Welcome to the Platzer Q3 conference call. 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 star five on their telephone keypad. Now, I will hand the conference over to the speakers. CEO Johanna Hult Re n tsch, and CFO Fredrik Sjudin, please go ahead. Welcome to our presentation, our Q3 report. Fredrik and I will take you through this, and let me start with taking you through the highlights of the report. It is well known that our sector is weighted by raising interest rates, and it is even more important that our day-to-day operations and lettings are delivering. So I'm very pleased to announce that we have a record high rental volume in our investment properties of SEK 117 million so far this year. Our net letting comes to SEK 8 million, and that is, of course, the balance between newly signed leases and termination of agreements, and this is very positive. We have been continuously delivering this positive result quarter after quarter for a long period of time now. This helps us growing our values. In renegotiated agreements, we achieve a rental increase of 15%, and that is well exceeding the CPI level. That means also that our investment portfolio, we have managed to double the net letting compared to the same period last year. I want to put this into the right context, why I'm mentioning the importance of our letting in our investment portfolio. As Platzer, we are focusing only on Gothenburg region, and we know this market very well. As a result, of large volumes of new office space coming out the last year onto the market, about 175,000 square meters, this new office space has been almost fully let. But we also experience a clear flight to quality, causing higher vacancy rates in older existing office space. We are now reaching 11% on the market. Hence, it's for us really important to highlight the achievement as our letting in our investment portfolio and existing stock is reaching these really, really good volumes. Our ability to fill the vacancies are crucial for our delivery, so we are really, really pleased. We also do experience a good demand for offices and its industry and logistics in our region, which we understand might stand out in comparison to Sweden as a whole. However, we are humble that this might change going forward, depending on how the global economic situation develops. Sorry, going forward, we are still closing as many lease agreements this period as last year, so we don't really see any change. But of course, should we get a dip in the demand due to, for example, that we have an unemployment rate that goes up, that will, of course, also affect our operations. So our operating surplus in this period is up 15%, and we are delivering the highest operating surplus so far of SEK 840 million, compared to SEK 709 million last year. On rolling 12 months, the operating surplus reaches as much as SEK 1,044 million. The largest effect we get from our newly completed product, Kineum, and the tenants that have taken occupation there, together with the purchase of Sörred Logistics Park. So this shows that we are well-performing in the core operations, and that's also giving us the ability to navigate and grow despite high financial costs. In our market valuation process of our portfolio this quarter, we have continued to adjust our portfolio values, and we have taken into account an increase of yield of 9 basis points on the total. We have now an average valuation yield in our portfolio of 4.94%. If we isolate the office stock, which is approximately 75% of our portfolio, we have an increase of 11 basis point and an average of 4.8% yield. The adjustments compared to Q2 2022, when our properties was valued at the lowest yield, is approximately 50 points up compared to now. There has really not been any comparable recorded office transaction on the Gothenburg market, especially not the office market. So hence, there is a little bit difficulties to find evidence in the market yield at the moment. We are a bank-financed, traditional bank-financed operations, and our long-term owners gives us a solid platform for further growth in this market environment. And we also believe that the diversification in our main segments of offices and industry and logistics has an equalizing effect on our stock and customer demand. So as I mentioned, our focus is Gothenburg. So why Gothenburg? Well, our region is experiencing a stronger economic resistance than Sweden in overall. The regional GDP growth in Gothenburg has in fact been 65% the last 10 years, and that's well exceeded the eurozone, which has an average of about 13%. So there is something special happening here. Well, the region has, of course, the largest export in Sweden of about SEK 350 billion, and it also holds Scandinavia's largest port, which is still experiencing an increase in volumes and market shares. Gothenburg has also got the lowest unemployment rate in the entire Sweden. It's now 5.5%. But why does then Gothenburg come out stronger? Most likely, one reason is that Gothenburg is Sweden's innovation powerhouse, and here a lot happens simultaneously. You find an extensive variety of trade and industry spanning over more than 750 different industries. We