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Edited Transcript of KLED.ST earnings conference call or presentation 23-Apr-20 6:45am GMT

Q1 2020 Kungsleden AB Earnings Call

Stockholm Jun 10, 2020 (Thomson StreetEvents) -- Edited Transcript of Kungsleden AB earnings conference call or presentation Thursday, April 23, 2020 at 6:45:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Biljana Pehrsson

Kungsleden AB (publ) - CEO

* Magnus Jacobson

Kungsleden AB (publ) - Former CFO & Deputy CEO

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Conference Call Participants

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* Andres Toome

Green Street Advisors, LLC, Research Division - Senior Associate

* Erik Granström

Carnegie Investment Bank AB, Research Division - Financial Analyst

* Niclas Hoglund

Nordea Markets, Research Division - Senior Analyst of Construction & Real Estate and Sector Coordinator

* Tobias Kaj

ABG Sundal Collier Holding ASA, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Kungsleden Q1 report. Today, I'm pleased to present Biljana Pehrsson, CEO; and Magnus Jacobson, CFO. (Operator Instructions)

Speakers, please begin.

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [2]

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Good morning to all. And welcome to our presentation of first quarter results. If you please turn to Page 2, the agenda for today is that we -- I will give you a summary presentation of the first quarter this year. Thereafter, I will hand over to Magnus Jacobson to present the financial performance and key figures. And thereafter, I will go back and give our outlook on the markets and our businesses.

If you please turn to Page 3, highlights of Q1. Well, as you can see, we had a very strong start in 2020. Our rental income increased by 8% and net operating income by 11% compared to same period last year. So a very good start in the year. And the increases in rents and NOI are mainly driven by large completed development project, new lettings and renegotiations. All in all, our profits from property management increased by 16% to SEK 310 million for the first quarter.

Rental markets continued to be good in the beginning of this year, and we have good new letting results and a positive net leasing as well as very strong renegotiations results for the quarter. Our value uplift was SEK 243 million for the quarter. And we have a very stable financial position with an LTV of 45.6% and a very good cash and credit line position. In March, Sweden and Europe got the virus pandemic. However, the effects of COVID-19 was very limited in the first quarter results.

If you then please turn to Page 4. After the first quarter, very quickly, and after Sweden got the virus, our tenants within foremost hotel businesses, restaurants and retail showed fairly big drops in sales of around 50% to 70% or even more. And we have had very close dialogue with tenants within these business, retail, hotel, restaurants that have been under financial pressure.

If we start with the payment of the Q2 rents, they were in line with previous quarter. And in order to help out the worst affected tenants, we have entered individual agreements on monthly instead of quarterly rent payment corresponding to SEK 32 million in the second quarter. We have also agreed upon rent discounts with some of our tenants of SEK 21 million for the second quarter against either extended leases or increased rents on the remaining lease term at, at least the same amount. And we have also allowed rent deferral of SEK 20 million of rent in the Q2 against 12 to 24 months repayment schedule. But taking into account all the individual agreements, all in all, it amounted SEK 73 million for Q2, which is still fairly limited to the full Q2 rents.

And again, handleable situation for us so far. However, due to big uncertainties onwards, our Board changed the proposal regarding dividends due to uncertainties onwards again. And last week, I was happy to announce that our Deputy CEO, Ylva Sarby-Westman, is appointed as the new CEO of Kungsleden and she will start the position first of May this year.

If we go back to first quarter results in figures on Page 5. As I mentioned, the profit from property management increased by 16%. The unrealized value changes came out at SEK 243 million or 0.6%. Total revenues increased in the first quarter compared to last quarter to SEK 638 million. And very -- I'm very happy that the like-for-like rental growth amounted 6.4% for the first quarter. So again, a very good and strong start for Kungsleden in the first quarter.

