Dios Fastigheter Stock

Hello, everyone. Thank you for joining us, and welcome to the Dios Interim Report January through June 2026. [Operator Instructions]

I will now hand the conference over to Johan Dernmar, Investor Relations Chief. Please go ahead.

Thank you, operator. Hello, and welcome to Dios interim report presentation for the first half of 2026 with a particular focus on the second quarter. The quarter once again confirms Dios' ability to deliver stable performance in an uncertain market.

David will start with a brief summary of the quarter, followed by Rolf, who will cover operational development and the portfolio. David will then conclude with our outlook before we move into the Q&A session. Instructions on how to submit a question will be provided at the end.

I will now hand it over to David.

Thank you, Johan. And hi, everyone. Let me start by saying that this quarter has once again been strong and stable. We operate in a market that continues to be affected by geopolitical uncertainty and financial market volatility. But despite that, our performance is stable and in line with our strategy. Our focus remains very clear: drive cash flow, maintain high leasing activity, and allocate capital where we create the best shareholder value in the long term. And in this quarter, we delivered on all of that.

Let me now take you through the key highlights. Operationally, this is a solid result. We delivered positive net letting of SEK 10 million, which reflects continued strong activity and confirms that our active way of working continues to generate results. At the same time, our occupancy remained stable at 90%, which we consider to be at a good level in today's market.

Looking at earnings, income is in line with last year at SEK 667 million despite a reduction of approximately 100,000 square meters in leasable area. Like-for-like rental income growth was 0.8%. And the surplus ratio improves to 74%, which shows that we continue to manage both revenues and costs in a disciplined way. This also reflects the impact of our transaction activity, where we have divested assets with lower operational efficiency. We also see clear value creation from what we do operationally.

During the quarter, we report positive unrealized value changes of SEK 109 million, driven only by new lettings and value-creating investments. This is important. It shows that our model works. Leasing activity and investments translate directly into higher property values.

On the financing side, conditions remain good. Our average interest rate decreases to 3.8%, supported by refinancing at attractive margins. Yield gap continues to improve and now stands at 2.3 percentage points compared with the valuation yield, while the yield gap on new debt is close to 3%.

So to summarize, strong net letting, stable occupancy, high activity across the portfolio and positive value creation from our core business. All in all, this is another quarter where we delivered stable performance and continue to create value in a volatile market. Over time, our portfolio has shown resilience in both occupancy and property values. Valuation yields have remained stable over the past 4 years, while our portfolio has continued to grow through profitable investments. This is particularly important given that we have been a net seller of assets during the same period. Vacancy remains around historical levels, and recent movements mainly reflect strategic divestments of fully let assets and completed projects, not weaker underlying demand.

I will now hand over to Rolf.

Thank you, David. Let's take a closer look at the earnings performance for the current quarter. Rental income was in line with the previous year with an economic occupancy rate of 90%. Several new leases were signed during the quarter, and we expect the rental market to gradually improve. There's still good demand for modern, centrally located premises, where our portfolio is well positioned. It's important to note that it usually takes 6 to 12 months from lease signing before it generates rental income.

Property costs were slightly lower during the quarter, primarily due to reduced expenses for electricity and heating and somewhat lower maintenance costs. Energy consumption for the first half year on a climate adjusted like-for-like basis decreased by 1.6%. Overall, this resulted in an operating surplus of SEK 485 million, corresponding to a surplus ratio of 74%. Net financial items improved by SEK 4 million compared to Q2 last year, driven by improved refinancing margins and lower STIBOR rates.

Income from property management increased by 4% year-on-year. And we've had positive value changes with valuation yield 1 basis point lower than last quarter, and I will come back to this later. Our well-diversified portfolio continues to strengthen the resilience of our top line. On a like-for-like basis, rental income increased by 0.8% compared with Q2 last year. With 33% of rental income derived from public sector tenants, we have a solid foundation for passing on CPI adjustments. This supports our ability to defend and increase rental levels in connection with both renegotiations and new lettings. In total, 98% of our commercial lease agreements include indexation clauses, of which 95% are linked to CPI.

We see clear potential for further rental growth through rent reversions, improved occupancy and by developing modern and efficient office space in prime locations. As the market leader in our core cities with strong local management and solid cash flow, we hold a competitive advantage compared with many other real estate companies in our markets. Net lettings during the quarter were positive, totaling SEK 10 million. Tenant concentration risk remains low. Our 10 largest tenants account for 20% of total rental income with a WAULT of 4.8 years, and the WAULT for the total portfolio remains stable at 3.6 years. We continue to see a clear trend where tenants prioritize attractive locations and demonstrate a strong willingness to pay for modern and efficient premises.

Vacancy levels are significantly lower in central urban locations where we have a strong presence. This contributes to the high resilience of our portfolio. At present, several discussions are ongoing with both existing and prospective tenants at good rental levels. The market value of our property portfolio amounted to SEK 32.8 billion. 96% of our properties were externally valued during the second quarter. The inflation assumption for the first year remains at 1% and then increases to 2%. The average valuation yield amounted to 6.08%, representing a decrease of 1 basis point compared with the previous quarter.

Overall, this means that we report a positive unrealized value changes of SEK 109 million for the quarter, driven by strong leasing activity and by deals such as converting vacant retail space into fully let offices. And we note that our divestments are made at or above book value, supporting our assessment that the reported property values reflect fair value.

During the quarter, investments totaled just over SEK 300 million, primarily related to tenant adaptations and new developments. Risk in our project portfolio remains low, as pre-letting is a requirement and most of the rental income is generated from tax-financed operations. All ongoing projects are progressing according to plan, both in terms of costs and time lines. Currently, 10,000 square meters are under construction, corresponding to a total investment volume of SEK 320 million, where remaining investments amount to SEK 100 million. In addition, we hold 310,000 square meters of existing and potential building rights, representing significant opportunities for further value creation. Around 50% relates to commercial premises with the remainder allocated to residential properties.

Going forward, our focus will be on tenant adaptation and selectively new builds secured by stable tenants and long-term lease agreements. In May, we issued a 3-year bond totaling SEK 600 million, while at the same time, redeeming SEK 300 million of bonds maturing in October. As a result, our average debt maturity stood at 2.8 years at the end of the period. Over the next 12 months, we will have additional loan maturities, excluding commercial papers of SEK 2.9 billion, corresponding to 17% of interest-bearing liabilities. We continue to actively work towards a more prudent maturity profile with longer debt maturities.

The average interest rate decreased from 3.9% at year-end to 3.8%, driven by lower margins upon refinancing. In mid-June, we entered a new 3-year interest rate swap, extending our fixed rate maturity to 2.4 years. Bank financing is, and will continue to be, our most important source of funding. Currently, 62% of our outstanding loans are financed through banks. We maintain a very constructive dialogue with all our lending banks who have demonstrated a clear willingness to support our growth ambitions and offer competitive terms. The margin on the 3-year bank loan is currently around 115 basis points. With a 3-month STIBOR at [ 6.08% ], this implies an all-in interest rate of 3.15%. Compared with our average property yield of 6.08%, this corresponds to a yield gap of close to 3 percentage points, supporting strong and resilient cash flow generation. For comparison, the margin on a 3-year bond is currently around 135 basis points.

In total, 62% of our financing is bank-based. In addition, we have SEK 2.4 billion in undrawn credit facilities and a secured loan-to-value ratio of 36%. Further borrowing capacity will also be added through completed development projects. Taken together, this, combined with our strong banking relationships, makes us feel confident regarding our future refinancing needs. We continue to apply a conservative balance sheet approach, reflecting our strong commitment to financial discipline and effective risk management. Over the past 2 years, we have reduced financial risk and improved our key financial metrics through divestments and a more cautious approach to larger new development projects.

The balance sheet has also been reinforced through strategic transactions, while cash flow is developing positively. Loan-to-value currently amounts to 52.6% and net debt-to-EBITDA stands at 9.9x. The strong cash flow, combined with a solid balance sheet provides us with the financial capacity to pursue both new investments and acquisitions. I'm comfortable with our current financial position and actions taken to date. Our robust cash flow is sufficient to cover the approved dividend, operating expenses, committed CapEx and to support continued growth.

With that, I will now hand over to David again.

Thank you, Rolf. Let me take a step back and talk about the bigger picture. We operate in a region with very strong structural tailwinds. Historically, this has been driven by energy, industry and infrastructure. But increasingly, we also see growth being fueled by digital infrastructure. A very clear example is the interest in data center investments in Sundsvall, where global players, Google in this case, are exploring opportunities to establish new capacity. This is not just another investment. It is a signal that our region is becoming part of the European digital backbone built on access to renewable energy, available land and a stable society.

