Samhällsbyggnadsbolaget i Norden Stock

Good morning, everyone, and thank you for listening in to our presentation of the second quarter of 2026. My name is Sebastian Westberg. I'm the Treasury Director and Head of IR at SBB. Here with me today, I have our CEO, Leiv Synnes, who will walk you through the highlights of the quarter, assets and strategy, the financials and finally, the key investment highlights of SBB.

Myself and our Finance Director, Daniel Tellberg, will join Leiv in the Q&A session after the presentation to answer any and all questions that you might have. With that said, I would now like to hand over to Leiv. Please go ahead.

Thank you very much, Sebastian. And good morning, everyone, and welcome. I am Leiv Synnes, CEO of SBB. Today, I will walk you through the second quarter, a quarter where we continue to strengthen our core holdings, simplify the structure and execute the transactions that will build long-term value. Nothing new. That is what we have been doing in the last years. SBB today is a Nordic social infrastructure investment company. Core holdings are Sveafastigheter, Public Property Invest and Nordiqus. These entities represent the majority of our value. They are all market leaders in their respective segment, and this is an achievement to be proud about.

Sveafastigheter is Sweden's largest listed residential company. Public Property Invest is Europe's largest listed social infrastructure company and Nordiqus is Europe's largest educational infrastructure company. These platforms have strong assets, access to investment-grade funding, strong demand from tenants and growing cash flows. The companies are young, and they still are improving every quarter at the moment. Non-core assets that SBB hold is good, but they will, over time, be divested in order to support stronger financials and to enable more resources to be put into the market-leading platforms. One example is SBB Residential that will be moved into Sveafastigheter, in line with the ambition to decrease non-core holding and increase core holdings. We, for sure, continue to walk the talk. Independent of the business cycle, we can try to improve the things we can control. This has been done the previous years and much so also during the second quarter.

For Sveafastigheter, the second quarter was a transformational quarter with major strategic value creation. Sveafastigheter grows 60% by merging with KlaraBo and SBB Residential. I will come back to this later in the presentation. Sveafastigheter also started to divest newly produced residential assets during the quarter. These assets are sought after by investors and Sveafastigheter can by divesting realize 20% plus in development margin. The capital received can be recycled into new projects or used to repurchasing shares. If we go over to PPI, PPI is scaling fast, strengthening margin and expanding its Nordic leadership. Public Property Invest delivered many strategic improvements during the quarter, demonstrating both operational momentum and financial strength. During the spring, PPI successfully integrated SBB's Property Management and a large part of the central administration. This was a major structural step that strengthens efficiency, margins and platform scalability. The company also completed its primary listing on Nasdaq Stockholm, further increasing access to capital. Finally, PPI continues to execute on the funding part. The company secured EUR 3.6 billion 5-year bank financing and issued EUR 200 million in 5-year bonds, both at very attractive terms. This shows confidence in PPI from lenders and investors.

It is also an evidence that SBB's strategy with moving assets into strong companies leads to enhanced access to funding. Operationally, PPI is expanding its footprint with disciplined high-quality acquisitions. During the second quarter, the company acquired 2 health care projects in Finland for EUR 33 million. They add long duration that supports stable cash flow and profitability. With a scalable platform, investment-grade rating and long leases and a diversified Nordic portfolio, PPI is positioned to continue consolidating the social infrastructure market. The company enters the second half of the year from a position of strength, stability and strategic momentum. And now on to Nordiqus. The company's platform is becoming increasingly robust, scalable and strategically important in the Nordic social infrastructure landscape. Portfolio activity is good in Nordiqus. Nordiqus successfully integrated previously acquired educational properties in Stockholm and Gothenburg that were acquired for SEK 1.8 billion. These assets strengthen the company's presence in 2 of Sweden's most attractive educational markets. And they contribute to a scalable and robust earnings base. During the quarter, Nordiqus signed a 15-year lease with Kunskapsskolan for a new school in Sweden, adding high-quality long-duration income. Nordiqus has low financial risk with long-term financing averaging more than 10 years and a strong investment-grade rating. And together, it can be said that Nordiqus has a very solid financial structure.

In short, Nordiqus is currently strengthening its Nordic platform and is delivering predictable long-term cash flow based on long leases, essential social infrastructure and long-term funding. And now on to SBB Development. SBB Development shows that focus delivers results. During 2025, SBB put properties which needed more attention into a specialized company, which we named SBB Development. One year after its creation, SBB Development is delivering clear results. Net leasing reached close to SEK 13 million during the quarter, showing strong momentum. One example is a new 10-year lease with Saab for a 9,000 square meter in a previously vacant property. This is also a strong confirmation of the potential in our development assets and show organizational skills to enter agreement with professional counterparts. SBB Development showed property sales totaling SEK 500 million, 12% above fair value. Including the signed sale to KlaraBo, the balance sheet has decreased by 20% to SEK 5 billion during the year. I believe that more value-creating processes are underway, which we hope to be able to present to you in later reports. Sveafastigheter, KlaraBo and SBB Residential merger is a transformational step. Prior to the merger, SBB has become the largest owners in all 3 entities with a clear ambition to make all 3 entities stronger by a merger.

The outcome of the merger will be a more robust and scalable platform, a stronger credit profile, more interesting for investors and a more stable and predictable cash flow platform. And it creates a company with SEK 47 billion in combined property value, which is an increase of 60% for Sveafastigheter. We will be able to get SEK 120 million in annual synergies. And regarding the benefits for SBB, SBB will gain a 20% earnings uplift due to improved cost of funds. This is a clear example of how far SBB actively built up market-leading platforms in improved capital allocation. Sveafastigheter is now positioned as a clear market leader among listed entities in a regulated residential housing market in Sweden, a sector with strong demand, resilient valuations and profitable growth. And due to the transaction, SBB capital structure will be more transparent and more cost efficient with less administration. Evidence of the reduced costs we hope to be able to present in the later financial report. This page illustrates the assets post the Sveafastigheter,KlaraBo and SBB Residential transaction. Our core holdings have become even stronger and more clearly defined, and there is a reduction in non-core holdings. It's even more clear that we now hold 3 Nordic market-leading platforms within social infrastructure, educational infrastructure and multifamily residential. Each platform is scaled with SEK 42 billion to SEK 52 billion in size, resilient with low downside risk in revenues and backed by investment-grade funding and also located in geographies with positive economic and demographic trends.

This structure gives us a balanced transparent foundation for long-term value creation. This page illustrates the buildup of net asset value in SBB. First, we have the core holdings and the non-core holdings and then we have the debt in the parent. The majority of the gross asset value comes from Nordiqus Public Property Invest and Sveafastigheter, rather even position in each company with SEK 9 billion to SEK 10 billion in each company. The position in Sveafastigheter will be larger once the merger with KlaraBo and SBB Residential is complete. The number of holdings will be gradually reduced and more and more focus is solely put on developing the core holdings. The net asset is SEK 14 billion or SEK 7.94 per share, a slight decrease since year-end. Property valuations across our holdings are stable. For Sveafastigheter, there is a slight lower required yield in the best location, and the company has carried out sales at fair value, a clear signal of where the transaction market is. Nordiqus have had some isolated events in a few assets, which lowered the value growth. The same story goes for SBB Development, however, mitigated with good progress in development gains. For PPI, the higher interest rates in Norway has had a negative effect on transaction market and thus the values. But as a whole, a stable situation regarding property valuations. And if we move over to the financials of the quarter.

The net operating income was stable, which basically is a result of a growth in Sveafastigheter and lower income in SBB Development due to divestments. The like-for-like net operating income is up, which is the key long term. The results from the associated companies and joint ventures came in at [ SEK 91 million ]. This is a figure that will be much higher in the future when property values have a normal growth pace. Negative foreign exchange effects and currency affect the result negatively with [ SEK 728 million ]. This is an effect of the debt in the parent being in euro and due to the stronger euro during this year. All in all, a negative result, but we have good hope to turn this around during the second half of the year. And now we come to the liquidity position. This has been much improved during the last years, and we have now a clear and well-defined path for managing upcoming debt maturities. We have funds for all maturing debt during 2026.

For 2027, we have several options for managing the maturities and plenty of time on our side. One clear possibility is monetizing the SEK 5 billion claim that we hold on Nordiqus. The market value of our listed holdings add further flexibility from a financial standpoint. And overall, we have a strong confidence in our ability to navigate the maturity profile in a disciplined and controlled manner. Financial results for the period were negatively affected by adverse currency movements, which reduced net asset value and have an impact on reporting earnings. These effects are temporary and no cash. Operationally, the business remains strong, and we continue to deliver strategic improvements, which support long-term results.

The property exposure increased mainly due to the growth in core holdings. This growth is expected to continue during the upcoming year. The interest coverage ratio is lower due to lower income from receivables from joint ventures. We expect to lower the debt in the parent and will also benefit from a larger [ Svea ], which is consolidated. So we are confident to maintain a good debt coverage in the future. Loan-to-value remains at a manageable level at 54%, but we have a clear ambition to lower the financial risk. This is expected to be done by good development in core holdings and divestments of non-core holdings. Let me summarize where SBB stands. SBB is a Nordic social infrastructure company. Our strategy is clear and consistent, build and develop the market-leading players in social infrastructure. These platforms benefit from strong market position, access to financing and a streamlined organization.

We continue to strengthen our companies through strategic transactions, including the Sveafastigheter merger and through liquidity generating divestments that reinforced the balance sheet. Our corporate structure is now significantly simplified with focused platform and reduced central administration. Core holdings are retained long term, while non-core assets are monetized to create value and support for delivery lower leverage. This model positions us for net asset growth and long-term value creation.

Thank you for listening in, and we will now move over to the Q&A session.[ id="-1" name="Operator" />

[Operator Instructions] The next question comes from Rebecca Clements from JPMorgan Asset Management.

I have a couple. The first one is related to some comments this morning on the [ Sveafastigheter ] call talking about capital allocation and share repurchase was mentioned. Do you have a preference as to whether or not if they do actually deploy cash for shareholder purposes, do you have a preference for share repurchase versus dividend? And what would a share buyback mean for the liquidity of the shares? I would think that, that would be a bit of a drag on the shares given that you hold a large proportion of those. So that's my first question.

