Hi, everyone, and welcome to the presentation of Bonava's Q3 Results. My name is Carolina Strömlid, and I'm Head of Investor Relations here at Bonava. With me today, I have our CEO, Peter Wallin, and our CFO, Lars Granlöf. As always, they will take you through the highlights of the quarter, and they will also comment on the outcome of the strategic review and the revised targets that was announced this morning. After the presentation, we will do a Q&A, and we will do the Q&A over phone only. Thank you for taking the time. Please, Peter, the stage is yours.
Thank you very much, Carolina. Welcome, everyone. Normally, we say good morning, but now when all the reports is coming, we are a little bit later in the day. We are very much energized to talk about our report and the outcome of the strategic review. If we start with setting the stage for the conditions, the market conditions that we have experienced during the third quarter, they are very stable on a good, robust level. We have seen price increases across our different markets, albeit at lower rates than we have seen during the spring. There is still a very strong interest in and demand, which reflects the prioritization for larger areas and greener areas, which we have seen during the pandemic. That is still true.
Another thing that is impacting the way we are looking into the future is, of course, the continued lingering effects of the pandemic. We are seeing some implications in St. Petersburg, in Latvia, for example. We hear that this will impact some of our businesses right now. We are still on a very high preparedness to act, and we have exercised this preparedness quite some time now during the pandemic. Switching over and talking about the result. We are posting a strong report in the third quarter with 26% increase in revenue organically, excluding FX implications. We have a significantly improved EBIT and margin, and it increases almost by more than two times. The reason for this is, of course, the increased revenues and then also strengthening the project and regional mix with an increased gross margin.
We have a somewhat lower contribution from the business unit St. Petersburg and the Baltics, and this is due to the fact that one of the projects that we have completed and sold has not yet been handed over to the customers in the third quarter. This will happen now in Q4 and perhaps also drag into Q1 2022. We are looking into a demanding situation across our markets when it comes to shortages of material, increased costs of labor, subcontractors, and so forth. So far, we have seen quite limited implications of this because we have been able to control these increases and also offsetting these with increased prices. So that means that we've actually strengthened the margin in our ongoing projects. This is to be reported, as you know, when we hand over the keys, the apartments and the houses that we are developing.
We have a very strong financial position, which is a great foundation to growth from. Lars will comment that in more detail. The starts we are according to the plan, and we have increased units recognized in the third quarter. We are maintaining our guidance when it comes to increasing the number of production starts by 5%. It's not far away from New Year's Eve, and we do not start our projects until we have the right prerequisites for starting the projects. We are also, of course, exposed to the permitting that is needed to start the projects. We are still maintaining our ambition of 5% increase in production starts. Let me take a few examples of what we have started in the third quarter.
To the left-hand side, we are putting a picture up of our single-family houses concept in Sweden. We have started one project on the west coast of Sweden and one project in the Stockholm area during the third quarter. Perhaps you have also seen the press releases that we are continuing to increase into building rights here with the acquisition of building rights in Linköping, a very interesting university city in the middle part of Sweden. To the right-hand side, you can see Wedeler Tor in Hamburg, where we have started and sold 62 investor units. And also in total, this block is encompassing 123 units.
It's actually where a former petrol station was located, so it's really showing how we are developing and improving the societies we live in and work in. Let me switch gears a little bit and come to the strategies, the revised strategy and also the revised targets, the new targets for Bonava from 2022. When I started as a CEO, we embarked upon a quite thorough review, a fact-based review of our business. We have been looking into macro trends. We have been looking into the various markets, and we have also looked into the various business units and functions to understand how do we perform relative to the market? Where are the gaps, and how can we bridge the gaps and actually succeed in exceeding the targets? The external conclusions are that our markets are attractive.
It's more how we play in each and every one of the units on the market. What is our level of expertise? How does our land bank look like, and so forth. The second part of the external conclusions is that all our markets are different. This might not sound like rocket science, but I think that it's first to recognize that this business is a local business. That recognizing the fact that we are working in a different way, customer needs are different, and our maturity in our businesses are different. Thirdly, competition is moving fast. There is no way like today when we have to use the opportunities in our business. We can't live on past successes. We must always prove ourselves for our clients, for our customers, and of course, to our shareholders.
