Ladies and gentlemen, welcome to the Castellum Q4 report 2018. Today, I am pleased to present CEO, Henrik Saxborn, and CFO, Ulrika Danielsson. For the first part of the call, all participants will be in listen-only mode, and afterwards, there'll be a question and answer session. Speakers, please begin your call.
Thank you. Welcome everyone to this Q4 2018 then. We will start with looking to the numbers. Please change page, please. I'm very proud with all the work done this 2018. It's because that we have achieved a very strong result, and it's coming in on all lines, and it's been a great job done by the team in Castellum. So we can conclude that we had a record strong quarter ending this year, that gave us increase on the group, on property management with 28%. So who supported a full year group of 17%. We can also conclude that we decreased the financial risk with lowering the LTV down to 45%, and also diversified our financing base, now also in the Euro bond market.
And with this, the board proposed to the AGM yesterday that the dividend is gonna be SEK 6.1. And this will be a growth on the dividend side for this 21st year in a row, and we are very proud of that, of course. And in the Q2 report, we talked about three items. So you can go to the next slide, please. We talked about geographically movement, we talked about the premises, especially the logistics side, and we talked about co-working. Going backwards, we can say now that what we have achieved on the geographic side is that we moved to more growth than we had earlier.
We took a huge step last Friday, when we sold out the entire portfolio in Sundsvall, and then changed that on the same deals, that well, I will come back to, on creating a new portfolio in Linköping. We will also start beginning with creating an organization in Finland. If you look on the premises, on the logistics side, we promised to focus more on logistics. We have strengthened the organization and changed it, and have now our own division on the logistics side. We also, just before Christmas, acquired, secured the land bank in Gothenburg, where we did the acquisition on the City Airport in Gothenburg. The logistics division now contains our properties worth SEK 13.6 billion , and have a rental value approximately around SEK 1 billion.
The third part was that we said that we will move into the co-working area. And the next step is under planning, and will be shortly, we will shortly coming to market with how we will, what we will do on the co-working side. So that was in short terms, but now some more figures. So I'll leave the word to Ulrika, and I think we change the page.
Next page, please, to the P&L. So the last quarter of 2018 was really good on all lines. An increase of income from property management with 28%, and a value uplift of just about 2%. And that means for the full year, an increase with 70% in income from property management, due to really good rental market, expressed in higher rental values and lower vacancies. Cost control, projects completed, and lower funding costs. A value uplift of properties of around 6%, due to strong cash flow, project gains, and lower yields in some assets. The last quarter's value uplift of around 2% was mainly cash flow driven.
A positive change in derivatives due to increased market interest rates, and finally, taxes of roughly SEK 867 million, of which we had an deferred tax income of SEK 600 million due to future lower tax rate. So if we go to the next slide, please. We're looking to the NOI. The NOI increased to 10%, and the growth in like-for-like continues to be very strong, with a contribution of SEK 270 million, or 6% of the 10%. On top of that, our development contributed a further 3%, and the transactions made had a smaller impact of 1%. But if we look into the different parts, so if we go to the next slide, where we will summarize the rental market and the rental income.
If you go to the next slide, please. We do have... If we start with the history, you could say, the rental market has, as you all know, been very strong the last years. So that, together with the hard work made by the organization in letting and renegotiation, is the reason for the like-for-like growth of 5.3%, apart from the index, of course. And if you split that growth in different parts, 3.4% is from increased rental levels, 1.7% is from lower vacancies, and the rest is due to early termination of leases. But another value-creating part is our development. So if we add that to the total growth in the portfolio had, 8% growth in rent, rental income, and then we had a little bit take down due to transactions made.
If we talk the future, you can see that roughly one-third of the leases at the year-end expired for termination or negotiation the coming two years, of which the bigger part is in 2020. And as you can see from the slide, the biggest volume is in the central part and the western part of our portfolio, and the region with the longest duration, and therefore, a lesser volume in near term is in Stockholm. What we also know is the CPI for 2019, that indication uplift of around 2.3% compared to last year's 1.7%. So if you compound those two together, I think you can expect a rental value uplift just around or just about 3% next year, just to be cautious. So if you go to the market.
