Fabege Stock

Good morning, and welcome to Fabege's Q3 Report 2026. My name is Bent Oustad and I am the CEO of the company and together with me I have Asa Bergstrom, our CFO and we are also so lucky to have Viktor Byrenius from Pareto together with us in this studio as a moderator for the questionnaires afterwards.

With that, we kick off today's presentation. And I always start to repeat just a short glance of who Fabege are. We are a modern -- we have a modern portfolio with focusing on Stockholm, and it's occupied by high-quality tenants. We own, develop and we also manage all the properties with focusing on creating attractive working places and a good living in superb locations in Stockholm.

So our key strength that's always important for us is our customers. We have a very high consumer satisfaction index, and it is highlighted by strong track record in serving our customer needs. 95% of the tenants say they will recommend Fabege as a landlord, and that's important for us in the daily work we are doing all the day. We also have the long-term lease contracts as a foundation, and I'll get a little bit back to that later on in the presentation.

We have our own employees across the entire value chain, and that also gives us further advantages while all the properties are also located in clusters.

It gives us some economies of scale. We have the opportunity to create engaging meeting places. And by that, I mean more or less focusing on creating the 15-minute city in all our core areas. We have excellent capabilities to deliver large and complex projects from start to finish. We have done that several times, and we will do it forward as well. Right now, the larger projects are a little bit smaller or less than it used to be, but we have the projects in the portfolio.

And we also have strong capabilities, and we are best-in-class when it comes to ESG initiatives and environmental results. That's also highlighted by our customers in different surveys.

So if I just look at the Q3 numbers separately, not year-to-date figures, only the Q3 figures, the net letting ended at plus SEK 55 million for the quarter. We are happy with that result and the rental income increased by 2.3% from second quarter to third quarter. The surplus ratio for the third quarter was 76% and profit from our residential development ended at plus SEK 33 million. And year-to-date, it's SEK 112 million from the residential development.

Value changes from the property portfolio, also I will get back to that a little bit later. We ended at SEK 259 million in the quarter and the occupancy rate stayed at 87%. And during the quarter, we also made some changes to the executive management team and everything in accordance to that is booked in our books and the P&L this quarter. So with that, Asa, I hand it over to you.

Thank you, Bent. To go through the P&L income statement. The rental income came in at SEK 2.7 billion. That's an increase of almost 4% divided into separate items. We had a negative rental growth in the identical portfolio of minus 1.2% relating to previous year's negative net letting. On the other hand, we had a positive impact from projects that were finalized during last year and the beginning of this year, contributing with approximately SEK 132 million during this period. The net operating income, as Bent mentioned, from the residential development came in at SEK 112 million and the net operating income from property management at almost SEK 2 billion, as you can see here in the P&L.

Central administration was in line with last year, SEK 78 million, and the net interest expenses increased a little bit to SEK 741 million, mainly due to higher STIBOR during the year. Ground rents in line with previous years and the share in associated companies also decreased to minus SEK 82 million, of which minus SEK 74 million is related to Arenabolaget and roughly SEK 9 million relating to a transaction of building rights -- residential building rights within Birger Bostad. And thus, we saw in total profit from property management of SEK 1.166 billion, up around 11% in comparison to previous years.

As Bent also mentioned, we see unrealized value changes of a total of SEK 120 million during the year. We have had now 2 quarters of positive valuation uplifts. And also this quarter, we saw a value uplift in the derivatives portfolio relating to increases in long-term interest rates. So a profit before tax of SEK 1.4 billion. And the tax came in at minus SEK 225 million, also impacted by some positive items relating to a transaction previous in the year and also the valuation of some carryforward losses that we could recognize after a court ruling previous this year. So in total, SEK 1.2 billion.

This quarter, we have valued roughly 45% of the property portfolio externally with the appraisers, Newsec and Cushman & Wakefield. And as Bent mentioned then, the value change in the quarter of SEK 259 million. We saw the yield coming down to 4.55%, a decrease of 4 basis points since year-end. And if we look at how it's divided between the different market areas, we can see that City provided SEK 500 million plus during this 9 months, while Solna and Hammarby are still on the minus side, residential also a little bit on the positive side. In total, we have invested almost SEK 1.5 billion in the management portfolio together with projects and also development properties, which are the residential development within Birger Bostad.

And a few comments to the key ratios. Equity per share, SEK 121 and the EPRA NRV SEK 147 per share. Positive return on the property portfolio, of course, since we now have also recognized positive value changes. The surplus ratio in line with last year. Also equity ratio and loan-to-value in line with previous year. And the debt ratio improved to 12.8x, in line with our long-term target. And also, we could see the interest coverage ratio increased to 2.7, good signs.

On the financing side, it's continued to be a very good market. We have very good access to financing from both the capital market and from our banks. We have refinanced everything that is up for refinancing this year, and we have initiated also next year's refinancing with banks. There's been some volatility on the capital market when it comes to margins, but we took a very good opportunity in August to make some new bond issues where we came out with a 5-year bond, SEK 600 million at a margin of 103 basis points. This would be somewhat higher in today's environment, but a very good opportunity for us.

And we have also entered some new swaps. During the second quarter, we entered some plain vanilla swaps of SEK 1.9 billion, 5-year swaps. And now after the summer, we have done some of the new callable interest rate swaps, SEK 1.5 billion at levels below 2%, which provides us as long as they remain with a positive cash flow as it looks now. And we are happy with the undrawn credit facilities of SEK 6 billion, which gives us safety, and we feel very secure that we will refinance everything that comes up in the future -- in the near future. So a very stable financial position.

And then when it comes to interest rate swaps, we have seen an uplift in the average interest cost of 2.91% now compared to 2.82% at year-end, but actually today back at below 2.9%. Around 44% of the portfolio is fixed and with a fixing period of 1.3 years. And if we include the callable swaps, that increases a little bit to 1.6 years. So I think we are happy with the situation as it looks today. And I think that's all I have for the time being. So back to you, Bent.

Thank you. Yes. So if you look at the occupancy rate in the management portfolio at end of Q3, it's at the same levels as in Q2. So it's 87% occupied. And we very well know that the easiest way for us to create shareholder value is to rent out the existing vacant premises. But if we go over to the net lettings, the net letting for the quarter ended at plus SEK 55 million. The large new lettings, we sent a separate press release on that one during July. But new lettings ended at plus SEK 93 million and terminations at SEK 38 million. And the large termination was more or less mentioned in the media in Q3 '25 when SOS Alarm said they would move out of our premises and to a new location in the city. And the lease contract runs out in second quarter 2028. Coming a little bit back to that later on.

So the renegotiations for the third quarter totaled SEK 90 million. It is an uplift of 1.9 million (sic) [ 1.9% ]. But if you look further into the figures, renegotiated rents rose up to SEK 60.4 million, so an increase of 3% and prolonged existing terms was SEK 31 million. So we're quite happy with the result this quarter.

Year-to-date, the total renegotiated amount is SEK 320 million, and that's a slightly decrease of 0.6% for the total portfolio. Renegotiated with different terms, SEK 165 million and prolonged on existing terms, SEK 152 million, total SEK 320 million. So that brings the total net lease for the year-to-date figures to minus SEK 7 million. And as I mentioned in my CEO letter this morning, we have had a nice kickoff of fourth quarter. So we are quite enthusiastic and ambitious for the last quarter. Also, SEK 136 million of the maturities in '26 and onwards have already been renegotiated within these figures and earlier quarters.

And if you dive a little bit further into the renegotiations we have done, it's a healthy mix among all market areas and all segments. Very often when they listen to media and we hear different roundtable discussions. It's a lot happening among governmental tenants, et cetera. We feel we are in all kind of markets and segments. And also that's what you see on the right side here is a nice mix of different tenants.

Two contracts above 1,000 square meters during Q3 and the same with the new leases are also in all kind of categories. And one contract above SEK 10 million, and then you all know that's, of course, the DNB Carnegie contract. If we divide it into the different segments we have, different areas, Stockholm -- it is dominated by Stockholm in the city this time, but we see activity in all our clusters, and that's important for us.

So the rental development, we gave -- this is not a guiding, but this is what's in our book already decided. So the forthcoming quarters, and we want to, of course, accelerate this. And if next quarter, when you also see fourth quarter here, you have the full effect of the DNB Carnegie contract, you have the full effect of the Mimer project and you have the full effect of Wenner-Gren Center that we come back to a little bit.

I mentioned here a slightly drop in Q4 2026. That's a one-off effect, more or less an IFRS effect -- auditing effect, meaning we have had some rebates to some customer that we now are renegotiating the whole contract, and then we take the full effect of the planned discount there. The new contract will increase our cash flow effect, and we try to focus on that this time.

So I mentioned in the beginning, our customers, is the most valuable we have in the company. The 10 largest tenants you have on the right side here, still the DNB Carnegie is renegotiated, but this is the old contract because the new one runs into effect from the third quarter 2027. So we will update it then, and they will be #3 on this site. The WAULT on the top 10 tenants will then go close to 10 years. And in total, we have 700 customers, but the 10 largest accounts for approximately 30% of the total rent, and they have a long WAULT. Yes, I think that is it.

So if you look at the trends, and this is Fabege's view and my view on the market trends, what we see, the rental market, last quarter, I said was slightly strong in the CBD. This quarter, I say it's stronger, and it's a good continued activity in the CBD portfolio. Rent levels have started to increase in areas where low vacancies and less alternatives on new productions. There is more tempo in the leasing activities as well. And we also see a stable rent levels in the Greater Stockholm that's also reflected in the figures we've shown you here today.

We see a more mix of tenants behavior. Still some tenants are reducing square meter in existing leases, but also more and more tenants changing their policy to be in the office at least 4 days a week. And I see someone do the analysis and say they will be in the office 4 days, but the policy is start to be more and more at least 4 days in a week. So that's also -- we see that on activity on ground levels, activity in the parking lots, et cetera, et cetera. So that's a good sign for us.

Suppliers to all the industries in Sweden that are really growing, even if it's in the Space industry, if it's in the Data Center industry, if it's in different industries. Suppliers there have -- some of them have quite high activity. And we see them around now looking for future relocation and opportunities, not all of them, but some of them. And still, we see also the growth in start-ups, AI/tech companies also being in the market. So it feels comfortable and also back my comment on that we are quite enthusiastic and ambitious for the last quarter.

When it comes to the construction market, we see free capacity among the construction companies. When we are handing out contracts, we see a good competition to get our potential building contracts. So we feel the market is healthy for us.

Transaction's market, quite limited numbers during third quarter, but we see as well as I guess most of the cities seeing, increased interest to investigate potential of market opportunities. Sometimes it's from a specific recent company, but even more often from the advisers and they -- that's their job. So it should be like that. But we see more interest these days. The Financing market, just to add on Asa's run through, it's a healthy activity there, and we see competition among all kind of investors and different markets. So it's up running and well functioning.

Going forward, what are we seeing? We have a lot of projects that will contribute to the top line growth. As I mentioned earlier on here, with full effect from the fourth quarter '27 Wenner-Gren Center, Mimer also with full effect from fourth quarter, but it started to kick in during the third quarter of '27. And they are running in accordance to the time line that we started the project with. So it looks good.

This year, in June, we bought a land plot from the municipality of Stockholm, the Gadden 1 Sveaplan. This is a fantastic area and it's very important for us. We have approximately 90,000 square meters here. This new building at right is approximately 8,800 square meter, and we have done a lot of work in a short period of time, and we will have the possibility to start the construction works quite early. And total investment, approximately SEK 370 million, including stamp duty, et cetera, and all kind of accumulated costs.

And yes, we are enthusiastic with this as well. It's a positive and attractive location for possible tenants, quite high interest in a short period of time. Planned move-in end of '28, beginning of '29. The area, just to put it in a bigger picture, I showed this last quarter as well. But from now on, I will focus on our properties, but kind of the interest is also the white circles where Ericsson signed the contracts for their new relocation, and we have all the red circles or squares here. So in total, 90,000 square meter.

Moving over to the residentials. We are creating Haga Norra from being nothing and be an attractive meeting place. It's parking, has a garage underneath the ground floor. We have all the green squares here we have completed. And right now, we are doing the last cleaning of the last flats in Block 4, Block 5, I mean, and so that will be also completed this year.

Block 4 has started up. We have done the planning. We have done the construction -- we have decided on the construction company, and we start the sale of the first flats this -- during October actually. So that's on the way. Block 3, we have done a lot of lease out. We have leased out the elder care facility, approximately 5,000 square meters to Stockholms Sjukhem. We will have a preschool that will be rented from Solna Municipality, and we are doing residentials that will come after Block 4 is finalized, but the construction work will start a little bit in parallel. There's also a potential for a potential office approximately 20,000 square meters at the last corner of the block.

So Haga Norra Block 4 will be 133 apartments, projects started during October, as I mentioned. Estimated investment, SEK 600 million, including the purchase of land and the completion will be '28, '29 in there with the move-in. The next phase, Block 3 are underway and total approximately 20,000 gross leasable areas, investment up to SEK 860 million. But as I mentioned, a lot of the commercial premises are already leased out.

The last one, Hagastaden Solna Municipality press released this quarter that the building rights for more residentials in Arenastaden on the doorstep to the new metro station are in place, and we have -- the first building will be approximately 200 apartments. This is still in the planning phase, doing a lot of calculations, both when it comes to construction cost, pricing of the units, et cetera, et cetera. And the Metro station, unfortunately, 1 year delayed. So we have -- we take the time and do all the calculations and try to lock in as much as possible just to finalize the potential in this project for us.

To summarize the quarter and what we are looking for going ahead, we are, as I mentioned, several quarters now, we have to conclude on ongoing leasing initiatives and to reduce vacancy, top priority. And definitely, to continue to be the preferred partner for all of our customers. We have to be available, accessible and always solution orientated. And when I see all the different surveys, I'm so happy to see we are ranked #1 in these questions all the time, and that's valuable for us.

Second -- third point is to secure the value creation in ongoing projects and our landbank. We have to do the calculation exactly how to be strict on cost and how we are using all our resources. That's both in commercial building rights and also in the residential portfolio. We will always continue to be active in the financing market. Asa showed a nice picture of the activity during the third quarter, and it continues going forward. And the last one, search for opportunities to create shareholder value. I know a lot of investors asking for that, and believe me, it's top of priority. So with that, we hand it over to you, Viktor.

Thank you very much, Bent, and thank you also for having me. My name is Viktor Byrenius. I'm an equity research analyst at Pareto Securities, and I will help you through today's Q&A session. I'll have some questions from myself, but then I'll let the audience in for questions through the telephone line. Before jumping into the details of the quarter, could you just very quickly mention one thing that you feel satisfied about this quarter and one thing that you need to improve going forward?

Leasing activities, I'm happy with that. I'm happy with enthusiasm among younger talents in Fabege. We are doing some smaller changes on the executive team, and we see enthusiasm coming up immediately, and that's very, very encouraging for me as a partly new CEO in the company.

Yes. And you mentioned the net letting came in at SEK 55 million for the quarter. Obviously, you had a very positive effect from the DNB Carnegie lease. Excluding that lease, how would you say that the current leasing market is, you mentioned that the CBD is going strong. How is it overall?

We have done new leases in all areas. But then also, as I said, we have had a nice kickoff of fourth quarter. This signing often goes some more weeks or something. And if we had closed the books today, it will have been positive for the year-to-date figures. So we have kicked off good. We see nice activity in all our areas. So I'm quite optimistic.

Do you have any larger ongoing discussions?

We always have some very, very large and some in more middle range. So the pipeline is -- we have a lot to do.

Good to hear. And about interest rates, you have decreased your fixed rate periods from an average of 2.2 years in Q3 last year, now down to 1.3 years. Given that the market rate curves are rather volatile at the moment, how will you work and operate to minimize the damage from this and to keep the interest costs on good levels?

Well, we took some opportunities in June to do some plain vanilla interest fixing, as I mentioned during the presentation, to secure some of those earlier taken swaps that are maturing over the years. And also one reason is entering these kind of callable swaps that are on very good levels for us that provide a positive cash flow. We have a number of those swaps that actually provide a good cash flow for us now. And I think today, with where the long-term interest rates are, it's a little bit too expensive for us to do a lot of more fixing. So it's always a balance to see. So we -- what we do is we follow the market. And when we find opportunities good or good enough, then we take action.

Yes. Okay. And one question that you have heard many times before. Some of your sector peers have sold noncore assets, enabling them to use the proceeds to reduce debt and buy back shares. Given the current 50-plus percent reported -- discount to reported NAV, what's the rationale behind not buying back shares at these levels?

The rationale is -- to not buy is that we don't have a lot of excess capital in the company these days. So we have to prioritize where to invest. That said, I will not be referred to as I say we will never buy back shares. We asked for a power of attorney to do it, and it's on the agenda. And also this time, as you saw, I changed a little bit on the last slide there. So we are really thinking about creating shareholder value. So it's always on the agenda.

And with that, I will open up the telephone conference for any of the audience questions. [Operator Instructions] The first question comes from Fredrik Stensved at ABG Sundal Collier.

Can you hear me?

Yes.

Perfect. Very good. First, a couple of questions on the forward guidance or projection of rental income. Bent, you mentioned in the presentation that Q4 was sort of impacted by what I understood at least a rental discount for a renegotiated contract being fully sort of considered in that quarter. So is that the full effect for Q4? And I guess, Q1, Q2 '27 also down sequentially. Is that linked to the same change or something else?

No, the one contract I mentioned that fourth quarter '26, that's a one-off. We are changing the tenant in this building. So the future cash flow will be higher, the yearly rent will be higher than it is today. But it's a long lease contract that we want to end earlier on, and they have had a rebate, and it's booked rebate for a short period of time and it's booked all over the total lease length. So that's why it's booked in the booked -- it is in our books, but divided over the total lease length, but we finalized this lease in advance.

When it comes to the other thing you said or you asked for there, Fredrik, as we mentioned in the press release in July, we have a large rebuild or refurbishment of our property in the CBD. And the tenants are operating in the premises while we are doing the refurbishment. So some smaller rebates on that tenant as well, you can account for that until third quarter '27.

Understood. And on the third quarter, which we see in the table, does that fully reflect full rent from DNB? Or do they have discounts or sort of phasing in of rents already as of Q3?

It's full effect in Q3 '26, I think.

There is a small discount also in Q3.

Sorry.

Okay. Very good. And then Mimer is sort of partly in Q3 and then full in Q4?

Yes.

Mimer, first phase partly in Q3 because we are renovating the second phase in the building. So full effect is not until August '27.

So full effect in the fourth quarter.

Yes.

Yes. No, that's clear. And then I guess, Wenner-Gren is the last sort of large one, I think you said Q4. What's your sort of expectations on occupancy trajectory in that property in next year and looking, I guess, into 2028 as well. Is that going to be, half-let at completion and then gradually increasing from there? Or what's sort of?

I think your projections are quite good. My team is much more in a rush. They want to sign it up as quick as possible. But yes, we have to think of this as a total refurbishment. It will be so nice when it's finalized next summer. So we can't be too eager to sign everything now. It's 400 square meters per flat. So the decision taking, if you want to lease 400 square meters, you are not leasing up now to move in 12 months. A lot of viewings there, a lot of tenants looking at the building and they see the potential, and they know they can take the decision in much shorter time. And I really want to finalize the entrance to the building, the lobby area, see all the services we are putting in there, see how it will be and have the good feeling. And then we think it's easy for us to also have -- to exceed our expectations when it comes to rent levels.

Yes, that's clear. Makes sense. And then second and final topic. Also you mentioned, if I'm not mistaken, that you did another SEK 1.5 billion of callable swaps now in Q4. Is that correct?

Q3 and Q4.

Okay. So what's the sort of addition from Q3, what we see in the report?

Yes, you see some impact from that, but not so much. It will kick in mainly from Q4.

Understood. And what's your sort of general thinking on how much volumes you can take in terms of callable swaps? I guess there is some kind of tail risk that the counterparty actually calls them.

I mean they are -- we do not regard them as sort of long-term interest rate swaps like the plain vanilla swaps. So these are mainly taken to provide a good cash flow in the meantime. And if they are closed, they are closed. We see it as the risk we take is that we will stay with these swaps at the levels that they are taken. And these latest callable swaps, they are taken at levels that are a little bit below 2% and that's interest rate level that we think that we can live with for a long time should they not be called upon.

