ProShares UltraShort Semiconductors Price & Performance (SSG)

Good morning and welcome to the Q2 and first half year twenty twenty three result presentation. So I will go through the financial results for the period. SSG continues to deliver solid organic revenue growth at attractive margins. We continuously develop new area for self storage and during the And are on track to reach the target of opening more than 20,000 square meters CLA development led growth in 2023. At the end of the quarter, we had 142 facilities with 32,600 storage rooms to offer our customers. Total lettable area amounted to 236,100 square meter Of which 100, of which 196,000 was in operation. The development pipeline of 40,001 100 square meters is record high and gives us solid foundation for further profitable growth and expansion. In the Q2, we had total revenues of €104,200,000 an increase of 6.5% Compared to Q2 2022, self storage revenues had an increase of 8%, but other income declined by SEK 800,000 in the period. The growth in self storage revenues is related to increased average rent and organic growth through opening on new facilities and expansions. EBITDA was SEK 62,900,000 which is an increase of 5.5% compared to Q2 2022. There were no non recurring items in the Q2 'twenty three nor in Q2 'twenty two.

Net finance in Q2 The 3 was minus €27,100,000 compared to minus €9,300,000 in Q2 2022. The new bank facility agreement was signed at the end of the 1st quarter and paid out in April. Interest expense in the Q2 is highly impacted by accurate non cash amortization of the facility, Which was repaid 1 year before our plan, but there were no earlier redemption fees. Profit before tax in the Q2 was 15,600,000 compared to 31,400,000 1 year earlier. Demand is strong although impacted by lower moving rates during the winter season compared to the COVID years. The like for like occupancy, that is occupancy for facilities with the same CLA in Q2 'twenty three As in Q2 2022 was 87.5 percent, down from 89.8 percent, while average rent increased by 9% to NOK 2,493 NOK per cubic meter per year. In the quarter, 3 facilities were opened, 2 in Norway and 1 in Sweden. Two properties in Sweden were acquired adding 5,900 square meters in potential CLA to the portfolio And in addition to the acquisition of 1 formerly sold land property in Norway. In the first half twenty twenty three, we exceeded NOK 200,000,000 for the first time with adjusted revenues of NOK 206,000,000, An increase of 8.5% compared to first half twenty twenty two.

The growth in revenue is related to increased average rent and organic growth through opening of new facilities and expansions. In the Q1 this year, the Swedish facility Jarada was discontinued due to a lease expiration And a compensation of CHF 3,400,000 is classified as non recurring income. Move out costs of CHF 800,000 are also classified as non recurring costs, Giving a net compensation and non recurring item of SEK 2,600,000 for the first half twenty twenty three. EBITDA adjusted for the net compensation was €120,000,000 which is an increase of 8.5% compared to first half twenty twenty two. There were no non recurring items in the first half twenty twenty two. As of June, we have 196,000 square meters CLA in operation and a record high pipeline of 40,100 square meters under development, which ensures continued growth. Loan to value of freehold investment property is 46% and has good headroom to the covenant of 60%. Total value of freehold investment property end of June was €2,800,000,000 The like for like performance for facilities with comparable lettable area in Q2 'twenty three and Q2 'twenty two It's robust with an occupancy of 87.5 percent and near target of 90%.

Lower move in rates during the winter season Compared to the covered years have impacted occupancy in the quarter. The development in the Q2 however has been strong with record high number of move ins in June. Rents were SEPA adjusted in the Q1 and like for like average rent in the Q2 has increased by 9% to NOK 2,493 per square meter per year. At the end of June, we had 196,000 lettable square meters to offer our customers. Since Q2 2022, 18,800 square meters have been opened. The opening of 11 new facilities added 13,000 Square Meters to the portfolio and 5,800 square meters were added through expansions on already opened facilities. The closing of the Lissol facility Jarda, however, reduces the group's letable area by 3,300 square meters, Giving a net change in CLA of 15,500 since June 22. Of the 196,000 screenmeters lettable to our customers, 176,200 have been in operation for more than a year and are defined as mature. The chart on the lower left hand side shows the increase in current lettable area as of June 23 compared to 1 year earlier And the chart on the lower right hand side shows the increase in average occupied area for mature facilities in the quarter compared to June 22.