Yes, and, if you look at the rental market on office side, it's simply about supply and demand. It always is. But it's also, we know that in our markets, the rental market of office remained very positive, 2018. It was, of course, driven by favorable economy, robust demand, and limited supply. In 2018, the average rent for the CBD of Stockholm and Gothenburg, and Stockholm increased to 13%, and for Gothenburg, 4% in average on CBD levels. And of what we experienced was the extreme low vacancy rate, in then Stockholm and Gothenburg, especially then as well. And it was that resulted in a strong demand for premises outside the CBD, and gave a rise in the rents there as well.
Looking at the regional Swedish cities, the rents also generally low, especially in cities with a lot of new production, such as Uppsala and Örebro. If we go to Denmark, and especially Copenhagen, the rental market there, with the same looks, approximately, have an increase in the rents for the CBD, about 5%. And if you look at Helsinki, the same figure was approximately 6%. So going forward on this one, we're seeing that we're gonna have a stable market because of the under supply, still rental office, but we're coming back to that. If we're taking the next slide, please. Looking at the same, what's happened on the logistics side, you have to divide that market into two parts. The larger logistics hubs, that we have seen in more developments in Sweden, 2017 and 2018.
It has approximately been 600,000 square meters built every year. But we can't see any effect on the vacancy. So simply is the conclusion that the market has absorbed all these new premises. And rents are positive on the right locations. Castellum has so far concentrated mostly on Stockholm and the Gothenburg area. Then, looking at the other part, is the last mile. We have seen a huge, strong demand, I can say, on this type of logistics properties, and that is because there's a very low supply on it, on the right locations. And we have growth on the e-commerce side, that grows with 15%, 2018 compared with 2017.
And here we have the same rent situation that we described last quarter, that simply over the year, have seen rents going in Stockholm area, especially from 900-1,100 crowns per square meter in a year. And then, if you take the next slide, we have the net leasing for Castellum. During 2018, we had a gross rent, gross net leasing, with that we signed 780 leases for a value of SEK 408 million. But we had net leasing was 161, compared with last year's 300. But note then, that we have not put in those figures for the E.ON headquarters, as well as the court in Malmö. If we do that, we would have ended up with the same figures.
But that said, you can also reflect on the drop the last quarter, and that was an effect due to a few large contracts that gave us a negative notice in the end of the year, especially some contracts in Stockholm. So I think we can see that we have less space to rent out, but that is combined maybe with a little bit calmer market than we had 2018. If we go then into net leasing on the next slide, per region, then you see that Stockholm was not the winner in this competition in Stockholm in 2019 in Castellum. And that is like I've said, the negative impact on a few large contracts that was giving us notice at the end of the year. But of course, that will be out.
It's also impressive that we all over the year have seen a good net leasing in the mid-sized towns that here is named Central. It's not so surprising that West, that is combined as part of story, Gothenburg, of course, has been in a good market. If you look at the next slide.
Yes, and then we are going to the cost side, and let us start with the property cost. They increased with SEK 27 million or 1.7%, of which the OpEx increased even more, SEK 64 million. And that was due to a more, you could say, snowing, colder climate the first six months, and then an extreme warm summer compared to 2017. And the last one means more cooling, and more cooling drives costs for electricity. However, that cost increase was mitigated with some in some extent, with lower maintenance and lower property administration on an annual basis. So if we go to the next slide, please, and look at on the next, next cost line, the interest rates cost. That consists of two parts: market interest rates, as well as the margin that Castellum pays to investors and banks in order to lend money.