Okay. I think we will try to increase the dividend received from our core holdings. And at the moment, we don't receive dividends from Sveafastigheter, and we hope to be doing so in the future. And we are receiving dividends from Nordiqus and PPI as of today.

Right. But they were asked about from a capital allocation perspective. I was personally surprised, given I know they haven't been paying dividends, I was surprised that they were asked about share repurchases. But would your preference be -- if it were up to you, would your preference be to receive dividends as opposed to a share repurchase effort on their part?

Yes, Sveafastigheter is like an independent company. But I think we, from our position, would welcome that the company start to give dividend. And this can, of course, be share buybacks could, of course, be a complement to that. That is our view.

Okay. And then what will be the pro forma stake that you hold in Sveafastigheter post the KlaraBo transaction?

[ 57% to 58% ], if I remember correctly.

What percentage?

58%.

Okay. And then the SEK 657 million receivable from PPI, will that actually end up being cash to SBB? And when do you expect to receive that?

We expect to receive it tomorrow, and it will be in cash.

Great. And then that leads into my last question. You mentioned that you had your 2026 maturities covered with existing liquidity, but it exceeds your reported cash balance as of the second quarter. So what will be the -- what will fund the remainder there?

Good question. That's correct that the liquidity on the balance sheet is not enough, but we have undrawn facility. And we have our own definition of liquidity where we add liquidity and unused facilities in the term. And together, that amount is larger than the maturing debt.

Okay. So we should assume that you would use your credit facilities to fund any sort of remaining portion that isn't covered by existing -- I mean, presumably, you want to hang on to some existing cash as well and then the receivable from PPI is the differential then you expect to draw that on the credit facilities?

That is correct.

Okay. And what would be -- just last question. What would be the minimum cash that you would want to maintain on your balance sheet, your reported balance sheet?

It's a good question. Usually, we would like to be in a place where we cover at least 1 year of debt maturities or like a capital need in line with the requirement to be an investment-grade company. And so that is like the ambition to have that amount of cash. And that amount can, of course, be larger if we have larger maturities ahead. If the maturities are lower, then we can hold a smaller amount of cash, but usually not less than SEK 1 billion, I would say, given the current operations.

Okay. And if you use will you just use your credit facility then for that if you end up -- just looking at the 4.1 billion of maturities that you have on your Slide 10, the SEK 1.8 billion of cash, the SEK 3.5 billion of credit facility that isn't drawn. Would you use your credit facility to make sure that you have enough cash on the balance sheet? Or would you do something else or source that cash elsewhere?

In a normal situation, we would like the liquidity on the balance sheet plus the undrawn facilities to be larger than the debt maturities within 1 year. And it's not always that we have been able to have that in the last years, but that is our ambition to have in the future. And we will improve the financials. That is our ambition, so we can always hold that on long term.

I think on the short term, it's likely that we will hold a little bit less liquidity if we combine the cash on the balance sheet plus the facilities that the maturities due to that we have a little bit of a weak financial position and large debt bond maturities. And also the cost of debt is a bit high for us at the moment. But we will continue to improve the liquidity position in the years to come. So we will always be having a liquidity position that the market appreciates.

Okay. And then just given that it's lower than obviously, you would ideally like given the maturities, have you engaged in any discussions about perhaps selling the Nordic receivable or some other transaction potentially with Brookfield?

Yes, we have been discussing the loan to Nordiqus with Brookfield in the past, but we have also discussed it with a lot of accounts in London and there is a great appetite to provide liquidity to us. So far, we have chosen not to monetize that loan, partly due to the cost of doing so and that we have found that other sources of capital have been better to use -- but we know that we within a short notice can borrow on that claim. So we're not worried. And that is also one reason why we could have a little bit lower liquidity than the maturities in the, let's say, in '27 because we know that we have that ability. And we also have the ability if we would like to pledge shares or divest shares or other kind of solutions. So we have a lot of ways to create liquidity, which we didn't have in the past. So from a lack of financial flexibility, SBB is much stronger today than it was just 1 or 2 years ago.

Understood. And definitely, the structure of the company is very, very different even from 6, 9 months ago.

[ id="-1" name="Operator" />

[Operator Instructions] The next question comes from Othman Iraki from Fidelity International.

Just a couple of maybe follow-ups from Rebecca's question. Just in terms of liquidity needs, does your kind of SBB Development stake any kind of any outflow from SBB to spend CapEx, et cetera, on some projects? That's my first question.

Yes, that's a good question. And when we want to do like a project in social infrastructure in a property that lies in SBB development, then we are looking for a long lease with a stable counterpart. And that project then become like, you can say, a liquid product in the market. So if we don't have in-house liquidity, we could either like borrow on that assets, and we could also sell the assets to another counterpart that have a different financial situation than SBB.

For example, in 1 or 2 years ago, we sold a property to [indiscernible]. And then we sold the property based on the project where we had a long lease investor. So we can -- if we don't have the internal proceeds, we can create a project, find a tenant and then sell the projects. And if we -- let's say, we have some proceeds, we can use that proceeds and do the project ourselves, and then we can sell the property when the project is finished. And then the return on that is a little bit higher than selling the property before the project is completed. And then in SBB development, there is, if I remember correctly now, it's 91 assets. And then usually -- so we can sell 1 or 2 assets each quarter and that bring cash flow to the remaining properties that need investments. So it's not so that we need to invest in all properties at the same time or we need to hold on to all properties at the same time. So we are rather confident that we will not need to put in much new equity into SBB development. We find we have many solutions to work with this.

Okay. That's clear. Okay. My second question really is on -- you said you have many options for the 2027 maturities. I think you discussed the shareholder loan. But looking at -- again, looking at your non-core assets, would you say -- I mean, do you think it's realistic that you sell a big chunk of those developments before within a year? Or do you think you will probably wait to finish all the construction, et cetera, before you sell? How do you look at this part of your portfolio?

I think we can be open to discuss a larger deal regarding SBB development if we find a party that is interesting in the whole package. At this point, it may be more realistic that we divest part of it during the next quarter. So the end result will be the same, but it will take a little bit more time.

Okay. Great. And my last question really is on the [ ICR ], which is a bit weaker. Do we expect with Svea and KlaraBo when the deal is done in September that actually your [ ICR ] will improve from here? Or it's quite close to, I think, to the current [ ICR ] level on your bonds. So just wondering if you expect this to improve a bit...

Yes. We believe that the results in -- as I mentioned during the call that the result in Case due to the combined portfolios with [indiscernible] Residential and KlaraBo and that big entity will be consolidated in the figures, so we can benefit from the cash flow. And also KlaraBo has a higher cash flow than Sveafastigheter has. So we will benefit from that. And also, we will benefit from a lower debt level. We will, of course, within a month or so, amortize on the '26 bond, bringing down the debt level. So those 2 effects will help the debt coverage going forward.

And also for maybe all listeners, maybe not all are like experts in covenants. So I can just mention that the risk we have with the covenants in our bonds is very low due to the fact that they are written in an issuer-friendly language and also incurrence based. So we see no or very little risk for the company regarding the loan-to-value or the interest coverage going forward, which is like a quite opposite situation if you look back just 1 or 2 years when we have the distress. I think the covenants now very friendly for us.

[ id="-1" name="Operator" />

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you all for listening in, and I think it was very good questions. And I hope to be seeing you in a quarter when we present the next interim report. Thank you.

Welcome to SBB Q1 Earnings Call 2026.[Operator Instructions] Now I will hand the conference over to Treasury Director and Head of IR, Sebastian Westberg. Please go ahead.

Good morning, everyone, and welcome to our presentation for the first quarter of 2026. My name is Sebastian Westberg. I'm the Treasury Director and Head of IR at SBB. And here with me today, I have our CEO, Leiv Synnes, who will walk you through our assets and our strategy, the highlights for the quarter, the financials and finally, the key investment highlights of SBB. Myself and our Finance Director, Daniel Tellberg, will join Leiv in the Q&A session after the presentation to answer any and all questions that you might have. With that said, I would now like to hand over to Leiv. Please go ahead.

Thank you, Sebastian. SBB has a diversified asset base across listed and nonlisted companies in the Nordic social infrastructure market. We aim for higher risk-adjusted return by helping our companies become leaders in their markets. Assets splits into two buckets. First, we have the core holdings that anchor recurring cash flows and are managed on long term. Second, we have noncore assets carrying significant value but are managed with a more flexible holding period. The property exposure in SBB amounts to close to SEK 80 billion, built around social infrastructure and residential, asset classes with stable and growing cash flows.

SBB is well positioned for long-term value creation, guided by our financial targets of minimum 12% growth in annual net asset value. A few things work together to get us there. First, we have a strong platform on its own, scalable, defensive long-duration cash flow assets with diversified exposure across residential, social infrastructure and educational infrastructure.

The group structure adds further upside. We have meaningful stakes in the portfolio companies, which give us direct influence on the strategy and capital allocation. We can optimize the cost of funding. And one key point here that all the key core holdings have investment-grade rating. Further, SBB has a proven management team that has created three market-leading brands. So what has actually happened across our assets. In Sveafastigheter , they have established our EMTN program and issued a NOK 300 million bond. The terms were favorable, and they increased the capital duration. That is very good. Further, the income growth in Sveafastigheter is strong. The income growth in the like-for-like portfolio was 5%. [indiscernible] also after the quarter, sold a newly constructed property for SEK 438 million, and that was 24% higher than the construction cost.

If we move to Public Property Invest, the properties and the organization that were moved from SBB are now fully integrated into Public Property Invest. They have issued bonds for EUR 900 million and refinanced the bridge that they took when acquiring assets from SBB. We will get a primary listing on the stock on NASDAQ in Stockholm, the 20th of May. If we move to Nordic, it's very good, I think, that Nordic made a strategic acquisition of 14 modern educational properties in Stockholm and Gothenburg for a total value of SEK 1.8 billion.

