Entra Stock

Good morning all, and welcome to Entra's second quarter presentation here in Oslo. On the front page here, you can see our building in Schweigaards gate 16, where we, in the quarter, signed a 12-year lease contract for the entire building with Coop.

Let's move on to some highlights. Rental income of NOK 781 million in the quarter, that is 2.4% down from last quarter or 1.4% up from same quarter last year. Net income from property management of NOK 320 million this quarter, which is down NOK 37 million compared to last quarter due to lower rental incomes and higher operating and financial costs. Net value changes came in with a negative of NOK 1.2 billion this quarter, mainly driven by the negative value changes of our -- on our investment properties of NOK 1.1 billion, leaving us then with a loss before tax of NOK 855 million in the quarter -- sorry, that's loss after tax. And the NRV per share this quarter stands at NOK 163.3 and cash earnings per share of NOK 3.54 for the first half of this year.

It's been a strong quarter in respect of letting with a positive net letting of NOK 131 million in the quarter, and we have started up one refurbishment project in Oslo and one in Bergen. So if you look at operations, as I already said, it's been a very strong quarter in respect of letting. And I'm pleased to see that we are benefiting from the work and efforts put down through 2025, where we also strengthened our letting and marketing capabilities to meet a slightly tougher letting market. We signed new and renewed leases for NOK 185 million in the quarter. Out of this, as much as NOK 175 million is new contracts, which will feed into our rental income bridge going forward.

Contracts with a rental income of NOK 43 million have been terminated in the quarter. Out of this, approximately 1/3 has already been resigned as part of the Coop contract and approximately 1/3 of the tenants in the terminations have chosen to re-sign with Entra.

If we take a look at the largest contracts signed in the quarter, you can see that Verkstedveien, we have signed Multiconsult for 16,400 square meters. And in Schweigaards gate 16, the Coop contract for 15,500 square meters in addition to Opak and DeepOcean in also 2 of our buildings at Skoyen. So at our cluster in Skoyen, we have had over the past year, 29,000 square meters of terminations due to public tenants choosing to move to less expensive locations. And I'm very pleased to see that we have now been able to turn that around when we have signed more than 24,000 square meters in the first half in the Skoyen portfolio. So good momentum for us there.

If we take a look at our average lease duration, it stands currently at 6.1 years. And our share of public tenants is currently slightly down at 48% following the 2 large contracts signed with Coop and Multiconsult. Our occupancy is down from 94.3% to 93.3% in the quarter. As I had commented on in previous quarters, we expect to see more fluctuations in our occupancy rate going forward. This is explained by the 3 factors that we have completed projects feeding into the management portfolio with different occupancy ratios. It also depends on the timing for when we start projects on vacated space. And thirdly, it depends on how the upcoming expiries, which already have been reflected in our rental income bridge are relet.

The increase in the vacancy this quarter is related to the portfolio in Sandvika in Bergen following the negative net letting we had in the second half of '24. And in particularly, there are 2 assets here where we are working on product development and the profitability, which has now then been included in the vacancy. We do expect to see some further near-term pressure on occupancy before stabilization, driven by the upcoming expiries not yet relet or ready for projects and project timing at the moment. All of this is, however, reflected in our rental income bridge. The 2 large contracts signed this quarter contributes in securing occupancy in the longer term with effects mainly from 2028 and onwards.

As mentioned, we've started 2 refurbishment projects in the quarter. First one here in Verkstedveien. This is a building which we in 2024, signed a large lease contract with Yara, and we were, at that point, planning to start a refurbishment project for Yara. One year later in 2025, we chose to terminate that contract with Yara as we got the opportunity to prolong with them in their existing headquarter building for a new 10-year period with no CapEx requirements. So since that, we've been working on reletting this building and pleased now to see that we have reached an occupancy ratio of 90%, having signed both the Norwegian public service pension fund and Multiconsult in this building. So this means that we now are preparing to start this refurbishment and the remaining CapEx here is around NOK 365 million, leaving us with an expected yield on cost for this building of 5.6%. The project will be completed in 2 phases where the Norwegian Public Service Pension Fund will move in during the second quarter of '27 and Multiconsult in the first quarter of 2028.

Moving on to the second refurbishment project, which is in Bergen, in Kaigaten 9. This building is located right next to the central bus terminal and train station in Bergen. It's also the neighboring building to our ongoing project in Nonnesetergaten 4. You can actually see Nonnesetergaten 4 as the white building in the back of this picture. This is a building where the Norwegian tax authorities have been temporarily sitting while they've been waiting for the project in Nonnesetergaten 4. And now we have let 24% of the space in this building and have started the refurbishment here. The remaining project cost here is NOK 243 million and leaving us with a yield on cost on this project for of 5.8% with an expected completion here in Q1 '28.

So if you take a look at our list of ongoing development projects, it has now been expanded with these 2 refurbishment projects. The list totals now 101,000 square meters, including our JV project in Christian Krohgs gate. Let me start by saying that all these projects are progressing according to plan at cost and on time. Limited changes since our last reporting. We can see that Drammensveien 134, the occupancy is up to 80% following the lease contract, which was signed with Opak. And the total group remaining CapEx on this list of projects is around NOK 700 million. And then in addition to this, you have the redevelopment in Christian Krohgs gate 2, which here is accounted for on a 100% basis. Also, this project is progressing according to plan. Very pleased to see that it's been very well accepted in the market since we launched it. A lot of interest for this product. And the remaining CapEx on Entra share here is approximately NOK 600 million.

A few words on the Norwegian economy. The Norwegian economy remains resilient and is well positioned through its strong public finances supported also by the sovereign wealth fund. Economic activity is supported by private consumption following now several years of real wage growth as well as public sector demand. The growth estimates for this year have been revised slightly down after a soft first quarter, held back by temporary effects. If you look at the top right here, you can see that the employment growth has remained positive for Entra over -- sorry, for Norway over time, and it's also expected to remain positive going forward. In Oslo, the employment growth has, however, been more or less flat over the recent years and not provided the same support to office demand.

If you look at inflation, it is now expected to remain above the Central Bank's targets for a longer period. The inflation is driven by domestic cost growth and also renewed imported price pressure following the closure of the Strait of Hormuz. And the Norwegian Central Bank raised the key policy rate in May with 25 basis points to 4.25%. And in their June report, the Central Bank further signaled that one more increase is likely this year, as you can see from the bottom right graph.

Now the June CPI came in just this morning, and it came in at actually 2.7%, which is -- was 50 basis points below the Norges Bank's estimates. The Statistics Central Bureau have said that they've had some data trouble this morning, but it should be more or less in line with what they expect to verify later. The core inflation has not been published yet.

Okay. So if we move on to the letting markets and dive into what we see from the market data there. First of all, Ideal statistics data, which came out earlier this week shows that the letting volumes signed in the second quarter were more or less in line with historical Q2 levels. And we also see that the upcoming expiry volumes for 2027 and '28 should continue to provide a good basis for letting activity also going forward. Now according to Entra's consensus report, which you can see from the top right, the vacancy for the overall Oslo market is now expected to increase towards 7.8% for the overall Oslo market throughout this year before it gradually trends downwards. This is up with some 30 basis points compared to the consensus report last quarter. The majority of this vacancy is in the segment of smaller space and also related to more secondary locations or in older building stocks, not meeting the current tenant requirements.

The limited new build volumes together with continued demand for centrally located high-quality buildings and CPI indexation continue to provide support for further rental growth. Our consensus report estimates around 12% market rental growth from 2026 to 2028. If you take -- our take on the market, we clearly see now that where and how to locate the office has become a much more strategic decision for tenants, seeing that they're looking for central locations, high-quality offices to a much larger extent as it also is a key enabler for productivity, talent attraction and culture. At the same time, we clearly see that tenants are cost conscious in the market environment with a high level of uncertainty. And in many cases, this flight to quality and also more urban qualities is then combined with less space to keep the costs down.

We are experiencing with more strategic decisions from our tenants that the processes take a lot more time, continue to take time with -- as examples, with both Coop and Multiconsult, we have been working for more than a year before finally closing those deals. We're also seeing that our city center locations and also the 2 projects which we brought to market earlier this year have been launched with a lot of interest and seeing that our products are located below the CBD segment, there is a good room also there to take out the market rental growth in that segment. The picture is more differentiated in the fringes and in the secondary markets, depending on the local supply and demand balance in each market.

Competition remains pretty strong in the segment for smaller tenants below 1,500 square meters, where we typically also meet the sublease market, while the larger tenants have limited options to choose from, particularly in the city center. A few words also on the transaction market. Transaction activity slowed in the first half of 2026 as investor sentiment turned more cautious, driven primarily by the interest rate hike and also the increased uncertainty with the elevated geopolitical tensions. Transaction volumes for the commercial real estate market in the first half came in around NOK 34 billion. And according to our consensus report now, expectations are that we will see a total volume around NOK 80 billion for the full year, which is more or less in line with what we've seen in the last couple of years. The bulk of the transactions closed in the first half have been within the retail segment, residential portfolios and logistics. 27% is related to offices, and this is mainly then the [indiscernible] portfolio.

The current prime yield levels around 4.5% has been supported by equity-funded investor demand, which still can meet their return requirements at these yield levels, supported also by outlooks for CPI and rental growth. There has been limited transaction evidence within the prime office segment during the first half. However, we know that a couple of the transactions which closed in the second quarter also confirm the prime yield levels of 4.5%. From our consensus report, we can see that the expectations are that prime yield now will increase somewhat from around 4.5% towards 4.8% throughout the year in response to higher interest rates before reverting to a more gradual downward trajectory.

Going forward, we expect that the prime and central office segments will screen increasingly more attractive to the broader investment market due to the favorable supply-demand dynamics and also with this a healthy rental growth outlook. In respect of the financing markets, they remain available and open and also with favorable credit margins at the moment.

So with that, Ole, the word is yours.

Thank you. Thank you, Sonja. In Q2, our financial performance was lower compared to previous quarters. Rental income came in at NOK 781 million, down from NOK 800 million in the first quarter. We had net negative impact from project of minus NOK 8 million as we have vacated a few properties for refurbishments during the quarter, as Sonja mentioned earlier. In addition, we had negative NOK 10 million in like-for-like growth due to reduced occupancy, mostly related to the negative net letting we reported in the second half of 2024 and Q1 2025. This is primarily in the Sandvika and the Bergen portfolios. Compared to the second quarter last year, the average rolling rent per square meter is up 4.1%, mostly due to CPI growth and finalized projects.

