Ladies and gentlemen, welcome to the Castellum AB Q3 Report 2019. Today, I'm pleased to present CEO, Henrik Saxborn, and CFO, Ulrika Danielsson. For the first part of this call, all participants will be in the listen-only mode, and afterwards there will be a question and answer session. Speakers, please begin.
Thank you, everyone. Welcome to this Q3 Report 2019. We will start with looking at this first page. You can change page, please. This last three months has been a quarter where we continue to concentrate on all our core business, meaning simply asset management and projects. It has been the quarter where we rented out in the same pace as last year. It has also been the quarter where we continue to renegotiate more contracts than ever. It has also been a quarter where we took the next step into the Euro bond market and benefited from the attractive interest rates and long duration. It has also been the quarter where we've proven that we are one of the best in sustainability. It has been an active quarter.
Regarding the market, we can conclude that we have been living with stable to strong, and in some cases very strong markets, both when it comes to rental as well as the real estate market. To date this year, the growth in the rental levels, like-for-like, in the portfolio has been 5%, like last year, and of course, a top level for Castellum. In that figure, renegotiation represents approximately half of that SEK 100 million. This means that on average, we have raised rents with approximately 18% in the renegotiations we have concluded in the end of last year and the beginning of this year. That is a trend that we expect to continue.
This, in combination with the program of continual efficiency, will mean that we continue to have effect going forward, which shows that we can, on a firm basis, continue to have earning growth. In total, the income from property management over three quarters totals to 7%, or if you want to, SEK 8.71 per share, despite that we still are affected of the sales within the beginning of this year. It's also a quarter that valuation increased and the property values added additionally another SEK 0.6 billion in value. It means that we continue to decrease the LTV and are now on 43.6%. That means that we have lowered the LTV since that we bought Norrporten in 2016. With this short summary in the beginning, I'll let Ulrika going into the figures.
To the next slide, please, on the P&L. As Henrik said, the growth in income from property management is 7% for the nine-month period and 5% each quarter. If you convert that to absolute amount, it's roughly SEK 160 million more that Castellum earns this year. That is with roughly SEK 145 million is coming from the like-for-like portfolio or pure asset management, SEK 60 million from the project portfolio, SEK 40 million from debt or interest rate management, where lower interest rate has contributed despite long duration for capital as well as interest rate, and then minus SEK 90 million from transaction due to that we still are a net seller on a 12-month rolling basis. This was mainly driven by good rental uplift due to CPI and renegotiations made, but also lower costs if we do exclude the high property taxes that was put on to us.
The property market is good, which in Castellum's universe means an uplift of 3.1%. We have also sold 28 assets so far, which gives an unrealized gain of minus SEK 325. That is, of course, mitigated by the fair tax income that we need to account for due to selling those assets. After some goodwill write down due to selling assets in Sundsvall earlier this year, negative changes in value in derivatives due to mainly lower market interest rates, and taxes of roughly SEK 640 means that the last line ends on SEK 3.7 billion. Worth mentioning this quarter is that we have accounted for the new and higher property taxes. Roughly SEK 50 million on an annual basis of which 75% hits this quarter. That is, however, put on to the tenants, meaning that the rental values also has increased with the same amount.
If we go to the next slide and look into the NOI, it increased with SEK 137 million, of which the biggest contributor was like-for-like with SEK 152 million of the NOI line, driven mainly by top-line growth and good cost control. If we take, as I said earlier, the property tax far from that. The developments contributed in a positive way while the transaction meant we lose NOI. The co-working part in United Spaces delivers a positive result. Even if it's small, it's still positive, which is important, and we will come back to that later in the presentation with the steps that we're taking. If we go to the next slide and look into the rental income growth. The like-for-like growth was 5%, and as I said earlier, this is a result of the CPI, the negotiations made, and higher property taxes.
That is, however, taken down a bit to that last year we had bigger lump sum from tenants leaving, slightly higher vacancies and incentives. The losses of rental values due to being a net seller is compensated by increased rental values from the project in United Spaces. If we then go to the rental market.
