Welcome to the presentation of Wihlborgs Q2 2025. This report we have some records, some repetition, and of course some news. As a part of that, we start with a celebration. Last year we celebrated 100 years as the company Wihlborgs. This quarter we have celebrated 20 years as a listed company. That might be worth some reflections. We often talk about focusing on growth and earnings capacity. What have we actually achieved? We started 23 May 2005 with a property value of SEK 7 billion. Twenty years later we have grown to SEK 63 billion without raising any new equity from our shareholders. During these 20 years we have invested SEK 20 billion in our project portfolio and gained an extra SEK 5 billion in profit from these investments. We have also made acquisitions at a value of SEK 14 billion.
We have 19 years in a row with increased dividend, a compound annual growth rate at 10.4%, and in total SEK 9 billion have been paid as dividend to our shareholders. Irrespectively, if you measure rental income, operating surplus, or income from property management, we have achieved a compound annual growth rate of almost 10% over these 20 years. The total return on the share with reinvested dividends has been 1,735% or annually 15.6%, well above the total Stockholm stock market has generated. Now time for a summary of Q2. We have record in rental income, record in operating surplus, record in income from property management, record in acquisition, record in dividend, record in property value, completely as we expect from ourselves. Net letting positive at SEK 24 million. The demand for good quality and good location remains.
So does our potential for growth from our own actions, of course, based on the fundaments in our geography. Results from the first period. First half 2025 rental income up to SEK 2,142,000,000, operating surplus increased to SEK 1,544,000,000, and income from property management increased by 12% to SEK 987,000,000. The result for the period amounts to SEK 883,000,000, corresponding to SEK 2.87 per share. EPRA NRV has increased by 10% to SEK 94.35 per share, adjusted for paid dividends. A comparison of the rental income first half 2024 and first half 2025: indexation SEK +21 million, acquisition plus SEK 47 million, currency effect SEK -14 million, additional charges SEK +11 million, and completed project, new leases, and renegotiation SEK +5 million.
Higher vacancy today than a year ago, but during the fall and beginning 2026 improvement from new leases will show and the streak of positive net letting continues, SEK +24 million in the quarter, SEK +29 million for the period. In total, new leases at a yearly value of SEK 235 million signed in the period, 41 quarters in a row. This quarter, the majority of new leases come from existing portfolio. Here are some of the tenants that we have signed during Q2: [Per Oslof] at ABG Sundal Collier restarted the quarter well, but we also see good expansion from, for example, ARM in Lund. They continue their growth before they even have entered the first lease at Värd 1 and growing demand from the secured sector as Defendify and Cyber who will also continue their growth. Here we have the net letting in a historical perspective.
Lettings in green, termination in light blue, and dark blue stacks are the net letting. The high volume with new and higher demand seems to continue. Our last goal was to beat the magic 40 quarters in a row. The next goal is of course to reach 42. On the list are 10 largest tenants in alphabetic order, strong customers, and they contribute with 90% of rental income. 7 out of 10 are governmental tenants and the public sector contributes with 22% of rental income. Rental value as of 1st of April SEK 4,810,000,000 per year, +7.1% on rental income, SEK 4,303,000,000, + 4.9% effects from acquisition, indexation, and higher willingness to pay for the right quality.
Looking at the like-for-like figures, all the properties we owned a year ago, excluding projects, compared with updated figures, we can see the rental value is up 2.1% and rental income is down 0.5%. The growth in rental value is supported by indexation of 1.6% in Sweden and approximately 1% in Denmark. Lower rental income is an effect of higher vacancy and that comes partly from the timing effect with many new leases and a gap between moving in and out, but also higher vacancy in the market. In some areas, as the industrial portfolio in Helsingborg, I think that higher vacancy will follow us for a bit longer time. In other areas, as in offices in Malmö, occupancy will pick up quite quickly when the market turns. We see very few new projects from competitors and my best estimate is that we can continue to take advantage from that.