On Page 6, you will see that our property portfolio has grown to close to SEK 39 billion thanks to made investments of SEK 360 million in the quarter and the value uplift. 75% of the property portfolio is offices. Industrial warehouse is 15%, and retail has actually decreased to 4% in this quarter. We have right properties in the right locations. And as you know, 90% of our property portfolio is located in our strongest growth markets, Stockholm, Gothenburg, Malmö and Västerås.

If you then turn to Page 7, you will see that 70% of the property value is located in 1 of our 12 clusters. And the 1 cluster that has grown since December last year is Stockholm City West with the acquisition we made in December of another office building in the same street where we have 5 other office buildings. Good properties in good locations is also the main reason why we have good leasing results that you can see on Page 8.

We signed 70 new leases in the first quarter, of which 42 were green leases, and all of the leases were signed at the rent per square meter higher than before. The new leases represent a rental value of SEK 38 million. We had some terminations of leases, but still the net leasing amounted plus SEK 3 million, slightly better than last year first quarter.

If we turn to Page 9. In this year, we have SEK 300 million of existing leases maturing. And so far, we managed to successfully renegotiate SEK 52 million of existing leases, and we achieved a rent uplift of 13% on average, which is a very, very good result. 31 leases were renegotiated, and 8 of those also leased additional space to the existing, which is also very good.

If we please turn to Page 10, so the new leases, the positive net leasing, good quality properties have also resulted in us increasing the average rent in the investment property portfolio by 7% on rolling 12-month basis. The average rent now is SEK 1,479 per square meter. And at the same time, we have substantially improved our surplus ratio in the investment properties. And for the first quarter, it's 68.2%, which is much better than corresponding period last year.

If you please turn to Page 11, you will see that we have rising property values, driven by improvement in rents and operating net as well as yield contraction of 2 basis points. If we look at the different categories of our property portfolio, offices logistic warehouse, which represent 90% of the property value, had a value uplift of SEK 350 million, while we had some value depreciation in the retail part of our portfolio of roughly SEK 90 million, so the net value uplift amounted just about SEK 240 million. The valuation yield on average is 5.2% for the whole portfolio.

If you please turn to Page 12, you will see that our 10 top list is -- consists of very strong and well-known customers. As you know, we have 1,600 unique tenants in our portfolio. And it's everything from small companies, startups, medium-sized companies, to very big companies such as ABB. 25 of -- a number of our tenants represent 75% of rental value. And retail and hotels stand for approximately 10% of the rental revenue. Co-working in office and hotel -- office hotels stand for less than 1%. The 10 top list, as you can see, have a maturity average lease duration of 5.5 years. And for the whole portfolio, we have managed to extend the average lease ratio, thanks to the new lettings, to 4.2 years. So this means a very stable rental income for coming years. 25% of the rental value of the 10 largest tenants comes from public tenants. And if we look at the whole -- all of our tenants, the 1,600, 15% of the rental value represents from public tenants.

If you please turn to Page 13, our list of large ongoing developments has shortened with 2 finalized projects Blästern and -- in Stockholm and B26 in Västerås. As of now, we have 7 large development projects under construction with a total investment volume of SEK 1.4 billion. To date, I'm happy to say that our constructions have not been affected by the virus pandemic. All constructions are within time table and budget so far. And we are closely monitoring deliveries of goods and material from abroad, and we have worked out alternative goods and material programs if needed, if that would be the case. And as you can see, for the 7 large development projects that are under construction, the pre-letting rate on average is 68%.

If you please turn to Page 14. So our largest development project since many years is the redevelopment and new construction of Blästern 14, Blique by Nobis, the design hotel opened in April last year, and Convendum accessed their premises in the beginning of this year. So this property is now fully leased to these 2 tenants and it's a very successful development project in all senses.

If you please turn to Page 15, another project that have been completed is B26 in Västerås, a creative arena for co-working and over 550 co-workers in shared and leased office spaces. An investment of SEK 130 million, and these are actual pictures from B26.