If we then look at Castellum beauty period, we are, of course, not satisfied with the net leasing. If we look into it, we can conclude that the gross leasing in the existing portfolio was in the same level as last year and consists of actually leased output 230 million SEK in that part of the portfolio. In this moment, it's less development to rent out for us compared with last year. If we correct that, we could add the rent agreements for the Swedish National Courts Administration in E.ON on the headquarters in Malmö. The two agreements, that adds up to approximately 150 million SEK in rental value. That will occur in the end of this year or the beginning of next year.
The reason behind the larger number of tenants giving notice is that in some extent to us is already known as larger short office leases that were terminated. Also our own activity, where we're moving around a larger logistic tenants in Gothenburg. Of course, there is a market that is calmer than a year ago. On time, it's also at the same time, very lack of good spaces for office and logistics in CBD, for example. If we then take the next slide, it's even interesting to look at. I could say that before on the next slide, actually. We can go back on the slide if that's possible. On the right side on that slide, you can also see that we have divided the net leasing into different sectors.
The conclusion of this is that we can see on the right-hand side that the government contracts are expanding, that the retail and the banks is decreasing. We can also see that we have a larger contract from the car industry that is actually one up for us that are leaving. This is showing us a picture that we think is more or less like the market is moving right now. We can change to the next slide, please. Looking at the supply, we have shown this market before, but it's very interesting to see that the construction of the new developments are less than the growth and are still under 1% in the most of the towns.
Even if we see a lot of movements simply into the market or new construction into market, it still gives us a market where there's not so much supply as we want it to. If you look at the rental levels, we can see that we have a rental market that is very robust. We have today rents of, in Stockholm, for example, SEK 9,500. That's higher than last year. We are in Helsingfors, EUR 4,500 a sq m. Copenhagen, SEK 2,400 a sq m, same as last report. In average, we can say that the market is stable to strong still. As we said, during the last period, we have renegotiated rents way up with 18%. It's a strong to stable market in our universe, and this limited supply simply continues.
we can go into the balance sheet on the next slide, Ulrika.
Yes. The balance sheet of Castellum is strong and the LTV continues downwards and was at the end of September for 43.6%, despite leaving dividend in the end of the period. The valuation yield was unchanged compared to Q2. This strong balance sheet gives an NAV as at the end of September of 186 Swedish crowns per share, which indicates a growth of 11% despite the dividend compared to one year ago, and 6% compared to the end of 2018. If we look into the property value and the property market on the next slide, please. The valuation yield is unchanged at 5.1% on a portfolio level. The unrealized valuation uplift of 3.1% is roughly equivalent to SEK 2.8 billion, of which SEK 1.6 is due to yield changes for logistics, public sector in good locations with long leases, and offices in good location.
The rest is made up of better cash flow, project gains, and acquisitions. If we look back this year to each quarter, the yield shift was really the big contributor in Q1 and Q2. It still contributed in Q3, but with much lower numbers. The cash flow that picked up in Q2 valuation still continued to be a good contributor this third quarter, despite the negative net letting that is taken into account in valuation. Regardless causes to the uplift, all in all, logistics is so far the segment with strongest uplift this year, followed by offices and public sector.
If we go to the market, we can conclude that we are still in a very strong property market. There we see stable to actual yield compression going on. That's, of course, because of the strong interest and demand. It is, of course, in the traditional CBD areas, but also if you look at stable cash flow portfolios, higher-yielding portfolios, or right-located logistics. To compare with the yields you have in the portfolio, we can compare with some of the last deals done. In Stockholm CBD, actually outside just the CBD area, we have deals done on 4.35% to 4.7%. We are in mid-sized towns on somewhere right now in the CBD areas on 4.5%-4.7% in yield. In Helsinki CBD area, we're down to actually 3%.
Looking at warehouses are, of course, attractive, as Ulrika said, and are moving, and we have seen evidence in the market right now with yields down to 4.4%-4.7% in the best cases. We can move on to the next slide, please. It is important to conclude when we're looking into our strong development pipeline that it's never been larger. The pipeline is not only large, it's also divided into so many mid-sized projects that we are not depending on one single project, one single zoning plan or some political decisions. The yield on total cost is very attractive compared with the market yields. The offices that are completed now have an average yield on total cost on 6.5%. The one we have under construction is calculated on ending up on more or less a little bit lower figures.