Looking into the internal conclusions of this same review. Again, not rocket science, but well-managed land bank is crucial, and we have underinvested for quite some time. We really need to grow our building rights portfolio. Secondly, cost and resource efficiency is key to stay competitive. We really need to look at our building systems. Once again, it's a local business and also depending on how mature we are in the various marketplaces. Thirdly, we need to continuously sharpen our commercial offering. That is both on how we are doing the placemaking of a new area, but it also relates on how we are doing the customer journey. What we have been building a lot of our successes on is working more and more digitally. We need to strengthen this part and work smarter. Fourthly, we need to clarify the operating model.
Since we are a local business, we need to have a good balance between the center and the local business units. We call it the decentralized integrated model. All of this comes together because if we don't have the right concept for the right land bank, we can't work with the right offering to the market. All of these pieces is linked together. First, setting a clear business focus, strengthening the building rights and the land bank in regions where we see the best opportunities to do so. The wind down of the Danish business as an example where we are deploying capital to other more profitable and higher growth areas. Thirdly, we need to leverage on the local market conditions and take the opportunities that we see in the market.
By having a too scripted approach to what we can and cannot do, we are missing out on what's happening in the marketplace. The second leg is that we need targets that steer the value creation in the right way. Starting with a good purpose, we create happy neighborhoods for the many. This is, I think, a very strong, which is close to our heart at Bonava. We love developing and creating happy neighborhoods, and we will continue to do so. To guide us in the right way, we have chosen to revise our strong targets and put more ambitious targets. We have six financial and non-financial targets that will guide us. I will comment these a little bit further on. Thirdly, sustainability is an integrated approach.
This needs to be throughout our value chain in order for us to make a real impact for society. The third and last leg is the strategic priorities for the themes that we are working on in order to get this strategic plan into fruition. Again, strengthening the building rights portfolio and the land bank, improving our efficiency, and ensuring commercial excellence. If we look upon our businesses over time to start with, we have a very high variation in profitability. If we look into our business units, we have some business units which are within the stabilized business. They need to get the basics right. Here we put the businesses in Norway and Finland. Secondly, we have to ensure profitability, increase performance, and here we put the Swedish business. Thirdly, we have the growth businesses where we put Germany and the Baltic States.
Our business. We do not see that you can take the step from stabilizing the business to growth directly. You need to take it by ensuring profitability. A little bit like walk before you can run concept. That means that in the medium term, we will need to move away Norway and Finland from the stabilizing part into the ensure profitability part before taking the next steps to the growth part. Here you can also see directed towards our one of our targets, the EBT, earnings before tax target of SEK 2.2 billion in 2026. We will steer the businesses and the stabilizing business units will have a more restricted growth and more restricted mandate. The ensure profitability will have a little bit more mandate, and the growth businesses will get the greatest mandate.
Coming into the targets, EBT, earnings before tax of SEK 2.2 billion 2026, combined with a growth target where we are aiming to reach 8,000 sold units in 2026. With these two financial targets, you can see that it's mostly about increasing our profitability and the profitability, the increased profitability is not only relating to the growth rate. Mostly into improving our margin and profitability. Of course, a prerequisite is to have a healthy and safe working environment. Fourthly, customer satisfaction. We live for our customers and buyer customers, so we need to have happy customers. Fifth, climate action, very strong targets when it comes to science-based targets. We're keeping those, of course.
Lastly, very, very important to make all of these changes, the employee engagement, where we need to continue to be on the top 10% of the companies within our comparison, our peer group, the benchmark. Underneath, we are still keeping the framework of an equity/assets ratio of at least 30% or above in equity assets. When it comes to the dividend policy, we are maintaining the level of at least 40% of net income. We have added over a business cycle to reflect the fact that we, of course, aim to give a consistently increased dividends to the shareholders. We need to be able to flex from year to year to reflect the investment opportunities that we see in our business. Because with increased investments, that is the way forward to increase value for shareholders.
With that, Lars, I hand over the word to you.
Thank you, Peter. Hello, good morning. I would like to start to go through the sort of reconciliation of the units recognized that I normally do, based on what we were saying in the Q2 report. You see that there is a difference compared to what we were estimating. It's relating to our customer segment. You see that our investor segment is in line with what we were expecting at that point in time. Out of the expectations that we had closing Q2, 65 of those consumer units were not completed in our third quarter. They were delayed, and 16 out of the completed were not sold by the end of the quarter. However, we managed to once again reduce the portfolio of completed unsold from prior periods.