Regarding the market interest rates, you are all aware of that it has increased, and in December, Swedish Riksbank raised the interest rate for the first time in seven years, from -50 basis points to -25 basis points. So the level is still on historical low levels. At the same time, the Swedish Riksbank lowered the curve, which now indicates that the next increase will be made in autumn 2019. If that increase will be made or not, remains to be seen, depending on the weakness or strongness in inflation and the economy as a whole going forward. As I said in Q3, our policy regarding interest rate duration is an interval of 1.5-3.5 years, and Castellum has been short within that interval.
But on Q3, when we started to move upwards, or with other words, prolong the duration up to 3.1 years at the year-end of 2018, a duration that we now are very comfortable with. But we have also prolonged the duration in the capital debt portfolio up to 3.4 years. And that is, however, a duration that we would like to prolong even more over time. And the reason is that the funding risk is one of the biggest risk we have, both regarding refunding, but also funding expansion. And one way to mitigate that is the duration. Another reason is also to lock in the price for lending, you could say the margin.
And we have to have in mind that that has been the biggest part for a lot of company, regarding the funding cost last year, and I still, still think that will be so for a while. So in order to prolong the duration, we still think that the bond market gives us the best possibility to offer that, but of course, that can change. And at the moment, that market is more cautious, so let us see what happens going forward. But let me come back to that, when we have done the funding side, further down in the presentation. So with all that said, the average funding cost to Castellum at year-end was 2.0%.
And since we have made a lot of renegotiation last year, the impact on Castellum's average interest rate next year will mainly be connected to volume and how the market interest rates moves. And then if we go to the next slide, please. We have taxes, and as you see, Castellum has tax losses carryforwards now of only, you could say, SEK 1 billion. And we have had more tax losses going forward earlier. And that is the reason that we have paid so little taxes from a historical point of view. However, this SEK 1 billion that we have left cannot be used all over the group, since some of it is connected to the Norrporten transaction.
And that means maybe from what we can see now, that you can expect a little bit higher paid taxes going forward. And of course, on the other hand, a little bit lower deferred taxes. And as you saw, the paid taxes was a little bit higher than last quarter, and that is more a correlation between higher paid taxes and lower deferred taxes connected to Denmark. So no impact on the result on an interim basis. And the new income tax legislation that was decided in 2018, and that will be applicable 2019, means an impact on deferred taxes this year with SEK 680 million as a deferred tax income.
And as I've said earlier, the impact of the paid taxes due to interest rates, the stability restriction, will have a less impact on Castellum due to good earnings and a stable ICR. Then if we go to the next slide, please, where we start to look into the balance sheet and the property market. So if you on the next slide, that with the balance sheet, we can just shortly say that at Castellum, we have a lower financial risk expressed as an LTV, which is now 45%. So the balance sheet is strong, and the NAV at the year about SEK 176 per share, which indicates a good growth in NAV. And you also have to have in mind that we have paid dividends from that.
If you go to the next slide, and we look into the portfolio, you know, that we focus on office, public sector, and logistics, and they together stand for roughly 85% of the portfolio from a valuation point of view. And light industry and retail, that is a smaller part, has decreased last quarter, mainly due to that assets have been sold from that segment. If you look at the valuation view, it has not moved on the portfolio level since the last quarter, but there is some movement between different asset classes. And that indicates what has driven portfolio uplift the last quarter. And that we can look on the next slide, please.
As you can see, we do an internal valuation in our balance sheet, but at the year-end, we also do an external valuation, and this year, Forum did that. And they valued 56% of the portfolio in a way to reflect Castellum spread between different assets and different geographical places. And if you look into the external valuation and compare that with Castellum, Castellum is 2.7% above, with an average deviation of 6.7%. And that is well within the uncertainty scope, that is normally 5%-10%, depending on type of asset. However, you can say there is difference within different asset classes, where Castellum is more positive to logistics and public sector, and less positive to retail versus the external valuation.
