Welcome to the Balder Q1 report 2024. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing pound five on their telephone keypad. Now, I will hand the conference over to the speakers. Please go ahead. Good morning, everyone. Thanks for listening in to this presentation of Balder's Q1 results. My name is Jonas Eriksson, and with me, I have Erik Selin, CEO, and Ewa Wassberg, CFO. The full presentation is available on our website. In our introduction here, we'll focus on some of the key points of the financials for the quarter, and then we'll open up for Q&A. Please, Erik. Thanks, Jonas. Yes, in the Q1 report today, we have a quite stable development. The rental income is 8% better than last year, same period, and the NOI, it's a bit even more +8% increase compared to last year. But then looking at profit from property management, we have a decline of 8% and per share, 10% due to more shares outstanding. And then the obvious explanation is higher financing cost, since we have a good development in the NOI. And I think it's kind of interesting to look at one year. If you go back one year in time, you can see that the profit before interest cost is SEK 800 million better, and we have roughly the same net debt. So the underlying performance is very strong in the portfolio and in the company, generating more returns, before interest, cost. So, looking at earnings capacity, it's quite stable compared to last year and last quarter. It's slightly better compared to last quarter, but we have a few more shares outstanding, so then we're basically flat from previous quarter. And the same thing there, that we have more money coming in, but a bit higher financing costs. And looking at the other metrics like debt to asset, and so on, is kind of similar development. In different markets, not much happened last quarter, obviously, but in brief, you can say that Swedish resi is around 4 or 5% in the negotiations in general, a bit depending on geography and if it's new or old or apartments, and also small and big apartments can have a different percentage changes. And on the commercial side, in our case, we have very stable performance in the quarter as well. In general, we think the office market is doing okay, as well as hotel and retail. I think the only part of the market where you can see some pushback if you have the absolute highest rents, and then had them indexed 20% since you wrote the contract, then you can have a risk of some pushback in rents. But in general, stable development and quite good demand in Stockholm, Gothenburg. In Finland, we have mainly residentials, and as you all know, there have been quite big supply side for resis. We think that that is going to be better, and we see some signs of that already. But maybe we will do more so next year. We are at least back to positive like-for-like rental growth, even if it's not big. But we think it looks promising, and we have a big inflow of people to Helsinki region. So the underlying demand continues to be very strong, and the forecast is less supply and a better market going forward. Denmark, we had small rental increases due to very low CPI, and rents in Denmark is linked to CPI. But then if we write new contracts, when a contract is terminated, we get a bit better new rent than the, incoming than outgoing rent. So actually, in Denmark, a higher churn would be, a bit, positive for the income. But, as you all know, Denmark is a strong economy, and the Copenhagen region is performing very strong, both if you look at number of inhabitants and the business environment in general. It's also interesting to look at the cost for, if you compare renting an apartment with actually buying, owning it, and, funding it with present interest rates. And now you have a big gap that is much cheaper to rent an apartment than to buy one. And that was long time ago. We had this big gap, if it ever was like that. We think that that also points to a good market for rental apartments in the Copenhagen region, long term. NAV per share is slightly down, but we also gave some detail in this report that is worth to just know the metrics of the convertible bond that we have, because the bond is basically a loan, and then we have a warrant, so to speak. And if the share price go up, that part is worth more, and in our P&L, it turns out as a negative. And it might be that you don't think about that. So actually, higher share price means lower LTV in the calculation, so that's a bit funny. And if you look at Balder's derivatives, this quarter is negative, and that stands out, but the explanation is that the interest rates derivatives is positive, and the part of the convertible that is a derivative is negative. But that part will go to zero. If it doesn't convert, it's zero, and if it converts, it don't longer exist. We also made some extra information about that. And we can also say a few words about the profit property development. As you all know, it's decreasing, quarter by quarter, and if we go ahead a couple of quarters, there is very few development projects ongoing, for us. Long term, we