79 units we managed to do in the Q3. But out of what we were guiding in Q2 for completions, some 200 units relating to the St. Petersburg Baltic segment were completed, but were not handed over. As Peter was saying, this will be happening now in fourth quarter and also rolling into the first quarter next year. There are some 200 units that we were lacking in terms of handover. I think that is explaining most of the difference, or all of the difference compared to the market expectations that we have seen. With the units, let's then move over to our income statement. We have recognized more units compared to the prior year, as you've seen.
The main increase is coming in the investor segment. We have increased our net sales to SEK 3.6 billion, and with good profitability coming from a good project and market mix, even though we have a higher proportion of investor units in that that normally comes with a slightly lower margin than the consumer units. With the increase both in absolute terms and in percentage terms in the gross margin with our selling and admin expenses in line with the prior year, we are leveraging, of course, this and having an operating income and EBIT that is more than double the prior year.
In terms of margin, it's double the prior year. If you look then at the financial net, slightly higher than the prior year, but it's like in the previous quarter that we have added a component where we are paying for an option in Germany that is the reason for the increase over the prior year. Our tax percent is slightly lower than in the prior year, which is based on the mix that we are seeing in the business. Let's move over to the segment, starting with Germany. Here you can see that we have a higher recognition of units, and that is coming from the investor area, not from the consumer area.
Despite the fact then that we have higher part of investor units, we have an increased gross margin, increased profitability in the German segment, with slightly higher selling and admin expenses in the quarter than we saw in the previous quarter. If you look at the sales and sold units and the starts, we see the market, as Peter was describing, most of our market or all our markets have a high demand and stable sales development, also with increased prices, in some markets a bit plateauing, but at a very high level. So we see a good market in Germany. We see good interest from the investor community. You saw that we have this project in Hamburg that Peter showed you earlier on.
Starts were lower than the prior year, but they're very in line with what we were planning for this period. Normally, we are also then talking about this process of getting the building permits, which is an obstacle for us in the process. It's still there, it's still on the same level. Nothing has happened. It has not worsening, but it has not been improving either. A bit of a heads-up now for Q4 in terms of Germany is, of course, that now we are moving into the strongest quarter of the year for us. Moving over to Sweden, also here we see a higher volume of recognized units, again, coming from the investor area. Despite that, also in Sweden, we see a higher gross margin than in the prior year.
With reduced administrative expenses, we see a significant increase, twice as high as we've seen in the prior period in terms of the EBIT margin. Moving over to sold units and start units, also here a strong demand and sales development. Here we see that the prices are a bit plateauing, slowing down in the rate of increase in Sweden, but at a high level, as I said earlier on. The sold units have increased, mainly being driven by the investor segment. There is some high interest for our investor deals, and not only by Swedish investors. It's also from the international segment that we can see a high interest in our business here.
In terms of looking forward into the fourth quarter, we are seeing a high proportion of investor units that will be recognized also in the fourth quarter. However, in that quarter, that will have a slightly negative impact on our gross margin compared to how it was in previous quarter. The Nordic segment, you see that here we have a very low volume of recognized units. It's basically driven out of Finland. You know that we have decided to wind down our business in Denmark. That is a slow business, and also right now we have a few recognized units in Norway.
With the low volume, we still have improved our gross margin slightly, but the volume is not enough to be able to leverage on the selling administrative expenses that are slightly higher than in the prior year, mainly due to the buildup of the Norway as a separate business unit. Here we are in a negative margin as in the prior year, even though we have reduced the negative margins slightly. If we're then looking at the situation in terms of the sold and started units, also here strong demand with increased prices. But we have a limited supply of units, products to sell to the market, in particular in Norway. The investor segment is also very interested here.
We have sold and started one project in Helsinki. Going forward, we are of course focusing on handovers and starts, really driving in particular the Norwegian business, going forward. Finally, moving over to St. Petersburg, Baltics. We have been spoiled, you can say, with very high levels of recognized units in this. Now we are in the quarter, we have had the quarter with slightly lower recognized units. You saw that from my reconciliation, you can say the bridge of units that we have recognized, that we actually had some 200 units that we have not been able to recognize that would be coming in coming quarters. That is the main reason for us dropping slightly here.
