Hello everyone, welcome to KlaraBo's presentation for Q1 2023. My name is Markus Henriksson. I work as an equity analyst at ABG Sundal Collier. First, we will listen to a presentation from CEO Andreas Morfiadakis, CFO Jenny Appenrodt, and Kristin Lundmark, Head of Sustainability. I will return for Q&A. We'll also have Q&A from the telephone conference. You also have the possibility to send in written questions. Without further ado, I'll leave the word over to you, Andreas. Thank you very much, Markus. Again, welcome to KlaraBo's Q1 presentation. As Markus said, I'm joined by CFO Jenny Appenrodt and head of sustainability, Kristin Lundmark, today. If we move over to the presentation, we have during Q1 continued the work to increase stability and predictability of our finances in terms of increased hedging ratio and fixed in-interest period. By the end of the quarter, our hedging ratio now amounts to 80% with an interest period of 4.3 years. By increasing the numbers, we have risk minimized our operations for years ahead, which is particularly satisfying in this volatile market and for the coming quarters. Based on the FRA curve, we see that our average interest rate will be well below the market price for the time ahead. During the quarter, we reached rent negotiations of a majority of our portfolio, and we have now had an increase of close to 4.5% for the entire stock. This increase will give full effect in Q2, since most of the agreements are signed late in Q1 or beginning Q2. We continue to focus on renovations, and for the quarter, we reached 65 apartments. As we mentioned in Q4, renovations are the single key factor to mitigate negative property values as yields continued up this quarter as well. After several quarters with falling profit from property management per share due to rapidly increasing interest rates, we now see an increase with 12.6% since last quarter. Like for like, we are increasing rental revenues by SEK 25 million per year due to mainly the yearly increase, the continued increase of revenues from renovations, and newly constructed apartments in Trelleborg. The revenues, of course, shows positive effect of on the surplus ratio, which is now at a level of 59% in our earnings capacity. Another reason for the rise in cash flow and profit from property management per share is the predictability of our finance expense, which we now see is not increasing in the same manner as before, due to the interest rate hedging of 80% that we reached this quarter. During a period of market turbulence, organic growth is a key for our company. The graph to the left illustrates KlaraBo's organic growth by showing the accumulated rent increase the portfolio has delivered in relation to the general increase from union tenants. Our property management is doing great work organizing hundreds of activities that improves our assets and creating shareholder values. On an accumulated level since 2019, we have succeeded the general rental value by 12.3 percentage points. During Q1, we reached one percentage point, which is one of the highest numbers so far in KlaraBo's history. The remaining approximately 4,000 apartments, where we estimate a possible rent increase of more than 20% through renovations, has a possible SEK 100 million increase of rental value, which is made by organic growth. Entering a period of a more volatile market and have an increasing yields, the left-hand graph shows the potential of our business model. The illustrative example shows 1 apartment receiving a decreased value from SEK 961,000 to SEK 851,000, since the yield increased by 50 basis points. Without KlaraBo's business model, this would mean a write-down of SEK 109,000 for the specific apartment. By performing the value add investment, where we for a rolling 12-month period have done approximately 70 apartments per year, we can mitigate the write-down and still come out with a higher market value than the apartment had initially. By keeping a high real occupancy rate of 98.4%, we continue to prove that our business model work even in a volatile market, and that there is a demand for our product Which gives us comfort in continuing the value add work for the remaining of the portfolio that is unrenovated. Now I will hand over to Kristin. Thank you. Now I will give a brief presentation about KlaraBo's most material sustainability topics and our key targets for the coming 3 years. We will also look at some of the metrics for 2022. Over the past year, our focus has been to understand and identify the sustainability issues where we have the greatest impact, and also locate the major business risks linked to sustainability. To identify our material topics, we conducted an in-depth stakeholder dialogue, with aim of gaining a deeper understanding of the issues that create value for stakeholders. We had a conversation with tenants, employees, the board, owners and lenders, as well as the Swedish Union of Tenants. Once we had our list with sustainability topics, we used the methodology of Global Reporting Initiative to prioritize based on the estimated seriousness and likelihood of an impact on society or the environment. The board were also involved in the ranking process, we landed in these 5 material topics. Climate and energy. Our long-term goal is climate neutrality in our entire value