And what is important to understand is that investments like this have a much bigger impact than what you see initially. One investment does not just create one job, it creates an entire ecosystem. To put this into perspective, consider a city with 100,000 inhabitants, the workforce would typically number around 50,000. An establishment creating 500 direct jobs and 1,000 indirect jobs would therefore have a very significant impact. It is not marginal. It is transformational because those jobs do not exist in isolation. You get suppliers and subcontractors, service companies, increased demand for housing, more retail and restaurants, and ultimately, more demand for offices and central locations.

So over time, this drives activity in the city, population growth and a strong local economy. And that is directly linked to our business because when cities grow, demand for our type of properties grows with them and rents tend to grow fastest in the center of the city where we have our properties.

During the quarter, we continued to deliver high activity and a large number of new agreements. Let me give you a few concrete examples of what drives our leasing and value creation. First, we continue to deliver large complex agreements with public sector tenants. During the quarter, we signed an agreement with the County Administrative Board of Norrbotten covering approximately 7,000 square meters in Central Lulea. The agreement includes modernization and significant technical upgrades with an investment of around SEK 111 million at a yield on cost of 7.6%. In Umea, we have signed a lease with Hanzens in MVG Galleria, a 1,600 square meter retail space across 2 floors, contributing to a more attractive city center offering. And in Sundsvall, we have signed a 10-year lease with the Gastrobility Group, covering approximately 3,500 square meters with a yield on cost over 10%, strengthening the city restaurants and experience offering.

During the quarter, we completed the redevelopment of Alvsbacka 9 and 10 in Umea, delivering a modern and purpose-built facility for the Swedish Defense Conscription and Assessment Agency, Plikt- och provningsverket. The project, involving an investment of SEK 122 million, further strengthens both the earnings capacity and long-term effectiveness of our portfolio and with the project profit exceeding 30%.

So if you step back, the common denominator in all these deals is active asset management, close dialogue with our tenants and creating the right mix in our city centers. That is what drives both demand, occupancy and property values over time.

So let me summarize the quarter. We delivered positive net letting, stable occupancy, high activity across the portfolio and positive value creation driven by our business. This confirms that our business model works well also in an uncertain macro environment. And at the same time, we have a strong balance sheet, stable cash flows and the capacity to continue investing profitably. So overall, we are a company with high yield, low risk and clear opportunities for continued growth. And it is important to highlight that this is ultimately driven by the work being done across the organization, very, very close to our tenants. High activity, strong execution and a clear focus on creating value.

So with that, thank you for listening, and I wish you all a very nice summer.

[Operator Instructions] Your first question comes from the line of Oscar Lindquist from ABG Sundal Collier.

Can you hear me?

Yes, we hear you.

So one question from me on -- if you could comment anything on sort of how letting activity has progressed throughout the quarter and if you see yourselves to continuing in positive territory for the remainder of '26?

Yes. David here. We have -- we had good leasing activity in this quarter as well as the first quarter. And we had a couple of terminations at the end that affected the net letting, but it was still positive by SEK 10 million. So that was good. And we see that it will continue on this level in the coming 2 quarters, as you asked about. But you never know, but the leasing activity is on a good pace now. So -- and we are continuously tracking and seeing what the risks are on the downside, and we see that it's more on the upside than the downside.

Perfect. And then a question on the earnings capacity. So the reported figure is 3% ahead of the earnings capacity in Q1 on rental income, and it's now 4% ahead of the earnings capacity now in Q2. Is there something timing related to the net letting? Or is there some other explanation to this deviation?

Yes, just on a rolling 12-month basis, you mean?

Just if I divide the earnings capacity rental income by 4.

Okay. Yes, there are some seasonal effects, of course, in there and also we've been net sellers maybe has some effect. Net letting is, of course, coming into effect later on, but that's only included in the earnings capacity when we have the signed leases, as stated. So I don't have any direct answer on the effect there. So -- but we could dig into that and maybe come back to you later.

Your next question comes from the line of Albin Sandberg from SB1 Markets.

Yes. I have a question on the net finance. I think you referred to the year-on-year change. But if I look at the quarter-on-quarter change, it's quite dramatic downwards. Could you just explain what's happening there?

Rolf here. It's mainly due to lowest [indiscernible] effect in the second quarter compared to the first quarter. And then also a bit lower margins when refinancing. But mainly on [indiscernible].

Okay. But we did see some positive margin impact in Q2 isolated as well.

Yes.

Yes. And then on the paid tax rate, which was a bit higher in this quarter. What do you say is the underlying tax rate for the year, assuming normal operations of course?

Yes. Well, normally, we pay around 10% in tax. So we had some one-off effects in connection with the divestments, withdrawal taxation of SEK 26 million in the second quarter.

And my final question is, David, you referred to tenant adaptations as a way to drive growth, of course. I mean if you look out the next 1, 2, or 3 years, is the sort of the run rate that you're doing now, is that sustainable? Or has there been any specific reasons why you have been able to perform as you have over the last 12 months?

It was a bit slurred. Can you take that question again, please?

No. I just wonder about the outlook for tenant adaptations because you referred to that as a driver for growth. So in terms of -- I mean, is the rolling 12-month basis is that a good way to look at the next 12 months? Or is there any reason that you're running at a little bit higher levels now than maybe we can see, just some flavor about that?

Yes. We're looking at -- we have -- tenant adaptations is around SEK 600 million, SEK 650 million today, and we think that pace is what we expect as well. We see that there are quite a few bigger adaptations, but they have a good yield on cost and good value changes as we saw in the last 2 quarters. So it's on that level. But in total, we are on the investment pace of SEK 1 billion around.

Do you have a comment on that, Johan?

What you can say is that the demand today is -- a lot of this is driven by public sector that's requested higher standards and also a lot around security these days, which drives a lot of CapEx. It's as David said, good returns, but also the investment on each adaptation has become a bit larger today than it was 5 years ago. We expect that trend to continue, and we also see that the demand for central premises is continuing. So the higher rents, but also mainly higher CapEx per each adaptation. So we expect to invest around SEK 1 billion in the portfolio each year, whereas SEK 650 million on tenant adaptation. So I think that run rate will continue from here.

And we see that the willingness to pay for modern and secure premises is still there and is growing.

If there are no further questions, we will reach the end of the Q&A session. I will now turn the call back to David Carlsson, CEO, for closing remarks.

Yes. Thanks so much for listening in and for good questions. I will say it again as I did 5 minutes ago. I wish you all a very, very good summer, and we -- it's going to be fun. We're in Ostersund now for Capital Market Days, and it's going to be fun to meet all -- some of you investors that were in the call today. So looking forward to good 2 days here, and have a real nice summer. Thanks.

This concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for joining us, and welcome to the Dios Fastigheter AB interim report January through March 2026. [Operator Instructions]

I will now hand the conference over to Johan Dernmar, Chief of Investor Relations at Dios. Please go ahead.

Good morning, and welcome to Dios interim report for the first quarter 2026. We're reporting on the period January through March.

It was a quarter marked by continued geopolitical uncertainty and somewhat higher interest rates. Against that backdrop, our message is clear. The year has continued to deliver stable operational performance, supported by strong leasing activity, resilient occupancy and disciplined capital allocation.

David will start briefly by summarizing the quarter, then Rolf will move on to the operational development and the portfolio before David closing with the outlook. The presentation will be followed by a Q&A session. Listen to the instruction at the end how to register your questions.

I now leave the word to David.

Operationally, the quarter was solid. We delivered positive net letting of SEK 15 million, which confirms continued demand for our premises, particularly in central locations. Net letting has now been positive in 26 of the last 29 quarters, underlining the consistency of our leasing performance over time.

Our economic occupancy remained stable at 90%, unchanged compared with the same quarter last year. This level aligns with Dios' historical average despite the economic slowdown in Sweden and demonstrates the portfolio's resilience.

Income amounted to SEK 663 million, broadly unchanged year-on-year but investments. And the surplus ratio was 65%.

On the financial side, the average interest rate increased slightly to 4.1%, driven by higher STIBOR fixing and longer interest rate maturity. Financing margins remained stable during the quarter. From a valuation perspective, property values were supported by our leasing activity.

Unrealized value changes amounted to SEK 13 million, where lower CPI assumptions and higher tariff-based property costs were offset by strong new lettings. Importantly, transactions completed at book value continue to confirm our property values.

Overall, this was a quarter of stable earnings, solid leasing and resilient values despite a more challenging macro environment.

Looking at the portfolio over time, both occupancy and values have proven resilient. Vacancy levels are around historical averages and recent fluctuations are largely explained by strategic divestments of full let properties and newly completed projects rather than any structural weakness in demand.

Property values in our cities have demonstrated low volatility over a long period with valuation yields consistently around 6% for more than a decade. In today's market environment, the marginal cost of new debt is approximately 3.2%, resulting in a yield gap of close to 3 percentage points versus our valuation yields.