If we look to what drives Castellum's value change in 2018, and the last quarter, as you can see, it's mainly cash flow, and it should be like that since Castellum, the last quarter, now, which is the high uplift for the next year, and that was 2.3%, they take that into the valuation. We can also see that we have some small, small negative impact from selling assets, but that is connected to three assets that we have sold for future development as versus here in Stockholm, where Castellum can get, up to SEK 200 million more in income from that selling. But that income is not accounted for yet, so you have to have that in mind. So if we then go to the market.
Yes, and if you look at the transaction market in Sweden, then for last year, it was a transaction volume of SEK 163 billion, approximately, more or less the same that we saw 2017. International investors accounted for approximately one part of that market, and has a higher share than it had historically. The trend in Stockholm is around 40% of that, and that's a normal figure in the market. If you look at the price of the square meter, then we have some objects in Stockholm, a few more objects in Stockholm, actually, that have the value of SEK 130,000 per square meter, and that's a new record that we have seen.
If you're looking at the deals, they are generally declining, and the last, the largest change was achieved in primarily for properties with safe, cash flows, and, absolutely the ones in the CBD areas. If you look into the Danish market, we had a transaction volume, approximately around DKK 70 billion, and that's a little bit more than last year, and half of the volume was done by, international investors. In the Finnish market, you had the transaction volume around EUR 9.3 billion, and international investor had, stand for so much as 70% of that market. Required yield in the Helsinki CBD area has fallen approximately with 150 basis points last year since 2014, and are now nearer the level in another Nordic capitals.
If we go to the next slide, we look at the same thing about logistics. And the logistics properties have attracted a good number of investors the last year. It has, of course, mean that we have been driving the prices upwards, and the required yields in Castellum's strongholds have been adjusted at the end of 2018, of course. We can now see yields around down to 5% in the market. Going then to the next slide, we will take some examples of the transactions done in last year. And just before Christmas, as I mentioned, we bought Säve Airport or the City Airport of Gothenburg.
We did that because it's a perfect logistics position, there we can, at a fast pace, I should say, produce approximately 850,000 sq m of logistics the next coming 10 years. And then, we are only using 50% of the land bank. Market price is approximately SEK 1.1 billion, that will be set out after how much we will develop. And the income on the site is a little bit more than SEK 50 million now. This could increase, and that gives us a safe investment and the cash flow for it, that covers much more than the cost for having it simply. So this is a land bank for the future with the cash flow.
Going forward, here we can look at the logistics, and on the page, you see the logistics site. We have now 100% leased out near the harbor of Gothenburg, and are under production on the second phase. It's approximately- the volume is approximately 65,000 square meters, and it will have total- a yield on total cost, around 7%. So, and we are also in the same way, producing right now, logistics asset, North Stockholm, with the same yield on total cost. Going to the next slide, we have a picture over Linköping, and this is, of course, to celebrate the great deal we did last Friday.
When we moved and sold for SEK 3.4 billion every asset we owned in Sundsvall, on a yield approximately on 5%, and were able to buy from the same company, assets for SEK 1.6 billion in Linköping, for the yield of 4.8%. And of course, we are very pleased with this deal, moving on more or less the same yield to more growth. And if we then look into the development pipeline, we can conclude that Castellum has an interesting development portfolio. And there we are ongoing with larger projects, that the projects over SEK 100 million sums up to SEK 3.6 billion, and have an average yield, approximately, around 6.7%.
And this pipeline today consists of a large number of developments, and will gradually increase because we have guaranteed us with a pipeline investment opportunity for the next coming years. One of examples of that is, of course, the E.ON headquarters, as well as the court we mentioned in Malmö, and so on. And if we go further, then we will look into the capital market, please.
Yes, and we can change to the next slide. And, talk about the credit market. Castellum likes flexibility, and want to have, you could say, many tools in the toolbox in order to match the property portfolio's need for money. We have been active in three markets, or used three tools now for quite a while, and we think the mix is good to have. We have the banks, the Nordic banks, and the Swedish bond market, and the CP market. And during the last quarter, last year, we also brought in the European bond market or the international capital market. Castellum experienced good access to funding within the Nordic banks and stable margin. As I said earlier, we had did almost all our renegotiation last year, and we have nothing to do during 2019, so to say.
