Intea Fastigheter (Stockholm:INTEA B) Q1 2026 Earnings Call

0:01 Welcome to the presentation of InteA's Q1 report. My name is Charlotta Wallman-Hörlin and I'm the CEO of InteA. Next to me is our CFO, Magnus Ekström. Good morning, everybody. InteA continues to develop according to plan. The beginning of the year has been characterized by stable management combined with continued development. We have continued to create value in our existing portfolio while at the same time completing acquisitions with a total investment commitment of just over 700 million. During the first quarter, we invested nearly 300 million in our ongoing projects of which approximately 100 million in the first phase of the expansion of the Kristianstad prison and just over 100 million in the Custody Unit Project in Västerås.

1:03 The development of our existing properties is a key part of our business, and we are pleased to announce that we are investing an additional 250 million in the expansion of the Viskan prison, that we are nearly doubling the size of the Ringsjön prison, and that we have leased previously vacant premises to the Swedish Prison and Probation Service in Skövde. I will get back to both the acquisitions and some of our development projects in more detail shortly. But first, I will hand over to Magnus, who will walk you through the financials. Thank you for that, Lotta. And if we go to numbers, we now have a contracted rent of 1.8 billion.

1:50 The property value of just under 29 billion with a running yield of 5.8%. The rental income for Q1 increased and with a surplus ratio of 81%. Our ICR for Q1 increased to 3.9 times and the LTB amounted to 46.5%. The growth for NRV 19% and the growth for profit from property management amounted to just over 24%. And if you look at the Q1 figures in more detail, we think that we had strong development in the quarter.

2:43 Good performance with an increase of rental income of 28% and like for like plus 2.4%. We also had an increase in NOI of 26% and like for like 0.7% and increase in profit from property management amounted to 33%. and the profit from property management was mainly driven by NOI from completed projects and acquisitions. We also had, if you go further down in the P&L, we had a positive impact from changes in value from investment properties of just over 200 million. We also had a positive impact from changes in value from Our interest rate swaps of 170 million and that's mainly due to changes in long term market interest rates.

3:49 And we also took a write down of 7 million on our hydropower plants. The tax is mainly deferred tax and after tax we have a profit of 470 million for Q1. In January, we acquired a property with an ongoing development project for a government authority in Uppsala. Upon completion, the lettable area will amount to approximately 6,600 square meters. The underlying property value in the transaction amounted to 160 million. The total investment, including the acquisition, is estimated at 266 million.

4:40 The acquisition also included building rights of 16,000 square meters, providing attractive potential for further development. In early April, we acquired the Skärholmen police station. The underlying property value in the transaction amounted to just over 440 million. We've also entered into an agreement to divest all hydroelectric power plants, which means that the sustainability target of being self-sufficient through self-produced electricity has been removed. The sustainability target of 100% renewable electricity remains unchanged. As usual, there's full activity in our project development.

5:27 We currently have ongoing projects totaling just over 13 billion of which more than 11 billion remains to be invested. The projects are located in different parts of the country, are at various stages of development and are expected to be completed over the coming five years. Here you see three examples of ongoing projects. The first is the custody unit in Gävle, which we will construct on behalf of the Swedish Prison and Probation Service. During the period, a lease agreement was signed, meaning that the project has moved up one step in our project table in the Q1 report and is now included on the projects with signed lease agreements.

6:13 Although not highlighted on this slide, the new project in Uppsala is now included in the project table under the same heading in the report. The second project shown is the first phase of the expansion of the Kristianstad prison. The project is scheduled for completion before year end and will contribute with approximately 200 new places to the Swedish Prison and Probation Service. As mentioned earlier, we invested nearly 100 million in this project during the quarter. In the second phase, which is still at an early stage, a further expansion of an additional 400 places is planned at this facility.

6:59 The final project is the custody unit project in Västerås. We invested just over 100 million in this project during the past quarter. Construction has been ongoing for one year and the building is taking shape rapidly. The structural frame is expected to be completed by the summer. Parts of the facade consists of prefabricated elements that are lifted into place using construction cranes. While other sections of the facade are built on site using reused brick. Before the roof is installed on each floor, fully fitted cell modules are lifted into place. It is an impressive logistical operation and a strong collaboration between landlord, tenant and contractors.