And how long do these run if they're not called the below 2%...

Between 5 and 10 years.

That sounds like a good instrument. The next question comes from Nadir Rahman at UBS.

Is that working now?

Yes.

Sorry, it took me a bit of time to work that out. I've got 2, and I'll ask them in turn. So the first one is rental levels on the leasing you've seen year-to-date and also in Q3. How does that compare between Solna and the Inner City? And a follow-up to that is how much discounting are you offering? And how many rent-free incentives underlie these rents? That's my first question.

It's difficult to say some percentage of differences. Just within Solna in Arenastaden, it varies from building to building and micro location within Arenastaden as well. So Arenastaden, you have rents higher than we have in CBD. But when it comes to the CBD, CBD it's, of course, higher, more or less twice the rent in CBD as we see in Solna, more or less that. You said incentives to move in. You asked about that?

Yes, correct. What sort of incentive levels are you offering at the moment across your leasings in the past quarter? Has that changed since the start of the year?

My -- I haven't really looked into it. Just my feeling, I'm a little bit even closer to the operations. So I think I have some feeling on it. It's not increasing, maybe a little bit tightening. But I would say, and if you do some analysis, it's the same level.

Okay. That's fair. Then my second question would be on your sector allocation. So of course, you mentioned towards the end of your presentation earlier that shareholder value is a focus to you and you're looking at ways to optimize and maximize that.

When you look at your sector allocation now, of course, your majority offices, there's some residential as well. Which of those 2 sectors do you see the most value being unlocked for shareholders? And do you consider any other sectors as an opportunity given the way the macro environment has changed perhaps to everyone's surprise this year given various geopolitical events?

Yes. It's a little bit less risk on the resi side since they were doing full, what do you call it in English, full enterprise contract. We lock in all the costs. We do the drawings of the separate flat. We do all the planning in advance before we hand out the building contract. So they are more or less the sales risk. And if we do lease out resis, we also know more or less the rent level before we start the construction work.

On the other side, the potential are maybe more into -- you mentioned now offices. We see more and more creating working places. So it's not pure offices. A lot of tenants have some special needs, could be labs, could be some data centers, some special -- they all have some special needs. And what we see in the contracts maybe 10% to 20% in average are some special needs. And we feel quite happy with that because they locked themselves into the buildings for a longer time. And I think we really, really -- that gives us excess value because they position us as the preferred partner for our tenants. So I see that as a good strength for us, and we try to focus on that in all the lease-outs we are doing.

Okay. There was a second part of the question, which is about maybe other sectors as well. And if they look more attractive now given the macro environment has changed?

Yes, it's always you see the companies really kicking off here in Sweden. They are, of course, attractive. Some of them have more production in their businesses. But for us, the short value creation is to lease out the vacant space. So more focusing on that than just what kind of tenants we are approaching. But yes, we are approaching all kind of tenants that want to have a place to want to create a new work environment for themselves.

Okay. Very clear. And my third question relates to your point on leasing. So Bent, you've been in the seat for nearly a year now. And a year on now, have you had any surprises to where you expect it to be at this stage, perhaps on occupancy or lettings has it been slower or better than you expected in the last 10 to 12 months?

My ambitions are sky high. So I will not say we are ahead of my plan, but we are taking step by step. I think we have an organization being ready to run and they are running a lot. But it's -- we can always be around talking about what we intend to do, but we try to focusing on signing lease contracts and do the work. That's job #1 for us.

The next question comes from Philip Hallberg at Nordea.

Yes. Can you hear me?

Yes.

So I have a question regarding, does this quarter's renegotiated volume include the old DNB Carnegie contract that you had? Or is that to be taken later?

No, it's not included. So we didn't include that area. We just put in the net lease effect and added them on the former area that Max Matthiessen rented from us. So it's not included. It will be totally dominated the whole overview. So a little bit more is -- or quite much more is renegotiated, but then it's on existing terms. We haven't divided the rent levels among those 17,000 square meters.

Okay. And also in regards to the Mimer Phase 2, will that have any positive impact on net letting in Q4? Or did you take that effect already in 2025?

It was taken when the contract with AcadeMedia was signed.

For both phases?

Yes, yes.

Okay. And Bent, you mentioned in the CEO letter, of course, that you still have a lot of focus on letting out vacant space, and I appreciate that. But you also have a lot of focus on cost for tenant adjustments. Does that mean that you are more flexible in terms of rental levels to rent out vacant space? Or how should we view that comment?

You should review it like we try to create an even clearer responsibility within our firm when we have a tenant TI we have to do, one person is responsible, has the total budget, and we have a lot of enthusiastic employees with a lot of specialties. But when we have done the calculations and we have said yes to the project, we close all the discussions there and we move on and we do the work and have the tenant in.

And if we can save 1 month of work or if we can stop one further survey on the work we're doing, it helps us to create better value going forward. When it comes to the flexibility that you asked for, please tenants come to us. We will always discuss and find solutions.

Okay. That's clear. And also just in regards to -- have you reviewed the former TIs and sort of seen that you have a low return on invested capital on those sort of improvements? Or is this just an ongoing focus in the business?

It's an ongoing focus, but I know how to calculate that as well as all of you do. And we are not satisfied with all the returns we have the last years. But over a period of time, we are proud of what we have achieved, but we want to get back to those historically levels.

Okay. And my final question is just regarding the potential divestment of Hornan 1 to the Solna Municipality. What is the current status of that deal?

That was more than 1 year ago, when it was stopped there and don't have any further comments on that, actually.

Okay. But is it still an ongoing discussion in the municipality? Or has it been called off entirely?

If they're interested, please call me.

We have no more phone questions in line. So I hand the word back to the speakers.

Thank you very much. Just one final question for me. There has obviously been some turmoil internationally, very uncertain geopolitical environment. What is your view on this? And how will you be working going forward to minimize the negative impact from this?

That's different angles to that question when it comes to financing, and of course, it influences. When it comes to operations, we try to focus on what's happening in the company. And we are not that much affected by what's happening at other places. When I -- that's also why I went through the construction work, how we see the construction market.

And of course, we are very well aware of what can happen there. We haven't seen the signs yet, but it's always on the agenda. We see a lot of industries going well in Sweden, try to focus on them and see their future needs. We see more effect from companies changing their policies to maybe be at least 4 days in the office. That means more for us in the short period of time. But I think everyone in Fabege are looking at the news every day and see what's happening, but we try to stay focused on Fabege and our areas.

Sounds great. Well, I think we are beginning to run out of time. Thank you very much for taking my questions. And over to you for any closing remarks.

But with that, we conclude the third quarter presentation, and we are already well on way in the fourth quarter, and thank you for taking your time being with us today. Thank you, Viktor.

Welcome to Fabege Q2 2026 Conference Call. [Operator Instructions] Now I will hand the conference over to the speakers: CEO, Bent Oustad; and CFO, Asa Bergstrom. Please go ahead.

Good morning, and welcome to Fabege's Interim Report to second quarter for 2026. We have a well-known agenda, and we just kick off. We own and develop and also manage our own properties, and we have the focus on creating attractive working places and a good living in superb locations in Stockholm. We have a modern portfolio occupied by high-quality tenants. We'll get a little bit back to that later on. And the rental value is SEK 4.4 billion and is divided here into different segments and the square meter, 1.3 million square meters, also divided into the different segments.

And the property value is SEK 79 billion at the end of the quarter, divided with 37% in Inner City, close to 50% in Solna, 10% in Hammarby Sjöstad and 3% in Flemingsberg. Also, repeat from last quarter, it's important for us that we're also marketing our biggest strength. It's definitely our customers. We have a high consumer satisfaction index, highlighted by a strong track record in serving our customer needs. And 95% of our tenants say they would recommend Fabege as a landlord, and we are very, very proud of that.

We have long-term lease contracts as a foundation in the business. We have our own employees across the entire value chain, and we have clusters giving us advantages like economies of scale and creating engaging meeting places, meaning we take the full responsibility for the ground floor, for the offices, for the living, et cetera, and we also invest a little bit in the community for safety, et cetera. We have an excellent capability when it comes to deliver large and complex projects from start to finish. We have done it before, and we will do it going forward and also strong capabilities and best-in-class practice within ESG initiatives and environmental results when it comes to CO2 pollutions, et cetera.

So if we just have a short summary of the second quarter stand-alone, the rental income grew by 5.9%. The surplus ratio in Q2 was 74%, and we had a profit from residential development of SEK 39 million, meaning a margin of 21%, and we are very satisfied with that. The net letting was minus SEK 86 million in the quarter. We have commented on that also during Q1. And it's 2 large terminations when it comes to Max Mathiessen and Telenor represent this figure. Value changes, more or less flattish, plus 0.15%, plus SEK 120 million for the quarter. We have improved our occupancy rate from 86% to 87%. And we have some new large leases in Solna Business Park in the quarter, I get a little bit back to that also. We finalized the acquisition of "Gadden 1" in Sveaplan from the municipality of Stockholm. And we also press released this morning that we have signed a construction contract for Block 4 in Haga Norra. It's 132 residential units.

So with that, I hand over to you, Asa.

Thank you, Bent. Well, the rental income came in at just under SEK 1.8 billion. And looking into rental development in identical portfolio, it was minus SEK 17 million or minus 1.1%, mainly due to terminations that were previously announced in the negative net lettings from previous years. On the other hand, we had a net of plus SEK 100 million from finalized projects that have kicked in during the first 6 months of this year.

The property expenses were very much in line with last year, and we saw an operating income from property management of just over SEK 1.3 billion with a surplus ratio of 73%, 1% up from last year. The residential part of the business was also contributing with SEK 79 million, as you can see here. We have finalized approximately 85, 86 apartments during the period and recognized the income from those finalized projects. So if we look at the net interest expense, it increased a little bit in comparison with last year. The STIBOR has gone up, and it has been, to some extent, not so much because we have seen also less margins, and we have had some interest rates that have matured during the period. But all in all, up from 2.82 % to 2.89 % during the first half year. And the share in profits from associated companies of minus SEK 42 million relates to contributions to Arenabolaget.

Then we saw in total unrealized changes in the values of minus SEK 139 million. But as Bent just mentioned, it turned positive during the second quarter. We saw a plus of SEK 120 million. The tax is a little bit also different from normal. We have sold one property, which contributed to a positive tax of SEK 24 million. But we also had a finalization of the outcome in the court that gave us another SEK 550 million in carryforward losses that we have now taken up to valuation, and that meant a little bit more than SEK 100 million plus in the tax. So all in all, a profit of SEK 521 million during the first 6 months.

During the quarter, we have externally valued 43% of the portfolio, and we saw that the yield in the valuations have come down 2 bps from 4.59% to 4.57%. And thus, we also saw, as I mentioned, the value change of SEK 120 million plus in the second quarter. We had an opening fair value of SEK 78.5 million. We have disposed Paradiset 31 construction for building rights to Besqab. We have bought Gadden 1, the SEK 211 million also includes the tax paid. We have invested almost SEK 900 million. We had the value changes of SEK 139 million minus. And we have the reclassifications when we have reclassified Haga Norra Block 4 from property management portfolio into development properties that will be carried out by Birger Bostad.

And all in all, the positive value changes refer to City properties, as you can see here, plus SEK 157 million during the first 6 months, while we also saw positive from the residential part of the portfolio. The key ratios came in SEK 119 per share compared to the same figure last year, an EPRA NRV of SEK 145 per share, positive total return on the properties, 1.5% and surplus ratio, as I mentioned, increased and equity asset ratio and loan-to-value ratio in comparison with last year and also year-end. The debt ratio improved from previous over 14% to less than 13%, which is also in line with our internal target for that. And the interest coverage ratio ended up at 2.6% for the full period and 2.7% if we look at the second quarter alone.

Financing remains very strong for us. We have very good access to financing both from the banks and the capital market. The margins have -- on the capital market have been a little bit volatile during the period, but ended up in very good levels towards the end of May and the beginning of June. We have refinanced everything that we are supposed to refinance during 2026 when it comes to bank loans, and we are intending to refinance the SEK 2 billion remaining on the capital market with new bond issues during the autumn. The last bond issue was done now in June, where we took in SEK 350 million in a 5-year bond at a margin of 110 bps, which I think is a very good level.

And we have also increased the interest fixing by entering into new interest rate swaps of SEK 1.4 billion, 5-year terminations and at levels between 2.5% and 2.6%. So we now have an average interest cost of 2.88% compared to 2.82% at the year-end and approximately a little bit less than 50% of the portfolio is fixed and the average interest fixation is 1.4 years. But if we also take into account the callable swaps, it increases to 2.1 years. So all in all, I feel confident with the financial situation. And over to you, Bent.

Thank you. So if you look at the occupancy rate in the management portfolio at the end of Q2, it's up to 87%, up from 86% and that also includes the remaining vacancies in the previous project that has entered into the management portfolio. And in addition, we have the improvement portfolio close to SEK 8 billion to SEK 9 billion. It's 127,000 square meter, of which 71,000 square meter is not let, but it's let out to different customers. And the yield on that portfolio is -- it covers its own debt cost, the interest cost for the debt, 100% financed. That's how it works.

The net letting for the first half, minus SEK 62 million, new lettings of SEK 132 million and terminations of SEK 193 million and the 2 large ones there accounts for more than SEK 80 million, as I mentioned in the beginning. Telenor is moving out in the third quarter 2028. I think it's September '28. So it's given notice and a very, very good advance.

We have the renegotiations. Totally, it was renegotiated SEK 230 million, was renegotiated with minus 1.7%, SEK 109 million is renegotiated and SEK 121 million is prolonged on existing terms. So I think that's also what we see in the portfolio.

A Lot of the renegotiations are more or less companies now maybe sold off as subsidiary, solding of a division, et cetera, and in that sense, also doing -- putting on a new lease. And SEK 156 million of the maturities in '26 and onwards, I think it's '26 and '27 has already been renegotiated for the total portfolio. If you just look at Q2 separately, it was a healthy mix among all markets, market areas that we have and all segments, meaning from hotels from restaurants to offices. Six contracts above 1,000 square meter during Q1 has been renegotiated. And all the new leases, also a mix of all kind of categories from hotels and everything. And one contract is about SEK 10 million in yearly rent. And we have divided here the renegotiations by area and also the new leases by areas.

And as you see, it's a healthy mix all over for us. Just want to mention, since I also had that in the beginning that a lot has happened in Solna Business Park this quarter, and it's been -- it's taken more than 1 year for the puzzle, but the Swedish National Agency and the Swedish Work Environment Authorities have reduced some of their space just to have space for the Swedish Transport Agency. So everything finalized, the Swedish Work Environment Authority leases approximately 4,000 square meters on a 6-year lease and the Swedish Transport Agency leases approximately 3,000 square meters also on a 6-year lease.

So really, the governmental tenant has cooperated together and leased spaces in Solna Business Park. With that finalized, our property, Fräsaren 12 is more or less fully let. Yes, nice mix of different tenants being active in the market. We also show this every quarter. This is just signed leases today with no further activities in the future. These are the development on the leases we have signed. I mentioned we have healthy and nice customers. They are definitely one of our key strengths. We have approximately 700 customers the average lease contract is 5.5 years. And the top 10 largest customers represent 29% of the contracted rent, and we have them on the right side there, all of them. One new is on the list is Tieto moved into a 10th place. They just signed a new 7-year lease contract with us.

The top 10 largest customers represent 29% and our -- actually, the real number is 38 largest customers is 50% of the contracted rent. And the duration on the 48 largest is 7.4 years. So it's very, very stable revenue stream. We have added one new slide this quarter, more or less Fabege's view on the market trends. If you look at the rental market first, we see strong and continued activity in the CBD market, especially for larger leases. The alternatives is not that many. We see rent levels slightly started to increase in areas with less alternatives for new production and low vacancies. We see stable rents level in Greater Stockholm.

And as I mentioned, a handful of tenants reduce the square meter in existing leases, more or less, if you read in the press, Solna subsidiary, Solna division doing some M&A, there are always some renegotiations. We also see start-ups and AI companies coming to the leasing market, more or less in the City so far.

For the construction market, we see free capacity among almost all of the construction companies, good demand to compete for potential building contracts, both in office and in residential. So far, we mentioned this morning that we have signed a new construction contract for residential in Haga Norra, and we are happy with that.

And so far, I will say we see limited or close to no price implication from the disruptive world outside Sweden.

When it comes to the transaction market, it is active, but it's not at the same level as in the more or less old days. Disposals made public during the quarter include both portfolios and individual assets. Buyers, I will say, is dominated by pension funds and insurance companies. And then I'm sure some of the listed companies and the private investors are not happy with me saying that. But I mean it's dominated by pension funds and investors are being pension funds. But all kind of companies are active in the market. And also I commented on the financing markets. We see healthy activity and competition among investors, banks, everything in all kind of financing markets. And it's been a very active financing market when you see the Nordic with all the data centers, massive financing and also in all kind of segments.

So if we look at our ongoing projects, Farao/Kairo, investment of SEK 613 million. We are doing the ground and foundation work and construction work up to the ground floor level. The decision for this investment was more or less taken 15 years ago when we went into the Arenastaden. So we have to do this work now because Solna municipality are trying to finalize their work with the roads and everything and just be prepared for the new opening of the metro station at the entrance of this building.

The Wenner-Gren Center investment of SEK 610 million, rental value of approximately SEK 58 million. is pre-let 30% marketing to start more active in Q3 '26, but we have started shortly, and we see a nice interest in this building coming to the market in Q2 '27.

And also Mimer 5 is an investment of SEK 217 million, rental value close to SEK 50 million. It's 100% let on a long, long lease to AcadeMedia, and it will come to -- will be finalized in August next year. So for the next school year, it will be open.

So here, you also see some of the growth in the top line the coming year. Completed an ongoing project in Birger Bostad, our residential builder, Haga Norra-Block 5 is right now under construction and is progressing according to plan, total of 288 units. We have completed 193 units and during second half of '26, the last 95 units will be completed. So far of the total 288 units, 20% are unsold, so meaning 59 units to be sold rest of the year. It feels very comfortable from our side.

With that, we also move on to the next phase. It's under -- the preparations are underway. And as we mentioned in the press release this morning, it will be 132 units in Block 4, estimated investment, approximately SEK 360 million. And the move-in is planned to start in first half of 2028. And if we are lucky, it will also be the first half of the first half year, so meaning first quarter, I will say. After that, Block 3, we have 260 rental apartments, and elderly care facility and a preschool there, approximately 20,000 gross leasable areas with an investment of close to SEK 860 million.

Just to mention and show it for you, then we will -- with those 2 last projects, we will finalize the quarter. Block 7 and Block 6 are finalized. Block 5 to be finalized this year and sold out hopefully this year. Ackordet 1, the offices are completed and part of the management portfolio, and we have signed on the construction contract for Block 4 this morning. And then the last one, Block 3 with both elderly care facility and the preschool will come in the last phase. And then we will finalize Haga Norra.

Project Gadden, it's in Sveaplan. Stockholm Inner City, we bought it in June '26, building rights, approximately 8,800 gross square meters. Purchase price, SEK 202 million plus tax to buy, so SEK 211 million also. We have a planned move in during '29, late '29, maybe early '30 in that range. And this is definitely one of Fabege's core areas. Also, it's the entrance to Stockholm Inner City. We will have approximately 90,000 square meters here, working places, including co-working, ground floor activities, food and beverage, high-class conference center, et cetera, et cetera. We will be everything in this area.

And we have a lot of questions from you, what happened with the large Ericsson lease in this area. So just try to put it on the map. The leases that Ericsson made was #1 to #6 as building to be constructed, maybe #2 is already constructed or underway, but rest is to be constructed. We, Fabege, our 90,000 square meters are #7 to #12 in the same area. So we see good interest in this area and I'm very happy that Ericsson showed the way and took the decision to move the business into Stockholm.