However, from a price perspective, we have noticed, and I think that you have noticed, the last month increase on margins in the bond market, for general and more specific for the property sector. Initially, in the Euro bond market, but at the end of last year, also in the Swedish bond market. I think that the main driver behind that, specific for our industry, is most likely that there has been you could say, increased supply of property risk or property-related borrowing during a long time. Which means that there is a lot of property risk in the bond market, or there is, you could say, more supply than demand, and that affects the prices. Regarding the short part of the capital market, the so-called CP market, it also has showed a decreased volume.
We have increased our curve, and offers now ten basis points for one-month lending, instead of zero basis points during Q3 last year. But there is still a form of, you could say, arbitrage to be made, lending in that market instead of lending in the bank. So if you go to the next slide, that will summarize what have Castellum done the last year. And as I said, we have a respect for increased interest rates, but we have really big respect for increased margins. And that is one reason that we, during 2018, worked hard on the capital ratio, accessed a new market in form of Euro bond market, and prolong the duration to 3.5 years. And we did that by renegotiate SEK 15.4 billion within the bank system.
We closed down SEK 6.5 billion. We used the facility from the EIB, we increased our presence in Swedish bond market. We entered the international bond market and as an arbitrage what we received market. So with all that made, I think we're well positioned with many tools in our toolbox going forward, that will give us great flexibility.
And then if we move to the next slide, we have the dividend. And we have, now we are closing 2018, and putting that behind us, we can conclude that we are on track, and have created a lot of shareholder value, this 2018. With that knowledge, the board proposes the dividend to be SEK 6.1 a share, to be decided on the AGM. And if you look at the outlook, if you move to the next slide, please. We can see that what we see in front of us, that is that the Nordic sector will have an interesting growth compared with our European peers going forward.
We're seeing a rental market that maybe not that positive that it was 2018, but we can, we have also seen that we have more or less no vacancies. That means that all growth has to be taken care of. That gives us the conclusion that we will have a stable to positive rental market going forward. And don't forget that renegotiations coming to Castellum and other property companies will of course have a positive impact. And if we go to our premises, you will see us moving the portfolio to grow with the developments, of course, and see if we can have a turnover in the portfolio as well. We will have focus on the logistics side that we have decided.
We see that it's extremely interesting what's happening on the logistics side in Sweden, because there are not the distribution system that's good enough for what the customers want. And we will decide what we will do with the coworking side, and we will come back with that early in the year. So Castellum has the group's potential, and the existing potential, together with the development, of course, will give us growth. And this is how much that will be is of course what we do with the portfolio going forward, especially on the investment. So with that said, I think we're open for questions. The next slide, please.
Thanks. Thank you. Ladies and gentlemen, if you do have a question for the speakers, please press zero one on your telephone keypad now. The first question is from the line of Tobias Kaj, ABG. Please go ahead, your line is open.
Yes, thank you, and congratulations to a very strong finish of a strong 2018. I would like to start to ask a couple of questions regarding the rental market and your comment in the CEO statement. Should we read that as rents has stopped increasing for offices, or is it more a slower growth for 2019 we should expect? And also whether this is specific for some specific markets or a general trend, if we look for office rents.
First of all, to start with, I don't think you can take it as a general trend. I think we will see growth in the rental market, but what we have experienced, 2018 has been extremely strong. I think what we are seeing in Stockholm, for example, we will not see that, that percentage going forward. In some markets, in some locations, you will see the market, market rents maybe staying at this level that it is. So we are on stable to positive if it talks with them. Finland, more positive. I think it's more to, to come on the rental side in Finland. And Denmark could be more positive to the same figure that Sweden. That's my view.
