Welcome to Neobo Q4 Report 2024. For the first part of the conference call, the participants will be in listen-only mode. During the Welcome to Neobo Q4 Report 2024. For the first part of the conference call, the participants will be in listen-only mode. During the Welcome to Neobo Q4 Report 2024. For the first part of the conference call, the participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing key 5 on their telephone keypad. Now, I will hand the conference over to CEO Ylva Sarby Westman. Please go ahead. Thank you, and welcome everyone to the presentation of Neobo's Year-End Report 2024. My name is Ylva Sarby Westman, and I'm joined here today by our CFO, Maria Strandbeg. Sweden needs more affordable housing, and by developing our properties to meet people's needs, we aim to contribute to a more sustainable residential property market in Sweden. We have worked intensively during the last year to prepare Neobo for compliance with Nasdaq Stockholm's listing requirements. The listing was followed by the positive news that Neobo, at the end of the year, had been included in the EPRA index. Operations have continued to perform well throughout the year. Rental income in the like-for-like portfolio increased by 6%, driven by rent adjustments and lower vacancies. Net operating income increased by 12% in the like-for-like portfolio, and profit from property management increased by 3%, despite the divestment of seven properties and higher financing costs during the year. Unrealized value changes amounted to minus SEK 301 million, reflecting a 2.2% decrease over the year. We have a residential-focused property portfolio with a value of SEK 13.7 billion and 8,300 apartments. Residential properties account for 95% of the value, and the remaining value mainly consists of community service properties. Our rental value is slightly above SEK 1 billion, with 77% derived from residential apartments and 20% from commercial premises. Increasing the occupancy rate has been a top priority since we started Neobo. The occupancy rate in the residential portfolio has improved by 1.5 percentage points since the start of Neobo and by 0.3 percentage points during last year. During the summer, a six-year lease agreement was signed with the Swedish Prison and Probation Service, with a rental value of SEK 10 million. In conjunction with occupancy during summer this year, the commercial vacancy rate will fall by 2.9 percentage points, and the total rental value will at the same time increase by SEK 5 million. We create attractive and sustainable living environments where people can thrive and feel secure, and during the year, we have invested SEK 164 million in value-creating investments that have increased our net operating income and made our residential areas more attractive and secure. This includes renovation of about 100 apartments and a number of sustainability investments. We have taken further steps on our sustainability journey and successfully met all internal sustainability targets for 2024. We have continued the important work with energy optimization in our properties and conducted a survey of climate-related hazards. We have also implemented a code of conduct for employees and a corresponding one for suppliers, enhancing our ability to steer sustainability initiatives in the desired direction. During the fourth quarter, we completed an energy and climate roadmap, detailing the necessary steps and providing a comprehensive assessment of the required actions to achieve our long-term goals. Work on our climate report for 2024 is in progress and will be presented as part of our Sustainability Report 2024. It is positive to note that the liquidity in the transaction market is recovering and that transaction volumes in Sweden increased by 40% compared to the previous year. We are optimistic that liquidity will continue to rise, which is positive as we plan to accelerate our transaction activities in order to further optimize and grow our property portfolio. Some comments on our year-end result: rental income increased to SEK 908 million, which is a net effect of higher income in the like-for-like portfolio and the absence of income from seven divested properties. The like-for-like portfolio showed an increase in rental income of 6%, explained by rent increases, reduced vacancy, and additional rent increases as a result of renovated apartments. Total property costs increased by SEK 6 million- SEK 435 million, and the increase is a net effect of higher costs for operations as well as reduced costs for maintenance and sold properties. The increase in operating costs is mainly attributable to increased costs for tariff and snow removal at the beginning of the year. Excluding non-recurring costs, property administration decreased by SEK 2 million. Net operating income increased by SEK 30 million- SEK 473 million and in the like-for-like portfolio by 12%. Central administration costs declined to SEK 75 million. During the year, we had non-recurring