Good morning, and welcome to Fabege's Q1 Report 2026 . My name is Bent Oustad. I'm the CEO of Fabege, and with me today I have Åsa Bergström, our CFO. We run through some presentation first, and then we go over to a Q&A after the presentation. Just a short recap from last quarter. We still own a modern portfolio with focus on Stockholm, occupied by high-quality tenants. As you all know, we own, we develop, and we manage our properties, with in-house personnel. We are focusing on creating attractive working places and a good living in superb locations in Stockholm. As you also know, very much aware of, that's the best growing region in Sweden. Our rental value at the end of Q1 is SEK 4.4 billion in the portfolio, and the number of square meters is 1,300,000 sq m approximately. The property value is at 20...
SEK 78.6 billion at the end of the quarter. Just to go through again some of our strengths in the company that I see after my first four months. It's definitely our customers. We have a very high customer satisfaction index. It's highlighted there by strong track record in serving our customers' needs, and that's important also going forward and in all our renegotiations. 95% of our tenants say that they would recommend Fabege as a landlord. That's positive for us, and we have to keep that number up. We have long-term lease contracts as a foundation for our business with our customers. We have our own staff across the entire value chain, meaning we have property caretakers, we have the leasing departments, we have the project team, is everyone employed by Fabege, and we even have a CFO and CEO in the company also. That's great.
Our properties are in clusters, giving us some advantages. I really see a lot of economies of scales like that when we are doing the management of them. It make it possible for us to create engaging meeting places in our portfolio, and that's important also going forward. We have an excellent capabilities to deliver large and complex projects from start to finish. We have done that several times, and we will do it, in the future as well. If you then go to the Q1, just a short summary. Positive numbers, almost most key figures. Rental income, surplus ratio, profit from residential development and net letting, all positives, and are more or less flattish on the value change. Also, we'll come back to those figures later on. On the positive, very good positive side.
We have signed a lease contract with Stockholms Sjukhem for an elderly care facility in Haga Norra in Arenastaden. They may have sent out a press release yesterday with that. It was signed in Q1 and are included in our figures. Permobil has also moved into Arenastaden. That makes us a little bit proud, because they have consolidated all its operations from Greater Stockholm to one location in Arenastaden. It's a very nice premises there. The vacancy rate is unchanged from last quarter at 14%. Then Åsa.
Thank you very much. I will go through the figures in a little bit more detail. As you can see here, the rental income came in at SEK 892 million. That's an uplift of SEK 27 million in comparison to last year. We have a negative impact from identical portfolio relating to negative net letting from the previous years. We also sold one property, Ynglingen, which we had some income from in the first quarter last year. On the other hand, we have a lot of new income from finalized projects during last year. For example, Saab, who occupied in Q4 last year. The net operating income came in SEK 39 million above last year. We had higher winter costs, but on the other hand, we have managed to reduce property tax and also some lower maintenance cost.
That meant that we had a surplus ratio of 72%, which is really, really good for a first quarter. We could also see that there were some finalized apartments in Birger Bostad that contributed to an income of SEK 172 million, and also a surplus of SEK 40 million. In total, that also contributed to the income from property management, which ended up at SEK 370 million. That's almost 30% up from last year. As Bent mentioned, we also saw some negative value changes. I will come back to that very shortly. We had some positive impact from value changes in the derivatives portfolio relating to higher interest rates. Tax is only carry forward losses, so it's not paid tax. The big positive amount from last year was related to the sale of Ynglingen and reversal of tax in that case. Property valuation.
We ended up with a property value of SEK 78.6 billion. We have externally valued 44% of the portfolio. The average yield in the portfolio was unchanged at 4.59% from year-end. There was some changes in the city properties, a little bit reduced. On the other hand, in the suburb locations, we saw a little bit higher yields in the valuations. Here you can see a split from value changes in the management portfolio, -SEK 191 million, and value changes in the improvement and project portfolio of -SEK 68 million. You can also see the division between the different market areas where both residential and inner city provided positive value changes this quarter. The key ratios not so much change, but equity per share, as you can see, came out at SEK 120 per share and the NRV at SEK 145.
