Good morning, everyone. This is Leiv Synnes, CEO of SBB and I've been here for a little bit more than 1 month.

And before I start with the conference presentation, I want to share some words about me. I've been in the real estate industry for 2 to 3 decades, first in the banking side and then on the asset side.

I worked with a peer called Akelius for 2 decades, where I worked with property transaction and financing, controlling and legal and tax. I think 3 things to point out in this presentation.

The first one is the excellent pool of assets that SBB has. The revenues grows with close to 10% like-for-like and the net operating income was close to 11%.

So we have a very strong operational track record and also the occupancy rates increases and the surplus ratio increases. So we are in a strong operational trend in the company.

The second part is to discuss the strategic overview that the company has planned to do. And the aim with that is to strengthen the company's financial position, to improve the liquidity and to improve the leverage and take the [indiscernible] back to investment-grade rating again.

And the highlights for the third quarter. Financial stability and liquidity, our top priority.

We've been downgraded to sub-investment grade. And now we have embarked the journey back to investment grade again.

We focus on the core business, which is strong residential assets and public properties to the community. And as I mentioned, we have a very strong performance at the moment from the assets.

And we have mainly long-term debt. The assets contributes of SEK [ 141 ] billion and the loan-to-value is 52% and the vacancy rate is 3.7 years (sic) 3.7%.

We are well inside of our covenants with loan-to-value of 52% and a interest coverage of 2.9. The yield on the properties is currently 4.5%, residential constitutes 1/4 of the company and the community service properties 3/4.

And we have launched a strategic overview and that includes to sell the whole company -- parts of the company or single assets. We have presented to the market some transactions and we have also conducted some transactions.

And we have also other processes in parallel. We are sure that we will be able put through some transaction [indiscernible] in the company.

In the fourth -- in the second quarter, we did some measurement to clean up the company a bit to make the company so that you to understand. So we have sold shares in JM.

We have sold properties to municipalities and we have divested shares in Heba. And we have also started discussions with Brookfield regarding the 51% stake SBB has in the EduCo, which is properties for education.

And we have signed a letter of intent for approximately SEK 3 billion to sell to the tenants. And we -- as I mentioned, we have also other processes in parallel, both regarding new financing solutions and also investments.

On the right hand on the page, you see the cash sources and cash uses and it's obvious that we needed to strengthen the liquidity. Some of the loan prolongations that we aimed for during the second quarter is due to the situation being slowed and we hope to make them in the third quarter instead, in order to improve the balance between cash sources and cash uses.

And also worth mentioning that today, SBB lends SEK 14.5 billion to EduCo. And one part of the discussions with Brookfield is to get that current intra-group loan prepaid, which will strengthen the company's financial situation quite substantially.

If you go back and look a little bit on the core of the company, their property operations, we see rather strong figures at the moment. The rental income like-for-like, as I mentioned earlier is close to 10% and the net operating income is close to 11%.

And today, we actually don't see any downside risk on the revenues. The rent level on the residential part is below market and we have long-term contracts with mainly public tenants, municipalities and so on.

So if we look on the occupancy, it improved to 96.3%, a strong performance. We see an increasing demand for the spaces we have and this will result in higher revenues in the quarters to come.

You also see that the yield on the properties increases as a result of growing revenues and also, of course, somewhat lower property prices. I'll touch upon this a little bit, the market outlook for the main segments.

The community service properties constitute 73% of the assets. On average, we have 11 years leases and we have strong and secured tenants.

We have very limited losses on the rents and we have also indexation. And it's likely that we will continue to increase rents in the fourth quarter with the new indexation.

Best case at the moment is that the CPI indexation will be 6%, meaning 6% growth in revenues automatically for the community service properties. If you look on the residential properties, it's 24% of the assets.

We have strong demand for housing. We have low vacancy and low turnover.

We have also -- we are also constructing new properties. And on the remaining volume of investments, we will get 14% return, if we divide the net operating income from the properties with the remaining investments.

And at the moment, we are very reluctant to start up new construction work. So mainly, we will see a growth in revenues and not so much growth in balance sheet when it comes to residential properties.

And if we look on the consolidated income statement, if you look on the -- and the income for the quarter, we have negative development. That is mainly due to that we have divested assets.