Average occupancy for mature facilities in the Q1 was 85.3% compared to 90.5% in the Q2 2022. The average rent per square meter per year for the Q2 was 2,516, which is an increase of 8% compared to Q2 2022. A chart showing the development in occupancy and average rent for mature facilities for the last year is included in the appendix. The chart on this slide show occupancy and average rent in NOC for mature facilities for both concepts And the 3 countries in addition for like for like performance. Average occupancy for mature facilities at group level is 85.3%. As you can see on the chart on the upper left hand side, occupancy in both concepts and the three countries are lower than 1 year earlier. Lower move in rates during the winter season compared to the COVID years have impacted occupancy in the Q2. Occupancy in CSS Norway is impacted by an increased share or large facilities newly defined as mature, but still in lease up. The development during the Q2, however, has been strong with record high number of move ins in June. The lag for lag occupancy for the Q2 is 87.5% and close to the target of 90%.

The chart on the right hand side shows the development in current Lettable area. The increased capacity in CSS Norway and Ukominy Nagel consists both on new facilities and expansions. The latter partly impacting occupancy and average rent. In connection With the change of CRM system, all areas rented to customers have been reviewed and 500 square meters of self storage area in CSS Denmark is reclassified as a space rented to office tenants. The reduction of CLA in CSS Sweden is related to the closing of Jarreda offset by the opening of Trollhattan. The chart on the lower left hand side shows the development in average rent in NOK. Average rent has increased across both segments and all three countries following annual CPI adjustment in January and increased focus in the organization on optimizing rent. A. Average shunt for mature facilities has increased by 8% compared to Q22 and by 9% for the like for like facilities. CSCS Norway achieve higher vent levels at around 3,100 Nok per square meter per year, while CSCS Sweden and CSCS Denmark have rates between NOK 2,700 and NOK. Oeko Mine Lagir has rent levels at about NOK 1800 per square meter. Low operational costs have made it possible to offer customers the lowest prices in the market and still achieve high margins.

Revenue for the Q2 was NOK 104,200,000. Self storage revenues amount to 96,300,000 and has increased by 8% since Q2 2022. The increase is related to higher average rent and organic growth The decrease is mainly related to fewer manned facilities offering ancillary products in addition to reduced income from parking at Adamstun As a new floor will be opened for self storage. Lease expenses for short term contracts have decreased by 400,000 compared to in Q2 2022. Property related expenses are impacted by growth in debtable area and number of facilities in the portfolio And have increased by NOK 2,000,000 from Q2 2022. Property related expenses include costs related to properties in the 40,100 square meter pipeline not yet in operation like property tax and insurance. The decrease of €1,900,000 in salary and other employee benefits is related to a change in timing or holiday pay for Norwegian employees. The number of full time employees in the group is stable. Other operating expenses has increased by 3,400,000 compared to Q2 2022 And are impacted by temporary higher bad debt provisions following the implementation of the new CRM and ERP system in Denmark. Bad debt provisions are normally on a low level and it is a focus area in SSTG to keep bad debt at low levels.

There were no non recurring items in the Q2 'twenty three nor in Q2 'twenty two. EBITDA in the Q2 was NOK 62,900,000, an increase of 5.5% compared to Q2 2022 and the EBITDA margin for the quarter is 60.3%. Revenue for the first half year was NOK 209,400,000 Adjusted for the non recurring compensation received related to the closing of Jarda, Adjusted revenue for the first half year was 206,000,000 which is an increase of 8.5% since first half twenty twenty two. The revenue growth is organic and is related to increased average rent and development of new CLA through opening of new facilities and expansions. Leases expenses for short term contracts have increased by NOK 300,000 compared to first half twenty twenty two. Property related expenses are impacted by growth in lettable area and number of facilities in the portfolio and have increased by 4,700,000 from first half twenty twenty two. Property related expenses also includes costs related to properties in the record high pipeline like property tax and insurance. €800,000 of the property related expenses are move out costs incurred by the closing of Jarete and defined as non recurring. The decrease of 800,000 in salary and other employee benefits is related to the change in timing of holiday pay for the Norwegian employees.