Looking at logistics, we can still produce logistics around the seven. If we take the next slide. As said, the pipeline is large, and the end of this slide you can see that we are stating that we have now a pipeline of approximately SEK 10 billion that is able to start in the next coming two years. Of course, after that, we have more or less the double volume that is identified, but it's not, of course, concluded that it can start in two years or at the exact start. The pipeline is huge or at least the biggest we ever had.
This was a very important step for us in the short-term basis last quarter when the three largest developments got their zoning plan permission approved, and where the new larger developments will start in the end of this year or in the beginning on 2020. The approximate volume of that is SEK 3 billion. If we go to the next slide, please. We are showing the airport, Säve, again, and that's because it appears to hold even more potential than we first saw. From the original intent in the beginning, it was just a pure logistic hub, but we see even more potential now. We learned that it's possible to develop Säve into a high-tech center in many types of transportation solutions. The likelihood thereby increases that logistic facilities will also be supplemented with some offices.
If we only build on 50% of the land bank in here, it will still be possible to produce somewhere around 800,000 to 850,000 sq m of logistics and still keep the airport intact and have the possibility to develop further office space. We can take some more examples on the next slide, please. Just showing some examples, what's ongoing. We have what's called the Nyhamnen. We are in Malmö. Here we have the two big projects. We're talking about SEK 2.3 billion in projects and will start this winter. It's 51,000 sq m together. What is called the Emigrant is actually where the Swedes emigrated to U.S. in the early days. Here we're building for a smaller project, but high-quality project of 4,000 sq m for approximately SEK 230 million, and that's under production.
Further on, we have the meatpacking districts in south of Stockholm, where we are under zoning plan, the early start of zoning planning. Here we calculate that we have a possibility to produce for SEK 1.3 billion, approximately a little bit less than 40,000 sq m. Just to give you some examples of this fantastic development pipeline. If we take the next slide, please. We have United Spaces. Rickard commented on it, and as you have seen, we have turned United Spaces into positive figures already in less than nine months. This is very positive and sustainable. We also succeeded in winning the contract with Geely in their new research and development facilities that will be built in Gothenburg. Here we will develop a new flex space arena on at least 4,000 sq m together with Geely.
From here, we're now planning with new locations, both where we are and into other Castellum towns. US, United Spaces simply will be a very interesting drive in our development going forward. Then we will, Rickard, continue with some funding.
Yes, on the next slide. The funding side of the market. At the moment or over the last period, we have felt that the bond market is attractive, not least the international ones, since here you can find longer capital duration for bigger volumes to reasonable costs compared to the Swedish bond market. We are seeking long duration on an unsecured basis, and so far we can find the volume outside Sweden, but would be very positive if bigger volumes was accessible also at home. We continue to see the CP market as a cost arbitrage compared to lending in banks and has a volume outstanding of roughly SEK 5 billion. That of course is for the backstop by unsecured, unused credit facilities. Regarding the interest rates, we, as many others, still believe that the coming years will be characterized by low underlying interest rates.
Regarding the credit spreads, the uncertainty is somewhat higher since they are affected by the economy as a whole, which can have increasing impact as well as quantitative market operation from ECB as well as the Sveriges Riksbank could have an impact the other way around. If we go to the next slide, we can look what's in Castellum's activities. Far this year, we are a net issuer in the Swedish bond market. We have issued NOK 850 million for a 10-year bond and EUR 400 million for seven years. The last one we did the third quarter this year and all in landed on a fixed euro coupon of 75 basis points.
At the moment, we do see that even if we have issued a lot of bonds, that we still will have a considerable volume of bank debt, mainly in RCFs, since they offer good liquidity preparedness and flexibility for us. Regarding the CP market, we still continue that market for cost reason, and on the bond side with the preferred duration, five year plus. On the next slide, we can see that Castellum has not only worked with moving the property portfolio. We have also worked hard with moving the funding side the last five years. We have moved utilized volume in relative terms as well in absolute amount from secured bank debt to unsecured funding, which consists of bonds, CP, and in some extent, even bank debt. Our financial KPIs are developing in a good way, not at least regarding LTV and the portion of unsecured assets.
