Wihlborgs Fastigheter AB

STO:WIHL

Welcome to the presentations of the Wihlborgs Q1 2025. A world with new conditions almost every day. Things have to be done. It was a keyword for many years is hunting left.

Best translated to we continue to act where we find possibilities, and we are prepared for new actions whenever the time is right. During 2024, we had a record high volume of new leases, and that strong trend has continued during 2025. High quality, good locations in the region, with also ahead and strong cash flow give opportunities for action to continue.

Let's go to our report and the summary for Q1 2025. Rental income is SEK 1.045 billion, and income from property management is 9% of SEK 400 million. Net letting positive with SEK 35 million and activity, net debt to EBITDA at 10x. Agreed, an acquisition of SEK 2.4 billion from Genentor was completed on the 1st of April.

Good quality and good location continue to be attractive, and we continue with our project investments with good results.

The results for the period, small increase in rental income to SEK 1.045 billion, but let's remember that the comparison period 2024 had one-offs over SEK 20 million.

The operating surplus increased to SEK 731 million, and income from property management, as mentioned, increased by 9% to SEK 463 million. The result for the period amounts to SEK 431 million, corresponding to SEK 1 per share and EPRA NOK 958 per share adjusted for paid dividends.

A comparison of the rental income Q1'24 and Q1'25. Indexation gives SEK 10 million, termination fees minus SEK 21 million, acquisition, plus SEK 3 million; currency effect, minus SEK 1 million, additional SEK 7 million, and completed projects, new leases and renewals, also plus SEK 7 million.

Q1'24 was a record level of new leases. And I then got questions if we and the market could keep that tempo volume. The market can change. I'm very confident that our skills are both focused and on tempo.

And now, the numbers also give proof that the market is there. Q1'25 is the third highest volume on new leases ever, SEK 134 million, and net letting of plus SEK 35 million. You never know ahead, what will affect each quarter, but seen over time, 40 positive quarters in a row is our new record.

Very grateful to the whole organization for this. It's interesting to see how we can sign new leases in both existing premises and in the new build projects. The [Indiscernible] is a strength.

Without new areas, we wouldn't be able to have positive net letting in all these quarters. But on a yearly basis, the net letting is positive also in the existing portfolio, both for 2023 and 2024. And 2025 also looks positive so far, including April.

Here are some of the tenants that we have signed during Q1. The largest lease is from [Technical Difficulty]. But as always, we see a mix of different businesses. It's companies in IT, construction, civil engineering, recruitment, and more governmental tenants as [Indiscernible].

The wide diversity is always a strength. Here, we have the net letting in a historical [Indiscernible], lettings in green, termination in light blue, and dark blue stacks are the net letting.

Now, 40 positive quarters in a row, and the high volume with new and higher demand seems to continue. And Q2 has also started well with a new lease with Per Aarsleff in Copenhagen of 24,000 square meters at AB [Indiscernible]. So, good potential is also ahead. Happy with 40 quarters.

So, the next goal is to beat that. And the list of our 10 largest [Technical Difficulty] orders, strong customers, and they contribute with 20% of our rental income, 8 of 10 are governmental tenants, and the public sector contributes with 22% of total rental income.

Rental value as of 1st of April acquisition is SEK 4.596 billion per year, plus 3.1% and rental income, [Technical Difficulty], but we also see a bit higher vacancy in line with the rest of the market.

Looking at the like-for-like figures, all the properties we own are 4%, and rental income is down 0.8%. The growth in rental value is supported by indexation of 1.6% in Sweden and approximately 1% in Denmark, lower rental income as a result of higher vacancy, and this comes from a timing effect with many new leases, where we can see a gap between moving out and new signed tenants moving in.

That means that it will improve in '25 and continue good effect in 2026. But we also see higher vacancy in the market in some areas, as in the industrial portfolio in Helsingborg, I think that higher vacancy will follow us for a bit longer time. And in other areas, as offices in Malmö, occupancy will pick up quite quickly when the market turns.

We see very few new projects from competitors, and my best estimate is that we can continue to take advantage of that.

Let's look at changes in the market value of our properties. We started the year with NOK 59.168 billion in accordance with our external valuation, and we let them evaluate 100% of the portfolio every year-end.