And Nordic were able to receive very good terms in a U.S. private placement with investment-grade notes. And finally, in the SPV development, we succeeded to sign a lease for 10 years for 9,000 square meter with SBB and the property was before that totally vacant. So that was very good. This slide bridges from gross asset value to reported net asset value. The waterfall works from cash to core and non holdings to gross asset value of SEK 48.4 billion at the end of Q1, then the deduct debt and hybrids to arrive at a net asset value of SEK 14.5 billion. The core holdings amounts to SEK 33.4 billion. And in the core holdings, the further -- the following assets are including Sveafastigheter, Public Property Invest Nordic equity and also loan to Nordic. The noncore holdings amounts to SEK 12.7 billion. And the main assets are SBB, Recycling, SBB Residential.

Deducting SEK 25.3 billion of bonds and bank loans and the SEK 8.5 billion of hybrids and other reserves, these are reported net asset value of SEK 14.5 billion or SEK 8.22 per share. It's very good, I think, that SBB now has a strong liquidity position of SEK 4.7 billion.

The current liquidity position exceeds all debt maturing in 2026. Beyond our reported liquidity, we also have additional capital available through our holding in listed shares. These shares are traded on a regulated market and with good liquidity, which gives us additional financial flexibility. On top of this, we have also receivables of NOK 5.8 billion, where the main receivables is towards the investment-grade company, Nordic. And finally, a reduction of noncore assets in the future will enhance the liquidity position, in my opinion.

The main takeaway is that our liquidity and debt burden has been significantly reduced and is now very manageable. And now to the financials of the quarter. Income and costs arise mainly from the consolidated [indiscernible] , who has a strong development in the like-for-like portfolio. As an example, the rental income increased close to 5% like-for-like. If you look on SBB consolidated figures since 2023, the rental growth like-for-like is 26%.

That is very strong. SBB is a smaller company now and cost cutting is a central theme at the moment. Staffing SBB outside the core holdings is reduced from 145 to 29 since last year. The disciplined cost control is evident from group administration costs coming in at NOK 96 million, significantly down from NOK 157 million in the same period last year, acting as a strong proof of point of SBB's ongoing transformation into becoming a cost-efficient investment company. We aim to continue to cut costs going forward. The largest negative change for the quarter comes from currency exchange effects of minus NOK 300 million. This is mainly driven by negative exchange rate differences on our euro-denominated bonds, which are not fully hedged.

For the period, we had an increase of -- in the net asset value of NOK 142 million. This slide is intended to show where the key components in the business have been during the quarter and what has driven the development in net asset value. Starting with liquidity.

The cash position is down by approximately NOK 2.7 billion during the period. However, this should be seen together with the repayment of bonds of approximately NOK 1.9 billion plus acquisition of shares in Sveafastigheter, KlaraBo, Arlandastad and also some other investments. So while the reported cash is lower, the part of the movement reflects an active reduction of debt and the strengthening of the balance sheet.

On the asset side, we have seen positive value development across the core holdings. This reflects the underlying quality of the portfolio, the stable income generation and continued progress in the business. The net asset growth in total is, as I said, NOK 140 million. In summary, SBB today is the market leader within social infrastructure in the Nordics. We benefit from long-term demographic trends, economies of scale in property management and a simplified corporate structure.

As the real estate and capital markets continue to normalize, we see good developments and good opportunities for continued net asset value growth across the core holdings. SBB is now an institutional platform built for scale, focus and discipline. With strong assets, improved financing and a clear ownership perspective, we are well positioned to create value over time. Finally, I would like to thank you for listening in.

Thank you, Leiv, for walking us through the first quarter of 2026. We can now move on to the Q&A session. Thank you all.

[Operator Instructions] The next question comes from Rebecca Clements from JPMorgan Asset Management.

I have on Slide 17 -- your interest-bearing receivable, that's the Nordic vendor loan, correct?

Mainly so, yes.

Yes. You suggest that's a source of liquidity. How easy would it be to monetize that? And what kind of time period would you be able to do that in if you chose to use that option?

It would be easy, and I can do it within 5 weeks.

And what would be the mechanism for that? Would you be negotiating with would you sell it? Or would you be negotiating with the issuer?

It's a good question. I would say we have always the opportunity to speak to Brookfield. As a large institution, they probably always give us a price. And also, we can talk with the company. And since Nordic is an investment-grade company, they, of course, have a possibility to raise the money externally and then use that proceeds to repay to us. That's also a solution. And the third one is to reach out to institutional bank and then ask a large investor for quotes on lending on with that asset as a security. So we have a couple of options to choose between...

And how do you think about -- how do you weigh the decision between continuing to have that outstanding versus monetizing it? Because it isn't paying cash interest, correct? So it's accruing, but it's not actually providing cash to you.

It's -- that's a good question actually. It's the cost of the new funding we receive versus the cost of holding on to the current bonds. So -- and if the difference is large enough, it's probably something that we will consider.

Okay. And then what's the expectation in terms of dividend flows given that the -- a lot of these larger holdings you have that are investment grade have now added leverage. So is that going to restrict their ability to pay dividends? Or what's the expectation there with respect to EPI, et cetera?

I think the investment-grade rating that we have increases the chances of possibility to create a cash stream up to the owners where SBB is a big owner of the entity. So a part of that cash flow comes to us. First of all, it was -- the first step was to establish the respective entity. And the first one was Nordic. And then after a while, we got a good rating on Nordic and we could reach out and issue USPP notes and then they started to pay dividend.

And now the second one was when we listed Public Property Invest two years back, and then they have been working on increasing the portfolio size and also improving the ability to raise debt. And now they are starting to increasing the dividend stream. And then we have, who is maybe one year behind the other ones, and there's a good chance that they are on the same journey as the previous two I mentioned.

Okay. But in terms of trajectory, [indiscernible] Is probably a little bit behind in terms of ability to pay out significant dividends given the new debt they've added. Is that fair?

Yes. And also one other thing that they have a lot of building rights and they are constructing new properties. So a part of the cash generated from the operations goes into new projects. But recently, the market for newly constructed properties have picked up in the residential space, and they recently sold one property with 24% gain if you calculate the sales price divided with the construction cost. So it shows that they now have an ability to divest newly constructed properties and then that reduces the cash flow needed for new products. So that increases the likelihood that they will -- the Board in the future will decide on our distributions to the shareholder.

Okay. And then my last question is you've had a lot of changes in how you report and the various consolidation it's completely changed the way your financial statements look. Is this pretty set going forward? Or do you expect to have more changes similar to last year?

I think you will spend less and less time on underwriting SBB in the future. It will become very easy. it's true that we -- due to the financial stress that we had a couple of years back, needed to raise some kind of structured debt and also organize the debt in a way that we could maintain the covenants that we needed to maintain in the bonds. And we are past that period now and now we actively dissolve the joint ventures that we previously created, and we are on a good path to a very simple and transparent corporate structure.

Okay. So do you plan to hang on to these -- this size of your positions will probably be fairly stable going forward. You don't have significant plans for further divestitures or acquiring additional stakes?

First step, I think, is to continue to reduce the noncore assets and try to sell off some of them and making the corporate structure even more simpler to understand. And then by that happen, we will also improve the financial strength of the company. And then the next step after that is to find resources to continue to invest in existing holdings, but potentially also new ones. But the first step is to reduce the -- you can say the assets a bit and then use that cash flow to reduce the debt and improve the financial stability of the group.

Okay. And just a follow-up on the noncore holdings. do you have a time line for divesting that? I appreciate that you may want to wait and get the best valuation, et cetera, but is there an approximate time line for completing divestiture?

We have the cash we need for the 2026 maturities, but we need to divest something until next year when the next bond matures, I think it's after the summer '27. So we will probably have done some divestments in the upcoming year, I would say.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you. SBB is a Nordic investment company in social infrastructure. We hold key stakes in three market-leading companies. And with that statement, I would like to thank you for listening in.

Welcome to SBB Q4 Earnings Call 2025. [Operator Instructions] Now I will hand the conference over to Treasury Director, Helena Lindahl. Please go ahead.

Good morning, everyone, and welcome to our year-end presentation for 2025, and thank you all for taking time to listening in. Today's presenter is our CEO, Leiv Synnes. Leiv will provide a thorough update and explain the SBB corporate structure, core holdings, finance and capital structure. I, Helena Lindahl, Treasury Director and IR and our Finance Director, Daniel Tellberg, will join Leiv in the Q&A session afterwards and answer any questions you might have during that session that will follow the presentation. Now I'll turn it over to you, Leiv. Go ahead.

Thank you, Helena. I'm very proud to have completed the company's strategic transformation. SBB has significantly reduced its leverage, simplified its corporate structure and increased its transparency. SBB is now the leading social infrastructure investor in real estate in the Nordics. We have market-leading companies in Public Property Invest, Sveafastigheter and Nordiqus, which fund themselves with investment-grade ratings. Public Property Invest is now Europe's leading publicly traded operator in social infrastructure with assets of nearly SEK 50 billion. Sveafastigheter is Sweden largest listed pure-play residential company focused on high-demand growth regions in Sweden. Nordiqus is a dedicated specialist in educational infrastructure and spanning the entire learning chain from preschool to universities.

We have achieved a transparent, well-defined core holdings and SBB will provide future growth. Currently, my understanding is that we have a strong financial market and the transaction market has picked up the momentum. And my belief is that this will lead to higher property prices in the times to come. It's time to capture the tailwind that we see in the market for residential and community properties. And remember, leverage works with you in times of tailwind. Now if we look on the highlights for the period, I think it's very good for a real estate company to have growth in net operating income like-for-like and the figure, 7.4% is according to me, a very good figure. And also, it's very good that SBB have managed to lower the leverage and the loan-to-value is now 50%. Maybe the biggest event for the quarter was the sale of properties to Public Property Invest, where we received back shares in PPI plus cash.

We have then fulfilled the transformation to a real estate investment company, and we have simplified the corporate structure in SBB, and we will take advantage of this going forward. A large part of the advantages come with lower cost in Public Property Invest. The rating in Public Property Invest has increased to BBB+, which is a very strong rating, and they have the ability now to invest -- to raise fund with attractive terms. And also, there will be synergies with the improved administration. At the time of the transaction, we estimated the benefit of future cost savings due to the better financial terms and lower admin cost to SEK 3.8 billion. That is a very strong and good figure. And also lower cost in PPI will lead to improved cash flow in PPI and a part of that cash flow will come to SBB as dividends.