Still a profitable business, even though the margins could be higher if we would have been able to recognize these 200 units. Looking at the market, we have continuously a high demand and the price increase, and we have a strong sales development in all of our markets in this segment. I won't comment on this project again, but as Peter said and I said, we have some 200+ units that will be recognized now in Q4 and Q2. Our starts, even though we would like them to be higher, they are in line with what we are estimating. Moving from segments now over to some slides about our balance sheet, and starting with the distribution of assets and equity/assets ratio.
Normally, third quarter is the weakest quarter in terms of the equity/assets ratio. We have been trailing 30% or around 30% in number of years now. We are almost on a 32% level. We are winding down in Denmark, so we're not building any new land bank, and we have divested the land bank now. As of October, it's not reflecting in these figures but will be reflected in the Q4 figures. We have a significant increase in our Baltics and St. Petersburg building rights portfolio. In terms of capital employed and return on capital employed, with the target of 10%-15%, we are now for the second quarter in a row within that range, now on 11.5% in return on capital employed.
That is driven by a continuous, relatively low capital employed and the increased profitability on top of that is of course building a better return over time. Going from that over to our cash flow, we have a balanced cash flow. We have investments in ongoing projects that are financed through handovers. In comparison to the prior year, we have in this quarter slightly less of advances coming from customers that we normally are seeing coming in. Moving from that over down to what's the situation in terms of net debt. It's on the same level, same low level that we had in the prior quarter and that we have had now for quite some time.
We really have the power for future growth and future profitable growth in the financing of our activities. Just going through these two graphs that you know are very vital part of our Q3 report and for estimating what we are completing in the coming quarters. You see that there is an increase in consumer area up to 1,260 units to be recognized in the fourth quarter in our estimate, and also in the investor area, 890 units. All in all, 2,150 units is our estimate then for completion in the fourth quarter. With that, I hand over again to you, Peter.
Thank you very much, Lars. Clear presentation. Thank you very much. Rounding up this part of the presentation, good favorable market conditions, improved profitability. The sale of the Danish land part is going according to plan, and this will be recorded in the fourth quarter. We have a very good foundation, I would say, to improve our performance over time. This is a long-term business, and it takes time to move step by step. Especially with that as a backdrop, I think that this third quarter report is showing very good signs across the board. We have a leading position as a sustainable residential developer, and we will continue to strengthen this as a main target for us.
Talking about targets, the revised strategy and ambitious targets that we revealed today will set us off well into the future, and also create a clear line of sight externally and internally what good looks like. This will mean that we will post -SEK 150 million to -SEK 200 million in one-off items affecting comparability, which will be recorded in the fourth quarter. Also the profitability, very important. We are aiming 2026 to hit SEK 2.2 billion at least in earnings before tax. This will also be manifested by a growth to 8,000 units and homes sold by 2026. With that, I hand over to you, Caroline.
Thank you, Peter and Lars, for a good presentation. Before we open up for questions, I would like to inform you about our digital Capital Markets Day that will take place on the fourteenth of December. Please save the date in your calendars. We will send out a separate invitation with more details shortly. Let's move over to the Q&A. Please, operator, go ahead with the first question.
Thank you. Ladies and gentlemen, if you do have a question, please press zero one on your telephone keypad, and you will enter a queue. Once again, it is zero one on your telephone keypad to register. Our first question comes from the line of Staffan Bülow from Nordea. Please go ahead. Your line is open.
Good morning. Thank you. I have some questions regarding the new financial targets. Starting off, what kind of ramp up does your target imply? Do you expect nine-year growth by 2026? In practice, the 8000 sold home target that implies that you expect to start 8000 units in 2024, right?
Was that the two questions that you had of ramp up? Yeah.
Yeah.
I think we will both comment it, but if you're absolutely right, we have roughly a year and a half in production before we actually hand over the homes and also record the earnings. That would imply 2024, but you should also remember that we are building up on the current portfolio projects we have is also dictating a build-up. It's not that we are starting from scratch. Any comments on that, Lars?
No, I think you're absolutely right. It is a gradual build-up in the different markets that we are in.
EBT.