No acquisition during the period, investment SEK 638 million, divestment, minus SEK 13 million; changes in valuation plus SEK 69 million, and together with currency translation of minus SEK 736 million, that adds up to a value of SEK 59.126 billion.

The value of the portfolio has developed, as you can see on this slide, since 2005 without raising any new equity. With investments, new leases, and a few transactions, we have also during the last years, been able to increase the value bit by bit.

For '25, the transaction made 1st of April will contribute in a good way, but we will see that in the next report. These figures, the running yield, show how we actually perform in relation to the valuation. So this is not the valuation yield.

For the whole portfolio, the occupancy rate is 9%, excluding project and land, and with an operating surplus of SEK 3.14 billion, that gives a running yield of 5.6%.

Fully let the portfolio would give a running yield of 6.4%. Good earnings capacity in relation to the value of the portfolio and good cash flow generation is the foundation for further expansion.

If we look at the office portfolio, the market value is SEK 47.1 billion. And overall, the occupancy rate is 91%, 92% in Malmö, 87% in Helsingborg, 91% in Lund, and 92% in Copenhagen, the same numbers as year-end.

A bit higher vacancy rate than last year, mostly affected by the gap between moving out and new coming in, these figures will improve later this year, but the largest effect from many new leases will come in 2026.

Occupancy for offices in Helsingborg is estimated to increase by 2% in October, for example, from new leases we have signed so far.

The operating surplus from offices was summarized to SEK 2.572 billion and a running yield of 5.5%, 6.2% fully let. The demand for logistics Production continues to be good in Malmo with an occupancy of 96% in Malmo, lower in Helsingborg at 82%, 99% in Lund and 96% in Copenhagen, 88% rate as a whole with a running yield of 6.5%, 7.6% fully let and total value of NOK 8.383 billion.

For us, the combination of businesses with production development and logistics will be the best tenant in the industrial portfolio. We continue to see harder competition in the third-party logistics segment, quick changes in needs, and a higher vacancy as an effect of a lot of new build facilities.

Worth mentioning is that our portfolio in Helsingborg still gives a decent running yield of 6.5%, even with a higher vacancy. Also good that tenants in our best segment continue with good demands.

The development of our total portfolio running yields, 5.6%, brings stability, not least since the portfolio overall has a high quality and good locations. As noticed before, a high increase in the running yield is expected since 2024.

ESG results from Q1, certification in Swedish offices are now at 91%, and Denmark has started the process in a good way. Energy consumption continues to decrease, and we have a new target of a maximum of 75 kilowatt hours per square [Technical Difficulty]. Reporting demands according to[Technical Difficulty] are limited.

But for most of the areas, we have found a way where reporting actually can contribute [Technical Difficulty] possible carbon footprint. We have reached[Technical Difficulty] a goal of reducing climate impact with more than 50% of the construction of office buildings in the last 5 years.

But even further, balancing the system will be necessary. And to be able to work with that in a local way,[Technical Difficulty] also contributing to that will be the best way for us[Technical Difficulty] materials as much as possible, which will continue the most fundamental way of working.

We have a collaboration [Technical Difficulty]. Here's a catalog of our value and properties in our 4 cities in Q1: 40% of the value in Malmö, 22% in Helsingborg, 17% in Lund, and 21% in Copenhagen.

As mentioned before, the diversity of different businesses in the region is a strength, but also the diversity in volume is interesting. Both in Q1 and Q2, we have signed leases, single leases of more than 20,000 square meters each in the office segment.

Especially in the Copenhagen area, we see more potential for interesting volume also ahead. The [Technical Difficulty] of small and larger tenants will also contribute to our strength.

As of April, we added [Technical Difficulty] in total, contributing 51000 square meters of land for industrial development in Lund and 12,000 square meters of building rights for offices also in Lund.

This portfolio will contribute an estimated yearly operating surplus of SEK 130 million at the start. And here's the land areas included in the portfolio. At Wisukollen, we estimate that we can build between 40,000 and 50,000 square meters of industrial buildings, and we'll see when the time for that will be right.

And time for financials. Over to you, Arvid.

Thank you very much, Ulrika, and good morning, everyone. Looking at the [Technical Difficulty] as Ulrika noted earlier in the presentation, rental income amounted to SEK 1.45 billion, up 0.5 percentage point versus the same first quarter of 2024.