The net income from property management came in at NOK 320 million, down from NOK 357 million in Q1 due to a combination of lower rental income, which I've already gone through, slightly higher OpEx as well as increased financing costs. Profit before tax came in at negative minus NOK 1.0 billion, including net value adjustments of negative NOK 1.2 billion related to both our investment properties, JVs and hedges. And I will come back with more detail on this number later on.

I have already gone through the rental income part, but I will give you some more flavors on the other P&L items. OpEx came in at NOK 72 million or 9.2% of rental income, which is somewhat above historical levels. This is primarily due to higher vacancy costs as well as letting related costs, and we also had a small one-off of NOK 2 million in the quarter. Looking at the first half as a total, the OpEx is 8.9% of rental income, which is more close to the historical levels. Admin costs are relatively stable at NOK 52 million and in line with expectation. The negative result from share of profit from JVs is due to an impairment of the investment in OSU which impacts NOK 128 million. OSU is a residential development company in Bjorvika, CBD Oslo East and the value adjustments is mostly related to lower expected growth in resi prices as well as higher return requirements.

Net realized financials came in at NOK 346 million, up NOK 20 million from last quarter. This is due to higher borrowing cost of NOK 15 million, mostly related to higher interest rates as well as a one-off of NOK 5 million. Value changes in our investment properties are negative with NOK 1.1 billion, and I will come back with more data on this later on. And then we had negative value changes in our financial instruments of NOK 84 million, and this is caused by a combination of slightly lower long and medium-term market interest rates as well as shorter remaining duration of maturity of the interest rate hedge portfolio.

The payable tax is also slightly higher than normal, and this is due to a reassessment of tax for one redevelopment project from previous years, which we couldn't offset against current tax loss carried forward. And this gave a negative net profit of minus NOK 855 million.

Moving then over to our rental income development. Looking forward, the model indicates that rental income in Q3 will be NOK 781 million, which is NOK 5 million lower compared to the bridge we presented in the first quarter. For 2026 as a whole, the total rental income in the bridge is down NOK 15 million compared to the bridge we presented in the first quarter due to an updated assessment of the portfolio. This graph is not a guidance. It just highlights the rental income based on reported events in existing contracts. As mentioned in previous quarters, we believe there is upside to this bridge going forward. Firstly, we aim to let out existing vacant space, which has a rental income potential of NOK 229 million per year. We also have market rent reversion potential of NOK 82 million.

And lastly, we currently have a few larger properties vacated in preparation for or already in project, which should support growth going forward. However, most of this is after the end of this bridge period. As an example, the strong net letting we had in the second quarter with both Coop and Multiconsult contracts will be phased in during 2028.

Moving then over to the property value, which is down NOK 1 billion to NOK 62.3 billion in the quarter. The value changes are negative with NOK 1.1 billion, a value decrease of 1.8%. The negative value impact is predominantly due to increased rate of return requirements driven by higher interest rate levels, and this is partly offset by increased CPI revisions as well as positive letting effects. We see that return requirements increased more in the fringe areas, while central located properties, which looks like being more resilient to interest rate increase. The value deviation between the appraises is now limited at 0.5% in the second quarter. CapEx came in at NOK 256 million in the quarter, which has also come down over the last few years.

We will continue to have a conservative and disciplined investment strategy going forward and prioritize defensive CapEx to secure occupancy and realize market uplift. The management portfolio net yield has increased in the quarter to 5.26%, up from 5.13% in Q1, and it's up 32 bps from 4.94% over the last 12 months. Fully let at market rent, there is solid upside with a portfolio yield at 5.83%. On the right-hand side, you can see that the net asset value per share is down from NOK 170 in Q1 to NOK 163 in Q2. NOK 6 of this reduction is related to the value adjustment in our investment properties and NOK 1 is related to impairment in our JVs. In addition to this, we paid out also approximately NOK 1 per share in dividend. This was then partly offset by a positive impact of nearly NOK 2 from our cash earnings in the quarter.

Moving then to our debt metrics. The ICR was stable at 2.16 measured over the last 12 months, but down isolated in the quarter to 2.05, predominantly due to higher interest costs. The leverage ratio increased from 47.6% to 48.6%, mainly due to the negative value adjustments in our properties. Going forward, we will continue to have a conservative approach when it comes to both leverage and interest risk to secure and improve our investment-grade rating. We have created a solid financial platform with an average time to maturity of our total debt of 4.0 years in the second quarter. And we had an active financing quarter also. We reopened a fixed bond at 5.5 years maturity and issued NOK 200 million, which we swapped to NIBOR plus 112 bps. We also issued new 6-year floating and fixed bonds under our new green bond framework, totaling slightly over NOK 1 billion, and the spreads here were 120 bps.

The debt capital market remain open for Entra at attractive levels, but we have seen some volatility in the spreads following the Iran conflict. As you can see in the graph to the right, we have undrawn bank credit lines of NOK 7.6 billion committed until 2028 and 2030. We did reduce our bank lines with NOK 1.2 billion during the quarter to improve funding costs, but with activities -- the financing activity in the second quarter, we still have ample available liquidity in the next 24 months. On the left-hand side, you can see that now nearly 72% of our debt is green, and we have the capacity to issue more green debt with our existing environmental-friendly property portfolio.

Lastly, moving to the cost of debt development. The all-in net financial cost is up to 4.50%, while the interest rate on our interest-bearing debt is up to 4.16% in the quarter. The forward curve has shifted up during the first half of the year, although it's down slightly from peak levels. Our interest rate forecast is based on the forward curve from July 3. Assuming this level, our cost of debt will increase in 2026, as you can see in this graph. This includes our existing interest hedges totaling 67% of our debt portfolio, which partly offset the effect of higher interest rates.

Sonja?

Thank you. Okay. So a few closing remarks before we go to Q&A. Well, first of all, operationally, this was a strong quarter for us. We delivered net letting of a solid NOK 131 million, which is the highest we've seen since back in 2020. And the letting also feeds our pipeline of refurbishment projects where we started 2 projects. Rental income of NOK 781 million is up 1.4% year-on-year. We have a solid financial platform. And during the quarter, we also updated our green financing framework in line with the EU taxonomy, expanding our future access to green financing. And we continue to take a conservative approach, both to leverage and interest rate risk. Profitability remains our key priority for 2026, both from increasing occupancy, from capturing the reversion potential and also from our ongoing projects supported by selective accretive developments, asset rotation and also a disciplined approach to capital allocation.

Our portfolio is well positioned to meet the future demand trends we are seeing and the long-term fundamentals of our letting market remains supportive. So we continue to focus on delivering operationally and the letting activity, which we have seen through the first half will provide profitable growth going forward.

I think that concludes the presentation for now, and then I believe we have some questions, Isabel?

Thank you, Sonja and Ole. We'll move on to the Q&A session. The first question is on the pipeline for letting. Given 2 large contract signings, how do you see your pipeline developing now?

Well, for the third quarter, we have -- we are actually quite optimistic. We have a good leads pipeline coming out of this quarter, several offers out. And we are, in addition, also very focused on building our leads pipeline into the fourth quarter. If you look at the fourth quarter, the outcome there will, to a large extent, depend also on a couple of large renegotiations, which will -- with expiry -- lease expiry in '28 and '29, which we expect also to conclude somewhere between the fourth quarter and the first quarter next year. But all in all, optimistic about the third quarter from what we see right now.

You have started 2 new redevelopment projects targeting yields on cost of in the range of 5.6% to 5.8%, while your all-in funding cost is now around 4.5% and portfolio yields have moved out to 5.3%. Why is this still an attractive use of capital? And what minimum spread over funding costs do you require before approving new development projects?

Okay. Well, we have, of course, a mix of projects in the project pipeline. Some are more value preserving, seeing that we have tenants moving out and assets which have been vacated, we put in the CapEx required to defend the cash flow and make the products competitive. The 2 projects we started this quarter are more in that bucket. We would, of course, like to see better yields on costs, but that's the way it is right now. And if you look at the allocation to more new project development, I think Christian Krohgs gate is a more example of how we think there where we choose to start a new development, seeing there that the yield on cost on that project is 5.7% versus what currently is prime yield of 4.5%, and it's an asset which should be valued around prime when it's completed. So you have a good spread there, and that kind of reflects the variance in the projects we work on. But we sit tight on the cash, but we still need to put some money into more defensive bucket of CapEx.

Next question is on valuations. Value changes were minus NOK 1.1 billion this quarter and minus NOK 200 million in Q1. What gives you confidence that today's valuation reset fully reflects current market clearing levels? And what are your expectations to value adjustments going forward?

Yes. I think we need to split maybe that answer in 2. You have the external factors and then you have the internal factors. Future value movements will be influenced by interest rate development and market yield expectations. But the net yield in our portfolio is expanded with 32 bps over the last year, which basically absorb -- partly absorbed some of these effects. In the same period, we also have increased vacancy, which basically means that we can provide some upside if we manage to increase occupancy going forward. And please also note that fully let at market rent, our portfolio yield is now 5.83%. When it comes to the more internal factors, our portfolio is centrally located at transportation hubs in Oslo and Bergen.

And as we commented earlier, the yield expansion is mostly related to [ Finch ] area and a lesser degree centrally here in Oslo. Also, we have quite a stable operation. Occupancy remains quite high. And as Sonja mentioned earlier, the tenant demand is quite solid still. Also, we have -- as mentioned earlier, we also have more or less 100% linked -- our contracts are more or less 100% CPI linked, which also creates some kind of offsetting factor on this. So in a sum, property values will remain sensitive to interest rates development, but the portfolio has certain characteristics that should help mitigate the impact of higher yield expectations going forward.

Thank you. EPRA LTV increased to 53.1% following the valuation decline. If property yields were to soften another 20 to 30 basis points from here, would protecting the balance sheet take priority over maintaining the current dividend policy? And should investors now assume a structurally lower capital distribution until leverage is back below your target range?

So we've already given some flavor on this, and there are offsetting factors, as mentioning earlier. According to our capital allocation framework, we target to distribute a minimum 30% of cash earnings and at the same time, assure that we have an investment-grade rating. Any changes of capital allocation will be handled through normal Board processes going forward.

Okay. Thank you. There are no further questions, then we'll conclude the Q&A session for today.

Okay. Thank you all for joining us today. And I think it just remains to say have a great summer, and we have to finish with a big 1, 2, 3 row. Bye.

