K-Fast (KFAST) Investor Update summary

Strategic transaction and business model transformation

• K-Fastigheter divests a SEK 10.8bn property portfolio (Region Syd) to Brinova, doubling Brinova's size and increasing its liquidity and market accessibility.

• K-Fastigheter shifts focus to construction and concept house offerings, splitting into two independent business segments for clearer value creation.

• Post-transaction, K-Fastigheter will own up to 58.4% of Brinova, consolidating it into its financials and benefiting from higher rental income.

• The new strategy accelerates construction activities, leveraging a proven, high-margin construction model and targeting 1,000–1,200 apartment starts per year.

• K-Fastigheter will complete ongoing projects in Malmö, Helsingborg, and Copenhagen for Brinova as part of the agreement.

Transaction details and rationale

• K-Fastigheter divests 108 properties in South Sweden to Brinova in exchange for up to 137.4 million newly issued Brinova shares at SEK 32.46 per share.

• The divested portfolio represents about 75% of K-Fastigheter's total investment portfolio by market value.

• Transaction creates one of Sweden's largest listed residential real estate companies, with a pro forma property value of SEK 19.2bn.

• Significant geographic overlap in the Öresund region enables operational synergies and economies of scale.

• Shareholder support for the transaction is strong, with over 70% of votes in both companies backing the deal.

Financial and operational impact

• K-Fastigheter's construction segment historically generated over 80% of group profits, with high project margins and strong return on equity.

• Pro forma Q1–Q3 2024: K-Fastigheter's rental income rises from SEK 453m to SEK 860m, profit before value changes from SEK 78m to SEK 192m.

• Property value increases from SEK 15bn to SEK 23.5bn, with total assets rising to SEK 26.3bn.

• Loan-to-value and debt-to-equity ratios remain stable post-transaction, supporting financial resilience.

• Brinova's pro forma NAV as of Q3 2024 is SEK 7.5bn, with a 4.8% valuation yield and 5.2% vacancy rate.