have leading competencies in life science, automotive, electrification, logistics, and city development, to mention some. But it's also one of Europe's most innovative regions. We have 34 of Sweden's private investment in R&D is actually placed in this region. Gothenburg is also the heart of the green industry transformation. Two weeks ago, we had the groundbreaking of Novo. That is the battery plant that Northvolt and Volvo is investing in. It's an investment of SEK 30 billion. Polestar has announced that they will establish their worldwide headquarters and development center here in central Gothenburg, and only these two investments results in 8,000 new jobs. However, having laid out the specifics of this region, we are, of course, humble what the future holds. Gothenburg economic activity has weakened. We are now on the level that is between normal and recession, and the latest statistics from National Institute of Economics shows a weaker economy on all. But how far this economy will dip and how for how long? It, of course, depends on what margins the households have, the global demand, and how that affects our strong export industry, the unemployment rate and exchange rate, and also, of course, the ability to match high-knowledge work competencies that is really sought after in this region. Obviously, this global situation will affect our business and the importance of cost control, prioritizing the right project investments and customer focus that is really essential for our business going forward. If we then look at our client base, we have a solid base of clients. Our top 10 tenants are listed to the left, and they are co-contributing with 36% of our revenues. 22% of our revenues are from public tenants. Speaking of our tenants, I will now hand over to Fredrik, that will guide us through our income statement and overall results of this period. Thank you, Johanna. We'll start with the income statement and begin from the top, so to speak, and if you look at the rental income development for the period, if you look at Q1 until Q3, for this year compared to last year, we have an increase of 16%. As Johanna mentioned earlier, the main drivers to that is, of course, the occupancy in Kineum when we finished up that project, and then as well as the transaction that we made in the mid-year in June 30 of Sörred Logistics Park. Looking down to the operating surplus, we have an increase of 15%, which is almost in level with the rental income development if you compare this period compared to last year. But we have some one-off effects that is impacting that. We had a positive effect last, no, that was the last quarter. But for this period, we have a one-off effect of about SEK 20 million, and that's driven from electricity support and transaction costs. And then we have as well, for the period, we have some new costs connected to the occupancy in the project and the transaction as well. That, of course, it's not only income that will come with it, we have some increase in costs as well. But the main driver that we have at the same development of the operating surplus is some one-off effects that we have to take into account. Going one step below, income from property management, we have a decrease if you compare it to last year, and the main impacting driver, as we all know, is the rents, the financial costs that are increasing due to market rents. And then we have the factor, in our case, the transaction. We have an increase in debt volume if you compare this quarter to the last quarter of about SEK 1.3 million. And that, if you look quarter-over-quarter on the financial net, we have an increase of SEK 30 million, and almost SEK 20 million of that is due to new debt, and the rest of that is driven by interest rates. Further down, we have a change in value of properties, unrealized value changes. As Johanna was mentioning, we have a yield decompression to manage. We have a negative effect of about SEK 1.3 billion for this period. And we have some mitigating effects, what we do in our day-to-day basis in our property management, that will sum up in some increased cash flows, and then we have the project development pipelines that are mitigating that. So for the period, we are down SEK 1.1 million. Looking into the earnings capacity by the end of the period, this is signed leases looking ahead and the leases that will be within a six-month period that we take into account in the earnings capacity. And it's down somewhat compared to last quarter. And how does that connect to the net letting? That's because all of the net lettings doesn't directly go into the earnings capacity. In if you look in our report, we also have a section, a short, where we show other lease agreements that will come into play after April first, the periods that start after first of April. If you combine those two, we have a zero net negative effect in the earnings capacity, if you look at all in all. But the negative effect in the current earnings capacity, that's vacated premises, and some of it is from our own projects in Södra Änggården, where we are moving tenants, and some of it is due to terminated leases. The net letting short in the isolated