Good morning all, and welcome Entra's first quarter presentation, moving directly to the highlights. Rental income in the quarter of NOK 800 million. That's NOK 26 million up or 3.3% compared to same quarter last year. Net income from property management of NOK 357 million in the quarter, up with NOK 37 million or approximately 11.6% compared to the first quarter last year. Net value changes of minus NOK 52 million in the quarter and value changes on investment properties were negative with NOK 199 million this quarter. Profit before tax of NOK 205 million and the NRV per share currently at NOK 170, up with NOK 1. We continue to see improvements in our key debt metrics and very pleased to see that Moody's have affirmed their investment-grade rating and also provided a positive outlook this quarter.

Operationally, it was a solid quarter. However, net letting isolated in Q1 was minus NOK 20 million. The underlying net letting was NOK 6 million positive when adjusting for timing effects related to a relocation, which I will get back to shortly. We have also started reporting on a new project this quarter in Christian Krohgs gate 2, where we are developing the asset in a joint venture with Skanska. It has been a good momentum operationally this quarter, and we have signed new and renewed leases with a rental income of NOK 121 million this quarter and contracts with an annual rent of NOK 64 million were terminated in the quarter. Net letting, as mentioned, of minus NOK 20 million in the quarter. This includes a negative net letting effect of approximately NOK 26 million from the relocation of Circle K, which was required to enable a large contract signed with [ Court Norway ] in the second quarter.

Adjusted for the negative net letting effects of this relocation, the underlying net letting in the first quarter would have been positive with [ NOK ] 6 million. Due to these timing effects between the first and second quarter, it is more appropriate to assess net letting for the first half under a whole. And based on what we have signed so far this year and also what we see of current lease activities, we expect that we will have a positive net letting for the second quarter and also for the first half of this year.

In the table at the bottom of the page, you can see the largest contracts signed in the quarter. A few comments on a couple of them. In Verkstedveien 1 at Skoyen in Oslo, we were pleased to renew a contract with the Norwegian Public Service Pension Fund for 8,000 square meters. This means that we now are preparing also to start the refurbishment of this building in a sequential phase. We have also signed with Circle K in Stenersgata 1. Circle K is currently our largest tenant in Schweigaards gate 16. This is a building which originally was developed as a new headquarter for Circle K. And over the last 10 years, they have gradually reduced their presence in this building and subleased material parts of their space.

So we have, over some time now, been working with Circle K to find suitable alternatives for them within our portfolio and are now very pleased to see that they chose to sign with us in Stenersgata 1. This enables us now also to start the second phase of the refurbishment of that building as we have signed 2 leases in this property. And by moving Circle K, we were also in a position where we could sign with Coop for their new headquarter building in Schweigaards gate 16. And very happy to see that we yesterday also could announce that we have signed a contract for 15,500 square meters with Court Norway and taking the entire building in Schweigaards gate 16.

The relocation of Circle K was executed in the first quarter, while the new contract with Coop was signed in the second quarter, which is why we need to assess the net letting for these 2 quarters as a whole. Our occupancy is currently at 94.3%, up from 93.8% last quarter. The change in occupancy is mainly explained by the fact that we now taken the investment decision in Stenersgata 1 to start the refurbishment, meaning that quite a lot of that space, which was vacated has been moved over to the project portfolio.

And I have, over the last quarters, been commenting on that we expect to see more fluctuations in occupancy ratios in the short term. This is mainly explained by 3 factors. Firstly, we are completing projects, which will be feeding into the management portfolio with different vacancy levels. Secondly, it depends on the timing of when we start new projects as exemplified by this quarter's changes.

And thirdly, it depends on the timing of when we sign new leases on space which has already been terminated. When we terminate a contract, it is immediately reflected in our net letting graph at the bottom right. It is also immediately reflected in the net rental income bridge, as Ole will go through, but it is not necessarily reflected in the occupancy rate as some of this terminated space has a cash flow for quite some time following the termination.

Last quarter, we announced that we had sold 50% of this property in Christian Krohgs to Skanska. This transaction was settled in the first quarter, and we have now established a joint venture, started the redevelopment of this building. This building is located only 3 minutes walk from Oslo Central Station. And here, Skanska has signed a lease contract for 35%. We have also signed a contract for the construction. It's a combination of refurbishment and new build volumes with Skanska at a fixed price contract. And the total project cost, including the initial land and property value is NOK 1.8 billion. And the remaining CapEx for Entra's 50% is approximately NOK 617 million.

So this is a very capital-efficient way for us to start this project. And also continuing the ongoing transformation in this very important part of our portfolio. Entra has approximately 200,000 square meters of management portfolio in the area around Oslo Central Station and also some projects in our pipeline further down. So very good to continue this transformation for us.

This building will be a top modern building, energy class A EU Taxonomy aligned and BREEAM certified, and we expect to see a yield on cost for this asset of around [ 5.7% ], which can compare to the current prime yields in Oslo around 4.5%. The completion of this building is planned for the fourth quarter of '29. If we move on to our ongoing development portfolio, we have now included Christian Krohgs gate 2 as a project we will report on. And the 2 other projects on this list have a remaining CapEx of NOK 195 million, and they are both progressing on -- according to plan, on time and at cost.

We have announced quite a lot of new leases over the last quarters. This also means that we are now starting to report -- in the coming quarters, we'll be starting to report on some more refurbishment projects, 1 in Kaigaten in Bergen, 1 in Verkstedveien at Skoyen, as already mentioned today, and the 1 Stenersgata where Circle K has signed. But this should feed into our list of reporting over the next couple of quarters.

A few comments on the Norwegian economy. During the first quarter, inflation in Norway has picked up somewhat, and the headline CPI came in at 3.6% for March, while the core inflation, which is the basis for Norges Bank's interest rate models is currently at 3.0%. In response to this, Norges Bank has adjusted its communication, while the policy rate has been held at 4%, the interest rate path has been revised upwards and the Central Bank has indicated that 1 to 2 rate increases may be required in 2026, depending on inflation developments.

Before gradually then rate cuts are indicated from 2027 towards 3.5% in 2028, as you can also see from the graph at the bottom right. Mainland GDP for Norway growth is expected to be around 1.5% in the years to come and also with a positive employment growth, as you can see from the top right picture. In Oslo, the employment growth has been somewhat lower than on the national basis, specifically within the private sector, which has not been benefiting the demand for offices in the Oslo market, where we currently also are seeing that public tenants are transitioning into more space-efficient workplace solutions.

With heightened geopolitical tensions and increased volatility in energy markets weighing over inflation and growth prospects, it is, of course, more uncertainty on these kind of outlooks. However, having said that, Norway remains in a strong position with its ability to both stimulate and support the economy through fiscal policies and public spending as they have proven to do in the past.

A few words on the letting market. Having a well-planned and central office is increasingly seen as a key productivity -- a key aspect for improving productivity, culture and attracting talent. We clearly hear this in all the discussions we have with C-level executives at our -- with our customers. This also entails that the decision on where to locate your office and how to organize your office has become much more strategic and thorough which entails that these processes are much more time-consuming. As an example, when Coop Norway came out, the first meeting on a search, the first meeting we had with them is more than a year ago. So it is a lot of work, and it takes a lot of time to get to these kind of large contracts.

Last quarter, I commented that the signed lease volumes in 2025 were in line with historical normal levels. However, based on [ Areal ] statistic database of lease expiries expected for '27 and '28, we had expected to see that the activity would be slightly higher. When we dive into the numbers for the first quarter, we are seeing that the activity in the letting market in Oslo was at a historic low. This may be a reflection of the increased uncertainty we are experiencing around us.

We typically see that decisions are postponed, take more time in times of uncertainty. So we will be following this closely going forward. But based on what we see from the lease expiry databases for Oslo, we would expect activity to pick up in the short term. However, we may also see that tenants now opt to make more short-term prolongations.

The vacancy in Oslo remains stable between 7% and 8%. Differences in different parts of the city in the secondary markets and some of the fringes, vacancy is above 10%. When you look at the market rental growth we've had in the past, it's been a fairly broad market rental growth and robust. And the consensus report, which Entra reports every quarter, expects now to see around 12% market rental growth in the next 3 years.

In our ongoing discussions, we clearly see that we are able to take out more market rental growth in the city center. The most -- we are located slightly below CBD pricing. So still a good sentiment to take out market rental growth there also based on the CapEx required to deliver the quality the tenants want. But somewhat more differentiated in the fringes and secondary market, depending on what kind of supply-demand balance you have locally.

A few words on the transaction market. The commercial property transaction volumes came in at around NOK 16 billion for the first quarter. That is more or less in line with normal first quarter. We are seeing quite a lot of market -- real estate deals marketed. But the broader transaction market continues to be a bit in a wait-and-see mode now with all the uncertainty emerging around us and also more -- less clarity on interest rate cuts based on the inflation. The financing markets remain accessible with good lending sentiment and also credit margins are currently favorable. As you can see from the top right graph here, Entra's consensus report, the prime office yield is now projected to increase slightly from current levels of 4.5% towards 4.7% in the short term before gradually assuming a downward trajectory again. I think that leaves it for me now. And the word is yours, Ole.

Thank you Sonja. In Q1, our financial performance improved compared to the same quarter last year. Rental income came in at NOK 800 million, up from NOK 774 million in the fourth quarter last year. We had net positive impact from finalized project of NOK 4 million and NOK 24 million in rental growth, mostly from annual CPI adjustments, which feeds into our income from 1st of January. The rental income is NOK 5 million higher compared to the bridge that we presented in the fourth quarter. This is mostly due to better letting effects than we had forecasted. Net income from property management came in at NOK 357 million. This is up from NOK 320 million in the first quarter last year. This is due to higher rental income, as explained earlier, and lower financing cost.

In the fourth quarter of 2025, we had positive gain from the forward sold development project, Holtermanns [ veg ] in Trondheim which had a positive impact, especially gain of NOK 101 million. Adjusted for this gain, we report underlying result improvement in net income from property management of NOK 33 million, and this is supported by both rental income growth, lower cost level and reduced financing costs. Profit before tax came in at NOK 287 million, and this includes net value adjustments negative with NOK 52 million. This is down from NOK 476 million in pretax profit in the fourth quarter, which included both the mentioned gain from the development project in Trondheim and a positive NOK 56 million in value changes, which explains then the reduction in pretax profit from the fourth quarter to the first quarter.

I have already gone through the rental income part, but I give you some more flavor on the other P&L items. OpEx came in at NOK 67 million or 8.4% of rental income. This is in line with historical levels and also in line with the same quarter last year. In the fourth quarter, the OpEx was particularly high due to timing of maintenance costs, which explains the reduction from the fourth quarter to the first quarter. Admin cost is also stable at NOK 49 million and in line with expectations. In Q4, we had a couple of nonrecurring items, which also -- which explains basically reduction in admin costs from the fourth quarter to the first quarter. The negative results from share of profit in joint venture is higher than normal as one of our partners sold the property below book values, and our share of that loss is reported in this line item.

