Interim report January-September 2024

January - September

• Rental income increased by 10% to MSEK 1,469 (1,333).
• The net operating income increased by 10% to MSEK 1,105 (1,007).
• The profit from property management increased by 11% to MSEK 629 (569). Profit from property management per common share increased by 9% to SEK 9.88 (9.06).
• Changes in the value of properties amounted to MSEK 202 (-406).
• Net profit after tax for the period amounted to MSEK 549 (78), equivalent to SEK 8.49 per common share (0.31).
• Net investments for the period amounted to MSEK 718 (568), of which MSEK 189 (317) related to acquisitions of properties, MSEK -33 (0) related to divested properties and MSEK 70 (-19) related to investments in associated companies and joint ventures. Investments in existing properties and new construction for the period amounted to MSEK 492 (270).

July - September

• Rental income increased by 10% to MSEK 491 (444).
• The net operating income increased by 11% to MSEK 404 (365).
• The profit from property management increased by 23% to MSEK 253 (206). Profit from property management per common share increased by 23% to SEK 4.00 (3.25).
• Changes in the value of properties amounted to MSEK 45 (-165).
• Net profit after tax for the period amounted to MSEK 110 (39), equivalent to SEK 1.54/common share (0.33).
• Net investments for the quarter amounted to MSEK 265 (106), of which MSEK 0 (19) related to acquisitions of properties and MSEK 56 (-2) to investments in associated companies and joint ventures. Investments in existing properties and new construction during the quarter amounted to MSEK 210 (89).

Comments by CEO Andreas Whalén
Profit from property management for the quarter amounted to MSEK 253 (206) and for the period to MSEK 629 (569), an increase of 23 and 11 percent, respectively, compared with the previous year. The increase is attributable to a higher net operating income from our property portfolio and lower financial costs. Profit from property management per average number of common shares for the period amounted to SEK 9.88 (9.06), an increase of 9 percent. For the quarter, profit from property management per common share increased by 23 percent to SEK 4.00 (3.25).

Our forecast for profit from property management in 2024 amounts to MSEK 850, up from MSEK 830 in the previous quarter.

New share issue
At the end of the third quarter, NP3 carried out a directed new issue of 4 million common shares, raising MSEK 1,000. The share issue was carried out for three main reasons:

1.      Financing the acquisition of a property portfolio in Östersund for MSEK 755.
2.      Creating the conditions to be able to act on acquisition opportunities.
3.      Strengthening the company's key financial ratios and broadening the shareholder base.

The acquisition, which requires a resolution by an extraordinary general meeting, means that we will complete the purchase of a large property portfolio in Frösön in Östersund in November. The properties previously housed "F4", air flotilla of the Swedish Air Force and is directly adjacent to Östersund Åre Airport. This provides the conditions for continued positive development of the property, as interest in national security and defence have increased significantly. After the access of the properties, the Swedish Fortifications Agency will become NP3's single largest tenant.

The share issue provides the conditions to make further investments, and we see solid opportunities to be able to act in the transaction market in the near future. The risk-adjusted return is considered attractive on new acquisitions, as price expectations from sellers have softened and current interest rates mean that the yield gap has increased to 250–350 bps, depending on the debt maturity.

The share issue will strengthen NP3's key financial ratios and broaden the shareholder base, improving the liquidity of the share which will benefit our shareholders in the long term. The key financial ratios at the reporting date are affected by the fact that the acquisition of the property portfolio has not yet been completed, meaning lower net debt. At the same time, for example, the interest coverage ratio will continue to strengthen as our financial costs decrease and income strengthens. Overall, the share issue will create the conditions to increase earnings per common share with a lower financial risk, which is in line with our overall long-term objective.

Business and the economy
There are concerns about the economy in general and specifically regarding the so-called "green investments". In this respect, I can safely say that the diversification that has been a key focus for NP3 since its inception mitigates the extent to which the company can be affected by developments in any one tenant, industry or location.

During the third quarter, we were involved in three restructurings of tenants to NP3. Although these have resulted in tenant losses and negative net letting, they do not affect the overall net letting of NP3. Net letting amounted to MSEK 14 for the quarter, which includes a negative impact from the above mentioned restructurings of more than MSEK 5. We read about failing ventures in northern Sweden, but as the trend in terms of net lettings shows, this does not affect NP3 significantly.

The primary reason for this is that NP3 started its operations before any of these initiatives were even considered. The company is therefore not built on the basis of these investments, which can only be linked to a small proportion of our leases. However, I would like to emphasise that my view is that northern Sweden will continue to benefit from a strong access to green energy. Green energy will be an important component in the transition to a more sustainable society. As to whether the green energy will be used for battery, hydrogen or steel production or something else entirely, I naturally cannot say, nor do I know when this will happen. But I am confident about the long-term trend for northern Sweden, and NP3 will continue to focus its efforts on the development of a more sustainable society from an economic, social and environmental perspective.

The occupancy rate is 93%, which is in line with previous periods. The occupancy rate remains stable despite the fact that the vacancy has increased due to some larger acquisitions that we made in 2021, knowing that they would become vacant.

We continue to see strong demand for commercial premises in our regions. Our project volume continues to increase slightly and we do not see any major slowdown in the near term. But the economic cycle is challenging, which means that things can take a turn very quickly, for the better or the worse.

In closing
The valuation yield was 7.14 percent. The property value increased by MSEK 255 in the quarter and amounted to a total of MSEK 21,127, which is equivalent to SEK 10,392 per square metre.

I do not foresee any dramatic near-term change in valuation yields. Our tenants' ability to pay rent remains in line with historical figures with regards to the proportion of rents that are paid on time no later than their due date.

We will continue to steer in the direction we have set out; to boost our profit from property management per common share while maintaining or reducing operational and financial risks. We will continue to focus on diversifying our risks across tenants, locations, business categories and properties. Those of you who follow NP3 have probably read it before, and you will most likely read it again: NP3 will quite simply continue to do more of what we've been doing for a long time.

This constitutes information that NP3 Fastigheter AB (publ) is legally obliged to publish under the EU's Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person specified, on 18 October 2024 at a.m. 08.00 (CEST).

This report has been prepared in both Swedish and English versions. In case of variations in the content between the two versions, the Swedish version shall govern.