We saw positive total return in spite of the negative value changes. Surplus ratio, as I mentioned, which is the best I think we have ever reported in the Q1, actually. Equity ratio and loan-to-value ratio remain at the same level as the year-end. We also saw an improvement in the debt ratio to 13.1. I don't know if you're familiar with the target that we have to be below 13. We are very close to that target now these days. On the financing side, the year started really, really strong. We saw very good access to financing from both banks and from the capital market. We also saw reduced margins, especially in the beginning of the year. It's been a little bit more volatile after the conflict in the Middle East started. We still see that we have very good access to financing.
We were lucky to do some bond issues in mid-February where we could come out on three-year maturities at around 84-85 basis points. We did another bond issue last week, where the same three-year maturities came at 97 basis points. I would say that we are more or less back to the levels where we were at the year-end. The ongoing refinancing with the bank facilities is according to plan, so we are moving some securities, changing some securities, which has taken some more time. Everything is according to plan. We still have the undrawn facilities of SEK 6 billion, which is good for us and gives us a lot of stability looking forward. The average interest cost came up a little from 2.82% at the year-end, up to 2.85%. It's actually been below 2.80% at some time during the quarter.
Higher STIBOR is of course reflected in these figures. A little less than 50% of the portfolio is fixed according to plain vanilla swaps. If we include the callable swaps, the fixing rate is nearly 70%. You can see also that the older swaps are at very good levels, most of them. They are, of course, contributing to the positive cash flow for Fabege. Higher STIBOR has had a little negative impact during the quarter. On the other hand, when we are refinancing debt, most of them come in at lower margins than we had before. Most of those debts are signed three to four years ago at margins that were, at that time, higher than what we see today. That will continue to have a positive impact. Also, to conclude, a few words on sustainability. Energy consumption remains in focus.
We were very lucky last year with a mild winter to come down at 65 kWh/ sq m. This year we've had a much more wintry, lots of snow, much colder. The 23 kWh/ sq m, as you see reflected in Q1, is actually the same figure as we had last year. We are on a good level also for that. Now last week, here in April, we actually sold the recycling hub that we have produced to Ragn-Sells. The hub was in itself established in 2023, and we have used it for most internally to reuse materials that are taken from one property into another property. The idea from the beginning was to ensure that we can scale up this business.
With Ragn-Sells and a number of other property owners also connected to this Ragn-Sells, this will be a system that can have a lot more impact going forward. I think that's what I say for now, and I leave that to you, Bent.
Thank you.
Then move on and look into the occupancy rate. It's at the same level as last quarter, and it's, as we said then, including the previous projects, Ackordet 1 and the Påsen 1. That was included in the portfolio from year-end. As I mentioned earlier on in the beginning, Permobil has moved into the properties in our portfolio. As I mentioned earlier on as well, Atea is moving in at 1st of April. That will be reflected in the second quarter. We also have an improvement portfolio that's properties partly or fully vacated for potential project development. It's 102,000 sq m, of which 31,000 sq m is let out. They are properties for future projects for us. Look at the net letting in Q1. It's ended at a positive of SEK 24 million. New lettings ended at SEK 69 million and terminations at SEK 45 million.
Some of you have mentioned in different reports that Max Matthiessen will terminate the lease with us. They haven't terminated it yet, and as you all are aware of, there are some special Swedish laws around that. We include the figures when we have a termination or when we have a signed contract. Normally we will not comment on these speculations, but we have read that in the press as well. We think they will move. Just to point out, it's not terminated yet. That said, we would be very happy to have Max Matthiessen as a tenant. We have had them for a long time, and they are a good tenant. On the other side, it's maybe also good that they are moving out of that building in this time. I don't want to comment much more on that right now.