This is a position we actively embrace. It reflects a portfolio of high-yielding, low-risk assets combined with discipline and efficient financing.

The attractive cost of capital strengthens the earning capacity of the portfolio and ensures that the spread between returns and financing costs remain robust. This solid yield gap not only provides resilience and financial security in our operations, but also creates clear headroom to continue investing in development projects and selective growth initiatives over the long term.

Taken together, stable property values, strong cash yields and competitive financing leave us well positioned for continued stable growth and value creation, even in a challenging economic environment.

I will now leave the word over to Rolf.

Thank you, David. Let's take a closer look at the earnings performance. Rental income was in line with the previous year with an economic occupancy rate of 90%. We continue to see that tenants take somewhat longer to make leasing decisions, certainly influenced by the geopolitical factors and the uncertainty they create.

Nevertheless, several new leases were signed during the quarter and we expect the rental market to gradually improve and there is still good demand for modern, centrally located properties where our portfolio is well positioned. It's important to note that it usually takes 6 to 12 months before -- from leasing signing before it generates rental income.

During the quarter, colder than normal weather resulted in higher electricity and heating costs. However, on a climate-adjusted like-for-like basis, energy consumption decreased by 1.2%. Overall, this resulted in an operating surplus of SEK 425 million for the quarter, corresponding to a surplus ratio of 65%.

Despite higher interest-bearing liabilities and lower capitalized interest on CapEx, net financial items were SEK 2 million lower compared with Q1 last year. This is partly explained by lower STIBOR rates as well as the successful renegotiation of a substantial portion of our loan portfolio at improved margins.

Income from property management was in line with the previous year. On a like-for-like basis, income from property management increased by 1.5%. And we've had slightly positive value changes with valuation yield 1 basis point lower than last quarter and I will come back to this later.

Our well-diversified portfolio continues to strengthen the resilience of our top line. On a like-for-like basis, rental income was unchanged compared with Q1 last year.

With 32% of rental income derived from public sector tenants, we have a solid foundation for passing on CPI adjustments. This supports our ability to defend and increase rental levels in connection with both renegotiations and new lettings.

In total, 98% of our commercial lease agreements include indexation clauses, of which 95% are linked to CPI.

We see clear potential for further rental growth through rent reversions, improved occupancy and by developing modern and efficient office space in prime locations. As the market leader in our core cities with strong local management and solid cash flow, we hold a competitive advantage compared with many other real estate companies in our markets.

Net lettings during the quarter were positive, amounting to SEK 15 million. Tenant concentration risk remains low. Our 10 largest tenants account for 20% of total rental income with a WALT of 5 years.

The WALT for total portfolio remains stable at 3.7 years. And we continue to see a clear trend where tenants prioritize attractive locations and demonstrate a strong willingness to pay for modern and efficient premises.

Vacancy levels are significantly lower in central locations across our cities, where our portfolio is well positioned, contributing to the high resilience of the portfolio.

At present, several discussions are ongoing with both existing and prospective tenants at good rental levels. The market value of our property portfolio amounted to SEK 32.7 billion.

All properties were externally valued during the first quarter. The inflation assumption for the first year was reduced from 1.5% to 1% and valuers have also assumed slightly higher operating costs. Taken together, these changes had a negative impact on property values of approximately SEK 110 million.

Despite these adjustments, we reported positive unrealized change in value of SEK 13 million, driven by value-creating lettings and profitable investments. The average yield amounted to 6.09%, representing a decrease of 1 basis point compared with the previous quarter.

And we note that our divestments are made at or above book value, supporting our assessment that the reported property values reflect fair value.

During the quarter, investments amounted to SEK 270 million, primarily related to tenant adaptations and new developments. Risk in our project portfolio remains low as pre-letting is a requirement and most of the rental income is generated from tax finance operations. All ongoing projects are progressing according to plan, both in terms of cost and time lines.

Currently, 18,000 square meters are under construction, corresponding to a total investment volume of SEK 580 million, where remaining investments amount to SEK 300 million. In addition, we hold 310,000 square meters of existing and potential building rights, representing significant opportunities for further value creation.

Around 50% relates to commercial premises with the remainder allocated to residential properties. Going forward, our focus will be on tenant adaptations and selectively new builds secured by stable tenants and long-term lease agreements.

During the quarter, we refinanced a total of SEK 1.5 billion maturing in June this year as well as an additional SEK 1.1 billion with maturity in 2027. As a result, our average debt maturity was extended from 2.6 to 3 years.

Over the next 12 months, we will have additional loan maturities, excluding commercial papers of SEK 3 billion, corresponding to 17% of interest-bearing liabilities. And we continue to actively work towards a more prudent maturity profile with long debt maturities.

Although borrowing margins have declined, the average interest rate increased from 3.9% at year-end to 4.1%, representing an actual increase of 17 basis points. This development is mainly explained by higher STIBOR fixing.

In mid-February, shortly before the escalation of the conflict in the Middle East, we entered a new 5-year interest rate swap, extending our fixed rate maturity to 2.3 years.

Bank financing is and will continue to be our most important source of funding. Currently, 63% of our outstanding loans are financed through banks.

We maintain a very constructive dialogue with all our lending banks who have demonstrated a clear willingness to support our growth ambitions and offer competitive terms. The margin on a 3-year bank loan is currently around 115 basis points. With 3-month STIBOR 2.1%, this implies an all-in interest rate of 3.25%.

Compared with our average property yield of 6.1%, this corresponds to a yield gap of close to 3 percentage points, supporting strong and resilient cash flow generation. For comparison, the margin on a 3-year bond is currently around 155 basis points.

In total, 63% of our financing is bank-based. In addition, we have SEK 2.1 billion in undrawn credit facilities and a secured loan-to-value ratio of 38%. Further borrowing capacity will also be added through completed development projects. Taken together, this, combined with our strong banking relationships, makes us feel confident regarding our future refinancing needs.

We continue to apply a conservative balance sheet approach, reflecting our strong commitment to financial discipline and effective risk management. Over the past 2 years, we have reduced financial risk and strengthened our key financial metrics through divestments and a more cautious approach to larger new development projects. The balance sheet has also been reinforced through strategic transactions, while cash flow is developing positively.

Loan-to-value currently amounts to 53.2% and net debt-to-EBITDA stands at 10x. During the quarter, we bought our own shares for SEK 200 million, which impacts the quarter's cash flow, LTV and net debt to EBITDA.

The strong cash flow, combined with a solid balance sheet provides us with the financial capacity to pursue both new investments and acquisitions.

I'm comfortable with our current financial position and the actions taken to date. Our robust cash flow is sufficient to cover operating expenses, committed CapEx and to support continued growth.

Starting this quarter, we're presenting a future earnings capacity that reflects the company's 12-month earnings capacity as of a given date. This should not be considered as a forecast as it does not include any assumptions regarding future changes in rental levels, vacancies or interest rates.

Rental income is based on contracted annual rents. Operating expenses reflect an assessment of normal year's cost levels, while central administration costs are based on the actual outcome over the past 12 months.

Net financial income is calculated based on the group's interest-bearing liabilities and assets. Interest expenses are determined using the average interest rate with additions for accrued financing costs and fees for unutilized credit facilities. The change compared with the earnings capacity as of January the 1st is primarily driven by a higher average interest rate.

With that, I will now hand over to David again.

Thank you, Rolf. The broader market context for our regions remains supportive. Just look at the map of all investments above SEK 100 million in Northern Sweden.

Northern Sweden continues to benefit from strong structural drivers, access to renewable energy, available land, ongoing industrial investments linked to the green transition and increased focus on infrastructure and defense-related activities.

Together, these factors support new establishments, job creation, economic growth and long-term demand for our premises in our cities.

What we clearly see is that demand is strongest in central locations. Tenants continue to prioritize modern, efficient premises in the very heart of our cities, where accessibility, quality and flexibility are highest. Vacancies are consistently lower in these locations and the willingness to pay for the right space remains solid.

At the same time, we are seeing continued reversal of the work-from-home trend in regional cities. More employers are encouraging employees to spend more time in the office. And unlike metropolitan areas, our [indiscernible] mini cities do not face the same commuting challenges.

This supports office attendance and drives demand for centrally located workplaces that function as meeting places, brand builders and collaboration hubs. Together, these trends reinforce our strategy of focusing on central well-located assets, where demand is most resilient and where we see the strongest long-term earnings potential.

For Dios, this reinforces our conviction in owning and developing centrally located properties with strong alternative use potential, where demand remains most resilient over the cycle.

In the spring budget, the Swedish government reiterated its focus on infrastructure investments, including continued commitments to rail infrastructure in Northern and Central Sweden, improvements in logistics and connectivity support, long-term economic activity and strengthened the investment case for our regions.