If you please turn to Page 16, we have a development that is under construction is the Rotterdam District in Stockholm. And here, we have decided to move our headquarters in 2021, which we very much look forward to. The Rotterdam District is an ongoing development project with an investment volume of SEK 230 million.

Another development under construction on Page 17 is, of course, Eden in Hyllie, our first ever new construction of a modern office building with Symbiotic concept, 8,000 square meters, GLA and an investment of SEK 350 million that is under construction.

On Page 18, you will see another bit smaller redevelopment of an existing office building of close to 6,000 square meters GLA, where we also are investing in a new solar plant.

And finally, on Page 19, the City Custody of Ostersund. As you can see, on the left side of the picture are the vision -- picture of the project, and on the right side, you will see a true picture from real life. And this development is to be finalized next week, which we are very happy about.

And now over to Magnus.

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Magnus Jacobson, Kungsleden AB (publ) - Former CFO & Deputy CEO [3]

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Thank you, and that's Slide 21. As you have heard from Biljana, it was a strong start of the year. Business strategy is paying off, but now we have to deal with a more uncertain landscape onwards, and we believe our finance strategy is good foundation to manage these challenges.

Firstly, we can state that we had a limited impact of the COVID-19 in the figures for the first quarter attributed to the property valuation. In some cases, we have made settlements regarding monthly payment, deferred or discounts on rents, which totally amounts to approximately SEK 17 million. Considering that the settlements made, we note that 95% or more of the rents for the second quarter has been received and that it follows quite well the rental payments on a normal quarter.

Back to the first quarter, profit from property management increased by SEK 43 million or 16% compared to last year, and that is explained by higher rents and largely unchanged cost levels. Rental income, SEK 46 million higher than last year, and like-for-like rental growth was 6.4%, adjusted for one-offs. The growth is due to high rents and new letting, indexation. Good performance in renegotiations. First quarter was, as you heard, plus 13% and last year, 10%, which affect these numbers and finally completed projects. For instance, the fully let less than in August in Stockholm. Vacancy is a little bit higher, 7.2%. We had a big tenant leaving us during the period, URA, but was, to some extent, compensated by the new tenant, Convendum, moving into the property at Blastern.

Property costs increased by SEK 6 million, slightly higher due to we have onboarded our own facility team, and we have already seen positive effects of the recruitments, firstly, better customer retention, and secondly, more cost-efficient management. One example is that to reach our goal to reduce energy consumption by 20% during 2014 to 2020, and in Q1, the total reduction over the period amounted to 25%.

Net operating income. The like-for-like increased close to 10%. Surplus ratio for investment properties, adjusted was 2 percentage higher than last year, 68%, and they were heading for our goal to exceed 70% on an annual basis.

Central administration decreased by SEK 3 million or SEK 25 million -- to SEK 25 million, explained by a lower cost of staff and some one-offs last year. Interest costs amounted to SEK 85 million, slightly higher than last year and is explained by highest LIBOR interest rate, but new sops have reduced increase of the cost level. Value changes of properties, plus 0.6%, and value changes in derivatives was negative SEK 121 million due to lower long-term interest rates.

Tax amounted to SEK 94 million. The income tax level this year lowered to 20.6%, 21.4% last year. The cost for limitation of interest rate deduction is calculated to SEK 5 million, and we still have losses carried forward amounts to SEK 2 billion. And finally, net profit for the year was SEK 338 million.

Funding mix, Slide 22. Less than a year ago, we got the investment-grade rating. We have prepared and shaped the company for several years, step-by-step, to be more focused and to establish a quality property portfolio with a strong earning capacity and combined with a robust financial situation. We have, during that process, worked a lot with risk assessment, and we have to admit this pandemic was not on the map at all. But we have gained a lot in the risk management to prevent and mitigate events in the risk environment we are in today. So we have achieved low LTV, strong equity ratio, even debt structure, long interest and capital maturities, strong liquidity and small risk of refinancing.

