Hello, welcome to Wihlborgs Fastigheter AB Q2 report 2021. Today, I'm pleased to present Arvid Liepe, CFO, and Ulrika Hallengren, CEO. For the first part of this call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. I'll now hand over to the speakers. Please begin. Thank you. Welcome to the presentation of the Wihlborgs half 2021. We start with a summary. We have seen the highest activity in the market, especially since March, and we've been able to sign leases for SEK 86 million during Q2, which is a high level, especially since that number is the sum of many new leases. I would say that is also a sign that the activity is high in many sectors. Rent levels continue to develop in a positive direction, not at a high speed, but still in the right direction. We are still affected by our large divestment from December and still a bit high on vacancy, but improving. Earnings in relation to assets remain strong, and a solid balance sheet and liquidity position means that we also are ready for investment possibilities. I'm really proud over our organization, who really have been focusing on preparation for the period after the pandemic. Now when we see opportunities, we are totally prepared to take advantage of that. We are ready for business. Continue to page three with a summary of figures for the first half 2021. Rental income is affected by divestment, as mentioned, also some counter effect that continued also during Q2. The income summarized to SEK 1,477 million. The operating surplus to SEK 1,046 million. Income from property management amounts to SEK 869 million. The net amount amounts to SEK 1,007 million, which corresponds to SEK 6.55 per share. EPRA NRV increased to SEK 154.48 or by 5% adjusted for dividends. Page four. We have had a high level of new leases, SEK 86 million in the quarter and SEK 142 million for the period. Net letting of SEK 36 million for Q2 and SEK 45 million for the period. Important to note, we have higher rents in the new leases than in terminations. We announced a new lease to a governmental tenant in Lund last week, and it's worth mentioning that that lease was signed in July after the end of the second quarter. We see the potential that the activity of the last quarter will continue. Of course, a bit of a slowdown now a few weeks in the summer, but we have several good discussions in all our cities. Of course, we will see terminations as well during this period. Termination can also give new opportunities as long as we are active and are close to our customers. The net letting in a historical perspective at page five. Positive figures for the last 25 quarters, that's not a guarantee that we will never be below zero, overall, we have a good stability in our market. Letting in light blue and terminations in dark. The black line is the net letting. Page six, the list of our largest 10 tenants. The rental income from public tenants continues to be high, 24%. As I also say every quarter, it's the wide diversity across many sectors in our region that is the strength that brings stability. Page seven. Rental value is SEK 3,287 million per year, rental income SEK 2,968 million after our divestment. Looking at the like-for-like figures, we can see that the rental value is just slightly up, +0.3%, this will continue up as long as tenants have new needs, that is exactly what's happening right now. The rental income is affected by higher vacancy than last year. We already can see improvements here as well. Page eight. A summary of our office portfolio. The market value is at SEK 9,224 million. Overall, the occupancy rate is 91%. When our new tenants move in, for example, in Patron One and Insula One in Helsingborg, these figures will improve. The operating surplus from offices summarized to SEK 1,881 million. A running yield at 4.8%. Page nine. The demand for logistic and production continues. Here the occupancy is very high, especially in Malmö at almost impossible 97%. Temporarily down in Helsingborg at 92% occupancy rate as a whole. With a running yield at 6.5%. A total value of SEK 5,998 million. Demand continues to be strong throughout this sector in all our cities. For the entire property stock, page 10, the occupancy rate is 91%, excluding three private and land, and an operating surplus of SEK 2,272 million. Which gives us a running yield of 5% excluding shift on land. Page 11, changes in market value of our portfolio. We started the year with SEK 46,072 million in accordance with our external valuation, which we do once a year with 100% of the stock at the same time. We have made acquisitions for SEK 182 million. We have invested SEK 463 million. We have changes in valuations of SEK 284 million, half come from new leases and half from lower yields in some properties. For example, Hermes in Helsingborg. Together with currency translation of DKK 65 million, that summarize the property value of SEK 47,056 million. Page 12. Even though the property value has increased at a slower pace during 2020 and so far in 2021, due to our large industrial divestment in 2020, the total value is still moving upwards, but there is more to come while we continue our investments, of course. A catalog of our value-add properties in our four cities on page 13. 