The net debt to EBITDA has been rather stable despite increased interest-bearing volume in absolute amount. The average interest rate has been reduced, that will be in the light of the last year's falling market interest rate, despite that the capital as well as the interest rate duration has been prolonged. Looking forward now, Henrik.
We can conclude on the next slide, please. We can conclude that we have a very strong position in some stable to a good market. We have both strengthened the balance sheet and created larger opportunities for the future. It's also important that we are more and more productive and efficient, and we're working with that, as you can see in the figures. I think that the strengths of our size, our finance, and our early leadership in digital solutions, we have a start over many of our competitors, and we intend to take advantage of the position we have. If you look into the market, we can still see the Nordics looking just to be now in a stable position going forward. We are depending on what's happening around us in the world.
That's standing right now on a solid ground for the future. With that, I thank you for listening, and if you have any questions, you can take them now. Thank you.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypad. Our first question comes from the line of Andres Toome from Green Street Advisors. Please go ahead. Your line is open.
Hi. Good morning from my side. I was wondering, are you planning more aggressive external growth and potential non-dilutive equity issue given the favorable NAV premium of the share price? Are you actively seeking acquisition opportunities in Finland, and would that be a preferred growth market as opposed to Sweden at the moment?
Yes, I can answer your questions. It's only one time that we have raised equity, and that's when we did the acquisition of Norrporten, and I think we succeeded in doing that. We did that because we saw a good deal. We have the same strategy now. If we see anything that looks very attractive, we go in for equity. As I said, we only done that once. Finland. Finland has gone more and more expensive in yields. It's therefore more tricky to find something that's attractive. We have a story of being very cautious on what we do on an acquisition side, and that's still the question. I'm positive to Helsinki as a town, and not to Finland, to be honest. I'm more positive on Helsinki. If we find attractiveness there, we will definitely do acquisitions, but we are not in a stressed situation.
Thank you, and views on Sweden?
You mean on acquisition side, sorry?
Yes.
I think that's the same answer. If we can find alternatives that gives us quality and more density by building it's preferred to acquisitions. In the same way, some acquisitions, I think is healthy. That strengthen the portfolio. Some sales also all the time is healthy to the market. It's of course more and more tricky to find good acquisition compared with what we can build at this moment.
All right. Thank you for that. Additional question on Säve Airport. Could you just give a general update on the planning process and also maybe elaborate more on the mixed use that you outlined, potential office, housing component, and the economics of that versus logistics?
First of all, Säve is already giving us cash flow. I think that's important to say. We are somewhere around the five on that one. The zoning plan is, I should say if it's normal circumstances, I think it's possible to start the production in two years on that airport. If something special occurs, we will have a fast track through the planning process. That has always been understood in the market because of this very lack of land. What a fast track means, I don't even know myself, but it's a faster track than two years. On the new part that we are looking into right now with office part, that's an, of course, possibility that we see that we can develop it on more self-driving cars, electrified and so on. Here the industry need more space, and especially in the rest of Sweden.
Combine that with an airport and logistic, that is something we'll be looking into. On that's a fast track because of the interest, of course, from the region. The worst-case scenario is a zoning plan that takes approximately two years, from my point of view.
Okay. The economics of the mixed use versus logistics, do you have any estimate on that?
That is a simple calculation. It's an office building we construct on a normal six, and a logistic on a normal seven to give you some guidance.
Okay. Thank you very much for that.
Thanks.
The next question comes from the line of Niclas Höglund from Nordea. Please go ahead. Your line is open.
Yes. Good morning. Niclas Höglund here. Three questions for me. First, you start out with the rental market. You were talking about 18% renegotiations, which you expect to continue. Could you elaborate a little bit more on that? Is it more continue for the fourth quarter? Maybe if you can also elaborate on your thoughts on the Swedish economy, given that the leading indicators are clearly pointing down and the CPI adjustments also looks to be well below this year for next year, at least.
