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 treasurer director and head of IR at SVB. Here with me today I have our CEO Leif Synnes who will walk you through the highlights of the quarter, assets and strategy, the financials and finally the key investment highlights of SVB. Myself and our finance director, Daniel Tellberg, will join Leif 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 Leif. Please go ahead.
Thank you very much, Sebastian. And good morning, everyone, and welcome. I am Leif Sinnes, 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 be long-term value nothing new that is what we have been doing the last years spb today is a nordic social infrastructure investment company core holdings are svea fastheter public property invest and nordicus 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 svea fastheter is swedens largest listed residential company Public Property Invest is Europe's largest listed social infrastructure company. And Nordicus 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 spb 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 leader leading platforms one example is spb residential that will be moved into svea fastheter 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 Sveafastheter, the second quarter was a transformational quarter with major strategic value creation. Sveafastheter grows 60% by merging with Clara Bo and SBB residential. I will come back to this later in the presentation. Sveafastheter also started to divest newly produced residential assets during the quarter. These assets are sought after by investors and Svea Fast Data can buy the investing realized 20% plus in development margin. The capital received can be recycled into new projects or used to be 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 financial strength during the spring ppi successfully integrated spb'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 continued to execute on the funding part. The company secured 3.6 billion five-year bank financing and issued 200 million euro in five-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 is expanding its foot sprints with disciplined disciplined high quality acquisitions during the second quarter the company acquired two healthcare projects in finland for euro 33 million they add long duration that support stable cash flow and profitability With a scalable platform, investment grade rating and long neases and the diversified Nordic portfolio, BPI 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 nordicus the the company's platform is becoming increasingly robust scalable and strategically important in the nordic social infrastructure landscape portfolio activity is good in nordicus nordicus successfully integrated previously acquired educational properties in Stockholm and Gothenburg that were acquired for 1.8 billion sikh. These assets strengthen the company's presence in two of Sweden's most attractive educational markets and they contribute to a scalable and robust earning base. During the quarter Nordica signed a 15-year lease with Kunskapsskolan for a new school in Sweden adding high quality long duration income. Nordicus 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 Nordicus has a very solid financial structure. In short Nordicus 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 spb development one year after its creation spb development is delivering clear results net leasing reached close to 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 urban development assets and show organizational skills to enter agreement with professional counterparts. SPB development showed property sales totaling 500 million, 12% above fair value. Including the signed sale to Clara Boo, the balance sheet has has decreased by 20% to 5 billion during the year. I believe that more value-creating processes are on the way, which we hope to be able to present to you in later reports. The Svea Fastheter, Klara Bo and SBB residential merger is a transformational step. Prior to the merger, SBB had become the largest owners in all three entities with a clear ambition to make all three 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 47 billion SEK in combined property value, which is an increase of 60% for Svea fastigheter. We will be able to get 120 million SEK in annual synergies. And regarding the benefit of SBB, SBB will gain a 20% earnings uplift due to improved cost of funds. This is a clear example of how SBB actively builds up market leading platforms and improves capital allocation. Svea-Fastet 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, SPB capital structure will be more transparent and more cost efficient with less administration evidence of the reduced cost we hope to be able to present in the later financial reports this page illustrates the assets post the Svea Fastheter Clara Bo and SBB residential transaction our core holdings have become even star even stronger and more clearly defined and there is a reduction in non-core holdings. It's even more clear that we now hold three Nordic market leading platforms within social infrastructure, educational infrastructure and multifamily residential. Each platform is scaled with 42 to 52 billion SEK 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 build-up of the net asset value in SPB. First, we have the core holdings, then the non-core holdings, and then we have the debt in the parent. The majority of the gross asset value comes from Nordicus, Public Property Invest, and Svefastheten. Rather even position in each company, with 9 to 10 billion SEK in each company. The position in Svea-Fastete will be larger once the merger with Clara Bo 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 assets is SEC 14 billion or 7.94 per share, a slight decrease since year end. Property valuations across our holdings are stable. For Svea Fastäter, there is a slight lower required yield in the best location and the company has carried out sales at fair value, a clear signal where the transaction market is. Nordicus have had some isolated events in a few assets which lower the value growth. The same story goes for SPB 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 relations. And if we move over to the financials of the quarter, the net operating income was stable. This basically is a result of a growth in Svea fastigheter and lower income in SPB 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 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 on currency affect the result negatively with 728 million this is an effect of the debt in the parent being in euro and due to the stronger euro during the 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 a the liquidity position and this have 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 C5 billion claim that we hold on Nordicus. 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. Finance 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 sphere of fast data which is consolidated so we are confident to maintain a good debt coverage in the future loan to value remains at the manageable level at 54 but we have a clear ambition to lower the financial risk this is a expect this is expected to be done by good development in core holdings and divestments of non-core holdings let me summarize where spb 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 organizations. We continue to strengthen our companies through strategic transactions, including the Svea-fast-theater merger, and through liquidy-generating divestments that reinforce 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 lower leverage this model positioned us for a net asset growth and long-term value creation. Thank you for listening in and we will now move over to the Q&A session.
Operator
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Rebecca Clements from JP Morgan Asset management. Please go ahead.
