fully out, this will be, and fully built, of a potential of about 80,000 square meters. Since it is fully out, and the rents are more than double as high, we will be able to increase the drift net on this market, with seven times, compared to the end of 2019. This is a potential where we have come a good way. We have built and completed almost 20,000 square meters, which is fully out, with a rent that is well over double what it was when we started in the area. This is something we have come a good way to deliver. Some words about sustainability. Unfortunately, we have not updated the 2024 figures here, but if we look at the last five, six years, we have reduced carbon dioxide emissions by about a third, and energy consumption per square meter by about a third. We have done a very good job in sustainability, I think. Sustainability is not just energy and carbon dioxide emissions, but we have much broader and higher-level ambitions for sustainability. I will not go through all of this now. This is our sustainable energy strategy, which we have launched, or updated, in April 2024. But if we want to clarify a little bit what we are working on, especially on the project side, we are working with solar cells, biodiversity. We often have fur heat. We work with tree trunks, as an example. And we have generally very good energy performance, where we are about 80% below the construction rules of the housing industry. If we look a little forward, we have mainly business in three areas in the company, and that is the acquisition, and this is our growth sources, which we are talking about now, and the acquisition. We have an acquisition model where we acquire single assets, i.e. a solid piece of the market, i.e. not competitive transactions. And that means that we can often acquire about 100 points, or 50 points higher emissions, and have done so in the last five years, apart from that we have paused the acquisition during a period when we did not really see the market potential. But we will continue with that acquisition model, i.e. single piece of the market, rather than a portfolio with premium in competitive transactions. We would like to spend in Stockholm, it was sometimes always for competition, in the best conditions in Stockholm, and when the competition is not very high, we want to prioritize that, but we also want to prioritize the critical mass of our new markets, Oslo, Köpenhamn, Helsingfors. In project development, it is about taking into account the potential of the 640,000 square meters of building rights, and that is everything from the Brownfield and Greenfield projects, and we would like to pre-let, if there is a little more logistics, and selectively on speculation in the best conditions where there is low market vacancy, and where we have low vacancy in our stock, and where there is not any concentrations of large volumes in our projects. We have about 41,000 square meters of ongoing project with drift network potential of 55 million, which is a relevant increase during the next year or so. In management, historically we have managed to renegotiate a relevant part of our stock to 25% higher rents during the renegotiation. There has been a little weaker development there in the last few years, and that has been a result of both high inflation, energy costs, rent costs and the conjecture that has burdened our tenants, but that is one of the main potentials in the stone door to be the rent potential in the stock, so we focus on maximizing rents during the renegotiation. So that is the way forward, a little forward-looking. With that said, I think I was done there, so please ask questions.

Thank you for the presentation, and now we open up for a question time here. If you call in and wish to ask questions, you press star 9, press up and then star 6 to turn on your sound. It is also good to write in written questions. We have David Flemming from Nordea, please, you have the floor.

Thank you very much, can you hear me? We can hear you. Great, great. I was going to start with a question, maybe not the funniest line item in the results calculation, but regarding tax. The current tax in Q4 was high and went up to almost 17% of the management result. I know that it may not be possible to evaluate a single quarter, but is there anything special that affects Q4?

A big explanation is that we have a re-earning tax on the sales of the stock of VARVET 1 during the year, which goes up to about 24 million of the 53 that we have in the result calculation per Q4.

Yes, great. If you look forward to 2025 and clean up for this re-earning tax, is there any reason to believe that the current tax will differ significantly from 2024?

No, it is so that during 2024 we did not have much undercut left to use during 2024. So that they are gone. Then we had, which may have made the tax a little higher in 2024 compared to what you might expect in the future, is that we had to redo some tax-based decrees, which we have done a little bit of with earlier years. But I would say that it is a fairly normal level that we have for 2024 forward.

Then it can be added that this re-earning tax is a consequence of the sales of the stock to the Swedish State Traffic Service, which makes the property transactions and not the stock transactions. It is unusual that we pay the re-earning tax on the property sales. Moreover, it sells very late properties.

In the positive scale, have you been charged anything with the -and-draft restrictions in 2024 that you might think that you will not be charged in the future?

I do not have a completely valid question, but we have a negative tax net during 2024. So we can not use the tax cuts on all tax expenses. And that can of course be sent to 2025. Great,

thank you for that. Then I thought I would ask about the net tax revenue. You talked a lot about the extremely strong figure here in Q4. Is there any specific market share in your portfolio where you see extra high demand or some kind of local? Or is it broad over the portfolio?

It is quite broad. I know that I have said in previous presentations that the number of vacancies has increased a bit and the net tax revenue has been worse. We have had some vacancies that have risen, which is sad, but on the other hand the numbers have been relatively good. And that is part of the numbers that we have paid out now. The advantage of having more vacancies is that you have more to offer the market. Then it is easier to have a good number of emissions. But you see in our tax revenues that we have sent during Q4 and Q1 that it is about 4-5, or about 4 quite large in the central Mälardal situation. But also in Enköping at the beginning of the year. So it is quite broad. And then it is only one quarter, but not less than the whole year, then it is also a nice number. If we take away Q4, then it was plus 4 in the net tax revenue for the first three quarters. So we feel that there is a demand there. And I would also like to add that if we look at what we have completed in the project the last six quarters, that is, 7300 square meters, which is an output of 95%, there is a reasonably good demand out there. I think that is an important message to take with you.