42% of the value is in Malmö, 23% in Helsingborg, 17% in Lund, and 18% in Copenhagen. These cities belong to the same region, but they also have differences that contribute and interact with the whole. All of the cities have noticed a rising number of discussions and leases this last quarter. Maybe Lund is a bit special. The cluster of companies working with the best engineers is growing in Lund. We have been waiting for the time when also larger areas will be attractive in Lund, now we see that seems to be the time. We are ready with for example. We have also signed leases in a new area in Lund, Science Village. I'll come back to that when we look at our projects. What about the future? How will we work in the future? Page 15. Is working from home the future? We and many others have tried to figure out what is happening and how our needs will change. To be ready for change, of course, but also to be ready to help our customers to be the best possible employer. Some have noticed a high efficiency in certain types of tasks performed from home, and high efficiency is, of course, a good thing. We also see measurements of lower creativity, larger gaps within the companies, harder for people to cooperate, and not at least a digital overload that maybe not contributes to high productivity. The time spent in meetings, sending and taking care of emails, and handling digital documents have increased massively, and I'm not sure that you do your best deals in your mailbox. Page 16. We will see changes in needs, and many companies will work in a more flexible way. In this situation, flexible premises will, of course, be an advantage. We also see expanding demand for upgrading the workplaces to be even more attractive for the employees. A common place for work will doubtless play a very important part in connecting people. That place can offer collaboration and a creative environment, and the office will continue to be a place to create the culture in the company and to share and gain knowledge. Over to Arvid for more figures. Thank you very much, Ulrika. Moving on to slide 18, looking at the income statement for the second quarter. You can see that the rental income amounted to SEK 739 million. Operating surplus was SEK 537 million, corresponding to a surplus ratio of 73%. You should bear in mind that the operating surplus has been affected by divestments, having an effect of -SEK 16 million and also currency effects of -SEK 5 million in that number. Income from property management amounted to SEK 443 million, and included in that is the financial net of SEK 76 for the quarter. Excuse me. The change in the value of our properties was +SEK 210 million in the quarter, and that is affected both by lower yield requirements for certain properties, but also improved expected operating surplus driven by the net lettings. We had a positive change in the value of derivatives of SEK 16 million, and the profit for the period amounted to SEK 529 million. On the next slide, page 19, you can see a bridge between the first half rental income in 2020 to the first half rental income 2021. I think it's interesting to note here that divestments had a negative effect of SEK 45 million for the first half of the year. We actually had a slight positive comparison when it came to COVID discounts. The COVID discounts 2020 in the spring were slightly larger than in 2021. We had a negative currency effect of SEK 15 million and lower service income also, of course, largely driven by the pandemic and its effects of -SEK 18. We had larger vacancies having an effect of SEK 39 million. Then we had positive effects on the rental income coming from lettings from projects and from indexation of SEK 40 million. That then amounts to the SEK 1,477 million in rental income for the first half of 2021. On Slide 20, you'll see the balance sheet's development over a 12-month period. Our property value has increased by approximately SEK 0.7 billion on a 12-month basis. At the same time, our borrowings decreased by SEK 1.1 billion. Equity increased by SEK 1.7 billion compared to the same period 12 months previously. Translating the balance sheets into key figures on Slide 21, you can see that our equity assets ratio now stands at 14.5%. The leverage is 49.6%, slightly higher than in Q1. As you remember, we have, of course, paid a dividend during May of SEK 807 million. Our interest cover ratio is 6.5 x, continues to be very strong. You have a few per share numbers at the bottom of the slide. The EPRA NRV, as Ulrika mentioned, now stands at SEK 154.48, which in a 12-month perspective is up 12% adjusted for the dividend paid. On slide 22, you can see the historic development of EPRA NRV. Since 2009, the average annual growth has actually been 17% adjusted for dividends. Moving to slide 23, you can see the historic developments of our financial ratios for which we have set different targets. Our LTV we have a target of being at a maximum of 60%, and we're now since a few quarters below 50%. The equity assets ratio has gradually gone up, and it's now also over the past few quarters above 40%. The interest cover ratio has since beginning 2019 been at very strong levels above 6 x. On