It comes to building rights, not much happened since last quarter. Commercial building rights, approximately 500,000 square meters with 65% legally binding and a book value of SEK 8,200 per square meter. The residential building rights has decreased slightly since last quarter because we sold some building rights in Kungsholmen. So it's 435,000 square meters left and approximately 40% is legally binding. Book value is SEK 7,800 per square meter for the building rights. And then other projects, opportunities in the near term, we have talked about it also several quarters now, Tegelterassen, in Kungsholmen, 36,000 leasable square meters. Partly demolition started in January and leasing activity is definitely ongoing in this building and our ambitions are quite high.

It's the same in Haga Norra. We just went through that, already produced 611 units, 95 units in production. And the last 2 quarters is another 390 units, including elderly home and a pre-school facility. So we're looking forward to complete these projects. And these are like Tegelterassen booked in improvement properties in our balance sheet, just so you are aware.

So if we try to summarize, we have to conclude different leasing initiatives that's ongoing and decrease vacancy is always top priority. And as I said, in Solna Business Park, it takes time, took us 12 months. In the old days, it would have taken 2 months, but that's how it is right now. We want to continue to be the preferred partner for our customers. We have to be available, accessible and solution-orientated. And I think we are and have a very good feedback on that, and that makes me proud for whole Fabege.

We have to secure value creation in ongoing projects. I hope you see that we are working with the balance sheet working with the projects that's ongoing, and we have to continue to do that. Also analyze the value creation in our land bank, both commercial and residential and continue to be active in the financing markets. I had some questions about that last quarter, but that's more or less -- of course, I have to say, we are always that and also has already done different things in Q3 already.

And with that, let's conclude our presentation. So I hand it over to you, Fredrik.

Thank you, and thank you for having me. My name is Fredrik Stensved. I'm an equity analyst with ABG. I will walk you through the Q&A of the day. I'll ask a couple of questions myself, but also let the audience in through the web conference. If I may, before we sort of jump into the Q2 numbers and the Q2 results, you started 6, 7 months ago. What have you -- I think we're all aware that leasing, leasing, leasing, that's top priority. But if we think about portfolio composition and strategy and capital allocation, is there anything that you have sort of learned during these 6 months that is different from what you thought when you took the CEO position?

Luckily, I learn something every day, so that's a good thing. I think we have done quite a lot as well. We have looked through the balance sheet. We have sold off different smaller plots that's been part of the balance sheet. We have also signed some LOIs on different plots we have across Sweden when it comes to elderly care facilities, et cetera. So we'll see if we do more of that, just try to clean up the balance sheet and just focus on the core assets for us.

We have done some organizational changes when it comes to the market area. We have said that Flemingsberg and Hammarby Sjöstad being one market area for us that will come into effect in Q3. And we are focusing on costs all the time. So luckily to see also the surplus ratio going up to 74%. So yes, you could be sure, I think about and also think about that every day. So I think we are on the right path. Still of course a lot of things to do, and it should be in a company like this. When it comes to the capital allocation, we are a developer as well as an operator.

And like I tried to say here in Arenastaden, the decision was taken when to do some investments when we entered the area 15 years ago. So more or less, we have to do what we need to do in our areas to comply with our -- what we have promised to the municipality. And we are hunting for new tenants, and I think the pipeline looks promising, I will say.

If we talk about that, you added some slides during this presentation showing sort of the geographical split of the renegotiations and the new leases. My impression, and correct me if I'm wrong, but has been during the past couple of quarters that City has been working, Arenastaden has been working, but this graph shows a fairly broad picture. Is that something new? Do you think sort of the rental market recovery is spreading?

It is recovering, but not in a dramatic way. But of course, when Ericsson say they will move 100,000 square meters into the area of Hagastaden area, of course, something happens. It's not a lot of available premises there going forward. So we see a better leasing market in that area immediately. Of course, it's a little bit more difficult maybe for Kista, but they will move out, probably move out in '35 or something, I don't know. So it's a lot of time.

But I think that's also some reason why we took Flemingsberg and Hammarby Sjöstad into one market area, then it's close to the same area, same size as Solna Business Park. And as soon as you have competition within the company, it's perfect. Then you see activity in both areas and shouldn't be in Arenastaden look at City. They should try to fight for a City looking at Arenastaden.

Speaking of Ericsson, you showed a picture of Hagastaden. I think it's pretty obvious that everyone that this is a positive for Hagastaden. How do you think about Solna Business Park or Arenastaden for that quite dramatic change?

It's in the same neighborhood. It's not far away. And the leases in Hagastaden and Sveaplan, it's at totally different levels than in Solna Business Park. So I think also that's why you see all the municipalities, the governmental tenants, et cetera, moving to Solna Business Park. When you come to Arenastaden, it is another story. The largest lease last year ended in the middle of Arenastaden, AFRY moving in there. You have all the activity, you have the Mall of Scandinavia, you have the Arena, a lot of things ongoing and happening. And right now, we have a construction site in one end of the Arenastaden and Skanska is building on the other one. So we just have to finalize those, and it looks -- I think it looks nice going forward.

One of your colleagues or peers, competitors was out last week saying that there is maybe more so than in the past, a large amount of large tenants looking for quite significant space. We have seen in the media 5 to 10 different companies maybe searching for 6,000 to 15,000 square meters each. Are those looking at all of your areas or any specifics and...

It's difficult to say they're looking at all of our areas all the time. But as you saw the mix here, it was quite nice mix between all the different market areas. But I follow that insight that a lot of -- if you say that 6,000 to 15,000 are large tenants, a lot of activity ongoing in the market. And we are also part of the discussions.

All right. I will open up the telephone conference. And also you have the opportunity to write questions, and I will try my best to read them.

[Operator Instructions] The next question comes from Paul May from Barclays.

Just a couple of quick ones. When you talk about the investments on the ongoing properties, I think you highlighted on Slide 17. I assume the figures you're quoting is marginal investment and don't include the existing value of the buildings. If you could give us some color on what is the kind of total cost, that would be great on that. And then the second one, just around the like-for-like NOI and the renegotiated leases, obviously getting slightly worse quarter-on-quarter. Do you see -- when do you see that changing? You talked to a slightly more positive market. Just wonder when do you see that feeding through into your operational performance in the business?

When it comes to the investments, that's the remaining CapEx that we showed on the slides here. I don't have the ingoing balance right now. We can come back to that. Yes, this quarter was slightly more negative on the renegotiations. I think it's 1 or 2 leases, a little bit special leases when it comes to that. So I don't think you should think of that as something ongoing in the market.

I'm not sure about your question about the investment. But if you take the remaining investment and add it to the book value or the market value, that's the value that is going to be recognized once the investments are finalized. And we have the end valuation, which includes also, hopefully, some uplifts in valuation towards the end.

So there will not be any negative valuations relating to ongoing projects.

Yes, I was just trying to get a sense for the sort of return on investment because obviously, the numbers on remaining CapEx look very high in terms of rents versus remaining CapEx. Just trying to get a sense of the total investment.

And then on the operational side, you mentioned it's not something to be concerned about. I appreciate it's just 1 quarter, but occupancy is still relatively low. The market still remains weaker despite the commentary that it's going to be better. So I just wondered when do you see that actually feeding through into positive numbers?

We are not guiding on that, but what I try to comment on is that this quarter, the renegotiations were a little bit more negative than it has been in the last quarters. And it's 1 or 2 contracts, a little bit special contracts just this time. So that was my comment. When it will turn to be positive, it's another question. And as I commented on in the CEO letter as well, if the new leases and renegotiations are in the CBD, it will be more positive and some other spaces can be more flattish.

[Operator Instructions]

All right. So no more questions from the telephone. We have a couple of written questions. You comment in the report on older and less sort of well-positioned properties attracting lower rents. What is the strategy for these properties? Is it just a refurbishment that is needed? Or is it more material redevelopment to sort of close the gap to prime assets?

It's both actually. I think you saw in the project we showed up here that we are doing some major refurbishment of some of the buildings and the development and the lease when you do that is very nice. So we are looking at our portfolio and see what are the potentials. We are always looking at our properties and see should we divest something or should we do something special with them. But that's also a question about returns we could receive.

And I think was the question here as well. But when it comes to resis, I think you should account for approximately 20% margin on those. And when it comes to new construction, we have a target of yield on cost around 6%. And sometimes we get much higher and sometimes we get slightly below that, but that are the targets we are trying to achieve.

Yes. And then there's a follow-up on that question from the same person. Would you be able to sort of quantify the share of your assets that you think is to be considered as sort of older and less well positioned? And any submarkets where they are particularly concentrated?

No. I think we do that every quarter, and that's what we call the improvement portfolio. It's approximately SEK 9 billion in the balance sheet. SEK 2 billion of that are the Wenner-Gren Center and the Mimer as we just showed here. So I think we have quite good control of that portfolio. That's including the land bank we have, it's SEK 9 billion. So if some properties should be in that portfolio, we put it there and we see what we do.

Yes, that's clear. One just dropped in. Given the improving demand, but also buildings being vacated, where do you see occupancy at year-end '27 or year-end this year and going into 2027?

It's a lag on the occupancy rate. So the last quarters -- previous quarters, we have had positive net lease. So that means they are moving in after we do the lease. And we have negative net lease this quarter. But as I commented on, Telenor moving out in September '28. So it's more than 2 years ahead. I also commented on Q1 that Max Matthiessen is moving out during '27. So -- but we have high ambitions for that space. So it should go in the right direction.

All right. Very good. That's it for the written questions as well. I think we are sort of running out of time. But maybe if I can just finalize with one last one. Also, I think in the last conference call in the Q1 or in conjunction with the Q1 report, you talked about Fabege taking a sort of hit to property values in Q1, but you sounded quite optimistic on leasing those in the upcoming quarters, and that would translate into positive property value changes. Did we see any of that sort of materialize in this quarter? Or is that potential still remaining for the second half?

I think most of that potential is still remaining for the coming quarters. The value uplift that we saw this quarter was mainly related to City properties and to lower yields.

And if you manage to lease those, is that sort of the normal move in a year from now? Or can they...

Normally, somewhere between 9 months and upwards. It depends very much on what kind of premises and what company.

The latest one in Solna Business Park, they took over premises there. That happens quite fast because they were nice and easy to just move right into. But as Asa said, 6 to 12 months is more normal, I would say.

All right. Then thanks for having me. Thanks for listening. Any closing remarks?

No, just want to wish everyone a good summer. Hope to see you in Båstad. And those of you not being in Båstad, probably see you in Miami in the quarter finals in the World Championship next weekend would be great. Have a nice summer.

Good morning, and welcome to Fabege's Q1 Report 2026. My name is Bent Oustad, I'm the CEO of Fabege. And with me today, I have Asa Bergstrom, our CFO. We run through some presentation first and then we go over to Q&A after the presentation.

Just a short recap from last quarter. We still own a modern portfolio with focus on Stockholm occupied by high-quality tenants. And as you all know, we own, we develop and we manage our properties with in-house personnel. We are focusing on creating attractive working places and a good living in superb locations in Stockholm, and as they also know I'm very much aware of, that's the best growing region in Sweden.

Our rental value at the end of Q1 is SEK 4.4 billion in the portfolio and the number of square meters is 1,300,000 approximately. The property value is at SEK 78.6 billion at the end of the quarter.

Just to go through again some of our strengths in the company that I see out there my four first months. It's definitely our customers. We have a very high customer satisfaction index. It's highlighted there by a strong track record in serving our customers needs, and that's important also going forward and in all our renegotiations. 95% of our tenants say that they would recommend Fabege as a landlords. That's positive for us, and we have to keep that number up. And we have a long-term lease contract as a foundation for our business with our customers.

We have our own staff across the entire value chain, meaning we have proper caretakers. We have the leasing departments. We have the project team, if everyone employed by Fabege and even have CFO and CEO in the company as -- that's great.

We have our properties are in clusters, giving us some advantages. I really see a lot of economies of scale like that when we are during the management of them. And it makes us -- make it possible for us to create engaging meeting places in our portfolio, and that's important also going forward. We have excellent capabilities to deliver large and complex projects from start to finish. We have done that several times, and we will do it in the future as well.

So if you then go to the Q1, this is a short summary. Positive numbers, as most key figures. Rental income service ratio, profit from residential development and net debting all positive and more or less flattish on the value change. Also, we'll come back to those figures later on.

On a positive, very good positive side, we have signed a lease to track with Stockholms Sjukhem

for an Elderly care facility in Haga Norra

In Arenastaden. They made a -- sent out a press release yesterday with us. It was signed in Q1 and are included in our figures. Permobil has also moved into Arenastaden that makes us a little bit pride because they have consolidated all its operations from Greater Stockholm to one location in Arenastaden, a very nice premises there. The vacancy rate is unchanged from last quarter at 14%.

Then Asa?

Thank you very much. So I will go through the figures in a little bit more detail. As you can see here, the rental income came in at SEK 892 million. That's an uplift of SEK 27 million in comparison to last year. We have a negative impact from identical portfolio relating to negative net letting from the previous years. We also sold one property in Ynglingen, which we had some income from in the first quarter last year. But on the other hand, we have a lot of new income from finalized projects during last year, for example Saab, who occupied in Q4 last year.

The operating -- net operating income came in SEK 39 million above last year. We had higher winter costs. But on the other hand, we have managed to reduce property tax and also some lower maintenance costs. And that meant that we had a surplus rate of 72%, which is really, really good for a first quarter.

We could also see that there were some finalized apartments in Birger Bostad that contributed to an income of SEK 172 million and also a surplus of SEK 40 million and in total, that also contributed to the income from property management, which ended up at SEK 370 million. So that's almost 30% up from last year.

As Ben mentioned, we also saw some negative value changes. I will come back to that very shortly. And we had some positive impact from value changes in the derivatives portfolio relating to higher interest rates. Tax is only carryforward losses. So it's not paid tax. The big positive amount from last year was related to the sale of Engelen and reversal of tax in that case.

Property valuation. We ended up with a property value of SEK 78.6 billion. We have external valued 44% of the portfolio. The average yield in the portfolio was unchanged at 4.59% from year-end. But there was some changes in the city properties, a little bit reduced. But on the other hand, in the suburb locations, we saw a little bit higher yield in the valuations. So here, you can see a split from value changes in the management portfolio minus SEK 191 million and value changes in the improvement in project portfolio of minus SEK 68 million.

You can also see the division between the different market areas where both residential and in a city provided positive value changes this quarter.

The key ratios not so much change, but equity per share, as you can see, came out at SEK 120 per share, and the NRV at SEK 145. We saw a positive total return in spite of the negative value changes. Surplus ratio, as I mentioned, which is the best, I think we have ever reported in the Q1 actually equity ratio and loan-to-value ratio remain at the same level as the year-end but we also saw an improvement in the debt ratio to 13.1%. And I don't know if you're familiar with the target that we have to be below 13%. So we are very close to that target now these days.

On the financing side, the year started really, really strong. We saw a very, very good access to financing from both banks and from the capital market. We also saw reduced margins, especially in the beginning of the year. It's been a little bit more volatile after the conflict in the Middle East started but we still see that we have very good access to financing. We were lucky to do some bond issues in mid-February, where we could come out on 3-year maturities at around 84, 85 basis points. We did another bond issued last week, where the same maturities came at 97 basis points. So I would say that we are more or less back to the levels where we were at the year-end.

The ongoing refinancing with the bank facilities is according to plan. So we are moving some securities, change in some securities, which has taken some more time but everything is according to plan. And we still have the undrawn facilities of SEK 6 billion, which is good for us and gives us a lot of stability looking forward.

The average interest cost came up a little from 2.82 at the year-end, up to 2.85. It's actually been below 2.80 at some time during the quarter but higher STIBOR is, of course, reflected in these figures. A little less than 50% of the portfolio is fixed according to playing vanilla swaps. And if we include the callable swaps, the fixing rate is nearly 70%. You can see also that the older swaps are at very good levels, most of them. So they are, of course, contributing to the positive cash flow for Fabege.

Highest STIBOR has had a little negative impact during the quarter. On the other hand, when we are refinancing debt, most of them came -- come in at lower margins than we had before. Most of those steps are signed 3 to 4 years ago at margins that were at that time higher than what we see today. So that will have continued to have a positive impact.

Also to conclude a few words on sustainability, energy consumption remains in focus. We were very, very lucky last year with a mild winter to come down at 65-kilowatt hours per square meter.

This year, we've had a much more wintery, lots of snow, much colder, but the 23-kilowatt hours per square meter, as you see reflected in Q1 is actually the same figure as we had last year. So we are on a good level also for that.

Now last week here in April, we actually sold the recycling hub that we have produced to Ragnsells. The hub was in itself established in 2023, and we have used it for most internal -- internally to reuse materials that are taken from one property into another property. And the idea from the beginning was to ensure that we can scale up this business and with Ragnsells and a number of other property owners also connected to Ragnsells. This will be a system that can have a lot more impact going forward. So I think that's what I say for now, and I'll leave that to you Bent.

Thank you. So we then move on and I need to look into the occupancy rates, it's at the same level as last quarter. And it's, as we said then, including the previous projects accorded one and the portion one that was included in the portfolio from year-end.

As I mentioned earlier on, in the beginning, Permobil has moved into the properties, into our portfolio. And as I mentioned earlier on as well, Arenastaden is moving in at 1st first of April, that will be reflected in the second quarter. We also have an improvement portfolio that properties partly or fully vacated for potential project development. It's 102,000 square meters, of which 31,000 is let out. They are properties for future projects for us.

Look at the net letting in Q1, it's ended up a positive of SEK 24 million. New lettings ended at SEK 69 million and terminations at SEK 45 million. Some of you have mentioned in different reports that Max Mathiessen will terminate the lease with us. They haven't terminated it yet. And as you all are aware of, there are some special Swedish rules around that. So we include the figures when we have a termination or when we have a signed contract. So normally, we will not comment on the speculations, but we have read that in the press as well. And we think they will move. But as just to point out, it's not terminated yet.

That said, we would be very happy to have Max Mathiessen as a tenant. We have had them for a long time, and they are good tenants. On the other side, it's maybe also good that we are moving out of that building in this time. I don't want to comment much more on that right now. When it comes to the renegotiations, we have totally -- we have renegotiated for a total of SEK 100 million in the quarter and SEK 104 million of the maturities in 2026 and onwards has also already been renegotiated.

So if you then dive into the renegotiated numbers of SEK 100 million. The rents are minus 0.4% of that, 65% extended on an unchanged terms and SEK 35 million is a small decline. That means that the reduced year-end is SEK 375,000. So it's more or less flattish. As I said, the renegotiated rents are still above the estimated rent levels used in the external valuation. So we are quite happy with the renegotiations we have done.

They have been dominated by several smaller tenants. Only one contract is above 1,000 square meter in the quarter. So this is back to what we also said before, it's the bread and butter that's been renegotiated this quarter.

New leases is a mix of all kinds of categories. We have 2 contracts, about SEK 10 million in yearly rent and the rest are on the smaller side. So if you see all the figures divided by the different areas, Stockholm inner city is 59% of the renegotiations, Solna is 29% and Hammarby Sjostad is 12%. And it's a not on the Solna figures, it's not included the Stockholm Sjukhem contract is not included in these figures. It's in the figures, but not in the percentage for each area.

The new leases is also divided by the same area, 36% in Stockholm, 49% in Solna and Hammarby Sjostad at 14% and Flemingsberg 1%.

What we find very healthy for us is the mix of renegotiations and new customers. SAAB is a -- from early days are a large tenant for us. They have signed also a new lease in another building. So that's -- we are very happy with that. And we have ATEA has signed some more areas and Skistar moved within our area. Willhem is a new tenant. So we have a nice mix of different customers this quarter.

That also underlines what I tried to comment on in my CEO letter that we see decisions being taken, especially in the smaller, more or less bread and butter leasing. So this is the rental development. And just to point out, it's only for the existing leases that we have in the portfolio at the end of Q1. So if nothing happens, the rental income would be like this. But we have higher ambitions and we want to improve this throughout the year.

One of our key strengths is our customers, and we have very long agreements, lease contract with them. And on the left -- on the right side, you see the 10 largest tenants. They account for 30% of our contracted rent, and we have a vault of close to 10 years for those tenants and that's more or less the foundation. And the 25 largest customers represent 43% of the rental value then. And in total, 700 customers. So it's a busy day for the leasing department within Fabege.