During this just month of COVID-19, we have had continued dialogue with our banks and mortgage institutions. In view of our long relationships, they have expressed their confidence in Kungsleden's strong financial position, and that there is also room for financing new projects and acquisitions. I would also like to mention that the covenants we have signed in our loan agreements, in most cases, are equity ratio. And there have been significant -- and there we have a significant headroom to the agreed terms.

Bonds amounts to SEK 7 billion or 40% of the total funding of SEK 18 billion. Commercial paper, 2%. Bank loans, 36%, and 20% is secured mortgage and life insurance institutions. So we believe that we have a good mix of different funding sources and makes it possible to alter proportions between the sources depending on liquidity and margins. And as you heard, our LTV is down to 45.6%.

Over to Slide 23, and that's debt maturity and certainly has also affected the capital markets. Bond market was closed a couple of weeks ago, but it's slowly opening again. And we have seen some transactions in the primary market in A-rated companies. Kungsleden is a well-known name and has a good reputation in the bond market. And as I have mentioned earlier, in the earlier reports, we especially noticed a demand for our green bonds. During the last weeks, I've got some requests from passionate institutions. So the market hasn't dried up totally. But it's not, of course, the tight spreads we have seen before. And we are pleased that we are -- for the time being, don't need to do any issuance.

In these times, it's important to notice that the MTN program does not include any covenants or agreed margin step-ups in the event of change we are (inaudible). And in the dialogue with the Moody's, we get the same feedback as we get from the banks. They expressed their confidence in Kungsleden's liquidity and financial position. And that our cancel dividend is well balanced, cautious measure in these uncertain times.

Over to Slide 24. During late '19, we extended the maturity in our RCF from 2020 to 2023. And now in Q1, we raised the amount by SEK 600 million, totally amounting to SEK 2.6 billion. On top of that, we had SEK 250 million in other bank facilities and approximately SEK 500 million in cash. To summarize, we don't have any bank or mortgage loan maturities until 2023. And we have cash and credit facilities to manage bonds maturing during the full year of 2021.

Now we have Slide 25, average debt maturity. After upgrading last summer, we have continued on the same track to retain a long capital and interest maturity. In October, we refinanced SEK 1.7 billion, 10-year mortgage loan. And in the first quarter this year, we issued bond with long maturity of SEK 300 million and 6 years. We have also purchased new 5-year swaps of SEK 500 million to attractive levels. And the average debt maturity was 4.3 years and the interest maturity 3.6 years.

Over to Slide 26, ICR. Due to good performance in operations and low financial costs, ICR ratio strengthened and is now 4.7x. About 55% of the interest are hedged. So we are not totally unaffected of the volatility in the market. And since autumn, it has been higher short-term interest rates, but due to purchase swaps to low levels and refinancing bonds and mortgage loans to lower margins, means that we have been able to keep the average interest level unchanged to 1.9%.

Page 27, key financial ratios. And EPRA NTA, that was earlier the triple norm, increased by 11% to SEK 92.58 due to growing profit from the property management and positive value changes in the property portfolio by 0.6%.

To wrap up the financials, Kungsleden has a mix of good tenants, strong balance sheet and long relationships with credit institutions, which leads to no need for funding in these expensive times. We are in good position to be active in the operations even under these circumstances.

Biljana, your turn.

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [4]

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Thank you, Magnus. If you please turn to Page 29. The rental market is not closed. We're still signing new leases. However, there has been a slowdown. And in many of the prospects that we have had, they are pausing their negotiations due to the virus pandemic. Fresh forecast from Newsec expect increasing vacancies, as shown on this slide, in our 4 core markets, however still at very low levels. And despite the fact that the Newsec expects the vacancy to slightly increase, rents are still expected to increase slightly this year, and we agree with this market view.

Please turn to Page 30. 2020 started off at all-time high when it comes to transaction volume in Q1. And many transactions indicate a continued deal compression for offices, logistics, warehouse and industrial. After the virus pandemic, a few big transactions have been halted and we see still small activity in present of transactions. So it's not closed down completely.