Q1'24, we had termination fees of SEK 21 million. So should bear that in mind in the comparison between the quarters. And that income, of course, fed through downwards in the P&L during '24.

The operating surplus in Q1'25 amounted to SEK 731 million, 2% up versus the previous year. Happy to note that the operating surplus margin thereby was 1 percentage point higher than the corresponding quarter previous year.

Income from property management amounted to SEK 463 million, up 9%, as financial costs have improved during the quarter. We had positive value changes in the quarter, plus SEK 69 million, also a slight positive effect from the change of valuation of our derivatives portfolio, plus SEK 38 million. And all in all, a profit for the period of SEK 431 million.

Looking at the balance sheet. Investment properties on a 12-month basis increased in value by SEK 0.4 billion to SEK 59.1 billion. At the same time, equity increased by SEK 0.8 billion, approximately to SEK 23.5 billion, and borrowings increased by SEK 0.6 billion to SEK 29.3 billion.

Translating these numbers into key ratios on the next slide. The equity assets ratio now stands at 38.8%, unchanged from 12 months previously.

Our LTV stands at 49.5%, slightly lower than 12 months previously. And the interest cover ratio in the quarter has improved to 2.8x5 Q1 2024.

You see the per-share numbers on the lower part of the slide. EPRA NRV now stands at EUR 95.08, which is an increase of 9% if you dividend [Technical Difficulty] previously.

On the next slide, the long-term development of the EPRA NRV and despite some over the past few years, the long-term trend is actually still very strong with a growth of 15% adjusted for paid dividends.

On the next slide [Technical Difficulty] improvement versus the previous few quarters. Our [Technical Difficulty] past few quarters, loans have come down a bit. And looking at the LTV, bear in mind that [Technical Difficulty], as Ulrika said, from Canito, which is debt financed.

So momentarily, that, of course, affects the LTV upwards. [Technical Difficulty] in relation to EBITDA. And this ratio now stands at 10.0x, which is a comfortable [Technical Difficulty] also in the Wihlborgs history.

On the [Technical Difficulty], our sources of financing as of end March '25. The Danish real mortgage system [Technical Difficulty] market. I think it's worthwhile noting that during Q1, [Technical Difficulty] activity was reasonably high, and over the past months, [Technical Difficulty] note that the bond market is volatile and sensitive to both financial, economic, and political issues around the globe.

[Technical Difficulty] You can see the [Technical Difficulty] with the average interest that is fairly close to where the marginal cost of debt would be for us with the current STIBOR of about 0.3%.

On the next slide, you can see how the development of our fixed interest periods and our loan maturities has evolved over the past years. Fixed interest period now is on average 2.3 years, and the average loan maturity is 5.3 years. [indiscernible] the previous quarter.

This slide shows you our available funds, unutilized credit facilities, plus liquid funds as of the end of March. The number is high. It's at SEK 4.6 billion. But as you're all aware, on the 1st of April, we acquired properties from Granitor for an amount of approximately SEK 2.4 billion.

That's, of course, for us to have a preparedness to be able to conclude such [Technical Difficulty] without any major activities having to take place on the financing side.

So obviously, the SEK 4.6 billion will also decrease with the expected payment of approximately SEK 1 billion, which will come in about a week's time.

And with that, I hand back the word to you, Ulrika.

Thank you, and I'll give you an update on our investments in progress and a quick overview of our largest projects.

During Q1, we have invested SEK 638 million, and it remains SEK 3.463 billion to invest in approved projects, a good volume also ahead. A quick improvement of the yield on cost continues, and the ongoing portfolio also secures decent gains from projects.

As always, a good mixture of refurbishment and new build. Let's start with the latest announcement made now in April, a 15-year lease with Per Aarsleff in Copenhagen, but the project that [indiscernible] started earlier this year and will give a total refurbishment of one of the buildings that [Technical Difficulty] years ago, 24,000 square meters now fully let, investment, SEK 231 million and yield on cost a bit about 6% completion in Q1'26.

Another announcement is the lease with Malmö University at Abidrute in Malmö. Abidtrute is the name of the goddess of the sea. But the building will be located right between the sea and Central Station. So, it's the best possible location in Malmö.

A bit above 20,000 square meters for Malmö University, and we won a competition a few years ago for developing this project together with the university and the municipality.

