CEO comment Q3 2026: Strong quarter

Hotel market growth continued in a turbulent world in the third quarter. For Pandox, total revenue and net operating income increased by 23 and 29 percent respectively, driven by strong development in the Leases business segment. For comparable portfolios in fixed currency, revenue and net operating income increased by 4 percent each for the Group as a whole.

Cash earnings per share increased by 23 percent in the third quarter, adjusted for preparatory financial expenses in the comparable quarter. The increase was 19 percent, measured on a rolling 12-month basis. EPRA NRV per share increased at the same time by 17 percent, measured on an annualised basis.

The Leases business segment saw accelerated like-for-like growth and the Dalata properties continued to develop well. The positive demand trend in the Nordics continued, with particularly strong growth in Sweden. Rental income and net operating income increased by 37 and 39 percent respectively. For comparable portfolios in fixed currency, rental income and net operating income increased by 7 and 8 percent respectively.

Revenue increased in the Own Operations business segment, while net operating income decreased, mainly explained by weaker development in London and Brussels as well as certain one-time costs. For comparable portfolios in fixed currency, revenue increased by 1 percent while net operating income decreased by 6 percent.

Takeover of operations in Germany

During the quarter Pandox established new operating solutions for nine hotel properties in Germany after the tenant, Revo Hospitality Group, declared bankruptcy earlier in 2026.

In line with Pandox’s active ownership model, six hotels were transferred to the Own Operations business segment, with a focus on developing the hotels’ market positions and profitability. The takeover is being undertaken with the intention of entering into new lease agreements with new tenants.

The remaining three hotels will continue to be operated within the Leases segment through the official receiver until final negotiations with a new potential tenant are concluded.

The change had a positive impact on revenue in the Own Operations business segment in the amount of MSEK 96, while revenue in the Leases business segment decreased by MSEK –37 for the quarter. While waiting for re-leasing, the market values of all of the properties continue to be reported under Leases.

Dalata continues to perform well

The Dalata properties developed well during the quarter with rental income amounting to MSEK 357 and good profitability. For the first nine months of the year rental income from Dalata amounted to MSEK 880.

Based on the assumption of equivalent leases being in place during the comparison period as well, revenue growth for the Dalata portfolio in the third quarter is estimated at 4 percent in the UK and 1 percent in Ireland. For the first nine months, growth is estimated at 3 percent in the UK and 1 percent in Ireland.

Development is well in line with our expectations and confirms once again the quality of the acquired portfolio.

The process of dividing up Dalata’s operations into a property ownership side and a hotel operations side is progressing according to plan and the anticipated divestment of the operating hotel platform to Scandic is expected to be concluded in the fourth quarter of 2026.

We will thereafter refinance our current credit facilities for the Dalata acquisition, replacing them with secured property loans at an indicated, considerably lower credit margin.

Divestment agreements in the Nordics

We have entered into agreements to sell seven hotel properties with a total of 1,248 rooms in Denmark and Sweden in two separate transactions. The combined underlying property value amounts to around MSEK 2,100 before deferred tax is deducted.

The divestments of the hotel properties are at price levels higher than book values, which have been unchanged the past 12 months, and reflect a growing interest in hotel properties. In addition, the divestments increase the quality of the portfolio and reduce our debt.

The properties’ total net operating income amounted approximately MSEK 130 annually.

At the end of the third quarter our loan-to-value ratio was 52.2 percent, compared with 52.4 percent at the end of the second quarter of 2026. Adjusted for the expected divestment, our loan-to-value ratio amounted to 51.2 percent.

Outlook

Despite turbulence around the world, the economy has proved to be resilient and the hotel market strong. The general outlook for the hotel market remains positive.

Increased inflation pressure and rising interest rates are increasing our financing costs. This is offset by a business model in which our revenuebased leases provide us with direct exposure to revenue generated by the hotels, which normally also increases in line with inflation and economic activity.

Furthermore, the effect of rising interest rates is mitigated by the interest-rate derivatives we have in place. We also see good opportunities to refinance a significant portion of our debt portfolio at lower credit margins than those in our current credit agreements.

We are also expecting a gradual positive impact on earnings in 2027 from major renovations, including Scandic Grand Marina in Helsinki, Clayton Cardiff Lane in Dublin and Clayton St Andrew Square in Edinburgh, and towards the end of 2027 also DoubleTree by Hilton Brussels City.

In the fourth quarter, we face a strong comparative quarter for underlying cash earnings, adjusted for non-recurring costs of MSEK 263 related to the acquisition of Dalata. As we recognised income from Dalata during more than half of the fourth quarter of 2025, its contribution to growth will be lower in the fourth quarter of this year. In addition, our interest expenses are significantly higher.