We estimate that SEK 360 million per year will come to SBB as dividends going forward. If you look on the core holdings in SBB, the assets under management is SEK 124 billion. And we have, as I said earlier, market-leading companies. And we are very proud of that, and the companies have a good chance to outperform the peers in the years to come. If you take a look -- a closer peek on Public Property Invest, a company that SBB now owns 40% of. We can see that the asset base is SEK 50 billion. And half of that, around SEK 25 billion is elderly care and health care exposure, segments that will have good opportunities to grow in the future and is very stable and reliable. My opinion is that Public Property Invest has a very solid asset core with a low risk. And if you couple that with prudent financing, you get a very safe company.

And if we move on to Sveafastigheter, they are performing well at the moment with a high like-for-like growth in revenues, but also in net operating income. And as I said earlier, the 7.4% growth in net operating income in the like-for-like portfolio is very good. And Sveafastigheter has established themselves now in the SEK and Euro market with issuing bonds with investment grade. My belief is that the revenues in Sveafastigheter will outperform inflation in the years to come. Nordiqus, the leading company in educational infrastructure in Europe has a very bright future. It was the first of the 3 companies that were established back in December 2022. And we have a very strong and knowledgeable co-owner in Brookfield, which we are very proud of. And it uses their investment-grade rating to issue very long-term bonds in the U.S. market.

In 2025, the net investments in Nordiqus amounted to SEK 1.6 billion, and they illustrate an ability to -- as a market leader to seize opportunities that arise in the market. I'm confident that Nordiqus will continue to pick up good deals in the market and grow and have a higher return on equity than similar peers. And the final part of the core holdings is SBB Development. It's a company that focus on develop and thereafter divest properties that need special resources. And to succeed with that, we have some resources that are skilled in strategic work to convert potential into long-term value. The plan is to develop all the properties in this company and sell them with a time period of 5 years. And already in 2026, we expect that some of properties will be ready to divest. And one example is elder care properties in the Stockholm region.

Besides the core holdings, we have also noncore holdings in SBB. And the biggest part of that is a loan to Nordiqus, which were given to Nordiqus when the company was created. And the second largest part of the noncore assets is the holdings in a company which we co-own with Morgan Stanley. It's called SBB Residential Property AB. And on top of that, we have investment in various other companies, which we could divest if we need proceeds to repay that. We have tried to help you and illustrate how the assets in SBB are built up. I think this picture illustrates the core holdings and also the noncore holdings. And if you start with the core holdings, you see Sveafastigheter, PPI and Nordiqus and SBB Development. And the sum of those holdings is SEK 33.5 billion. And then you have the -- after that, you have the noncore holdings of SEK 12.6 billion. And as I said earlier, that is the loan to Nordiqus. It's the joint venture we have with Morgan Stanley and it's the other shares we hold.

And one also good thing to know is that the low cost of debt that we have in SBB. The annual coupon on the bonds in the parent is 1.9%. And the noncore holdings will be used to lower debt. One thing that have happened during the last years in SBB is an improved financial position and a much higher financial flexibility. This cash position now is SEK 5.2 billion, and that is a figure excluding the liquidity that is in the consolidated Sveafastigheter. Sveafastigheter has on its own a very strong financial situation with cash reserves. And on top of that, if we look on the nonconsolidated companies, we can see that both PPI and Nordiqus have available cash and liquidity resources. So you can say if you take a look on the big SBB Group, you see a group with multiple sources of cash and liquidity sources and our ability to raise further liquidity if needed.

And if you zoom back to SBB and look on other financial assets, you can see that we have interest-bearing assets of SEK 5.8 billion. And the largest part of that is the loan to Nordiqus, and that is a loan that matures in 2029, but can be, if needed, be monetized earlier. And then we have liquid assets. If you look -- if you take the end price in the previous quarter, the value of those liquid shares is SEK 14.1 billion. The listed shares, we don't intend to sell, but it adds to financial flexibility. And to give you some aid on how we can proceed and what we intend to do going forward, we have created a picture. And if you look on the middle part of the picture, you see that we have a liquidity position of SEK 5.2 billion, and then we have undrawn credit facilities of SEK 2.5 billion. And this is only SBB, excluding Sveafastigheter. And you can see that the sum of those 2 capital sources exceed the maturities in 2026. So we are not under financial stress anymore. We have a time to act and we can act in a proper manner.

And also, if we look on the bonds, you see them on the left side. And you can see that the cheapest bonds are actually the bonds with long tenure, meaning that the coupon that we have on the average coupon of 1.9% is unlikely to increase as we repay bonds. And this is an additional page to help you to understand how we can manage the maturities in the upcoming years, that bond maturities in the upcoming years, but also give you an understanding that the core holdings will perform well and create NAV growth for SBB in the years to come. If we start on the left side of the picture, if you add the cash position of SEK 5.2 billion with the [Nordiqus] holdings, you can see that we cover debt maturities almost to the end of 2028, giving us 3 years of runway. And during these 3 years, the core holdings are estimated to perform well based on the solid asset base and the good funding situation these companies have.

So if we look on PPI as an example, we expect that the growth in NAV for that company will be SEK 3.2 billion during the next 3 years, and that is SBB's part of the growth, meaning that if the companies perform well and the value of the company increases, the loan-to-value in the SBB Group will decrease. And on the right, you see an estimation of what the loan-to-value can be going forward. SBB corporate structure leads to lower risk due to diversification between assets within the social infrastructure markets in the Nordic. It also gave multiple funding options. Only SBB could raise equity and debt in the past. Now SBB, PPI, Sveafastigheter and Nordiqus all have access to equity, which is a good and strong ability, both to be able to raise equity when needed in financial stress, but also to grasp new opportunities in the market. And also, PPI, Sveafastigheter and Nordiqus all can issue bonds with investment grade bond -- investment-grade rating.

And on top of that, we have all the bonds in SBB with very low interest rate. And together, you see a picture with attractive funding and low cost of capital for the SBB Group. And if you combine that with a very strong asset base, Nordic infrastructure properties that will perform well in the upcoming year, coupled with low cost of debt, then you have a good chance to present a high return on equity in the years to come. And to summary, SBB is creating and developing market leaders in the Nordic infrastructure segments. And these companies have the potential to outperform peers in profitability due to market position, access to capital and streamlined organizations, and a higher degree of specialization further contribute to tenant long-term needs, which will give us more tenants and higher rental growth.

We have demographic needs and trends in the sectors that benefit SBB. And we believe that simplified corporate structure in core entities, focused platforms will radically reduce the cost going forward and create value for the shareholders. The business cycle is going to be strong, I believe, in the years to come. We have passed the bottom and my expectation is that we will see solid growth in property values in the upcoming years. And also, it's good to remember that the leverage works with you in the current environment when the property prices can be expected to grow in value. And altogether, I think SBB has a high potential for NAV growth in core holdings and that leads to the current strong possibility to have a high earnings per share.

Thank you very much, Leiv, for those concluding remarks. And I think we can move forward to the Q&A session, please.

[Operator Instructions] The next question comes from Othman El Iraki from Fidelity International.

Congratulations on the strong result. I just had a question on the noncore asset. Leiv, when you say that, for example, the Nordiqus loan could be monetized ahead of 2029. Can you just explain how this can happen in practice? And the second question is really on the JV -- on the Residential [JV]. What is the timing you think with Morgan Stanley to unwind the structure?

Good question, Othman. If you start with the Nordiqus, Brookfield is, of course, a very strong counterparty to have. And also Nordiqus is a very strong company. So that open up possibility to speak with them to find a solution if we, for whatever reason, should need capital. And if you remember, we have done this earlier I think it was 2023. The loan was bigger then, but then actually Brookfield helped us and we reduced the outstanding loan to Nordiqus. If I remember correctly, it was SEK 8 billion. So if needed, we can reach out to Brookfield and discuss it. And if we are not successful in that -- those discussions, we can always go to third party and try to pledge the loan to Nordiqus. And Nordiqus is a very strong investment-grade company. and then the loan should have one notch lower rating than the company. So it's assets that creditors like. So there's a possibility to pledge it if needed.

And then the second part of the question was -- or the second question was the joint venture. I think it's usual in the market that if you take in a part owner, you have a shareholder agreement and then you have a certain investment period. And that -- then you have a breakup fee if you want to go out of that agreement in advance. And for us, it's no cost to repay the preference shares after mid 2027. So that is the latest date, I think, when we will try to optimize the capital structure in the joint venture and which leads to us for a more like low-cost solution. And one solution is to repay the preference shares to Morgan Stanley and raise secured debt from the Nordic banks. And that cost at the moment is below 4%. Another solution is that we say that we focus on residential only through Sveafastigheter and then we choose to divest the Morgan Stanley platform in order to get even more proceeds out of it and to be able to repay more bonds.

[Operator Instructions] The next question comes from Michael Johansson from Arctic Securities.

Two quick questions on my end. The first one, by the lux of it, it seems like the amount of credit facilities has increased in the quarter. Can you comment any on these facilities, please?

Yes. I think if I'm correct, if you look only on SBB, the amount of credit facilities is similar, but we have used the proceeds from the sale to Public Property Invest to repay some of the drawn amount under the facilities, leading to the conclusion that we now have more unused credit facilities, but the total volume is the same. And then if you add the ability in Sveafastigheter, I think Sveafastigheter have improved their ability to raise -- or to get facilities from the local banks. So it could be so that the total figure, if you include Sveafastigheter has increased.

Perfect. Very clear. And then on the operating cash flow in the quarter before changes in working capital, it was negative SEK 1.6 billion approximately. Can you just -- what mainly drove this negative figure? What made it SEK 1.6 billion negative was the main cause?

That's mainly related to the restructuring of the company due to the sale.

So restructuring costs then?

Not restructuring cost itself, but effects from the restructuring of the company.

I think for -- if you look on the future instead of the like the history, I think the ability for us to have a higher or better cash flow is -- in the core holdings has improved. Most of the assets are now moved into effective companies, PPI, Nordiqus and Sveafastigheter. And they also fund themselves with cheaper debt than we could raise on our own. So of course, the cash flow in SBB is, of course, dependent on the dividend streams from the large entities. But if you look on the -- how the cash flow comes from the properties itself, I think the cash flow creation in SBB has increased or the possibility to create cash flow has increased.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much, and we will give the floor to Leiv to give concluding remarks.