As I mentioned before, the like-for-like portfolio performs very well. We have also conducted external valuations of all our properties.

And the result is that there is a negative value growth quarter-to-quarter. And for the first half of this year, we have a negative change in value of close to SEK 6 billion.

We have also chosen to divest and clean up the company. So we have sold associated companies and joint venture and that have created a loss of SEK 3.3 billion.

And then we have also translation losses, mainly due to the fact that we have more loans in euro compared to the assets in euro. So all in all we make a loss for the period of close to SEK 10 billion.

As I mentioned at the slide earlier, the loan-to-value is 52%. The secured loan-to-value is 19% and the interest coverage ratio is 2.9.

So we are far away from the covenants we have in the loan agreements. We're not happy of these figures, we would like to improve them.

So we intend to strengthen the balance sheet and also to reduce debt in order to improve the key figures and take us back to investment-grade rating. SBB is a company that does things, we have acted actively from the beginning when the company was started and we have also acted the previous year.

If you look 1 year back, until now, we have decreased the debt with close to SEK 18 billion. So SBB has been very good at reducing debt.

And we have done it by, partly by divesting assets and partly by raising equity through subsidiaries. One main transaction was the sale of 49% of the educational portfolio to Brookfield.

And the ambition is to continue to be active in order to reduce debt. It's easier to reduce debt when you have good assets.

On average, the interest rate maturity is 3.3 years and close to 60% of the debt, the interest rate that is hedged is maturing after 3 years. If you make the company a little bit smaller by divesting or raising equity through subsidiaries, we intend to mainly repay short-term debt in order to reduce the effect of the higher interest rate environment.

And then we will keep the low-yielding debt and we will have a profitable company in the years to come. To summarize, financial stability and liquidity are top priorities for the group.

We focus on the core business. We know very well performing assets and we will make sure that this continue to be the case.

We will try to improve the net operating income even further and increase the occupancy rate. And we will try to have a good way path to -- back to the investment-grade rating.

Okay, thank you, Leiv. We will now take some questions.

We are, however, a bit limited on time. So we will only be able to take a few and I see that we have a few questions.

I urge you to try to limit your questions to only 1 per person, if possible. So operator, do we have any questions from the call?

I'll try to limit myself to 2 questions, if it's okay. And to start off with, the large negative value revision of SEK 6 billion.

Was part of that taken to reflect levels in ongoing discussions?

I think the valuation is done by external firms. They take a picture on the market as a whole and not in the individual discussions we're currently having.

Okay. Understood.

And then the restricted cash is now reported at 0 compared to SEK 1 billion as of Q1 '23. Can you comment on how this has been resolved?

SBB in the past have had financial solutions. And for that -- those, we have pledged cash.

We have cleaned up the company a bit and believe that those arrangements, so there is no need to pledge cash anymore.

All right. And if I may just add 1 quick question as well.

How much do you need to divest for to feel comfortable with the refinancing risk?

That's a good question. We are currently doing a strategic overview.

And 1 part of that is selling assets but we can also raise equity through subsidiaries. We have done it with Brookfield.

We took in a partner for our educational properties and we can do the same with other parts of the group. So we're not sure yet if the whole recovery scenario from a like a credit perspective needs to come from divestment.

It can also be that we take on partners that will help us to strengthen the company.

All right. That's all for me.

My first question would be, you're referencing in your reports that a new equity can be fund by means of capital net from stock market, so just wanted to understand better what that reference is. You've talked about raising equity issues through subsidiaries.

Now then will you consider also raising outside equity from the stock market? And then I have another one as well on the [indiscernible].

Yes, we have in the earlier quarters reflected on a potential IPO of [indiscernible] which is the residential part of the SBB Group. And should that happen, later this year, the company will receive equity.

Okay, very clear. Just to come back to Slide 3, I think you're showing a gap of 8 billion of liquidity over the next 12 months' time.

If I understand correctly, I mean what are your options from here? Is it mainly try and come to a deal with Brookfield, including the repayment of that SEK 14.5 billion loan?

And how are you thinking about equity raise? You said also something about -- through equity -- subsidiaries.