costs of SEK 16 million attributed to preparations for the transition to Nasdaq's main list, reorganization, and to a provision in the fourth quarter relating to an ongoing insurance case. Excluding one-offs during both the current and preceding year, central administration costs decreased by SEK 11 million as a result of the structuring of operations now being complete. Profit from property management during the fourth quarter increased by 50% compared to the corresponding period previous year. Neobo's earnings capacity is not a forecast and does not include any assessment of future trends. Since the previous quarter, profit from property management has increased by SEK 17 million, mainly attributed to increased rental income of SEK 23 million as a result of indexation of commercial rents and increase in negotiated residential rents. So far, 48% of our rental income in the residential portfolio has been negotiated, with an average increase of 4.9%. That That took full effect as of January 1st of this year. The remaining rent negotiations are expected to be completed during the spring. Increased property costs are attributed to higher tariff expenses and increased central administration costs due to the addition of two new employees, a head of transactions and a financial controller. The improvement in net financial items is primarily due to a lower policy rate. Over the past three years, the value of the like-for-like portfolio has decreased by SEK 2.2 billion, with a decline of SEK 301 million during 2024 due to increased yield requirements and also higher tariff-based costs. The average yield requirement used in the valuations has increased from 3.8% in the beginning of 2022 to 5.0% by the end of 2024. We now clearly observe that yields have leveled off and stabilized. We continue to conduct external valuations of all our properties quarterly to ensure accurate and reliable book values. We have a strong financial position based exclusively on bank financing from banks in the Nordic region. Over the past year, we successfully refinanced loan agreements totaling SEK 2.7 billion at margins lower than our average interest margin. Additionally, we reached an agreement with our banks to reduce the annual amortization rate by 50%, which will enable us to prioritize value-generating investments and accelerate the refinement of our property portfolio. The average debt duration amounted to 2.8 years at the end of December, and our average interest rate amounted to 3.2%. Since we have a higher hedge ratio of 76%, that effectively has offset the upswing in interest rates that took place over the past years. The average fixed rate period was prolonged from 2.2 years - 2.8 years during the year, and the ICR amounted to 1.6x on a rolling 12-month basis. The Swedish central bank reduced the policy rate on multiple occasions throughout the year to support the economy and stabilize inflation at its target level. For Neobo, this will result in an improved financial position and enhanced opportunities to make value-accretive investments in the property portfolio. In order to secure future cash flow and further mitigate financial risk, we utilize interest rate derivatives. At the close of the period, the total nominal value of these swaps amounted to SEK 5.4 billion, with maturities ranging from 1 year- 7 years. Additionally, there are interest rate derivatives with future commencement dates totaling a nominal amount of SEK 1.4 billion. Here you can see our largest shareholders as of the end of December, and we are very pleased with our large number of shareholders totaling 102,000. Some key takeaways: we see a continued increase in both NOI and profit from property management, with a positive outlook going forward. Strong prospects for rental growth in the coming years. Refinancing of bank loans of SEK 2.7 billion and halved amortization in a significantly improved financing climate. Listing on Nasdaq Stockholm and inclusion in the EPRA index. We have successfully achieved all interim targets for sustainability in 2024, and we see improved liquidity in the transaction market as we now increase our focus on optimization and growth. We are now entering our third year with a solid foundation in place and strong opportunities to generate shareholder value moving forward. With this, I would like to open the floor for questions. If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Keivan Shirvanpour from SEB. Please go ahead. Good morning, and thank you for the presentation. I just have a couple of questions. First of all, the earnings capacity. You mentioned that 48% of the negotiations are finalized, so that's 4.8% rent increases. Are only the completed negotiations reflected in the earnings capacity, or do you have any type of assumption for the remainder of the portfolio? No, only the negotiated part, 48% of the residential rents in the earnings capacity. Okay. Also, when it comes to the rent increases, 4.9% for 2025, do you have any type of two-year