slide 24, we have another metric which we feel is very important to look at when you try to judge our financial position and the stability of that. Net debt in relation to EBITDA now stands at 11.1x, and that is slightly better than the average over the past few years. As you can see on the slide in the long-term perspective, the ratio has been basically between 10x and 11 x for many years. On slide 25, you can see the split of our sources of financing. Almost half of the financing comes from bilateral bank loans with part of 36% of our loans come from the Danish mortgage loan system and 18% from the bond market, both via SFF, Svensk FastighetsFinansiering and via our own MTN program. On slide 26, you have the details of our loan portfolio. The average interest rate in the portfolio is now 1.28%, and we have an average fixed interest period of 3.2 years, and then average loan maturity of 6.2 years. On the next slide 27, you see the historic development of the loan maturity and the fixed interest period. As you can see, the loan maturity has been around six years over the past few years, actually. The fixed interest period used to be quite high, but that is now very many years ago, and over the past few years we've been at between three and four years in average fixed interest period. Moving to slide 28, you see the historic development of available funds. That is our unutilized credit facilities plus liquid funds at each quarter end. As Ulrika touched upon before, our liquidity position is strong with over SEK 3 billion in available capacity at present. I'll end the number crunching there and hand back the words to you, Ulrika. Thank you. Let's say a few words about sustainability. Page 30. We have been focusing for many years on investing in sustainable new properties with the highest certification levels when we invest. Of course, also improving in things that we believe really matter. Reduce energy consumption, invest in solar cells, and not least, to replace bad refrigerants with sustainable gases. We also have an efficient method for certification of existing properties, and we think that works very well, and we continue that work in the highest speed. It is important that we all are aware of the largest climate impact our industry has is in Scope three. Until we have figured that one out, we cannot ever be satisfied with the sustainability work that we do. We will step up and on that one, and do the best we can to also improve the whole industry in that part. Let us go to acquisitions and divestments. page 32. We have only made a minor acquisition during the second quarter, as we acquired Naboland 3 in Dockan area. Here we will have the opportunity to build approximately 8,000 sq m of offices. Investments in progress, page 34. We have, during the first half 2021, invested SEK 463 million in ongoing projects, and it remains SEK 1,486 to invest in already approved projects. Overall, the projects continue according to plan in a good way. We are well-protected, especially in the larger projects, against higher prices of material. We see indications of a slowdown in price increases during the autumn. It is also an interesting fact that we actually, in our market, see a good correlation between construction costs and rent level. When prices go up, the rent goes up. Who knows, if the price of materials gets even more aggressive, the whole industry might use engineers more, calculate more, and then use less material. That could actually be a good thing for the climate. Page 35. Kvartetten at Solgatan 5 in Hyllie, with 16,000 sq m lettable floor area, is now moving up from the ground. We can offer great efficiency, a warm inner core, the highest sustainable standard both in zero carbon dioxide footprint, environmental classification, and also a WELL certification. This is the right project, definitely. We have now signed the first leases, and we have made offers for more than half of the lettable area. There is a long time before this project is finished in Q2 2023, and we have no other vacancy in this area. Page 36. In Kranen 2 in Dockan, we continue with our project for Region Skåne and Malmö University. In total, we invest SEK 237 million fully let and long leases. This will be completed in Q4 2021. Page 37. At Hindbygården 7, we are doing a project for Electrolux Beckhoff optimization. A state-of-the-art office and a good transport location in Malmö. Completion in Q3 2022. Page 38. At Sunnanå 12:54, we have just completed two projects, one for Region Skåne and one for Veho. Page 39, in Raffinaderiet 3 in Lund, we continue with this conversion project. The old tenants have moved, and preparation and planning for the building phase continues. We have started to sign the first leases, and the investment will give us 5,800 sq m modern offices with this interesting industrial touch and right beside Central Station. Page 40. This is a new project. We have decided to start this project in the new area, Science Village in Lund. It is located just right in the middle between the research facilities MAX IV and ESS. We won this competition of land here in 2015, and now we have been redesigning this project and waiting for the right timing, and now is