think the land bank is very interesting and promising, so we continue with zoning and preparing that, obviously, but we see no building start in Sweden this year. Our feeling is that sales in apartments in Sweden is picking up a bit. We see more interest and also more business being done, so we think there's a better trend there. And looking at financing, it's also getting much better in the bond market domestically. So investors have better appetite, and spreads are lower. And long term, we want, of course, to be in the bond market, so this is positive for us. And the banking system is also very well capitalized and open for business, I would say. And if you look at banks in general, the loan books is flat year-over-year or even negative, and that, combined with very high return on equity, makes it a very strong system, and we think that is positive long-term for the market. And some more financing detail, maybe, Ewa, you can go into that. Thanks, Erik. As Erik mentioned, funding conditions have continued to improve through the start of the year, and the spreads for our new funding agreements are now only marginally above our back book average. During the first quarter, we did a couple of smaller transactions in the bond market, corresponding to roughly 30% of all Balder's bond maturities for 2024 and 2025. We now have 47% of our financing in bonds. We have been fairly active in our interest rate hedging, rolling or increasing swaps during periods when rates have come down. Our average interest rate fixing is pretty constant since year-end, but the proportion of debt with fixings rolling over in 2024 and 2025 has decreased by 3 percentage points. Our available liquidity is almost SEK 21 billion, and as we have mentioned before, this number will fluctuate a bit between quarters and is a bit elevated now to cover for bond maturities in Sato during this year and Balder in Q1 2025. Let me also mention a few hedging-related items that I think are worth noticing to understand our accounts. Those of you who look a little bit more closely into the details know that we saw a 4% weakening of the Swedish krona versus the euro during this quarter, but the average exchange rate was 1.6% stronger versus Q4, causing a headwind for our NOI. Our focus is to hedge the equity in relation to assets, not the equity in absolute amounts. That means that we will see fluctuations in both the equity and P&L in absolute terms, but also in metrics like net debt to EBITDA, and also cause some noise from quarter to quarter in the financing costs. Thanks, Ewa, and with that, we open up for questions. If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Jan Ihrfelt from Kepler Cheuvreux. Please go ahead. Okay, thanks for that. A couple of questions from my side. First one is on guidance. So you had some kind of, was it light guidance, in the former report, but I don't find anything here. So could you just comment upon why it's not there? No, we thought that last year was kind of exceptional in the uncertainty of basically all parameters, FX, interest, rental market, everything. Then we thought that the guidance was a sort of, could have value. Otherwise, we'd never had guidance before, so... But a good observation, Jan, that we had it and don't have it now. We think it's more stable situation now in general, so. Okay. And the second question here relates to your rental income. And your residential rental income has all come in in the first quarter, or is there something remaining in the second quarter? You mean the actual rental income? I think it's something—some of them will be better Q2 and Q1, because not everything is from first of January. So a small positive effect in Q2, but not much. Not very big, just something. And the full effect, is that reflected in the earnings capacity? Mm, yes, I would say so. Okay. And your LTV is just slightly above 50%. And in what kind of range do you feel comfortable going forward? Long term, we want to have it below 50%. So, this quarter was a bit, you know, inflated by currency movements, and we also used the call option. But, otherwise, it will, it will trend down again as we see it. But it isn't necessary to sell assets to bring it there or? No. Okay. Final question from my side. You're talking about higher yield requirements, in, slightly higher. Mm. In what segment do you see higher yield requirements? We saw a bit higher in Swedish residentials. Otherwise, it was the same in Finland. Denmark was stable. The Swedish resis was a bit higher, and maybe, I don't know, was there something more, Ewa, that you can remember? That I know, but it's a small adjustment. Yeah, yeah, I know. 7 points and 3 points and 1 point in some asset, and so it's a bit slightly higher on average, and- Mm. especially Swedish resis. Okay, thanks for taking my questions. Thanks, Jan. The next question comes from John Vuong from Van Lanschot Kempen. Please go ahead. Hi, good morning. Thank you for taking my questions. Hi. Just as a follow-up on the guidance, maybe to ask it differently. Mm. Last quarter, you also mentioned in your