Now, the final agreement for construction and a 10-year lease has been signed. Completion in Q4'27 and procurement of the contractor are ongoing.

In Lund, we are building a new modern office right beside the Central Station, post hornet Phase 2, 10,100 square meters completed in Q1'26, approximately 40% pre-let and yield on cost 6.5% and at [Indiscernible] 1 also in Lund, we will refurbish and add on areas for our new tenant Arm.

5,700 square meters and a 7-year lease investment SEK 144 million, excluding the value of the land and yield on cost a bit over 10% and over 6.6% yield on cost, including ingoing property value. A new modern facility, and we also improved the impression and the attractiveness of the whole Ideon area.

In Malmö and Hyllie, we have Bläckhornet 1 Vista, a NOK 884 million investment. The mobility has already been completed and has a good occupancy. The offices will be completed end of '25 and during '26. Yield on cost is 6.2% and 25% pre-let for the office part.

A bit lower than we aim for, but the product is the best with great flexibility, and the competition from new builds in the area is low.

An example of [Technical Difficulty], this is an almost iconic building right beside the train station, a 6,000 square meter restaurant, and absolute [Technical Difficulty] perspective [Technical Difficulty] and continue during '26.

[Technical Difficulty] for the University of invest 100% [Technical Difficulty] pre-let 8 years lease have been able to continue this project for BPC completion Q2'26 and investment SEK 79,600 square meters and yield on cost 7%.

Next to that, at [Indiscernible] 322, 11,900 square meters for note completion in Q3 '26. Investment SEK 263 million and yield on cost is also at 7%. [Indiscernible] at Malmö, we build a facility for Caldic completion in Q3 '25, approximately 10,000 square meters of production, logistics, and office.

Total investment, SEK 264 million, and yield on cost 7%. And at Sunnana 1254, we built 7,000 square meters of logistics, 100% pre-let, a 15-year lease with completion in Q4'25.

SEK 280 million invested and yield on cost improved close to 7%.

In Copenhagen, we invest in a new school for [indiscernible], 25 25-year lease, 11,600 square meters, and an investment of SEK 290 million. Completion is expected at the end of '25.

And at Høje-Taastrup, the refurbishment for Norvo continues 62,000 square meters. Our investment is limited to SEK 423 million, and completion is expected in Q4'25, but Norvo pays rent also during the refurbishment period.

That was some of the ongoing projects. Let's also mention something about future investment.

Here, we have 4 possible projects in Lund and Helsingborg. We can develop some 70,000 square meters in the future. [indiscernible] in Lund. And here are some of the office possibilities in Malmo in the area of [Technical Difficulty] continues to have high attention, of course.

And our summary of Q1 again, rental income, SEK 1.045 billion, income from property management up 9% to SEK 463 million, net letting positive with SEK 35 million and continued high activity EBITDA at 10x. The acquisition of SEK 2.4 billion from Granitor will be completed now the 1st of April.

Good quality and good location continue to be attractive, and we continue with our project investment with good results.

So, by that, we are open to questions.

[Operator Instructions]

The next question comes from John Vuong from Van Lanschot Kempen.

You mentioned that occupancy is set to improve over and well into 2026. What's a more normalized occupancy rate in your view once all these lag between terminations and move-ins settles?

I think if you look at the long-term development and look at our whole portfolio, which now excludes projects and land, which is now at 90%.

I mean, long term, being at 92% is probably close to the long-term average. 93% is good, 94% is rare, so we're a touch below where we would like to be, but see good potential for improving the occupancy end of '25 and during '26.

Let's also keep in mind that as long as the rents are continuing to pick up, I mean, the demand is there, and our tenants are willing to pay for good quality and good location. So if we have some vacancy for some [Technical Difficulty].

Would 92% be a reasonable number for 2026?

It depends on many things. So I think it's [Technical Difficulty].

We buy a vacancy because we want to develop things over time. So we [Technical Difficulty] isn't the only thing that points to possible growth.

The net letting side, you mentioned high activity. Is that both on the positive and the negative side? Or how should we read this? And maybe also on the [Technical Difficulty], how long can [Technical Difficulty]

I think that at the moment, we know that we would have a large termination now in Q1 from Saab. And now, when we have that, I think the number of [Technical Difficulty]is lower.