At the same time, we continue to see strong momentum in the green industrial transformation in Northern Sweden. Stegra has secured additional institutional backing, including an extended commitment from the Wallenberg Sphere, further strengthening the financial and industrial credibility of the project.

These developments are complemented by coordinated regional growth initiatives where municipalities, industry and the public sector work together to ensure that infrastructure, skilled supply and urban environments develop in parallel.

Taken together, this supports our conviction that the long-term fundamentals in our markets remain strong, providing a solid backdrop for leasing demand, occupancy and earnings growth. This quarter proved our ability to deliver results through active leasing, reinforcing our strong market position and sustainable growth.

We signed and expanded leases with government-funded tenants in large, well-established corporates such as National Government Service Center, the Statens Servicecenter, Swedish Transport Administration, Trafikverket and SCA. These type of leases are attractive from a return perspective. They offer low credit risk, stable cash flows and attractive use of capital.

National Government Service Center is an office lease with a 6-year term, 2,600 square meters and yield on cost above 9%. The lease to Swedish Transport Administration is on a 6-year term, 1,100 square meters and a yield on cost around 8%. And SCA is an office lease with a 6-year term, 1,200 square meters and a yield on cost above 11%.

In addition to leasing, the quarter also highlights our ability to create value through development. We completed 50 residential condominiums in the Vale block, a very central located project in the heart of Umea. The total investment amounted to SEK 132 million and the project generated a profit above 20%.

This is a clear illustration of how we can monetize building rights and crystallize value in a disciplined way, delivering attractive project returns while recycling capital into new opportunities. Asset rotation remains an important part of how we sharpen the portfolio. After the end of the period, we announced the divestment of 7 noncore properties for approximately SEK 290 million at book value.

The divested portfolio has an occupancy of 92% and the annual rental value of SEK 32 million, which again confirms market liquidity and the robustness of our valuations. These divestments free up capital and management capacity, allowing us to focus on assets and projects with stronger long-term strategic fit and return potential.

To summarize, we delivered strong net letting, maintained stable occupancy and reported positive value supported driven by good business and leasing activity. We are operating in a world characterized by continued uncertainty.

Geopolitical tensions, volatile capital markets and an interest rate environment remains difficult to predict. This naturally affects sentiment and decision-making across many sectors. At the same time, it is important to emphasize that Dios is well positioned in this environment.

Our portfolio is concentrated in regional cities with stable underlying demand, lower volatility in rents and property values and the tenant base dominated by public sector and well-established corporates. This provides resilience through the cycle.

We also benefit from strong and predictable cash flows, a conservative balance sheet and disciplined capital allocation. These factors give us flexibility, both to manage risk and to act on opportunities when they arise.

In periods of uncertainty, the importance of location quality, tenant quality and financial discipline becomes even clearer. These are exactly the areas where Dios has built its strategic position over time. And they give us confidence in our ability to continue delivering stable performance and long-term value creation even in a more challenging external environment.

With that, I would say thank you for your attention, and we will now open the floor for questions.

[Operator Instructions] The first question comes from the line of Lars Norrby with SEB.

Two questions from my side or 2 topics. First on the net letting number, which obviously improved sharply in Q1 to SEK 15 million from a range, if I remember correctly, of between minus SEK 1 million and SEK 2 million in the quarter for '25.

Why was there such a sharp improvement? And is it something that we should not extrapolate into the remaining quarters of '26?

David here. Yes, it's no -- it's some bigger deals, lease agreements that we landed, but there is no exceptional what we see in the rest of the year. We're aiming for this SEK 15 million in net letting every quarter.

So that's our aim and we're really proud that we did it this quarter with the war and everything when the tenants are pushing the decisions a little bit further, but we landed those SEK 15 million this quarter. So -- and there's no turnovers like one deal in SEK 15 million or SEK 20 million or something. It's a lot of -- it's 125 new lease agreements and in total in net letting, SEK 15 million. So yes.

Okay. Second and final topic, buybacks. You did some SEK 200 million in Q1. You have signed a couple of quite substantial divestments that will add, I think, some SEK 400 million in the rest of the year.

You have an LTV of 53%. What are you going to use the proceeds from those divestments? Would that be redeployed into CapEx and acquisitions? Or is there excess capital that gives you room for more buybacks?

Yes. This is Johan. We're currently, like everyone else, checking every day, every week with the current financial uncertainty that we have in the world and also strengthening our balance sheet short term, but also gathering some firepower for continued investments.

We did in the quarter, we see a pickup in investments in the current portfolio at good returns. So we -- hopefully that will continue and that will give better returns than buying back the shares as we see it right now.

So we will continue to invest in our portfolio, but also gathering firepower for finding new acquisitions. But it also gives room if we can't find the right kind of properties to buy back shares in the future. But as we sit right now, we're a bit -- we're gathering some financial flexibility short term.

Yes. And in addition to that, we took decisions this quarter on SEK 123 million in new tenant adaptations at a return on 8.4%. So that's higher than the implicit yield right now. So we're having good capital allocation at the moment.

Your next question comes from the line of Martijn Kartman with Van Lanschot Kempen.

So I also have a question on the share buybacks. As you believe that share buybacks are accretive -- or attractive alongside investments in own portfolio, is that due to limited investment opportunities? Or is that reflective of tenant demand for better quality assets?

David, I can take that. It's a combination of the situation with our low value on the stock market and the stock price and that we have liquidity to do the share buybacks. So we are aiming to be a net buyer on site.

But right now we're in a situation that we're selling more than we're buying, but we see that we will grow in the future with more acquisitions. So it was a good opportunity to use the over liquidity in Q1 to buy back shares and use that way of capital allocation, but we will have good opportunities for investments and to be a net buyer on site.

Okay. And I have a second question, which is following up on your net lettings. You mentioned that tenants are taking longer to make decisions because of the war. Q1 only had 1 month of impact. Are you confident that you can continue to achieve this quarterly SEK 15 million target for the remainder of the year?

Yes, we see that. I have a big respect for the situation in the Middle East and what that affects. But we see that we are -- we have large deals on the table that we know are not affected by the situation in the Middle East. So I'm saying that with confidence.

There are no further questions at this time. I will now turn the call back to Johan Dernmar for closing remarks.

Thank you, everyone, for listening to this webcast. And as always, if you have any questions, please reach out to us. The details are on the website or in the end of the presentation. So with that, I wish you all a fantastic day. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning or good afternoon all, and welcome to the Dios year-end report. My name is Adam, and I'll be your operator today. [Operator Instructions]

And I will now hand the floor to Johan Dernmar to begin. So Johan, please go ahead when you're ready.

Good morning, everyone, and welcome to Dios year-end report presentation for 2025. My name is Johan Dernmar. I'm Chief Investor Relations Officer, and I'm joined today by our CEO, David Carlsson; and CFO, Rolf Larsson. Today, we will walk you through our performance for the fourth quarter 2025 and highlight the strategic process that we made during the year.

With that, I'll leave the word to David.

Hello, everyone. Let me begin with the most important highlights of the quarter. We delivered strong and profitable growth in income from property management, and we see increased leasing activity in our core portfolio. During Q4, IFPM increased by 16% quarter-on-quarter and 10% year-to-date, all in line with our new financial targets, underscoring the strength of our operating model and the resilience of our market. This growth is driven by higher earnings from completed projects, continued demand in central locations and strong performance all across our portfolio. In addition, we took an important strategic step to further support long-term shareholder value.

As announced recently, our Board has initiated a share buyback program based on our strong and stable cash flows, a solid financial position and the fact that Dios share is currently trading at low levels relative to underlying value. This strengthens our capital structure while fully maintaining our long-term growth ambitions. Operationally, the quarter was solid. Income reached SEK 669 million, supported by finalized projects and transactions. Net letting was slightly negative at minus 1% for the quarter despite 2 major terminations totaling minus SEK 18 million, leasing activity remained robust overall, ending the full year positively of SEK 3 million. The surplus ratio remained stable at 67%, normal level for the fourth quarter.

We reported SEK 120 million in positive value changes, thanks to strong new lettings. The divestment of the order portfolio for SEK 660 million at book value, again confirmed liquidity and robustness in our markets. In total, we divested SEK 1.6 billion during 2025 at or above book value. Financing conditions also improved with our new -- with our average interest rate declining to 3.9%, down from 4.3% last year. Altogether, Q4 confirms our trajectory of profitable growth, strengthened fundamentals and disciplined capital management.