the time. We have signed 50% of the area with a company in the food tech sector. It will be both labs and research and offices. They have also asked for an option for the rest of the area, but there is no decision made yet. We will invest SEK 244 million, and we will also have an option to buy more land in this area. I more or less lived my life up here in this area during five years when we built MAX IV, and it is really satisfying that we now can continue with more investments for companies in the private sector in this area. Page 41. We have also decided to start project Huggjärnet 13 in Helsingborg. It will be a facility for multi-tenant and logistics, and we build this project in two phases. Something about the future investments. Page 43, Västport 1 in Malmö. This is the project that we call Vista. This might be our next largest project put in production. Procurement is ongoing, and we are planning for the possibility to start the first phase with 400 parking spaces and a great sport hub in 2021. It's a unique opportunity to offer both good parking and direct access to the train station for both Fortessan 5 and Västport 1. Page 44, 4 possible projects in our three Swedish cities. Posthornet 1 is just beside Södra Hamnviken. It will provide the city center with larger areas than Södra Hamnviken. Ideon Porjus is just beside the tram station in the Ideon area. Polisen 7 in Helsingborg. The top picture is a bit of a redesign of Kroksabeln 15 and 18, where we now can offer up to 22,000 sq m cross-floor area in logistics. Page 45. Since there's some extra focus in logistics, I would like to mention a few other possibilities that we work with. We have Grustaget 1 in Helsingborg. Interesting area for a combination of office and logistics. We can both build and refurbish here, approximately 20,000 sq m. Village Target 1 is also in Helsingborg, also near approximately 20,000 sq m. Lilla Hjulsån 5 in Malmkrona, 14,000 sq m logistics with up to 20 meters after the ceiling and just beside the highway. In Södermanland, where we have built for Region County of Sörmland earlier, we can add on 17,000 sq m logistics for production. We have possibilities in all cities and in both offices and logistics. Page 46, of course, Nyhamnen. This was actually an area for logistics in the old days, but now it will be in the city center. This picture and this land area will follow us for many years. They have just stuck this to us. Page 47, Norrhamnen is one of the first possible projects there where Söderplan continues, but in a bit of a slow pace at the moment. We work in several parts of Nyhamnen with Söderplan. Here in Norrhamnen, we will be able to produce at least 10,000-13,000 sq m offices in this first project. Page 48 is Kranen 1, just at the entrance to the Dockan area from Nyhamnen, and our application for planning permission is still being processed. Next slide, 49, summary. We see high activity in the market, strong assessing, rent level positive, earnings in relation to debt is strong, and we can continue to be ready for further investments. We will continue to invest, focus on our earnings capacity, and we will do so with continued stability. Now we're open for questions. Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Erik Granström from Carnegie. Please go ahead. Thank you very much. Good morning. I have a few questions. If we perhaps could start with a comment made in the report about the vacancy rate. You state that you expect it to gradually decrease throughout in coming quarters, but that the bulk of it will happen in 2022. Could you give us some indication of what you expect vacancy rates to be at the end of 2022, given what you already know at this point? I think when we look at the vacancy rates, currently, if you exclude projects and land, we're at 91%. We were down at 90. In the long-term perspective, 93 is a high number. We're really talking about decimals here. We would expect from the current levels that we'll move in the right direction as of the end of this year. You'll see a longer effect of the deals that we're signing in 2022. I don't want to put a specific number as a year-end occupancy because we don't give forecasts as you well know. Moving in the right direction from the current 91%. We will improve also during 2021. In some leases, we have to do some refurbishments first, then they move in in early 2022. Okay. In terms of net letting, it was obviously another quarter with positive figure. You also mentioned that new leases carry higher rents than terminated one or old leases. Could you tell us something about how much renegotiated rents are up on average in the portfolio? Of course. It's always tricky to compare different services with each other. They are up, not in a dramatic way, but they are definitely moving in the right direction. I would say that I think I mentioned I think your last quarter, but it's not easy to compare overall because it's not the same thing in those parks. Definitely we can add on some extra quality, but we can also increase the rent levels as a base. It's not dramatic, of course, but definitely good. Okay. It still means that you expect like-for-like rental value to trend upwards going forward. Yeah