We know that our number will improve towards the end of 2025 and with continued good effects, 2026. This has already started with, for example, Tuvalu and Malmö University entered their new leases in Malmö 1st of July. Let's look at changes in the market value of our properties. We started the year with SEK 59,168,000,000. In accordance with our 100% external valuation, we have made acquisitions with add-on SEK 2,552,000,000, investment SEK 1,265,000,000, divestment -90, changes in valuation SEK +312,000,000, and together with currency translations of -SEK 476,000,000. That summarizes to a value of SEK 62,731,000,000. This quarter, we have made extra external valuation by two different appraisers of approximately 20% of the portfolio value, just as an extra checkup. The output from that is that our valuation is almost perfectly in line with their views.
These figures, the running yield, show how we actually perform in relation to the valuation. This is not the valuation yield for the whole portfolio, with the occupancy rate at 90%, excluding project and land. With an operating surplus of SEK 3,273,000,000, that gives a running yield of 5.6%. Fully let, the portfolio would give a running yield of 6.4%. Good earnings capacity in relation to the value of the portfolio and good cash flow generation is the foundation. Also, ahead in the office portfolio, the market value is now over SEK 50 billion. The occupancy rate is 91%. It's 92% in Malmö, improved to 89% in Helsingborg, 90% in Lund, and 92% in Copenhagen. Same total number as year end and last report, but on the decimal a bit improved. The signed leases mean that we will improve ahead during the fall and 2026.
The operating surplus from offices summarized to SEK 2,730,000,000 and running yield of 5.4%. 6.2% fully let. Demand for logistics and production continues to be good in Malmö with an occupancy of 89%. Lower in Helsingborg at 83%, 99% in Lund, and 95% in Copenhagen. 88% occupancy rate as a whole with a running yield of 6.4%, 7.5% for the net, and a total value of SEK 8,474,000,000. As mentioned before, we continue to see harder competition in the third-party logistics segments, quick changes in needs, and higher vacancy as an effect of a lot of new build facilities. Our portfolio in Helsingborg still gives a decent running yield of 6.4%, even with a high vacancy, and the market as such continues to grow. The development of our total portfolio running yields 5.6% brings stability, not least since the portfolio overall has a high quality and good locations.
As noticed before, a high increase of the running yield since 2021. ESG results from Q2: certifications in Sweden offices continue up and Denmark has started the process in a good way. In the same way, we also continue with certifications in the industrial portfolio. In Sweden, energy consumption continues to decrease and we have a new target of maximum 75 kW hours per square meter to be reached by 2030. As mentioned in the Q1 report regarding Omnibus, we will continue our process with most of the metrics of CSRD, but we will exclude some of the data points where our opinion is that the value of measurement is limited. For many of the areas, we have found a way where reporting actually can contribute to improving our operations. Other sustainable highlights from Q2: Wihlborgs has been pointed out as one of Europe's climate leaders by the Financial Times.
We have renewed the climate contract with the municipality of Malmö and not at least we have reduced the energy consumption at Vasakronan 2 by 22%. By adding on our own skilled organization, more improvement comes, but 22% less consumption almost without investments is a good start. We see that kind of improvements in the acquisitions made the last years: Amager, Sandviken, [Hedgesville], and Vasakronan. We updated the product, improved some technical standard, reduced energy consumption, and increased leasing. Some is already done and there's more to come. On April 1, we added on 8 properties in Malmö, Lund, and Helsingborg, in total contributing with 51,000 square meter lettable area, 82,000 square meter land for industrial development in Lund, and 12,000 square meter building rights for offices also in Lund. This portfolio will contribute with an estimated yearly operating surplus of SEK 130 million at the start.