Yes. First of all, the renegotiation we have in P&L right now is created last year, more or less. We are in a situation that we renegotiate the same amount or more actually right now. We have levels that have been stable to up going. It means that we should have at least that potential going forward that we present right now on the 18%. If everything stops now on the rent levels we have renegotiation power, more or less in the same figures, like the %. Economy, that's a big one. You know that Sweden is depending on everything that happens around us. From my standpoint, my own small outlook around Europe, I think as a real estate company, we have a good position with a relatively stable to positive market compared with some of the colleagues out in Europe. That's my view.
Okay. Maybe if we can move into the net letting and you're providing us more data on the sort of mix of the gross and net letting numbers. Could you add maybe some flavor, which we did in the first quarter? What's the reason for the cancellation of contracts and maybe why you're not worried that the negative net letting will actually have a negative impact also on your renegotiation power going forward?
I think that if you're looking into out of the 10 largest contracts that was giving us notice for moving, they were done in this quarter. 67% of it was done in this quarter of the 10 biggest ones in value. They consist of a logistic. They've been moving around our logistic tenant. I'm not worried about leasing them out. We are losing some larger office tenants that are mid attractive locations, but they are not in the CBD of the towns, means that we will have the renegotiations power. The mostly of the renegotiations power is in locations where we have more negotiations power in elsewhere than where they are moving. That's the difference.
No, I see most of it something that we simply can re-lease out, and I can't see it still affecting the renegotiation power because this will not, in our case, affect the vacancy rate in the CBD areas. For example, that's down to 2%. It really still going to be hard for our tenants to find somewhere else to rent. That will not be the effect right now. We will have still very low vacancy rates in the CBD of Gothenburg and Stockholm, so on.
A follow-up on the CPI numbers. We got 2.3% in Sweden last year. What's in your valuator's expectations right now? What's your thoughts ahead of the October number?
The CPI is at the moment roughly 1.5-ish, if I look into the SCB statistics. We have one month to go in order to see what the October CPI will be that is important for us. In our own valuation, to be honest, we have 1.5 as the inflation assumption when we do our valuation.
Right. The final question, just tidying up my model here. Your pay tax is coming up quite substantially in the quarter. What's your guidance on the underlying pay tax here? Should we expect 8% going forward out of the property management, or should we see a step up?
That's a little bit tricky due to the interest deductibility restriction and also changes in derivatives that is included in that calculation. Changes in derivatives can go both ways, so to say. If we exclude that, I would say that somewhere between 8%-10% maybe from the knowledge we have today will be a guidance.
Okay. The underlying will be then rather around 9%. Okay.
Yeah. As I said, the value changes of derivatives can have an impact on that.
Right. Thank you.
The next question comes from the line of Simen Mortensen from DNB Markets. Please go ahead. Your line is open.
Well, two of my questions was already on the payable tax and the net letting. You can move on to the next question. They have been answered.
The next question comes from the line of Tobias Kaj from ABG. Please go ahead.
Yes. Thank you. I would like to start with a question regarding your net leasing and your view on the rental market. You have two quite big projects, one in Stockholm, Östkaret, with 28% occupancy ratio, which was unchanged compared to Q2, and also Masthugget in Gothenburg with 0% net leasing, and both are completed in less than one year. Can you give us some more flavor why you haven't seen any activity in those projects?
It's simple. Both those projects has, of different reason, gone a bit slower. Because of technical reasons and municipality regulations reasons. Actually, the real renting out, so leasing out now in this project is ongoing right now. This figure will move the next six to nine months. I'm definitely certain of that. It's not a market effect or anything. We can't see that. We're holding the rent levels, and we have a lot of interest. We are unstable on those developments.
I ask, what kind of rent level do you expect?
We are at least at a six for the average. To calculate, if we have a figure, we should talk about SEK 6,000 a sq m a year or less.
Okay. Thank you. Another question regarding your cash earnings. Year to date, it's down 3% due to the increased paid tax. You have never reported a decline in cash earnings per share before. Do you think it's a risk that we'll see that for the full year this year, or do you think that Q4 will make up for the shortfall in the start of the year?