quarter, we have a positive effect of SEK 8 million. Johanna mentioned that we have a positive effect in our investment properties, our standing assets, so to speak, for SEK 20 million. That's twice the amount of net letting in our investment properties compared to the same period last year, which is, if you look at the strategic essence of this, we have fewer projects to occupy, and we are really keen on getting the cash flow as soon as possible. So we will occupy our standing assets as much as possible, and this is a really good receipt of that. And the bulk volume is the gross volume is SEK 170 million in lettings in our investment properties. But we also have some project lettings, so for the whole period, we amount to SEK 38 million in net lettings. I mentioned changing value of SEK 1.1 billion, that we have in our income statement, but, that's not all, all factors, that impact our balance sheet. We also have a project pipeline and investments, in our ongoing projects and our existing properties that amounts to SEK 1 billion. And then we have the property transaction that we made thirtieth of June of SEK 1.5 billion. So all in all, our closing balance in our value of properties is at SEK 28.4 billion. This graph shows that we are still growing. We are growing in both our business areas, and we still deliver growth in market value. And, of course, market value by itself isn't the whole story. We will deliver our... Net asset value over time, and that's, as you can see on the chart shown, the market appreciation through the share price connected to the net asset value doesn't always meet, but over time, they seem to correlate. And I will not draw any conclusions of that, but sometimes the market is drawing the wrong conclusions, but I'm not here to judge. But you can see we have a discrepancy now, and over time, they will meet again, I would say. We have a decrease now since the year-end of 7% in our net asset value. Key figures. What's top of mind? Interest coverage ratio is on all dashboards now, I would say. We have a decreasing interest coverage ratio driven by the hike in interest rates and of course our debt portfolio. We are now for the period at a level of 2.2 times, and if you look at the rolling four quarters, we are at 2.3. That's above our financial target. We have a parameter that is 2.0, and we are aiming to keeping that at bay, but it's well above any covenants that we have. Of course with the interest rate hikes that we are facing, of course, this is a challenge. We are keeping our financial targets at bay all in all. Our loan-to-value is at 49%, and our target is to be below 50% over time. Then there's the issue of refinancing, and we are a traditional company, and we have 80% of our financing is dependent on our bank relations and 20% of the capital markets. In the graph on your left, you see the gray-shaded chart, and part of the chart is our capital market financing. In the short term, it's our commercial paper program that we are keeping up with the market conditions and refinance ourselves there as far as possible. Then we have in the column that you see 12-15 months, that's an MTN. It's a bond in our own name, unsecured bond. The next period is two bonds actually, that is secured in the period of 15-18 months, secured bonds through SFF. But we have those within good grasp of our refinancing plan going forward. We have capability, credit facilities of SEK 2.1 billion in our books, but we will mitigate this refinancing without any great hassle. We are still trying to develop our sustainability linking in our financing. We are now at 66%. We have had a higher ratio, but due to increasing terms and conditions, we have gone below 70%, but we are working on making progress at that going forward. Sustainability is an important key factor for us, and I will now hand over to Johanna to keep you updated on where we stand right now. Platzer was one of the first companies in Sweden to receive the green label, Nasdaq Green Equity Designation, two years ago. To qualify, more of 50% of sales and the majority of investment must be made in green activities. We are, of course, renewing the green label each year and through an audit. The results of this latest audit, we can see that we have a green classification in 90% of the rental income, 89% of the operations, and 91% of the investment, which we are really glad for. On this slide, we present three different areas from our sustainability work. We have the energy consumption, which we have been focusing on for many years, and compared with the same period last year, we have decreased our energy consumption with 5.8%. We have continued to invest in further solar plants, and we have now 17 of them, and with an installed effect of 3,750 kilowatts. When it comes to CO2 emissions, we're looking at scope one and two, and there we also see a reduction. The green leases that we have now signed, we have increased further to 63%. We have a positive result and progress in all three areas, both in relation to last year and also during the last ten-year period. I would like to summarize what we identify as our success factors. We are experts of commercial property in Gothenburg. Our