Here are the land areas included in the portfolio as shown before. At Bronsålderskullen, we have estimated that we can build between 40,000 and 50,000 square meter industrial building. A catalogue of our value and properties in our four cities end Q2: 40% of the value in Malmö, 22% in Helsingborg, 17% in Lund, 20% in Copenhagen. As mentioned before, the diversity of different businesses in the region is a strength, but also the diversity in volume is interesting. Both in Q1 and Q2, we have signed leases of more than 20,000 square meters each. In the office segment and especially in the Copenhagen area, we see more potential of interesting volume ahead. The combination of many small and some larger tenants also built a strength.
Our growth is of course related to the possibilities in our geography and at this picture we can see the employment growth in a comparison between Stockholm, Gothenburg, Malmö and Rest of Sweden. Malmö have had a good growth and we have been able to meet that growing demand. Let me wrap up this part of the presentation with a quick update on the Öresund region. The Öresund Bridge just turned 25 years. Still young for a bridge and just in the beginning of its lifetime. For Wihlborgs it has been central to our growth for two decades. Infrastructure drives development. The Danish government clearly sees this and they continued with their large scale investments. The Fehmarn Belt, linked to Germany, now under construction, will open in 2029. That will strengthen the region's role as the northern gateway to Europe.
Just this week the Swedish government appointed Allan Widman as special investigator. His task is to develop a joint Swedish Danish mandate for a strategic study on capacity and redundancy across the Öresund with a long term view towards 2050. The proposal will be delivered in November and that's a strong step forward. Separately, the Swedish Transport Administration is already analyzing future capacity for road, rail and maritime transport, including the potential for a fixed Helsingborg-Helsingør link. Meanwhile, cross border integration is reaching record levels. In 2024 the integration index hit 234, up from 100 in 2001. More than 19,000 people now commute across the border for work. The daily train commutes have also reached all time high. Over 40,000 passengers a day. Alongside monthly records for both car and passengers crossing. These developments support long term growth for the region, but also for Wihlborgs and time for financials. Over to you Arvid.
Thank you very much Ulrika and good morning everyone. If we look at the income statement for the second quarter 2025, you can see that rental income amounted to SEK 1,097,000,000, up 6% versus the corresponding quarter during 2024. We had an operating surplus of SEK 813 million, also up 6%, and the income from property management was up a full 14% to SEK 524 million in the quarter. All these three numbers, as Ulrika mentioned, are actually record figures for an individual quarter for Wihlborgs, with positive value changes in the quarter of SEK 243 million. No differences in the underlying assumptions and the valuations, but rather a few minor effects from projects and from the net letting. Minor changes overall. If we sum up, we had a profit for the period of SEK 452 million in Q2.
Looking at the balance sheet, property value now amounts to SEK 62.7 billion. That's up SEK 5.6 billion versus 12 months previously. At the same time, equity grew by almost SEK 1 billion despite paying out SEK 1 billion to shareholders. Our borrowings at SEK 33.3 billion was up SEK 3.6 billion in a 12 month perspective. Translating this into key figures, our equity/assets ratio stands at 35.8% and the leverage now is 53%. That is up somewhat over the past quarter as expected since we chose to debt finance the acquisition and we also paid a dividend of SEK 1 billion during the quarter. We see the LTV gradually moving downwards from here as a result of our cash flow earnings. Basically, the interest coverage ratio during the first half was 2.8 in Q2. Individually it was actually 2.9x . The development of the interest coverage ratio is positive.
We had an EPRA NRV at the end of Q2 of SEK 94.35 per share and that is up 10% versus 12 months previously, adjusted for paid dividend. The EPRA NRV per share development you can see on this slide in the historic perspective. Over this time period since 2009 we've had an annual average growth of 15% adjusted for paid dividend. The financial ratios in a historic perspective is shown on this slide. The interest coverage ratio now picking up after the sharp interest increase which started during 2022 and that is good. The equity/assets ratio in a historic perspective is still on uncomfortable levels for us and that actually goes for the LTV as well versus the limitations we've set up for ourselves. However, from the 53% LTV, our objective is of course to bring that downwards slightly from here.