When it comes to the renegotiations, we have renegotiated for a total of SEK 100 million in the quarter. SEK 104 million of the maturities in 2026 and onwards has also already been renegotiated. If you then dive into the renegotiated numbers of SEK 100 million, the rents are minus 0.4% of that, 65% extended on unchanged terms and SEK 35 million with a small decline. That means that the reduced yearly rent is SEK 375,000. It's more or less flattish. As I said, the renegotiated rents are still above the estimated rent levels used in the external valuations. We are quite happy with the renegotiations we have done. They have been dominated by several smaller tenants. Only one contract is above 1,000 sq m in the quarter. This is back to what we also said before. It's the bread and butter that's been renegotiated this quarter.
New leases is a mix of all kind of categories. We have two contracts above SEK 10 million in yearly rent. The rest are on the smaller side. If you see all these figures divided by the different areas. Stockholm inner city is 59% of the renegotiations, Solna is 29%, and Hammarby Sjöstad is 12%. It's a note on the Solna figures. The Stockholms Sjukhem contract is not included in these figures. It's in the figures, but not in the percentage for each area. The new leases is also divided by the same area. 36% in Stockholm, 49% in Solna, and Hammarby Sjöstad 14%, and Flemingsberg 1%. What we find very healthy for us is the mix of renegotiations and new customers. Saab is from early days a large tenant for us. They have signed also a new lease in another building.
We are very happy with that. We have Atea has signed some more areas and SkiStar has moved within our area. Willem is a new tenant. We have a nice mix of different customers this quarter. That also underlines what I tried to comment on in my CEO letter, that we see decisions being taken, especially in the smaller, more or less bread-and-butter leasing. This is the rental development, and just to point out, it's only for the existing leases that we have in the portfolio at end of Q1. If nothing happens, the rent level, the rental income would be like this. We have higher ambitions, and we want to improve this throughout the year. One of our key strengths is our customers, and we have very long agreements, lease contracts with them.
On the right side, you see the 10 largest tenants. They account for 30% of our contracted rent. We have a WAULT of close to 10 years for those tenants. That's more or less the foundation. The 25 largest customers represent 43% of the rental value then. In total, 700 customers. It's busy days for the leasing department within Fabege. On the project side, ongoing projects, we have Farao Kairo. We've taken a decision to invest up to SEK 630 million. We have dismantled the existing buildings. Ground and foundation work are on the way. We are doing the preparation for construction documents to the municipality, et cetera. We have taken the decision to do construction work up to the ground floor level.
It's just 20 m from the new metro station arriving in Arenastaden. We have Wenner-Gren Center, an investment up to SEK 609 million. We are doing the facades, the roofing, and also doing the refurbishment of the different floors. If you have visited Stockholm or if you live in Stockholm, I'm sure you've seen it. You see the building from all over the city. It's pre-let 30% and marketing to be started now during Q2 2026. It will be finalized and moved in in second quarter 2027. A new project on this list is the project Mimer 5. It's 100% pre-let on a long lease Stockholms media. That's a school building. Investment up to SEK 217 million and a rental value of close to SEK 50 million. It will be finalized next summer 2027. That's ongoing projects.
In the ongoing project within Birger Bostad, we have talked about this also last quarter, but block five is then progressing according to plan. It's a total of 288 units. Completed in 2025 and Q1 2026 are the corporation Alma, 23 apartments, 20 are sold. The three remaining are used as showrooms when potential buyers are visiting this area. We have produced and rented out 78 rental apartments, and 50 owner-occupied apartments have been finalized, of which 47 are sold. Possession to the final owner during Q1 was 42 of the units. Five is still to be delivered there. Also to be completed in 2026, that's the corporation residential. It's Brf Mathilda and Ingetora , 137 apartments in total. Which actually this morning, 60 are sold, but he said 57, that was yesterday. It's a good area. It's progressing according to plan.
We have the last block there in the next phase, block four. We are ramping up the construction work these days. Looks promising. In total, 132 cooperative apartments there. Investment approximately SEK 315 million. We have 260 rental apartments, elderly care facility, as I mentioned, in Stockholms Sjukhem, and a preschool, and total of close to 20,000 gross leasable area in block three coming up. That will be an investment up to SEK 860 million. Estimated completion for the whole Haga Norra, block four and three, will be end of 2029. We also have the land allocation at Sveaplan. Nothing more is totally agreed there. Possession date will be mid-June 2026. Building rights 8,800 sq m gross area. The purchase price of SEK 210 million. Planned move-in there could be during 2029.