agreements that could give an indication for rent increases for 2026? Yes, we have a few ones, but we have also seen in the market a two-year agreement indicating increases of approximately 3.5%-4.5% during next year, depending on which municipality and what type of premises and so on. Okay. Do you have any type of indication for 2027? Do you think this will carry over at a slightly lower rate, or do you have any type of assumption for 2027? No, we have not really done that assumption yet, but hopefully it will be a bit over inflation since we still have high inflation during the last years that we need to pick up on. Okay. I am also wondering about the investments. You had SEK 167 million in investments, and you talk about you want to continue improving the portfolio. What do you expect for the type of investment pace in 2025, and how will this be financed given your LTV is 51%? Will you divest properties, or? I think we will be able to keep the same pace during this year with only our earnings and the cash flow generated from operations. Hopefully we will be able to grow the portfolio further. When it comes to the investments in the existing portfolio, we think that approximately the same level as this year, sorry, as last year. Okay, good. I have a, yep. Okay. I have one final question, and it is related to the operating and maintenance costs in Q4. First of all, how much of the decline is due to weather effects isolated? Yes, good question. When it comes to, if you compare the fourth quarter 2024 with the last quarter previous year, it has been warmer and not so much snow, and that has, of course, affected the costs in a positive direction. We have also worked very hard with trying to lower all our costs. I don't have the exact figure. Of the SEK 17 million combined operating and maintenance, could you say it's maybe half of that, or? Yeah, maybe half or a bit more. Okay. Just a final follow-up on that, and that's also related to the weather. Based on the first one and a half months of the year, did you expect any type of carryover from weather effects in Q1, maybe? No, we don't expect that. Okay, good. Those were my questions. Thank you. Okay, thank you very much. The next question comes from Jan Ihrfelt from Kepler Cheuvreux. Please go ahead. Okay, thanks. Good morning. I have a couple of questions. Starting with your earnings capacity, just to be how to interpret that. You have included a contract that will not hit the panel until, let's say, mid-2025. I'm looking at the Sollentuna contract. Is that correct that you include that in your earnings capacity? No, we haven't included that in our earnings capacity. We have a very strict way of presenting the earnings capacity. As we say in the report, we only use contracts really active on the specific date. As of January the 1st this year, that we can see in the Q4 report, we haven't included the signed lease agreement in Sollentuna. It will start to affect earnings capacity when they have moved in and started to pay rent. It will have an, when they move in, it will have. Yeah, I'm just coming back to the earnings capacity. If I, I mean, just do a simple math here, dividing the Q3 earnings capacity when it comes to rental income, you end up with SEK 231 million, and the actual outcome was SEK 227 million, so it's SEK 4 million lower rental income than the earnings capacity indicated at the end of Q3. Something changed during the quarter here. Sorry, can you please repeat the question? If you look at your earnings capacity at Q3. Yes. Divide the rental income by four, then you probably will end up with what you're going to deliver in the fourth quarter. That's a difference of SEK 4 million in rental income. I just wanted to check whether something has changed during the quarter? No, nothing has changed. I think that probably we see the effect that only at each date, we only present the things that have really, really happened in the earnings capacity. Maybe that's something that can explain the difference. We can absolutely take a look into this deeper, a bit deeper into this question. Okay, great. Next question regards financing. You mentioned that you have ended up with a somewhat lower average interest rate for your new financing. Could you maybe share a little bit of what kind of magnitude in terms of basis points that you have been lowering your average interest rate from the new financing? Yeah, I mean, we see a significantly stronger finance climate. It is very positive when it comes to refinancing discussions right now. We have not communicated the exact figure, but I mean, we have said before that we have an average margin in Neobo somewhere around 170 basis points. We have the refinancing agreements at lower levels than that. So maybe 150 or? Yeah, in a range of, I mean, it is more than one refinancing in the figure, so they have different levels, but yeah. We have not communicated the exact figure since we are in ongoing discussions, negotiations with our other banks