But we see new lease numbers. I mean, it takes years before you[Technical Difficulty]. They are very important for our business as a whole. So the answer to your question, how many quarters in a row that you say [Technical Difficulty].

It would be to have this type of track record of properties with vacancies that can gradually fill up. But our ambition or our strategy on continuing to grow remains.

So I mean, as your portfolio, we continue to develop new properties. And occasionally, we acquire properties, [Technical Difficulty] so from that, we obviously aim to continue this trend as long as possible.

I have mentioned this before, but the most important thing with net letting basis is actually for our own organization so that we have the tempo, and I mean, the awareness that it's very important for us.

But for the total business, looking at a longer period should be more relevant, maybe. But for us, we like the net letting measurement quarterly because I mean, we like the tempo.

The next question comes from Lars Norrby from SEB.

Some details on the SAAB termination. Weren't those 4 different contracts? And were all those terminated as expected? And what was the value of that?

I think the total value was SEK 31 million or SEK 34 million.

SEK 32 million, I believe.

So yes, the termination came in as we expected. They had added on some areas, but that is not definite yet. I think they will stay within Malmö as well.

Just so I understand it correctly, that was the effect, but are they going to stay for a while on some areas? Or did I catch that the wrong way?

All these leases, they will move in early 2026, something. And my best, I think that they will stay with one hub in Malmö as well. But the largest portion of employees will move to Lund.

Then, Malmö University, in that press release that you put out, I think you mentioned a basic rent of some SEK 69 million. What about that other lease that was signed in early April in Denmark with, if I pronounce it correctly, Aarsleff, what's the basic rent of that?

Aarsleff. And that is not included in the report numbers because that was signed in April. Remember that. So, the rest of the volume in signed leases for Q1 is without Per Aarsleff.

But what's the basic rent of the Oslo, 24,000 square meters in Denmark?

Let's see if I can find it here. I think, Arvid?

It's in Swedish krona, it's just above SEK 30 million.

Just a final question, a quick one on transactions. You obviously made a big transaction that portfolio of some SEK 2.4 billion coming on board on the 1st of April. So are you done for '25? Or what do you expect for the rest of the year?

No, you never know. We continue to look at different kinds of interesting things. So let's be open-minded.

The next question comes from Markus Henriksson from ABG Sundal Collier.

First, a question on you have your table with rental income as of 1st of April, the one excluding projects, it's at SEK 4,050 million, and it declined 1.3% Q-on-Q, and your occupancy rate declined 30 basis points Q-on-Q. The question is, is this all FX effect-driven or also driven by renegotiations?

I mean, I don't have the exact number in my head, but you have quite a large FX effect in this table because the Swedish krona to the Danish kroner was, I believe, SEK 154 at the end of December and SEK 145 at the end of March.

So that makes out the bulk of I mean, if you look at the Copenhagen portfolio in this table, you will see quite a large amount is driven by FX.

Yes, I see a decline then. So it's not driven by renegotiations, mainly FX.

No.

Then a follow-up on Per Aarsleff. Just curious about the whole project. It used to be leased out, as you mentioned, to Danske Bank, and the rent was SEK 29 million back then.

And then you rented out to Bningkielsen and now Per Aarsleff, you mentioned a rent of around SEK 30 million or just above SEK 30 million in Swedish krona, and of course SEK 29 million in Danish kroner.

What type of total refurbishment will you do for the remaining part? You have around 36,000 square meters leased out now, and how can you see such a huge lift? What type of investments are you doing there since the rent per square meter used to be very low?

I think that this [Indiscernible] we're in today, when that area has really developed well, and the attractiveness has risen. We started this project late '24, early '25, aiming to make it into a multi-tenant building.

So this is just one of the buildings that Danske Bank left. And sometimes after a few months in that project, [Indiscernible] decided to be in [Indiscernible] area. And [Technical Difficulty] is approximately the same. You just have to [Technical Difficulty].

So we get a good cost for the refurbishment, and the cost we put in there. [Technical Difficulty] We are happy with that also for the rest of the property. And at the same time, we are working further with the [Indiscernible] to give a higher density to the area as a whole with more building opportunities on the land that we own.

But also, that thing has to go in the tempo that fits the municipality and the surroundings, of course. We have had help from the letbanen with a new station just [Technical Difficulty].

