Wihlborgs Fastigheter AB (publ)

Hello and welcome to the presentation of Vibra's Q2 report 2023. When people talk about the digital revolution, we know it's not here yet. Sorry for the delay. Financial costs continue up, but market rent rise as well. And our remedy for rising interest as always spells out strong cash flow. High activity among our tenants contributes to a quite positive picture also ahead of us. and that includes our confidence that our region continues to deliver. If life was a racetrack, we would focus on the whole shot. There will come other kinds of times after this. We have prepared and have a good position on the way into the turn, but our goal is to come out even better.

Let's go to our report and a summary Rental income up 20% operating surplus up 25% higher financing cost balance by increased earnings, positive net lending, stable balance sheets, continued access to liquid funds, And by that, we can also continue with our investment. And the result for the first half income increased by 21% to 1,935,000,000. The plus increased by 22% to £1,389,000,000. An income from property management amounted to £9,000,000. going to push that

increased to 90.41 Swedish kronor per share, plus 7% compared with one year ago adjusted for paid dividend. A comparison of the rental income between first half 22 and first half 23. Acquisition plus 94 million, currency effect plus 27 million, indexation plus 137 million, supplementary billing increased by 48 million and other increases from completed project new leases and line unmuted 32 million the canteens in denmark were outsourced from the first of march 23 and that gives lower

income but also lower cost we have signed new leases for the quarter of 77 million 154 million for the first half of the year and the positive net lasting for the quarter is 14 million a high activity rather than the opposite and we see the same signals as last quarter that customers also have done terminations, but we are quite sure that they will come back on the positive side when they have decided about their future. We see many examples of new leases in production of businesses in Helsingborg, more offices and loans, and a mix in Stockholm and Copenhagen. New tenants are, for example, in Copenhagen, the municipality of Malmö in Malmö. Together with the gaming industry and a new head office moving from the western part of Sweden. And I repeat myself from Q1. If I see any trend, it's the demand for high quality and efficiency. And no trend that clients are leaving us. for others. Last quarter, we have signed leases at New York. The records for us in Malmo, 3,600 kroner per square meter. And if we look a few years ahead, we know that we will see some changes, for example, leaving Malmö and moving to Lund.

But we have already good discussion with a possible new tenant looking for high security building in a good location. Some of our new tenants that we have signed during Q2 on this slide, as usual, a mix of different segments, governmental tenants together with lawyers, banks, the life science sector, and combination of production logistic are especially active in a positive way. Here we have the net letting in the historical perspective, letting in light green, termination in light blue, and dark blue stacks are the net lettings. now actually 33 positive quarters in a row and only one quarter with a negative number for over 14 years.

We will do everything we can to contribute like this is quite a short period. Here's a list of our 10 loudest tenants in alphabetical order. is new this year. All these are strong customers. Seven out of 10 governmental tenants. The rental income from public tenants is in total 24% and they contribute to a long-term stability in our cash flow. First of July is $4,250,000 per year. Income $3,905,000 plus 20.6%. is, of course, in taxation and acquisitions, but it's a good signal of growth. Growth, both in volume, but also quality that our tenants are willing to pay for. Looking at the important life for life. figures comparing the same properties one year ago we can see that rental value is up 10.4 percent and rental income is up 12.1 percent

So rental income, again, actually continues to beat our ambition to exceed index by at least a percentage point. A part in the strong figure for rental income like is higher occupancy plus 1.5%, also a good number. Rental value is up 10.4% and rental income is up 12.1% in like for like. So rental income again beats our ambition to exceed index by at least one percentage point. And if we look into changes in market value of properties, we started the year with 55 billion, 179 million in accordance with our external valuation.

We have acquisitions for $20 million. Invested 933 million. Changes in valuation amounts to minus 87 million. And together with currency translations of 584 million. Let's summarize to 56,629,000,000 As always, we have a dialogue. with our external advisors also for quarterly evaluation. It's important to note that the estimate of future market rents is of great importance in evaluation calculations and today there's good support for good market trends also ahead. We started to raise the valuation yield in Q2 and continued in Q3 and Q4. Our market has not been very volatile in the past and it's not currently either. Therefore, the values continue to be quite stable. The value of the portfolio has developed on this slide since 2005, without raising any new capital. And last year, also despite higher yield expectations, But as always, evaluation is a kind of calculation method with several assessment parameters.

Therefore, it's interesting to measure how well we actually perform in relation to these values. And we will see that on the slides. These figures, the running yield shows how we actually perform based on that calculated valuation. So not valuation yield. Maybe you can say that we actually perform better in our portfolio than our appraiser's expectations. For the whole portfolio, the occupancy rate is 93%, excluding project and land, and with an operating surplus of 2,975,000,000 that gives a running yield of 5.5%. This running yield was 5.1% a year ago and the same figure 5.1% nine months ago.