Thank you. I think it's very good to be located in the Nordics with all the investments. Nordiqus is -- have a population growth and also good economic development. So the asset side in SBB, I think will perform well due to the trends we see in the market. And also, we see the business cycle at the moment works in our favor. And then we benefit from both low-cost debt in core holdings, but also low-cost debt in the parent. So we can combine very strong business side or property side with attractive funding levels, and that gives us a strong opportunity to present growing results in SBB as the years come. Thank you.

Welcome to SBB presentation of the transaction between SBB and PPI. [Operator Instructions] Now I will hand the conference over to Treasury Director and IR, Helena Lindahl. Please go ahead.

Good morning, everyone, and a warm welcome to our presentation this morning, which will cover all you need to know about the transactions made public yesterday between PPI and SBB. I stand here with our CEO, Leiv Synnes, and he will walk you through the transaction, the strategy behind it and where -- and also where it will lead SBB going forward.

After Leiv's presentation, we will host a live Q&A session, and we expect to be finished well ahead of the market open at 9:00. So with that said, please go ahead, Leiv.

Thank you, Helena. I'm very happy with this transaction. I think it is the best solution for SBB. I also think it's a win-win transaction. So it's good for SBB but also for our associated company, Public Property Invest. I think this is the final step in SBB's transformation by selling the Social platform to PPI, SBB completes the strategic road map we set out a couple of years back. And we are simplifying the group. We are reducing the risk, and we are sharpening our focus on core value creation.

And as I said, we believe this is the best solution for SBB for a multiple of reasons, including the valuation upside delivered to shareholders, liquidity release and the ability to grow in the future through 3 clear and well-defined strategies. Such deal allows SBB to retain a minority stake in the market-leading brands with investment-grade ratings.

The transaction will generate SEK 11 billion in net proceeds. We will be able to reduce that in the near future. And this will create a runway that we will use to build up and grow the subsidiaries and associated companies. The remaining debt in SBB will have low coupons and long maturity, which is a huge benefit for SBB. And all the progress we have now or have exposure to will have attractive cost of funding supported by investment grade rating in each leg. And we will, from SBB side, benefit from the strong cash flow in the core holdings.

The business lines will be well defined and clear run by Specialized employees and clear reporting. Over the last 2 years, we have been set to reshape SBB into a simpler, stronger and more focused company. We have been committed to creating 3 distinct specialized platform across education, residential and social assets. We have executed on that plan.

Nordiqus, our educational platform is now a market leader and holds an investment-grade rating. Sveafastigheter, our core residential platform, also operate with an investment-grade rating. And now the social properties when moved into PPI can benefit from the BBB+ rating that PPI get through the transaction. The combination of such businesses is to be a clear path for growth underpinned by highly predictable and uniquely stable income streams from the safest economists in the world.

All 3 respective strategies benefit from critical mass and becoming the leader in the sector with an appropriate cost of capital and investment grade rating. Each platform now has a clear mandate, a strong brand and specialized management.

This page show the transaction structure. The SBB are selling assets to PPI worth of SEK 35 billion. And in return, SBB receives shares in PPI plus cash. And we are able to increase our holdings or share of the holdings in PPI from 33% to close to 40%. And maintaining our role as the largest shareholder in PPI. After this transaction, PPI will become a larger, more institutional platform with SEK 50 billion of assets.

That is a huge benefit. And if we look on the holdings in total for SBB after the transaction, we can see that we have 3 market-leading platforms. We will hold 40% in PPI, the #1 listed social infrastructure owner in Europe. We will hold 62% in Sveafastigheter, the #1 pure residential platform in Sweden, and 50% in Nordiqus , the #1 educational property platform in Europe.

On top of that, SBB will retain around SEK 5 billion of development properties that see growth into these core platforms. Each platform benefits from stable, predictable income streams, that is backed by public tenants in some of the safest and most resilient economies in the world. SBB is now the only listed entry point into 3 essential social real estate segment, education, residential and social infrastructure. At a scale and with investment-grade funding. In addition, the development arm enables SBB to be selective in investment and to perform value-add investments.

On the next page then on Page 8, we will look on the core holdings and also the non-core holdings. We will be able to reduce the debt in SBB in the transaction. And after the transaction, we have core holdings, and we have non-core holdings. And we believe that we -- this transaction will enable us to grow the core holdings so that from 2025 to 2028, we will gain and increase the value of the core assets.

And the non-core holdings mainly consist of the loan to Nordiqus, the residential platform joint venture that we currently have with Morgan Stanley and some other assets. And in total, those assets, which are non-core amounts to SEK 14 billion. And we'll use those SEK 14 billion to continue to create a runway, a runway that enables us to continue to grow the core holdings.

On Page 10, I think the SBB stakeholders will be usually positively impacted directly, but also in the coming years. The number of strategic and operational benefits driving direct and indirect value creation for SBB shareholders. First of all, there will be a simplified and more transparent structure, and that will reduce also the admin burden and the external costs in SBB. I think it's around SEK 100 million lower cost for administrative topics in SBB going forward.

And also we will limit the amount of cost of debt in SBB and reduce the financial costs with around SEK 400 million per year. And the net proceeds of SEK 11 billion will enhance the liquidity quite well, and will enable proactive liability management targeting at delivering and preserving capital growth for opportunities.

SBB equity story. We were creating a leading and resilient business profile, position it for future growth. SBB's all 3 segments benefiting from a very resilient position in the market. And the tenant base in the -- both educational and the social arm is supported by AAA-rated public sector tenants. And the residential sector benefits from demographic positive outlook plus a regulated market.

We are creating leading brands with significant scale. It's a huge benefit to have the market leading brands among the SBB core holdings. We also benefit from having a diversified corporate structure and into having 3 different segments, social, residential and education. And also, I think we benefit from a transparent and simplified business model and structure, and this will attract investors, both credit investors and equity investors.

When reducing the short-term maturities in SBB, we will be able to focus on long-term value creation. And also during that time, we benefit from the low cost of debt that we will have on the remaining bonds. I also think that the management team in SBB have proven itself during the hard times. And now we will have some tailwind going forward. And I'm very confident that we will perform above the market going forward. And in total, I think SBB is well positioned. We will have -- we will be able to show superior growth underpinned by core holdings and good funding situation. Thank you.

Thank you very much, Leiv. Leiv has just walked you through the logic of the transaction, and we will move on to the Q&A session.

We have a lot of listeners to the call -- in the call, and we expect many questions. So will you please refrain yourselves from asking questions that has already been asked.

[Operator Instructions] The next question comes from Mary Pollock from CreditSights.

Congrats on the deal. I was hoping you could help me understand how some of this is going to impact consolidated IFRS figures for SBB. Starting on the debt side, you talked about SEK 15.3 billion of debt leaving the group. How much of that debt is at the Castlelake JV, so it's not consolidated and how much is consolidated? And also, what do you expect the impact on total value to be? I assume it's consolidated community properties, it's like SEK 19 billion at 3Q. And then also the receivables are really the bulk of value you have from the Castlelake JVs. But what else -- am I missing anything in those?

We are experiencing some technical difficulties to move to the Q&A session. Please stay with us.

Mary Pollock, your line is now unmuted. Please go ahead.

Congrats on the deal again. Can you hear me now?

Yes. Thank you very much, Mary. Now we are in sound mode again. Thank you for that. So please go ahead with your question, and we will answer it.

No worries. So I was hoping you could help me understand how this deal is going to impact consolidated IFRS figures for SBB. So you talked about SEK 15 billion leaving the group. How much of that is the debt at the Castlelake JVs? And how much is consolidated in your accounts? And if you could provide like a mix of how much of that is secured. That would be really helpful.

And also on the asset side, what are you deconsolidating as a result of this transaction?

Yes, the Castlelake funding at the moment is combined in the 2 portfolios we have with them is around SEK 10.5 billion. And if we add the local banks funding into the portfolios, we add up to SEK 15 billion in total. So you can say that the secured debt that moves with the properties or are repaid in connection with the trade is SEK 15 billion. And we will not consolidate PPI.

Yes. And in terms of what it you deconsolidate, obviously, the community assets, which is SEK 19 billion and then the receivables from the 2 Castlelake JVs, and then you'll increase, I guess, your holding of PPI on the asset side? I'm thinking about that the right way?

You're correct.

Okay. And also just -- I'm pretty sure this is the case. Obviously, there's a few different steps in this transaction. Aker is paying you to transfer shares. You're getting shares in kind from PPI, which then Aker is buying from you. That cash from Aker that's like about SEK 4 billion, I think, that's included in your SEK 11 billion proceeds. It's not in addition to, yes.

It's included.

The next question comes from Othman from El Iraki (sic) Othman El Iraki.

Just a question on the rating agencies. Have you been in touch with S&P and Fitch? And do you expect them to react positively to the news?

Othman. Yes, we have been informing the rating agencies about the transactions. I have not read the report yet after the conclusion of the -- on the trade. So at the moment, I don't know how they will react. But we have well informed them about the transaction details.

The next question comes from Fredrik Stensved from ABG Sundal Collier.

Congrats. I have one question on the administration costs that you referred to. I think you mentioned a SEK 100 million cost saving. And I'm trying to sort of understand what is the base here? I mean last week in the Q3 report, there was one figure in the earnings capacity, and there was also a comment from you that maybe it should approach 10% of NOI towards the end of 2026, and looking at the press release from yesterday, it seems like PPI will incur another SEK 150 million in admin. So what is sort of the base? And where will SBB end up in terms of administration costs, do you think going forward?

In the parent, we estimate around SEK 60 million to SEK 80 million in administrative cost after the transaction. But let me come back to you in writing about the starting level. I don't have it in my head. But in general, when I said 10% of the administrative cost should be 10% of the -- of the rent. But now we have a limited amount of properties left. So that will be not like a target going forward. It's more that we will have some unnecessary costs for maintaining the development portfolio on top of managers running the company outside the development portfolio. So maybe SEK 60 million to SEK 80 million in total cost there.