The net debt in relation to EBITDA is still on a strong level, 10.1x at the end of Q2, and that of course takes into account the cash earnings capacity that we have and that remains our prime focus. On the next slide you can see the sources of financing. We now have 50% of our financing from bilateral bank agreements with Swedish Nordic banks. Bank margins are moving in the right directions for us as a borrower, and access to capital is quite advantageous. I would say bond financing is now 16% of the total. The bond market has over the past few months still been a bit volatile, but generally developed in a very positive way. We have access to bond financing at attractive levels currently. We have 34% of our financing from the Danish real mortgage system, which continues to work in a stable way.
On the next slide you can see the details of our loan portfolio. The average interest rate is now 3.29%. You can note, looking into the future, that we have some attractive interest rate swaps expiring both in Q3 and in Q4. At the same time, we have during the second half of 2025 a few bank renegotiations where we expect the margin development to be positive for us as a borrower, that is, margins moving downwards. On the next slide you can see the development of the fixed interest period, which now stands at 2.4 years, quite in line with our interest rate risk management policy. We have a loan maturity moving downwards a bit to 4.7 years.
That has been affected, of course, by us adding some new debt in relation to the acquisition made in Q2, and that debt has had a slightly shorter loan maturity than our average. Finally, looking at available funds, we had a very high number at the end of Q1, but as you're quite aware, on the 1st of April we paid approximately SEK 2.4 billion for the acquisition from Gianvito. In May we paid SEK 1 billion in dividends. Available capacity has gone down. We've increased bank facilities somewhat during the quarter, so available funds is now SEK 2.5 billion, which is a comfortable level in the long-term perspective. With that, I'll hand over the word back to you, Ulrika.
Thank you. An update on our investments in progress and a quick overview of our largest projects. During the period, we have invested SEK 1,265,000,000 and it remains SEK 3,132,000,000 to invest in approved projects. A good volume. Also ahead, the quick improvement of yield on cost continues and the ongoing portfolio secures also decent gain from projects. A good mix of refurbishments and new build. Let's start in Copenhagen with our project at EB Industri. In the beginning, planned and decided for a multi-tenant transformation, but with the 15-year lease with Peroeslev, turned into a single-tenant building, 24,000 square meters, investment SEK 231 million and yield on cost a bit above 6%, completion in Q1 2026. The large project at Amphitrite Malmö has started off really well. A bit about 20,000 square meters for Malmö University.
We have started that site with selective construction of the building to enable reuse of part of the existing building in the new one. We expect building permission in September. Zoning plan is approved and procurement of contractors is ongoing in a very good way. In Lund, we're building a new modern office right beside the Central Station, Posthornet phase two. 10,100 square meters, yield on cost 6.5% and completion Q2 2026. At Vertex One, also in Lund, we refurbish and add on areas for our new tenant ARM, 5,700 square meters as a start and they now have added on some extra, 7 years lease, investment SEK 145 million, excluded value of the land and yield on cost a bit over 10% and over 6.6% yield on cost including ongoing property value. A new modern facility and ARM has already signed, as mentioned, additional areas.
In Malmö and Hyllie, we have Black Hornet 1 Vista, an SEK 884 million investment. The mobility hub has already been completed and has good occupancy. The office will be completed end 2025 and during 2026, yield on cost 6.2% and 35% pre-let for the office part at end of June. In July, we signed additional 8,900 square meters at 7-year lease with a public tenant. Even if patience is important, the movement is in the right direction. The product is the best with great flexibility and the competition from new builds in the area is low. An example of refurbishment in Malmö is Busshuset 1. This is an almost iconic building right beside the train station. 6,000 square meter office, restaurant and co-working and absolutely top rent in the Malmö perspective. Completion in Q4 2025 and moving in will continue during 2026, pre-let 95%.