Other operating expenses have increased with 3,400,000 and are impacted by the temporary higher bad debt provisions following the implementation of the new server and ERP system in Denmark. Total adjusted operating cost In the first half year 'twenty three are NOK 6,700,000 higher than in first half year last year. The net compensation of SEK 2,600,000 is defined as non recurring item and there were no non recurring items in the first half twenty twenty two. Adjusted EBITDA in the first half twenty twenty three was SEK 120,000,000 an increase of SEK 8.5% compared to first half 22. And the adjusted EBITDA margin for first half year is 58.3%. We have a steady growth within freehold property and the share of freehold property in operation is increasing. At the end of June 62 percent of current letterable area in SSG is held freehold. We opened 17,300 in the Litter Mill area during 2022 and as of June we have opened 10,200 Square Meters CLA and are on track to reach the target of opening more than 20,000 square meters that develop at Lake Road in 2023. The entire pipeline of 40,100 square meter is freehold and will increase the share of freehold to 69% when opened.

The chart on the upper right hand side shows the split between CSS and Oco Mini Lage. 54% of current lettable area in the City Self Storage segment is freehold, while 75% of current lettable area in Nukomindelage is freehold. Our freehold portfolio consists of approximately 225,000 square meters gross area freehold property a 26,500 gross area land for containers. Approximately 65 to 70 percent of gross area is utilized as lettable area for our self storage. SSG has freehold investment property of 2,800,000,000 as of June 23. Freehold investment property has year to date increased by 234,300,000 from December. The increase is related to the acquisition of 9 properties, 5 in Norway, 2 in Sweden and 2 in Denmark. Investment in several development and conversion projects and exchange differences, partly offset by the change in fair value of minus 22,500,000. The chart on the upper right hand side shows the development in freehold investment the independent appraiser estimated a negative change in the fair value of freehold investment properties driven by rising interest rates And the following yield expansions in the property market. Inflation is expected to exceed the long term inflation target over the next years, Which drive rent and increases the value of the freehold portfolio.

The benefit is offset by negative effects from yield expansions in the property market. Hence, for the Q2, the appraiser has concluded that there is no further indication or change to the fair value of freehold investment properties in SFG. Net change in fair value amounts to minus 22,500,000 in the first half year twenty twenty three. This is a non cash P and L charge and there are no other negative elements impacting the valuation of the portfolio. We are considering changing the current evaluation methodology to the one more commonly used by European peers. In this methodology, The full cash flow from operating the facility is included in the valuation as opposed to the current methodology which uses a market rent This uses a market rent for the property as the basis for valuation. The chart on the lower left hand side shows gross area and yield per region in the period 2020 to 2022 with an average yield in the group of 5.6% as of December 22. Change in fair value over P and L back to 2017 is shown on the chart on the lower right hand side. The development of current left of Bell Area is an important growth indicator for us.

There has been a stable growth in current left of Bell Area since the IPO in 2017 consisting of both organic growth and growth from acquisitions. During the first half year twenty twenty three, we added 10,200 square meters of lettable area to the portfolio and we plan to open in total more than 20,000 square meters during this year. We have 40,100 square meters under development, including 14,300 square meters rented to office tenants which gives a total electrical area of 2,000 36,100 Square Meter. We have a record high pipeline of 40,100 Square Meters under development and are on track of opening in excess of 20,000 square meters during this year. 17,100 square meters of the pipeline is in the Greater Oslo area as you can see on the map, but we are growing in all markets. We have rental income from 14,300 of the development mainly from expiring contracts with office tenants. The pie shows the distribution of current electrical area and operation with a larger portion in the Greater Oslo area. Self storage revenue can be calculated by using the 3 KPIs currently occupied area occupancy and average rent per square meter. As of June, we have currently at the area of 196,000 square meters. 176,200 of these have been in operation more than 12 months and are defined as mature.

We have 40,100 square meters under development and we are continuously working to increase lettable area further and we are on track to open 20,000 screen meters during this year. The occupancy level for the Q2 is 85.3% for mature facilities. Many facilities are still in lease up and there is a significant potential to increase revenue. We continue to experience high demand for our services And the development during the Q2 has been strong with record high number of move ins in June. The average rent level for mature facilities in the second quarter Reported revenue for the Q2 was NOK 104.2 million including NOK8 1,000,000 in other revenue. With our solid pipeline and steady growth in that area, there is a significant upside potential from existing assets in years to come at high margins. There will be operating costs related to maintenance and operation of new facilities, but the business model has proven highly scalable. The financial position shows total assets of €3,900,000,000 as of June with an equity ratio of 48%. Freehold investment property is €2,800,000,000 and includes the pipeline of 40,100 square meters not yet opened. Loan to value stand moderate stand at moderate 46% and has good headroom to covenant of 60%.