management commentary that you expect to keep profit from property management stable for this year, that that should be attainable. Mm. Do you still believe that this is an attainable goal? I mean, looking at your earnings capacity, it did improve compared to last quarter, but it's still below last year's results. Yes, exactly. But it's very... I mean, this is a very, or how should I say, stable portfolio where not that much happened, but of course, a couple of% is that precise you can never be right. I mean, interest rates can vary something, and FX can vary something. So stable for us is a range of some% up or down. But I mean, it seems to be very stable, actually. I mean, it's just one month, then we invoice Q3 rents, so yeah, we feel comfortable about that. Okay. That's right. Thank you. And, maybe move on to the like-for-like rental growth. Came in weaker at +3.7%, you had a different drivers. So do I understand- Sorry, John, you're break- -mostly- Sorry, you're breaking up a bit. Would you mind repeating that question, please? Oh, yes. On the like-for-like rental growth, it came in a bit weaker at +3.7%. You highlighted different drivers. Mm. Just to understand whether I understood correctly, is this mostly driven by Finland and Denmark? Correct. Correct. So Finland, you have like-for-like. At least we are in positive territory now, like 1%. But it's been improving slowly for a while, but it was negative if you go back maybe 1 year or something like that. So, but we are optimistic about it now. I think it will improve because everything points to that direction. So I think we can finally be, that, that will finally be better. And Denmark, residentials is, the rents are linked to CPI, and Denmark had just like 1.05 or something like that in CPI, so it's very low index. But when we make new contracts, they are higher rents than the expiry. So, but that's why like-for-like is a bit low, it is 3.7. So Finland, Denmark, lower, and then you have, of course, much better in commercial properties in Sweden, for example, with maybe like 6%. And I would guess Norway is 4-5. Swedish resis, 4-5. So there, basically, you have the mix. Okay, that's clear. And then basically, you are seeing that 3.7 improve over the year. bit difficult to know exactly, but I think Finland will be better. I think Denmark will be better. On the other hand, I think Swedish inflation is much lower, so I think Swedish commercials will be slower if we look forward. So, but, I mean, if inflation comes down to 2-3%, then we can have like-for-like a bit above that level. I think that will be good in the long run. Okay. Thank you. That's it from my side. Thanks, John. The next question comes from Fredrik Cyon from Carnegie. Please go ahead. Good morning. I have three questions for you, starting off with the property, PMP per share. We have been spoiled by solid growth historically. However, this year, it looks like it might decline somewhat. When do you expect Balder to be back in growth mode? on that metrics? I hope next year, Fredrik. But this is very painful to have negative numbers. We don't like that. Yeah, I feel with you. Moving over to occupancy rate, we've had it at steady at 96% for a number of years now. Given what you're seeing in the letting market, one year from now, from now, do you expect it to be lower or higher or about the same? I would guess about the same, because if you look at us, we have, for example, 5% vacancy in Finnish resi. That's quite a big part, and I think that one can improve, if we look one year ahead. But on the other hand, we have very low vacancy in the commercial properties, and, as of today, it feels stable and strong, but, I mean, you never know. We have nothing that we know negative, but, perhaps something. So I would guess the same. It's hard to go to 97, but I don't think we should go down either if we look one year ahead. So I think it will be—I think it will be the same if I'm guessing. Perfect. And then my final question, based on your experience of external valuation of properties and what you're seeing in transaction market, how many more quarters do you think we'll see negative fair value at most? Then, it's also a bit of a guess on, you know, interest rates. So, but if the interest rate curve, I think what is expected there, maybe 2, 2, that they will lower end, maybe 2 x or something like that. Then, so let's say if interest rates comes down, then I think values will not go down so much from this level unless the economy overall gets weak. But if we have the combination with present economy, that is actually starting to grow everywhere and interest rate comes down, I think property values will be, as an average, quite stable. But maybe there can be a quarter or two, who knows? It's always some lagging effect, you know, up and down. It's not like stocks, this moves slower. Thank you. Those were all my questions. Thanks, Fredrik. The next question comes from Andres Toome from Green Street. Please go ahead. Hi, good morning. So I only had one question, and I was just trying to understand the component