I think you also had a question about the EBT target and the way to go there. I think we have to come back to that when we come to the Capital Markets Day. Right now, we are stating that this is our target for 2026, the SEK 2.2 billion of earnings before tax.
With that also, we are increasing profitability in the ongoing projects, the bulk that we have yet to be recorded. There is again, we are also not coming from scratch situation there. To repeat ourselves a little bit, it will be mostly coming from increased profitability, i.e., increased margin rather than top line growth.
Okay, thank you. Regarding the SEK 2.2 billion EBT target, could you comment what kind of gross margin and EBIT margin and average selling price that implies?
We have of course been looking into the analysis and in order to drive an improved earnings before tax, we need to improve gross margin, we need to improve the EBIT, and we need to have some growth. It's like Peter saying, it's coming mainly from efficiencies and improved gross margins in what we are doing. We are not about to today comment on what are the levels in terms of gross margin and EBIT margins. Whether we are doing that going forward, we just have to come back to.
We have to save some things, Staffan, for the Capital Markets Day as well.
I see. Perhaps this question will also relate to the Capital Markets Day, but I'm wondering regarding geographic mix, if the target implies changes in mix, or do you expect the same geographic mix as you have today, or do you expect it to change?
We are happy with the fact that we have ample of opportunities to improve our profitability and growth within the current context. That of course also implies that we will grow the parts which are showing the best preconditions for profitable growth. So the weighting could change. We have 22 regions and eight countries when we start this after having wind down Denmark. Of course, there could be changes within that we meet over the next five years. This is our responsibility as management over the business to make sure that we are always measuring and looking at what is the best allocation of our financial and capital allocation over time.
I see. Could you comment anything about the selling and admin expenses if you have to ramp up those to achieve the target?
Definitely not in line with the growth targets and the growth of EBT. Depending on where we are investing, depending on what kind of project, etcetera, it might be that we need to invest some part in selling and administrative expenses, but not in relative terms in the same way as we are growing profitability.
If I only can throw in there, and this is also pertaining a little bit to your earlier question on gross margin. We have to recognize the fact which is clearly visible, when we demonstrate each and every one of the business units that gross margin levels is so different across our markets. We will need to sort of set these parameters on a local level when we're measuring and give ambitious targets for the businesses.
Okay. Thanks. I'll round off here with one question and save the other ones for the Capital Markets Day. I note in the press release that you state that investments in building rights must be linked to increased resource efficiency through repetitive production. I reacted to repetitive production. Does this mean that you're planning to have the same production line of houses like K2A Knaust & Andersson Fastigheter, or how should we interpret that?
Good question. It's not predominantly linked to vertical integration, which implies when it comes to K2A Knaust & Andersson Fastigheter. It is that you have a building system predominantly, and then you can know what kind of concepts you can develop. Because when you acquire the land, you need a very good understanding of what kind of concept you can use in order to understand how you can drive the value of that specific land investment. It also links back to the concept you sell to the market, the place making, the type of products. All of these sort of is linked together on how you're working with your land bank.
It will also mean that we will need to look into larger investments into specific areas and not infill investments, so that we, with the repetitive system, also can draw benefits from the value creation we create on our own in that specific micro location.
All right. Thank you very much for taking my questions.
Thank you. Our next question comes from the line of Fredrik Stensved from ABG Sundal Collier. Please go ahead, your line is open.
Thank you. I have a few follow-ups on the first round question. I'll see if you will answer them today or save it for the Capital Markets Day. Starting off with the EBT target of 2.2, and as you point out, most of that is expected to come from increased margins rather than top line growth. You also mentioned that you have to invest in more building rights to get there. The question is, how much incremental capital need does the target of 2.2 imply?
We are looking for a land bank increase over the coming years to start with of SEK a few billion. But it's like Peter saying, it will also have to. We have to go into the markets where we see the best return on those, also seeing that it's relating to our building system, so we actually have a cost-efficient model to it. That is what we are looking at right now.
If building on Lars' question, then so overall we have an increase. That increase is sufficiently covered by our strong balance sheet. Mind you that we are not yet to the equity taking the profit secured in a large proportion our ongoing projects, which are sold with binding contracts. Secondly, the net implications also means that some areas will need to decrease and others will increase. That's another way to fund it. All in all, you have one level, which is a step up where we need to be as a business, and then you have yet another step to give the implication of growth going forward.