It bounced up a bit around year end as a factor of high indexation. But in 12-month perspective, the running yield has grown from 5.1 to 5.5. Good earnings capacity in relation to the value of the portfolio. The office portfolio is now 46. 6,832,000,000. And overall, the occupancy rate is 94%. It's 95% in Malmö, 91% in Helsingborg, 92% in Lund, in Copenhagen, improved numbers since a year ago. Improved occupancy rate is a joy, but we don't hesitate to create or buy vacancy when we think that it's the right thing to do. It's part of the growth strategy. And especially a strength when we see support for higher rents and customers' willingness to pay for quality. They're all breaking surplus from offices summarized to 2,580,000,000 and a running yield of 5.4%.

The demand for logistic and production continues to be good. Occupancy 97% in Malmö, which is a very high level. 89% in Helsingborg, 98% in Lund and 96% in Copenhagen. 92% occupancy rate as a whole with a running yield of 6.7% and a total value of 6,798,000,000. And a catalogue of our value and properties in our four cities. 40% of the value is in Malmö, 22% in Helsingborg, 16% in Lund and 22% in Copenhagen. The value in Copenhagen is also an effect from a weaker Swedish corona.

in a region continues to be strong the level of unemployment continues down and domestic immigration to a region is Day-ish employment continues to increase to record high levels since the first corona shutdown three years ago. ago, more than 250,000 new jobs have now been created in Denmark. At the same time, the weak Swedish corona means that Sweden's economy is supported by the increasing number of Danes who come to Sweden's side to shop and to rest. Sweden, the Danish economy is expected to continue to grow this year. In both Sweden and Scotland, unemployment continues to fall. even among groups that tend to be further from the labour market. In Skåne, the unemployment fell to 8.2%. percent in April and that is now the lowest number since 2009. The demand for new labor continues to be high in many industries, and we also see that passenger traffic at Castor Bearport continues to increase. in the Nordics, again after Gadlemoen, and also other infrastructure investments increased massively in Denmark.

The parties in the Danish parliament have agreed to invest around 22 billion euros in the country's infrastructure until 2035. And that is the largest Danish infrastructure plan ever and will, of course, obviously benefit our entire region. No acquisition during the quarter, but 4th of July, we acquired a property in Copenhagen on the same block as we already have properties, Klärdemålet. Fully let to a school and with a property value of 71.5 million Danish krona. And finally, time for financial. Over to you, Arvid.

Thank you very much, Ulrika.

Looking at the income statement for the second quarter, isolated, you can see that our rental income amounted to £964 million, 20%. and up versus the same quarter of the year previously. Operating surplus was 722, up 25%. And thereby, the operating surplus margin amounted to almost 75%, 74.9% in should bear in mind, however, that during the quarter, we have accounted for the state's support for electricity costs. We've also decreased rental income by 15 million. since the largest portion of such costs to the net effect of that state with the support of just 5 million, 91 million, up to a cent, despite interest costs in the quarter being three times as high as as in 2022 Excuse me. Also here you should bear in mind that included in the income from property management are a positive effect

of 20 million Swedish kronor, which is an effect for its realized gain on a sale of a part of a property in one of our joint ventures. We have change in value of properties of minus 59, and Ulrik has already touched upon the driving forces behind that. a small positive value change in our derivatives portfolio and all in all a profit for the period of 370 million in the quarter. Looking at the balance sheet on the next slide you could see that in a 12-month perspective the value of our

Our investment in properties has gone up by 4.9 billion. At the same time, equity has gone up by approximately half a billion and our loans have increased by 3.6 billion in 12 months. Taking those numbers, computing key figures, we have an equity of 50.3. Looking at the LTV, you can also note that the stronger Danish corona affects our LTV upwards. by approximately half of the percentage points, since we have basically as large loans in Danish kronor, as we have assets in Danish kronor. The interest cover ratio for the six-month period amounts to 3.2 times. EPRA NRV stands at 90 kroner and 41 euro, which is 7% of the year. were previously adjusted for the dividend of 3.1 kroner in May.

Looking at the EFRA NRV in a historical perspective, you can see on this graph on page 22, and since 2009, the annual average growth rate has been 16% adjusted for dividends. On this slide, you can see how the financial ratios have developed in a long-term perspective. We usually show this slide in a five-year perspective, but we thought this time it's actually interesting, given that the times are changing, to also look at this in a slightly longer perspective. So the graphs actually go back to end of 2011.

You can see how interest cover ratio on the left-hand side of the slide has gone down from above seven times to 3.7 on the left-hand side. rolling 12-month basis. Historically, this is not unusual levels. We've been around three times as you can see a number of years back in another industry environment than we have had over the past few years. But I think it's also worthwhile keeping in mind that if you go back to 2012, 13, 14, 15, equity assets ratio was about 30%, and it's now around 40%. And our LTV was around 60%, and it's now around 50%. So we have a stable financial position going into these changing times as we see currently. Our net debt in relation to EBITDA on a rolling 12-month basis. And as of the past quarter, The ratio has come down and now stands at 10.6 times. Looking at our financing situation... We have total debts of 28.5 billion Swedish kronor.