customer focus is actually important, and this current results in this report shows that we are on to this task. Our growth rests on three pillars: our ability to create an increased operating surplus from our investment properties, of course, the strategic property transactions, and project development. We also find that we have a strength in our diversification of offices and industry and logistics. The tenants are different. They have different drive and business logic, which has got a balancing effect on our business. Our committed and skilled employees with the ability to create these results, we are very proud of, and our financial strength, as we described before, with 80% bank financed and strong support from solid long-term owners. Now that I have joined as the company's CEO, I look forward to develop this business further together with my committed and skilled team. I truly believe in our strategy of district development to reach strong long-term results. Under my leadership, we will continue to be dedicated to our customers and also bringing our sustainability work into our core business. This is to further enhance our businesses and our results, and I'm convinced that these strategies will lead us to further success. With that, we would like to open up for Q&As. If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Lars Norrby from SEB. Please go ahead. Hello, Johanna. Hello, Fredrik. Hello, Lars. Hello. Given that we are in a situation with sharply higher interest rates than since a little while, a few questions about your financial situation. You brought this up to yourself, but nevertheless, the ICR R12 standing at 2.3, I think that's down from 3.6 at the beginning of the year. The LTV is at 49%, up from 44% at the beginning of the year. In terms of targets, you mentioned the ICR at least 2x and the LTV of 50%. So taking them one at a time, the ICR, looking at the period 2023-2025, are you confident that you will be able to stay above 2? Yes, I would say that it will take a real effort, but the direction is negative, of course. But that is new. That's not news to us because we made our calculations in advance. But, of course, I have to answer with some assumption of the development of the interest rates. So if that increases, I don't know, if you say 200 basis points, then there's a whole other area to take into account. So of course, we are dependent on the market conditions that we cannot impact on our own. But so it—the challenge will be connected to the market conditions. We are working to keep our financial goal 2.0. So that's what I can say for now. Regarding the LTV at 49%, taking into account that you have, as I understand, signed an acquisition, the Mimo transaction from NCC coming on board planned, at least for the final quarter of next year. You're close to the 50%. Yes. Will you be able to stay- Yes, correct. Beyond 50, taking that transaction into account? That's correct. We also have signed divestments as well that will mitigate that effect. But all in all, if we go sideways from now and add on Mimo in Mölndal, of course, that will not keep the financial target at bay. So we have to do some mitigating effects, some mitigating measures to meet up with that. And there's not a set date for the transaction of Mimo as well. That's also due to market conditions. So the timing, the exact timing, we don't know. It could possibly be in Q4 next year. ... And just finally, just a question, additional question regarding that transaction. It's a signed deal, isn't it? You can't back out of it, can you? No, not if the conditions on the seller's part is fulfilled. And they have some conditions as well to meet up against. For example, the 80% letting rate, isn't it? Yes. It's quite far from that at the moment, roughly half. Yes. Yes, that's correct. So, will it not come on board until the 80% level has been reached? Is that correct? That is correct. That's what the agreement says now. And the market has shifted since that was signed. So but, that's what the agreement - the signed agreement says. So you have to be above the 8%. A final question on that, just the funding for that transaction, is that already today sort of secured? Do you have that? We have the possibility to fund that transaction. Yes. We have capability in our own portfolio to execute on that. Okay. Thank you. Those were my questions. Thank you, Lars. The next question comes from Markus Henriksson, from ABG Sundal Collier. Please go ahead. Thank you. Good morning, both. A few questions from me as well. First off, on net letting, it's been positive every quarter so far. Could you say anything about the end of September or earlier into October? Do you experience any weaker or stronger market, market? Do you receive more or fewer requests from te nants? Anything that could help us out there? Hello. We actually don't really—it's rather that it's more active now than it was before summer, I would say. So the demands from the tenants are still there. And when I speak to colleagues in other parts of Sweden, I understand that that might be a bit different, but might have to do with the specifics in the Gothenburg market. But we don't really feel that