chain by 2045, which is in line with the Paris Agreement. As a milestone by 2030, we should only use renewable energy for electricity, heating, and vehicles for our own operations. We also have a goal that the newly constructed housing units are to be certified as the Nordic Swan or Miljömärkt. Another important activity that we will get started on this year will be to inventory all our properties for the risk of negative consequences due to climate change. Secular societies. Here we have 2 focuses. One is to reduce waste, both for households and in construction projects. The other one is to create conditions to be able to reuse materials from our renovations. KlaraBo wants to contribute to safer, more attractive, and inclusive neighborhoods. To do so, one activity is to perform annual security rounds in all our neighborhoods. Another activity will be to offer 50 summer jobs or employment opportunities to residents. We will also establish partnerships with local sports organizations in all our neighborhoods, with the aim of creating meaningful activity for young people. Employees, to create an open, inclusive culture where our employees can develop and reach their potential. We believe in a long-term, even gender distribution and to reflect society with respect to international background. We also want all employees to receive a training in KlaraBo's sustainability work and our code of conduct, which define how we will act to one another, but also the ground rules for our business relations. Regarding sustainable business and governance, we aim for no serious cases reported on ethical violations, and we also want to have 100% sign-off on the code of conduct internally as well as externally. Since we landed the new code just a couple of months ago, the external sign-off is still an ongoing process. This is some of our sustainability metrics for 2022. This was the first year that KlaraBo conducted a climate report, which is based on the GHG Protocol. 2022 will be the base year for the climate reduction target. Since it was our first year, we weren't able to collect all of the Scope 3 emissions. Here you can find that Scope 2 has the largest emissions, mainly due to district heating, followed by other heating from biogas, pellets, oil, in Scope 1. During the quarter, we have decided to install district heating in a property in Sundsvall, which is one of the last to heat with oil. You can also find the metrics for energy consumptions. During 2022, we had a focus on energy optimizations, and we can gladly state that this work led to a reduction in energy consumption by 6%. We also had a 100% sign-off on the code of conduct from our employees last year and no reported cases in the whistleblower or through other channels. Finally, we want to present the metrics for diversity. 31% were women of the total share and about the same on the executive positions. 60% were the share with international background. This was a short summary of some of the steps we have taken, and we will of course, continue to develop our sustainability work and report on the progress in future sustainability reports. Now I will pass over to Jenny. Thank you, Kristin. One more page, please. Hi, everyone. Just a brief summary of our numbers, reported numbers. Revenue amounted to SEK 142.9 million for the quarter, and it's up by 6.2% on a like-to-like basis versus quarter one last year. The increase is a result of renovations and of the negotiated annual general rent increase. We ended, as Andrea said, at an average increase of our rents of just over 4.4% for the portfolio. Just over 40% of the rent increase out of our portfolio of about 6,600 apartments will have an effect from first of April. The general rent increase provides a total of an annual extra income of just over SEK 21 million, i.e., just over SEK 5 million per quarter. SEK 3 million of this will occur in quarter 2, and the remainder has had a partial effect on quarter 1's numbers. Costs on a like-for-like basis have increased by 11.9% year-on-year. Electricity costs continue to be a deviation from last year, up 40% on a like-for-like basis versus the same quarter last year. Surplus ratio ended at 47.2% for the quarter to be compared to 50% quarter 1 last year. The deviation is mainly explained by the higher electricity and other utility costs. If we look at financial costs, they are up versus prior year with the same explanations as last quarter being, firstly, a general increase in STIBOR 3 months, which accounts for approximately 60% of the increase. The average level of STIBOR 3 months of our debt portfolio amounts to 3.2% at the end of March this year to be compared to close to 0% a year ago. Secondly, new credits in connection to acquisitions in Umeå and Östersund, as well in connection to completion of project portfolios in Mölndal and Halmstad. Finally, we have additional borrowings of SEK 250 million in quarter 2 last year as a basis of the value of existing properties. The changes in value of properties amounted to a negative SEK 174.1 million, being the net of the negative contribution as a result of a continued increase of the exit yields and investments made in 41, offset by a positive contribution as a result of increased rental income from refurbishments and general rent increase. Tax expense is positive for the