7:53 As I mentioned at the outset, the development of our existing properties is a key part of our business. The conversion of a former school into police premises at the Garrison area in Linköping has now been completed. And in early April, the Swedish Police Authority moved into newly renovated and purpose-built premises totaling 4,200 square meters. The investment amounted to approximately 50 million, and the annual rental value is estimated to increase by 3.5 million. At the Viskan prison, a third 250 million will be invested in the ongoing expansion. The prison, which currently accommodates 144 places, was opened in January last year.

8:45 Shortly thereafter, an agreement was reached with the Swedish Prison and Probation Service to expand the facility by 120 places. An expansion initially estimated to cost 250 million. Since then, the project planning has been ongoing and the project has increased in scope, resulting in the total investment being doubled to 500 million. The annual rental value attributable to the additional investment of 250 million is estimated to amount to just over 27 million in the form of a non-indexed annuity-based annual additional rent.

9:32 At the Ringsjön prison in Eslav, the number of places will be nearly doubled. Intea acquired the prison in 2022 and has since expanded it in several phases from 46 places to the current 105 places. The facility is one of the country's largest women's prison in Security Class III, and we have now reached an agreement with the tenant to expand the prison by a further 80 places. At the same time, existing areas will be adapted to accommodate the expanded operations. The investment is estimated at 80 million, and the annual rental value is expected to increase by nearly 15 million. In this way, we are creating a significantly larger capacity in a short time and in a cost efficient manner for the Swedish Prison and Probation Service.

10:34 This summarizes our project portfolio and as Lotta said, the current investment volume is now 13 billion and we estimate an additional rental income from our ongoing projects of approximately 52%. We have a high average lease period and an estimated additional NOI of just under 9%. As most of you know by now, Intia has a goal that more than 90% of the rental income should be derived from public sector tenants.

11:23 At the end of the quarter, this share amounted to 97%, an increase from 96.2% for the corresponding period last year. The remaining contract length for public sector tenants amounts to eight years. At the end of the quarter, annuity-based additional rents amounted to 234 million, of which approximately half mature between the years 2037 and 2049. The property value has increased with just over 700 million during Q1 and the current value The current yield is 5.8% and is based on our NOI in the earning capacity.

12:32 We have good cash flow from our operations on the last 12 months basis. We have a cash flow from operating activities of approximately 930 million and the total investment of approximately 3.6 billion. In Q1, we had a cash flow from before changes in working capital of around 200 million. Q1 of just over 430 million. We have still a strong financial position with an LTV of 46.5%, ICR 3.8 times for the last 12 months and for the 7 in Q1. So we are in a good position for growth.

13:44 and if you look at the APRA NRV per Class A and B share, it has increased to 55.97 SEK per share and the profit from property management per Class A and B share increased to 1.06 SEK per share in the quarter and is 3.74 SEK per share for the last 12 months. So we have a strong track record for Fastigheter AB Class B If you look at the financials, we have a debt portfolio of 30.8 billion. And as we said earlier, with a good mix of bank loans, bonds and commercial papers, our interest rate has decreased a bit during Q1 and was 2.75% at the end of the period.

15:05 We also have a high interest rate hedging ratio of around 100% and our duration is 3.8 years at the end of the period. Our duration in capital binding amounted to 3.2 years at the end of the period which is the same duration that we had in Q4 2025. Finally we have a good access to capital with Fastigheter AB Class B Fastigheter AB Class B Fastigheter AB Class B Fastigheter AB Class B 700 million with a margin of 94 pips.

16:10 So even though the spreads have came up since our issue, I believe the capital market is still good. And finally, if we look at the earning capacity, the profit from property management has increased with 40% per Class A and B share. It has increased with 32% and is currently up to With that, I hand over to you, Lotta. Thank you, Magnus. Our business model with long-term public sector tenants is a clear strength, and InteA continues to develop according to plan. We are seeing a high level of activity among many of our public authorities, creating demand for both new and adapted premises.

17:02 We perceive the market as positive, with a range of future growth opportunities both within our existing portfolio and through new projects and acquisitions Thank you for listening