SSG enjoys attractive financial terms. The new bank facility coupled with the 5 year interest rate swaps we entered into in 2020 21 at low interest rates, provide us with financial flexibility to continue to execute on our strategy. Interest bearing debt amounted to 1,300,000,000 as of June 23 with 59% of the debt fixed by interest rate swaps. A year to date a gain of €8,200,000 of the interest rate swaps have been received. The new bank loan was paid out in April And the former bank facility was repaid a year before planned. Due to the early redemption as well as a technical error in the amortization schedule An accurate non cash amortization was recorded in the quarter. There were no early redemption fees. During the quarter, the company paid and expensed 16,700,000 in net interest. The increase in net interest paid in the Q2 'twenty three compared to Q2 2022. It relates to high interest and timing of interest paid on the new bank facility. With a new bank facility the schedule for payment changed and interest paid in the second quarter applies to more than a quarter for 4.5 months to be exact. SSG has built a unique and a durable market share positioned over the past 3 decades.

The strong balance sheet combined with a record high development pipeline provides a scalable platform for future growth in the Nordics. Alex. And now Fabian will go through the business development for the quarter.

Thank you, Cecilia. There is a significant untapped potential for self storage in the Scandinavian markets. Square meters per capita is lower compared to the more mature markets. Our awareness about self storage is still low, and the market is growing across all of Europe. The key driver for demand growth is urbanization and increased awareness. The growth of smaller apartments with less storage space is also driving demand. Self storage is less developed in Norway compared to Sweden and Denmark. SSG has a market leading position in the Norwegian market and this is a position we are focused on developing even further. The market is fragmented with a lot of small local and regional operators. In Sweden, the market is dominated by multinational operators. SSG is a regional operator in Stockholm. In 2023, we have opened the first property outside of Stockholm in Trollhattan, and we will enter Malmo later this year. In the Danish market, we are also competing against Multinational Operators. SSG has the 2nd largest geographic footprint in Denmark with Facilities on both Zealand and Jutland. We have several projects in development. The self storage market is growing in all of the 3 Scandinavian countries and there is still consolidation opportunities.

We have identified the 6 most important success factors in self storage. An important factor for profitability is scale, and in self storage, it takes a long time to build scale. With scale in the market, we are able to leverage our brand and to be the top of mind operator. Scale also enables us to invest in IT and automation, which is another success factor. To succeed in self storage, you also need to have good locations close to the target market. You also need to provide the best customer service to ensure customer acquisition and retention. In addition to this, any successful self storage company rely on a share of freehold facilities in the portfolio. With 2 strong brands in the market, we are able to compete on both value and price. City Self Storage is our high end brand providing self storage and related services in the larger Scandinavian cities. Some of the facilities are manned. We have 54 facilities in the City Self Storage segment in Scandinavia. In City Self Storage. We have a strong pipeline in the Greater Oslo region and a presence in Stockholm and Copenhagen, as well as regional cities in Scandinavia. Uko Minelager is our countrywide discount priced offering in Norway.

We have 88 facilities across the country. Uko Minilager is the 2nd largest operator in Norway behind a City Self Storage. All the facilities in the segment are unmanned. Our strategy is to grow the geographic print of Oka Mini Lager in Norway even further. While we have 2 separate brands, we use the same IT systems and most of the back office functions are shared between the companies. SSG have a large and diversified customer base. The customer concentration is low and the customer base is increasingly loyal. About 80% of our customers are private customers and 20% are business customers. The average rental time per customer is approximately 1 year. The average age of our individual customers is 45 years. There are a number of different reasons why individuals need self storage. Among the most important demand drivers are relocations, refurbishments, downsizing, lack of space and student storage. We also see strong demand in the business segment and the businesses also have a number of reasons for story. Our business model with online booking is highly efficient and highly scalable. SSG offers a fully digitized customer journey with e signing and automatic credit check. We have an app based access system and our customers are able to get in contact with us through their preferred channel with our omnichannel service software.

And all of our solutions are built on modern IT platforms. A senior executive director of the company.