in your P&L, profit from property management from associated companies. So when I look at the earnings capacity, that line item hasn't really trended down over the last 18 months. In fact, it's actually trended up, but it's quite counterintuitive, I guess, versus your own, sort of, profit from property management. And then, a big part of those associated companies is, of course, Entra, where actually earnings are also trending down. So can you just give a bit more color around what's happening in that line item? Yeah, yeah- How is it actually trending up? Absolutely, Andres. I think if you look back one or two years, profit from property management, excluding associated, is also stable. So I think it's quite similar development if you compare the two. And what we see now is that, in many of the companies, if you look one year back, quarter-to-quarter, I think there will be an upward trend, actually, in some of them already Q1, and some will be Q2, Q3. So, that's why we have this earnings very flattish and, not much happening. Entra is a bit down compared to one year, but it's actually up compared to last quarter. So depends a bit if you compare quarter-to-quarter or year-over-year. But I think it's quite similar development as the other portfolio. Even in those companies, there will be less construction activity going forward. Reminds us of Balder as well. So you have the effect of more rental income and less investments. So, as a group, they are kind of similar. Okay. I guess the answer is that Entra is a sort of a headwind, but then the other parts of those associated companies are actually on a positive growth trajectory- Yeah ... therefore, it's flattish. Exactly. Exactly. Right now, that's the situation. Correct. Okay, thank you. Thanks. The next question comes from Lars Norrby from SEB. Please go ahead. Well, good morning. I think in connection with the Q4 call, I asked you about what 2024 is going to be like compared to 2023, and I believe your answer was something like that it's going to be similar- Mm ... but calmer. Is that still the picture, or is there any change compared to, let's say, 2-3 months ago in terms of the market situation? You have a very good memory, Lars. Thank you. I would say that the market situation is... I mean, I think the view is similar as three months ago, but the market situation is better in the sense that the bond markets is not strong, I would say, but it's quite okay right now. I mean, it's not more expensive to borrow bonds than bank loans right now for us. So I mean, that is a good sign. And also that, in general, the banking system is, as everybody knows, super strong with low demand for credit. We also feel that banking system in general is more positive to do business. So all in all, a bit better sentiment, Lars. But still, I think it will be, for us, kind of similar. Not much will happen, if we look now. But, yeah. In terms of how you act, in terms of pushing the accelerator or not, I mean, for example, if you look at CapEx, it's down quite sharp in the first quarter. It's some SEK 800 million versus some SEK 2.4 billion. It will continue down this year. For the full year, what's a reasonable assumption in the context of you having some 7.5 last year or something like that? What are you expecting for 2024? I don't have that number in my head, but 7.5, maybe 2.5 then, or something like that. So it goes down quite deeply. Now, if you look at when this year ends, for example, Sato, if you take that as an example, they will have no—no, no ongoing new construction, last of December, so it will be actually zero. And the same for Balder, Denmark, or. So it will go down gradually this year, and we are not planning to start anything this year. But we developed the land bank, so we have a good potential later on when we think it's the right timing. But of course, it will be very, very little this year, actually. So if anything, just to round it off from my side, pushing the accelerator again, if I phrase it that way, is more a thing for early 2025 than second half of 2024. Yeah. Exactly. Okay, well, thank you. Thanks. The next question comes from Neeraj Kumar from Barclays. Please go ahead. Morning, everyone. I have two questions. So firstly, it's in regards to the Euro bond market. Are you looking to issue to prefund your debt maturities? I recall S&P was focusing a lot on the liquidity profile in their latest note. I think we are not looking at Euro bonds right now, but we get incoming calls, so we can do it if we want to. But we have a lot of facilities and liquidity, so our basic plan was to wait many years, but maybe it will be earlier, but we have no immediate plan. But we did some domestic bonds in Sweden, and pricing is quite okay right now, Jonas. Yeah. No, I would also say that we don't actually have that much bond maturities in 2024 and 2025. So if you look at the very small SEK bonds we did in Q1, was actually about 30% of our total bond maturities for 2024 and 2025. Uh-huh. So given that maturity profile, I think we are currently rather in a wait-and-see mode. But let's