On Page 31, our main focus will be our investment program and our development. And as you can see, the investment program is unchanged. We believe that we will invest roughly SEK 1.3 billion to SEK 1.4 billion this year, thanks to already ongoing development projects under construction and already signed new leases where we will carry out TIs and other value-creating investments. We continue to have a good pipeline of potential new projects forward.

And on Page 32, as I mentioned before, one of the development in pipeline, where we are in marketing and leasing activities to secure the anchors and to sign leases corresponding to 50% of the GLA is a place in Kista. The target was and is still to sign 50% of the GLA this year.

On Page 33 is another new potential development project. This time in Västerås. It's Verkstaden 7, it's in the city center location and it's new offices and a hotel of 30,000 square meters where we are in discussions with potential anchor tenant at present.

And if we summarize and give our outlook for onwards on Page 34, we have a very stable financial position, as Magnus have reported. We have an LTV of 45.6%. We have cash and credit facilities of SEK 2.7 billion net of commercial papers, and we do not have any debt maturities in 2020. We have had marginal effects of the virus to date, but clearly, there is uncertainty going forward. And that's why our Board changed the dividend proposal to just get clarity of how the virus will affect the market and the businesses.

Our base case scenario is that Sweden and other countries in Europe will get control over the virus and that we will see reopening of countries, societies and businesses by summer, by June. If that is to happen, then we hope and look forward to a gradual step-by-step recovery in the market in the second half of 2020 and onwards, but of course, from lower levels.

The forecast for Sweden for the unemployment rate is that, that would grow to 10%, 11%. The forecast for the GDP is that we will have a negative GDP for 2020 of between 7% to 10%. So of course, it is -- it will be a much slower market environment ahead of us. But still, our base case scenario, we truly hope that we will have a gradual recovery in the market in the second half of 2020.

And I would like to take the opportunity to extend a big thank you to all of our tenants and especially the ones that are really suffering these times. They are struggling and they are showing good mood despite the fact that, that is very troublesome for many of those. And I would also like to extend a big thank you to my coworkers in these difficult times. It's a lot of work right now for all of us within Kungsleden, but we are doing that with a positive mood. Thank you.

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Questions and Answers

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [1]

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Are there any questions?

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Operator [2]

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(Operator Instructions) We have 1 question from the line of Andres Toome from Green Street Advisors.

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Andres Toome, Green Street Advisors, LLC, Research Division - Senior Associate [3]

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My question is about the rent deferrals, the total amount of SEK 73 million. Could you give a split of which sectors this relates to?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [4]

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The sectors relate to hotels, restaurants and retail predominantly.

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Andres Toome, Green Street Advisors, LLC, Research Division - Senior Associate [5]

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Okay. So there's no office tenants who are asking for such deferrals at this stage?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [6]

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No, or very, very limited.

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Andres Toome, Green Street Advisors, LLC, Research Division - Senior Associate [7]

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Okay. My second question is about the like-for-like rent growth. Could you elaborate a little bit about the drivers behind that 6.3% figure, which seems quite high?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [8]

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6.4%, actually. It's a combination of the new lettings. All the new lettings are made on higher rent per square meter on average, I would like to say somewhere between 20% to 50% even, combined with renegotiations. As you know, last year, we renegotiated SEK 250 million of rental value. And on average, we achieved a 10% rent uplift. We have had indexation of roughly -- it was 1.6% or something like that. So those are the main drivers behind the like-for-like rent growth.

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Andres Toome, Green Street Advisors, LLC, Research Division - Senior Associate [9]

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Okay. Very clear. And does that number also include some impact from development properties that you've put into your investment portfolio, which were not fully leased yet, and there's some uplift from those?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [10]

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Yes, yes. But that is included in the new lettings.

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Operator [11]

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(Operator Instructions) The next question comes from Niclas Hoglund from Nordea.