Net realized financials came in at minus NOK 336 million or down NOK 10 million compared to last quarter. This is due to lower debt level as well as slightly lower commitment fees as we are working to optimize our funding costs. Value changes in our investment properties came in at negative NOK 199 million, and I will come back with more on this later on. While we had positive value changes in our financial instruments of NOK 147 million, and this is caused by higher medium and long-term interest rates. And this gave then the profit before tax of NOK 287 million.

Moving then to our rental income development. Looking forward, the model indicates rental income in Q2 will be NOK 786 million, which is NOK 5 million higher compared to the bridge that we presented in the fourth quarter. For 2026 as a whole, the rental -- the total rental income in the bridge is NOK 24 million higher compared to the bridge we presented in the fourth quarter, and this is due to letting effects. For 2027, we have also increased the impact of estimated CPI -- estimated high CPI in 2026, which then feeds into our 2027 rental income. The new CPI adjustment is 3.25%, which is the average forecast from Bank of Norway and Statistics Norway.

This graph is not a guidance. It just highlights the rental income based on reported events in existing contracts. As mentioned in previous quarters, we believe that there is upside to this bridge. Firstly, we aim to let out existing vacant space, which has a rental income potential of NOK 193 million per year. Secondly, we also have market rent reversion potential of NOK 135 million per year. And lastly, we have significant potential in our ongoing and upcoming project portfolio, although most of this is outside the bridge period.

Moving then over to our property value, which is slightly down to NOK 63.3 billion in the quarter. Divestments of negative NOK 553 million is related to the Christian Krohgs gate 2 project or joint venture project we have with Skanska, which we announced in the fourth quarter. 50% of that value totaling NOK 276 million is moved from investment properties to JVs and reported under other, as you can see in this graph to the left. Value changes were negative with NOK 199 million in the quarter, a limited value reduction of 0.3%. The negative value impact is predominantly value reduction in our Sandvika portfolio. The deviation between the appraisers has come gradually down every quarter over the last few years and is now insignificant.

Investments or CapEx came in at NOK 185 million in the quarter, which has also come gradually down over the last few years. We will continue to have a disciplined investment strategy and prioritize defensive CapEx to increase occupancy and realize market uplift.

Having said that, some more development projects are in the pipeline and the CapEx in the first quarter is below the full year run rate expectations. Portfolio net yield is slightly increasing to 5.13%, up from 5.04% in Q4, while the fully let at market rate, the portfolio yield is at 5.70%, which is unchanged from the fourth quarter. On the right-hand side, you can see that the net asset value increased slightly per share from NOK 169 in the fourth quarter to NOK 170 per share in the first quarter.

Moving then to our debt metrics, which also continued to improve in the first quarter. The ICR looks like have bottomed out and improved to 2.17x and that's measured over the last 12 months. Leverage ratio also improved from 48.8 -- sorry, 48.0% to 47.6%, while net interest-bearing debt to EBITDA is down to 10.8. We will continue to have a conservative approach when it comes to both leverage and interest risk to secure and improve our investment-grade rating.

In March, Moody's affirmed our Baa3 rating and changed our outlook from stable to positive. Further, the ICR trigger was reduced to 2.3 from 2.5, highlighting our high-quality real estate portfolio together with creditworthy customer base. We have created a solid financial platform and the average time to maturity for our total debt increased to 4.1 years from 3.6 years in the fourth quarter. We had a very active financing quarter. We started with reopening a fixed bond with 5.5 years maturity and issued NOK 250 million, which we swapped to LIBOR plus 104 bps. While the debt capital market was somewhat muted since the war in Iran started, we are now starting to see some more interest in the market at attractive terms. Secondly, we also extended NOK 8.3 billion in secured bank financing with 1 year to 2030. The bank spreads has come gradually down every quarter, and the bank market remains open with competitive dynamics.

And lastly, we did a new 12-year sustainable-linked loan of NOK 1.5 billion with Nordic Investment Bank at attractive terms, which is then linked to our science-based targets. The proceeds was used to repay the existing NIB loan, which is due in the second quarter 2027. As you can see in this graph to the right, we have undrawn bank credit lines of NOK 7.7 billion due in 2028 and 2030. We did reduce our bank lines with NOK 600 million during the quarter and an additional NOK 600 million after quarter end. This is to improve our funding -- total funding cost. With the financing activities we have now completed in the first quarter, we still have available liquidity in the next 24 months, and we will continue to work to optimize our funding costs during 2026. To the left, you can see that 70% of our debt financing is now green, and we have capacity to issue more green debt going forward due to our existing environmental-friendly property portfolio.

Moving then lastly to the cost of debt. The all-in net financial cost is down to 4.24%, while the interest rate on our interest-bearing debt is slightly up to 4.01%. As you can see from this graph, the forward curve has shifted significantly up in the period, although coming slightly down from peak levels. Our interest rate forecast in this graph is based on the forward curve from April 17. Assuming this level, our cost of debt may increase going -- somewhat during 2026, and this is partly offset then by interest hedges, which total 65% of our debt portfolio with 3.4 years time to maturity.

To give you some sensitivity, if the forward curve shifts up or down 0.5 percentage points, the impact on financial cost is approximately NOK 35 million in 2026 and NOK 70 million in 2027, all else equal.

So there, you were a bit fast. Closing remarks. First of all, I'm pleased to see that our rental income growth was 3.3% year-on-year and also net income from property management growth of 11.6% year-on-year, so providing stable rental income growth in operations in the quarter. And the net letting was positive when we take into account the timing effects as I have commented on. And we expect also to see positive net letting for the first half of this year based on what we now see in our pipeline.

We have done a good job on the financial platform as Ole was summarizing. Very happy to see that our investment grade has been reaffirmed and also given a positive outlook and extended our debt maturity profile and the new sustainability-linked loan we did with NIB based on our science-based targets is also clearly demonstrating that we are able to achieve tangible commercial value based on the environmental qualities of our portfolio.

And we've continued to see improvements in our debt metrics. Profitability continues to be our key priority in 2026, and we will continue to see rental income growth driven by CPI, but also operationally by increasing our occupancy levels and capturing the reversion potential in our portfolio as well as getting the ongoing development back into the management portfolio.

We continue to work selectively with accretive project development as exemplified by Christian Krohgs gate 2 this quarter and asset rotations also. And we will continue to have a disciplined approach to capital allocation going forward. we are working in a market environment where we see supportive long-term letting market fundamentals. We have a backdrop of a resilient Norwegian economy with a positive employment growth outlook. We have limited new office supply coming into the market also supporting occupancy and market rents.

And based on the lease expiry database for Oslo we would expect also to see support in the letting activity going forward. I think that concludes it for now, and we'll just check with Isabel if we have any questions?

Sonja and Ole we will then transition to the Q&A session. Sonja occupancy rate increased to 94.3% this quarter. What is the expected run rate here over the next year?

I think we got that question last quarter also. I think it's difficult to be very specific on the number because it's affected by the 3 factors as I commented on in my presentation, how much have we managed to let the projects before they come back into the management portfolio. And when do we start a new project based on assets, which currently are being optimized before we are ready to start some project development.

I don't want to give a number on that, to be honest, but we will be moving plus/minus the levels we've had through the year. And let's see, our clear target is to bring it back up above 95% into historic levels. We have the locations and the qualities, which should enable that. But it takes time. It's very dependent on also the market dynamics we're working in.

Thank you. Is it possible to get some color on the portion of larger contracts maturing this year relative to the given maturity profile?

The proportion of -- sorry, just repeat once again.

The larger contracts maturing this year relative to the given maturity profile?

Okay. If we look at our maturity profile in the management portfolio, we currently -- we don't have any very large contracts maturing in 2026, not 2027. So the larger ones are from '28 onwards. And I am seeing that we -- every year, we go through the contracts at risk and how we're doing, and I'm very comfortable with the way we're working now for '26 and '27. So I don't see a very big risk in the 2 next years, but we have a big job to do from '28 and onwards.

Admin costs decreased a bit quarter-on-quarter. What is your expectations for 2026?

Yes. We guided a little bit on this in the fourth quarter presentation. So we have been able to scale our admin costs every year over the last few years, meaning as a percentage of rental income, it's coming down. And we expect basically to continue that trend in 2026. So we assume that admin cost as part of rental income will be slightly lower than last year. But these are -- it's kind of difficult to exactly target it, but slightly improved scaling also in 2026 as a whole, the whole year.

Okay. Moving on. How do you view the risk of further outward yield movement given the higher market rate outlook? And how sensitive is the portfolio to additional yield expansion from here?

Yes. So we used 2 external appraisers in our valuation and average of that goes into our balance sheet. The appraisers, they need observable transactions, while this expectation in our consensus report is basically a year-end assumption. And it's important also that the recent increase in yield expectation is driven by high interest rates, which is driven by, again, a higher CPI expectation. So when the appraisers adjust their valuation, they will not only increase the yield, they've also increased their CPI assumptions in their forecast, which basically creates an offsetting factor in the valuation.

So maybe there's 2 messages here. One is that there's an offsetting factor from the CPI and then there's a kind of a timing effect. These changes usually happens over time as you have proofs of observable transactions in the market. And then obviously, all else equal, we will have a positive improvement in our values, right? So you have a timing effect on top of this. So if this increase gradual over time, it will be also partly offset by the timing effect that our values in the portfolio will increase with higher CPI.

Thank you. And with that, we'll conclude the Q&A session for today.

Okay. Thank you so much for joining us today, and have a nice day.

Welcome to Entra's fourth quarter presentation brought to you here from Oslo. Let me start by enlighting you on what you can see on this picture. This is Christian Krohgs gate 2 in Oslo, our planned redevelopment project, which we, in the quarter announced that we have entered into a partnership with Skanska to develop.

So moving on to the highlights. Rental income of NOK 787 million in the quarter. That is NOK 20 million up compared to same quarter last year, meaning also that the effects from previous divestments have been offset by an increase through projects feeding into the management portfolio. Net income from property management of NOK 425 million in the quarter, that is up with NOK 108 million compared to same quarter last year, mainly explained by the completion and divestment of our project in Trondheim. The net value changes in the quarter were NOK 56 million. And in that, we have also included the positive value uplifts on the investment properties of NOK 111 million. Profit before tax of NOK 476 million in the quarter, and our EPRA NRV is up with NOK 2 per share to NOK 169 in the fourth quarter. We've had a good quarter in respect of operations with a positive net letting of NOK 4 million, and we have also completed 3 projects this quarter, one new build project in Trondheim, which also has been forward sale. So upon closing of that transaction, we have taken a gain of NOK 101 million in the fourth quarter.