50% come from bilateral bank agreements with Nordic banks. 42% from the Danish mortgage loan system. And 8% from the bond market. Looking at the next slide, you can see how our maturities come over the coming few years. The loan maturities of 820 million in 2023 are on loans falling due in Q3 and Q4 respectively. And given how the bond market works currently,

We expect to repay those bonds as they mature. is now two and a half years, and the average level of maturity is six years. You can see how the average interest rate has gone up, particularly in 2023, and that is, of course, effect of Stiver and Kyber continuing upwards, about 50 basis points during the quarter, but is also causing effects of interest rates was maturing. Those swaps were at favorable rates. We've entered into new swaps Current market rates were just significantly higher. Next slide. You can see our interest rate sensitivity. And the graph on the left-hand side basically shows our average interest rate rates will momentarily move by approximately 1.1 percentage points. And the interest cover ratio

of course, comes into increasing focus in today's environment. And looking at the situation as of end Q2, if the underlying interest rate of Stiber increased by two percentage points, the way our loan portfolio looks, we would still have an interest cover ratio above our target level of two times or 2.0 times and you can stretch that even to a five percent increase in cyber momentarily and our interest cover ratio which would still be at 1.5 times which is the covenant that we have in our bank agreements um

On the next slide, you can see how the fixed interest period and the loan maturities have developed over the past five-year period. And I basically touched on those numbers before. 2.5 years fixed interest period and six years in average. No. On my slides, looking at available funds, at the end of Q2, we had unutilized credit facilities plus liquid funds. amounts to a bit over 2.6 billion Swedish kronor. And with that, we feel that we stand on firm ground for continuing our operations according to plan. With that, I hand back the word to you, Ulrika. And I will shortly mention an update on our sustainability. And then I will shortly questions as soon as possible. But first, an update. We continue with our certification program, adding new projects to this list. This is the certified properties this year. The forecast for this year is 80%, and our goal is that 90% of the Swedish offices will be certified until 2025.

On the certification program, we are especially proud to be a part of developing the new zero carbon dioxide certification system. Here we are one of the first to get a certification according to this system for ready building, Polpeten 5 in Hylje, Kvartetten. But now we also have a new pilot project in the same system with space in Lund for a laboratory building. We also continue to develop the way we measure and we learn a lot. Very proud of really low levels of scope 3 in F-quartets. Approximately 230 kilograms in total.

And one of the things that we have learned is that it's not possible to see on the outside of a building if it's good or not so good. actually build that building with what you could describe as a well-known and traditional technique. We have a steel structure and we have concrete slabs. And still, that building will get a lower climate impact than a new modern wood building produced at home. top level of what's possible. So that is good to know. of the overall product gives. We and the business must continue to learn and do even better on this case. energy savings another 3% reduction in energy consumption Q2 and a part of that is continued investment in our own innovative reversible heat pump system that saves up to 40% on each building. Our largest problem with that system is what to call it. So we have decided just to call it the Janne solution of the inventor Janne Larsson.

Another important part of sustainability and ESG is, of course, social commitments. In our report, we mentioned a few of them, and here we mainly focus on how we can support young people to get an education or start new companies and how to stimulate growth in young companies. We do this together with, for example, Hedge in Helsingborg for TechShip and together with the Region Council of Skåne for ID on Navigator Scale-up. And shortly mentioned on the investment, we have made some new groundbreaking ceremonies.

And under the first half of 2023, we have invested $933 million in construction costs, continues to improve from our point of view, and that helps us to get our calculations together with an even higher requirement, as we all are aware about. through these projects very short. It's good to know that we think that we can ... ... ... ... ... ... ... ... ... ... And in total, at least 5.7% yield on cost. In considerable amounts of space, You have seen this project before. Here we have maybe a bit of a delay as we see possibilities for a new and even better We continue in Lund with Tomaten for impact.

It will be completed Q2, 24. And Nederman in Helsingborg, Rausgård 21. Everything works out well. So completion in Q3, 24. Hugg Hjärnet, 13. The first building is completed and the tenants have started moving in and will continue with that until Q1, 24, for the second building. And at Plåtslädningen, 15, we invest for Spring Hill, a very quick project.

in Q4 2023. And we have completed a building for Doga, Storskogen 5, and now we have started our project at the same property. And the last one ongoing is Sunanod 1254. Four. Four. will be completed in Q1 2025. Some projects from the ongoing portfolio and we also continue of course with the planning for future projects maybe i can mention something about shoe sets it's our goal that will be the best possible office in the world. First tenant is signed and we have really good discussions with several possible tenants of the building so i hope that this project will be and we can take a decision on Good to know that we have a project ready to start both on the office side but also for logistics.

and we also have possibilities for fill-in projects of different kind. And we also continue in Nyhamnen. We have a lot of possible projects there. That will be the best area in Malmö in the future.

And with summarize Q2 again. Income up 20% and operating surplus up 25%. Higher financial costs balanced by increased earnings, positive net lending, and stable balance sheet. So by that, we are open for questions.