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Niclas Hoglund, Nordea Markets, Research Division - Senior Analyst of Construction & Real Estate and Sector Coordinator [12]

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Sorry for a slow start here on questions. If we start off with the sort of COVID-19 indications, you're talking about 3% discounts going into the second quarter. Have you included any bankruptcies and those kind of failures that goes along with this crisis?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [13]

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Well, actually, we have had 1 bankruptcy, and that is not due to the virus. That has been a business that was struggling for a long time. So, so far, we have not experienced any larger amount of bankruptcies, but that may come, of course, over time. I think also what is important to understand is that the rent discounts that we have agreed upon with our tenants, we have also, at the same time, extended the leases for those tenants or increased the rent of the remaining lease term. So we have got this money back, I would like to say onwards.

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Niclas Hoglund, Nordea Markets, Research Division - Senior Analyst of Construction & Real Estate and Sector Coordinator [14]

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So it's just a matter of time value that you're losing out...

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [15]

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Exactly.

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Niclas Hoglund, Nordea Markets, Research Division - Senior Analyst of Construction & Real Estate and Sector Coordinator [16]

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Yes. Okay. So -- but isn't it fair to expect that you will sort of have a negative impact of around 3% of your rental revenues then quarter-on-quarter in the second quarter? Or will that be more deferred and added later on?

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Magnus Jacobson, Kungsleden AB (publ) - Former CFO & Deputy CEO [17]

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The discounts are spread out over the whole agreement period. So it will not affect the actual discount that you have for this -- for second quarter.

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Niclas Hoglund, Nordea Markets, Research Division - Senior Analyst of Construction & Real Estate and Sector Coordinator [18]

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Okay. So no step down in rents then in the second quarter. That's what we know right now. Okay. And then moving over to a question on renegotiation. I mean you continue on a very strong note. You're talking about 13%. Could you elaborate a little bit on the pipeline for 2020 and especially in the light of the uncertainties that are arising right now? Are you sort of targeting unchanged level for the full year? Or do you expect to get to at least double-digit number? Or what's your thoughts?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [19]

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It's very difficult to give some kind of indication or forecast. I think our Q1 results shows a very, very strong start of 2020. However, the virus pandemic has dramatically changed the market since then. And it's very hard to predict. I think the key to our performance onwards will really be if our base case scenario of the virus pandemic and getting it into control and slowly opening up the country, societies and companies towards the summer, I think that is the key for how the market will perform onwards. If that is to happen, we believe that we can still have a fairly good year despite everything, and that is our base case scenario.

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Niclas Hoglund, Nordea Markets, Research Division - Senior Analyst of Construction & Real Estate and Sector Coordinator [20]

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Right. And on valuations, the figure that surprised me a little bit on the low side is actually the project contributions. We finalized the Blästern project now in the quarter, have you -- what you -- do you see remaining potential there? Or is it related since the project is -- has hotels included, that sort of mitigate maybe a positive revaluation when the project was finalized?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [21]

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Yes. That is completely right. So the fact that Blästern consists of a hotel and a co-working tenant has affected the valuation.

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Niclas Hoglund, Nordea Markets, Research Division - Senior Analyst of Construction & Real Estate and Sector Coordinator [22]

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Right. Okay. Just could you elaborate how much have you taken down? Or you talked about SEK 90 million in negative on revision related to retail and hotels in the quarter. Could you elaborate on what -- is this related to yields or is it related to cash earnings or cash flow expectations, NOI?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [23]

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It's both. But again, SEK 90 million is a very low number. So it's not any -- no discrepancy in that, so to say.

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Niclas Hoglund, Nordea Markets, Research Division - Senior Analyst of Construction & Real Estate and Sector Coordinator [24]

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And looking at the sort of the group, you're lowering your yields with, well, a small number, was it 2 basis points? We've seen a pretty mixed bag when companies or peers have been reporting, some raising yields quite substantially, especially on the retail side, but also a lowering on yields. Could you -- is these valuations backed by external valuators? Or is it more of a desktop valuation?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [25]

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No. It's backed by external valuations, and we are -- the external valuations and the internal valuations for the first quarter are pretty much the same.