quarter as a result mainly of the negative changes in value properties. If we go to next page, please. Investment properties have decreased compared to previous quarter as a result of the negative changes in value properties netted against the investments made in quarter 1. As I just mentioned, the valuation firm has increased exit yields with an average of 16 basis points compared to previous quarter. This translates into negative effect of just over SEK 350 million. We had a positive increase in value of approximately SEK 235 million coming from increased rents for renovated apartments and general rent increases which came in higher than what was forecasted in the valuations as of quarter 4. The negative effect of increased yields is efficiently mitigated by the positive effect from completed renovations and general rent increase. Due to the negative changes in value of properties, also deferred tax and equity have come down since end of quarter 4, where equity has gone down by our net loss. We ended the quarter with a cash balance of just below SEK 260 million. In addition, we have SEK 300 million of committed credit facilities to be used as needed. The loan to value ratio amounts to 51.2%, and the equity ratio is at 43.9%. Next page, please. Our interest-bearing financial liabilities amount to close to SEK 4.9 billion and have decreased by one quarter amortization since quarter 4. The average credit maturity amounts to 2.2 years, while the average interest rate tenor amounts to 4.3 years. We have during the quarter continued to extend our interest rate maturity, this time by another year, where we have entered into 2 new interest rate swaps for the amount of SEK 600 million. The tenor runs from 8-10 years, with the rapid increase of floating rates, the swaps were cash flow positive already from day one, with the floating rate exceeding the fixed rate. As you heard, we are now at a hedge ratio of close to 80% of our debt portfolio, where only 20% of future interest rate hikes will affect our reported numbers. The average interest rate margin, excluding 3-month STIBOR, amounts to 1.65%, which is the same level as last quarter. The total average interest rate of our portfolio, including floating rates, amounts to 3.5%, up from 3.3% previous quarter. The increase entirely explained by the higher floating rates. The high share of fixed interest gives us a high predictability of our future interest rates and financial costs. Potential future interest rate hikes will only have a marginal impact on the financial costs, which we see as a major strength in today's uncertain environment. As you can see from the chart up to the right, which is based on the FRA curve on 19th of April, the interest rate of our portfolio, excluding margins, would go from 1.87% today up to 2% if STIBOR 3 months continues up to 3.87% end of June this year. The calculations are based on our current debt portfolio, taking into account the outstanding interest rate swaps that we have and how they are being phased out over the next years. It does not include any new hedging, however. Please bear in mind that the FRA curve is only a snapshot and differs from day to day. Hence, the percentage levels are only illustrative based on market pricing of STIBOR 3 months on 19th of April, but illustrates the marginal impact on our interest rate of potential future interest rate hikes. As we have mentioned before, we continue to simulate the development of our main financial ratios and covenants based on increased interest rates, inflation, and also yields, where we simulate the development up until 2026. We use the FRA curve to simulate the interest coverage ratio based on reported numbers and based on forecasts for the coming periods. The latest simulation shows that we continue to meet all our covenants stipulated by our banks for the entire tested period. Back to you, Andreas. Okay. Thank you very much, Jenny, for that run through the finances. I thought that we should go ahead to talk a little bit about our portfolio. As you all know, the company has over 6,500 rental apartments under management, from Trelleborg in the south to Visby in the east, and all the way up to Umeå in the north. We have altogether a real occupancy rate of 98.4%, which in our view, it's a fully let portfolio. The assets are located in 4 regions, with south and east are the largest set to market value. The market value for the portfolio corresponds to below SEK 18,000 per square meter and has a low average rent per square meter in a year for the unrenovated portfolio of SEK 1,068. That level does indicate that with refurbishment, we can increase the rental value with up to close to 40% when we do the refurbishment. Other part of our operations is, of course, the new construction. As we have mentioned, the last couple of quarters, this area is challenging and nothing has really changed for the Q1 of this year. However, we did finished a project in Trelleborg, and we have welcomed new tenants to all 25 apartments that we have newly constructed there. The project is another receipt that KlaraBo houses are much appreciated in the market. We have a market where the majority of Sweden's municipalities have a documented housing deficit, which is now increasing due to the major decrease of residential new construction. Even