see how the year transpires. Got it. My second question is in regards to hybrids. Recently, you lost the equity content on them from S&P. It was a bit of an interesting event. Can you help us understand what led to that outcome, and how should one be thinking about that hybrid now from a call or non-call perspective? We were a bit surprised as well, you know, because we thought it could still be a hybrid, but on the other hand, it's a very small amount now because we bought back. How much was it, Jonas? We have SEK 100 million. Hundred. Yeah, something like that. So, now it's basically just a loan. Okay. So it should be- Yeah, no, so I think as you know that we did a small share issue in Balder and another one in Sato, a subsidiary. And with that, you know, we felt that the... Even if we did lose the equity content, it would be a neutral matter from a capitalization standpoint. So then the buyback, the sort of continuing the buyback activity that we've been doing before, felt like worth it. And then when we now lost the equity content, essentially it becomes an ordinary bond for us. I think from a sort of looking at our key metrics, I think we appreciate the long sort of formal maturity on that. And then as we come closer to the call date, I think we, we can become more clear on what, what our intentions are. But I think if you look at our past, we have so far always called on first call date. But, let's see how things develop over the course of the next couple of years. Got it. That's helpful. Thank you. The next question comes from Markus Henriksson, from ABG Sundal Collier. Please go ahead. Thank you. Good morning, everyone. First, a question on net debt. It increased quite significantly at Q1Q. Obviously, partly driven, you mentioned the hybrid bond, and we have a bit of unfavorable FX. But, I'm a bit curious on the SEK 1.4 billion investment in joint ventures in the cash flow statement. Could you highlight what that is? And also, what's the capital need for JVs in 2024? Thank you. We think the capital need for 2024 is, I think from this date and going forward, actually negative. So I think it will be more inflows to us than outflows. But we always do some smaller restructuring in it, and we are looking at some changes there as well. So, we increased the part in one of the companies and changed some capital in another. So small changes, but I think from now on, it's most likely to be we getting more money than investing. I think also, Jonas, I mean, when we look at the total number, so, if you account for the SEK 3.7 billion FX effect, and the SEK 2.2 billion like-for-like hybrid effect, we actually have a decline in net debt. Obviously, we had the share issues as well, helping us a bit. But it's worth pointing out when it comes to the associates as well, that there may be differences from quarter to quarter in how various transactions are booked. And so I would say that we view sort of from a net investment perspective in associates, we didn't have, you know, it was around zero this quarter, but then it might differ a little bit from when money are hitting the account and what's paid in cash versus sort of forward payments, et cetera. I wouldn't read in anything too much into that. All right. Thank you for that. Then you highlight a bit of possibilities on the cost side I had in the CEO statement. What type of improvements do you see, and could we see it already in 2024? Anything you can help out there? No, I think it's more of a general, you know, little here and little there. That is still a lot of potential, both on cost and income. Because it's not one big dramatic move, it's more that we can continue to improve the efficiency and the cost side, totally, Markus. So we have more potential on both ends there, but it comes slowly and gradually. Thank you, Still, we have a good potential. Could you, looking at kind of, gross margin or NOI margin, you, you peaked in 2020, and then it's been a few tougher years for everyone here in the sector. You bottomed out in 2022, and then up a bit in 2023. Are you confident it will increase in 2024 and 2025? Yeah, that's the ambition. Thank you. Then last question, what type of spreads and maturities did you have on your most recent issued bonds? And also, if you issued something today, what do you think you would get if you accessed the capital market? So we have done 2 bonds in the SEK market this year. One 2-year and one 3-year with 200 basis points. And I think the pricing has changed quite rapidly since then. So I think if you look at the 2-year now, you're maybe looking at 125 basis points. You're actually below bank financing now? Yes, I would say so. We also got some incoming quotes in Finland. That also was for longer durations, lower than bank margins, unsecured. Very clear. Thank you for taking my questions. Thanks. Thank you. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments. Okay, thank you very much for listening to this call. If you have any further questions, you will find our contact details on the website. Just give us a call. Thank you very much!