Okay, thank you. And regarding the net lease, which also were coming down quite significantly, and you mentioned that you had a couple of larger terminations in Stockholm. In that perspective, should we see the Q4 numbers as temporary low level, or do you think that we will, in coming quarters as well, see lower activity in terms of net lease?
I think you have it's three parts. We have to recognize that we don't have that much to rent out, and that's generally in the market as well for Castellum. And then you have the effect of a few large contracts that will, of course, be rented out, that will not have an effect. And on top of that, yes, the market will not be as fantastic as it was 2018. So that said, I think we will not see the net leasing of SEK 300 million that we had 2018 to 2017.
... And in terms of remaining investments in ongoing projects that has been declining, given lack of premises to lease, should we expect that to pick up again during 2019?
This is due to the start of new projects, new trends coming in, I should say yes. And the normal project will continue, pipeline will continue like this right now. So yes, the number will go up on the investments on the pipeline.
Okay, thank you. And one final question, if I may, regarding your balance sheet, the net LTV came down to around 45% now in Q4, would be 44 if you adjust for the transactions in January. Do you think your gearing will continue to come down, or do you expect to be more aggressive in terms of acquisitions? And what do you expect in terms of expansion in maybe especially Helsinki, but maybe also in Oslo, if that is a market you're looking into?
I mean, we will be keeping the LTV levels on comfortable levels. That's extremely important for us, and we were cautious on that. And we, as we have shown on this deal we did in Sundsvall and Linköping, that we can have a turnover in the portfolio and create room for new deals. So, on the LTV levels, we will be cautious. We are very comfortable with the 44 that you indicate right now.
Okay, thank you. Or maybe if I can just ask one more question. If I understood it correctly, on the valuation side, on the slide with the gap between internal and external values, is it correct that the internal values are 2.7% higher on average than the external, and it's the internal values in the balance sheets?
Yep.
Thank you very much. Then I'm finished with my questions.
Thank you. Next question is from Fredric Cyon from Carnegie. Please go ahead, your line is open.
Good morning. Good morning, Henrik and Ulrika. Couple of follow-up questions to the ones Tobias asked. So first of all, on the net leasing, you mentioned that it was negatively impacted by a couple of larger contracts. To what tune were those contracts affecting the total of the lease terminations in the quarter?
We have a few contracts around SEK 25 million in Stockholm, that came in the last. That is actually, of course, gonna be rented out.
Okay. And I would imagine that you expect more than SEK 25 million positive contribution from those in 2019-
Yes.
Given the strong market then?
I agree on that.
Okay, good. And then, second of all, on the investment level, you invested about SEK 2.8 billion in projects and maintenance CapEx during 2018. Given your statement here on the question that Tobias asked, should we expect that level to be maintained throughout 2019?
Yes, I see it like that. If it could be stable to upwards in 2019, depending on the project starts on some projects, simply when we can start.
That's clear. Then my final questions, question on acquisitions. Obviously, the balance sheet is very strong, and it's going to be even stronger, given the latest deals you've announced. It's no secret that you wanna grow in Helsinki. At the same time, you mentioned that yields have moved in 150 bps. Is now the right time to make portfolio acquisitions in Helsinki?
It would been a cheaper buying the same asset if they was on market four years ago. That's correct. But we still see opportunities in Helsinki, and that's due to the rental market for that we have there. And honestly, I think Castellum can make a difference in the Helsinki office market. And it's extremely interesting investment opportunities still in the market. But, of course, you have to be picky in what you're doing.
Thank you.
Next question is from the line of Niclas Höglund, Nordea. Please go ahead, your line is open.
Yes, good morning. A couple of follow-ups from me as well. Firstly, when we look at the net operating income, the sort of surplus margin, it was very strong, at least compared with my estimates. And you're talking about that you had some lease terminations. Should we... Are there any you can say, one-time positive supporting items, that will sort of mitigate the very strong numbers we've seen in the fourth quarter? Any other sort of temporary positives, or what are you the most satisfied with on your NOI margin? Thank you.