And our Board has decided to propose a dividend of NOK 1.10 per share for the second half of 2025, and this will be then decided at the Annual General Assembly on April 21. In addition to that, the Board has also decided to initiate a share buyback program of up to 0.5% of the company's shares based on the gains realized on the Trondheim transaction.

Moving on to operations. We have, as I said, had a good quarter in respect of letting. Pleased to see that gross letting came in at NOK 183 million in the quarter. And if we look at the year as a whole, it's also been an active letting year where we signed a total of NOK 555 million. So right up there with historic best levels. If you look at our terminated contracts, NOK 80 million in the quarter. Out of that, approximately 57% is related to contracts which have been resigned in the Entra portfolio and the net letting then of NOK 4 million this quarter.

A few comments on the largest contracts you can see at the bottom of the page. We were pleased to see that we prolonged and renegotiated with the Police, getting a good uptick on rent and signing 9.5 years new lease there. We will do some refurbishments for the Police here. And upon completion of that, we will prepare this asset for sale seeing that it's in a nonstrategic area for us. In Christian Krohgs gate 2, Skanska has signed 7,500 square meters. I'll get back to that shortly. In Kaigaten 9, Tide has signed 2,000 square meters, and that's also a project which we now will be preparing to start a refurbishment of this building, which is located right next to the train station in Bergen.

Our occupancy is down with 40 basis points in the quarter to 93.8%. And as I have commented on in previous quarters, we expect to see more fluctuations in our occupancy ratio going forward, explained by a mix of factors. Firstly, the terminations and negative net letting we've had in the past quarters will potentially affect the occupancy going forward if we do have not let those vacated -- terminated space before the new leases -- sorry. This may translate into increased vacancy if we do not sign new leases on this space before the existing tenants move out. This is, however, fully reflected in our rental income bridge.

If we take a look at also the timing of new projects will affect the vacancy and also the completed projects returning back into the management portfolio with some remaining vacant space will typically also affect the occupancy. So this quarter, the increase in vacancy is explained by the fact that the Brynsengfaret 6, one of our projects is feeding back into the management portfolio with an occupancy ratio of 83%. So if we move on to the projects which were completed in the quarter, Brynsengfaret 6, we had a refurbishment project here of 35,000 square meters. This has been completed in line with expectations, leaving us with a yield on cost of 5.8% and the building has now reached an energy class of C in line with the EU taxonomy.

In Sandvika, we have a small project, 3,400 square meters, which is a courthouse building let to on a 20-year lease to the courthouse administration. This has been completed with some increase on costs, leaving us with a yield on cost of 4.6% versus the initiated reporting of 5.3%. And finally, in Trondheim, the new build project, which we completed is also part of a larger project totaling 48,000, which has been realized in 3 phases over the last 6 years. So when concluding this project, we have built 2 sections here, the new regional office for the Norwegian Broadcasting Corporation and one section of office. Both have been sold to the 2 buyers, the Norwegian Broadcasting Company and the existing previous buyer of the Trondheim portfolio.

The total project cost here is NOK 611 million. That is NOK 73 million lower than what we initially started reporting on. And this is reflecting several factors. Firstly, we have managed to materialize some learning effects compared to the second phase, which was done with the same contractor and also the same team. We did a very favorable timing on that contracting. And also, we have transferred some of the lease-related risk and cost to the buyers as part of the forward sale. The transaction value of NOK 845 million includes also a tenant-specific outfitting of NOK 77 million for the Norwegian Broadcasting Company, which was settled as part of the transaction. And the return on investment on the project here is 25%. So this also is from a sustainability project perspective, quite an impressive project right up there amongst the top buildings in Norway, which also is part of the reason why we managed to do a decent or very good, I would say, transaction pricing on this building.

If we move -- look at the completion of the entire Holtermanns project, I would say that it is a very good example on how we manage to combine high-quality development, disciplined risk management and transactions and creating good value. If you took a look at the ongoing development portfolio, we only have 2 projects on this list now. Both of them are progressing according to plan with the remaining CapEx of around NOK 270 million. And in Nonnesetergaten 4 in Bergen, we have increased the occupancy from 83% to 91% in the quarter. The cost is up slightly with NOK 5 million, but that is also financed through tenant investments. And the Drammensveien 134 project at Skoyen, also here, we've seen that up slightly in the quarter. We continue to have a disciplined approach to investment, prioritizing CapEx to solving the letting activity on vacant space.

And as already mentioned, we will now prepare to start the project in Kaigaten 9 in Bergen and start reporting on that from the second quarter. That building is located right next to Nonnesetergaten on this list, meaning that we also expect to benefit a bit from the lease activity or letting activity and lease pipeline we already have on Nonnesetergaten 4. We also announced that we did a transaction in the fourth quarter with Skanska, where we sold 50% of the share in our building in Christian Krohgs gate 2 as part of a larger JV structure established for the redevelopment of this asset.

This asset is located only 3 minutes walk from the central station, which you can see is around the high-rise buildings in the background there. And the transaction was based on a gross property value of NOK 550 million, which was 2.7% above our Q3 book values. And as part of the transaction, Skanska has also signed a lease contract for 7,500 square meters in 10 years in the new project. And they have also prolonged their existing lease with us in their current location at Sundtkvartalet, which is located, you can see on the map, the top right corner of this picture. That was a project which was materialized in the same JV structure with Skanska almost 10 years ago.

And in addition to that, Skanska will act as a turnkey contractor for the construction of this project. And we clearly see that this partnership provides a very capital-efficient way for us to start the redevelopment of this project, which also will benefit this very strategic area for Entra, enhancing the qualities of the neighboring surroundings. The transaction closed in the first quarter and the project start is planned for the second quarter this year with the completion in the end of 2029. So that leaves us also with 4 years to solve the vacant -- remaining vacant space, seeing that we start the project with a pre-let ratio of 35%.

I would also like to take the opportunity to update you a bit on the ongoing transformation on the area around the Oslo Central Station. Entra has approximately 190,000 square meters in their management portfolio in the area surrounding the Central Station. And this part of the city is going through a transformation. This is the most central communication hub in Norway. And I remember when I came into Entra more than 10 years ago, we started setting targets that we would push rent levels about NOK 3,000 per square meters in this high-rise building, where you can see that the current top rent is now around NOK 5,000 per square meter, which means that we, in the past 10 years, already have seen a 60% increase in rents in this area.

Now on the photo on the right side here, you can see that the CBD East, which has been developed over the last 20 years in Oslo. In this area, top rents are now at NOK 6,500 per square meters. While on the north side of the tracks, rents are between -- top rents between NOK 4,000 and NOK 5,000 per square meter. So we clearly see that this gap is going to be narrowed over the years to come and the projects which start in the neighboring area will also reinforce and strengthen this transitioning, which has already started. So we also continue to work on optimizing our project in Stenersgata 1 Phase 2, which is located in the bottom left of this picture next to the NOK 4,000 mark. That's the Phase 1 of that building project. And once we get the anchor tenant we're looking for, we will also be able to start that project.

A few words on the Norwegian economy. It has remained robust through the global market volatility in 2025, and we are well positioned with the Norwegian oil fund also to stabilize the economy through fiscal policies and public spending. Mainline GDP growth is expected to be somewhere around 1.5% and 1.7% going forward. Employment growth has remained stable around 0.7% in the last couple of years and is expected to stay around those levels also going forward. In Oslo, however, we've seen that in 2025, the employment growth was lower, around 0.3%, and that was also mainly driven by the public sector, which currently is transitioning into more space-efficient workplace strategies, meaning that we are not getting much tailwind from the employment growth in the Oslo market currently.

The key policy rate has been reduced to 4% in September. Expectations from Norges Bank has been that we could potentially see further rate cuts with cut per year over the next 3 years. CPI for January, however, came in higher than expected with an adjusted CPI of 3.4% versus the Norges Bank's forecast or estimates of 2.9%. So forward interest rates now indicate lower probability of rate cuts in the near term. Entra's contracts are indexed based on the November index. And from January, that means 3% indexation for our portfolio.

If we move on to the letting market, we have seen that the total volumes signed in 2025 were in line with expectations, slightly lower maybe than what would have been expected based on the future expiries in the market database. We have, however, seen that the tenant search activity picked up through the fourth quarter coming also into the first quarter and are currently also seeing quite a lot of activity in the letting market. The vacancy is currently around 7% in Oslo, expected to remain around those levels with some variations between clusters, some clusters also above 10%. Same goes for Bergen vacancy levels.

Now if you look at the expected market rental growth for the next 3 years, according to our consensus report top right, the growth is expected to be around 12% over the next 3 years. If we look into Areal statistics database, we have actually seen that in the inner city center of Oslo, the area which I previously showed on the map, the market rental growth from the fourth quarter in '24 until the fourth quarter of '25 in the top segment was actually 13%, which clearly supports that there is willingness to pay for the CapEx required to deliver projects in this area.

New build volumes are expected to remain low in the next years with -- seeing that we also have had a few new project starts in the recent years. A few words on the transaction market. The financing markets are available and lending sentiment is positive with credit margins tightening through the fourth quarter, both in bank and bonds. The transaction volumes for 2025 came in at around NOK 87 billion, slightly below normal historic levels. We saw that the segment split, office represented 22% of that volume, while more normal levels would be between 40% to 45%. So more activity than within segments like logistics and also residential portfolios. The prime rent in Oslo -- sorry, prime yield in Oslo is currently around 4.5% and is expected to remain around those levels going forward according to our consensus report.

We can see that we have seen transactions supporting those prime yields and also that there is continued interest for prime assets and also central city offices in the market, primarily from equity buyers on these current yields. And our assessment is that at these yield levels and with the forecasted consensus on inflation, equity buyers are still able to achieve their return targets with 7% to 8% potential. And that we also see that the market players are confident or comfortable that we will see a real rent growth also in the years to come. So that also supports the current yield levels.

Okay. I think that leaves it for me for now, and we'll get some more details from you, Ole.

