Wallenstam AB (publ)

Welcome to the presentation of the first half year of 2024. My name is Susanne Linde, CFO and Head of Investor Relations here at Wallenstam. I start with some events during this second quarter. We acquired land in April in Elta. from Nacka municipality for a price of 136 million and 50 million more in April, 2026. And this is in our urban development project here in Elta. We have also sold three ready to use building rights in Umami Park, Sundbyberg for an agreed price of 147 million. It was vacated at the end of May. And you can see here on the picture Östermalmssallen. We received more awards from this reuse project in Munnlycke. In 2022, we took down the temporary market hall on Östermalmstorg in Stockholm and erected it as a pedal hall in Munnlycke, which you can see here on the picture. With competition entries from 80 countries, it is now clear that our fantastic reuse project is a winner in two categories in the Architizer A-plus awards. It's both for sustainable adaptive reuse or renovation and also gyms and recreation centers. So we are very proud of this reuse project.

So if you visit Munlike, go there and play some paddle.

So what is Wallenstam today? A summary of the company and it's almost the same as last quarter. But you who are new listeners, I can go through it. We have properties in both Stockholm and Gothenburg region. Residentials have a volume of 51% of the rental value and we have our residentials in both regions. The commercial part is mainly in Gothenburg and CBD of Gothenburg. We have a good demand for our product with an occupancy rate of total 96%. We are self-sufficient and also a net producer of renewable energy by our 53 wind turbines. And we have also 12,000 solar panels, which produce the same as two wind turbines, or it has an effect as two wind turbines. And when I talk about energy, I can summarize our work with sustainability this quarter. First, I will tell you about our status regarding the implementation of CSRD. We are not legally forced to report this until financial year 2025. We have completed the dual materiality and the board and group management has adopted it. And it shows what sustainability risks and possibilities we think affect most. both regarding people and environment and also financial. One thing that we can see that we think is important and a risk is security. In this new environment with a lot of bad things happening makes people feeling unsafe. We think and hope that we can help to make that better and make our areas a safer zone to live and have your business in. So because of that, we arranged meetings with tenants in two residential areas to increase collaboration and security. We were some employees from us, from instance, our security department, which we have in our company, but also the police. It was two events which were very appreciated by the tenants. So hopefully we can do the same in other areas. We have also joined the recycling hub in Gothenburg, Rebygg. It's a recycling hub for the construction industry with a focus on the reuse of building materials for local adaptions to minimize the amount of waste and promote sustainable constructions. We have also planted some new trees and plants in Umami Park in Sundbyberg, which you can see here on the picture, to help biological diversity. But it's not just this that I talked about on this page that we work with. We are also doing a lot of sustainable activities in our property holding, like decrease energy consumption and so on. So let us go forward and talk about the result for this half year. If we start with the net operating income, it has increased by 14%. It's up to 1.1 billion. We recognize a surplus ratio of 76.2%, and that is now on the same level as before the energy crisis.

But as always, I will go through what happened on next slide.

