Release Date: November 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rental income increased by 5.9% on a like-for-like basis, indicating strong performance in the core business.
- Net operating income grew by 7.4%, showing effective cost management and revenue growth.
- Debt reduction efforts have been successful, with a decrease from SEK4 billion to SEK3 billion over the past two years.
- The company has secured long-term financing from Nordic banks and additional credit lines, enhancing financial stability.
- Strong development in the residential segment is expected, with rental growth anticipated to outpace inflation.
Negative Points
- Property valuations decreased by 0.8% during the quarter, reflecting ongoing challenges in the real estate market.
- Occupancy rates have slightly decreased due to project-related vacancies, impacting short-term revenue.
- Loan-to-value ratio remains high at 62.2%, which the company aims to reduce.
- Interest coverage ratio (ICR) is slightly below the company's policy, indicating pressure on financial metrics.
- Unrealized changes in property values amounted to negative SEK0.5 billion, affecting overall asset valuation.
Q & A Highlights
Q: Can you provide more details on the new credit facility mentioned in your filing? Is it a straightforward revolving credit facility (RCF), and do you have full access to it for liquidity needs?
A: Yes, the facility is in place and ready to be utilized whenever needed. However, we cannot provide more details on the maturity or terms at this point.
Q: Regarding the occupancy decline, can you provide more detail on which types of tenants are departing? Is this indicative of a work-from-home trend?
A: We focus on residential and long-term leases to publicly financed tenants, which provides a strong income stream. While there are some agreements that can be vacant, it shouldn't be a large concern. The decline is mainly due to public offices, which is a small part of our business.
Q: How will the settlement of the court case in early 2025 impact your access to financing and partnerships?
A: Winning the court case will make it easier to raise new debt and lower the cost of capital. It will also improve our ability to cooperate with other investors and raise equity for the SPB group.
Q: Can you explain the negative unrealized changes in property values despite unchanged yield requirements and positive contributions from rent development?
A: The negative changes are mostly due to technical accounting reasons and some increased vacancy in certain properties. However, these properties are not the majority, as most of our properties have long leases or are residential.
Q: On the bond exchange done in the summer, do you foresee similar transactions in the future?
A: The bond exchange was a one-off to create a good financial structure ahead of an IPO. We aim to reduce debt levels through asset divestments or partnerships, which will create liquidity to buy back or repay bonds.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