Our occupancy remains at 90%, fully in line with the long-term historical average. Fluctuations are explained by strategic divestments of fully let residential assets affecting by 1 to 2 percentage points and temporarily higher vacancies fully correlated with newly completed projects. Property values remain resilient. Across our cities, valuation yields have consistently been around 6% for more than a decade. Despite changing market conditions, the yield gap remains positive, supported by rental growth. Higher yield requirements in some parts of the market have largely been offset by higher rent levels in our portfolio. Currently, we are refinancing debt at 3.5%, which compared to a valuation yield on 6% gives an attractive yield gap and a strong cash flow. Overall, this slide illustrates the stable operational and financial platform that underpins our strong growth in income from property management.

And then over to Rolf.

Thank you, David. Let's get deeper into the result outcome. Rental income increased by 6%, and the economic occupancy rate was 90% compared to 91% last year. The change is partly explained by completed new production, which has created short-term market vacancies, but also by the fact that as of December 1, we sold 6 fully leased properties in �re, which had some impact on the occupancy rate in Q4, but will have full effect from Q1 this year.

Our assessment is that the market has bottomed out, and we see a more positive rental market going forward as demand continues to concentrate towards modern, centrally located premises where our portfolio is highly exposed. However, it's important to remember that it usually takes 6 to 12 months from the time we sign a lease before it generates rental income. Property costs are slightly higher compared to last year, mainly due to higher costs for heating and property taxes. All in all, this means that the operating surplus for the quarter increases by 6%, corresponding to a surplus ratio of 67%. Despite higher interest-bearing liabilities and lower capitalized interest on CapEx, our financial costs are SEK 9 million lower compared to Q4 last year.

The explanation is partly that STIBOR is lower, but also that we have renegotiated a large part of our loans at lower margins. Income from property management increased by 16% for the quarter and by 10% for the full year. And we have had slightly positive value changes regarding properties, and I will come back to this later. Our well-diversified portfolio has strengthened the resilience of our top line. Like-for-like rental income in Q4 increased by 1.4%. And with 32% of our rental income derived from public sector tenants, we have a solid foundation for passing on CPI adjustments. And we see that we can defend and increase our rental levels in connection with renegotiations and new lettings.

98% of all commercial lease agreements include indexation clauses with 95% tied to CPI. With the increase in GDP growth and upcoming tax breaks for individuals, we are optimistic about the economic outlook for Sweden. We see potential for rental growth through rent reversions, increased occupancy rate and by creating modern efficient offices in prime locations. As the market leader with local management and being a company with strong cash flow, we have a competitive advantage over many other real estate companies in our cities.

Net letting for the full year is positive, while in the quarter, it's marginally negative at minus SEK 1 million. And as David said, the reason is 2 major layoffs, a cold storage and freezer warehouse and a school, both in remote locations, which affected net letting by minus SEK 18 million. We have a low tenant concentration risk. Our 10 largest tenants account for 20% of our total rental income with a WAULT of 5.1 years. And the WAULT for the whole portfolio is stable at 3.4 years. We continue to see a strong trend that tenants are looking for attractive locations and that the willingness to pay is high for modern and efficient premises. Vacancies are much lower in central locations in our cities where we are well positioned, which means that the resilience of our portfolio is high. And currently, we have several dialogues underway with existing and new tenants at good levels.

The market value of our properties amounted to SEK 32.5 billion. 92% of the property portfolio has been externally valued in Q4. The unrealized value changes in the quarter amount to SEK 120 million as a result of value-creating lettings and profitable conversions. The average yield was 6.10%, a decrease of 4 basis points from the previous quarter. The change in yield is partly affected by our sale of �re but also by a general adjustments of yield requirements in our strongest markets, Ume�, Lule� and G�vle, due to increased cash flows and increased quality in our property portfolio. And we see that our divestments are made at book value, which supports our view that our property values are at fair value.

During the quarter, we have invested just over SEK 300 million in tenant adaptations and new builds. There is low risk in our major projects where pre-let is a requirement and most of the rental income comes from tax finance operations. And all our ongoing projects are proceeding according to plan, both in terms of cost and time. And we currently have around 26,000 square meters under construction with a total investment volume of SEK 850 million, where remaining investments amount to just over SEK 400 million. And in addition, we have around 310,000 square meters of existing and possible building rights where we see great potential for further value creation. 50% refers to commercial premises and the remaining to residentials.

Going forward, we will prioritize tenant adaptations and in addition, new builds where we have stable tenants and long lease agreements. By year-end, we had loan maturities over the next 12 months of SEK 2.9 billion, which corresponded to 17% of interest-bearing liabilities. Since then, we have refinanced a total of SEK 1.5 billion maturing in June this year as well as an additional SEK 1.1 billion that matures in 2027. This also means that we have extended our debt maturity from 2.6 to 2.9 years. And we're actively working for a more prudent maturity profile with longer debt maturities. Our average interest rate at the end of the period was 3.9% and the trend of lower interest rate continues as the marginal cost of debt is still lower than our average cost of debt. This will have a positive impact on our income from property management when refinancing and taking out new loans.

Bank financing is and will be our most important source of financing, and we currently have 63% of our outstanding loans with banks. We have a very good dialogue with all our banks, and they are clearly willing to join our growth journey and offer us good terms. The margin on a 3-year bank loan is currently around 115 basis points. With 3 months STIBOR at 2%, it means a total interest of 3.15%. If you compare that with our average yield of 6.10%, it means a yield gap of nearly 3% and thus a continued strong cash flow. And the margin on a 3-year bond is currently around 140 basis points.

As I said, we have 63% of our financing in banks, SEK 2.3 billion in unused credit facilities and a secured loan-to-value of 37%. We will also add additional borrowing capacity through completed projects. This, together with good relationships with our banks, makes us feel comfortable about future refinancing. We have a conservative balance sheet approach, which reflects our commitment to financial prudence and risk mitigation.

During the past 2 years, we have reduced our financial risk and improved our key financial figures through divestments and a more cautious strategy regarding major new projects. The average interest rate continues to decline, and we are strengthening our balance sheet through strategic transactions, while cash flow is growing. The loan-to-value ratio amounts to 52.5% and net debt to EBITDA to 9.8x. The strong cash flow and a strong balance sheet means that we have room for both new investments and share buybacks. Yet again, I feel comfortable with our current financial position and action taken. Our strong cash flow will serve operating expenses, committed CapEx and further growth.

And I will now leave the word back to David.

Thank you, Rolf. Northern Sweden continues to offer exceptional conditions for long-term economic growth, driven by a combination of structural advantages, abundant hydropower and wind power with really low electricity costs, large areas of available land, a cold climate that supports energy-efficient industrial production and stable institutions and governance. Also strengthened security conditions following NATO membership, which is driving investments reachable for Sweden with so low national debt. Combined with attractive 15-minute cities, green industrialization, electrification, forestry, data centers and military investments, the region is undergoing one of the strongest transformation phases in Europe.

This environment is fundamentally positive for Dios. It supports sustainable rental growth, high tenant demand and long-term value creation. During the quarter, we finalized 2 essential projects, Biet 7 in Lule�, a new production of a more than 5,700 square meters office property and Kraften 12 in Umea, a conversion into a centrally located 2,500 square meter hotel property. Annual rental income from these 2 projects amounts to SEK 22 million. We invest in centrally located properties with strong tenants and no speculative developments. All our projects are delivered to BREEM standards of very good or higher. These investments strengthen our range and enhance our platform for profitable growth.

We have renewed a 10-year lease with Region J�mtland H�rjedalen for the �stersund primary care center, covering approximately 3,500 square meters. The agreement includes significant property upgrades to enable modern, sustainable and efficient health care operations, strengthening one of the region's key care hubs in the growing �stersund district. Yield of cost is approximately 8% for the SEK 46 million investment. We also signed a 15-year lease with Evidensia for a new modern veterinary clinic in Central G�vle in a today vacant premise. The long-term establishment enhances the local service offering and aligns with Dios strategy to attract strong community-focused operators to prime urban locations. Investment for this tenant is SEK 24 million at a yield of cost of 9%. The agreement with Member24 in G�vle demonstrates our approach to transforming less desirable retail spaces into gyms in prime locations. We have signed a 10-year lease supporting it with a SEK 9.5 million investment at a yield of cost of 12%.

During the quarter, we were appointed a 15-year lease agreement in Sundsvall with the Swedish court administration, Domstolsverket. The agreement covers approximately 6,300 square meters in a newly developed modern and sustainable courthouse at [indiscernible] in Central Sundsvall, adjacent to Clarion Hotel, which we built a couple of years ago. This project follows a competitive procurement process in which our proposal was evaluated as the most advantageous based on the combination of price and quality. During the appeal period, one competitor complained, which resulted in a revaluation process. So we cannot be completely certain yet that we can proceed and sign the lease agreement with a rent of SEK 23.2 million.