Thank you, Sonja. In Q4, our financial performance improved compared to previous periods. Rental income came in at NOK 787 million, up from NOK 767 million in the fourth quarter last year. We had positive -- net positive impact from realized projects of NOK 19 million and also a positive impact from CPI growth of NOK 17 million. This was partly offset by negative like-for-like of NOK 10 million due to increased vacancy as well as a negative NOK 5 million due to divestments. The rental income is NOK 15 million higher compared to the bridge that we presented in the third quarter. This is a larger than normal deviation due to a combination of positive one-offs as well as letting effects.

Net income from property management came in at NOK 425 million, up from NOK 317 million in the fourth quarter last year. In Q4, we had positive gain from the forward sold development project, Holtermanns veg in Trondheim of NOK 101 million. Adjusted for this gain, we report underlying result improvement in the quarter, supported by both rental income growth and by reduced financing costs. Profit before tax came in at NOK 476 million, which includes both the mentioned gain from the Holtermanns veg project as well as positive NOK 56 million in net value changes. In the fourth quarter last year, we had net value changes positive of NOK 457 million, which explains the reduction in pretax profit from the fourth quarter last year to the fourth quarter this year.

I have already gone through the rental income part, but I will give you some more flavors on the other P&L items. OpEx came in at NOK 80 million or 10.2% of rental income. This is above previous quarters. In Q4, the OpEx was particularly high due to timing of maintenance cost and to a certain degree, higher vacancy cost. The OpEx percentage level for the full year of 2025 is a realistic indication of the cost level also going into 2026. If we look at other revenue, other costs, this was net positively impacted by the gain of NOK 101 million on the forward sold Holtermanns veg project in Trondheim, as mentioned earlier.

Admin cost is up to NOK 55 million due to increased personnel costs and a couple of nonrecurring items in the quarter. We have managed to scale the admin costs for several years by offsetting some of the wage increases with efficiency measures and other cost reductions, and we target to continue to improve the admin cost ratio also for 2026. Net realized financials came in at NOK 336 million, which is down NOK 10 million to previous -- or to the last quarter. This is due to lower debt following the settlement of Holtermanns veg. Value changes in our investment properties were positive with NOK 111 million, and I will come back with more on this later on in the presentation.

We had negative value changes in our financial instruments of NOK 55 million, and this is mainly due to 1 quarter shorter duration in our positive market value positions from 2021 and 2022. And the value of the interest rate hedges will gradually be reduced until maturity. And this gave then a profit before tax of NOK 476 million.

Moving then to our rental income development. Looking forward, the model indicates rental income in the first quarter to be NOK 794 million. This is NOK 13 million higher than the bridge we presented in the third quarter. For 2026 as a whole, the total rental income in the bridge is up nearly NOK 40 million compared to the bridge that we presented in the third quarter, of which nearly NOK 10 million is due to higher-than-expected CPI, about NOK 15 million is related to letting effects. And lastly, some of the compensation we did for one-offs in Q3 was too conservative, and we, therefore, rebalanced our model slightly.

This graph is not the guidance. It just highlights the rental income based on reported events in existing contracts. There is upside to this bridge as also presented in previous quarters. Firstly, we aim to let out existing vacant space, which has a total rental income potential of NOK 211 million. In addition to this, we have available vacant space in the reported ongoing project portfolio with an annual rent potential of NOK 21 million. And lastly, there is a market rent reversal potential of NOK 161 million.

Moving then to our property value, which is slightly down to NOK 63.6 billion in the quarter. Divestments of negative NOK 841 million is related to the sale of Holtermanns veg. Value changes were positive with NOK 111 million in the quarter, which is a limited value increase of only 0.15%. The positive value impact is predominantly a slight increase in the CPI for 2026 compared to the estimates in previous quarters, and this was partly offset by a rent reduction on certain specific assets in the quarter. The deviation between the appraisals has come gradually down over the last few quarters and is now only 0.5%.

CapEx in the quarter was NOK 249 million, which has also come gradually down over the last few years. We will continue to have a disciplined investment strategy going forward and prioritize defensive CapEx to increase occupancy and realize market rent uplift. The portfolio net yields now stands at 5.04% and 5.70% fully let at market rent. On the right-hand side, you can see that the net asset value increased from NOK 167 per share to NOK 169 per share in the quarter. In addition to this, we also paid out NOK 1.1 in dividend in the fourth quarter, which brings the total dividend since the IPO to NOK 38 per share.

Moving then to our debt metrics, which continued to improve in the quarter. The ICR looks like have bottomed out and improved to 2.14 measured over the last 12 months. Leverage ratio also improved going from 48.8% to 48.0% and the net debt-to-EBITDA is down to 11.0. The debt metrics in the fourth quarter is supported by the gains of the Holtermanns veg sale. However, we will continue to have a conservative approach when it comes to both leverage and interest risk going forward. And we, therefore, expect a gradual positive development in our debt metrics going forward. This is supported by the running cash flow from our property management, a conservative and disciplined capital use as well as potential for value increases in our property portfolio over time.

We have created a solid financial platform in 2025 with an average time to maturity for total debt of 3.6 years. The debt capital market was open with tightening spreads also during the fourth quarter. We issued NOK 750 million in new green unsecured bonds, both 6-year fixed bonds, which we swapped to NIBOR plus 118 basis points, and we did floating bonds at 5.5 years at 113 basis points. In total, we have issued NOK 6.7 billion in bonds during 2025, and the debt capital market remains attractive and open in the beginning of 2026. As you can see in this graph to the right, we have undrawn bank credit lines of NOK 7.7 billion committed until 2028.

We have reduced our bank lines during the quarter to optimize our funding cost, but we still have ample available liquidity in the next 24 months. We also see that the bank spreads are coming in during the quarter, and we will continue to work to optimize our total funding costs during 2026. On the left-hand side, you can see that 68% of our debt financing is now green, and we have the capacity to issue more green debt with our existing environmental-friendly property portfolio.

Moving then to the cost of debt. The all-in net financial cost is down to 4.31%, while interest rate on our interest-bearing debt is slightly up to 3.97% in the quarter. The forward curve has shifted slightly upwards in the fourth quarter. However, our interest rate forecast is more or less unchanged from what we presented in the third quarter as we compensated higher interest rate outlook with lower credit margins in our bank debt during the quarter. As you can see in this graph, we estimate slightly increasing but relatively stable interest rates going forward, and this is due to improved credit margins, our existing hedges as well as future policy rating cuts according to market expectations.

As Sonja mentioned earlier, the Board has proposed to pay out NOK 1.1 per share in dividend for the second half of 2025. This corresponds to 32% of the cash earnings or the underlying cash earnings in the period. This is the same amount as we paid out in the first half of the year, which gives a total dividend of NOK 2.20 per share in 2025. In addition, the Board has decided to initiate a share buyback program of up to 0.5% of the outstanding shares with the proceed from the gain from the Holtermanns veg project in the fourth quarter. This totals approximately NOK 100 million in value.

The shares will be proposed to be canceled at the Annual General Meeting at the 21st of April. The Entra share is currently trading at approximately 33% discount to net asset value. And with the share buyback, we are efficiently buying our own assets at 15% discount. And we believe this is a good investment and creates shareholder value. Dividends and buybacks combined total capital distribution yield of approximately 2.4% and 36% of the cash earnings in 2025. The capital distribution level is in line with the revised dividend policy to distribute a minimum 30% of cash earnings with room to distribute more capital over time as financial conditions permits.

Okay. Thank you, Ole. So before I do some closing remarks, I think it's good to also reflect a bit about on the achievements we've had through 2025. First of all, we improved our financial performance and debt metrics. We have had solid gross letting volumes in what I would describe as a more muted demand environment in the Oslo market. We have had property value changes. So we're back in the positive territory here. And the financial flexibility has been secured through the restructuring of our bank facilities and also by reestablishing Entra in the bond market. We have clearly articulated our return targets and supported that by capital discipline across the portfolio and resumed semiannual distributions to our shareholders. We are also well positioned now to capitalize on previous investments in environmental qualities with an already very energy-efficient portfolio.

And from that to a few closing remarks, we've had -- pleased to see that we are now once again proposing cash dividends of NOK 1.1 per share and also that we are initiating a share buyback program based on the proceeds from the Trondheim sale. In the fourth quarter, we also see examples that we are able of unlocking value from the project development and transactions with the successful divestment in Trondheim and also the capital efficient and very value-accretive project realization we expect to see in Christian Krohgs gate 2. The letting market fundamentals continue to look promising, supported also by a stable Norwegian economy, where we expect to see also positive employment growth going forward. And I'm pleased to see that the activity in the tenant market picked up during the fourth quarter and also feeding into the first quarter this year.

And we are now also seeing the first signs of market rents reaching the breakeven levels we need to see to have accretive projects, particularly in the city center of Oslo. So Entra will continue to deliver future rental income growth driven by CPI, letting of vacant space and capturing the reversion potential in the portfolio and also selective projects going forward. So when we look forward, the priority is clear. We continue to focus on improving profitability through increasing the occupancy and capturing reversion potential through selective project development and asset rotation and continue to have a disciplined approach to capital allocation, preserving our balance sheet strength and funding flexibility and also deploying capital where we find it to be most accretive or also through capital distributions.

So I think that sums it up for today. And let's see if we have any questions, Isabel?

Yes, we have got one question in. Can you please provide more details on the rental market demand and discussion with potential tenants and the risk for higher vacancy?

Okay. So that's 3 questions. Let's see. A bit more flavor on the market. As I said, we are in a market where we have employment growth, which is a positive. What we saw through 2025, however, is that in Oslo, the employment growth was driven by the public sector tenants, which are currently reducing their space when renegotiated -- renegotiation. And in the private sector, we have experienced through 2025, more wait-and-see mode. I hope to see that we'll see more activity also within the private sector going forward following that we have at least had a few rate cuts. So hopefully, a stable demand side, that's our base case going forward. And if you look at where do the tenants want to go? They want to go more into the city center. So the tenant search activity, which we see now are much more heavily dominated towards the city center locations.

And if you look at the city center locations, our products are in the less expensive parts of the city center compared to CBD. So we can offer relative more value in our products than other locations in the city center. So I'm very confident that we will be able to bring our occupancy up. Having said that, we also experienced that the letting processes are very timely because our tenants need time to reassess how they want to sit and work. And we can easily use on the large searches more than a year before they conclude. And on the shorter ones, the absolute shortest is 3 months. So it will take time to get the contracts signed.

But based on our leads pipeline now, we have good activity, progressed also leases but then again, there's competition. So if you get -- if you win them, I'm very confident that we'll see occupancy come up in the short term, but we probably also will lose some of these competitions we are in. So I'm -- I think it's difficult to give clear guidance exactly on how our vacancy will develop in the short term. But I'm very confident that we're going to bring occupancy back about north of those 95% over time. But where we'll be through this year, somewhere between 93% and 95%, maybe, but it's difficult to be very precise on that.