I mean, if EBIT is going to grow by 100%, can you say anything about the incremental capital need? Is that gonna grow your balance sheet by 50% or 100% as well?
Let us come back to that on the Capital Markets Day, as you alluded to.
Second one then. The press release mentioned that you could in some cases sit on or continue to own the completed projects once they are finalized. Maybe if you could add some color on that. Does that mean that, you know, you can own them for six months and then divest? Or could you sit on this for several years? And if so, do you have to sort of build up a property management organization as well in order to do that? Thank you.
Very good question. Well, the idea of retaining some assets on the B2B side would be to see further value creation coming from these assets. These assets, we know for a fact that you get greater value by having a portfolio rather than having a piece by piece. That clearly indicates that we will hang on to some of them over a number of years at least. Then sort of replenish the stock when you get enough to a going concern level of that business. If it becomes a true business, for sure, we will need to staff it adequately with resources.
Okay. That's clear. Thank you.
Thank you. Our next question comes from the line of Stefan Andersson from Danske Bank. Please go ahead, your line is open.
Thank you. Yeah, I'll start with some questions on the strategy as well, I guess. First, you divided your regions in different stages, and I guess Sweden being a rather big one would interest a little bit. Could you maybe elaborate a little bit more on what you need in Sweden to get that up to the group of St. Petersburg and Germany?
Yes. Number one, I would say that you can divide Sweden into various pockets. If you look into our single-family house concept, we need to build that across the Swedish market where we have growth opportunities. We need more building rights because there is a huge shortage today of single-family housing. That is one growth area where we need to grow. On the multifamily houses, it will look a little bit different depending on where we are, because we are working with different models in our different markets.
For sure, Stockholm, I don't think that we have enough muscles in the Stockholm area. There is more opportunities in markets than we can take right now. That also means that we will need to strengthen our business in our various regions within Sweden as such.
Okay. Bringing Norway and Finland up could I guess be interpreted as taking some of the costs that you mentioned will be charged in the fourth quarter. Are you willing already now to elaborate on what those costs will be associated with? What type of activities or do you want to wait for the Capital Markets Day to
I think we can give some more flavor, and I'll let Lars give some more flavor to that.
Yeah. I think if you read the report, I mean, we have said that it's mainly relating to say, impairment, the write-down of land pieces. That is of course relating to places where we are not operating, where we're not going to operate going forward because those are not the places giving the highest return. Those are not the places where we can run cost-efficient operations, productions, and development. We also have some sunk cost in a number of places where we also see that these are not the ones that are fitting our strategy going forward, i.e., getting the returns much earlier on in the timeline as we see compared to how it has been in the past.
Those are the two major areas that we see.
This will of course make it possible for it to recycle the capital and plug it in where it gives more return.
Coming back then to the question, is that Norway and Finland primarily, or what? Where do you mean geographically on those?
Yeah. I mean, they are on a bit of a different markets, but they are also in Norway and Finland. Again, sound like a parrot here, but perhaps we will look into this of course during the fourth quarter, and that is why we have expressed a range. When we have set the final costs come close of Q4, we can give much more color to that.
For me and my estimates, I'll just see this as being ending up in the different regions, not as a sum cost on a separate line.
It will be reported as items affecting comparability. On the same line as you see the provision that we took for the winding down of the Danish operations in Q2, and we also have the gain, the capital gain of the sale of the Danish land bank that we released on the 1st of October will be part of the fourth quarter figures on the items affecting comparability line.
Perfect. Thanks. Then you talked about this, I mean, stepping up. It's a fantastic market, and everyone is trying to step up, and it's of course hard to get the permits and so on. Bonava has been selling off some of the land banks, unfortunately, and now you need to reach your target, if I understood you correctly. It's not the best market, I guess, to buy in. How do you see price levels out there? Then, I mean, the competition and your ability to actually capture those building rights.
You're absolutely right. You need land bank in order to be successful in the long run, and you need a certain buffer to be able to offset how different zoning processes are kicking back and forth in order to be on a consistent level. With that as a backdrop, we need more building rights. Now, when we come to that, of course, it is a high competition for land and for building rights. I think this lends itself to our part and how good we are on early stages in the zoning part. We are really able to create a lot of value being early on rather than buying ready-zoned land. We can buy ready-zoned land, but more as an exemption rather than the main rule of thumb.