Construction is planned to start around the turn of 2026, 2027, with occupancy expected in the first quarter of 2029. The building will be certified according to Milj�byggnad 4.1 aiming for a Gold rating. The evaluation of the project and Dios as a landlord strengthens our long-standing position as an attractive key partner to public sector tenants, which today represents roughly 1/3 of our rental income. Our growth strategy remains clear. Our strategy for profitable growth continues to be built on 3 pillars: one, investing in the right assets; two, optimizing revenue and costs; and three, owning properties in the most attractive locations.

We focus our portfolio towards central locations where demand is strongest and alternative use potential provides long-term resilience. Our strong local presence, long-term customer relationships and high-quality premises are key components driving profitable growth. The core strength of Dios is the resilience of our property portfolio with stable tenants, diversified segments and centrally located assets in growing regional cities. Our portfolio generates strong and predictable cash flows. These cash flows are not only stable, they also provide us with favorable financing conditions as lenders clearly recognize the robustness of our business model. Lower margins and attractive terms directly supports our ability to continue investing and critically help fuel continued growth in income from property management.

Our strong cash flow gives us the capacity to invest in profitable tenant adaptations. Finalized projects is now at 7.7% yield on cost and new tenant adaptations is aimed at over 9%. Energy-efficient upgrades resulting in energy savings of 5.4% for 2025, selective new developments and strategic acquisitions. This disciplined capital allocation ensures we continue to deliver sustainable long-term value for both tenants and shareholders. We also took a clear strategic step this quarter by divesting the correctional facility project in �stersund to Stenvalvet for SEK 117.5 million. This move is fully in line with our long-term focus, concentrating our capital on core urban properties where Dios has scale, market leadership and strong value creation potential. A correctional facility does not fit naturally in our core portfolio and selling the project now allows us to realize value and redirect resources to high-return opportunities.

As the project in Sundsvall, this is a clear example on how we are in the position to create value with our land and building rights. The project includes both the full renovation and new construction totaling 5,400 square meters, supported by a 15-year lease with Kriminalv�rden. In addition, the authority has signed a separate 15-year office lease in our adjacent property, which remains in our ownership and continues to strengthen our stable long-term cash flows. This divestment sharpens our strategic focus, frees up capital for growth in our priority cities and demonstrates our ability to create value from noncore assets while continuing to contribute to �stersund's development alongside strong institutional partners.

To summarize, Dios holds a unique position in a geography experiencing strong structural investments. Our business model based on central locations and active management gives us long-term profitability, strong and stable cash flows and low tenant concentration risk. Looking ahead, we enter 2026 from a position of strength. Demand continues to concentrate towards modern centrally located premises where our portfolio is highly exposed. Leasing activity remains solid and tenant willingness to pay for the right space in the right location supports both occupancy and rental growth.

Delivering on our 10% growth ambition. With strong and stable cash flows, declining financing costs and a solid balance sheet, we have a clear capacity to execute on our ambition of delivering 10% annual growth in income from property management and NAV per share. Through value-adding tenant adaptations, selective investments and disciplined capital allocation, we see a clear incredible path to continued profitable growth.

Before we open for questions, let me make some closing summarizing remarks. As recently announced, our Board has launched a share buyback program enabled by the mandate from the 2025 AGM. This decision reflects our strong cash flows, our robust financial position and our view that our Dios share is currently trading at low levels relative to intrinsic values. The program optimizes our capital structure and importantly, does not limit our ability to invest in profitable growth. Our strong operational momentum, disciplined financial management and proactive capital allocation give us great confidence in our ability to continue delivering profitable, sustainable growth.

Thank you. We now welcome your questions.

[Operator Instructions] And we have a question from Lars Norrby from SEB.

Two questions. First, a simple one. Let's talk about the weather. Wasn't it unseasonably warm in Q4? And for that matter, now in Q1, it's super cold even here in Stockholm. So has that affected your profitability and costs in the fourth quarter?

The weather was quite normal in Q4 in our region. But as you say, it's been very cold both in January and so far in February. So the cost for heating will probably be a little bit higher than last year.

Okay. And second question on a completely different topic. Asset rotation or structure, whatever you like to call it, you have divested the entire portfolio, �re. You're in the process of divesting a correctional facility in �stersund. Anything else that you're looking at in terms of magnitude in the portfolio that's not a natural part of your portfolio, let's put it that way.

Lars, David here. We have -- as we talked about before, we have identified a noncore portfolio of about 5% of our assets. So it's SEK 1.7 billion, SEK 1.8 billion. And we are currently looking for right buyers and to pick a portfolio that suits the buyers. So we have around 10 to 12 discussions all the time, and we see what fits everyone. So it's up for grabs, but we don't do it as one portfolio in the market. We are currently having discussions. Sothat's -- if that's the answer.

And you don't break that up and communicate it? Geography-wise what is included in that SEK 1.7 billion, SEK 1.8 billion?

No, we do not because it's current -- it's rotating all the time in the noncore portfolio because if we find a good tenant with a long lease, it can change. So that facility won't be in the noncore portfolio anymore. So all the time, we are rotating. And the cities are changing all the time also in -- especially in the C and D locations where most of these assets are. So if we find some good conversion opportunities, we can keep it. But if it's still noncore, we'll sell it. So it's taking all the time, so it won't be a good idea to communicate the whole portfolio all the time.

[Operator Instructions] We have no more questions on the phone line, so I'll hand over to Johan for the webcast questions.

Yes. Thank you. As of now, there is no webcast questions. I'll leave it for 30 seconds if there's someone who would like to send some questions. So it seems like we have no more questions. So I will try to round this off, and thank you all for listening. And as always, please reach out if there's any questions or something you would like to discuss after the call. So with that, we wish you all a nice day and see you again in next quarter. Thank you.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Good morning, everyone, and welcome to the Dios Interim Report, January to September 2025. My name is Brika, and I will be coordinating your call today. [Operator Instructions]

I will now hand you over to your host, Johan Dernmar, Chief Investor Relations Officer, to begin. So please go ahead, Johan.

Good morning, and welcome to Dios Q3 2025 Result Presentation focusing on the period July through September. My name is Johan Dernmar. I'm Chief Investor Relations Officer. I'm joined today by CEO, David Carlsson; and CFO, Rolf Larsson.

In today's presentation, we'll begin with a brief overview of our third quarter performance, followed by a deep dive into the financial result. We will then provide a market outlook and conclude with a Q&A session.

Thank you for joining us. And with that, I hand over to David.

Thank you, Johan, and good morning all. Our focus is clear and simple. We aim to increase revenues, reduce costs and make profitable investments. This quarter confirms we're on the right track. Despite the challenging economic climate, our occupancy rate remained stable at 90%. Leasing activity remains strong with several major deals in central locations contributing positively to both cash flow and property values.

At the same time, we continue to divest assets at book value, strengthening our balance sheet and confirming liquidity in the market. Financing conditions remains favorable with lower margins and declining average interest rates. We have some one-off costs related to bond buy-backs of SEK 5 million affecting net financial item for the quarter that will have positive impact on net financial items coming quarters.

The past decade of near 0 interest rates enabled the real estate sector to prioritize growth through acquisitions and new developments, often at the expense of operational excellence and organic value creation. Our strategic focus is toward the fundamentals of property management and building strong, sustainable cash flows. Over the past 18 months, we have actively rotated assets to strengthen our portfolio, positioning it for long-term value creation. This transformation supports our updated financial targets, which emphasize profitability, resilience and capital efficiency.

To clarify our commitment to long-term profitable growth, the Board has adopted new financial targets, rotating from return on equity of 12% annually, we aim to increase our income from property management per share by 10% annually while also growing our net asset value expressed as EPRA NRV per share by 10% per year. These are ambitious, yet entirely achievable goals, reflecting the value creation potential we see in the company today. This includes, among other things, strategically located vacancies that offer strong upside. Our market has shown resilience in the face of rent increases driven by CPI adjustments.

We continue to see solid payment capacity among tenants, and our portfolio is well aligned with demand. We own the right properties to capture payment willingness through a relevant and competitive offering, an important factor in achieving our financial goals. In addition, our climate target to half CO2 equivalent emissions by 2030 remains firmly in place, underscoring our commitment to sustainable value creation.

Looking ahead, our strategy is built on three pillars: one, operational excellence, driving NOI growth through active management and cost control; two, selective development and reinvestment, focusing on projects with signed leases and strong tenant demand; three, disciplined capital allocation, ensuring every investment contributes to long-term value and supports our financial targets. While the targets are challenging, they are well within reach given our current position, strategic direction and the strength of our underlying assets. The direction is set, and now it's all about execution.

Rolf, please give us some more insights to the results.

Thank you, David. So let's get deeper into the result outcome. Rental income increased by 5% and the economic occupancy rate was 90% compared to 91% last year. The change is mainly explained by the divestment of fully let residential properties and completed new construction, which has created short-term market vacancies and some major vacancies occurring in Q2 that now have full impact.