There is no, you could say, extraordinary, no lump sum, no extraordinary stuff on the income side or the cost side, so to say. But the last quarter has been a very, you could say, favorable quarter from a cost perspective, if you are a landlord. So that together with really strong still rental growth and low vacancies has made the strong NOI margin.
... Sounds good. And then another follow-up, maybe on, on the sort of transactions you announced, end of, end of last week. Could you talk a little bit more about Sundsvall? I mean, the value growth, of, of that portfolio in the fourth quarter, maybe, and, what kind of returns you've had on that, those properties since you acquired them from Norrporten. And then maybe also on, on that note, what we should expect on the central and admin side since, since part of that organization is, is included. Thank you.
Yeah. If we talk about the profit from the acquisition of Norrporten, we are at least at 16%. So that's a good deal, and in line with the sale we did with Diös earlier. And if we then look at the valuations, they are in line with what we did on the portfolio overall. And if you look at the question about administration, we have efficient organization today in place in Sundsvall. So it's not due to the adjustment on the overall side.
Okay. So no cost decreases on major notes related to the-
No.
In those cases, no?
A round figure on the admin side is approximately SEK 10 million.
For the full year, yeah?
Yes.
Okay. Yeah. And then maybe also on the sort of switch to Linköping. You talk about growth opportunities. Is it really that much of a difference? Could you maybe share some thoughts on the sort of difference between Sundsvall and Linköping?
Yes, our view is that it is two parts. It's general growth potential in Linköping going forward, connection to Stockholm train station, growth in what is in their old tech industry that we have in Linköping is extremely interesting. We have been in the Mjärdevi in 2018. We bought that with 50% vacancy. You have more or less one of the few places in the world where they talk about connecting non-self-flying vehicles. It's China, US, and Linköping. So we like that extremely good, so we see potential in that. On top of that, for Castellum, we acquired 67,000 sq m. That gives us more efficiency, of course. So-
Yeah.
After that, yes, we see larger potential in Linköping next coming years than Sundsvall. And the deal was actually done by that we wanted to buy the Lilium's portfolio earlier, and that they said, "No, but we can be interested in a switch." So if we could have just acquired a Linköping portfolio, we would have done that, but that deal was not on the table.
Okay. Those are the questions. Thank you very much.
Just as a reminder, if you do have any further questions, please press zero one on your telephone keypad now. The next question is from Andres Toome from Green Street Advisors. Please go ahead. Your line is open.
Hi, good morning from my side. Just wanted to ask whether you can add some color on your Flexi office strategy, and what kind of a business model are you pursuing there? Are you looking to service all sides of clients, or you will be focusing more on smaller companies, startups, et cetera?
We will, we will come back in more detail, but I can give you this to start with, is that we're looking to supporting, as we're doing in all our other services, know the companies with services, either they are clients or not clients at this moment, with a new product that we can combine with what we can serve with today. We have, and especially in Stockholm, seen the growth going up 10 times in volume, and this is necessary for us to handle in some way, to not lose the contact with the clients, and also to offer some space. Since right now, I'm sitting in Stockholm, we have everything leased out 100% in the absolute city, and we can't offer to tenants anything.
We will come back with more details on this in early this year.
Okay, very clear. And, maybe you can just provide some information on, of the scale you're pursuing there. We see other companies across Europe targeting 10% of their GLA. Do you see that being sustainable for Castellum as well, or do you have a different target in mind?
No, I won't comment on that right now. I will come back, please.
Okay. Very clear. Fair enough.
Thank you.
Thank you very much.
There are currently no further questions registered, so I'll hand the call back to the speakers. Please go ahead.
Okay, everyone, from us at Castellum, Ulrika and myself, we thank you very much for listening and wish you a good working day. Thank you very much.
This now concludes the conference call. Thank you all for attending. You may now disconnect your lines.