Maybe also a few notes on net letting because we know also that we have 3 large tenants in this -- 3 of our large tenants in Entra who are on lease searches, and they will probably also conclude through 2026. So we're well prepared, work very well to ensure that we are going to be the preferred landlord. But at the same time, if you lose one of those, it will also affect our net letting through 2025. So it's a bit binary how we end up. But these large leases, they will still be sitting with us 1 through 2027, 1 through 2028 and 1 through 2029. So that also tells you that tenants are planning 4 years ahead, giving us time to solve the letting if they should choose to go elsewhere.

So a long answer. I hope that was helpful, but we are, of course, available for chat if somebody wants more flavor on that.

Thank you, Sonja. There are no further questions today.

Okay. Thank you all for following us, and feel free to get in touch if we can help with some more information. Have a nice day.

Good morning all, and welcome to Entra's third quarter presentation. Let me start by letting you know what you can see on this picture here. This is our building in Nonnesetergaten 4, where we currently have an ongoing project. As you can see, it's located spot on the central train station in Bergen and also with the metro next to it.

If we move on to the highlights in the quarter, rental income of NOK 767 million this quarter, which is NOK 3 million below the same quarter last year. Net income from property management of NOK 328 million, which is up then by NOK 10 million from last year and fairly limited net value changes this quarter with minus NOK 11 million. Profit before tax of NOK 326 million in the quarter. Our net asset value increased with NOK 1 per share to NOK 167, and happy to once again see that we have a positive net letting this quarter with NOK 10 million.

Our Board has decided to resume the semiannual dividends and at the same time, also revised our dividend policy. Since the IPO, we have had a dividend policy to distribute around 60% of cash earnings as cash dividend. Dividends were suspended in 2023 and '24 to strengthen our balance sheet in a challenging market environment. With an improved financial position and also seeing that the market is showing clear signs of stabilizing, we are now resuming our semiannual dividend.

The Board has also revised the dividend policy from distributing around 60% of cash earnings as cash dividend to now at least 30% as semiannual capital distributions, either through cash dividend or share buybacks. The revised dividend policy provides financial flexibility, allowing more room for accretive investments and share buybacks as well as dividends, depending on what provides the best shareholder values at any given point in time.

As we are transitioning into a revised policy, the Board has decided that the dividend for the first half of 2025 will be distributed as cash dividend of NOK 1.1 per share. Going forward, the Board will assess and evaluate capital distribution levels and form based on what yields best returns to our shareholders. This revised dividend policy does not mean that we are compromising on our return requirements. Our investments shall generate shareholder value, and we want to underline that by, at the same time, formalizing an ambition to generate more than 10% return on equity over the cycle.

The revised policy and return on equity ambition are key components of our capital allocation framework, balancing strength -- financial strength and ensuring that all capital is deployed with a focus on shareholder value, which Ole will get back to in more details later.

If we move on to our operations and the market, we have maintained a positive momentum from the second quarter and signed new and renewed leases with an annual rent of NOK 72 million this quarter. At the same time, we have had fairly limited terminations with NOK 17 million in the quarter. And out of that, 60% has been re-signed within our portfolio, leaving us then with a positive net letting of NOK 10 million in the quarter.

The occupancy is currently at 94.2%, slightly lower than in the second quarter, but unchanged compared to the first quarter. As I mentioned last quarter, we expect to see more fluctuations in the occupancy ratio going forward. The previous terminations, which have been reflected in our net letting and also now are reflected in the rental income bridge will potentially feed into vacancy if new leases are not signed before tenants move out of their contracts and it will be dependent on when we sign new leases or start projects on the buildings which have reached the end of life.

Now in the third quarter, the increased vacancy is due to some tenants moving out of buildings, which have reached their end of life and are being prepared for refurbishments. One of these properties is located right next to the Central Station in Bergen and one is located right next to the Central Station in Oslo. We have been working on optimizing costs and also scoping the project and office layouts to attract the right tenants. And we have now also seen an increase in market rents in the city centers of both these cities, and we have some active letting processes ongoing.

So we will be assessing when to start this refurbishment based on the ongoing lease discussions, our leads pipeline and as well as micro market rental development and supply-demand balance. In Oslo, we have seen that search activity has increased slightly before the summer, and we know that there are quite a lot of leases expiring in 2027, which should also provide more activity going forward. We have great locations. We have attractive products, and we are very confident that we will be able to bring our occupancy back to the historic levels, but we are also, at the same time, realistic that it may take some time, also seeing that we are working to capture the rent uplift potential in the portfolio, and currently, we are not seeing any support in growth in demand in particularly the Oslo market.

If we move on to our list of ongoing projects, they are progressing according to plan. The project in Trondheim is now close to completion and will be handed over to the buyer in the fourth quarter, seeing that we are close to completion, we have also resolved some of the contingency reserves and taken down the cost slightly. In Brynsengfaret 6, we have increased the cost with NOK 8 million. This is due to some tenant requirements, which is financed over the rent and thereby not affecting the yield on cost.

And the first phase of the project in Nonnesetergaten 4, which you saw on the front page has been completed and the tax authorities have now moved in, in the lower 8 floors of that building and the remaining vacant space is on the top floors in that building. The main part of the refurbishment of Malmskriverveien 2-4 is completed and the tenant has moved in. So we will finalize the project reporting next quarter. And in Drammensveien 134 is also progressing according to plan, and the remaining CapEx in all of these projects is now NOK 460 million.

We continue to have a disciplined approach to capital allocation, prioritizing project CapEx supporting our letting activity in the short term. If we move on to a few words on the market. The Norwegian economy is strong and well positioned to both stimulate and support its economy through fiscal policies and public spending with its sovereign wealth fund. Norway's economy has remained robust through 2025 and the Mainland GDP has been higher than expected, supported by public spending, business investments as well as private consumption as lower interest rates and solid wage increases has started to feed into the economy. The mainland GDP growth is expected to be around 1.5% to 2% going forward.

Norges Bank's initial rate cut of 25 basis points came in June and was followed up with another cut in September. So the key policy rate is currently around 4%. And the latest forecast from the Central Bank is that we will see potentially one interest rate cut per year over the next 3 years. The CPI came in at 3.6% in September, which was in line with market expectations. The core inflation, which is the basis for the Central Bank's interest rate models, came in at 3% and was below the estimates from the Central Bank.

Employment growth is expected to remain slightly positive going forward. In Oslo, the employment growth over the last year has primarily been within the public sector, which we also see are currently moving or transitioning from one desk per employee policy to free seating and underutilization. And at the same time, the private sector is focusing more on cost reductions and thereby also reducing space. So currently, employment growth is not contributing to net office absorption in the Oslo office market.

If we move on to the letting market, we have seen that year-to-date in 2025, signed lease volumes have been more or less in line with historical levels. However, lower than one would have expected for the second and third quarter, knowing that there is quite a large chunk of lease expiries coming in 2027. According to [ Eiendom ] statistics database, there is around 900,000 square meters to be up to expiry in 2027 compared to 700,000 in 2026. And we know that typically the large tenants, they start to plan for this 3 to 4 years ahead of an expiry, while the smaller tenants, they start 6 to 24 months before expiry.

So this should mean that we should see more activity in the letting market going forward, and we also then expect to see more lease searches coming out in the months to come.

The vacancy is currently around 7%, as you can see from the top right graph and expect it to increase slightly going forward. We see that there are variations between the different parts of the city with vacancies between 6% to 8% in the more central areas and in parts of the city where you have older building stock or in some of the fringe areas, we are now also seeing that vacancies are above 10%.

As you can see from the lower right graph, there is limited new supply coming into the market in the years to come. A few words also on expectations for rental growth with economic growth continuing. As a base case, the letting market fundamentals are promising for Oslo going forward, particularly in the city center, where we believe that rents should increase more than CPI going forward, seeing that there is very limited new supply and also a drive towards the center from tenants.

As you can see from the top right picture, the market consensus reports expects to see that we will have 12% market rental growth in the Oslo market as a whole over the next 3 years. And the most recent data points from [ Eiendom ] statistic, which came out this week, also show that we have seen top rents in the inner city increase with 10% so far this year, which means that the market rents now are converging towards the levels we need to see to be able to start new build projects in the city center of Oslo.

If we move on to the transaction market, the financing markets are available and lending sentiment remains positive. Debt capital markets are open and attractively priced. We have done quite a lot of financing in the quarter and are clearly seeing that credit margins have been tightening, both in bank and bonds. The transaction volumes year-to-date have been around NOK 50 billion and expectations in our consensus report is that it will be around NOK 80 billion for the full year, in line with last year's activity.

More real estate deals are currently being marketed, but the market is still in a bit of a wait-and-see mode due to recent global market volatility and interest rate volatility. As you can see from the consensus report also top right, the prime yields are currently around 4.5%. This has also been supported by transactions during the third quarter. And we see that the prime yield transactions are driven by buyers in the equity buyer sector, meaning pension funds. Ole, the floor is yours.

Thank you, Sonja. In Q3, our financial performance is slightly down compared to the second quarter. Rental income came in at NOK 767 million, more or less in line with the NOK 770 million we had in the second quarter. Compared to Q2, we had negative impact from net letting of NOK 7 million due to increased vacancy, which was partly offset by positive development -- positive contribution from our project portfolio of NOK 4 million. The rental income is NOK 4 million above what we highlighted in our rental bridge in the second quarter as we had less negative one-offs than expected.

Net income from property management came in at NOK 328 million, down from NOK 352 million in the second quarter. In Q2, we had especially low OpEx, while in Q3, this reverted back more to historical levels. In addition to this, we have NOK 13 million higher financial costs compared to the second quarter, which is a combination of many -- several smaller items, which I will come back to on the next slide. Profit before tax came in at NOK 326 million, and this includes negative net value changes of NOK 11 million, while in Q2, the net value changes was positive with NOK 191 million, which explains the reduction in pretax profit from the second quarter to the third quarter.

I've already gone through the rental income part, but I'll give you some more flavor on the other items. OpEx came in at NOK 63 million or 8.2% of rental income, which is in line with historical level and also the third quarter last year. In Q2, the OpEx level was particularly low at 7.5% of rental income. Admin cost is also stable at NOK 50 million as we have managed to offset wage increases with other cost reductions. As we've already mentioned, we target to have an admin cost for the full year of around NOK 200 million.