We can see that vacancies have been unchanged during the first 3 quarters of the year. Our assessment is that the market has bottomed out and that we see more positive rental market going forward, but the recovery will take a little longer than we previously assumed. Property costs are slightly higher compared to last year, mainly due to property acquisitions and one-off cost of SEK 3 million related to potential projects that have been canceled.

All in all, this means that the operating surplus for the quarter increases by 5%, which corresponds to a surplus ratio of 74%. Financial costs are SEK 10 million higher compared to last year. The reason is higher debt and that we have redeemed bonds early and taken the redemption cost upfront, which has affected the quarter's financial cost with a total of SEK 5 million.

Income from property management increases by 3% to SEK 267 million. We have had slightly positive value changes regarding properties, and I will come back to this later. Despite the higher taxable result this year, current tax is lower due to nonrecurring items last year in connection with divestment of properties. Our well-diversified portfolio has strengthened the resilience of our top line. With 32% of our rental income derived from public sector tenants, we have a solid foundation for passing on CPI adjustments. And we see that we can defend and increase our rental levels in connection with renegotiations and new lettings.

Notably, 98% of all commercial lease agreements included indexation clauses with 95% specifically tied to CPI. Like-for-like rental income increased by 0.9%, thanks to positive new lettings, and we continue to experience strong demand for premises in central locations and expect continued positive development. With lower financing costs to come and a more optimistic economic outlook for Sweden, we see great potential in our rental growth, both when it comes to rent reversion, a continued increased occupancy rate, and creating modern and effective offices in prime locations.

As the market leader with local management and being in a company with a strong cash flow, we have a competitive advantage over many other real estate companies in our cities. Net letting has been positive in 25 of the last 27 quarters, including SEK 1 million this quarter. The offices role as a brand builder and meeting place is becoming increasingly clear. We continue to see a strong trend that tenants are looking for attractive locations and that the willingness to pay is high for modern and efficient premises. Vacancies are much lower in central location in our cities, where we are well positioned, which means that the resilience of our portfolio is high.

Currently, several dialogues are underway with the existing and new tenants at good levels. We have a low tenant concentration risk. Our 10 largest tenants of which 6 are tax finance account for 20% of our total rental income with a WAULT of 5.1 years and the WAULT for the whole portfolio is stable at 3.6 years. The market value of our properties amounted to SEK 32.8 billion. During the quarter, we have invested just over SEK 200 million in projects. 90% of the property portfolio has been externally valued in Q3.

During the quarter, we have adjusted the inflation assumption from 1.5% to 1%, which has negatively affected the market value by SEK 100 million. The negative effect of the changed inflation assumption is offset by strong cash flow, thanks to new leases, resulting in a positive unrealized change in value of SEK 16 million during the quarter. The average yield was 6.14%, a decrease of 1 basis point from the previous quarter. The change is explained by new leases, changing the estimated yield requirement at property level. And we see that our transactions are made at book value, which supports our view that our property values are at fair value.

As I said earlier, we have invested just over SEK 200 million in tenant adoptions and new builds. There is low risk in our major projects requirement and most of the rental income comes from tax finance operations. All new commercial projects are built according to BREEAM at least level very good. And we currently have around 21,000 square meters under construction with a total investment volume of SEK 730 million, with remaining investment amount to SEK 370 million.

All our ongoing projects are proceeding according to plan, both in terms of cost and time.

In addition, we have around 270,000 square meters of existing and possible building rights, where we see great potential for further value creation. 54% refers to commercial premises and the remaining to residentials. Going forward, we will prioritize tenant adoptions and in addition, new builds where we have stable tenants and long lease agreements. At the beginning of July, we issued 2- and 3-year bonds of a total of SEK 850 million and at the same time, redeemed bonds maturing in May and October next year, corresponding to SEK 450 million.

And as I said earlier, we have taken the redemption cost upfront, which has affected the quarter's financial cost with a total of SEK 5 million. In the next 12 months, we will have additional loan maturities, excluding commercial paper of SEK 2.6 billion, which corresponds to 14% of interest-bearing liabilities. And we're actively working for a more prudent maturity profile with longer debt maturities. Bank financing is and will be our most important source of financing, and we currently have 69% of our outstanding loans with banks.

We have a very good dialogue with all our banks, and they are clearly willing to join our growth journey and offer us good terms. The margin on a 3-year bank loan is currently around 120 basis points. And a 3-year bond has a margin of 150 basis points, which is 25 basis points lower than 3 months ago. Our average interest rate at the end of the period was 4% and the trend of lower interest rates continues as the marginal cost of debt is still lower than our average cost of debt. This will have a positive impact on our income from property management when refinancing and taking out new loans.

We have 69% of our financing in banks, SEK 2.4 billion in unused credit facilities and a secured loan-to-value of 39%. We will also add additional borrowing capacity through completed projects. This, together with good relationships with our banks, makes us feel comfortable about future refinancing. We have a conservative balance sheet approach, which reflects our commitment to financial prudence and risk mitigation.

During the past year, we have reduced our financial risk and improved our key financial figures through divestments and a more cautious strategy regarding new major projects. This, together with a strong cash flow and available liquidity means that we now see opportunities for growth, which primarily means an increased volume of tenant adaptions and acquisitions.

And as we have mentioned earlier, in October, we sold all our properties in order for SEK 660 million, and we will use the proceeds to amortize debt to create space for profitable investments. And we will also continue to divest noncore properties. Yet again, I feel comfortable with our current financial position and action taken. Our strong cash flow will serve operating expenses, committed CapEx and further growth.

And I will now leave the word back to David.

Thank you, Rolf. Northern Sweden is experiencing a wave of investments tied to the green transition, a shift that is not only vital for Sweden's climate goals, but also for its global competitiveness in delivering high quality, fossil-free products. We're seeing new industrial facilities being built to refine natural resources and into sustainable outputs alongside energy infrastructure, transport upgrades and housing developments. These investments are grounded in strong long-term fundamentals, access to clean, affordable energy from hydropower and wind, a cold climate that supports energy efficiency and based land areas available for development.

At the same time, we are observing several structural shifts in the broader market. One clear trend in the wake of the economic downturn is the resilience of regional cities, which we -- which have outperformed larger metropolitan areas in terms of stability and tenant demand. This is particularly relevant given the limited pipeline of new commercial developments in the coming years, which will constrain supply and support rental levels in well-positioned assets. Despite these macroeconomic headwinds, our recent transactions demonstrate strong liquidity in the market and confirms that our book values are well aligned with market pricing.

During the third quarter, we completed several major lease agreements that positively impacted both net leasing and property values. Notable transactions include Clear Street in Umea, 1,200 square meters; Academedia in Gavle, 2,300 square meters; Bonnier and AFRY in Ostersund, 2,100 square meters; and Kronofogden in Gavle, 1,500 square meters. A common denominator across all these deals is the demand for modern premises and central locations.

At the same time, we see lease terminations primarily driven by tenants directly or indirectly relocating to newly completed developments. These moves are often motivated by the pursuit of more efficient premises, and they occur both within our own portfolio and to competitors within city districts and from peripheral areas to more central ones. This dynamic is an effect of slightly higher market vacancy.

Importantly, tenant payment capacity is not a limiting factor in our cities, given the relatively low rental levels. What we do observe, however, is a growing willingness to pay for the right space in the right location. The trend remains clear. Tenants are leaving outer areas in favor of central well-connected properties with 95% of our portfolio located in A and B locations, we are well positioned to capture this movement.

Occupancy and portfolio impact. We're seeing that the turnaround in occupancy ratio is taking slightly longer than we initially anticipated. While we continue to close strong deals to attractive levels, the ongoing relocations to new developments are delaying improvements in key metrics. Given the size of our property portfolio, it naturally takes time for these metrics to strengthen. Still, the fundamentals are in place, and we're seeing positive momentum.

The lease mentioned above carry an average gross yield-on-cost of over 9%, contributing positively to property values by approximately SEK 60 million. Despite the downward adjustment in our CPI assumptions for 2025 from 1.5% to 1.0%, which negatively affects property values by around SEK 100 million, we still achieved positive unrealized value changes of SEK 16 million for the quarter. This becomes particularly relevant in light of the limited pipeline of new commercial developments expected in the coming years across all our cities. This environment will constrain supply and in turn, support rental levels for well-positioned assets.

We're also seeing clear patterns in the behavior of public sector tenants across Sweden. Demand remains stable, especially for modern centrally located premises. Government agencies and municipal operations continue to prioritize accessibility, energy efficiency and long-term functionality. In October, we divested our portfolio in Are – six fully leased retail and office properties for SEK 660 million. Over the past few years, we've actively developed the assets, reaching a strong occupancy rate of 98%. However, given the portfolio's relatively small scale, the surplus ratio remains low.