I mean, what part of the portfolio would be in equivalent to the education business that could be a standalone entity?

Very good question there. If I remember out of my head here, we have [ SEK 1.6 billion -- SEK 1.8 billion ] of elderly care homes.

And if we add other publicly financed homes, it's close to EUR 2 billion, so that's the portfolio. And if we add also other kind of public financing -- finance the properties, it's up to EUR 4 billion and that could be a subsidiary.

If we put together all the joint ventures and collaborations we have in the residential space, it will be around EUR 4.5 billion in [ debt ] assets. So we have 2 large entities that would attract money from the capital market.

And then, of course, we still own 51% of the educational properties.

Very clear. Last question for me, if I may.

You just announced a recent disposal of assets. Can you comment on where it's disposable, where it's good value, which is...

Yes, first, it's a strength, I would say in this market. We have assets that can grow revenue so rapidly and with limited downside risk.

And of course, we have strong tenants in municipalities and other organizations. And they are not equally affected on the current market conditions that we see.

So we understand that they look favorable up on the -- of the potential to buy some assets. And we -- at the moment, we review all the offers we get from those kind of tenants.

And a part of those offers we have signed a letter of intent.

Sorry, just coming back to the question. The recent properties you've already sold to municipalities, I think post close, perhaps but are you able to comment on the sold properties already, why was the pricing less [indiscernible]?

Yes, the pricing was a bit lower than the latest fair value in the books. It was a [ fast ] process with the municipality that prefer to own the buildings, the yield when we sold it was around 4.1%.

So that was the yield on the books? And are you able to comment on the year-over-year that you achieved on the yield?

Yes, yield on actual costs.

I apologize. I didn't get the answer.

If you divide the net operating income from the properties with the price you sold them, then you get [indiscernible]

So 4.1% versus disposal yields?

Yes.

All right. And what was the book value yield?

I'm sorry to -- but we need to take all the other questions. We're a bit limited on time.

But please feel free to e-mail to the IR e-mail and we will try to answer more of your questions.

In the cash flow statement for the quarter, there is a large outflow in other noncurrent receivables of about SEK 1.2 billion. Would you be able to explain what that relates to, please?

Good and detailed question, I need to check it out there. What did you say [indiscernible]?

Was it the change in other long-term assets?

Was the change in other noncurrent receivables -- so in the investment activities section of the cash flow statement. And so I see minus [ SEK 1.172 billion ].

My guess was that related to the transaction, which eliminated the pledged cash but I'd just love some insight.

Yes, we did one of those transactions with that size and [indiscernible] that's the item on that growth. But it's correct that we have done such transactions.

We haven't released the cash assets instead lent money to another company.

Yes. Understood.

And then look, I know you may not be able to comment on this but are you able to give us any color around the possible valuations you're discussing for the Brookfield transaction?

Good question there. Now at the moment, we will not like to publicly speak about that -- those discussions.

And we would like to come back to you on that topic when we have done the transaction, if we do the transaction.

So this will be...

And I have 1 question relating to the cash flow. Previously, you stated that you have sufficient cash flows from operations to pay and even increase dividends each year.

But neither in the last 2 quarters or last 12 months have cash flow from operations before changes in working capital were higher than paid dividends. So; a, what is basically the explanation to the very weak operating cash flows in the last 4 quarters?

And; b, if you can say something regarding your view on the ability to pay dividends going forward?

Yes, I think I'm a bit more conservative on this topic. My first aim would be to strengthen the liquidity position and also the balance sheet in general of the company and be somewhat reluctant to pay a dividend before the financials looks more stable.

That's my view and I don't see any dividend in the foreseeable future -- meaning in 1 to 2 years. It depends also first this strategic overview of those.

And I also think that we should work and continue to work in improving the cash flow in the company. And then not only the operating cash flow but also the investments that are -- we currently working with.

We are finishing the project we have started and we are very cautious of starting new products. We will be in a positive trend in reducing the investments in the group and bringing up the cash flow in general.

Okay. Thank you, everyone.

This is unfortunately, all that we have time for during this call. But please, if you have further questions, please write in to the -- [email protected], our e-mail and we will make sure to answer all questions.

Thank you so much for calling in today.