In the Dockan area, the refurbishment for Malmö University and the police education has been completed as of July 1. Yield on cost approximately 11%. The same thing with Dock Port and one headquarter for [Tuvalu]. They entered the building July 1. A smaller investment but a great result and a good impact for the area. In the southern parts of Lund, we have been able to continue the development of Tomaten. This project is for BFSA, completion Q2 2026, yield on cost 7%, and next to that at Stora Råby 3222, we have actually been able to improve even more. We have signed a new lease with Lund University, and that means that we can use the land area even better. Now in total 14,500 square meters for Note and Lund University, completion will start in Q2 2026.
Investments a bit lower, actually SEK 260 million, and yield on cost improved to 9.2%. At Gjuteriet 1 in Malmö, we build the facility for Caldit, completion in Q3 2025, approximately 10,000 square meters, production, logistics, and office. Total investment SEK 264 million and yield on cost 7%. In Sunnanå, we build 17,000 square meters, 100% pre-let and 15-year lease with completion in Q4 2025. Also 7%, close to 7%. In Herlev, Copenhagen, we invest for the school for NGG, 25-year lease, 11,600 square meters, completion in Q1 2026. At Ørestads Boulevard Tostop, the large refurbishment for Novo continues, 62,000 square meters. Our investment is limited to SEK 423 million and completion is expected in 2025, but Novo pays rent also during the refurbishment period. That was some of the ongoing projects.
A quick view on some of the future investment: here are four possible projects in Lund and Helsingborg, some 70,000 square meters for the future. Zoning plans are approved for the first three projects and ongoing at Västerbro in Lund and some of the office possibilities in Malmö in the area of Nyhamnen and Dockan. There is high interest for the future, of course. A summary of Q2: again, a record quarter for rental income, operating surplus, income from property management, property value, acquisition, and dividend. Net letting positive at SEK 24 million. Net EBIT to EBITDA at 10.1. There remains a good demand for good quality and good location, and project investment continues to give a good potential for growth. With that, we are open for questions.
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 Lars Norrby from SEB. Please go ahead.
Good morning, Ulrika. Good morning, Arvid.
Morning.
Okay, let me just put the spotlight on what you're saying about the economy and the market, looking particularly at you're sending out positive comment about the Copenhagen market, whereas in Sweden you say the economy is weaker. In Sweden, do you think we have now passed the low point in the cycle? Is it now turning up?
Of course, hard to say. It's true regarding Copenhagen that we see really interesting discussion on larger areas, and that's promising for the future. Many things in Copenhagen are working very well. Looking forward to see what will come from that. When it comes to Sweden, yes, I mean everybody knows that the market is weaker, but still positive things are ongoing. I hate actually to speculate, but I think that we see some light ahead definitely. Maybe I don't think we should expect any quick race for the future, but a slow turn in a good way. Many things from our customers' perspective seem to be pointing in the right direction, but a bit of cautiousness, of course, is there.
I wouldn't call it speculative. I call it forecasts in my Excel model. Anyway, just to be clear here, when you talk about Copenhagen and you talk about Sweden, are you talking about comparable segments of the market or is your own segment mix different in which in some way affects your market? Comments, if you see what I mean.
I think that of course I'm more, more. I'm closer to our own portfolio and our own discussions. Let's be aware of that. The Copenhagen market still hasn't shown any dramatic changes in higher increasement of rental value. It's still a very slow moving market in that way. It's interesting to see that. I mean the discussions we have ongoing is interesting. It will never be the same as the Swedish market. You don't count. You cannot expect that.
It's not like this final question, clarification. It's not like when you're talking about Sweden, you're talking about some, what is it, 70, 75 offices? Where? Copenhagen. It's less than that, is it?
I mean, I talk about the office market mainly in Copenhagen.
Okay, very good. Thank you. Those were my questions.
The next question comes from John Vuong from Van Lanschot Kempen. Please go ahead.
Hi, good morning. I just wanted to talk about the LTV which has been trending up since its trough in 2021 and now at 53%. I think you mentioned you intend to bring this down a bit. I suppose this will be coming from retained earnings. Just wondering, how do you see the LTV in light of investment opportunities that you're seeing in the market?