And the cost reduction, if I elaborate a little bit on that, it will be synergies between us and PPI, meaning to some staff optimation, but we also likely don't need cost structures anymore. It is costly to run joint ventures, both from like a legal perspective, but also from an accounting perspective and reporting perspective. And also, we don't need to have as much ratings as we have today. Today, we have ratings both in the parent and in the holding company. So there are a lot of different costs that we'll be able to cut if we're able to streamline the corporate structures and not live in such a complex environment that we have been during the last years.

Yes. Yes, that certainly makes sense. I have one more question, if I may. On Page 8 in the presentation, you show the asset side, core holdings versus non-core holdings. Can you split the investment holdings of SEK 5.9 billion that you include in the core holdings. What is that? What are sort of the main pieces in that SEK 5.9 billion?

Yes, we have different holdings in various companies and most of them are unlisted, but we have also listed assets in that portfolio. But the larger part are smaller joint ventures and also some equity stake in larger entities, which are private. So there is not one big holding, it's a number of small to mid-sized holdings in various companies.

Okay. But all of those are sort of core holdings going forward as well then?

Okay, you mean the [ SEK 5.9 billion ]?

Yes, the SEK 5.9 billion.

Sorry. Sorry, I misunderstood you. That's mainly the development portfolio.

The next question comes from Emanuele Arnoldi from Barclays.

Congratulations for the transaction and I have to say, for the whole journey since you joined the company because you really told us every time what we were going to do and you did it. So well done. It doesn't happen very often.

The questions that I had are very -- so fairly detailed, but hopefully simple to answer. So on this Page 8 of the -- Page 9 of the presentation, sorry, which is the same one we were looking at now for the previous question. Am I right to say that when we look at the equity, which is SEK 14.1 billion in the chart for 2025 post transaction, we need to then keep in mind that, that includes also the minority into, for example, Sveafastigheter.

Yes, you're correct.

Okay. Perfect.

I think it's only our holding there. So it's not like -- it's not the minority part of the equity is on our part.

Because Sveafastigheter is there for SEK 9.2 billion, which I assume is the total assets you're consolidating into the balance sheet. And then SEK 14.1 billion, I would have thought it's more or less [ SEK 9 billion ] of your own equity, so to say, and [ SEK 5 billion or SEK 6 billion ] is noncontrolling interest into Sveafastigheter and other entities.

Let me see if I'm correct here, but I think the equity in Sveafastigheter, the total equity should be around SEK 15 billion plus, so the SEK 9 billion here is 60% out of that SEK 15 plus billion.

It's our share.

Yes. So it's not the minority interest.

Okay. Yes. Okay. Now because I had to mind the market cap, which was obviously a much lower number. So that's why I had the question. Okay. Understood. And so it's just a matter of how one looks at it.

And the other question is use of proceeds because obviously, it's a -- if I understand correctly, you are getting more or less EUR 1 billion, which is this SEK 11 billion, and you are using more or less EUR 300 million between the reinvestment that you have to make and in shares of PPI and paying redeeming more or less at par, the bonds at the whole top all co-level, the original holding company, the ones that were not exchanged, which I think, if I remember correctly, roughly speaking, leaves the company without any security carrying a financial covenant because I guess the whole transformation here obviously is not compatible with that. Is that fair?

So that will mean that you have EUR 0.7 billion that you can then use to tackle the 2026 maturities and any...

Can you please ask your questions in the interest of time?

Yes. I understood the question. So yes, it's -- out of the SEK 11 billion we have already taken care of initial debt, that you mentioned, the only debt that we repay with SEK 11 billion that is concluded already is the debt in the parent, the bonds in the parent. So that is around SEK 1.7 billion and SEK 1.8 billion something around that. number. So that would leave us with roughly SEK 9 billion left to spend on other debt reductions.

Yes. And also, you're correct that it will remove all the historic covenants. And the only remaining covenant is in SBB holding now, and they are quite flexible, enable us to manage the company in a good way, both for equity investment, but also for debt investors.

And that concludes the Q&A session. We promised that we would finish ahead of the market. And please, if you have any further questions, please contact us at the [email protected], and we will be able to answer your questions there. Thank you all so much for listening in this morning. Have a great day.

The host has ended this call. Goodbye.

Welcome to SBB Q3 Earnings Call 2025. [Operator Instructions] Now I will hand the conference over to Treasury Director, Helena Lindahl. Please go ahead.

Good morning, everyone, and a warm welcome to our Q3 presentation. Here with me this morning, I have our CEO, Leiv Synnes, who will present the Q3 results and also give you a strategy update. And Daniel Tellberg, our Finance Director, will answer questions on the reports and run through the numbers. After the session, we will host a live Q&A session, and please prepare your questions, and we will be ready to take them after the presentation. With that said, I will hand over to Leiv.

Thank you, Helena. SBB is 4 segments: community, residential, education and development. So in total, the property exposure is SEK 94 billion, and the assets have low downside risk. Instead, there is a potential for higher revenues and also for more investments. We are creating efficient and focused platform, and we have a very good market position. If we look on the highlights for the period, the property exposure increases to SEK 94 billion, which is good, and that is mainly through the subsidiary, Sveafastigheter and the associated companies, Nordiqus and PPI.

We see a good development in rental income, plus 1.6% and also a growth in net operating income, +2.9%. And we're happy to see that we are reducing the costs. So the central admin cost is down 22%. And we think that the central admin costs have potential to further decrease in the upcoming quarters. We have an increased activity in leasing, and we start to sign new leases. And one lease that we have signed is with the city of Stockholm for -- during -- for 15 years lease. And I think we will be able to announce more of these new leases to the market within short.

We continue to develop our brand names in the SBB Group and we are benefiting from the stronger and stronger ability to raise capital in those entities. And it's good that Nordiqus Public Property Invest and Sveafastigheter all have investment-grade ratings. If you take a closer look on the community sector, it's SEK 40 billion of assets and 50% of that is consolidated and the rest is through joint ventures and associated companies, where one big associated company is Public Property Invest. In the segment, Elderly care is the largest subsector.

If we move over to residentials, the property exposure is close to SEK 30 billion. And Sveafastigheter is the core assets in the sector. And our part of that company is -- we have a property value of close to SEK 19 billion. And Sveafastigheter was listed on NASDAQ First North and also upgraded to the Stockholm main list in June this year and have also received our investment-grade rating from Fitch. We believe that Sveafastigheter will be able to show high growth in revenues and also lower costs. It's a large vehicle, and I think it will be more effective than the market as a whole. And in the upcoming years, we will be able to show it. That is my expectation.

Education, the core assets in -- for us in Education is Nordiqus and our part of that is we have a proper exposure of SEK 20 billion. In total, the company have assets for SEK 40 billion. So we hold close to 50% of the shares in Nordiqus, a company that we co-own with Brookfield. And we show -- we see a strong development in Nordiqus rental growth and net operating income growth and also an ability to act on the transaction market for properties and grow. So we believe that Nordiqus will be a growing companies with higher and higher dividend stream to SBB.

We have moved some properties with great potential into a subsegment called development, where we have put increased focus on leasing activities and also investment activities. And we are in the final time to sign new leases in development for the properties here. And I also think that we were able to announce to the market positive development of the assets in sign of lower vacancy and higher net operating income and a positive revaluation to higher rental income and lower vacancy. And I'm very positive to the development in this sector at the moment.

We limit the segment to 10% of the company balance sheet, and we have a minimum return on equity of 15% for all the investments we have in development. I believe that we are in a good shape when it comes to the strategy. We have done a lot and the rest of the plan we have in the strategy, we will be able to work in tailwind. The market is strong now, and it's easier for us to execute on the strategy that we have in the company. We see strong growth and positive development in the platforms that we're creating. We are starting to see cost reduction in the group, and we believe that we will be able to continue with this positive trend. And we have a very strong confidence in the core business.

Residential is a very strong segment and also public properties is safe and have ability to create higher rental income in the future. We have some areas that we will put more focus on going forward. We are addressing the joint ventures and the financing cost of those. And we think that we will be able to cut the financing cost in the joint ventures that we have in the upcoming year. And we also think that we will be able to make SBB easier to understand and reducing the number of joint ventures.

We will see higher and higher cost control in the SBB Group through that we are -- more and more of the assets are in effective vehicles, and that will lead to higher cash flow from the property management. Thank you.

Thank you, Leiv. Deep diving into the P&L. We had a solid like-for-like development for the year. We see a strong continuous growth in the residential revenues, giving a total revenue increase of 1.6% on a like-for-like basis. At the same time, we are closely monitoring our property costs with lower maintenance and operating costs compared to 2024. In the last years, we made some wise energy investments, clearly showing signs of paying off. All in all, we had a 2.9% net operating income increase on a like-for-like basis.

Looking at administration costs, we have several strategic initiatives aiming for strengthening internal functions, reducing consultant dependency and improving operational efficiency. In total, administration costs are down by 22% from last year. Continuing on this road is a key priority for both SBB and Sveafastigheter. Changes in property values amounts to minus SEK 0.5 billion for the year. This has been impacted by some individual projects and sales during the year. Looking at the quarter, value changes are clearly leveling off and flattening out for both consolidated properties as well as joint venture properties. In total, we're happy to see a net profit for the period of SEK 1.6 billion. With that said, Helena will take it from a liquidity standpoint.

Yes. And the liquidity is improving. The total liquidity for the SBB Group on a consolidated basis is a tad over SEK 4 billion and with unutilized credit facilities of SEK 2.1 billion. And on a stand-alone basis for only SBB, we have a liquidity position of SEK 1.5 billion and unutilized credit facility of SEK 500 million. We also have the availability of liquidity in the form of the listed shares that we own, such as the Public Property Invest and Sveafastigheter, and that is in total SEK 7.5 billion. As you all know, we have worked tremendously hard to strengthen the company's financial stability, and we are improving it quarter-by-quarter.

We have a ICR ratio of 2.4% for this period and a loan-to-value of 59%. We still enjoy a very attractive long-term funding position. We have an average maturity of 2.5 years. And also, we enjoy the low cost of funding of the average interest rate of 2.4%. And also, I would like to highlight that 78% of the debt stack matures later than 2026, which gives us plenty of room to further improve the financial stability of the firm. And with that said, I leave the word to Leiv for -- to summarize the quarter.

