Fabege AB Q2 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Paul J. May - Barclays Bank PLC, Research Division - Analyst : It's Paul from Barclays. Just -- so I've got 3 questions. I can probably take them 1 by 1. On the property values in the commentary, you seem to be a bit more confident or it seems like the values have dropped far enough given the commentary in there. I'm just noting your yield of 4.17% is well below levels where property yields were when swap rates were at current levels previously. I think previously, you were up at sort of 5.9%, 6.7% in 2005 and 2010 when top levels are at similar levels. I appreciate we've got some inflation at the moment, but that's not coming through in market rents from what you're saying. So I just wondered how your -- what gives you the confidence that the property values in the property yield at 4.17% is the right level? And could we see further pressure on that, particularly given the recent move in swap rates over the last couple of days? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 07, 2023 / 9:00AM, FABG.ST - Q2 2023 Fabege AB Earnings Call

Question: Paul J. May - Barclays Bank PLC, Research Division - Analyst : Yes, I very much appreciate your openness, should we say, in disclosure relative to potentially some others. Just on the second question, the renegotiations you had in the first half, are those renegotiations on leases that saw the 10.9% CPI uplift? Or did they not see that uplift because they were being renegotiated quite soon after? Just trying to sense is the 1.5% increase that you noted on top of the 10.9% CPI? Or is there some adjustment that we need to be aware of?

Question: Paul J. May - Barclays Bank PLC, Research Division - Analyst : Yes. And then just final 1 more just on a general quick discussion in a bit more detail, if you could. Obviously, everyone is looking or most companies are looking to get secured bank financing at the moment in most markets. Sweden is not alone in that. We're hearing in other markets that negotiations are taking a long time, much longer than previously, banks are being more selective over the properties that they provide security on given they've got access to pretty much all properties. But also, we're hearing that while they are open, the size of deals, so the size of the lending and the debt that's being provided on each individual deal is much smaller than it was previously obviously in other markets. I just wanted to get a sense as to Sweden, is it all operating as it was? Or are we seeing similar issues with on the bank lending?

Question: Paul J. May - Barclays Bank PLC, Research Division - Analyst : Great. And just linking with the previous question from Jonathan on the ICR. Is that the main focus for the banks at the moment and LTV is kind of a byproduct of what is the ICR that you could have given marginal financing costs, and if the LTV ends up being very low, the LTV is low, that's not the fact that the banks are focused on. Is that fair to say?

Question: Paul J. May - Barclays Bank PLC, Research Division - Analyst : So just speaking on the ICR, that's not on a per secured building that's -- the banks are looking at your ICR on an overall company basis? I just think that's a bit surprising given they're securing against specific properties, but maybe I'm right.