And then if we just translate this net tax revenue into the amount of more than one quarter, as you mentioned, you have announced a number of bigger exports here under Q4 with, if I remember correctly, influx under Q2 something. Explain that movement in the export rate sequentially which was down by one percent, that it is an outflow from the assets that you have now announced that you have signed a new agreement on, but that has not yet been moved in.

The expiration date is normally nine months, but it can be both shorter and longer. So there is a time lag from the vacancy to the time that the agreement is signed. In terms of influx, it can be a little more varied. A rental property can move in at a very short time if the current location is in the right order, but it can also be quite a long time depending on which rental property adjustments are made. But basically, you are correct.

Toppen, then the value changes in Q4 were positive. I get it to be 75 million of it was harmful to the revaluation of buildings. Is it harmful to commercial buildings or rental buildings? Commercial. We have seen some transactions, it was certainly not in Q4, but in Q1. Arlanda Stad sold some building to data centers and some to logistics at well over 5000 per square square. It is nothing that has taken any more consideration in your valuation.

No, it has not done.

Good. Then just on the rental properties that you have and have had a take in the balance calculation now, a third of the building value, how do you see them over time?

We see that there is an interest in rental properties again and there have been some transactions and we have actually had some questions about them. But we do not feel that the market is really there and strong yet. Is it not a decision-making board that is finalized, then it is something that we ourselves should develop. But I would say that when that market comes back, then we will take a new look at it and what the board will come to finalize. It may be another decision that they will be sold, but it is something we can look forward to when the market is back for real.

Good. Then as far as investments go, you have increased the pace markedly here during the second half of 2024 and you talk about your three growth legs here ahead. I think that you in the CEO word may be a little more positive about opportunities to start projects in 2025 based on the strong demand. How do you see further investments here in the future? What should we think about volumes, how should we look at leverage? What do you think?

The dynamics in that question is that we have said that we would like to build -50,000 square meters over time and depending on the market, but we want to keep a high growth rate in development. The calculations are very nice. If we take yield on capex, which you spend, then it is well above the average on what we have done in recent times. We want to grow as much as possible and we see that there is a demand. In the case of demand, it is a little more the market that has to decide what is available. We are in many dialogues, we have a nice pipeline. I hope that the demand window that we see is open for a long time, even if it is a little optimistic, but it is very attractive to do. The access to capital is there, the capital financing costs are relatively low, despite the relation to the demand. We want to keep a high rate of growth before the competition at some point will be needed, or increased, at least. We want to keep a high growth rate, that is the answer. Then, as far as capital financing is concerned, we have almost a billion equal resources in Q4. We have the capital to grow quite a lot, and we want to do that. Then we have two effects that go a little bit. On the capital structure side, even if the rent has fallen, we have a rent derivative that runs out. We have a That is exactly what we expect, which makes the base rent increase a little for us. Exactly what the balance point is when we need to get more capital in one way or another, we will see.

Right, but you should not see it as that the balance here and now is a limiting factor. You have a solidity goal that stipulates that you should have at least 35%, but it is quite free-priced, where it should never go below 20%. Could you think that it is a coincidence to go below 35% on solidity?

Yes, that is what we could do, but if we think that we have the liquid funds, we put some debt on that in expansion, then we have cash flows that can also be borrowed in projects and through the handling of rents. So capital is not a limiting factor for expansion during a time of excess.

Very good, I will let in someone else and thank you for answering my questions.

Then we go on to Emil Ekom from Pareto. Here you go, you have the floor.

Hello, thank you very much. A little follow-up question on the latest question. Would you say that it is as good a possibility to acquire now as it was half a year ago?

Yes, I think we do. It is possible that the competition has increased a little, but yes, it is a very good possibility to acquire, and we have a nice competition, so yes, I will answer that.

Thank you, and you also reported an average of 1291 kronor per square. Should one think that it includes the index that occurs during the year shift, or should one put on the index to get the number per 1 January 2025?

Yes, you have to think about that. The index is different from the index, and it is more powerful when we go over the year shift, so should one put it on?

Then I thought that the financial costs have increased a bit between the quarter, is it because you solve the obligation and get some kind of redemption fee? You have a higher debt, but in my work I can't see that, because it leads to a strong action, is there anything else that is behind it?

Yes, if we compare Q3 to Q4, as it is written, we have solved an obligation that gave a redemption fee of about 7 million, we have also solved the financial costs, which actually led to in August we solved the debt, which we paid this year, about 1 million. Then we also have that under Q3 we had a very nice pension swap, 800 million with a zero pension, which gave about 7 million in positive effect in Q3, which we did not have at all in Q4. And then there is also another pension cut, which also gave about 1 million in positive effect in Q3, which eventually ran out of Q3, which then made that we did not have that effect at all in Q4.