When we get these questions, and we understand why, we get a lot of questions regarding on how the situation is in the Swedish context. We are active in a lot of other markets, apart from Sweden. That also means that we see pockets of much higher appealing prices when it comes to buying building rights outside Sweden as well. I think that lends to our advantage of being active in across a number of markets.
Thank you. Then on the investor packages and rental and so on, which you've been doing rather successfully also. It seems like that market is very hot and yields are coming down, prices are very good. Where are we now on differences in margin between co-op and the investor packages? Historically, it's been a little bit of a lower margin, if I understand correctly. Where is the market now, you think?
I think in some pockets we are extremely close, as you see it, that also means that we are, as a backdrop of analysis, if we want to reduce risk, we are looking into what the risk reward is to actually turning a B2C into a B2B.
We are that close. That, of course, also depending on what kind of product development expenses you will need to take on and invest in order to make that transfer from B2C to B2B, if any. It's clearly something part of a market where I have not seen it that tight for quite some time, if ever.
Okay, good. Yeah, no, it definitely looks like an opportunity if you can find the building rights on the land part. Okay, then my final question was not really a question, I guess more of a request or so. I mean, I guess we as analysts, we're looking quite a lot on your guidance when it comes to completions. Then we have two quarters behind us where you surprised us with completing and handing over quite a lot more than you guided for in the quarter before. Now it was on the downside with 200 or something. Maybe in order to to.
I mean, it's possible, since the deviations has been rather big, if it's possible to maybe press release adjustments during the quarter before the quarterly results on that number. I guess that would be taking out some of the volatility. Just a suggestion.
It's a good suggestion.
Thank you for-
Yeah. It's a good suggestion, and thank you for putting it forward, Stefan. Because I think also we want to be in with a good relation with the market and also to have this discussion on how things are faring in a good way. A press release just becomes a very good, open, and transparent way of doing it. We will take that piece of advice on board.
Thank you.
Thank you. We have another question from the line of Jan Ihrfelt from Kepler Cheuvreux. Please go ahead, your line is open.
Okay. Jan Ihrfelt. Good morning. I have a question, actually a couple of questions. Two of them regards your charge here in the fourth quarter, and then it's actually twofold. It's land, and it is some kind of sunk cost for different projects. If we start with the land, are you by this saying that you see a risk that you are forced to sell this land at a lower price than it's booked? Or how does it come, this charge?
Yeah. That is definitely correct. I mean, if you look at the situation where we have the land in our land bank at the carrying value, at the book value. We have intended to do things based on previous strategy. Now, considering the revised strategy, we see that is not the way going forward. In some of these, we don't see reasons for adjusting the value because we might not get the amount that we have paid for it in the past. It's part, of course, of the equation here, say, impairment or reducing the amount to the estimated sales value that we see.
Also, I'm sorry. Building on what Lars said, I think it's important. We do believe that we have an excess surplus value in the land bank as such. We have a carrying amount of SEK 7 billion. We are not saying that the whole land bank is valued less, but we can't look at the portfolio when we look at this. We need to look at the singular and standalone pieces in the portfolio.
Okay. This comes despite the strong market for building rights there.
Mm-hmm.
Correct.
Yeah. Okay. And the other part of the charge is this, sunk costs. Could you just give an example what kind of products do you not materialize?
It is, for example, where you think that you have worked with a project that will come into fruition. You will have put the cost on the balance sheet, and then the project become different, or it doesn't come into fruition. You will need to write it down or right-size the value that you keep in the carrying amount.
Okay. Another kind of question regarding the units in the 200 units in St. Petersburg that wasn't handed over. Will all of this be handed over in the fourth quarter, or do we see some delays even into 2022?
It's like we're saying in the presentation here and in the report that some of it will likely move into the first quarter 2022. The greater part of it will of course be handed over and recognized now in the fourth quarter.
Okay. Thank you very much.
Thank you.
Thank you.
Thank you. As a reminder, for any more questions, it is zero one on your telephone keypad to register. We do have no more questions registered. I hand back to our speakers.
Thank you all for listening in to our presentation today. Welcome back on our Capital Markets Day, the 14th of December. Have a nice day.