This creates an opportunity to reallocate capital to larger assets and markets, where we benefit from economies of scale and greater long-term value potential, such as last year's acquisitions in Lulea and Gavle for SEK 940 million or Umea earlier this year for SEK 1.6 billion.

The Are transaction was completed at book value, consistent with all our divestments this year. In total, we've sold or signed agreements for approximately SEK 1.6 billion, all at or above book value. This is a clear sign of strength, confirming the accuracy of our valuations and the liquidity in the market. We have a unique position. Our property portfolio is concentrated in attractive locations to meet the current demand of central, modern and flexible premises. The Are strength lies in our local presence combined with the company size, which creates economies of scale in terms of expertise, favorable financing conditions and investment capacity. This provides competitive advantages that few other companies in Northern Sweden have.

Our business model is future-proof at low risk. With primarily A location in regional cities that are benefiting from urbanization, our premises have great yield resilience. We aim to make sustainable investments in our portfolio to minimize our carbon footprint and future-proof of our assets. We're currently making very good deals through our reductions and renovations. The gross yield on costs for our ongoing investments is on average 9%, which also leads to an increase in value.

With an improved economic outlook, we expect the volume of tenant adaptations to increase. We have a top-of-the-line cash flow generation from our business. With prime location assets on a running yield at 5.6% and financing cost at investment-grade levels, we are generating strong and predictable cash flow. Our operations demonstrate stable performance. We have observed significant resilience among our tenants throughout the recent economic cycle with few bankruptcies and low rent losses. The real estate market in general also shows stability with property values being less volatile than in metropolitan areas. Our cash flow is not only higher than many other regions, but also more stable.

Looking forward, we are well positioned in our cities to meet market needs, demand and emerging trends. Our strong local presence, combined with advantages of scale in terms of capital access and investment capacity gives us a solid foundation to drive organic growth. At the same time, we continue to make value-creating investments and with stabilizing vacancies, we believe this will have a positive impact on property values.

Our own transactions confirm the market valuations as we've constantly sold properties at or above book value. We will continue to grow by acquiring properties with potential assets that complete -- complements our existing portfolio and are in regions with strong growth prospects. Now with some more firepower, we're seeking opportunities to deploy capital. We will also continue to divest properties that are not part of our core strategy where we see limited development potential. With more optimistic economic outlook for Sweden, I'm very confident in Dios as a company and in our ability to deliver sustainable long-term returns in line or above our new financial targets.

That concludes my part. I will now hand back to Johan.

Thank you, David. Thank you, Rolf, for the insights. We are now opening up the floor for questions.

[Operator Instructions] The first phone line question we have comes from Oscar Lindquist with ABG Sundal Collier.

So firstly, I wonder if you could sort of bridge rental income Q2 to Q3 in regards to contribution from the acquisition you exceeded in June last quarter?

Yes. On an overall basis, the rental income has benefit from the acquisition 1st of June, where we bought for SEK 1.6 billion in Umea at around the yield of 6%. On the other side, we sold the fully let property, Mimer 1 in Borlange at the last of June. And with that also taking on some vacancies in Q2 that will roll over and get full effect in Q3. So all in all, we have some positive effect from this acquisition and some negative effects from vacancies in Q2. Is that enough?

Could you quantify those contributors?

I can try, approximately the divestment was on an annual basis, around SEK 42 million in income. And let's see the number [Audio Gap] and around almost double, I'd say, around SEK 100 million -- SEK 120 million on an annual basis for the acquisition. And then we had a couple of millions in increased vacancies.

And then secondly, on your financial targets to grow income from property management by 10% and NRV by 10% per year. Could you give sort of a bridge or how you expect to reach that target on an annual basis?

Yes, David here. We have now around 2% more vacancies than 3 years ago. And that's an asset and a possibility for us. So it's renting out the vacancies that are now positioned in central locations in the cities. We have successfully rotated our assets. So the vacancies that has been coming up now after the pandemic and the economic downturn is low rents in the localities and the possibility to make good deals and rent it out, so we see as we reported -- as I mentioned in the CEO report, we're making good deals with good returns on the investments on those vacancies. So that's the way to go. And reduced cost of...

And on letting activity in the market, how would you say it has changed, say, before and after the summer?

Yes. It's taking up pace as we pressed 4 new leases in the last 2 months in the high scale and we have over SEK 60 million newly signed leases this quarter, that's almost a double from Q2. So we see that the rental market is picking up pace, and we're doing good deals. But we're seeing that it's going to take some more time to show in the numbers of the occupancy rate. So we see 2 or 3 quarters from now, we're having this flat state that we are now.

And on your press releases here, should we expect you to have a positive net letting in Q4?

We're not guiding on that one, so -- and we have just started the quarter, so I can't answer that.

[Operator Instructions] We now have Viktor Hokenhammar with Pareto Securities on the line.

Sorry, I was a bit late in the call, but regarding the Are divestment, are you actively looking to divest other portfolios in other cities like over the next year or so?

Yes, David here. We have our noncore assets that were listed that we're open for discussion and divesting if the right opportunities arise. And we are also looking all the time to divest and invest all the time. So we have a lot of discussions on the run, but nothing that we can communicate today.

No, of course. Perfect. That's clear. And are you a net buyer or seller within the next months, if you say the next 6 months or so?

That's -- we're always having -- we're just having discussions all the time. We have both on the buy side and the sell side, so it's hard to say if we're going to get through with the deals on the buy side or sell side. So a few months, it's hard to say exactly if we're a net seller or a net buyer. But we have this over 2% on the LTV in space to invest and then we have a strong cash flow so we can invest in. So we're going to be a net buyer in the long run, and we're not passing 55%.

And then more like a general question, how you and the Board view like capital allocation in terms of -- we have the upcoming dividend suggestion now in Q4, potential sharebacks maybe given the discount to NRV. And also you mentioned the good return on investments in your existing portfolio. Can you please elaborate a bit on the capital allocation over the next year?

Yes, Johan here. On the share buy-backs, there is a mandate from the Board, of course, to always look over the possibility to buy-back shares. At the current levels, we see that the investment in the standing portfolio returning at good levels. So for the long run, as long as we find investment opportunities in our portfolio and for our tenants, our take is that the Board will, at these levels, prioritize organic growth instead of share buy-backs. So that's where we stand on capital allocations right now.

And then maybe a final question regarding the vacancy. You report like even numbers, not with decimals, et cetera. Can you provide some details on the effect of increasing vacancies, as you mentioned in late Q2, how much of that affected -- like how much of the increased vacancies affects the rental income bridge, you can say, sir?

Sorry, the line was a bit blurry. Could you take the question again on vacancy?

Yes, sorry, absolutely. So Oscar asked about the rental bridge, and I understand that you have some both projects and divestments and acquisitions. But what's like the -- can you provide some more detail on the vacancy effects of the rental income bridge from Q2 to this quarter?

It's quite flat, but we have this effect by the -- sold fully let high school building in Borlange and now in Q4, 97% let buildings in [Mora] coming quarter.

We're selling assets that are on a higher occupancy ratio than the standing portfolio. So the transaction will have a negative effect on the reported occupancy ratio.

We currently have no further phone questions. So I'd like to hand it back to management for the webcast questions.

Thank you. We have some written questions, and I will try to summarize them. The first questions are around occupancy rate and it's more or like is there a structural vacancy in the market that limit the occupancy rate to 90%, 91%. I will take that one first.

Okay. David, I can answer that. No, we see no structural shift in the occupancy rate, and we see that the vacancies for us is an asset to use a potential, so we are -- as I said earlier on another question, we constantly rotated our portfolio to more central located assets that have high demand. So there's no structural shift that we should stay at 90%, 91% in the long run.

Great. And I think the second question we've answered around where we see a stabilized occupancy and when the market has bottomed out, when will we see increased occupancy ratio, and to repeat that is -- we see that the market has bottomed out. We see some 2 or 3 quarters at stable levels like-for-like. But as we communicated the deals that we press released are coming into force, we could expect the vacancies to be reduced.

And one question about CapEx and tenant adoption in new builds. And will you see an acceleration in your project starts from here going forward? And to answer that one, we have investment capacity. And as David mentioned, there is -- there's a willingness for us to invest for our tenants, but also mentioned on the call that we were not looking for new builds in the current market. So we will focus more on tenant adoptions and transactions rather than new builds and new constructions at this point.

So that was all the written questions, and we would like to say thank you for listening in, and please reach out to us. The contact details are in the presentation. So with that, I would like to end this call and wish you all a pleasant Friday. Thank you.

Thank you. I can confirm that does conclude today's call with Dios. Thank you all for joining. You may now disconnect, and please enjoy the records.