though that we have developed a cost and production efficient alternative to the rental market with our new constructed KlaraBo houses with reasonable rents, we are forced to continue the temporary hold when it comes to new projects. This is because the material prices, currency yields, energy prices are all pointing in the wrong direction, which does make it very difficult to create shareholder value at this point. We continue to work with our close to 1,300 apartments in planning phase. We will not construct any new apartments in the near future due to the ongoing circumstances. If we look ahead, we do see an increase of revenues with full effect during Q2, since the majority of yearly rent increase kicks in starting 1st of April. The weighted average of increase amounts to close to 4.5%, which is the highest increase that KlaraBo has ever received. On a yearly basis, our revenues will increase with SEK 25 million from Q2. The value add investment through renovations will also continue and hopefully remain at the same level as the last couple of quarters. The value add investment not only creates value, it also increases long-term cash flow and mitigates higher yield requirements as the market is adjusting. Finally, a continued focus on financing through banks, keeping the LTV level at a stable level. Stability and predictability is key, which has led us to an 80% hedging ratio with an average interest rate maturity of 4.3 years. Looking at the existing FRA curve, as Jenny mentioned, KlaraBo will have stability in financing costs coming years. To finalize the presentation, we'd want to add that KlaraBo has a proven business model and a track record by creating shareholder value through renovations, which has increased rental value for residential by over 12.4 percentage points over the general rent increase the last 4 years. This is made possible since the average rent level is only at the SEK 1,068 per square meter in a year. Creates opportunities when investing with the yield on cost between 7% to 8%. Being able to keep a high occupancy rate of 98.4% clearly shows the potential in our portfolio going forward with organic growth. The stability and predictability of the finances through 80% hedging ratio with 4.3 years of interest rate maturity. Coming years, you will get a company that have a rise in income from property management and cash flows, which is clearly shown in our earnings capacity. As we have mentioned before, the income for property management will increase with over 12% starting from Q2. With that, we would like to end the presentation and, hand over to you again, Markus. Thank you very much. I'll start off with some questions, and then we'll switch focus towards the telephone conference. I would just also like to thank you for that table on the interest rate path in the financing section. That's very helpful. First off, most companies nowadays talk about divestments to reduce debt. What's your view on your situation? Are you actively looking into divestments or acquisitions? At the moment, we have focused on just creating the stability and predictability in the company. By doing that, we have increased the hedging ratio quite a bit. We feel quite happy at the moment with that level. There are no other discussions at the moment. Okay. Thank you. Have you seen any deals made on the transaction market, or anything out for sale? Yes, we have. We have seen K2A and Trianon has made 3 deals the last couple of weeks that we will say are quite close to our assets. They have all been made at a very interesting level price-wise. That is, of course, very satisfying, I think, for the market in general. Hopefully, we are looking ahead with maybe a little bit more transactions coming weeks or months or quarters and at the same level as K2A and Trianon have done. A little bit surprising perhaps that the price level that they made the deals have been quite high. That, of course, shows the strength of the market, I guess. We are a little bit hopeful looking forward when it comes to transactions. Have you seen any more transactions out for sale here in the spring? It's been. Well, we have seen a few, not that many, though. The market is still, it's still not really functioning, as it used to be. Again, hopefully with the announced transactions that K2A and Trianon that did, maybe the market will open up a little bit more, in the near future. Thank you. One more question from me before I put it over to the telephone conference. Looking at the investments, you have invested around SEK 300 million, SEK 310 million to be exact, in existing properties and new construction projects on a trailing 12-month basis, and now it's around SEK 70 million here in Q1. What do you think is a reasonable level to assume during 2023, given the pipeline that you foresee? In the forecast that we are working with, Markus, we have estimated around SEK 120 million for the remainder of 2023. That's very clear. Thank you for that. Operator, are there any questions on the telephone conference? If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Stefan Andersson from Danske Bank. Please go ahead. Hello. A couple of questions from me. Maybe going back to where Markus started there. Just trying to... You write in the report that you're hoping to see some acquisition opportunities. As