Yes. In SBB, we are creating subsidiaries and associated companies that are able to grow and benefit from the strong market position that they have. Nordiqus is the largest company in educational properties. Sveafastigheter is the largest listed pure residential company in Sweden and PPI is a growing company in Norway. All of these companies, I think, will be able to benefit from the market position and the access to capital and will grow in the future. These companies will also have effective cost control and also SBB as a whole will reduce costs. And in the upcoming years, we will show the market that we will be a low-cost company.

I'm very confident of the core business in SBB. We have very resilient assets. Instead, we have potential in revenue growth in both public infrastructure properties and the residential properties. So I'm very confident. And quarter-by-quarter, we increased access to capital in SBB, but also through the strong subsidiaries and all the associated companies that we create. So overall, I'm very proud of the development in SBB and confident about the future.

Thank you, Leiv. And with that said, we are happy to take your questions in the live Q&A session. [Operator Instructions] The next question comes from Mary Pollock from CreditSights.

I was wondering if you could provide an update on your SEK 10 billion of disposals. How many have you completed? And what is your plan for the remaining? And then I also wanted to ask on how you're thinking about refinancing the 2026 Eurobond.

Good questions. We have sold SEK 1 billion of residential assets, I think it was end of Q2. And the rest of the residential properties outside Sveafastigheter is on the investment portfolio. So we think that we will be able to sell residential assets outside Sveafastigheter if needed. And I also believe that the market will pick up quarter-by-quarter. And next -- first half of next year will be stronger than this year. So I'm very confident that we will be able to divest those assets to a good price if we choose to go that path.

We also know that we can either get back the money we have lent to associated companies or pledge that asset and receive funds. So at the moment, we are very confident of being able to repay the bonds that matures in 2026. And we are not overly worried about the refinancing risk.

Are you still considering tapping the market to extend the maturity?

Yes, that's an option we have. And I think we have met the investors during the last quarters, and we see that some of the larger bond investors in SBB are happy with the development and could add to the exposure if we come to the market. So it's clearly an option for us.

The next question comes from Othman El Iraki from Fidelity International.

Actually, my question was covered by Mary just before, but maybe just a follow-up on this in terms of the different levers you have for your disposal. So I understand the residential outside of sales. But I'd like to better understand how you can improve your liquidity, especially through your joint ventures in that are you looking to reduce, for example, your stake in PPI or Nordiqus? Is that an option for you at the moment or not really?

Good question. We, of course, have the options. But at the moment, we don't have the intention to do so. So we have created companies that are attractive for other investors. I think if we speak about the Nordiqus and we discuss it with Brookfield, I think we can come to an agreement if we go that path. And also clearly, Sveafastigheter public property investor listed companies, so we can also lower our stake there. So what we have done the last years is to create companies that are attractive for other investors. And we are -- we think that we are able to capitalize on that if needed. However, it is not our intention to reduce our holdings in Nordiqus, Sveafastigheter or PPI at the moment.

Okay. And just one follow-up on this is kind of unwinding any of your deals with Castlelake? Is it something that is achievable sometime next year or naturally it's longer term?

Yes. In the transactions we have with Castlelake, we have our ability to prolong them if needed. We have also ability to find other solutions if other solution is cheaper or better for SBB. We have also the opportunity to renegotiate the terms with Castlelake. And I think the market as a whole has both lower market interest at the moment, but also lower risk premium. And on top of that, SBB is much a stronger company now compared to the situation where we took the initial discussions with Castlelake. So I think at the moment, it's very, very likely that we will cut the costs for funding the properties that lies in those joint ventures.

The next question comes from Emil Ekholm from Pareto Securities.

You've touched upon briefly, but you have on Page 37 in the report, non-pledged property value of almost SEK 17.7 billion. How much of that is in Sveafastigheter?

I

Think that we will come back to you in writing on that one, so we can give you a precise number.

Okay. And also in the same table, you have pledged net assets in subsidiaries of around SEK 14.9 billion. Could you explain what that is referring to?

Yes, we can come back at that as well, so you can get a precise explanation.

Okay. Perfect. And then also, I think we should be around halfway through the maturity of the intercompany loan to Nordiqus as of now. What is the current outstanding amount? And can we expect any repayment before the maturity in about 3 years?

Yes. We -- Nordiqus is a company that we co-own with Brookfield and Brookfield is a very strong institution. So I think it's just a matter of price if you would like to discuss the loan to Nordiqus with them. And also Nordiqus itself have an investment-grade rating at the moment and are potentially able to raise similar debt themselves and repay the money to us. So if we open up that discussions with Nordiqus for Brookfield, I'm sure that we will come to a good conclusion or agreement.

Okay. And how much is outstanding as of now approximately?

Yes. I think the outstanding amount is a little bit more than SEK 5 billion.

Okay. Perfect. And if there were to be any repayment before the maturity, would that entail any early redemption costs for you?

It's not -- it will not have any early redemption cost. But since the interest on the lending to Nordiqus, the interest rate is low, then we will have to take a haircut of the face value. And we have done an assumption of that. So we have a lower book value in SBB than the nominal value of the loan. So I think it is SEK 4.3 billion the book value and the face value is a little bit more than SEK 5 billion, as I mentioned.

Okay. And also talking about Nordiqus, you can see that the average interest rate increased from 3.71% to 4.79% quarter-over-quarter. What happened there? I can see that the loan amount has been lowered as well.

I think in Nordiqus, they calculate with -- I think they have obtained long-term funding in Nordiqus. So that's one reason. So -- and the funding mainly consists of U.S. private placement. And the funding cost depending on the market situation is -- tend to be around 1.7% to 2%, depending on the timing in the market and then you have a base rate. So at the moment, that base rate is around 2% or 2.5%. So then you should expect Nordiqus to have a funding cost around 4% to 4.5%. And if there are any changes in the interest cost or interest rate level since they have refinance short-term debt, which they have with RCF with banks and added more USPP private bank private funding. So yes.

Okay. Because I can see that interest-bearing liabilities were down by around SEK 5 billion quarter-over-quarter. So I guess maybe they repaid some very favorable debt so to speak. Is that a fair assumption?

You mean Nordiqus?

Yes. In Q2, they had around SEK 23 billion in debt, and now they have around SEK 18 billion.

Okay. I need to come back to you. I don't have the report in front of me, but mainly they are a growing company, and they have bought more properties in Nordiqus. So they have added more debt both in 2024 and also in 2025. And then they have -- what they also have done is they have refinanced the RCF that they have with [ 4 banks and tapped USPP ] private placement market. And then they have taken a duration of, on average, 13 years of the new funding.

So due to the longer duration, there have been a little bit pickup in funding costs. But instead, we have received a very low risk on the financing in Nordiqus. So it might be so that the interest costs have gone up a little bit due to taking the safety route when it comes to funding.

The next question comes from Filippo Tomasi from BNPP.

I just wanted to ask you about the community segment as it seems like occupancy and kind of operational performance is very strong at the residential part of the portfolio, but a bit less so in community. I just wanted to understand if it's like some short-term [ play it short ] or is this something more structural going on?

Yes, it's a good question, and I can explain how the market is. When it comes to residential, it's like a rental negotiations with the tenant association each year. And when you have high inflation, usually, there is a time lag between the inflation picking up and when you get a rental increase. So that is one of the reasons why we have good rental growth in the residential because we're getting compensating from the previous year's high inflation. So therefore, we have a strong growth at the moment when it comes to revenues in residential and also expected to have a strong rental growth in the next year.

And when it comes to community properties, most of the leases we have is very long term, and they are linked to inflation. So meaning if the inflation is low, we get lower income growth. So that is what's happening at the moment. We enter an environment with lower inflation, which is very good and helpful from a funding perspective. When it comes to rental growth, it means that we have lower rental growth in 2025 and also in what we can see for 2026. So I think also in the upcoming year, when it comes to rental growth, residential will outperform public properties.

Can you comment on the occupancy?

It's been rather stable if you look on 1 year back, I think it's less than 1% change. So if we have included the development properties is around 90% to 91%. And if you exclude the development properties, it's around 94% occupancy rate. And it's a rather stable business. I don't think you should expect any large movement towards higher vacancy. It's likely that you will see a lower vacancy going forward. And we see a good trend in Sveafastigheter and they are facing a lower vacancy at the moment, and that is a big part of the consolidated assets.

And also we -- since the beginning of the year, we have put more emphasis on the development properties and both like in doing investments in order to attract new tenants, but also in hiring people that are actually leasing out the vacant premises. So I think if you look 1 or 2 quarters ahead, you should expect a positive trend when it comes to vacancy in the public property segment.

So you expect an improvement on the community segment as well? Yes.

[Operator Instructions] Yes, there are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Yes, we see no further questions. So Leiv will give some concluding remarks.

Thank you all for listening to this update from SBB. We are very proud of the development in the SBB at the moment. And also, I think we are very fortunate at the moment to have a tailwind. I think the property market is -- the heat is picking up with higher pace in the transaction market and also boosted by good funding possibilities for the market as a whole. And also, we are very confident about the rental growth in SBB. So overall, we are very positive at the moment and see strong development going forward. And with that, I would like to thank you for listening.

Good morning, everyone. Thank you for taking time this morning and listening into SBB Q2 2025 Earnings Call. My name is Helena Lindahl, and I'm the Treasury Director of SBB.

Here with me this morning, I have our CEO, Leiv Synnes, who will present the Q2 results and the strategy update for you. And also Daniel Tellberg, our Finance Director, who will answer questions on the report.

After the presentation, we will have a Q&A session. If you have any questions during the call, please submit them to our e-mail address [email protected]. You can also find the e-mail address in the press release with the details of the call.

With that said, I hand over to Leiv to present the results.

Thank you, Helena. I will shortly introduce the numbers to you. But first, I would like to give you a quick reminder of what SBB is all about.

SBB owns social infrastructure in the Nordics and residential properties in Sweden. We have close to SEK 100 billion in property exposure spread across the four business segments. These are mainly, Community, Residential and Education.

The tenants are typically government backed for Community and Education segment, and we provide housing within the Swedish highly regulated residential market. We see ourselves as a partner helping to enable the very successful Nordic welfare system.