And if we go into more detail, the rental income has increased by 118 million. It's 9% up compared last year for the same period. And two thirds of the increase, 77 million, comes from the completed new construction. Both the 250 apartments, which we completed this half year, but also the one which were completed the second half of last year. The transactions give us a minus of 8 million and in the comparable holdings it is up by 49 million. The commercial base rent has increased by almost 6% and the negotiation with the tenants association about the residential rent ended with a total growth on average for the group of 4.5%. And as I said last quarter, we made a two year deal and there will be almost the same growth next year for the residentials. And then we go down to the operating expenses, which has gone down by net 21 million. The main reason to lower operation expenses is lower electricity price. Last year, we had an electricity price of an average just about two kroner per kilowatt hour. And now we have 90 öre per kilowatt hour. The effect is 44 million lower expenses, but as you know, we are self-sufficient. So in total for the group, it's a zero sum game on the total result. But we also work hard with energy saving projects, as I said in the last picture, but the rates and charges for water and sanitation and cleaning are higher. And also the weather related expenses were higher compared last year by 4 million. So in total, the NOI grew by 139 million or by 14%. We have a stable demand for our commercials in Gothenburg, but we also tried different ways of letting. Our next page is a new concept that we have tried in one property. It's Kazan Toilet 6 in Gothenburg. It's a full service green contract offices ready for occupation. Everything is in place for the tenant at contract signing. For example, it always includes wireless connection in all rooms, meeting technology, alarm system, fire protection, and cleaning. The contract and access times are shortened and we reuse material This was completed during the second quarter, and we have just one office left to let out here in this property. Since each premises is already optimized, no major interventions and extensive renovations are required in case of possible relocations. In this way, both agreement and access times are shortened, but above all, also our CO2 footprint. And if we go further down in the income statement and administrative expenses and net financial items, we get the income from property management. It has increased by 6% and amounts to 563 million. You can see that the financial expenses are still up, but at the closing day, the average interest rate was 3.17%. which is 10 basis points lower compared last quarter. But the effect of lower interest rates are coming now after this quarter. The total profit after tax is 408 million, which is almost 600 million better than last year. The interest rate could have been higher if it wasn't for our interest rate derivatives, We use that as a hedge. We have no new interest rate derivatives during this period, which means 53% of the total loan volume have fixed interest rate, which is some lower compared last quarter because of increased volume of interest bearing liabilities. The total average fixed interest term is 35 months. And for the 12th rolling months period, we report an ICR of 2.2 times.

So let us move on to the balance sheet.

And if we start with the properties, the total value of investment properties is 64 billion. We have a volume of almost 5 billion, which are either under construction or land for future construction. which means that just above 59 billion is the value of the properties in operation and give us a cash flow. The value of 64 billion are distributed as follows. 57% are residential properties and the rest commercials. We haven't changed any direct yield requirements during this first half year, which means that we have an average direct yield requirement still at 4.6% for commercials and 3.6% in residentials. The value from the properties increased during this first half year by just over 1 billion And the net reason is the investments as you can see here on the table.

Now we look at the investments.

We have invested 1.1 billion this first half year and it is around 250 million lower compared the same period last year. And it feels very gratifying to say that we have started one big project this quarter. Orstadberg in Stockholm, close to Marievik. It's a project of total 408 apartments in total. And it's in a very city close location and close to the local traffic. The completion starts in 2026. And we will do this in different phases, of course, because it's a huge project. We haven't completed any apartments during the second quarter. So now we have 1,238 apartments under construction. Next project to start occupation is Nacka Grace. And this is a very popular property to live in. And when we released the first 23 apartments, our web went down and Bostadsförmedlingen in Stockholm received several thousands of applicants to this 23 apartments. so we can see that the demand in the right locations are still there we hear about vacancy in residential holdings but we can't see that in our areas so it is very important to construct in the right locations where people both want to live and can pay for it and hopefully we can start more projects during the year but there is a lot of things to have under control before we start For example, we do background checks on all our suppliers, both because of criminality and also to see the financial stability. You don't want a bankruptcy in the middle of a project.

So it takes time before we can start.

Our goal to reach up to 100 kronor per share in net asset value until 2030 are still there. The profit from the period affected positively, but the first dividend of 2,25 EUR per share affected negatively. So at closing day we recognize an NAV of 56,7 EUR per share. And if we look at our interest bearing liabilities, it amounts to 30 million, and the LTV and equity ratio is on the same level as last quarter. It's 30 billion of course. The LTV is 46% and the equity ratio is 45%. We have increased our interest bearing liabilities during this half year by 1 billion. The bond market has started to work again and during the quarter we have issued one new green bond of total 300 million. And we had a bond maturity of 334 million. So now we have 1 billion in total and we use this money to refinance the wind turbines. The volume of commercial papers has also increased, but so did even the bank loans and the distribution is the same as last quarter. 95% of the total financing is from banks. Yes, a summary. All our figures is going up and we think that we have an exciting future ahead of us. and also hopefully a sunny summer. So this was all for today. Thank you all for listening. And if you have any questions, please send me an email or maybe you can attend to our other live recording in Swedish, which has started right now. Or otherwise you can send me an email. Have a nice evening and also a nice summer so we can hear for the next third quarter. Thank you very much for listening.