On the project side, ongoing projects, we have Farao/Kairo, it's taken a decision to invest up to SEK 613 million. We have dismantled existing buildings, ground and foundation work are on the way and we are doing the preparation for our construction documents to the municipality, et cetera. So we have taken the decision to do construction work up to the ground floor level. It's just 20 meters from the new metro station arriving in Arenastaden. We have Wenner-Gren Center and invest spent up to SEK 609 million. We are doing the facades, the roofing and also do the refurbishment of the different floors. If you have visited Stockholm or if you live in Stockholm, I'm sure you've seen it, you see the building from all out the cities. It's pre-let 30% and marketing to be started now during Q2 2026. It will be finalized and moved in, in second quarter 2027.

And a new project on this list is the project Mimer 5. It's 100% pre-let on a long lease to AcadeMedia. That's a school building investment up to SEK 217 million and the rental value of close to SEK 50 million. It will be finalized next summer, summer 2027.

So that's ongoing projects. In the ongoing projects within Birger Bostad. We have talked about this also last quarter, but Block 5 is then progressing according to plan. It's a total of 288 units completed in '25 and Q1 26 are the cooperation Alma, 23 apartments, 20 are sold. The 3 remaining are used as showrooms when potential buyers are visiting this area. We have produced and rented out 78 rental apartments and 50 owner-occupied apartments have been finalized, which 47 are sold, possession to the final owner in -- during Q1 was 42 odd units. So 5 is still to be delivered.

Also to be completed in 2026, that's the cooperation residential. It's Brf Mathilda and Ingetora, 137 apartments in total, which actually this morning, 6 they are sold, but he say 57 that was yesterday. So it's a good area. It's progressing according to plan. We have the last quarter, last block there in the next phase is block 4. We are doing the construction work or are handling up the construction work in these days. It looks promising in total, 132 cooperative apartments there. Investment approximately SEK 315 million. And we have 260 rental apartments, elderly care facility, as I mentioned, in Stockholm Sjukhem and a preschool and total of close to 20,000 gross lease area in Block 3 coming up. And that will be an investment up to SEK 860 million.

Estimated completion for the whole Haga Norra, Block 4 and 3 will be end of 2029. We also have the land allocation at Sveaplan, now more is totally agreed there. Possesion date will be mid-June 2026, building rights, 8,800 square meter gross area, a purchase price of SEK 210 million. Plan moving there could be in -- during 2029. And this is definitely one of Fabege's core areas, and that's the entrance to Stockholm inner city. As you see on the picture on the left -- on the right-hand side, you see in the red line, that's our existing portfolio in this area and the purple one is a new building in Sveaplan.

In addition to this, we also have the quarter with Mimer as I just mentioned, the school. It's also in this area. So in total, we have more than 100,000 square meter gross area in this area. We will have office co-working ground floor activities, food and beverage high-class conference center, looking into different training facilities, et cetera, all kind of services in this area. So this will be important for us, and we have high ambitions here.

When it comes to our building rights in our balance sheet, we have a commercial building rights of a little bit above 500,000 square meters, 65% of them are legally binding and it's booked at SEK 8,100 per square meter. And the residential building rights is 445,000 square meters, approximately 43% legally binding, also booked at the same price per square meter. As you can see, the reduction, there are some reduced numbers from last quarter, and that's more as we did last quarter when we took down -- when they have terminated the land location in Flemingsberg. we also looked over the building rights in the same area and reduce those according to what we think is most likely that we will develop.

So the project opportunities in the near term, we have the Farao-Kairo, just mentioned, 77,000 office gross leasable area. And there, we are also in the same area have approximately 500 units of residentials. And in the Phase 1 of the residence, there will be 185 apartments in one of the Farao buildings. And Haga Norra, already produced 519 units, in production 187 units and another 390 units on the way that also include elderly care facility that I mentioned several times now.

We have Tegelterassen in Vastra Kungsholmen, that's 36,000 square meter office. It's partly demolition has started during Q1, and we see nice interest in the market for this building. A handful good discussions. So also high ambitions there will be more decisions taken just after the summer in this building.

Solna Business Park, we have the Parkhuset thats an office building. We have the land allocation, 22,000 square meters and have Yrket next to it, the one in the red line, 320 residential units. These are a little bit on hold just because the other building marked there with the green roofing has to be finalized before we can start doing a construction work on our plots but they are on the way.

So to summarize up our short-term priorities, also long-term priorities is definitely to decrease the vacancy is to continue to be a preferred partner for our customers. We have to be always available, accessible and try to be solution orientated. We had to secure value creation in our ongoing projects. It's important when they're starting projects, and we don't have the final tenants already in place. We have to do some extra work here then.

We have to analyze our land bank like we hope you can see we have done the last quarter as well and made this eldercare facility have to look through it and try to create value for both our customers and our investors.

We will continue to be active in the financing markets. As also mentioned, we have already done some work there during the second quarter, and we are always looking for opportunities to further develop our company. And that concludes our presentation, and we'll go over to the Q&A.

Yes. My name is Johan Edberg. I'm from Handelsbanken Capital Markets. I will have the pleasure to lead this Q&A and ask some questions to Bent and Asa. I will not do that all by myself. I will also let the web conference in to ask questions. And I think we have -- you have the opportunity also to post questions on content website.

I will do my best to read them up to the management here. But kick it off and starting with a very easy one before we dig into the Q4 numbers.

Bent, you promised in an article that I read this week to increase the share price since the main shareholders, [indiscernible] is not happy with SEK 80 per share. So the question, a very simple question. How will you do that?

I promised, I promise. We have to do our work and then the investors have to decide that. Because I'm also a shareholder. So I'm not happy with it either. But we are doing that, and that's what we try to present right now. We have to do the -- to take down our vacancy, have to be -- try to be a little bit more creative going forward, meaning we are -- or at least a lot of people talking about us just as an office and pure Stockholm, but we are creating working places. We see the leases that we have done the last time here has been a mix could be some offices could be showrooms, et cetera, and that's what the tenants today are searching for.

When we see Permobil taking all the different premises around Stockholm, establishing a new hub in Arenastaden, it makes really proud. And we see more search for areas from tenants doing exactly the same. We see also at moving into Haga Norra. They want to rent a block of apartments. They want to rent working spaces, et cetera.

So they are requesting more and more services in addition to the lease contracts. And I think we -- when we have all the properties in our clusters, we have the possibility to really -- to give them what they are searching for.

You've been in the company, as you said, four months now. Have you changed anything substantially how you work with lettings or marketing in order to do what you want to do? I mean increase. Sorry, decrease the vacancies? Or is it just more like working on as normal or...

The thoughts are getting more and more grown in me and try to communicate some of it. It takes a little bit more time. We also have new Board members in place in the company. But I think we are getting forward and definitely it's focus within Fabege. I think you can ask anyone employed in Fabege, what's job #1 right now, and that's leasing.

That's to reduce the vacancy and to reduce the vacancy, meaning the property caretakers have to be a little bit more on the front foot when they get up in the morning, has to look nice in front of the buildings, has to be -- everything is working on the ground floor, has to work in the building. We have to listen to our tenants. We have done that before as well. But I always trying to make a little bit new stuff and maybe we'll see some other changes going forward.

Okay. Interesting. It was very good to see being into the report now, I think that we should focus on. It was very nice to see the occupancy rate being flat from Q4, standing at that vacancy at 14%. Of course, you want to be that number to be smaller, but at least it's not getting worse. The net letting, positive second quarter in a row now, SEK 24 million in Q1, starting to make a new trend. Is it a new trend that we see for net letting?

I hope so. And what I also see all the more or less bread and butter actions we're taking within leasing these days. I think if you have waited for 2 or 3 years to see what happens, now we take the decisions and we move on.

And probably you see that in all kind of countries, even if there are something happening in the Middle East, the daily life here in Sweden and especially in Stockholm is still moving on. And something is happening in the world and Sweden. The tech industry in Sweden is definitely on that train. So you see someone are quite optimistic doing expansions and some other have to adjust to a new reality. That it's a mix.

I think what's leading up to the positive numbers for net letting is more lettings and a smaller amount of terminations. If you look at the lettings, how -- what's the composition there?

Is it anyone -- anything that sticks out as a big new lease? Or is it more like broad-based?

Very broad-based. I tried to show that on one of the slides as well. You have -- but you have some tenants within the municipality or within Stockholm or Solna , there are always large tenants in our portfolio. But you also saw some venture funds focusing on security interest, what tech securities. They're also in an industry that's growing these days.

You mentioned Max Mathiessen and the leases expiring in the beginning of '27, and you expect the termination to be -- to reach during Q2 this year.

I mean, you also have a big profit and big premises very close to Max Mathiessen, Carnegie for example. What's your -- you made me interested when you said it might be positive that actually leaving those as a good tenant. Can you please try to say something more because that sounds interesting, what you mean?

Max Mathiessen is now in the same building as Carnegie and everyone knows that Carnegie, if it's a merger, they have been bought by DNB. And maybe they want to grow in their existing premises as well. I think they have high ambitions for their business going forward. So that could be an opportunity.

And of course, the location of this building, it's on the map for a lot of potential tenants. And if you want to lease 15,000 square meter in Stockholm CBD, you don't have a lot of options. So we see that from different requests we have from potential tenants.

So what is the potential to actually match the termination with the new lease in the same quarter, is it possible?

It's possible, definitely possible, but we also take another quarter, and we are booking the terminations when we receive a formal termination and we booked the new lease when it's signed. And of course, as I said, here in Sweden, the tenants have some rights. If they don't want to leave the premises, they can stay there for a longer time. So it's difficult to sign before you have the termination in hand.

It is, but since you kind of alluded to the potential that it might be a positive with Max Mathiessen leaving, I mean, looking at the market rent at this time, looking at what Max Mathiessen is paying and also the standard or what you might be able or forced to do with the premises in order to rent them up again. I guess what you said that it could be a positive. I guess, the net effect on those items is probably something that could be more value enhancing for the premises?

I definitely know probably as you are as well, but Carnegie are a good negotiator. So I don't feel it's over-rented this building at all. we have high ambitions there on this location.

Yes. Values came down a little bit in Q1 not very much, I think it was like SEK 250 million or something. You're pointing at higher or the high vacant and high vacants in few properties. And you also say that a big part of the -- or the vacancies is actually in 3 properties in Solna Business Park and also the premises for ICA and Telia. Are those the ones that actually leads to lower property values in Q1?

So it's Solna Business Park primarily or is it something else?

It's Solna primarily, I would say, not pointed out, especially on the Solna Business Park.

If you exclude those properties, the 3 in Solna Business Park and also take ICA and Telia into account those premises. what is the underlying vacancy rate or occupancy rates, if you like, excluding those 3 properties primarily?

You mean the occupancy rate in each different market?

In the company?

In the company.

You're reporting 40% vacancies and you say that much of the vacant spaces are in these 3 properties.

I don't know that number in my head. But of course, there's an improvement if you exclude those properties.

But also we have the projects now ongoing with Wenner-Gren Center. We have vacancies there, but that's not in the property of that portfolio.

But you have the two just look into there portfolio like Ackordet 1, and Atea . There are signed leases in this year already. And as I said, Atea is moving in first of April. So maybe it should be -- have been adjusted from the Q1 figures, but it happens in Q2, so in Q2.

And also impressive to see the surplus ratio at 72%, the best Q1 ever. And I think there are many of your peers say Q1 was a pretty tough quarter in terms of weather and snow, I guess it would have been even higher in like a normal Q1?

Yes. I mean we have worked a lot on the energy side, for example. And I think all the efforts that we have put in, in previous years also pay out now with the energy consumption. So actually, we didn't spend more energy in total, but prices were coming up. So that's the difference from that.

We have also managed to get some property tax back, which had a positive impact. And then a little bit less maintenance costs. We are very sadly looking over when to do things in the properties and not to spend when we don't have to spend.

And the reversal tax for example. Is that a one-off that has a positive impact in Q1 now?

It has a positive impact in Q1 but it's a small number

I just read, and I guess it's common information. It seems like there are many companies out seeking for new premises in Stockholm. I saw an article summarizing 7,000 square meters for 8 companies with and without names searching for something primarily in the city or CBD, but also the potential outside. Would you say it's more normal than -- activity than normal and then I realize I don't know what normal is, but you see more activity now than you did maybe in the fall last year or in the beginning of this year. Do you feel those companies -- do you speak to those companies?

Yes. But now we are referring to those that are officially out searching for premises. Also a lot of companies not being that much out in the press. So for us, it's our mission is to be out there, talk to different companies, talk with the management team, try to put in place a plan for when your lease expires in 3 years, we have this -- can match and exit from a potential tenant in our premises.

What I really feel in the market now is a lot out there. There's a lot of potential tenants in the range of 500 to 3,000 square meters. And you have some much, much bigger ones as well in the 10 to 50, 60,000 square meters.

So there are movements ongoing in the market. And I think if you have been quiet for 2 or 3 or maybe 5, more -- 5 years more than you had anticipated to be, you really do these things. So I'm optimistic, but still we have to -- we have to sign the leases. And I think also, when we go back to your first question, if you sign the leases and we rent out more, we also have a better share price. I can wish for a better share price, but we have to do our work first.

I don't know if it's a reasonable question. But I'm trying to look for a delta between, I mean, for the sentiment and in the rental market, also the demand from maybe Q4 late last year and the beginning of this year. Now a lot of things that happen in the geopolitical area and lots of new turbulence or potential uncertainty.

Can you say something what you experienced when you talk to clients, do you have regular negotiations that are actually halting or something that is different now? Or are you still positive on '26 and given what you -- I mean, you posted obviously a positive net into the quarter now.

I don't think we should put too much into what you read in the press, if that's affecting the leasing market here in Stockholm. Because yes, there are some war ongoing in the Middle East. One day it's a war and next day is peaceful again. But what we can influence is the energy prices, what happens to the inflation, et cetera.

So but that takes a little bit longer time. Can you influence the interest cost plan influence energy prices, construction prices, et cetera. And I tried to mention as well, in these days, we received construction estimates for some of the blocks in the resi portfolio we have and it looks promising. Still, there are big deviations between the different entrepreneurs, but I think we are in line with what we expected. Right now, it's not heavily insulin, but we have to follow up what happens.

Before I let the web conference in, I will do that very soon. Also just a question on the financing side. You staking out has been very short on interest rate maturity. Are you comfortable with that number? It's actually decline even further in Q1 to 1.3 if you exclude [indiscernible]

Yes, it is we are comfortable. But of course, we are following the market to take the opportunity when we find that the timing and the pricing is correct for us. So I think looking forward, you will probably see a little bit more hedging than we have right now. But I'm not worried.

And Q1 wasn't the right timing for doing more hedging.

We should have been acting in the beginning of Q1.

You said in Q1 call, I don't know if it was an answer on the question, if you said it yourself, but your best guess on '26 was pretty flat in paid interest rates, and that was a net of higher market rates, but also compressed margins and bond expense, given what we see now, market rates are up.

Obviously, you're doing pretty well in the home market. Banks are pretty stable, as I understand it. what's your best guess now, standing at 3 months later?

When I said this was in the Q4 presentation and when STIBOR was expected actually to get lower than it was at the time. And many of the banks was -- were expecting rate cuts from the Riksbank. It's been very, very volatile during the Q1. There have been banks expecting rate hikes from the Riksbank. Now it seems more stable again. Everything depends on what Trump is saying from one day to another.

But to summarize, I think we have negative impact from maturing swaps. We already saw that in Q1 to some extent. We have now a little bit negative impact from rising STIBOR. But on the other hand, we have a positive impact from reduced margins in refinancing.

So I think it's fair to say stable, maybe up a little bit. Last year, I was talking about below 3%. I still think that we can hold average interest rate well below 3%, but maybe a little bit up from now, depending on how STIBOR is developing.

But you're not stressed up and you won't buy -- I mean, going up from 1 point to 2 something much higher just because you're being stressed, you will be able to follow the interest rate development and do smart decision.

I think this is a good time to actually see if you have any questions from the web.

The next question comes from Jan Ihrfelt from Kepler Cheuvreux.

A clarity question. On the first one, if you could quantify the winter costs this quarter and compare it to the first quarter of 2025. How much more expensive was this quarter compared to the first quarter of 2025?

A couple of millions.

Okay. Second question, do you have any guidance for Arenastaden or investments?

Did you mean investments in Arenastaden?

No investment total for the group. What do you expect kind of levels for the investment for this year?

For this year, we are expecting a little bit less than SEK 2 billion. So I think we are a little bit below that in the first quarter. So we will see what happens. And increasing investments will depend on decisions -- Board decisions for new projects.

And final question, we're now three weeks into the second quarter. And if you look at the leasing market, has anything changed if you compare April to, let's say, March?

I think I like the comments we had here as well. There's a lot of tenants out there searching for potential new premises. But it's a big difference from March. I will say it was a trend. Trend was also ongoing in March. So I feel it's a positive trend.

The next question comes from Lars Norby from SEB.

First a question on buybacks. I mean you cancel or you repurchase shares after decision at the AGM and you have a first 10% mandate. Looking at your LTV gives you some room up to your self-imposed limit but your debt ratio does not. So to do a material size of buyback, would you have to do like sell them. Sell properties in order to get some volume in doing it.

Yes. Now you went through the toolbox and toolbox is of course there and should definitely be there after AGM as well. That's why it's -- we have the authority to do that. Of course, we are now approaching discussions in the Board and the discussion would be there.

I think on the broader view, buybacks is perfect if you have a lot of excess capital as well. We have a lot of -- or 40% of our portfolio and it is in the city with a lower yield and lower cash flow. So I think dividend policy goes first, and if we have sold some properties to other things that have a lot of excess capital. It's definitely on the agenda.

But I should also ask a question to the -- so a new chair in the Board and new Board members just been in place in the company as well.

Thank you One more question. Very much a different topic, but residentials gave a boost to your numbers of some SEK 40 million in the first quarter. This is, of course, hard to predict, I guess, both for you and for us as analysts. But if you're looking at full year '26, based on the situation right now, what is a reasonable assumption for the full year?

I think I commented on that last quarter as well. I said around 200 units a year. It could be a good estimate. We'll stick to the same, the numbers of sold units, it's quite stable, was one week during March was a little bit quiet, but then it's back again. And I think this week alone is 3 or 4 units. So it -- I don't know. But overall, to sell a unit should be around 100 a year, and then we have some rental apartments on top of that and have eldercare facility on top of that as well. So around 200 is good estimates.

The next question comes from Nadir Rahman from UBS.

Just to drill into the point on the revaluation this period and the focus on the Solna properties. Could you give a little bit more color on the 3 properties that took the revaluation hit?

And what is the prospect going forward given that we did see a one-off in Q3 last year in Solna and it seems to have happened again. So could you give a bit of color there, please?

It's properties where we are expecting some higher vacancies where we already see some higher vacancies coming we will not communicate names of specific properties because we're also in renegotiations and discussions with potential tenants for those vacancies.

So I think we are -- we have decided to take a hit now. And hopefully, we will see a reversal of that in the coming quarters. So I'm quite optimistic that we will not continue to see write-downs in the portfolio. But on the other -- on the contrary, more potential to for increasing values going forward.

That's very clear. And just to confirm, so you're saying that your vacancy assumptions for these properties has declined versus where it was at full year 3 months ago?

Maybe also some lagging from valuators into that figures. But there are some discussions ongoing. So I think listen one time more through what also just said, and it was very good when you know everything happening, Yes.

The next question comes from Tobias Kai from Nordea.

First is regarding your financial expenses. I mean, the average interest rate so quite small increase and the net debt also saw a small increase, but it was quite significant increase in financial expenses. Can you give some more color on that, please?

Financial expenses were somewhat up, yes, mainly depending on a little bit higher cyber during the quarter or at least towards the end of the quarter. second half of the quarter, you can say, but also that there are less interest rate costs activated on projects since the project portfolio has been reduced. And not all, I mean, this should be met by increased income, but we still have some tenants moving in and starting to produce income. So I think you will see -- you will not see the same in the second quarter.