Looking then at the other revenue, other costs, this was positively impacted by net gains of NOK 50 million on the forward Holtermanns project in Trondheim, which is expected to be completed in the fourth quarter. Net realized financial increased to NOK 346 million, NOK 30 million higher than we had in the second quarter. This is not due to increased interest rates or debt volumes, but the combination of several other items. The number of days in the quarter impacts NOK 3 million, and we did buybacks of nearly NOK 1 billion of short-term debt -- short-term bonds, which impacts NOK 4 million.

In addition to this, we have capitalized NOK 3 million less in interest costs due to lower project activity. And lastly, we have NOK 2 million higher commitment fees due to more undrawn credit lines. Net value changes for our investment properties was negative with NOK 88 million. I will come back on this later on. And we had positive value changes in our financial instruments of NOK 77 million caused by higher medium- and long-term interest rates. And this gave in some profit before tax of NOK 326 million.

Over then to our rental income development. Looking forward, the model indicates rental income in the fourth quarter of NOK 772 million. This is similar to the bridge that we presented in the second quarter. If we look into 2026, we can see that the positive net letting we had 2 quarters in a row has started to impact the bridge positively with higher rental income trends compared to the bridge we presented in the first quarter and also higher than the bridge we presented in the second quarter. This graph is not a guidance. It just highlights the rental income based on reported events in existing contracts.

It is upside to this bridge, particularly in the latter part of the period. Firstly, we aim to let out existing vacant space, which has a rental income potential of NOK 202 million per year. In addition to that, we have available space in our ongoing project portfolio, which has a rental income potential of NOK 55 million a year. Thirdly, there is market rental -- market rent reversion potential of NOK 247 million. And lastly, we expect to relet space that already feed into vacancy in this bridge following terminations in previous periods.

Moving then over to our property value, which increased to NOK 64 billion in the quarter. Total value changes are NOK 235 million, of which value changes in our investment properties are negative with NOK 88 million, which is a value reduction of 0.15%. We have positive value impact from net letting and a slight positive also from market rents, but this was offset by increased void on a couple of assets we are preparing for project, which is at the end of the lifetime. And in addition to this, the appraisers have also reduced their forward CPI assumption slightly on our portfolio.

The deviation between the appraisers is now very limited at only 1.3%, and this has come gradually down over several quarters. CapEx in the quarter was NOK 315 million, mostly related to the 5 ongoing reported projects. We will continue to have a disciplined investment strategy and prioritize defensive CapEx to increase occupancy on existing portfolio and realize market rent uplift. On the right-hand side, you can see that our net asset value increased also slightly in the quarter from NOK 166 per share in second quarter -- NOK 666 (sic) [ NOK 166 ] per share in the second quarter to NOK 167 per share in the third quarter.

Moving then over to our debt metrics, which continued to have a slight improvement in the third quarter. The ICR looks like have bottomed out and also improved slightly to 2.04 measured over the last 12 months. The leverage ratio improved from 49.1% to 48.8%, while our net interest-bearing debt to EBITDA was flat at 11.7. We expect to continue a gradual improvement in our debt metrics, and this is supported by our running cash flow from our project management, combined with continued capital discipline. In addition to this, there is potential for value increases on our portfolio over time.

We have created a solid financing platform in 2025 with an average time to maturity of our total debt at 3.8 years. The debt capital market was open with tightening spreads during the third quarter. We have issued NOK 2.3 billion in new green unsecured bonds with 5-year bonds at 115 point spreads and 6-year bonds at 128 point spreads. And after the quarter end, we issued a new green fixed 6-year bond at 118 basis point spreads. As you can see in the graph to the right, we have undrawn bank credit lines of NOK 8.8 billion committed until 2028. We have reduced our bank lines during the quarter to improve funding costs, but still we have ample available liquidity over the next 24 months. We also see that the bank spreads are also coming in during the third quarter, and we will continue to work to optimize our total funding cost going forward.

On the left-hand side, you can see that 66% of our debt financing is green, and we have capacity to issue more green debt based on our existing environmental-friendly asset base. We will continue to have a conservative approach when it comes to both leverage and interest rates going forward. And with the gradual improvement in our credit metrics and continuous capital discipline, we believe that we are on the path for a rating upgrade in the future.

Moving then over to the cost of debt. All-in financing -- financial cost is up from 4.23% to 4.38%, while the interest rate on our interest-bearing debt is down to 3.91% in the quarter. Despite a good credit margin and the second cut from the Norwegian Central Bank of 25 basis points in September, our interest rate forecast is slightly higher compared to what we presented in the second quarter due to an upward shift in the forward curve.

Despite this, over the next 12 months, we estimate relatively stable interest rates due to improved credit margins as well as our existing interest hedges. As Sonja talked you through earlier, we are now resuming shareholder distribution under a revised dividend policy. As you can see in this graph to the right, we paid out an increasing cash dividend up until 2022 before suspending dividend in 2023 and 2024 to focus on strengthening our balance sheet following challenging markets. We have now decided to pay out NOK 1.1 per share in cash for the first half of 2025, corresponding to 30% of the cash earnings in the same period.

On an annualized basis, this corresponds to a dividend yield of 1.9% based on yesterday's share price. The payout level is in line with the revised dividend policy to distribute a minimum 30% of cash earnings to the shareholders in form of cash dividends or share buybacks. With this policy, we also increase the flexibility to optimize our capital allocation to balance different objectives. We will maintain or improve our investment-grade rating and at the same time, provide a floor for capital distribution while opening more flexibility for either share buybacks or growth investments, whichever creates most value for our shareholders.

As Sonja also pointed out, we are not compromising on our return requirements or our commitments to create shareholder value. To underline this, we are formalizing our ambition to generate a return on equity of at least 10% over the cycle to ensure a disciplined long-term capital allocation. Internally, this will also help us to continue to strengthen our commercial mindset and alignment around profitability, project returns and cost discipline. We will have projects with higher returns and higher risk, and we will have projects with lower return and lower risk.

However, setting an overall return on equity ambition for our total portfolio will help us direct capital to assure best risk-adjusted returns. Our return on equity drivers includes the cash flow from managing our property portfolio, and this includes our cost-efficient financing platform, accretive project development and transactions and property value appreciation over time. This is a long-term ambition over a cycle, which typically can last up to 10 years.

Looking at the graph to the right, in the current market environment, this might look like an aggressive ambition given that we have seen below 5% return on equity over -- in the 2020s and 5.9% over the last 12 months. However, our historical performance shows that over the last 10 years, our average return on equity has been 12.6%. We consider above 10% return on equity to also be achievable in the future given a balanced macro and office market fundamentals.

So summing it up, we have a portfolio of high-quality assets and project development opportunities that are going to generate capital through cash earnings, gains from asset rotation as well as value appreciation with deleveraging over time. Our core priorities for capital use will be the investments required to preserve asset values, securing financial strength to maintain or improve our investment-grade rating and distribute at least 30% of our cash earnings in capital to our shareholders.

Excess capital will be distributed -- will be allocated between accretive growth investment that supports our return on equity ambition of over 10% over a cycle and additional direct shareholder distribution either through cash dividends or share buybacks. Overall, we believe that this framework gives us the flexibility to both invest in growth and return capital to shareholders, which we believe will support attractive shareholder returns over time. Sonja?

Okay. Thank you, Ole. A few closing remarks before we take some questions. We are pleased to be resuming dividends for the first half and paying NOK 1.1 per share in cash dividend. And the revised dividend policy with a capital distribution of at least 30% will provide more flexibility for either share buybacks or growth investment, whatever creates most shareholder value over time. And to underline this, we have now also formalized an internal ambition to generate a return on equity over time of 10%.

The revised dividend policy and return on equity ambition are key components in our capital allocation framework, as Ole mentioned. The Norwegian economy or economic activity continues to increase as lower interest rates and the strong wage growth has started to feed into the economy. And we expect to see stable employment growth going forward and also further rate cuts are expected to come in the years to come. Now with continued economic growth, the long-term letting market fundamentals are promising. We expect that the activity in the letting market should pick up, knowing that there are quite a few contracts there up for expiry in 2027.

And we are also seeing that -- sorry, market rents are converging to the breakeven rents we need to start projects in the city centers of Oslo and Bergen, which clearly is a good sign. And we are optimistic that we should be able to start some of these refurbishment projects in the quarters to come. Now we have a strong organic levers for growth, as Ole went through, both in the CPI adjustments, letting of vacant space reversion potential and projects. So we continue to work to deliver growth in the quarters to come. I think that leaves it for today. And I don't know if we have any questions, Isabel or Knut, I don't know.

Thank you, Sonja and Ole. We can -- we have a question. What are the specific actions and initiatives that will enable you to reach above 10% return on equity through the cycle?

Yes. Entra has a solid foundation. We have attractive high-quality assets at the clusters with -- at central transportation hubs in Oslo and Bergen. We have long-term clients, solid clients with CPI-linked contracts. Important for us first is to capture the organic growth, meaning increasing or reducing vacancy and capture the market rent reversal. In addition to this, it is -- we need to continue to optimize our funding costs and capitalize on the financing platform we have set up in 2025. Over time, with balanced macro and office market fundamentals, we should also have accretive project development, asset -- positive asset -- contribution from asset rotation as well as value increases on our portfolio over time. So in sum, this will basically drive up the return on equity above 10% over a cycle.

Thank you. What do you mean by a balanced office market? And what is your outlook for the market in your areas?

Well, first of all, I think economic growth supporting demand is, of course, an important driver for rental income growth and also that we have some normalized vacancy levels in the markets where we are operating, providing support to get the rental income growth we are expecting to see going forward. And currently, we also see that the market rents are slightly below the breakeven rents to get to the project returns we want to see on the land bank or new builds. However, that is also in the move. So we hope to see that we will get some more support from market rental growth also to start new projects because it has also been an important part or an important lever for the return on equity in the history that we've made some good projects.

And the projects we make, they're also in the clusters, which we are working to transform. So we have previously seen that when we do new projects in the [indiscernible] quarter, it increases the entire rent on the portfolio in that area. And that's also something we are now very strongly positioned to do around the Central Station. So if we can start new projects in the area around the Central Station, we will harvest on a portfolio of 200,000 square meters of management portfolio when the market rent is pushed up by the project developments we do. And in the long-term perspective, that is also part of our picture when we look to get to the return on equity ambition of above 10%.

Thank you, Sonja and Ole. We'll conclude the Q&A session for today.

Okay. Thank you. Thank you all for joining us, and see you again next quarter.