The paid tax is the reason to that, and this is the first year that Castellum can't use all the tax losses carry forward because they, you could say, are locked in some vehicles. That's the reason. From what we know now, you can say that the case we are having so far nine months, is the direction we have for the whole year. As I said earlier on another question, the change in derivatives can have an impact on the paid taxes.
Okay. Thank you very much for taking my questions.
Just as a reminder, if you do wish to ask a question, please press 01 on your telephone keypad now. We have the question from Simen Mortensen from DNB Markets. Please go ahead.
Yeah. I'm coming back with a new question. I noticed when Henrik spoke about the net lettings, which is right. You gave a lot of details on tenants moving and terminating leases, et cetera. You also gave the comment that in general, it is calmer in the rental market when you spoke. Could you please elaborate on what you actually meant by that?
Yeah, I think that compared with last year, it is calmer. I think it's extremely important to make that specification, because last year was fantastic. Now we're more into a normal market situation. The tricky thing is, I think, is to understand where we are right now. We have an undersupplied market, but in normal situation on the leasing out. It's different from last year, and that's what I mean. Don't forget, it's still an undersupplied office market in good locations and good markets.
Yeah. Just to follow up on that, when you see at your net lettings, which is a focus area for everybody here today, you have on reported 12 months -SEK 34 million. We see that projects actually concludes roughly SEK 64 million on plus on that. The like-for-like adds up to -SEK 98 million or roughly -1.9% of your annual rental income. Shall we look at that negative like-for-like excluding projects when you're talking about you actually having an uplift of 18% when you relet? Your net lettings is reporting quite differently.
Yes. As I said, mostly of that, it is lot of renegotiated contracts. The situation is that the rent is on an uplift in Sweden in general, and especially in Gothenburg and Stockholm. We have still benefited from, in the short-term basis, that we have rents going up to 30%-50% from where they were in 3 to 5 years. That's the reality. At the same time, as you see, you have a negative net letting index in the existing portfolio. Partly continue are because of that we have larger tenants moving around, changing their position, or we are moving them around simply. We are in a situation where, yeah, it's a little bit calmer market, but we have higher rents and we have still a lack of space in some locations. Very lot of locations some.
That is the day-to-day fact.
Just a final question. In terms of your larger investments, which is listed in the recorded report, we see like those add up to below roughly SEK 672 million in terms of remaining CapEx for those developments. What do you expect to be using annually going forward in terms of developments? Because what we see here on developments now is clearly on the low side.
What you're going to see is simply that that increases. As we stated, we will start developments approximately for SEK 10 billion the next coming two years. The beginning of the period will be a strong start because we will start three. We have started one, and we have another two to start over SEK 3 billion ones. That means that we will be a strong start. From that, we will have a continue of increases on development. To continue that question we had earlier on leasing, the majority of these projects is well leased out before we start.
Can you just give us a timeframe on the Säve Airport? Give us the start, but how much time you expect to be producing on that in terms of developing that?
It's really tough to say on the, because it's a market situation. We can conclude that if you look at the logistics side, this is approximately 8-850,000 sq m of logistics. In Sweden today, we produce somewhere around 500,000-600,000 sq m annually. It means that this is more than 1.5-2 years production of logistics. I have respect for the timeline on that one. It's hard to say if that will take another five or seven years or something like that from the start of the production of that logistics site.
Thank you for taking my questions.
Thanks.
The next question comes from the line of [Robert Kempe] from Kempen & Co. Please go ahead.
Good morning. This is Robert Kempe. Actually one question. Rutger Arnhult is obviously becoming a larger shareholder, nowadays owning 10.9% of the company, putting forward Mr. Essehorn in the board. Do you see any changes in the board with respect to future strategy? Let's say more precisely, can we expect Castellum, for example, to go further on the risk curve knowing Rutger Arnhult's view on leverage and stuff?