driven by. Okay. All right. Fair enough. Could you tell us something about your ability to acquire? You mentioned a rather small acquisition out here in Q2, but what is the outlook for acquisitions going forward in your view? What are you seeing in the direct market? We are ready, we're looking into every possibility. Sometimes it's not so much to acquire at the moment. We try to continue to be careful about what we buy, because we want it to be sustainable over time. There will be possibilities, of course, and we are looking into something that can be interesting, but you never know. It's hard to give a prognosis about when you can acquire the right thing. Okay. Investment volumes, they have been sort of a little bit sluggish lately. The pandemic is obviously a reason for that. What could you tell us about sort of the outlook for investments in projects going forward? You had a number of potential projects in the presentation. What's the timeframe of those, so to speak? When do you think that those can be started? Are those 2022 projects or are we talking 2025? I would say that it's possible that we can start with some in the end of 2021. I think that a few of the other projects can be started in 2022, definitely. I think that we have just started Kullpiasan and Kunskapen 1 in Lund, which we'll start now, I think, the production phase would start early 2022. I think that we keep filling up the portfolio in a good way. Okay. The activity in the rental market from your tenants, have you seen a change in the ability to sign sort of longer leases in new projects versus renegotiations of, let's say, three- to four-year leases? The activity is really high. I didn't really get the question, actually. Once again, Erik, please. Yeah, sure. The difference in sort of if clients or tenants, potential tenants, are more likely to do renegotiations of shorter contracts, meaning existing contracts from, let’s say, three-four years, versus the demand for actually signing new leases when you talk to tenants that are looking at maybe 5-10-year leases in new projects. If there’s a difference there or if the increased activity basically means that all types of discussions, no matter how long the leases are, is increasing. I would say that it is pretty much we can keep the times for the leases as before. We have, of course, more discussion on flexibility, but that is more of can we have a part of the surface in other type? Can we have a possibility to add on surfaces during the lease time and such? The flexibility need can be provided in different ways. It doesn't mean that the time of the leases will be shorter. We solved it that way. I don't feel that the tenants are afraid for the times in the leases that we want them to have. Okay. That's interesting. Thank you very much. Those were my questions today. Thank you. The next question comes from the line of Stefan Andersson from SEB. Please go ahead. Thank you. A few questions from me then. Going back to the vacancies there, to just see your view on the market. The 9% that you have, I guess it's fairly equal to the market vacancy in your region. It seems like the prices are not high enough to have any pressure on price. Is there a level where actually you couldn't drive rents up any longer? If you are at 12 or 13, what's your experience there? If you come down to a tight market like 4, 5, then 5%, 6%, then of course price starts moving up rather quickly. What's your view on that? I would say that you have to go much lower than 90 before you can feel the pressure on the price, because it is not only the price and it is of course location and quality, and you do not see that in the figures of the vacancy. The vacancy for the overall market is including a lot of properties that maybe is not the most attractive ones. I would say that the product that we offer, the competition on that one is not too hard. It is more about finding the right product for the right client, more than a discussion on the price. A question on, and it's very difficult, of course, to understand what kind of needs people will have in the future, and I heard your comment, and it's very similar to what everyone is saying. I would say that more flexibility, but still a need to meet and so on. I fully agree. This flexibility question, do you think that it actually will increase or decrease or not affect the total need of space in the office segment? We see that the clients choose to do in a bit of different ways. I would say that I don't expect the needs to go down in any way. The needs will be a bit different. I think that most of that would be that we add on quality, which is a good thing. Of course, we will see companies that choose to try to have less area, but we also see the opposite. I think this will be a period when different companies try to figure out their best way of doing things. We have to be aware that we are in a market that the lack of the best employees is a competition. It's a competition on that one. You have to offer a really good environment for your employees. I think that's an important factor when you also try to figure out what our product, how that is best performed. Yep. A notice on some releases that has come out lately, but