Okay. And it seems like the volume of closable swaps are unchanged despite quite a big increase in market rates. Is that correct?

Or did you enter new closable swaps in the quarter?

We have not entered any new swaps in the quarter.

Also, you report rental discounts and they seem to increase from SEK 44 million quarter-over-quarter and SEK 132 million year-over-year to SEK 269 million. Are there some specific contracts that explains the increase?

I don't have the detail on that. I'll come back to that, Tobias, if you don't have..

I didn't really get the question.

I mean in your -- when you report your rental value, you also have a note saying that you have some time limit rental discounts of SEK 269 million, and that was up from SEK 225 million in Q4. So I wonder if it's some specific context explains the increase.

It's related to some specific contracts, yes. And also two tenants moving in, that has a discount in the beginning of the contract.

Okay. But you don't want to disclose which contract it's related?

Not.

[Operator Instructions]

The next question comes from John Vuong from Van Kempen.

You mentioned since you've been rethinking your maintenance costs. Could you provide a bit more color on your thoughts there?

And so do I understand it correctly that you are overspending on maintenance previously? Or have you changed your approach because you expect more property to move into the renovation pipeline, for example.

We have done a lot of work for the planning of maintenance costs. To make sure that we are acting with the right timing, doing things when we need to do them and when we're doing other things in specific properties to make the best of it. So I think we are a little bit more cautious these days than we have maybe been in the past. But we are not doing any maintenance. We are doing what is actually needed in order to keep the properties in good shape and to be relevant for renting out to tenants.

Okay. That's clear. And I think you mentioned that we negotiated rents are still above rent levels in our external valuation. Just trying to understand here, what does your external valuation imply in terms of rent reversion?

And are these assumptions too conservative? Or is there a change in the underlying trend in market rents, you'd say?

I think that was a comment on the renegotiations been done in Q1 here, that was 1 point, 1% down. And still, the rent level in those SEK 35 million that we renegotiated are slightly above the rent in the external valuation, the estimated rent index valuation.

So I said, okay, the revision wasn't that much, but was negative, but it's still at the level or above -- slightly above what's in the external valuation as a comment on that. So I don't see it dramatically that we have the renegotiation of minus 1.1% and minus 0.4% for the whole portfolio. But it was just a color, some flavor to that for you.

So just to quantify it, did the external acceleration implies a minus 2.5%, 5%? Or is it just a small difference?

No, it's a small difference, but it's around 2%. Yes, 1.5% to 2% difference.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you. And I can't see here on my screen that we have any written questions either in time slides, just a couple of minutes left. I think I'm doing one more question. I'm referring a bit to one of the questions from the web here. I mean we're seeing Castellum obviously selling something and doing buybacks. You're opening up a little bit, although it's maybe not fully up your question, but selling something could lead to buybacks.

Is it possible, for example, to sell building rights?

Because that is not yielding anything at this point. If you sell something that's not yielding, creating an opportunity to actually invest in your own share that's planning a huge discount. Would that be possible you think that? Or is it difficult market?

Some of our building rights are possible to sell. But I don't think you can take the 1 million square meter that was on one of the slides here and sell them just flat out today. But legally binding building rights possible to sell. But we also have quite high ambitions. We have a building right in Sveaplan block in middler in the our core area. It's quite healthy for us to have control of that spot, and that could be also lead to better leasing level in the neighboring buildings.

So we are building this as a company, and it's not just to sell out one building right because we think there are excess value in that building right for us. And at what time, what is the right timing of selling?

Normally, it's a hot market, it's good to sell and should rather buy when it's a more difficult market. Of course, with our share price today, I don't think you will see us buy a lot of properties right now. But if it's the right property for us, we will act.

And I guess my last question, I have many questions left, but I think I have time for one maybe. We saw a transaction in Q1, it was the Swedish Fortification Agency selling sorry buying many square meters in Solna . It's pretty close to your areas or you have properties, have you seen already some inquiries from those tenants because they need to find something new in maybe in the area?

Yes. I think whole city are approaching those tenants. And also saw the seller of the property bought a new building in Haga Norra. So it's good to see that they like our local markets. But I think for all those tenants, they should -- everyone should be by the end Arenastaden it's easy view, but they have an agreement whether they are using their time and looking at different opportunities and they are very much welcome to our properties. And of course, we are also in contact with a lot of them.

I'm not very surprised you saying that. I think time is up. I promise not to use more than 60 minutes. So thank you, Bent and Asa and thank you for those listening and asked questions. Thank you. Oh, maybe you want to say something. Sorry.

Well, thank you for taking your time. We will back here next quarter and hopefully, we see some of you also in our Capital Market Days in Bostan. Thank you.

Good morning, and welcome to Fabege's Year-end Report 2025. My name is Bent Oustad, I'm the CEO of Fabege, and I'm lucky to have with me the experienced CFO, Asa Bergstrom, here today.

We run through the report, quite well-known structure on the report today. And just to start with Fabege in brief, we are a modern -- we have a modern portfolio, we focus on Stockholm. We own, we develop and we manage our properties, we focus on attractive working places and good living in superb locations in Stockholm. And as you all know, Sweden is the capital of growth region in the Nordics.

If you distribute the rental value of SEK 4.3 billion to different segments, office stands for 84% of the portfolio. That's office in a broader definition, including also education. Industry logistics, 4%; retail, 4%; hotel 4% and other segments, 4%. If you allocate square meters into the same segments, office is 72% and industry and logistics up to 9%, the others more or less the same.

And the market value of the portfolio, SEK 78.5 billion, 37% to the inner city, and that also explains the differences from the rental value of the square meters because a lot of the properties are in central locations in Stockholm, and there the rents per square meter are quite substantially higher than rest of the city. Solna stands for 48%; Hammarby Sjöstad, 10%; and Flemingsberg, 4%.

If we try to summarize the fourth quarter '25, rental income came in at SEK 899 million, up 4.4% from last year. Profit from property management ended at SEK 371 million, up 11% and the surplus ratio was 75% for the quarter. And as we have commented on the report, quite lucky with the weather at least at the end of the year. So that's why we had a quite good surplus ratio.

Profit from residential development came out at SEK 35 million in the quarter, 23% margin. Shouldn't expect that high margin going forward, but close to 20% is something you can count on. Value changes -- net value changes of SEK 711 million downwards and earnings before tax then came in at SEK 293 million. Net lettings for the quarter was SEK 33 million, ending the total year at plus SEK 36 million. And we see increased activity in the leasing market. I will get a bit back to that later on.

Large projects entered the management portfolio during the quarter, also coming back to that and large refurbishments are ongoing. That's how we try to secure also future value creation for the total portfolio. The quarter has proven our quality and our capability to capitalize on Birger Bostad's business model. We are then converting our residential land bank into shareholder return, and we will have more reporting on that also going forward. The last point, north on the summary slide is the Board has requested or has proposed a dividend per share of SEK 2.20 per share.

So with that, hand over to you, Asa.

Thank you, Bent. Yes, I'll go through the income statement. Rental income, as you can see here, amounted to almost SEK 3.5 billion, a little uptick from last year. We had a negative impact in the identical portfolio of minus 3.2%, mainly due to the negative net lettings of the previous year. We also sold one property that impacted on the negative side. But on the other hand, we have several projects that have been finalized during the year and that are now producing income for us.

Property expenses, a little bit higher than last year. We have an uptick in property tax. But as Bent also said, there were lower winter-related costs, very good, both beginning of the year and end of the year. And thus, we had a surplus ratio in property management of 74%. This year, we also had a positive impact from Birger Bostad's residential development. They have finalized just over 100 apartments during the year and produced an income of SEK 280 million and a result of plus SEK 55 million, which is included in the gross profit, as you can see here.

Net interest expense was slightly lower than last year. We have borrowed roughly the same amount during the year, but the average interest rate has come down from SEK 2.98 to SEK 2.82 during the year. The share in profits in associated companies increased. The majority of this or all of it roughly is related to our share in Arenabolaget. There was a one-off included in this figure of SEK 63 million, where we have taken down the value of the shares that we have in Arenabolaget. So that's SEK 63 million of the SEK 130 million is more one item -- one-off item.

So all in all, profit from property management increased by roughly 5.5% to SEK 1.4 billion. The impairment development properties relates to the Bostad future project --future potential projects. And the realized changes in value is related to the sale of Ynglingen in the first quarter. So that's the same figure as in the first quarter. Unrealized values came at SEK 1.7 billion for the full year. I will come back to that a little.

And then changes in the derivatives were positive in the fourth quarter, but all in all, over the year, a little negative number. And so we have a result before tax of minus SEK 508 million and then a positive tax impact, SEK 160 million, of which SEK 128 million relates to the sale of Ynglingen in the first quarter. We have externally valued roughly 50% of the portfolio this quarter, and the property value came at SEK 78.5 billion, as you can see here. There's been a shift upwards in the average yield from 4.55% in the first quarter to 4.59% in the fourth quarter.

And this next slide is -- gives a little bit more transparency to unrealized value changes over the year. We can say that during the first half year, the negative value changes were mainly related to increased yield and lower expected cash flows, longer vacancy periods expected from the external valuers and also a write-down of building rights, mainly in Flemingsberg.

In the second half of the year, we saw increased yield requirements in suburb location, a little decrease actually in the most central CBD location. And we also took a write-down on the building rights in Flemingsberg since the land allocation agreement with Huddinge has expired at year-end. But what you can also see in this slide is that actually the projects have contributed on the positive side in all the 3 first quarters.

Key ratios, we landed at SEK 119 per share and an EPRA NRV of SEK 145 per share. Total return of the properties after the write-downs amounted to plus 1.1%. The surplus ratio, as I mentioned before, 74%. Equity ratio and loan-to-value ratio remains on the strong side. And as you can see here, the debt ratio has actually improved as well as the interest coverage ratio. So we feel that we are still in a strong position going forward.

Financing has been on the positive side all over the year, maybe getting even more positive during the second half of the year. We see continued strong access to financing, both from banks and from the capital markets. We have some ongoing refinancing with banks that will hopefully be finalized during the first quarter. We have done some refinancing for maturities in 2026 already. We did bond issues of SEK 850 million during January, short of 3 years. And as you can see here on margins of 89 and 84 basis points. Those are maturing in November 2028.

And we still have the undrawn facilities of SEK 6 billion, which provides safety, security going forward. There has not been any change in fixed rates. As I said, the average interest rate cost has come down during the year. Approximately 47% of the portfolio is fixed and with an interest rate fixation of 1.5 year. And if we include the callable swap, it increases to 2.1 years. So we have some safety for increasing rents or increasing interest rates should that happen, although it seems that the opposite now is more likely at least in the near-term.

This is also a new slide that we just wanted to show that how rental income and results have developed over the last 10 years. And you can see that rental income and gross profit from property management has increased while the profit from property management, including interest rate -- interest cost is more variable depending on the level of the market interest rates. The surplus ratio is fairly stable. We still have the target to reach 75%. And what this figure shows most apparently is the occupancy rate, which has come down, and we will come back to that a little later.

Also finally from me, a few words on sustainability. We keep working very hard in order to reduce energy consumption. We're now very well below the target of maximum of 70 kilowatt hours per square meter with the outcome, which was in 2025, only 65 kilowatt also, of course, due to very mild winter conditions over the year. But nevertheless, a target and a result which we are very proud to present. And we also achieved the goal to reduce CO2 by 35% in comparison with 2018. And finally, the Fabege share is again confirmed green by Nasdaq Stockholm, which I believe is also a good sign for all the work that we are doing on the sustainability side.

So that's it for me. And back to you, Bent.

Thank you. The work done in the sustainability department is very important for us, and it reduces our costs, so keep up the surface ratio for the company very well. If you look at the occupancy rate, it has fallen down to -- or increased up to 14%, as I said, that's driven by the 2 previous projects, Ackordet 1 and Påsen 1 that has now been transformed into the management portfolio, increasing the vacancy. And as the one of you that's really following us, you know that some tenants are moving into Ackordet this spring, for instance, Atea moving from Kista to our property. So it will start to increase again. We also have improvement portfolio, not part of the occupancy rate. There, we have a total of 156,000 square meters, of which 127,000 square meters is left. That's future potential projects for us and are on short-term lease contracts without any right to possession when it expires.

If we go a little bit more into the net lettings and the renegotiations for the whole year, the net lettings came in at plus SEK 36 million. It's new lettings of SEK 236 million and terminations of SEK 200 million. That's in our historical view on the lower side for us. And it also shows that we have a year without any major new lease agreement signing. So that's a goal for 2026.

The renegotiations in total SEK 618 million, decline in rents of 0.3% with SEK 2 million down for the whole year as a whole. That also shows more stability in the leasing market. And bear in mind, SEK 316 million of maturities in '26 and onwards has now already been renegotiated and are part of these figures. So the tenants are forward-looking. That's great news for us.

If we dive a little bit deeper into the renegotiations, I said SEK 618 million. You can divide that into SEK 341 million extended on unchanged terms and SEK 277 million with a 0.7% decline, so total SEK 618 million. As said, they are dominated by several small and medium, large tenants. We don't have any of the really large one this year. And for the total 2025, we only have 6 tenants with a yearly base rent above SEK 10 million a year. And actually, 2 of these 6 were concluded in Q4, both with an unchanged rent level and one in Arenastaden and one in the City portfolio.

So that shows also for us, even though there are a small number of renegotiations that it's stabilizing in our view. If we distribute the new leases above SEK 10 million, 45% are in the office, 35% in the education and 20% in the hotel. And if you take all the renegotiations per area, 72% are in the inner city, 25% in Solna, 2 in Hammarby and 1 in Flemingsberg, just to give you a little bit more flavor on the figures.

So rental development for the existing leases and existing contracts we have put in place. So it's definitely not a forecast, but that's what we have secured so far. And as we see, all numbers a little bit better than last quarter, and that's kind of more or less reflected by the positive net lease in the last quarter.

I really like this heading stable customers. What we are talking about is high-quality customers with long lease contracts. And just to remind you, we have in total around 700 customers in our portfolio. It's a lot and it's an important work for us. If you look on the right side, the 10 largest tenants, they stand for 30% of the total rent. And the 10 largest tenants have a WAULT of 10 -- 9.2 years. So it's very, very good as a base for the whole company.

And if we go further into it, the 25 largest customers have close to 50% of the total rent, meaning 670 customers more or less stand for 50% of the rent. So that also takes down the big risk of many of those customers. They are more or less flexible customers also when it comes to better market conditions and to adjust the portfolio to what the larger tenants also would like to rent on us. In total, the average lease contract length is 5.1 years. And we're very happy to welcome 2 new tenants on the top 10 board during 2025. The subcontract is the second largest one and Alfa Laval are in place #9 there. It's very nice to see.

Also, we've seen in several quarters some questions about the parking business. We have increased our parking business. We have specialized personnel taking care of that for us in our company. We have total 12,500 parking spaces approximately, can be [ 501, ] I'm not quite sure, of which 2,700 have a separate charging station for electrical vehicles. And we see that as a key factor for some of the larger customers we have. It's important for them to have access to parking spots.

We see increased demand for day-to-day permits instead of monthly agreements, and that also increased the flexibility in the portfolio for us as a company. It's easier to book spots up to 120%, maybe 130% when you have day-to-day permits instead of monthly reservations. So in total for 2025, approximately SEK 210 million in parking revenues.

So if we look a little bit at the completed projects, I think they are well known for most of you. But in May, Alfa Laval took occupancy in the premises -- in their premises in Flemingsberg, very nice property. And in September and November, Saab took occupancy in Nöten 4 in Solna Strand, also a nice property, even though I'm not allowed to go into that property yet. So I haven't seen it from the inside, but it's -- as I said Ackordet 1 and Påsen 1 tenants have gradually moved in during the last quarter as well and some more tenants will move in during spring 2026, and that's also the reason why the vacancy in the management portfolio have increased slightly this last quarter.

If we look at the ongoing projects, we have the Farao, Kairo. We have also talked about that earlier. For me, Arenastaden as a whole is a sweet spot. This is the sweet spot in the sweet spot, 20 meters from the metro station. We have Board approval for investments up to SEK 630 million. We have dismantled the existing buildings, and we are doing ground and foundation work and also preparation for construction works these days.

And so why are we doing this right now? This was more or less decided 10 years ago when we entered Arenastaden. So now Solna municipality are doing their last work on all the roads, the infrastructure in this area. And then to be cost efficient for us, we do this work on the plots at the same time. So being ready for that. It's an interesting spot for -- and we have a lot of interest in that spot. But as of today, we haven't concluded any leases on it so far.

We also have Ormträsket 10, the Wenner-Gren Center, investments approved for up to SEK 609 million. Rental value in this part will be approximately SEK 58 million, and it's pre-let 20%. That's a little bit down from last quarter and it's due to when we started the construction work there or the refurbishment, we had to move out all the tenants to other buildings we have in the neighborhood. Some of them are very satisfied in the new locations. They have signed new leases there instead of going back to this one. And some of them have even found other premises in our portfolio, other places in Stockholm. So right now, it's 20% let.

We are starting the marketing towards end of second quarter 2026 on this building and it will enter the market 1 year from now or between first and second quarter 2026. Each floor plan is 400 square meters, so it's a little bit early for us to be in the market already. But we see good interest.

We have also completed and have some ongoing projects in Birger Bostad of a residential company. Haga Norra, the block 5 up there is processing according to plan. It's in total 288 units. Completed in 2025, we had Brf Alma, which is a cooperative apartments. 23 out of 20 are sold as we have 2 showroom apartments there, and they are not for sale yet. And we have one that's not sold at Fabege.

We also finalized 78 rental apartments in Q4. That's what's reported in the numbers in Q4 and to be completed in 2026, 50 owner-occupied apartments, of which 44 are sold when we wrote this yesterday. And today, it's 45 actually. So possession of this will be during Q1 this year. And we are coming with Brf Mathilda and Ingetora also later on in 2026, in total, 137 apartments, of which 35 are sold and on the marketing during last Sunday, and more than 17 interested parties showed up. So it's looking good for us.

We also have the preparations underway for projects to start in the next phase in Haga Norra. So it's block 4 and block 3, totally 132 cooperative apartments in the block 4 and 260 rental apartments and senior housing plus a preschool actually in the block 3. When it comes to the senior housing, the preschool and also grocery store, we have signed LOIs on those units already, but they have not signed contracts and not part of the net lease at this time. Remaining investment in that one is SEK 860 million, completion in '28 and '29. And with that, we complete the residential buildings in Haga Norra.

If you look at our building rights, commercial building rights of 550 million square meters, approximately 60% legal binding of those, and it has a book value of SEK 7,000 per square meter. That's a little bit down from earlier quarters. And as Asa mentioned, we have not -- or it's been a termination of the land allocation in Flemingsberg. We haven't agreed on the terms with Huddinge mun. But we have ongoing negotiations, have a positive tone. So we will report to the market when things changes.

And we have 500,000 square meters of residential building rights in addition in our portfolio. So the last land allocation that we received is the Sveaplan. It was legally binding in January 2026. So preliminary possession date around mid-April 2026 and the building rights approximately 8,800 square meter gross floor area also taking into account the floor plans underground.

Purchase price is SEK 208 million, should be index-linked and start to be close to SEK 230 million and a planned move in during 2029 on this property. And that more or less completes our -- one of our core areas in Sveaplan going forward. We will have 55,000 square meters of gross leasable area in that area, having ground floor activities, including food and beverage, having high-class conference centers, parking and other services to be a center for our portfolio that can have some extra services going forward.

Project opportunities in the near-term, as I mentioned, Farao, Kairo with commercial units coming in addition of approximately 500 apartments. And in Phase 1, we have 185 apartments there. We see apartments in this area is more or less bought or let by the larger tenants in this area. So it's very, very popular. And that's really give us a well-functioning urban area. So that's good for us. Haga Norra, as I said, already produced 519 units, in production 187 and decided to produce another 390 units already with LOIs on a lot of them.