right now, but we see it is a competitive market. That is very good. Okay, great. I'm just a little bit puzzled about your, as I follow a lot of similar companies, your NOI margin comes down seasonally very much in the fourth quarter compared to your, let's say, three capacity or are there any reasons for it, or is it some kind of extra cost that you maybe could squeeze out later on? Yeah, I mean, I think the surplus ratio still is too low in Neobo, and we are really focusing hard on increasing it in a lot of different ways. I don't know why it's, I mean, since we had a strong development in NOI. Of course, the fourth quarter is a bit challenging always. That's why it's lower in Q4 and Q1, but we can see an improvement on a full-year basis, and we are very glad to see that we are going in the right direction with a positive trend. Okay, and have you set up any targets for your NOI margin in a couple of years? I mean, just to get a feeling, where are you targeting? Yeah, not a specific number, but we are really targeting substantially higher surplus ratio. Substantially higher. Okay. Yes. Okay. And my last question regards, could you just remind me of the metrics here? Loan to value, ICR, and so on. Your targets, and does this have any constraints to your expansion plans? No, there are no changes in the financial goals and restrictions to keep the LTV below 65% and the ICR above 1.5x. It is the same financial targets and restrictions that we have already had, but of course, we will take very good care of our balance sheet and our financial position. Since it is important for us, of course, to keep a strong position. Okay, thanks for taking my questions. Thank you very much. Yes, and then we have some written questions. I start with the first one. There are no questions at this time. I hand the conference back to the speakers for any written questions and closing comments. Yes, we have some written questions as well. I start with the first one. The vacancy, can you give a more detailed description of it? Yes, it has been a top priority, as I said, since we started Neobo. We can also, I mean, we have lowered the residential vacancy from 6.6% when we started Neobo to 5.1% today. We see clearly that we have, I think, 50% of the vacant apartments located in four or five areas. We are really targeting them and focusing on increasing the attractiveness in these areas in order to lower the vacancy rate going forward. When it comes to the commercial vacancy, we still have a high figure, but it is the same situation. We have 50% of the commercial vacancy in four or five properties. We can really focus our efforts to those vacancies. We have good hope that we will be able to lower or to increase the occupancy rate going forward. Yes, and the next question, can you please give some color on the current options for refinancing? Yes, it's the same question. As I said, really, really strong, good climate right now. I mean, we have seen the bond market really, really, really recovering, almost all-time good conditions, at least for some companies. It is a good situation. I mean, we are really, we have strong relationships with our banks, very, very good discussions with them, and really appreciate their intention to help us. Also, we have lowered the amortization rate by 50% in order to be able to increase value accretive investments in the portfolio and so on. It is a good situation right now. Yes, and the next question, can you elaborate more when you say you want to focus on growth? Yes, it's a very good question, of course, since I mean, our portfolio, it's still low-yielding residential properties. We think that we have good opportunities to both grow by continuing to invest in the existing portfolio, doing renovations of apartments and sustainability investments and so on. We will also be active and really evaluate opportunities to grow the portfolio through acquisitions since we think that it's a good way to create increased shareholder value and increased profit from property management per share. We will continue to evaluate interesting opportunities. If it's possible to really increase shareholder value, we will take the opportunity. Yes, could it be an option to sell some properties and start buying back your own shares? We would like to optimize our property portfolio as we have communicated. Absolutely, we are working, trying to do some good divestments. Our core business is to increase the yield from the property portfolio, and that's our focus. If we will buy back shares, it's a question for the board, of course, but as we see now, we think that it's better long-term shareholder value to really invest in the liquidity in the existing portfolio. Yes, and the last question, an ICR of 1.6x, how fast do you think it could improve? Yeah, I think that it will improve during coming years. We will absolutely see an increase during this year. Yes, that's the last question. Okay, thank you very much for listening in, and have a great day, everyone.