this is Stockholm related more, I would say, that the public sector has been looking to reduce their spaces, maybe being already onto rather large spaces. I don't know if you see any of those tendencies at all between different segments. We see different decisions. Sometimes it depends on if the decision is made of the company in this area, or is it made in an international perspective. The decisions can be made in different directions, of course. We see a bit of both. I think we will be in a kind of test period for at least a year when companies try to figure out what they have to offer their employees to be the most attractive ones. Connected to that- As long as we are active and close to our tenants, we're certain that we can provide them with what they need. Yeah. Connected to that, when you look at your pipeline of projects in the office space, in the last year, have you changed any views on when to put the button to start a project or what level of pre-rent you want to have done and pre-lease and so on? Have you changed your ways in any way due to that? We always have to be very close to the market, and we decide from case to case what is the right thing to do. We've just decided to start with PSN 5 without any signed leases, for example, because we are totally certain that product would be 100% right for the market, and we have no vacancy in that area. Now we started this industrial project in Helsingborg also without any signed leases. That's also because we know that product is very attractive. In other cases, we have patience and wait. For example, Kungsgatan 1. We would never have started that project without any tenant. Even though it's 50% let, but we also have good discussions for the rest of that project. It's really depending on the situation. Of course, in times when things are changing, you have to be even closer to the market. We try to do that. Yeah. Good. On the discount side for COVID, looking ahead now, you have very small ones, but are they fading out now as you're going to Q3 and Q4? They are fading out, yes. A question on your two projects in Malmö. I think it was two that you plan to have finalized in the fourth quarter. Are those up and running? I think they were fully let, if I remember correctly. Are they contributing throughout the fourth quarter, or should I be cautious and have them contributing in Q1 2021, for example? It's the Kranen 2 projects you're referring to, right? Yeah. I think they would be finished in October, November or something like that. October, November, yes. So it- A good effect in Q4, but not 100%. Perfect. Sorry. Coming back to the rents again, there was one thing I forgot there. Again, looking at the Stockholm inner city, we get the comments that prices are held steady and so on. On the other hand, we also get some comments that instead of reducing price, discounts are offered, and they could be rather long, two years in some cases. I don't think you have the same situation in your market, but just to double-check, do you see scale prices are held up but that you have to give more discounts to get the tenants in, or is that something we see more of here? No. I would say it's the same situation as always. Sometimes you can give some discounts for support on the moving period, but no large discounts. Okay, perfect. Thank you. That's all for me. The next question comes from the line of Staffan Bülow from Nordea. Please go ahead. Yes, good morning, thank you. I have three questions, starting off with one on the NOI margin. NOI margin of 17% was a bit weaker than a typical Q2 quarter. I'm wondering if there are any particular items in the Q2 real estate costs that are elevated. You have some additional costs for heating and snow also in Q2 as we saw in Q1 as well. If you look at Q2 isolated, that has had a bit of an effect on the operating surplus ratio for the quarter. Okay, thank you. Regarding net letting, are any large contracts affecting the net letting figure? No. I think we have one larger signing at SEK 8 million and some of SEK 3 million. The big amount is from the widespread manufacturers. That is actually a very good trend, I think. Okay. It's the same thing on the termination side. We have a few above, I think we have two over SEK 5 million, but otherwise it's very low activity on the termination side. Thank you. Okay, thanks. One question on the transaction market. Can you guide us what you see on the transaction market for offices in your market, both in terms of transaction volumes and yields compared to pre-COVID? I would say the volume is low, and I think the yield also is maybe a bit lower than before. Okay, great. That was my questions. Thank you. We have one more question from the line of Victor Krüeger from ABG. Please go ahead. Thank you. I didn't quite catch how to cancel the question. Staffan just had it in his first question there, so I'm good. Thank you. Thank you. As there are no further questions, I'll hand it back for any closing remarks. Okay. Thank you, everybody, for listening in. If you have additional questions, you know where to reach us. I'll just take the opportunity to wish you all a nice summer. This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.