We have the Västra Kungsholmen, Tegelterassen is 36,000 square meter office, partly demolition has started in January 2026, not -- and we don't have any lease contract in place, but the interest and the pipeline is quite good, quite promising. So there's a big ambition for 2026. And we have the Solna Business Park, the Parkhuset is a land allocation for 22,000. That's in the purple line on the screen here. And we have Yrket next to it with 320,000 residential units and 2,200 square meter premises, more or less ground floor activities there. The last one, we already own and have in our books 60% of the land plot, but 40% is a land allocation from the municipality.

So if we try to summarize our main short-term priorities, we are working every day, every night, every second to decrease vacancy in our portfolio. We have to continue to be the preferred partner for our customers. It's so good for me as a new CEO to come into this company and meeting a lot of the larger tenants and everyone talking good about the Fabege employees. It's very, very nice to hear. We have always to be available, accessible and be solution orientated. And in my view, we are that, and that's what I hear. So it's very good.

We have to secure value creation in ongoing projects. We have to analyze value creation in our land bank to be very exact about that going forward, that both in the commercial and the residential land bank. And we have to continue to be active in the financing markets, which started well already first day in January, that looks good. And as a company, we always have to search for opportunities, and we are searching for opportunities to build the company and not to do a single transaction.

So with that, I conclude our presentation and maybe you have some questions for us. You were so shocked about the presentation.

Thank you very much for that. And also my name is Albin Sandberg, I'm representing SB 1 Markets as a sell-side analyst, and I will be moderating this Q&A and all of you will have the opportunity to ask questions as well.

So I want to start with you, Bent, I mean, obviously, you provided us and the market with an update a few weeks before Christmas about your first thinking and so on. Now you've been through a Q4 results. And I just wonder if there's anything that has come across your mind that either better or worse with the company compared to that you thought initially. I mean you were always on the board before. And maybe also you're a Norwegian and now we're coming to Sweden. Any cultural differences that you have encountered so far?

Definitely some cultural differences. It is on the good side. You see Stockholm as a city is much more vibrant. It's much more happening here. You see also in the papers, you see on the stock exchange. Things are happening, you are taking all the opportunities, and that's something also we have to grab in this market that we are right now.

On the very, very positive side is to be around meeting all of our employees, see how they are burning for Fabege, really want Fabege to do well. That's important for us. They are the one that always meet the customers first. So that's a good sign. On the negative side, we have some vacant space, and I've been around visiting most of the vacant spaces. I can't believe that we don't have tenants for them. So they are very nice, superb locations. So that's what we have to achieve going forward.

Yes. Now obviously, the numbers that we're seeing that you're reporting today on the one hand, positive net letting. On the other hand, a little bit higher vacancy, which I understand is a bit of mix, and you're also saying that key focus is to reduce these kind of vacancies. But from a broader market perspective, in this cycle where we are now? Do you think that it's the same as previous cycles? So once we get the economy running, demand should pick up? Or is there anything else because of work-from-home habits, AI and so forth that would sort of impact this, let's say, potential recovery differently than what we've used in the past? What do you see?

I'm not sure if it's that much actually. But now the vacancy in total in Stockholm, the biggest Stockholm is quite high. So that's why it will take a little bit longer time. But if you look at the pipeline, look at the leases being out there, the competition, I think the pipeline is growing only the 2 months I've been on board. So that's positive.

What kind of tenants are growing, you see within the defense industry, you see within municipalities tenant or link tenant, they are growing. You see some tech investors are growing more or less -- I think you take some more opportunities in Sweden than I saw in my -- in Norway at that time. So I think more is happening here, and this is more or less the capital of Scandinavia. Someone is talking about Copenhagen, but I think more will happen here. So I'm quite positive about that.

When it comes to all the other things you are mentioning, and I hear that all the time, all talent, if you need talent, you have to be in CBD. I don't think it's like that. I've been in my company now in Fabege, talented people all over, but maybe in my view, we are more or less in the center. It's very nearby. Nice locations. And I think what we are searching as a young employee today is you want to be where things happen. You want to be in the office that you can be creative, that you meet your older colleagues, you want to grow within the company, you want to be motivated. And that's up to us as landlords are, are the premises good enough?

And if I hear someone, no, I have to stay home to be efficient. Okay. So then you have to really have to move because that's a landlord's responsibility to give you the right location, give you the right premises.

And the positive net letting that you managed now in Q4, can you say anything about were these negotiations that have been going on for a long time that finally made it? And also, given the high vacancy rate we're seeing in the Stockholm office market, do you need to offer extra rental rebates or something like that in order to sign these leases?

It's on the both sides actually. As I said, this time, it was no major leases. So the leases we took now are not being going on for so long time. But we had ambitions of higher numbers, but someone came in early January instead of this, and -- but it can be both ways. So this time, it was not -- that was not the reason. On the other side, the lease -- the period to conclude the leases are getting longer and longer. This is much longer than I'm used to. But still, I see they are getting concluded. We listen about all possible leases in the media or 2 years before they are really concluded on the larger ones.

So things happening in the market, quite positive. But as I said now during the presentation, the signs in our numbers are there for real, but it's not a lot of them. It's only SEK 36 million in total in positive net lease. So if it really recovers, should be much higher. And definitely, we don't have any new major new leases during the whole year and that we have to step up the gas.

And I know that in the past, you referred to an annual net letting target. I don't know if that's still valid or if you have one, what would that be for 2026?

It's SEK 50 million in net lease. We need that. And we have some extras in new leases. But in the management portfolio...

And you were referring to your tenant list saying you were very happy with that. And still, there are some that account for a little bit more. Are there any specific one that you are already now working with and so on in order to make sure that they stay or anything that we should watch out for here in the near-term?

We are always working with our tenants. So we try to keep all of them. We try to have them grow. And if they don't want to grow or they may be as we have been done in a little downturn in generally, they have to adapt their business to the reality. And if they can't increase the prices, they have to look on the cost side. And if it's possible, among other things, they also try to reduce some of the space. So we think we have high-quality tenants, and we are working with them every day. 24 hours a day, and that's our main priority as a landlord.

Yes. And out of these, let's say, 14% of vacancy that you have now, what would you say is a normal level for vacancy in the Fabege's portfolio across the cycle level?

Across the cycle. It's always difficult to be 100%. So -- but we should be high in the 90s actually, mid-90s, 95% maybe.

Yes.

That's a goal, and it's absolutely reachable.

Yes. Do you want to say any target year for that number?

In my head, it's only 1 year ahead, but they have to be a little bit realistic. So we need some time. And as I said, to conclude a lease it takes some time. And for them to move in, it also takes time. So the larger tenants, they are planning 5 to 10 years ahead. So bear that in mind.

And are you in a situation now where some of these vacancies are close to structural, you believe that you're looking into alternative use for some of these assets that you have?

Not yet. But if you think we only have pure office, then it can be some alternatives. But within the education sector, within the health sector, et cetera, things are growing.

Yes. And I also wonder a little bit about your potential to start new projects. Obviously, you are very much focused on getting the vacancy numbers down. And you have your balance sheet where I guess your LTV is well below target, but you still have a debt ratio that is a little bit high. So how do you envision the development CapEx going forward here, 2026 specifically maybe?

As we went through some of the projects, larger projects we have now. And I think the CapEx for 2026 would be around SEK 2 billion, but it's a little bit on the way to go down. But some of the CapEx are also for the residentials, and that's more or less a sale. So that will be -- and in a future sale. So when you see the result from the residential, the cash flow is much better, of course, comes that. But going forward, if you are a potential tenant, we always have space. We always have potential projects. We're talking about the portfolio of 150,000 square meter that's now running on shorter leases. That's also potential projects going forward. But in the meantime, they run on shorter lease lengths, et cetera.

So a new potential commercial project starts this year, 2026, that would require a tenant in place, would you say? Or could you imagine starting anything on speculative grounds?

We can start on the speculative grounds. The balance sheet, we are not worried about that, but we'd like to have tenants in place before we start any larger at least.

Yes. And then on the property valuation side was negative in Q3, was negative now again in Q4. If you just could clarify a little bit what was happening in your own assumption and maybe in the discussion with the valuers, anything that struck your mind in one way or another delta-wise? I'm just wondering what happened and that needed you to take down values again in Q4 [indiscernible] are we reaching the real trough here now? Do you think you can see the numbers in red -- sorry, in black for '26?

I hope so. But it also depends on what's happening on the market. And specifically in this quarter, the expected indexation or inflation for next year was taken down by the valuers from 2% to 1.5%. So that has a negative impact. We also saw increasing yields in the suburb locations, still coming from the deal Vasakronan did, and there has not been any other deals in this kind of suburb locations. So that has had maybe too much of an impact, I believe.

And then we have -- because the land allocation -- the agreement with Huddinge regarding the land allocation in Flemingsberg was terminated by the year-end, which made us take down the values for, you can say, overvalue -- extra value that we had allocated to those building rights that we don't, we are not at least sure that we will have them anymore. But as Bent said, also, there are ongoing discussions with Huddinge. So that might change in the coming months. So I think no major changes, but small changes that had this impact.

And just to be clear, the 1.5% indexation that's for 2026.

Correct. Yes. And then onwards, it's still 2%.

And then also, I mean, obviously, the financing market continues to be strong is my feel. And as a CFO, I guess you can confirm that your interest rate duration is a little bit on the low end, in my view, at least. Do you -- are you happy with it? Or are you have any plans to extend it or what would it mean for you?

I mean, yes, we are -- as it is right now, we are quite happy with it. But of course, we are monitoring long-term interest rates and the levels of them in order to be ready to act when we find it more favorable than it is right now. We have some older swaps that will mature during this year, also next year, that will increase rents, increase interest rates costs going forward. But we also see when we are renegotiating both banks and refinancing bonds this year, margins are substantially lower today than they were when these were signed before approximately, say, 3 to 4 years ago. So there are ups and downs, and I'm quite confident about more or less sideways development of the average interest rate this year.

Compared to this outgoing rate as of Q4.

Yes.

Yes. That's clear. And I think the discussion about share buybacks is a topic for a lot of Swedish property companies trading at a discount to NAV. You have carried out buybacks in the past. And my understanding is that you have referred maybe a little bit to your underlying cash flow and the debt ratio in order not to continue buybacks. Is that correct understanding? And is that still valid? Or are you considering buybacks maybe ahead of investment starts?

We are always considering everything. But when it comes to the capital structure, that's the main priority. We have also the dividend policy more or less as a base for how the Board is thinking these days. And Asa and I, we are not deciding, this is a discussion in the Board, how should the capital structure be? And it's part of that discussion actually.

Okay. So you don't rule out share buybacks for 2026.

We never rule out anything actually. But as I said, the priority is the dividend policy we have in place. And after that, we look at the cash flow and the key metrics for the company.

Yes. And then I have one last question before I hand over to the telephone conference and also questions on the web. But now Bent, you obviously have a bit of connection, I must say, with the main owner in Fabege. You used to be the Head of -- CEO of Norwegian Property. Would a merger between Fabege and Norwegian Property make sense in your view?

Never say never. I'm not spending too much time on that actually. But in my view, at least the 2 of us, we are synergies. We don't need 2 CFOs or 2 CEOs. On the other side, we have better financing here in Sweden. So that's also a synergy. But beyond that, I'm not sure about the synergies.

Great. Thank you very much. Okay. And with that, we open up for the telephone conference, and you can also send questions via online, and we will see if we can take them here. But operator, please go ahead.

[Operator Instructions] The next question comes from John Vuong from Van Lanschot Kempen.

You mentioned that lettings in Q4 was skewed to SMEs. Looking at your leasing discussions, are they also skewed the same way? And do you expect new lettings to gain momentum over '26?

It's a little bit difficult to hear.

Yes.

Can you please repeat the question? As the line wasn't that good here, actually. I'm sorry.

Yes. Just on your leasing discussions. Do you see the same skew towards small and medium-sized companies?

Going forward, I think that's more or less the bread and butter for us in Fabege. We -- as I mentioned, we have 670 customers/tenants in our portfolio. And we are always looking for smaller and larger tenants. That's part of our portfolio. We have some very large tenants. The top 10 stands for 30% and they take more time, take longer time, but they are also in the market. There are companies growing. There are different segments growing. So we have this mix. It's actually not a clear view of what's happening forward.

So if you just look at Solna, Solna Business Park in that area. We had a large contract with Saab. Our neighbor had a large contract with [ Svenska Kraftnät ] and the social government has also moved to this area, large tenants. So large tenants are in the market. And unfortunately, we didn't have too much succeed in 2025, but that's top of the agenda going forward.

Okay. Clear. And just how well is your current vacancy position to capture this demand? Do you still need to spend some CapEx to reposition these assets?

It's very different. But a lot of the vacancies are very, very nice. So more or less the CapEx will be maybe to do something at the entrance just if it's a single-tenant building converting to a multi-tenant, we have to look a little bit to the entrance for the whole building to be for a multi-tenant building. But we have the examples at Stjärntorget 1 where Telia is the main tenant, approximately 8,200 to 8,300 square meters are now rented out to 2 new tenants in that building during '25. So things are moving.

Clear. And sorry, just on the near-term project opportunities, what returns do you see and how does it stack up against your cost of capital?

And cost of capital are in the -- around 10% is the cost of capital. And as you see, we haven't really succeeded in the last years. But as I tried to summarize, to really look into the value creation in the land bank and in the projects is a top priority.

The next question comes from Jan Ihrfelt from Kepler Cheuvreux.

I have a couple of questions here. The first one regards, if you look at the central administration on a year basis, it's up 14%. Are there any extraordinary costs in that increase?

Sorry, it seems to be a very bad line here. I couldn't understand your question.

I'll try to repeat it, maybe taking it a little bit slower. Your central administration costs are up 14% year-on-year for the full year. And are there any costs that are there though be of extraordinary character.

Last year, we in -- sorry, in 2024, we didn't make any provision for the profit sharing foundation in Fabege. And this year, there is a provision for that, and that pretty much explains the whole difference.

Okay. And then the question on the NOI margin, you have a target of 75%. How comfortable are you of reaching that already in 2026?

It's definitely a goal to reach it in 2026. I think if we are a little bit more successful in the letting business, adding more rental income to the P&L, we will soon be there. So it's more related to income side than cost side actually.

Okay. And then maybe if you could comment or make any kind of guidance for your associated companies, i.e., the Arenabolaget for 2026. Do you have any figure there?

Except for the write-down of SEK 63 million that we took in 2025, this is in line with what we have communicated before. And as it looks now, it will be the same for 2026. So roughly around SEK 70 million negative.

Okay. Then a question on -- maybe a clarification. Your net letting target for this year, was it SEK 50 million in the management portfolio?

For 2026, yes.

Yes. Okay. And then a final question from my side is, if you look at the chart where the rental income in the coming quarters. And if you zoom into to the first quarter, that figure has increased SEK 10 million from the Q3 report. Is that the indexation effect?

Indexation is very low. It's an impact from positive net letting that has that.

Okay. So hardly any increase from the indexation?

I think indexation is roughly in total, SEK 25 million over 2026, the full year. So of course, it has a little impact.

Including the [indiscernible]

Yes.

The next question comes from Lars Norrby from SEB.

First, a simple question on the headline, the CEO statement is the same as in the Q3 report, I note. Does this mean that your view on the market is very much the same? Or is it looking slightly better now or the opposite?

I haven't concentrated about the former CEO's view there. This is my view, and it's the view as of today. And I'm quite positive actually, but it's better to try to show you some results before we are too optimistic, but it looks better and better in my view.

And then my second and final question. You did not do many transactions during '25, if I remember correctly, just one centrally located property. If you would sell something in 2026, would you focus on selling something centrally located or rather in Solna, Arenastaden? And for that matter, are you looking at divesting residential building rights?

We are always looking at opportunities. But in my view, with the balance sheet we have, we do transactions when the markets are favorable for us. I don't see the market is very favorable to sell assets these days, but that can change quite fast. And we also see the transaction market in the CBD being better, even though it's a low volume. So -- but we are looking into that. When it comes to residentials, we will try to develop the residentials at least in our core areas ourselves. We still own some residential land banks outside Stockholm, and that could be possible sales going forward, but nothing is concluded as of today.

Just to complement, we did some -- we sold some building rights for SEK 200 million on the Western part of Stockholm City, Western Kungsholmen. And those will be vacated probably in April or May in 2026. So the agreement was signed. They still remain in our balance, but they will be vacated in the spring.

[Operator Instructions] The next question comes from [ James Cattell ] from Green Street.

When it comes to your land rights and the decision to sell or develop your land rights, what's the required rate of return that you would need to develop a piece of land rather than selling it?

That's also a little bit different. If it's in the core area, then we are more -- we don't have that high development margin. But it's above other. But we'll try to achieve 15%. It's difficult these days, to be very honest. And when it comes to residential, as I mentioned, they are a little bit higher.

And that figure, is that levered or unlevered return?

Leverage to return, equity return.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Yes. So we have a few questions left. I think we can make it within the 11. From Fredrik [indiscernible] at ABG. One question is, are the 2 remaining floors in Haga Norra leased now, even though tenants have not yet moved in? If so, when are tenants moving in?

There is one tenant moving in, in April this year, and there's still some remaining space to be let.

Yes. And the other question refers to the JV, Fredrik, unless you got the question before -- answered before, please reach out to management, but I think we -- you guided for SEK 70 million for this year. And then from Mihail Tonchev from Kempen Investment Management. Would you consider rationalizing your location and perhaps tightening the portfolio segments via capital recycling? Or are you fully convinced of all your location for the longer-term?

We are always looking at all kind of opportunities. But at the time being, nothing is decided with that. And I've been on board for 2 months. It's a little bit early to conclude on all those kind of questions.

And I think the final questions has been answered. So I think we'll leave there.

Okay. Then we close the call and thank you for participating. We look forward to the next quarter and see you back in 3 months.

Thank you.

Welcome to Fabege's conference call. With me today, I have our new CFO -- CEO, Bent Oustad and our CFO since many years, Asa Bergstrom.

The purpose of this call is actually to just introduce Bent to the market. He's very familiar and many of you knows since the past, but for some of you, he's new. So please, Bent, tell us a little bit about your background.

Thank you. Pleasure being here. Thank you for joining this. I have to maybe start because a lot of you an list, all our companies have contacted me and wanted to have meetings with clients and interviews, et cetera. And I know Peter as an employee in Fabege, motivated, highly enthusiastic, want me to book all these meetings, but I said no. But now he has booked for today. So I'm really happy that you showed up.

My background, I'm a Norwegian citizen. I have moved to Stockholm now from 1st of December. Very, very happy to be in the city. My education is from the university in Bergen, the Norwegian University of Business Administration. I started to work in Arthur Andersen when I finished my studies, I worked there until they went bankrupt in 2002. And then ABG Sundal Collier called me and asked if I would join them. So I joined the corporate finance department. They were building up a new real estate arm and asset manager.

So I started that business in 2002, worked there for 8 years, building it up, had properties. I was asset manager for different real estate funds. We had properties in Norway, Sweden, Baltics, Germany, Denmark, U.S., more or less around the world. We were about 30 employees in ABG, and we had several contacts with different managers around the world.

After 8 years, I joined -- or I was repositioned to head the real estate corporate finance team in ABG Sundal Collier, stayed there for another 8 years. That was more core corporate finance like M&As, IPOs, financing, different financings, both debt, not so much debt but mostly equity then.

From 1st of January 2018, I was asked if I would take over the CEO position in Norwegian property. It was a listed real estate company at that time. I said yes, new challenge. I've been there now for 8 years. We have done several things, and I see a lot of similarities with the position I joined right now, actually. So...

So can you some -- similarities, differences between Norwegian properties in Fabege?

Yes. The similarities is when I joined Norwegian Property, they had sold several properties on forward contracts. So more or less, we were -- a lot of the cash flow was sold. So we had to do something with the firm. We had also some properties that have been vacated from larger tenants, single tenants.

So we were in a position that we had to transform them finding a new single tenant or do it multi-tenant buildings. So we had some challenges. We started the work there just to try to meet all the placeholders a little bit like we do today. I had to meet all the placeholders get an overview of the company, meet all the employees, see our strengths and weaknesses and try to put a plan up after that. And the years ahead, we started to do some smaller transactions. We bought a very large -- when the pandemic hit the market, we bought a large property just outside Oslo City in Fornebu, the former Telenor headquarter is 200,000 square meters. Opportunity the way we saw it during the pandemic, Norway had quite strong restrictions of foreigners going into the country.