it's any decrease in demand at the moment. No. Well, When it comes to the office space. Yeah. I would also say the logistics that is a slightly different product, of course. We have got a 1% vacancy rate in the Gothenburg area, and our portfolio is located in Arendal and Torslanda. And that means that it's really in this hub, which is not only depending on logistics and it's also light industrial, et cetera, and also the whole green reindustrialization is really affecting this area. So I could see that the market conditions slightly stronger. Yes, and Marcus, we of course have to take into account compared to which time period, because we are now. It's not like in the good old days, that was pretty recently, but there hasn't a hesitancy in the market existed, that it, it's a longer time frame to get the signing, but we haven't seen any decrease now. So it's good market conditions for us in our net letting. And as our figures show that we report, that we are still producing positive net letting. Thank you very much. Then you discussed different one-offs. I heard SEK 20 million popped up here. I just want to have a bit more details. Back in Q2, you reported SEK 10 million in electric subsidy- Yeah ... and it was a positive net effect of around SEK 5 million, if we looked at net operating income. Then I see a few items affecting comparability here in the Q3. Could you just help us out? What is the isolated effect in Q3, positive or negative, and what has happened? If you look at the one-offs in the isolated quarter, I would, the SEK 20 million is there, and you can divide it into half of it due to transaction costs and half of it due to electricity. All right, thank you. And then a follow-up on electricity. Electricity prices are down year-over-year, so could you help us there as well? How have you hedged costs so they are up year-over-year? How should we think going forward? Yeah, but then you look at the spot price year-over-year, and we have had in 2022 we had an average price of SEK 1.1 per kWh, and now we are more than double in the year 2023, because we hedged 2022 earlier on. So it's not... you can't compare spot price 2022 with spot price this year. So we have more than twice year-over-year comparison price. It's also not been possible to buy on fixed prices, we should also say, in 2023. Yeah. This must be available for corporates. ... Thank you. And, and also that effect, the negative effect of electricity prices, when, when did that start to kick in for you? When were your hedges lifted off? I would say in the beginning of this year, but we have the accumulator effect. I will have to come back to the accumulator effect because now we have looked on quarter to quarter, but since the beginning of this year. Thank you. Then you mentioned that transaction costs in one-off, as a one-off. I just note that if we look in your segment reporting, and I look at logistics, top line is up around SEK 7 million sequentially, while the costs are up SEK 11 million sequentially. Also then if I look at the NOI margin in the segment reporting, it's down almost 10 percentage points year-over-year, and also a very steep decline Q1 Q. Is the transaction costs included here, or why do you see so high costs from the logistics? Yeah, it's a non-recurring item, so it's the one-off. Okay. And also, you have mentioned previously that there has been some rental discounts in this transaction from Bockasjö. But the main effect here, should we, if I phrase it like this, did you have a full positive impact from the acquisition here in Q3? So just the burden of the one-off is the one we should exclude. I would say top line will be Q4 and going forward, then we will be in the right position regarding discounts. All right. Thank you. So not the full effect. Thank you. Then also, as Lars was discussing regarding Mimo, do you have a fixed net initial yield here in the signed transaction, in the signed LOI with Mimo? Yes, that's correct. Correct. The wiggle room you have, if the leasing ratio is below 80%, else you need to acquire it. Yeah, yeah, and what property value? So it depends on what the lease agreements, what amount they are signed at. So there are still moving parts in this transaction, a lot of moving parts. The project is making good way, I would say, so they will be finished on time, project-wise. Perfect. Last question, you discussed a bit on your ICR 2x, and that your covenants are well below. Could you help us out on what level do you have your covenants? No, we don't discuss our covenants. Fair enough. Thank you. That's all my question. Thank you, Marcus. The next question comes from Johan Edberg from Handelsbanken Capital Markets. Please go ahead. Good morning, Johan, I'd like to thank you. My question has a little been answered regarding ICR, for example, Marcus' question just before me. I mean, if you look at Q3 isolated, rather than the past twelve months or Q1 to Q3, I think, think it falls down a bit 2x, depending a little bit on how you treat the, income from or results from associate companies. But is that an issue from a rating perspective, for example, ICR, how they're looking at the ratio? Is it more like the past quarter or the