Things are moving, and when investments come to an area, things happen there. So, I don't have any prognosis on the timing effect for the last buildings there, but good interest.

I was just a bit interested in fairly good development there. On SEK 8 million here in Q1, that's a very high level for Q1 in a historical perspective. Can you usually share guidance for [Technical Difficulty] '25? Should we expect similar seasonal patterns as historically?

[Technical Difficulty] in Q1 or Q4, that is not, I mean, it's more in the tempo in the process of the ongoing project. So, I expect the volume to continue approximately at this level.

[Technical Difficulty] is the latest from the Danish mortgage system and the bond market for [Indiscernible]?

I'd say that the market is favorable. The banks are willing to lend, and [Technical Difficulty] 6 months ago, there were a bit tighter, a bit lower bank margins than 6 months ago.

The Danish mortgage system continues to work [Technical Difficulty] 6-month period. [Technical Difficulty]in my presentation. I think [Technical Difficulty] happens somewhere else in the world, and suddenly everybody gets worried, and it spreads wider.

But generally, the bond market versus a year ago, of course, works a lot better and is also a financing option for us, the way markets work today.

And the Danish system was similar to the banks?

I mean the system works well [Technical Difficulty].

Then the last question. You highlight increased vacancies you're seeing [Technical Difficulty], you used to be above [Technical Difficulty]on both offices and logistics.

So first, what has happened? What is the current status? And are you initiating any type of measures, more personnel for leasing? Or is the competition just high because of new construction? Or what's going on? And what's your type of measures?

I think on the logistics side, the competition is high because of new constructions. We have been able to [Technical Difficulty] the quality in some properties as we did for [Indiscernible], for example, a very good investment.

And I think that we will see more of that transforming areas into a higher level of quality and suiting different kinds of businesses in that. We also see transforming parts of the portfolio, areas that will be something else in the [Technical Difficulty] industrial areas.

We can just keep that going for a couple of years until that development can start. So it's a bit of [Technical Difficulty] and that. The [Indiscernible] area continues to be very good and continues to work both with [Technical Difficulty] for new tenants in [Technical Difficulty].

Regarding vacancies in the office portfolio in Helsingborg, [Technical Difficulty] affected that. We have also been affected consciously by acquiring a few years back, the Helmes property, which is a large property where we have some vacancies, which we're working with.

But at the same time, we're confident that we are the right owners of such a property and that we, over time, can develop that for the benefit of both ourselves and the market as a whole.

And we have been quite successful filling that Helmes up with new tenants. [Technical Difficulty] has moved out from[Technical Difficulty]. So I think that [Technical Difficulty] is working well[Technical Difficulty].

And just a quick follow-up there. So if I get this correctly, if we split it up in kind of structural problem with demand versus that we have been and are in a recession, we see, we see [Technical Difficulty] either supply-driven or demand driven and then maybe you have a and then maybe you have a structural tilt towards the demand as well. Is that something you experience in Helsingborg, or is it mainly in accordance with [Technical Difficulty]?

I think in a very small local perspective, [Technical Difficulty]could be maybe you could call that a structural problem when you're going to take an area in the [Technical Difficulty] development phase.

But otherwise, if you look at the whole city, it's a part of a normal transformation. But of course, if you look into the total needs of, especially storage, Helsingborg will continue to be attractive. No end to that. But there has also been quite a large volume added to the market, and maybe the time for picking that up takes some time.

The next question comes from Fredrik Cyon from Carnegie.

I have 2 questions for you this morning. So starting off with the [Indiscernible] acquisition. Will that in any meaningful way impact your average cost of debt, i.e., the new loans that have to be done at higher or lower than the 3.45% that you have at the end of the quarter?

It will not impact the average cost of debt materially.

In any direction?

In any direction.

And then the second question relates to income from JVs. It was fairly high in Q1. Were there any impacts from property revaluations in the quarter?

No. It was slightly higher profits in one of our JVs. I mean, it's not a huge amount, I would claim.

There are no more questions at this time. So, I hand the conference back to the speakers for any closing comments.

So, thank you for your questions and your attention. Do we have any written questions?

No, I have not received anything via email.

Good. So then I just got a message that there was some problem with the sound, but the version that will be presented on the website afterwards will be corrected with good sound. So sorry for that. But thank you for your attention and [Technical Difficulty].