Intea Fastigheter (Stockholm:INTEA B) Q3 2025 Earnings Call

0:00 Welcome to the presentation of InteA's Q3 report. My name is Charlotta Wallman-Hörlin and I'm the CEO of InteA. Sitting next to me here is CFO Magnus Ekström. Good morning, everybody. Together, we will present the Q3 report. To begin with, we can conclude that we are leaving a strong and stable third quarter behind. The business is developing in a positive way and our business model will focus on long-term public tenants, provide us with a robust platform to build on. Intea's project development is buzzing with activity.

0:49 New constructions in various phases are ongoing across the country. from Ånge in the north to Kristianstad in the south. We currently have ongoing projects of more than 12 billion kronor. This summer, we acquired a portfolio of security properties from Special Fastigheter. The acquisition was completed on 1st of October. I will come back to that shortly. As usual, there's high activity within our local asset management organization. During this quarter, a new agreement was signed with the Swedish police authority in Linköping, which includes both an extension of the existing agreement and the project to create new premises.

1:41 I will come back to this too. As we grow with new projects and properties, we have also strengthened the organization during the summer and autumn, both within asset management and project development. Yesterday, we signed a new 14-year green loan with the Nordic Investment Bank. The loan will be used to finance the new Justice Center in Kristianstad. Credit and capital markets remain relatively strong, and we see that credit margins are declining. Now, Magnus will walk you through the financials. Yes, thank you, Lotta. This period, the first three quarters, is mainly driven by project completions in 2024 and 2025, and also acquisitions that we did in Q4 last year, and also indexation. If we summarise the first three quarters, we have a contracted rent of 1.5 billion, We also have a property value of 25.7 billion with a running yield of 5.5%. The rental value has increased and is now up to 1.1 billion and this gives us also high cash flow from our operations as you can see with a surplus ratio of just under

3:13 85%. Our ICR for the last 12 months increased Fastigheter AB Class B We have a rental income increase in 30% and like for like 2.4%. The increase in profit from property management is 85.8%.

4:00 And this is also mainly driven to NI from completed projects, as I said in the beginning, and also the additional rental income from acquisitions We had a positive impact from changes in value from investment properties of 168 million. Positive impact from change in value from interest rate swaps of 124 million, mainly due to change in long-term market interest rates. And we also took a write-down of 70 million of our hydropower plants. and this gives us a profit of the tax of 410 million for Q3.

4:54 The acquisition from Special Fastigheter was completed on 1st of October, so it is not yet included in the figures for Q3. Through this acquisition, we add seven additional prison facilities in Security Class 2 and 3. located in the Mälardalen and Malmö regions. Intia already owns and develops five prison facilities. With this acquisition, we see opportunities to further support the Swedish Prison and Probation Service in developing its operations. The acquisition also included four SIS institutions, and we look forward to working with the National Board of Institutional Care as a new tenant.

5:46 The underlying property value in the transaction amounted to nearly 1.4 billion. The lettable area totals just over 78,000 square meters and the annual rental value is just over 190 million. Here you can see examples of ongoing projects. The custody unit project in Västerås is in full production. The investment is estimated just under 2.8 billion, of which approximately 2 billion remains to be invested. The rental value amounts to approximately 225 million. In September, an agreement was signed with the Swedish police authority to expand the premises at Garnisonen in Linköping for the Police Authorities National Forensic Centre, NFC, by just over 5,000 square meters. The new premises consists of laboratory spaces, among other things. At the same time, the existing lease agreement of 15,000 square meters was extended by 15 years from completion of the project in Q1, 2028.

7:07 By adding new modern premises the area becomes more compact and more workplaces are created. This increases the attractiveness of the area. Once the new premises are completed, the police authorities' total lease at the Garnisonen area will amount to approximately 50,000 square meters' legible area. With a zoning plan for the Garnisonen area, which have added 66,000 square meters of Building Rights, we can meet both existing and new tenants' needs of premises for a long time to come. Lastly, the Viskan prison, which was taken into use by the Swedish Prison and Probation Service earlier this year, is being expanded by 120 places. The investment is estimated at just over 240 million with a rental value of 28 million.

8:12 And if you go to the project portfolio, we now have a total current investment volume of 12.6 billion. And we estimate an additional rental income from our ongoing projects of approximately 58%. We have a high average lease period in those projects and an estimated additional NOI of 870 million. And the rental value will be around 2.5 billion when completion of all projects. That's an increase with just over 900 million. Intia has a goal that more than 90% of the rental income should come from public sector tenants. At the end of the quarter, the share amounted to 96.7%.

9:09 an increase from 95.7% at year end. The average lease term with public sector tenants has increased to 8.5 years from 7.8 years at year end. Our earning capacity, before I go through it, I must say that Fastigheter AB Class B The property value has increased with almost 2 billion during the first three quarters. The current yield is 5.5% and is based on our NOI in the earning capacity.

10:22 The increase in yield in Q2 is mainly due to completion of a project in the justice segment with a higher initial yield than the average yield that we have We have a good cash flow from our operations that we could use for coming investments and on our last 12 months basis we have a cash flow from operating activities of approximately 730 million and the total investment Our financial position is strong. We have an LTV of 46.3%.

11:14 Our ICR is 3.4 times for the last 12 months. And for the quarter, the ICR was 3.9 times. And if we look at the adjusted net debt EBITDA, The APRA NRV per Class A and B share increased to 50.84 SEK per share and the profit from property management per Class A and B share increased growth both for APRA NRV and from profit from property management and it has increased for the last 12 months.

12:14 And if we look at the growth in APRA NRV and profit from property management since 2018 the average growth was around 16% for NRV and 20% for the profit from property management. We have a debt portfolio of 12.2 billion, a mix of bank loan, bonds and commercial papers. Our interest rate has decreased a bit during Q3 and was to 91% at the end of the period. And we now have a total of 13.8 billion with an interest of 130% at the end of the period.

13:10 During the year we have been active in the interest market and did interest swaps mainly in the first half year. We did interest swaps of 3.5 billion and also extended existing swaps. Our duration is 4.5 years. End of the period and our duration in capital binding was 2.4 years and we're currently working to prolong the duration for capital binding. Finally, we have good access to capital with unutilized credit facilities of just over 5 billion. And finally, we have not been active in the bond market during Q3. However, we intend to issue a bond probably in Q4.

14:09 The spread has come down and currently, I believe we could issue a five-year bond around 150 bps. So for the moment, the capital market is good, I think. And with that said, I hand over to you, Lotta. Thank you, Magnus. We are seeing more and more signs that the transaction market is gradually opening up. We both hope and believe that we have good opportunities to find interesting deals in the coming months. So now it is full focus on both acquisitions and projects, and we look forward to an Exciting end to the year.

14:56 Thank you very much for listening today.