He is very clear, thank you very much. Something about the yield, it is flat at 1.3%, but can you say something about the additional decimals, in what direction it is shaking?

I don't have the decimals on that, unfortunately.

Can you say something about the year, on the value front?

It is not some kind of spot market that you can look at in that way, but if you just look at the capital flows in the real estate sector, and the transaction volumes increased and lower capital costs, then our starting point is that the demand for the decimals will decrease, and the prices will increase, and that is why we also think it is a good opportunity to buy. So that is the direction in my opinion.

Thank you. And then the last question, I thought a little about, can you say something about how the bank margins are moving during the next quarter? Have there been any differences between your conversations with the banks?

We have not really been in any sharp discussion with the banks for a while, so it is difficult to say, but it is undeniably the case that we have been more vigilant in a way that we have not been in the last five years, I would say, since I started at Stendörren, so there is no doubt that there is an incredible appetite for loan from the bank side. So if we were to go into a harsh discussion, we would undoubtedly get the margins down a little.

That's all from me, thank you very

much. Then we go into the written questions here, and we start with the first one, which sounds like this. The average interest is down 10 points to 4.2 percent, while the implicit interest is, according to the bank, how should one think about the future?

The insight is the latest, per January 1st. That is the one I would leave out, since there is a part of the one-off that we have talked about in terms of Q4. Then it is like that, the stimulus is also moving, so a part of our debts is unhurried, so I would probably look at the implicit interest as the best estimate.

Thank you for that. And what does the difference in the financial network explain to the implicit interest of 98 million crowns versus the implicit interest per Q3 of 78 million crowns and 83 million per Q4? How should one think about the future?

If you look at the Q4, we said 98 million. Our implicit interest is mechanical, and if we look at the one that we have published recently, we have 83 million if you divide it by 4. The big effects of that is that we had now in the fallout solved the obligation as I said, a total of 7 million. We have then also solved both that obligation and other finances that have risen to about 2 million. Then with the mechanics of the implicit interest we calculate the net debt so if we break out the cash and take that time in average interest, it gives about 2.5 million in interest on that quarter. And then it is so that we have the most loans interest fixing day at the end of each quarter which means that under Q4 we have a higher interest than what we then have in the income per year. The difference is that we have a higher interest in the income per year than we had in Q4.

We have now a little more interest in the

income per year than we had

So we have now a little more interest in the income per year than we had in Q4. Absolutely,

exactly. So we have about 24 million of these 53 that are attributed to the property sales of the VARV 1. If we exclude that effect, we see that it is a pretty reasonable way forward. We have a little as you mentioned before, a lot of return on tax is written off by 2024 so that can vary from year to year. But if you look at the rent cost again, then, for the property sales against the result of the tax, then I would say that it should not be higher than 2025.

Thank you, we move on to the next question here. Revenue at 6% for 2024. How do you see the outlook for 2025?

6% is a little weak number. I have believed that the potential despite inflation, interest and the economy would be a little higher than that. And 6% is at a pretty low base and a fairly low amount that is reimbursed. And since we do not really have a clear economy turn, I would say that it will continue to be weak on rent increases. Then the economy is one thing, but I also have to remember that the rents have come down very strongly for rents and inflation as well, so that somewhere rents are starting to be able to absorb higher rents within a reasonable time. But it is clear that I have thought that the potential would have gone a little stronger, and I will simply learn from that and we will have to wait and see. It may be that the potential is a little more. But it is my absolute firm conviction that the underlying potential given our types of properties and conditions, makes that somewhere we should get back to the -25% of the relevant part of the stock in the potential for reimbursing at contract costs. But we are clearly not there yet.

If we look at the net rents of 24.5 million kronor in Q4, how much is driven by the project?

The absolute largest part is not project, but I do not remember if we have done some specific project extensions in Q4. Yes, we have done something, but above all it is for our management properties.

Thank you. And then we take a final question here before we round off the broadcast. If we look at the heating pipeline, what can you say about volume, price but also geography?

We think we can do use at the level we have done. Maybe a little lower emission, because I think it has been a fantastic emission that we have done. I suggest that it can be a little lower emission, but we have a nice use pipeline. Volume, we will see, the market and negotiations will show, but we want to keep a high demand rate, there is no doubt about that. Then, what about geography? We want to prioritize and build a critical mass of our new markets. Now we are starting to get there in Copenhagen, I think we have 12 properties there for about 600 million, or maybe even a little more, but about 10% of our population is in the other Nordic capitals. But we want to prioritize new markets both in Oslo, Copenhagen, Helsingfors and the Gothenburg region. Then, if we look back during the last five years, there has been so much high competition in the most urban areas in Stockholm, so I want to grow there too, but maybe not in the more periferous parts of Mänandalen, it is not our favorite right now to grow there.

Good, then I thank you, Erik and Per-Henrik for today's presentation and also for answering all our questions. I would like to thank everyone who has followed today's show with Stendörren. I wish you a nice day, thank you very much. Thank you very much.