So we thought that we don't see any foreign investors buying that property without being on a property tour. So that's a real opportunity for Norwegian property at that time. 20,000 square meters was several tenants, the ABB head office in Norway is there, Telenor and several good credit tenants. We also used the time to start to invest in some debt in properties that the return on the debt itself, debt was good for us, was okay. But we had an ambition that maybe they will fail on the debt because the interest rate and inflation started to kick off, then we would have the property. And that happened around 1 year after.

So they got a new property, the neighboring property to the Telenor headquarter, also with creditworthy tenants, credit rated A tenants, long leases. So we try to use this period to do a lot of opportunistic moves. and other things, very centrally located, newly refurbished building in the CBD of Oslo, owned by the syndicate. SPV syndicate more problems when the interest rates started to increase. So we also placed a bid on that and got that in a favorable position for us at least. And I think that's why we also have to start to think in Fabege. So that's similar to SC.

We have to stay informed. And when telling this is more or less if you look back to Fabege when it was founded by the Paulsson family. It was -- maybe that way it was founded. It was driven by a lot of transactions. They bought properties. They did some refurbishment. They got the leases in place. They sold it, bought a new one. It was more or less driven by that in the beginning. And then, of course, you all know real estate are in different cycles and the cycle maybe it's not favorable to buy it because it was too expensive.

So the new management in Fabege, they started more development, was really developers, bought land and made a fantastic job in Arenastaden. It's a superb area. I really love it. And then they did that for several years. And when the pandemic hit, more or less you started a more consolidation phase for the company. And always with a strong balance sheet through the cycle, the last cycle, it's fantastic. So this company has a lot of opportunities going forward.

Yes. Over to you, Asa. Bent will be your third CEO. What was your first reaction when you heard it was going to be a Norwegian? Oh my God, not another one.

Oh my God, not another one. No. I know Bent since a couple of years since you've been on the Board and you are very familiar with the company already. So I'm very much looking forward to continue working with Fabege together with you. So I think from my point of view, the change is not that big. Of course, there's another person to sit and have these daily conversations with, but I'm sure it will be very good.

Do you want to comment anything about the Stockholm office market? We were quite a little bit more optimistic after the last call.

Not to tell too much in front of the Q4 report, which will be released in February. But yes, so far in the fourth quarter, and we are coming close to the end of December, it still looks positive. So I'm much more optimistic about the future than I was a year ago, and I was somewhat optimistic even a year ago. So I think we are looking forward to better times.

One last question to you, Bent, before we open up for the audience. We had a new owner this week, read in the paper. Can you have a comment about that?

You also asked about that. Everyone asked about that. I'm more or less familiar with the question, had it for 5 or 6 years, I think, but it's nothing changed in that. Every time it's a press asking me the question, and I say, okay, what do you know, I ask? Now all the researchers are telling me this. So probably you guys are telling the press that something will happen. As I said, I'm still in the Board of Norwegian Property. I'm also in the Board of Fabege and now even the CEO of Fabege.

And I'm pretty sure I would have known if that was on the steps right now. So quite comfortable with that. I don't spend a lot of time discussing who are my main owners or owners at all. But I don't think that will happen now. What happened in the future? I don't know. But I have taken this step. I moved from Norway, moved from my family, moved here. I go all in for his job. And to say it in an American way, I would do far great again. But I really have high ambitions for this job. This is where I will try to make a good return going forward.

Any questions from the audience?

Okay. Lars Norrby, SEB. A couple of questions from my side. First, a follow-up on that transfer of ownership, which was done, as I understand earlier this week on Monday, wasn't it? Now why now? Why was the change done at this point in time? I understand it obviously strengthens the balance sheet of Norwegian property, but why this week and not earlier?

When they are doing anything, it's out of my hand. I have nothing with that to do. But it's like you said, you have probably also read the credit reports for Norwegian property. So everyone is asking if they would strengthen the balance sheet. Just show the support from the owners, I think. It comes to are there any synergies between different countries, et cetera. And one synergy is maybe financing so to have some Swedish assets in Norwegian property. I think that sounds good.

Okay. Fine. And just then turning to Fabege. Of course, like in any property company, the composition of the property portfolio is something that -- well, that's what you work with basically. So you've been on the Board for what is now 1.5 years and now you're in a different position in the company. What's your view of the composition of the portfolio would there be potentially be parts that could be of material size that could be up for sale going forward?

You should never say never. Everything is in the toolbox at all time, but I'm not very fan of selling properties when I feel the market is not super hot. But if it's a hot market, it's easier to do it. But otherwise, if our stock is trading good, you as an investor can also decide to sell or not.

The composition of portfolio, I like it a lot because you have several properties here in the city. That's not so concentrated. I would have preferred to have even more concentrated portfolio in the city because then we can have full control over the area like we have in Arenastaden, like we have in Haga Norra and also partially in Hagastaden. Then we have more control. We can have a gym, we can have a parking, we can do everything together.

So we have a lot of synergies when we have more in one spot. But our main concern or my main concern these days are just the vacancy. So that's what we really have to focus on. We have to take away the vacancy. We have to be best on renting out leasing. So operations, operations, operations. And I see if we have a cluster of -- or a core area with properties, it's easier to have the real focus on the same.

This is Fredrik from ABG. A couple of questions as well. First, you talked about kind of a couple of similarities between Fabege and Norwegian Property. And during your time at Norwegian property, you did some acquisitions, you invested in credit, talked about being opportunistic. What do you think that sort of means for Fabege to be more opportunistic what -- in what way?

Maybe opportunistic is the wrong word. But in my work, I have 2 things. I'm addicted to details. I really are hands on. I really like to understand everything. I'd like to keep myself informed what's happening in the market and see if there are something that we can do. to grow the company, to have better operations. Can we have some economy of scale by having more properties together in one area. We can divest someone and invest in something else.

Of course, we can, and we probably will do going forward. But I think that's what I tried to say is that I think going forward, you will see more happening in Fabege than you have seen in the last 5, 6 years. There are some very large differences between Norway and Sweden in my view so far. I will come back to that later on also. But in Norway, you don't have the large corporations as we have here in Sweden.

So here, we have several tenants renting 50,000, 60,000, 100,000, 150,000 square meters. We don't have that in Norway. only have the governmental tenants being that big. So that means that when you do some structural changes, every corporation are more or less in a cycle. So maybe they have rented 10,000 square meter too much, maybe something is happening then. So they may be reduced from 100,000 to 80,000 square meter. It's still a fantastic tenant to have. It's fantastic. You have all possibilities.

All of our tenants are not only in Stockholm, maybe they need some help, other places around Stockholm or even other places that we can have some opportunities to follow them. We have to look into that to see what can we do. So when I see here in Stockholm, we see the increasing vacancy more or less all over. That's probably because they are reducing. They don't have excess square meters, et cetera. that we don't see that in Norway yet. But still Norway are behind Stockholm in the cycle.

And what you see in the cycle, more or less what's happened in at least Paris, a little bit in London, where the office market also is awakening up. I think that will transform into Stockholm as well. And when we see the IPOs in on Stockholm Exchange this year, like Klarna, very sure. Very, very large share of IPOs, also tells a lot about the market and what's going on. We don't see that in Norway this year.

And then second question on -- do you have sort of a view of the balance -- you mentioned the balance sheet being strong in Fabege and that sort of sets up for good opportunities ahead. Do you have a personal view of where the balance sheet should be? Should it be where it is today? Or can you increase leverage and so on?

I didn't mean it that way, actually. But I think to be in a position to eventually look at opportunities, you need a strong balance sheet. That's the base. And Fabege has had that through this cycle. So I think this company is ready for everything. That was my meaning. How strong should the balance sheet be? That varies through the cycles. And it's important to be there. And if you don't have a strong balance sheet, you missed the opportunities.

So -- but we have centrally located properties, close to 50% of our portfolio yielding assets are here in the center. It's not a lot of cash flow. So that's why also we need a strong balance sheet. The balance sheet has to be adjusted for the kind of properties you own.

Yes, you have a very strong balance sheet and you also have a big discount valuation to net asset value, and you talk about buying new properties and et cetera. Isn't it more profitable from a net asset value enhancing perspective to buy back your own share?

That's absolutely a good opportunity these days. So more or less, the toolbox is there. Do we have enough cash flow or do we have enough free cash to do it? I think, first of all, we have to focus on the operations the way we are today. And that meaning reducing the vacancy we have. We have above SEK 0.5 billion in yearly rents in vacancy. So that's job #1 for all of us. So of course, should they borrow money to buy back shares? I don't know.

More or less, my opinion is that the shareholders should have at least a small portion of dividend. And that's what they have in Fabege, not a lot. And then I'm not deciding even if I'm part of the Board, but you can be quite sure that that's also on the table in the Fabege Board if you should use that mechanism or not. But before we do purchases of eventually properties, that also has to be evaluated definitely.

Okay. And on the vacancies, I think you have like 13%, 14%, and it's been quite high for quite some time, one of the higher ones among the real estate companies. What are you structurally going to change to actually get this vacancy down to a more normal like 4%, 5% level?

Yes. I've been in this position for 2.5 weeks and a Christmas party, as I say, and probably I learned more during the Christmas party than did the first weeks. I started on Monday, and we had to send the papers to the Board on Friday. And luckily, I got it postponed 2 days during the weekend, so we had some more time. So we haven't done enough work to really answer in detail that question. But that's job priority #1.

And every time I speak to some of our employees, I say, don't wait for me, work on the vacancy. That's job #1 for all of us. I tell it every time I meet our employees. So there are different ways we can do it. Today, we do most of the work ourselves. and we are very, very good at it. But still when the vacancy get at this number we are now, we have to look into different possibilities how to work on that. But definitely job #1 before everything else.

Yes. Emil from Pareto. How familiar are you with Stockholm since before joining Fabege?

Quite familiar. We -- in the funds when I told you about my background as asset manager, we owned [indiscernible], we own several properties in Kungsholmen. We never got the possibility to buy inside CBD because it was too low yields. We had about 50,000 rental flats in Stockholm and other places in Sweden, southern part of Sweden. So we had logistics here. We had [indiscernible] in our funds. So I've done a lot here in Sweden.

And what's your view on Flemingsberg?

Very, very small portion of Fab so far. We have some very, very good tenants in Alfa Laval and Dramaten. Yes, we have SEK 160 million in revenues there. We have SEK 15 million in vacancy. So that's more or less my view on Flemingsberg right now.

Albin Sandberg, SB1 Markets. Two questions from me. You were referring then to we should expect more activity from Fabege over the next 5, 6 years than we've seen in the past. Obviously, the market situation is a bit different maybe, but is it that you're referring to? Or is it anything that you would have wanted to see in Fabege over these past 5 years that didn't happen? Or how should we...

All things I would allow to see. There have been some opportunities in our areas as well. I think on the Q3 report, we heard the neighboring building to our headquarter was sold, in my view, at quite favorable price. I think we had -- if we have been very lucky, it could have been us owning it. But of course, we have a lot of vacancy. The share is priced where it is right now. So I think we have to do some homework within our team first, and then I think you will see more from us.

And final question is, obviously, you've been doing a lot of property deals over your time as a banker and the CEO. What's your view on a property company in general? Would a larger size Fabege make more sense? Would it be more interesting to invest in? Would you get more favorable financing terms? Or how do you see a property company enabling the best return, so to speak, in your view?

Of course, how that's happening is dependent on where we are in the cycle. And that's also why I tried to go a little bit back and look at Fabege from the beginning where they were set up the way they were and then they got more urban developers. And right now, we still have a small land bank in our balance sheet. I think it's around SEK 7 billion.

So it's not a lot now, but it's not really high valued in the investor market right now, for sure. It will come back, definitely. But when I look at the property company, I want to build it as a stable company. That's work number one. And I love to have some CBD properties, but they're not yielding more or less anything. So cash flow is close to 0. And that's why it's very, very good to have strong areas around the city, giving us a little bit higher yield, maybe 100 bps higher. And like Arena has done, it's just fantastic.

I took my car first day to work and one later they told me, you are crazy driving here. You take the tram and the train. And that takes 15 minutes from my walk out my door. It's so central actually. You have everything. You have hotels, you have nice offices, very nice offices. When it gets finished, you have -- you already have a shopping center right there, but we need to have the security.

We need to have more shops, restaurants on the ground floor. And when I visit some of the tenants there, you're not sure if you are in my living room, I'm not the living room I have now, but living room home in Oslo or if I'm in a hotel or if I'm in a lobby, it's very, very nice offices. So I think when you build a company, we need to have stable cash flow. And that then you can -- if you only have centrally located properties, you don't have enough cash flow in my view.

So we try to balance that out. And here, we are close to 50% the yielding assets in CBD, then we need something else as well.

Jan Ihrfelt, Kepler Cheuvreux. I have a question on your building rights. You have a lot of residential building rights. And have you considered anything about these assets? Are you going to develop your own or going through joint ventures or even selling them or -- because that's a kind of a hidden asset in the company, I would say.

Yes. I think you saw last quarter that we were selling some building rights in Kungsalman. So they will be divested, is it first quarter or second quarter? First quarter, next...

May.

May, next year, second quarter. But I think we have the building rights where we own all the properties and also on the commercial properties. We are kind of urban developer in these areas to have control of the residentials. If we are competitive, can be competitive and we can do that job well, which I think right now that we can.

We should do that at least on our balance sheet. And we have a perfect team, a very lean team, hands-on team doing very, very well in Haga Norra these days. So I think we'll come back to that actually on Q4. So I'll little bit ahead right now. But yes, we will come back to that at the Q4 report, how we are thinking about that.

Okay. And right now, it looks like you're going to develop them yourself. develop the building rights yourself and doing residential. A lot of them construction.

Not all of them, but a lot of them.

Michael Anderson, Handelsbanken. Coming back to the question about the balance sheet and leverage. I guess Norwegian property has been run a bit higher leverage, at least looking at LTV than Fabege in the last couple of years. And it's also rated and not lower than Fabege. How is your view of rating agencies or at least some experience with them, I guess, with more transactions maybe going forward and buybacks, et cetera, they might have an opinion on that. So a bit your thoughts on the rating agencies and the rating.

I think they do their job. It's -- I don't have a lot of views on them actually. They have to make up their opinion more into what the question from the front row here that how is the company looking? And I like -- I prefer to have a balance there. And we need a strong balance sheet to act on possibilities and act on things happening in the market.

So pandemic inflation. We have low interest rates here in Stockholm. Look West, it's quite much higher. So I think they do their job. Why is Norwegian property a higher loan-to-value? They were down to on the 30s some time and then they did a lot of acquisition, opportunistic acquisitions, bought buildings with -- also with vacancies. And then you have a higher LTV, but still get supported with some new equity, but not 60% new equity.

So it's going up and going down. But my view is to have some stable balance sheet through the cycle. I'm not in my head, not has to be below this and below this. That's more or less over the cycle and see how the company is performing and how we look at it.

Do we have any questions from the telephone conference?

Next question comes from Stephanie Dossmann from Jefferies.

I would have 2 questions, please. One -- the first one will be related to the AI adoption with -- by corporates. I was thinking about what's your view, I mean, on the impact from AI on office demand in the long term and especially in the situation that we see currently with lots of vacancies.

And I know there are -- there have been disruptions in the past, such as working from home trends and so on. So I was thinking about the megatrends on the office market. And maybe the second one correlated to the first one. When it comes to fill the vacancy, do you think about converting assets into other asset types such as either data centers with the AI adoption or other type of assets, please?

Yes. Try to start with number one. So you have to remember the question to Peter. When it comes to AI, of course, it will influence. Hopefully, it will influence, and I'm sure it will influence the companies really succeeding with AI, they will get even stronger, will be better credit. They will have a lot of opportunities going forward. Some of them will be growing, some will losing and maybe really reduce. That's also why I say our job #1 is to lease out. There are a lot of tenants in this city. And in my view, everyone should be at Fabege. It's the best company.

And when I am out there, not so many yet, but I met some of our largest tenants, everyone very enthusiastic telling so good stories about all the Fabege employees they are meeting on a more or less daily basis, and that's really one of our strengths. We have to be there for our tenants. We have to be out there hunting for new tenants. And as I said, we will reduce someone will reduce, someone will grow, some will be stable, and that's part of life. That's our work.

We should be #1 in renting out offices. I don't think any office will -- I don't think the office will die. When you see the total vacancy in Stockholm is also heavily influenced by some areas with larger vacancy. We have also, as was a question from the audience here, quite high vacancy, but we've also done a lot of new build, new construction and not everything is rented out 100% when you have started the project. So we have a little backlog to work on there, and that's goal #1, as I said several times.

And the second question was about your view on converting vacancies -- office vacancies to other.

Yes. It's not so much potential in our portfolio. It was a little bit question from Flemingsberg here. There can be some other -- everything doesn't have to be offices to say it that way. On the core portfolio we have in Arenastaden , Haga Norra in Hagastaden or here in CBD, we don't see that much conversion.

But of course, we have -- is it 6 or 7 hotels in our portfolio today. That's not pure offices, even though we don't market them so much as a hotel portfolio. We have a central located hotel in Sturegatan and also several hotels in Solna. So we have different types of assets. And as I said, we have several office tenants that also want to expand into other things.

That could be an opportunity for us. We see also maybe more tenants asking for combined properties with some kind of research development department, some smaller part logistics together with office. we also have plots available for that. But the offices we already own, they are not that -- not all of them at least so flexible to convert to other things right now.

Well, if this is still -- this was the last question, do you want a last comment before we wrap this up then?

Not so much, but I want to say I'm very enthusiastic. I'm humble about this task I have. I'm grateful for the opportunity. And my big, big dream is that my position is not necessary because then the management team and all employees really runs the company. But I'm looking forward to this. Thank you for taking your time, and we we'll meet more investors, sorry. But after Q4, I think we will be very much more available. Thank you for taking your time.

Welcome to Fabege Q3 2025 Report Presentation. [Operator Instructions] Now I will hand the conference over to the speakers. Please go ahead.

Good morning, and welcome to our presentation of the third quarter. As usual, it will be -- afterwards, there will be an opportunity to ask questions. To summarize the third quarter, I would say it was a stable quarter. We had increased rental income. We had increased net operating income, and we had increased profit from the property management and the net letting was positive with about SEK 9 million.

So in a stable quarter. After the summer, we have seen some signs of improvements, inquiries are increasing and there have been more viewings. So it's more activity. That's small, but maybe clear signals that we slowly but surely hopefully, will be starting to be more active -- there will be more activity in the market. And especially, this is true in the Stockholm city. So Asa, please give us a review of our numbers.

Thanks, Stefan. Please turn to Page 4. Rental income for the period amounted to SEK 2.5 billion, just above the same period last year. On a like-for-like basis, income decreased by SEK 74 million, equivalent to minus 3.2%, which was mainly related to relocations due to the previous year's negative net lettings.

The sale of the property Ynglingen meant a decrease of SEK 25 million. Meanwhile, income increased by SEK 103 million related to occupations in completed projects. Net operating income decreased to SEK 1.9 billion. Property costs include a nonrecurring item of SEK 7 million.

Other deviations mainly relate to slightly higher repair and maintenance costs and property tax. The surplus ratio thus amounted to 74%. For the quarter alone, the surplus ratio was 78%. No sales were reported in Birger Bostad during the third quarter as no projects were completed.

The sales were then related to the second quarter when the first phase in the housing project in Haga Norra with 23 apartments was completed. This means that the residential development in Birger Bostad reported sales of SEK 128 million and a gross profit of SEK 20 million.

Central administration costs amounted to minus SEK 78 million. Net interest items came in at slightly lower level than the previous year. Higher debt was offset by lower average interest rates during the period. And the result in associated companies amounted to minus SEK 49 million, of which minus SEK 50 million related to the period's capital contribution to Arenabolaget.

Share in profits of other associated companies amounted to smaller positive amounts. This meant a profit from property management of SEK 1.050 billion compared to SEK 1.012 billion in the previous year. Unrealized changes in value amounted to minus SEK 338 million in the quarter and minus SEK 988 million accumulated for the first 9 months. I will come back to this very soon.