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Operator [26]

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And the next question comes from the line of Tobias Kaj from ABG.

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Tobias Kaj, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [27]

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Yes. I just would like a clarification. I think Magnus said that you already received 95% of the income for Q2. But if I calculate it correctly, the SEK 32 million, plus SEK 21 million, plus SEK 20 million amounts to almost 12% of the income in Q1.

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Magnus Jacobson, Kungsleden AB (publ) - Former CFO & Deputy CEO [28]

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Yes. If you take them into consideration and deduct them from what you should have had, that's when you have this 95% because we have settlements on that front.

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Tobias Kaj, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [29]

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Yes. Okay. And also -- yes. And the 95%, does that include the first monthly payment for the SEK 32 million, so to say? Or what's the status of the...

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [30]

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The SEK 32 million are payments for second and third month in Q2.

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Magnus Jacobson, Kungsleden AB (publ) - Former CFO & Deputy CEO [31]

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So they are already deducted in that figures.

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Tobias Kaj, ABG Sundal Collier Holding ASA, Research Division - Research Analyst [32]

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Okay. And for the first month, did you receive them? Or have you seen postponement?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [33]

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Yes. Yes. No. We have received.

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Operator [34]

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And the next question comes from the line of Erik Granström from Carnegie.

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Erik Granström, Carnegie Investment Bank AB, Research Division - Financial Analyst [35]

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I think most of my questions were answered. I had a little bit of tough time to hear you guys. But I have 1 question that I think you might be able to answer. If we look at the investments you've made so far, I think it's somewhere to the tune of close to SEK 360 million in Q1, that gives you sort of a run rate of around SEK 1.4 billion, SEK 1.5 billion for 2020. Do you still think that that's going to be the case given the situation? And could you also perhaps say a little bit about your investment plan for coming years where you have a target of SEK 4 billion. I understand that this is obviously quite special times, but have you considered revising that already? Or are you more in a wait-and-see mode?

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [36]

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Well, if we start with this year investments, they are pretty much secured already by signed leases and ongoing developments. So I think that, as I mentioned, our forecast is that we will invest somewhere between SEK 1.3 billion, SEK 1.4 billion for this year. And when it comes to the investment program onwards, of course, we will monitor how the development is in the market. And as of now, we don't have any plans to revise our investment program. On the contrary, as you have heard, we continue to market and to do leasing activities on some projects that we have in the pipeline. But then again, the development of the market will be very much important to follow and to see what will happen.

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Erik Granström, Carnegie Investment Bank AB, Research Division - Financial Analyst [37]

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Okay. And a follow up on that, can you say something about the situation in terms of financing for projects? Has there been any issues in terms of financing of your ongoing projects? Or are there -- have you seen any issues in terms of financing for projects in perhaps early stages?

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Magnus Jacobson, Kungsleden AB (publ) - Former CFO & Deputy CEO [38]

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No, we don't see any problems with that because we have the cash earnings during the year. And now we have this dividends that are not paid out, so we can't see any problems with that.

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Erik Granström, Carnegie Investment Bank AB, Research Division - Financial Analyst [39]

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Okay. But it still means that you can draw credit from the banking system, for example, for your ongoing and future projects in your view.

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Magnus Jacobson, Kungsleden AB (publ) - Former CFO & Deputy CEO [40]

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Yes. It's no problems.

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Operator [41]

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And as there are no further questions, I'll hand it back to the speakers.

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [42]

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Okay. Thank you for listening in this morning.

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Magnus Jacobson, Kungsleden AB (publ) - Former CFO & Deputy CEO [43]

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Thank you.

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Biljana Pehrsson, Kungsleden AB (publ) - CEO [44]

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Bye-bye.

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Operator [45]

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This now concludes our conference call. Thank you all for attending, you may now disconnect your lines.