With these segments, we have an overall platform, which give low downside risk in revenues and also provide a substantial growth potential. We have efficient and very focused platforms, and we have overall a very good market position.

And now to the highlights for the period. First of all, it's very pleasing to see that SBB increased its property exposure by SEK 900 million for the first half of this year. The growth comes from the strong companies we have created during the last couple of years, Sveafastigheter, Nordiqus and PPI. They are financially strong and all of them are able to capture growth underpinned by low cost of funding, which they are able to attract through the investment-grade rating.

It's also pleasing to see the underlying business deliver in such a way it does. Rental income growth is 1.3%, up and the net operating income growth with 3.7%, both like-for-like. During the period, SBB issued shares, which resulted in lower leverage and with Aker entering as a new major shareholder and now hold 29% of the votes. This is a strong signal and a vote of confidence in SBB's assets, business model and organization.

And now I would like to dive into each of the business segments. We will start with Community. It shows strong fundamentals and have a positive rental outlook. In short, it is government-funded tenants, minimal risk of rent loss and also close to 100% CPI linkage. Around 30% of the assets are elderly care, which is a segment where Swedish local authorities and regions project that the demand will increase with more than 30% in the next 8 to 10 years. The interest from external parties confirms the strong underlying value of the portfolio, both with regards to asset quality, but also in the operation.

A part of the segment is Public Property Invest, PPI, that is listed in Oslo and is part of the segment. PPI has acquired properties during the second quarter with an area of almost 200,000 square meters, and it contributes to SBB growth in total property exposure.

The company has also issued new shares as a part of acquiring some of these properties. SBB has a strong belief in PPI business plan, and we, therefore, choose to invest SEK 700 million to safeguard the position as the largest shareholder.

SBB now own 33% of the shares and continuously, the investor base for PPI is growing. Aker is now the second largest shareholder with 25% of the shares. Dividend has started to be received by SBB, and I predict that the future dividends will grow from PPI over time.

Next business segment is Residential, where most of our exposure is in Sveafastigheter. Sveafastigheter has started on an impressive journey. They have listed -- they were first listed last October. And in June, they will uplift to NASDAQ Stockholm Main list.

Sveafastigheter have also successfully received an investment-grade rating from Fitch and has issued bonds in the capital market, capturing lower cost of funds, which will enable future growth. The operation in Sveafastigheter is going well. They report 4.3% rental growth like-for-like during the first half of this year. We estimate that the rent will continue to increase faster than inflation in the next years.

The residential properties that SBB owns which are not included in Sveafastigheter, we will plan to divest them over time and focus solely on Sveafastigheter in the residential space.

I believe that SBB is industry-leading and has a strong competence in sourcing and developing large-scale residential projects. During the second quarter, a series of newly developed properties were divested to a North American pension fund. The total value of the transaction was roughly SEK 1.2 billion, and the rental value was SEK 65 million. This is just one example of SBB's ability to create and realize value from project development. And also the demand for the products that SBB creates.

Moving on to the Education segment, which is -- which to the utmost extent is made up by Nordiqus, the company that SBB owns together with Brookfield. Nordiqus has been developed to become a leading platform for the infrastructure in education with growth potential and scalability opportunities.

Long leases, together with long-term funding results in a high predictability of future cash flow, a very stable business with government-backed income, high lease renewal and close to 100% CPI-linked of rents.

I'm happy to see that Nordiqus is growing and has during the second quarter, acquired a new state-of-the-art campus with Dalarna University as a tenant and the price was around SEK 700 million.

The dedicated Development business segment was established during the Spring. The purpose is to single out properties with significant potential or and a need for special consideration to maximize stakeholder value, both for shareholders and for tenants.

In Development, we gather specific and specialized competence to be designed to ensure and to drive further value creation in our projects. Higher return on equity is expected on these projects, 15% and above. To manage risk, we have limited the Business segment to 5% of the total property exposure.

One of the success stories we have in SBB and which we intend to replicate within the newly formed development segment is the creation of Kriminalvårdens hus in Västerås.

Back in 2017, SBB acquired together with K2A, a small commercial property with potential. In 2025, the project resulted in an upcoming state-of-the-art retention center with the Swedish Prison and Probation Service as a tenant with a 20-year lease. SBB successfully divested the project in April 2025 with a liquidity effect of SEK 300 million.

SBB has the ability to provide rental growth and net operating income growth in the like-for-like portfolio. 21% increase in rents, 26% growth in net operating income since January 2022 is a clear evidence. Regulated residential in Sweden and social infrastructure assets in the Nordic with long leases provide limited downside risk and long-term growth potential. SBB has large property portfolios that lower the risk, improve efficiency and market recognition. The platforms are scalable.

To sum it up, strategy execution is well on track. Subsidiaries drive growth. We have delivered on the strategy to create financially strong companies, which have potential to be leading within their segments. Nordiqus, PPI and Sveafastigheter are examples.

We are improving the effectiveness of the cost control. Central admin cost is decreasing year-by-year by 23%. Company-wide drive to increase efficiency is showing results.

There is a stronger confidence in the core business. Positive net rental across the portfolio. And there is a vote of confidence with new strong ownership by Aker.

We see an increased access to capital, more options for sourcing funding and equity, coupled with more favorable capital markets. Significant holdings in large listed company, PPI and Sveafastigheter create a liquidity reserve.

And now I would like to pass the word over to Helena, and it's your turn to go through the finance.

Thank you, Leiv. I will start with the liquidity. The total liquidity for SBB on a consolidated basis was SEK 3.9 billion quarter end and SEK 2.2 billion for SBB on a stand-alone basis.

The unutilized credit facilities was SEK 1.1 billion for total SBB and SEK 500 million for SBB stand-alone. We continue our strive to improve the liquidity for the consolidated SBB Group.

We are also continuing to strengthening the SBB financial stability. For this quarter, we report a lower loan-to-value of 59%, where the share issue in Q2 contributed positively. We have also improved access to capital overall, both equity and debt, at a time when the capital market has improved significantly during the past 1.5 years. This is particularly true for Nordiqus, Sveafastigheter and PPI, which all individually have set their own footprint in the debt capital markets.

We also report a higher interest coverage ratio, 2.3x. And also during next 6 to 9 months, the refinancing for the joint venture is a top priority for us. We expect a significant lower cost of funding for the assets in the joint ventures.

SBB is continuously benefiting from having a very attractive long-term funding. The average interest rate is reported low at 2.5% with an average interest maturity of 2.7 years. Still, 75% of the company's debt matures later than 2026, which gives the company a runway to secure the refinancing of the longer-dated debt.

I will leave the word back to you, Leiv. It's time to summarize the presentation.

Thank you again, Helena. To sum it up, strong companies in the SBB Group drives the growth. which is positive. We also see a positive net letting and that central costs are trending down, which is positive. We have a stronger confidence in the core business. And all of this results in increased access to capital.

Thank you very much for listening in. And we now move on to the Q&A session.

First question. How will you fund the upcoming maturities in 2026 and 2027?

I think that question belongs to me. We are executing on the plan to divest the non-core assets, which has been previously communicated. And we have already divested SEK 1.2 billion of non-core residential assets during the second quarter.

We are also working on the structuring of the Community segment and thereby opening up for additional funding sources. Also, we are in a position where we feel that our options for sourcing liquidity and also capital have increased significantly compared to previous years. As we say in Sweden, we have a much larger smörgåsbord to choose from when it comes to sourcing funding.

In addition, I feel and we feel strongly that the time is on our side, and it is a good possibility that we will be able to refinance the maturing bonds with extensions.

Thank you. On to the next question. Will you continue to make divestments?

I think, similar as what Helena said, we have time on our side now, and we can take our time to make divestments if we need to. Overall, I think that we have a good chance of long-term increasing the property exposure by the growth in the subsidiaries and associated companies that we have in the group. By that, I mean that, I believe that both Sveafastigheter, Nordiqus, as well as PPI have a good chance in growing their portfolios.

Thank you. Next question. Can you elaborate on the NOI?

Yes. I think, we -- as I said earlier in the call, we are happy with the development of the net operating income. It was increasing by 3.7% during the period and 26% since 2022, everything on a like-for-like basis. I think, it shows -- and sorry for repeating myself that we have low downside risk. Instead, we have a potential to year-by-year growing the business with higher and higher net operating income.

Thank you. Moving on to the next question. How much of the SEK 253 million in interest income and similar items are actual cash flow? You have previously had a positive accounting effect here due to recognizing intercompany loans at fair value.

The reported interest income for the period amounts to SEK 253 million. If you exclude non-cash effects, the cash flow statement outlines that received interest amounts to SEK 120 million for the period.

Thank you. We'll move on to the next question. You have said previously that central administrative costs should decrease, yet expenses continue to rise compared to the previous quarter. Sveafastigheter's central administration costs are also increasing. What concrete measures are planned to reach a more competitive level?

Yes. As we have several ongoing initiatives to strengthen the organization and further increase the internal competence, this will drastically reduce the purchase of external expensive services. One such initiative is the in-sourcing of financial management.

Looking at 2025, the administration costs include legal expense related to the resolution of the dispute with bondholders as well as costs associated with Sveafastigheter's listing on the NASDAQ Main market. Despite this, administration costs for the first 6 months are a total of SEK 130 million lower than prior year. We will stay on this road and continue to reduce the administration costs further.

Thank you. Final question. The loan-to-value ratio is at 59%, which is above the internal target of 50%. How does this affect the possibility of achieving investment grade and what is required to reach the target?

It's a good question. We -- I think we and SBB has time on our side, and we will continue to divest non-core assets in order to optimize the capital structure and thus lowering the leverage.

We also have a period with declining property values and a period where we have been able to increase the rental income and the net operating income. I think we will see continuous trend of increasing income in the like-for-like portfolio for SBB and also with a stronger trend in the capital market, there is a high and high chance that we will see an improvement in the property values. And together with divestment, of course, this will lead to a higher and improved financial situation and also a lower loan-to-value.

Thank you. As this was the final question, I'll leave it back to Helena Lindahl.

Yes. Thank you very much for listening in to this Q2 earnings call. And also, please note that if you have any further questions that you might have, please write and send an e-mail to [email protected]. Thank you very much.