past twelve months, and could that be an issue for you? Of course, it will be... We will get closer to discussions with the rating agency. That's when you are getting closer to your financial targets, so that's a given. So, I will see what the next update will show from them. But we and all other depending companies, we will be impacted, and then the rating agency, of course, has to take that into account. And they don't look at the-- they look at the short term as well, but they have to make a forecast of where we are heading, and can we keep the financial targets at bay? So we might get closer to them, but if we have a good plan and how we will manage them over time, and how quickly we will get back on the race course. So I will not be surprised if we will get some more discussions going forward. With regards to the assets or companies or joint ventures, do you receive any kind of cash flow from those, or is it more rather cash outflow from those commitments? In our joint ventures? Yes. Not so negative-wise. We done some letting in one of the old ones, one of the original ones, and the other in Gårda Vesta, that's just a property that's ticking going forward. So no negative effects. We have some minor investments, of course, connected to the letting in Stigberg, Masthugget—but no, nothing with significant impact. Thanks. And maybe finally, it might be a stupid question, but I mean, you referred to slight vacancy, and we see that in your numbers. You're still reporting positive net letting and renegotiations and releases are on the positive side. But what is quality in your view? Is it only new production that is high quality, or is it also a question of local markets where you're better exposed compared to the average kind of Gothenburg exposure at this point? I think it's a very good question. The market at the moment, what has been put on the market is almost fully let. I mean, it's not many square meters that are left there. And what we are pleased to see is that, the location of our properties, I mean, they are really well located, and we are also focusing a lot with this district development. So we get to know our areas, and we develop from there and let from there, which means also that we can move tenants around, we can meet the change of demand if they want larger or smaller spaces, and that is, I think, a huge strength for us. Quality today, I think, that's different. It's got different aspects, of course. Of course, the location is always important, close to public transport, and services. I think that is still the most important quality that tenants look at. And then, of course, it has to meet the requirements of modern offices, meaning that you need to work, I mean, we work slightly different now compared to how we worked just five years ago. So I think it's more the ability to meet that demand, and that we of course do with tenant fit-outs, et cetera, so. Mm-hmm. What part of your portfolio, where do you see the biggest challenges? I don't know if that is on the basis of location or something else, but I assume you're at least exposed to a market with the higher vacancies. I assume the different parts of your portfolio will behave a little bit different in the coming future. What's your best guess on challenges in your situation? If I look at the latest figures from JLL, the vacancy between the quarters actually went down almost 1%, which is good because that means that the investment stock is picking up the demand. If we look at our portfolio, we have focusing areas of Lilla Bommen, which is very close to the central station, and with the completion of Västlänken, that will, of course, be an even stronger location than it is today. So that is one of our focus areas, and we have quite a few assets here. We are also having our own offices in this area. And then, of course, we have Gamlestaden, which is a long-term project that I'm sure you know a little bit about, and that is also filling up. We have a focus on food tech, and we signed with Picadeli headquarters here this quarter, which we are really glad to see because that's proven that the concept is right. So I would say that those two areas from office space are the ones that we are currently working a lot with. Yeah, there was mostly opportunities there. And west Gothenburg, there we have a situation with higher vacancy, but that's an area that is in transition. So, we conclude that we are in a pretty good situation, and therefore, we have a positive net lettings even today. So, we haven't seen Q4 yet. It could change, but we are positive, and we are in good discussions now, as Johanna referred to earlier. And of course, humble that what does this crazy world bring to us? I mean, it's that we always have to be humble on that, of course. But this is what it looks like now. Very good. Thank you, Johanna, Fredrik. Have a good day. Bye. Thank you. Well... As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any written questions. Yes, and we have no written questions that has come in so far, so this will conclude our Q3 presentation for now. And I, Fredrik Sjudin, will thank you all for listening in and- Thank you from Johanna as well. Thank you. Bye-bye.