This is definitely one of Fabege's core areas, and that's the entrance to Stockholm inner city. As you see on the picture on the right-hand side, you see in the red lines, that's our existing portfolio in this area, and the purple one, that's the new building in Sveaplan. In addition to this, we also have the quarter with the Mimer, as I just mentioned, the school. It's also in this area. In total, we have more than 100,000 sq m gross area in this area. We will have office coworking, ground floor activities, food and beverage, high class conference center, looking into different training facilities, et cetera. All kind of services in this area. This will be important for us, and we have high ambitions there.
When it comes to our building rights in our balance sheet, we have commercial building rights of a little bit above 500,000 sq m. 65% of them are legally binding, and it's booked at 8,100 per sq m. The residential building rights is 445,000 sq m, approximately 43% legally binding. Also booked at the same price per sq m. As you can see, the reduction, there are some reduced numbers from last quarter, and that's more or less as we did last quarter when we had terminated the land allocation in Flemingsberg. We have also looked over the building rights in the same area and reduced those, according to what we think is most likely that we will develop. The project opportunities in the near term. We have the Farao Kairo, just mentioned, 77,000 office gross leasable area.
There we also, in the same area, have approximately 500 units of residentials. In the phase one of the residence there will be 185 apartments in one of the Farao buildings. In Haga Norra, already produced 519 units. In production, 187 units and another 390 units on the way. That also include the elderly care facility that we have mentioned several times now. We have the Tegelterrassen in Västra Kungsholmen. That's 36,000 sq m office. It's partial demolition has started during Q1. We see nice interest in the market for this building. A handful good discussions. Also high ambitions there. There will be more decisions taken just after the summer in this building. Solna Business Park, we have the Parkhuset. That's an office building. We have the land allocation, 22,000 sq m. Then we have Yrket, next to it, the one in the red line.
320 residential units. These are a little bit on hold just because the other building marked there with the green roofing has to be finalized before we can start doing construction work on our plots. They are on the way. To summarize up, our short-term priorities, also long-term priorities, is definitely to decrease the vacancy. Is to continue to be a preferred partner for our customers. We have to be always available, accessible, and try to be solution-oriented. We have to secure value creation in our ongoing projects. It's important when we are starting projects, and we don't have the final tenants already in place. We have to do some extra work there then. We have to analyze our land bank. Like we hope you can see we have done the last quarter as well, and made this elderly care facility.
Have to look through it and try to create value for both our customers and you, our investors. We will continue to be active in the financing markets. As also mentioned, we have already done some work there during the second quarter, and we're always looking for opportunities to further develop our company. Conclude our presentation, and we go over to the Q&A.
Thank you, Bent. Yes. My name is Johan Edberg. I'm from Handelsbanken Markets. I will have the pleasure to lead this Q&A and ask some questions to Bent and Åsa. I will not do that all by myself. I will also let the web conference in to ask questions, and I think you have the opportunity also to pose questions on the conference website. I will do my best to read them up to the management there. To kick it off and starting with a very easy one before we dig into the Q4 numbers, Bent, you promised in an article that I read this week to increase the share price, since the main shareholder, Mr. Fredriksen, is not happy with SEK 80 per share. The question, a very simple question, how will you do that?
I promised. We have to do our work, and then the investors have to decide that. I'm also a shareholder, so I am not happy with SEK 80 either, but. We are doing that, as what we try to present right now. We have to take down all our vacancy, have to try to be a little bit more creative going forward. Meaning we are, or at least a lot of people are talking about us just as an office and pure Stockholm, but we are creating working places. We see the leases that we have done the last times here, has been a mix. Could be some offices, could be showrooms, et cetera, and that's what the tenants today are searching for. When we see Permobil are taking all their different premises around Stockholm, establishing a new hub in Arenastaden. It makes me really proud.