Good morning. Thanks for taking my questions. I have a couple. The first one is related to some comments this morning on the Svea Fosketter 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, is do you have a preference for share repurchase versus dividend and and what would a share buyback you know means 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 large proportion of those so that's my first question
okay i think we we will try to increase the dividend received from our core holdings and at the moment we don't receive dividends from and we hope to be doing so in the future
and we are receiving dividends from Nordicus 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, you know, if it were up to you, would your preference be to receive dividends as opposed to a share repurchase effort on their part?
Yes, the Sveafasteater is like an independent company, but I think we from our position would welcome that the company start to give dividends. And this can, of course, be some share buybacks could, of course, be a complement to that.
That is our view. okay and then uh what what will be the pro forma uh stake that you hold in svea foskater post the claribu transaction 57 58 percent if i remember what percentage 58 58 okay thank you and then the 657 million receivable uh from ppi will that actually end up being cash to sbb and uh when
you expect to receive that we expect to receive it tomorrow and it will be in cash and then that leads into my last question uh you mentioned that you had your 2026 maturities covered um with existing liquidity but it exceeds your reported cash balance as of the uh the second quarter so what will be the what will fund the remainder there good question that's that's correct that the the liquidity on the balance sheet is not enough but we have our own facility and we we
have our own definition of liquidity with where we add liquidity and unused facilities in in the term and then together that that amount is is larger than the maturing debt okay so we should assume that you would use your credit facilities to fund any any sort of remaining portion that isn't covered by existing cash I mean presumably you want to hang on to some existing cash as well and then the receivable from PPI is it 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 report a balance sheet it's a good question usually we we would like to be in a place where we cover at least one 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 one 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 the 4.1 billion of maturity maturities that you have on your slide and the 1.8 billion of cash the three and a half billion of credit facility that isn't drawn would would you use your credit facility to make sure that you have enough cash on balance sheet or 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 on-road facilities to be larger than the debt maturities within one 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 uh that is some ambition so we can always hold that on long term and i think in in on the short term it's likely that we will will hold a little bit less liquidity if we if we combine the cash on the balance sheet plus standard on facilities that the the the maturities due to that we have a little bit of a weak financial position and large bond maturities and also the the cost of that is is is a bit high for us at the moment but we will continue to improve the likely liquidity position in years to come so we will always be be having a liquidity position that the market appreciate.
Okay and then just given that that it's lower than you know obviously you would ideally like given the maturities have you engaged in any discussions about perhaps selling the Nordicqvist receivable or or some other transaction potentially with Brookfield?
Yes we have been discussing the loan to Nordicqvist with Brookfield in the past but we have also discussed it with a lot of accounts in in London and that there is a great appetite to provide liquidity to us and so far we have chose not to to to monetize that that loan partly due to the cost of doing so and that we have found that that other other sources of cap have been better to use and but we know that we within a short notice can can can borrow borrow on the on that claim so we're not worried and that that is also one reason why we could have a little bit lower liquidity then the maturity is 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 the rest 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, SPB is much stronger today than it was just one or two years ago.
Understood. And definitely the structure of the company is very, very different, even from six, nine months ago. So thank you very much.
Operator
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Othman El-Arraqi from Fidelity International. Please go ahead.
Hi, guys. Thanks for the call. Just a couple of maybe follow-ups from Rebecca's questions. Just in terms of, you know, liquidity needs, does your kind of SBB development stake need any kind of, needs any outflow from SPB to SPAN-CAPEC, et cetera. That's my first question.
Yes, that's a good question. And when we want to do like a project in social social infrastructure in a property that lies in SBB development, then we are looking for a long lease with a stable counterpart. And that product then become like, you can say, a liquid product in the market. So if we don't have a 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 um financial situation than than spb for example in in one or two years ago we we sold a property to interior and then we sold the uh the property based on the project, where we had a long lease in Westeros. So we can, if we don't have the internal proceeds, we can create the 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 instead 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 SPB development there is if I remember correctly now it's 91 assets and then usually so we can sell one or two assets each quarter and that bring in cash flow to the reminding properties that need investments so 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 so we are about we are rather confident that we will not need to put in much more much more much a new equity interest to be development we have fine fine we have many solutions to work with this okay okay that's clear okay thank you very much my second question really is on the on you know you said you have many options for the 2027 maturity i think you discussed you discussed the nordic coast you know shareholder loan
but looking at again looking at your you know your non core asset would you say I mean do you think it's it's realistic that that you sell a big chunk of those you know development you know before you know within a year or we think you know you will probably wait to you know to finish you know all the construction and etc before you before you sell how how how you look at this part of your portfolio i think we can be open to discuss a larger deal regarding spb development if we if we find a
party that is interesting in in the whole package and at this point it may be more realistic to that we invest parts of it during the next quarter so the end result will be the same but at the time it will take a little bit more time.
Okay great and my last question really is on the on the ICR which is a bit a bit weaker. Do we expect you know with DEFA and Clarabo, when the deal is done in September, that actually your ICR will improve from here? Or because it's quite close to, I think, to the influence 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 two fastigheter due to the combined portfolios with SBB Residential and Clara Bo, and that That big entity will be consolated in the figures so we can benefit from the cash flow. And also Clara Bo has a higher cash flow than Suefa Steter 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 pound, bringing down the debt level. So those two effects will like 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 no very little risk for the company regarding the loan to value or the interest coverage going forward which is like a quite the opposite situation if you look back just one or two years when we have the dispute i think the covenants now are very very friendly for us yeah yeah okay that's understood thank you very much thank you
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, 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 all.