you say, your sales prices have held up rather nicely. It's a bit difficult, of course. You. You would like to see values up, keeping up and because you want to, of course, find support for your valuation and then at the same time see opportunities. It's very tricky, I understand that. If you look at this from your balance sheet side, the interest rate coverage of 1.7 coming down a little bit, LTV is still 50%, so that's okay. How do you view the ICR and then also looking at acquisitions, is there room for you to actually go out and do acquisitions? I think, Stefan, thanks for your question. The ICR is, of course, the single most key figure that we're looking at at the moment. That is, of course, the main reason why we have a hedge ratio of 80% and the interest rate maturity of 4.3 years. Of course, we're not gonna be challenging the balance sheet just to make any new transactions for that reason. At the moment we're not looking at any new transaction in the near future here. What we're trying to say is that at some point, having interest rates that are increasing so rapidly in a short period of time, that might open up for some opportunities in the future. How those opportunities will be financed and gone through, we'll just have to come back with that. At the moment, the ICR is the most important figure for us to have a stable and predictability what's gonna happen with that. Perfect. Thank you. Then on your, on projects, I think you have a list in the report there with some estimated project starts the year. I can notice that you have 3, I think it's 3 projects, Jönköping, Oskarshamn, and Malmö, where you are hoping to start in 2023. At the same time, you say that you don't have all the puzzles, all the pieces in the puzzle there to start now. Would you say that, you know, could we rely on the 2023 there, or is that one still open for postponements? No, I would say it's what we've been saying for the last couple of quarter, is that as long as we don't see the shareholder value in any project, we will not start any project. That is something that we reevaluate every month and every quarter. We really don't have anything more to add on that. At the moment, we're not starting any new projects. Yeah. If you look at the projects that you have ongoing, could you indicate roughly yield on cost there or if you want to, you know, what kind of results you could make out of those projects? You know. on those will be at a similar level as the finalized projects that we've had before. The reason for that is that the project has been on, the costs are almost all of the costs are a fixed rate since they were, the tenders came in before the volatile market started. Okay. Thank you. A final question. We're a little bit surprised, I guess, about Heimstaden's initiative to try to renegotiate rents in Malmö, I think it was. You have some partners down there as well, and some other companies have indicated that they are, you know, viewing what's happening there. What's your take on that? Is that something you would also consider or? Well, we have noticed what Heimstaden and some of our other peers here in Malmö have done. Of course we are following that very closely. As you maybe don't know, the union of tenants that are in Malmö also are the same union of tenants that we have in Trelleborg. Of course, we have 900 apartments in Trelleborg. The development of that new negotiation is of course very interesting for Klövern at least in Trelleborg. All I can say is that we are following that very, very closely. We will see the... We will see how we will act, when, if, something happens in that, in that area. Thank you. Awesome. Yeah. Thank you. Thank you, Stefan. The next question comes from Jan Ihrfelt from Kepler Cheuvreux. Please go ahead. Okay. Thanks. Good morning. Morning, Jan Just a question on. Morning. Question on your earnings capacity, net operating income margin. There is 59%, you landed on 47% in the Q1. Is it really realistic to have 59% as a target? Well, I mean, that's of course, all the numbers that we have in the earnings capacity is the numbers that we think is realistic. You have to bear in mind now that the Q1 is not a representative quarter for the entire year. As you know, Jan, the utilities costs are much higher in Q1 in any other quarter. Another thing is that the earnings capacity has a full effect of the yearly increase of rent value, which is barely not any effects in our Q1 report. There is, we believe that the numbers that we have in the earnings capacity clearly shows what the potential is in our profit and loss, of course. What kind of heating costs, et cetera, do you have put in that calculation? Is it as in 2022 or is it something else? Yeah. It is, it's based on the 2022 numbers. We've increased that with the index. With inflation. Okay. The next question also regards the earnings capacity. Your central administration line indicates a run rate of SEK 10 million per quarter. You landed on almost SEK 13. Are there any extraordinary items or should we expect future extraordinary items on that line going forward? For the quarter, we do have some extraordinary items. We'd, of course, we did recruit a new CFO during the quarter, and that cost is a one-off cost that we have in the central administration cost. There are a few other costs, but we