I think the current LTV at 53%, given the way we look at the world around us, we would like to gradually bring it down and to be say around 50%. As we have shown actually during this quarter, we feel that we've managed our balance sheet in such a way that we've been able to seize an acquisition opportunity in a good way. Focusing on improving income from property management per share, we've chosen to debt finance that acquisition. As we've talked about on different occasions previously, and I'm sure you're aware that we also have a mandate from the AGM to issue new shares up to 10% of the total number of outstanding shares. We have never used that mandate, but that is of course a tool which can be used if the right opportunity arises. We don't feel that the current LTV limits us from looking at future opportunities in the market. What will come up is of course, very, very uncertain.
Okay, clear. You also point out that the net debt to EBITDA or net debt to operating profit is at 10x . I understand that it's not an official KPI. Just curious to understand, is this a metric you look at and consider when you're considering investments?
I mean, we track the number on the group level fairly closely because we think it makes sense to relate the debts to an approximation of the cash flow. We're happy that that level or that metric over the past few years has been stable and even improved. That is of course one factor which we bear in mind when looking at investment opportunities.
It is not necessarily a level that you target with this metric.
I think if we're at 10x where we are, we're very comfortable, and we've been at 11 and above 11 as well, which also may be fine. We don't feel from a financial stability perspective that it's important for us to significantly strengthen this ratio. If we're at 10x , we're quite comfortable.
Okay, that's clear. Thank you. That's it from our side.
The next question comes from Oscar Lindquist from ABG Sundal Collier, please go ahead.
Now we don't hear you, so maybe you.
Oh, sorry. Can you hear me now?
Yes, now we hear you. Perfect.
Perfect. Good morning. On occupancy, I think you alluded to it in the presentation, but given recent quarters net letting, how do you expect occupancy to develop in H2?
We expect to improve both in late 2025 and even more to come in 2026.
Perfect. A more detailed question, current tax in the quarter was a bit higher than expected. Could you, is there anything to highlight here?
Yes, as you can see in the report also, we divested some residential building rights from part of one of our properties in Copenhagen, and that will also trigger a tax effect, which distorts that number somewhat from what you would have expected.
Okay, perfect. Thank you. That's all for me.
Thank you.
The next question comes from Albin Sandberg from Kepler. Please go ahead.
Yes, I had two questions. First of all, the comment you're making about competitors not being too active in the market, is that a sign you think that they don't really have the same faith in the market as you have, or do you expect them to pick up pace as obviously the outlook seems quite good relative to other parts of the country?
Most of all, decisions for new projects competing coming out to the market now in 2025, 2026, and early 2027. These decisions were supposed to be made some time ago. Yes, Skanska have started a new project in Helsingborg now, but that will be completed later. The competition is very limited for new builds coming out to the market during 2026, I would say. There are also some other projects starting up a bit, and possibilities. Is there? Of course, but things are. I mean, it's not like some years ago when everybody tried to do anything everywhere. It's a fact of decisions made during the last years that now make us quite competitive, I would say.
Okay, that's good. Arvid, the comments you're making about the swap expiring and possibly renegotiating lower margins, do you target to maintain the 3.3% or do you foresee a slight uptick in your overall cost of finance for H2?
In the second half, we will have an effect of expiring swaps, meaning that the average interest rate would move upwards slightly. As I also believe I mentioned, we're also having a few bank renegotiations during the second half. My expectation is that those renegotiations will be beneficial for us. Generally speaking, I think our financing terms are fairly much at market. We will continue to work with our interest rate risk management policy, entering into a few new swaps basically on a quarterly basis. I don't expect any major change in the average interest rate over the second half.
Great. Thank you very much. Those were my questions.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time. I hand the conference back to the speakers for any written questions and closing comments.
We've not seen any written questions coming in via mail here.
As always, you're always welcome to come back to us with further questions. With that, thanks for today and we wish you all a great summer.
Thank you. Bye.