IT is important for SSG and we continue to make investments in IT. A new ERP system was implemented in the 4th quarter of 2022 and the Q1 of 2023. A new website for Oka Mine Ilage was launched in the Q3 of 2022. A new website for City Self Storage Sweden was launched in the Q4 of 2022 and a new website for City Self Storage Denmark was launched in the Q1 of 2023. And in the Q1 of 2023, City Self Storage Sweden and Denmark have been unified on the same CRM Platform at the Norwegian Companies. We have 3 Greenfield projects which are in progress. The development of our Greenfield project at the company is in Salzburg is in progress and we plan to open the facility in the Q3. This is our 2nd facility in Seippsburg. The facility will have an estimated lettable area of 2,000 CLA an Envy upgraded under the City Self Storage brand. The development of our greenfield project at Sordansparken in Kristiansand also in progress and we plan to open this facility in the Q1 of 2024. The facility has an estimated lettable area of 2,700 CLA and will be operated under the City Self Storage brand.

The 3rd Greenfield development project in progress is a property outside of Knardvik, north of Bergen. The construction of this building is complete and we opened in July. The facility will have a letable area of 1100 CLA and is operated under the Oka Minelager brand. SSG has a strong pipeline and here are some selected conversion and expansion projects which we are working on at the moment. We are currently converting additional area of our property in General Bixgate in Oslo into self storage. Part of the 3rd floor of this building opened in July. This is already our largest facility and We have added around 300 storage rooms with the recent expansion. At Billingsdas Letta in Asker. We have opened 2 additional floors and we are in progress to install fit out on the next floors of the building to build a new lift as well. In Kristiansen, Fidiman, we are in progress to convert an existing building into self storage. This project has an estimated lettable area of 2,300 Square Meters. In Malmo, Arleve. We have started the planning and zoning process to convert the building into self storage. The building has an estimated lettable area of 4,700 square meters and will be opened in phases.

SSG have acquired 3 properties in the 2nd quarter. The first is a property in Arlo in Malmo, Sweden. This is a landmark property in Malmo with a central location and unique visibility from main roads. The letable area potential is 4,700 square meters. We expect to open the first phase of this project in the Q1 of 'twenty four. The second is our a property in Malmo in Fosse. The property has a central location in Fosse with easy access from main roads. We plan to open in the last quarter of this year with an estimated lettable area of 1400 Square Meters. We have also acquired a proper land plot in Norway. This is an existing leasehold which we convert into a freehold. And there is additional development potential on the property. Then we have highlighted 3 selected market entries during 2023 2024. We introduced the City Self Storage brand with 2 new facilities in each of these cities taking an immediate market position. Kristiansand is Norway's 8th largest metropolitan area. Okominynologer have 4 facilities in the region. The 2 new City Self Storage facilities have an estimated letable area of 5,000 square meters combined. Gernland is Norway's 7th largest metropolitan area.

Ukom Minnilager have 3 facilities in the region. The 2 new City Self Storage facilities opened in the first half year of 'twenty three with a combined CLA of 3,500 and an additional potential of 1100 Square Meters. Malmo is Sweden's 3rd largest metropolitan area. SSG have no existing facilities in the region. The 2 new facilities have an estimated CLA of 5,900 square meters combined. SSG has a low carbon footprint. We aim to be part of the circular economy, as we give our customers the opportunity to take care of their belongings. SSG is converting vacant buildings into self storage then extending the building lifetime. Our greenfield projects are built according to strict Nordic building regulations. SSG has limited energy consumption with a focus on reducing the use of electricity per square meter even further. We are currently piloting solar cells on one facility. Working conditions is a high focus for us. We have recently published a report in compliance with the Norwegian Transparency Act, and this report can be found on our website. SSG has a strong platform for further growth. We focus on organic growth in the Greater Oslo region, strengthening the position of both the City Self Storage and OKO Minnlage brands.

We focus on larger urban areas in Norway and we see a potential to enter more than 30 smaller markets with a population of at least 10,000 in Norway. We also see great growth potential within visiting Smaller Markets in Norway. We see organic growth opportunities in both large and small markets in Sweden and Denmark. And in addition to this, we see opportunity for M and A in selected markets. And then at last, I would like to summarize our strategy. We focus on keeping occupancy at our target at 90%, at the same time as we optimize rent levels to outpace inflation. We continue to include sustainability as an integrated part of our business. We focus on lean operations, self-service and great customer experiences. We invest in CRM, Automation and Digital Platforms. We plan to strengthen our market leading position in Norway even further. We focus on growing our freehold portfolio in selected urban markets. We plan to continue organic growth in Sweden and Denmark and we look to selectively acquire existing self storage providers across the Nordics.