The procedure is like this. We have an election committee that is under meetings right now. The election committee is elected by the four biggest owners. Mr. Essehorn is the chairman of this committee that was pronounced. What that will be the conclusion of their meetings, I don't know, definitely can't comment on. From that, we will see. Simply it's too early to comment, and this is an owner question, not the CEO question.
Okay. That's clear. Thank you.
The next question comes from the line of Albin Sandberg from Kepler Cheuvreux. Please go ahead.
Yeah. Hi there. I have only one question and that is on the yield requirements. I think also you start off in the annual report with a question mark where the yields are coming down. From Castellum specific perspective, since you kept it flat quarter-on-quarter, are you waiting for any further evidence before you're ready to put in a lower yield or do you think that the yields you're reporting are the right ones?
My view on the valuation is that the valuation is correct with the knowledge we have and the way we have seen in the market right now. The feeling is, what we want to say is that we can conclude in that it's not impossible that we will see yields go down in the future, calm and simply. The feeling is that the next acquisition is a little bit more expensive than the last one still in the market. It's also definitely so that we have a large interest into the market from foreigners as well as intra-Swedish investors. In the Nordics, especially Helsinki as well. It's a huge interest for the Nordic sector. What I can feel is that we are on stable yields going down. The valuation we have is to our best knowledge.
Okay. Thank you.
The next question comes from the line of Philip Hallberg from Danske Bank. Please go ahead.
Yes. Good morning. I have two questions. The first one is relating to your Säve Airport acquisition. What's your view on the competition out there? Obviously, Tapster has a large amount of land to build on also. How do you view that one?
I simply think that it's a lack of efficient logistic assets close to Gothenburg Harbor. The land bank that are possible to build on right now is needed for the future growth in the region and actually for the total Nordic sector since the harbor is the only transatlantic harbor in the Nordics. We see the volume going up and needed to go up. If we don't want to transport everything we're going to buy by trucks going from south and upwards into Oslo, Stockholm and so on, the harbors volume is going to increase. It's all about investments. We need more land bank actually in total in Gothenburg right now to support the harbor. That's my view.
Okay. Is the municipality supporting you in this planning processes and are they keen to you building this as well?
Yeah. We are very supported by the municipality and also by the region and the harbor.
Okay. Thank you. The second question, I guess that everyone has already tried to ask you this, but could you give an indication of the net lease during the coming quarters if you exclude these SEK 150 million from the already announced project leases?
No. It's very tough to look into that figure. The only thing we know, as you indicate, is where we have already leased out in the project side. No, I can't give any more guidance, unfortunately.
Okay. Just to follow up then, in the first period of this year, I think you mentioned that you had some leases that was terminated in the CBD of Stockholm and in Copenhagen as well. Has those been let out or are those still vacant?
First of all, the ones that are giving notice to moving, they haven't already moved. They are giving us cash flow. That's very important to say. Part of that volume has been leased out.
Okay. Thank you.
Thanks.
We have a follow-up question from the line of Niclas Höglund from Nordea. Please go ahead.
Yeah. I just have two follow-up question. Firstly, is it fair to conclude that the negative net leasing you are presenting right now will put a pressure on your vacancy levels in the coming quarters? That's my first follow-up.
If you're looking at that, we are looking for stable to some adjustments maybe on the vacancy rate, or occupancy rate as I see it right now.
You're on very high level compared with the history, of course. I was looking at that portfolio.
Yeah. We are. Don't pencil in too dramatic figures.
Right.
Of course, we have the new ones coming in later on in the portfolio.
My final follow-up, maybe a little bit boring, but credit duration is coming up a little bit. I was under the impression that you're aiming for even a higher capital duration. Is that still the case? Should we expect your capital duration to move up to about 3.5 years over the coming quarters?
I said earlier this year that we aimed at roughly 3.5 years because each quarter that goes means that we lose duration, of course.
That's correct.
long duration is preferable. There is a question, of course, of what the market can offer us and at which price, so to say. Where we are now is roughly where we targeted it for this year, and then we are still working on it.
Okay. Thank you very much.
As there are no further questions, I'll hand it back to the speakers.
Yes. We thank you, everyone, for listening, and yes, thanks, everyone.
This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.