Impairment of the value of development properties of minus SEK 21 million remains from the previous quarter and related to the valuation of future project opportunities in Birger Bostad. Realized changes in value, minus SEK 37 million related to deductions for deferred tax in connection with the sale of the property Ynglingen, which was vacated in the first quarter.

The valuation of derivatives portfolio follows the long-term interest rates, which rose during the quarter. This meant a positive effect during the quarter, but over the entire period, this plus value decreased by SEK 216 million. The tax expense, which related to deferred tax amounted to plus SEK 47 million, of which plus SEK 128 million related to a reversal of deferred tax in connection with the sale of Ynglingen.

Next slide, please. During the quarter, we have independently valued approximately 40% of the property portfolio supplemented with internal valuations of other properties. The average yield requirement increased during the second -- during the third quarter by a further 0.04 percentage points to 4.6% compared to 4.54% at the year-end. The increase related mainly to Solna, while the yield requirements in the city are unchanged.

In the first quarter, we reported negative changes in value of minus SEK 565 million. This mainly related to the fact that values expected longer vacancy periods and slightly lower rent levels, primarily in Solna, where we do have some vacancies and longer implementation periods for future projects opportunities in Flemingsberg. In the second quarter, the changes in value amounted to minus SEK 85 million, net of minor adjustments, both upward revaluations and write-downs.

The change in value in the third quarter amounted to minus SEK 338 million, and as mentioned, were mainly related to higher yield requirements in Solna as a consequence of Vasakronan's acquisition in Arenastaden. Overall changes in value during the period, thus amounted to minus SEK 988 million.

And the total property value thus amounted to SEK 78.5 billion. In addition, there is the property value of the development property portfolio in Birger Bostad of SEK 1 billion.

Next slide, please. Reported equity amounted to SEK 120 per share, and the long-term EPRA NRV amounted to SEK 146 per share. The equity asset ratio and the loan-to-value ratio were unchanged at 45% and 43%, respectively. Both of these key performance indicators confirm our continued strong balance sheet.

The interest coverage ratio amounted to 2.7 in the quarter and 2.5 for the entire period, which is in line with last year. Next slide, please. Access to and pricing of financing is still very good. This applies to both the capital market and banks. The capital market is now strong after the summer with high demand and lower margins. Several of the property companies have been active, and there is a broad-based demand from investors.

In late August, we issued a bond of SEK 1.25 billion. The bond has a term of 3.5 years at a margin of 100 basis points. Remaining bond maturities during the autumn amount to SEK 0.5 billion. And in 2026, we have SEK 4.6 billion maturing, of which SEK 2.3 billion during the first half of the year.

We intend to refinance our bond maturities with new bonds, whereas our bank facilities are continually refinanced through extensions. We have also started the process of refinancing the bank facilities that mature in 2026, which will mostly occur during the fourth quarter.

Undrawn facilities amounted to SEK 6 billion, including the backup facility for outstanding commercial paper. In October, the seller's promissory note was repaid from NREP, which meant that we received just over SEK 680 million.

Overall, we continue to have good preparedness for upcoming financing needs and refinancings. We have facilities in place to cover the upcoming loan maturities. Next slide, please. The average interest rate decreased to 2.83% at the end of the quarter. Maturity of derivatives at low levels and entering into new interest rate derivatives was offset by lower margins on refinancing as well as lower STIBOR rates following the Riksbank interest rate cut in September.

During the quarter, we entered into additional SEK 250 million in a fixed 5-year swap and SEK 500 million in extendable interest rate swaps that run with fixed interest for 2 years with the right of the bank to extend for a further 3 years. Of the loan portfolio, 49% is fixed, mainly based on long-term maturities and mostly through straightforward interest rate swaps supplemented by some fixed rate bonds.

In addition, there are callable and extendable interest rate derivatives totaling SEK 7.5 billion. Straightforward interest rate swaps have a fixed interest rate of between 0.11% and 2.18%. The callable interest rate swaps have an interest rate between 1.82% and 2.5% and the extendable swaps finally have a fixed interest rate between 1.66% and 1.72% for at least 2 years then.

The average fixed rate term amounts to 1.5 years, adjusted for the estimated maturity of the callable swaps, the fixed rate term increases to 2.1 years. So next slide, please. News in the third quarter is that we received the result of a travel survey in Arenastaden. 6,500 people responded, and we can confirm that public transport has increased and that the climate impact from work-related travel thus has decreased.

In addition, Separatorn 1, the Alfa Laval office in Flemingsberg obtained its final certification, BREEAM-SE, Excellent standard. And during the quarter, we completed an internal training in Fabege's code of conduct for all the employees.

So all of the employees have now participated in the training and have also signed the code of conduct. This is something that is now a requirement in connection with new hiring. Otherwise, we have continued to work in line with our environmental and sustainability targets relating to, among other things, the property energy consumption and the reduction of CO2 in project development.

Last but not least, I tend to say something about the CSRD, ESRS. It's now clear that the Omnibus proposal will be approved and that Fabege is not covered by the comprehensive sustainability reporting under the CSRD. We will retain the key performance indicators we have reported previously, but we will revise the structure of the sustainability report so that it's more aligned with the ESRS inspired structure. And so back to you, Stefan.

Thank you, Asa. About the transaction market, it has been a quite slow market during the last third quarter, which is not that unusual, as you know, over the -- from earlier years. But what we see is continued healthy market when you're talking about the good properties that find good buyers at good prices.

And then the most important transaction during the last quarter for us was actually when Vasakronan choose to invest in Arenastaden and acquired Tygeln 2. It is also known as Solna United, 34,000 square meters of offices for a little bit more than SEK 2 billion. That price is probably -- we don't know exactly the figure, but we know that there was -- but we know that it's probably below 5% yield on -- running yield and a little bit more than 5% yield on exit yield.

And that's also what you can -- we also talked about earlier the valuation in Arenastaden, we saw a little bit of uptick in the yields because of this transaction. But we're very happy that are getting Vasakronan as a neighbor in Arenastaden. And I think that's good for area also for the future.

The other transaction on this slide you have seen before, but as you know, also that are in good locations and they are confirming our valuations we have in the books. Next slide, please. The Stockholm office market, we have shown this before, is increase -- continue to be stable and even increasing rents. Vacancy rates are continuing to increase in most areas, but we see it stabilizing over during the summer, during this time now. And of course, you know that the vacancies we see right now are from what the net letting we saw a year ago.

So a little bit better market, a little bit probably some of the vacancies are flattening and hopefully and some of the -- also we see now in the reports coming from the advisers, a little bit more positive view for '26, '27 and onwards. Very important for the market has been the number of employees in the office-intensive industries, and we have seen it flattening out over the last years.

But hopefully, we even can see that with a little bit better economy starting to pick up during the next years. But on the other hand, we see very limited new space -- office space and especially there are very few new projects for offices started during this year.

So next slide, please. You can also see it in this slide that we expect the market to be relatively flat when we're talking about total office space in square meters for the next year or so. Next slide, please. Our challenge is and it's well known, the occupancy rate in the management portfolio. It's still -- it's about 87%. And we said it before, but it's too low. And that's what one of our focus is right now is to increase this occupancy rate and decrease the vacancies, of course.

We have the highest vacancies in Solna Business Park. We have in the other areas, Hammarby, some smaller spaces. But in total, when you add them up, it's quite -- it's more than 15% of that area. In Arenastaden, we have a little bit, but we now start to see more activity. And those, I think it's important to remember that the vacancy rates we see now is known already a year ago so that we will -- that we -- when we saw the net letting at that time, that what we now see in the occupancy rate.

Now talking about the net letting, so let's go to the next slide, please. We -- for the quarter, we had a positive net letting of SEK 9 million. In total for the -- so far this year, it's plus SEK 3 million. We had -- so I think it's good signs and also even if it's small numbers, it's more -- as we said, it's lighter after the summer, and we see more discussions and more viewings and so in September -- or during the third quarter. And after September, I would say that continues, and we have seen a good start in the fourth quarter.

Renegotiations also better during this third quarter. We have continued to extend most of the contracts on unchanged terms. We have also already renegotiated some of the contracts that will mature during next year -- end of this year and next year. And we had some negotiations that have been on the positive side.

So right now, we are a little bit -- still a little bit negative for the whole -- for the first 9 months, minus 0.1%, but it's a little bit better than it in the third quarter. So next slide, please. This one we normally show -- shows and to show you what we expect for the next 4 quarters. And we have an uptick in the incomes in the rentals -- rent incomes for the next quarters, and that's mainly because of thanks to Saab. And then we have a little bit slower development for 2026, and that's due to the negative net letting we had 2024 mainly.

But hopefully, we can be see a little bit -- so we will see benefit in the future. For the next slide, please. I think it's that we have long-term agreements with stable customers is important. It is an important phase for us. And you can -- we also know that very often, sometimes we get the question that large tenants don't like to have long contracts any longer, but that changed, but it's very individual. And as you know, now Saab is a 20-year contract. Alfa Laval is more than 20-year contract. So there are many -- it's so individual and many of the large companies like to have or prefer to have long long-term contracts.

And I think that's also very good for our -- especially the project portfolio. So next slide, please. We have, during the year, completed the projects. We know that Alfa Laval moved in -- before summer. And in both Haga Norra and in Hammarby, we have completed the projects. We have also the new contracts that we are working on new contracts in both Hammarby and Haga Norra, and I hope we will be able to announce some positive news there for them during the fourth quarter.

In the rest of the ongoing projects on the next slide, please, we know that Saab started to move in, in September for the first step -- phase. And now they will -- in November, December, they will take over the whole properties. And so from -- we will have the whole project finalized during the end of this year. And then we will have mainly Wenner-Gren -- the big project will be from that, the Wenner-Gren Center refurbishment, which will be during last year, the largest project we will have, and that will be finalized in the beginning of 2027 as it looks right now.

And it's mainly the facade, but we also do some then we upgrade the whole building when we work during the next year. In Arenastaden, we take the next step with the investment of Farao-Kairo, which is the entry of Arenastaden. The demolition is almost finished and the next phase is to start to build and construct a new infrastructure, mainly a bridge that will be the new entry to Arenastaden, which also will be finalized when subway will be open some years from now.

So we also will construct the groundwork or do the groundwork for the big future project of Farao-Kairo, but that will be later on. Next slide, please. Birger Bostad has no projects finalized this quarter, but it will be a better fourth quarter with some projects finalized. And especially with the 79 rental -- 78 rental apartments will be -- there will be tenants moving in during November.

And for time being, we will keep that property. But long term, I would guess that it will be -- we will not -- you shouldn't see that just as a strategic decision building out our residential portfolio. It's more that it's so closely linked to the rest of the development. So -- but it's good that we start to generate cash flow and one will be finalized even that part of the project. During -- for the rest, we have started to convert the agreements with -- for the owner-occupied apartments. We have sold 34 with final agreements.

There were a little bit higher numbers after Q2, but they were not finalized agreements that were at that time. Now that will -- 34 that we have got, they also have final agreements on. So we will sell -- we are right now in the process of selling the rest. And we have had another 52 apartments reserved in the total for the upcoming phases.

We see a little bit better even here, activity after summer, a little bit better market. It started to be mainly -- and that's I would say we're mainly driven by Riksbank's interest rate cuts.

Next slide, please. We are not talking that much about the building rights right now, but I think it's important to say that many of those building rights we have in the portfolio, both for offices and residential and mainly the one we have in Solna has been developed during -- within the -- over many years in our portfolio. It has been in the zoning plans developed by us together with the municipalities.

But in Q3, we decided to sell about 8,000 square meters of building rights for approximately SEK 200 million to Västra Kungsholmen. We think that, that was a natural transaction for us to get that since we think they are very good for developing that, and it's not really in our prioritized areas. And we think especially it was a good deal.

Next slide, please. When talking about future opportunities in the portfolio, we see, as we were talking about before, the Farao-Kairo more than 70,000 or almost 80,000 square meters of office space. It's apartments and there will be next door to the new subway, and that's where we have now the first step when we are starting to build the infrastructure. And that infrastructure investments are also important for the whole Arenastaden, I think.

Up in Haga Norra, we have the opportunity to build another 130 apartments next door to the project Birger Bostad has today. We haven't decided when to start that. We would like to sell more in the existing project or the ongoing project before making any decisions for the future.

At Kungsholmen, on the next slide, please, we have -- at Kungsholmen, we have Tegelterrassen. As you know, after I think it was 12 or 14 years of planning processes, we got it legally binding beginning of this year and where we sold building rights for residential to Västra. It was part of this block. And then we also have another 36,000 square meters of offices where we have actually good discussions with some potential tenants.

And in Solna Business Park, NCC is right now developing the building in the middle for Svenska Kraftnät, the grid company of Sweden. And we have the building rights for offices to the land, but especially also for more than 20,000 square meters of residentials. And we haven't made any decisions when, but it will -- I think that is very attractive and will be a great opportunity for the future.

For next slide, please. For all of those discussions are, of course, how can we create values? How can we increase the profits? How can we increase the management profit for -- of course, and how can we get the best total return in the prospect portfolio of the companies on the stock exchange. We will continue to complete the existing projects, of course.

We have a strong focus on getting the occupancy rates up. We look at finding opportunities to invest in future new projects, but we will not do that much on speculations. We are looking on value-creating transactions, and we have a close eye on cost effectiveness and efficiency, of course. And I would say that the management -- in the management portfolio, we have a good cost control, and that's also what you have seen in the figures.

So to summarize, next slide, please. This is not probably not a surprise, but we continue to believe in Stockholm and what Stockholm, the long-term opportunities in Stockholm and also that Stockholm is and will be the engine of growth for Sweden.

And next slide, we believe -- continue to believe in offices. And I think that's also what we have seen during the year. Even if it has been a tough market over the last years, we see that offices are important for the companies, but the product will change and has changed. So we have to be proactive and we have to respond to the offers and be in front line of developing the products.

So with this said, I think we summarized the quarter. We see more activity. We see a better -- a little bit better market. We have a strong financial position. We have a good cost control, and we see better numbers. And we see also future opportunities, especially for decreasing the vacancies and using the land bank for future products. So please, questions.

[Operator Instructions] The next question comes from John Vuong from Van Lanschot Kempen.

You talked about increased activities. I understand it correctly, it's mostly in the city. So that -- is it fair to say that demand is more skewed towards smaller floor plates and any specific sectors that are looking to take up space again?

You can say, yes, it's the first most focus is inner city, you can say, but we even see higher activities for questions about Arenastaden, for example. The sectors, it differs. It's everything from auditors, lawyers, but also AI companies in Stockholm now are growing quite fast.

We have seen a couple of them growing very fast right now. So it's a mix. But I would say that the main reason is that people are a little bit more optimistic and also about the economy and the development. So -- but it's a mix, but we start -- normally starts in the inner city and then hope go up, but we see more activity even in Solna.

Okay. That's good to hear. And the discussions on rent levels, how does that compare to current market rents or ERVs, if you will?

I would say we are about the current market rents. And it's -- some are a little bit higher and some are the same level and some are even also a little bit lower. But it's about the level of what we expect.

Okay. That's clear. And just on the positive reversion that you're getting in Q3, I think you captured 4% on roughly SEK 80 million of leases. Could you provide a bit more color? Is this coming from a specific asset that was hugely under-rented? Or do you see a turn in the market here?

I would say it was a couple of different tenants, but it's one larger ones. And that -- but that we should also notice that it will come with some investments. So -- but it's a good deal in total, but there will be some investments in that for getting the higher rents. But it's -- but we see more stabilizing. And as you also know that we are just prolonging a lot of contracts on existing terms. So that's the main. But it's about the same level.

Okay. That's clear. And in terms of investments, what size are we talking about?

We will -- that will be, but it's -- in total, it's -- you can say, plus SEK 100 million plus.

The next question comes from Nadir Rahman from UBS.

Congrats on the positive reaction to the results. My first question is on the rent negotiations. So you mentioned at Q2 that you were seeing 3% declines and now Q3, you're seeing them stay rather flat. I think it's around minus 0.1%. So could you give some color on where this is concentrated? Are there any particular office submarkets for this? And then I'll save my following questions for afterwards.

No. As we said, it's a couple of different tenants, but there is one larger one. It's a mix in the areas. It's mainly in the cities. And as I said before, this -- the larger ones is also coming with some investments. But in total, the deal is good for us.

Okay. Very clear. And I see that like-for-like rents and values are still declining. So curious to know when these will bottom out and when you think the market will start to turn in favor of rents and value? And the same question as well for vacancy because it has been flat for a couple of quarters now around 13%. So do you think that the vacancy has now bottomed out and it will start to trend towards your 5% target? And also, you're guiding towards reaching this 5% vacancy by 2030. I think that was mentioned in your Q2 report. Is that still the case? Or do you think you can achieve this 5% ahead of 2030?

Many, many questions in one question, but let us try to sort it out. When it comes to vacancies, yes, hopefully, we will see that we are at the bottom now and we will improve from now on. I mean the signs on the rental market and the positive net letting is pointing in that direction.

On the other hand, we have to be -- anything can happen. It's some positive signs and the turning point, hopefully, but there is not a big rush, I would say. The target for 95% is still there. It will take some years to reach it, but there is absolutely full focus in the organization of Fabege in reaching to get to that target. Did you also say something about yields?

No. So I mentioned the like-for-like rents and value declines. I think we've still seen the values declining the past few quarters. So I was curious to know if you think this will bottom out in 2026 or whether this will continue for the coming quarters?

Hopefully, it will bottom out, and we will see also hopefully some improvement in the coming quarters. In the last quarter, the yield shift in Arenastaden related to a transaction where Vasakronan bought a property on [indiscernible] in Arenastaden at somewhat higher yields than was previously seen in the valuations in that area. But that's now reflected in the books. And I think what we see from transactions on the Stockholm markets, they are supportive of the valuations that we have in the books.

Okay. Very clear. And on the Saab letting, how did this impact the net letting? So what contribution did that particular net letting activity have...

The Saab net lettings was recognized last year or was it even 2023. So it's not recognized in the net letting this year. However, they moved into part of the property in September, so they have started to pay some rent, and they will move in the rest of the property in November. So it will be fully occupied from November and onwards.

I can say also said it was 2023, we had a very positive net letting, one of the best years ever at SEK 160 million plus from -- almost SEK 160 million from Saab and the rest was almost neutral. So that's why.

I see. Okay. And on the topic of the rents, I see in one of your slides, you mentioned that Saab contributes 4.7% of your total rental income share. Is that only including the current 1/3 rented out? Or are you taking the entire building in that calculation?

That's the entire building, which is also in the note. So we just to make it, what will be when they have moved into the whole building.

The next question comes from Stéphanie Dossmann from Jefferies.

Just one question on your Slide 15, which relates to the rental development. What are your assumptions in terms of indexation, rental uplift, the underlying assumptions, I mean, please?

Sorry. Did you say Slide 15? Rental development?

Yes. Right. Correct. Yes.

This slide reflects what we know about tenants moving in and tenants leaving. So it doesn't include any assumptions on new lettings that have not been signed, for example. So this is just a picture of what the portfolio looked like by the end of September.

All right. And what about the indexation impact then?

Indexation is probably going to be around 1% kicking in from the 1st of January for the majority of the contracts, although we have some contracts where -- which are indexed on a more quarterly basis now. So indexation will have a very limited impact on this.

Okay. And regarding your financing, is the ICR a concern for your credit rating? And what is currently your marginal cost of refinancing?

Marginal cost is -- it depends on the maturities you choose. But for a 3-year financing, the margin is less than 100 basis points. And then you have the STIBOR on top, which is a little bit less than 2%. So marginal cost of financing around 3%, a little bit less than 3%.

When it comes to the rating, we are -- Moody's are happy where we are today. We are -- we just had a management meeting with them a couple of weeks ago. So they have all the information, and we expect to maintain the rating level where we are today.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Okay. Thank you very much, and thank you for listening to us and for asking the questions and following us. If you have any, as usual, you're always welcome to give us a call or to come and visit us here in Stockholm. And we hope it will be for more sunny times than we have had in the past. So have a nice day, and thanks for listening.