have a little bit of work to come down to SEK 40 million per year. We still think that it's that is the normal run rate that we have in central administration cost. Okay, thanks. You were mentioning the transaction market, and you were also mentioning deals made by K2A, for example. Does this mean that you're if you're going to sell something, is it that the newly constructed ones that you're going to sell, or is it more, I mean, re-renovation? I also mentioned Trianon's deals, and those are existing properties. My reflection there was mainly that the price level in all those deals were at a very interesting level. With that said, we feel quite comfortable with the valuations that we have in our properties, of course. However, if we are going to sell anything, we'll just have to come back to you in that regard. Okay. You mentioned here, figure here, yield on cost of 7% to 8%. Is that what you have in your, the projects that you're building right now? No, the 7% to 8% is the refurbishment. When we do a total renovation of an apartment, we receive 7% to 8% depending where in the country we are. That is the yield on cost when it comes to refurbishment. Yeah. That's what you have in current renovation projects? Yes. Okay. Thanks. A final question from my side. Looking at, you mentioned here, the rent negotiation this year. If we just turn into next year, do you expect or maybe hope that the rent increase could be higher than the inflation to make some kind of catch up for this year? That is quite tough to speculate at this early in the year, of course. I mean, we do expect that the yearly rent increase will be at a higher level than we have had the last couple of years. Hopefully, it's gonna be at least at the same level as we have had this year because we are seeing that the inflation is still high this year, and interest rates, of course, will be higher this year than they were last year. There is, you could imagine that we will at least try and negotiate a higher rent increase than we have had the last couple of years. Okay. Thanks for taking my questions. Okay. Thank you, Jan. There are no more questions at this time, so I hand the conference back to the speakers for any written questions from the webcast, as well as any closing comments. Thank you very much. We have a few questions from the webcast. First off, from Oscar Lindquist from Handelsbanken. Can you give some more details as to when ongoing projects will be completed here in 2023 of 104 ongoing apartments? I would say in the, in the, later stage of the year. The completion and moving in, can you add something there as well? The later stage of the year. We are. The projects are ongoing and the timetable is being kept at the moment. We haven't set a specific date exactly when they're moving in. Before the year end, they will all be moved in, hopefully. Okay, thank you. Another question from Oscar. On average, you renovated 70 apartments per quarter on a trailing 12 months basis. Is this a run rate we can expect going forward as well? I would believe so, yes. Of course, we can't control that entirely ourselves because it does depend on the natural churn rate of the portfolio, of course. It has to be the right apartments that will be vacant. Since we are on a run rate of 70 apartments per quarter, and we have done so for the last year and a half, I think now, there is no reason to believe that that number will be significant lower than the past couple of quarters. Thank you. Oscar had a few other questions, but I believe they are already been answered. We have a question also from Jonas Slättung from FastighetsSverige. For how long do you foresee the stop in new project starts? We can't answer that at the moment. What we have told the market is that at the moment we do have a temporary stop and, we will just have to come back when we think that we can create enough shareholder value to reevaluate that position. At the moment, we're not starting any new projects, however. Very clear. I have another question on that topic. Do you have any further view on construction cost in specific? Have you been in any discussions with any construction company or any view or thoughts on potential downturn in construction costs? We see that some material cost is at somewhat lower level than before. All in all, nothing has really changed during the Q1 here. Another reason for that is of course it's not only the material cost that we're looking at. We do have a problem with the energy prices, we have a currency issue, and of course, we are still seeing yield requirements that are moving up when it comes to new construction. Of course, that does affect the profitability in new construction. It's not only one item that needs to change. We do have a few items that needs to stabilize a little bit and before we can go ahead again. However, we do have the organic growth and of course, we're extremely happy to have the organic growth by renovations in the company. We can still add the increase of income from property management. Understood. Thank you. That's all for me, I'm handing back to you to, for some concluding remarks. Okay. Well, if we don't have any more questions, I would like to thank everybody for listening today and thank you Markus for moderating the presentation today. Thank you everybody, and have a good day.