Neobo Fastigheter AB (publ): Interim report January-September 2024

January–September 2024

• Rental income increased to SEK 680 m (658). For the like-for-like portfolio, rental income increased by 6.3 percent.
• Net operating income fell to SEK 363 m (366) due to the divestment of seven properties during the year. For the like-for-like portfolio, net operating income increased by 8.5 percent.
• Profit from property management fell to SEK 122 m (127) due to sold properties and higher financial expenses.
• The property portfolio’s value at the end of the period amounted to SEK 13,696 m and change in value of the properties amounted to SEK -238 m (-926) for the period.
• Net loss for the period amounted to SEK -211 m (-795).
• The net asset value amounted to SEK 44.89 per share (45.83). 

July–September 2024

• Rental income increased to SEK 227 m (224) as a result of rent increases and a decrease in the vacancy rate.
• Net operating income fell to SEK 133 m (140) due to sold properties.
• Profit from property management for the third quarter increased to SEK 55 m (52) due to higher income and reduced central administration costs.

Significant events during the third quarter

• Neobo’s share has changed marketplace and was listed on Nasdaq Stockholm’s main list on September 20.
• A six-year lease agreement was signed with the Swedish Prison and Probation Service for premises in the property Träkolet 16 in Sollentuna, Stockholm. The letting covers approximately 3,400 square meters and the annual rental value amounts to SEK 10 m.
• Two loan agreements of SEK 2,655 m were refinanced at a lower margin than the average margin for Neobo’s loan agreements.
• The divestment of the retail property Tegelbruket 4 in Falun was closed. The sale took place at the end of the second quarter at an underlying property value of SEK 75 m, which was 18 percent over the most recent external valuation conducted. 

CEO Comments

Ready for the next stage of our growth journey 

Following an intensive period of focused effort to prepare Neobo to meet the listing requirements of Nasdaq Stockholm, we joined the main market on September 20 and rang the stock market bell for the second time in just over 18 months.
The list change provides confirmation of the work performed and a seal of quality as we now take the next step in our journey. A liquid share in a regulated market broadens our funding options and gives us opportunities for value-generating growth as we move forward.

Continued value-creating refinement
We are continuing to refine our property portfolio and carry out value-creating leases and investments that generate value for our customers and shareholders. Net operating income in the like-for-like portfolio increased 8.5 percent compared with the preceding year due to increased rental income and lower vacancies, which is positive given the high cost trend we have experienced in society in recent years.

Since year-end, we have invested SEK 101 m in value-creating measures that have helped to increase our revenues and reduce our costs. This includes renovation of 70 apartments and a number of sustainability investments that have generated attractive returns.

In September, we signed a six-year lease agreement with the Swedish Prison and Probation Service for probation premises in the property Träkolet 16 in Sollentuna, Stockholm. The letting covers approximately 3,400 square meters and the annual rental value is SEK 10 m. We are proud and pleased that Neobo has been entrusted by the Swedish Prison and Probation Service to work together to create modern and purpose-built premises in one of our commercial properties. When the premises are occupied in summer 2025, the commercial vacancy rate will fall by 2.8 percentage points relative to the third quarter of 2024 and our total rental value will increase by SEK 5.3 m.

Refinancing in an improved financing climate
Neobo’s high hedge ratio has effectively offset the robust upswing in interest rates that has taken place in recent years. During the third quarter, the Swedish central bank continued to cut the policy rate in line with a more expansive monetary policy and more rate cuts are expected in the future. For us, this offers a stronger financial position and improved opportunities to carry out value-generating investments that increase the return from our property portfolio.

During the third quarter, two loan agreements of SEK 2,655 m were refinanced and extended at lower margins than the average margin for our existing loan agreements. This is a testament to the shift in quality achieved by Neobo and a clear indication of improving market sentiment.

Time for the next stage of our growth journey
After an intense period since the formation of Neobo, we now have a solid foundation with an efficient organization and good prospects to increase returns from the property portfolio in the future.

I am very proud of Neobo and the refinement of the company that we have achieved since the start. The listing on Nasdaq Stockholm’s main market is an important milestone as we now take the next step on our journey with a focus on portfolio optimization and growth.
 
Stockholm, October 25, 2024
 
Ylva Sarby Westman, CEO