We see more search for areas from tenants doing exactly the same. We see also Atea moving into Haga Norra. They want to rent a block of apartments. They want to rent working spaces, et cetera. They are requesting more and more services in addition to the lease contract.
Mm-hmm.
I think when we have all the properties in our clusters, we have the possibility to really give them what they are searching for.
You've been in the company, as you said, four months now. Have you changed anything substantially, how you work with lettings or marketing in order to do what you want to do? I mean, decrease the vacancies. Or is it just more like working on as normal or?
The thoughts are getting more and more grown in me, and I try to communicate some of it. It takes a little bit more time. We also have new board members in place in the company. I think we are getting forward. Definitely it's focus within Fabege. I think you can ask anyone employed in Fabege, what's job number one right now? That's leasing.
Mm-hmm.
That's to reduce the vacancy. To reduce the vacancy, meaning the property caretakers have to be a little bit more on the front foot when they get up in the morning. Have to look nice in front of the buildings. Everything is working on the ground floor. Has to work in the building. We have to listen to all tenants. We have done that before as well. Always try to make a little bit new start, and maybe we'll see some other changes going forward.
Okay. Interesting. It was very good to see. Digging into the report now, I think that's what we should focus on. It was very nice to see the occupancy rate being flat from Q4. Standing at that vacancy at 14%. Of course, you want that number to be smaller, but at least it's not getting worse. The net letting positive, second quarter in a row now. SEK 24 million in Q1. Starting to make a new trend. Is it a new trend that we see for net letting?
I hope so. What I also see, all the more or less bread and butter actions are taking within leasing these days. I think if you have waited for two or three years to see what happens, now we take the decisions, and we move on. Probably we see that in all kind of countries. Even if there are something happening in the Middle East, the daily life here in Sweden and especially in Stockholm is still moving on and. Something is happening in the world. Sweden, the tech industry in Sweden is definitely on that train. You see someone are quite optimistic, doing expansions, and some other has to adjust to a new reality. It's a mix.
I think what's leading up to the positive numbers for net letting is more lettings and a small amount of terminations. If you look at the lettings, what's the composition there? Is it anything that sticks out as a big new lease, or is it more broad-based?
Very broad-based. I tried to show that on one of the slides as well. You have some tenants within the municipality or within Stockholm or Solna stad. They are always large tenants in our portfolio.
Mm-hmm.
You also saw some venture funds focusing on security, interest, tech securities.
Mm-hmm.
They're also in an industry that's growing these days.
You mentioned Max Matthiessen, and the lease is expiring in the beginning of 2027, and you expect the termination to reach you in Q2 this year. You also have a big property and big premises very close to Max Matthiessen, Carnegie, for example. You made me interested when you said it might be positive that actually leaving, though it's a good tenant. Can you please try to say something more because that sounds interesting? What do you mean?
Well, Max Matthiessen are in the same building as Carnegie, and everyone knows that Carnegie, if it's a merger, they have been bought by DNB. Maybe they want to grow in their existing premises as well. I think they have high ambitions for their business going forward. That could be an opportunity. Of course, the location of this building, it's on the map for a lot of potential tenants.
Mm-hmm.
If you want to lease 15,000 sq m in Stockholm CBD, you don't have a lot of options. We see that from different requests we have from potential tenants.
What is the potential to actually match the termination with a new lease in the same quarter? Is it possible?
It's definitely possible, but could also take another quarter or two. We are booking the terminations when we receive a formal termination.
Yeah.
We book the new lease when it's signed. Of course, as I said, here in Sweden, the tenants have some rights. If they don't want to leave the premises, they can stay there for a longer time. It's difficult to sign before you have the termination in hand.
It is.
Yeah.
Since you kind of alluded to the potential that it might be a positive with Max Matthiessen leaving. Looking at the market rent at this time, looking at what Max Matthiessen is paying and also the standard or what you might be able or forced to do with the premises in order to rent them out again. I guess what you said, that it could be a positive. I guess the net effect from those items is probably something that could be more value enhancing for the premises than you see today.
Definitely. Probably as you are as well, but Carnegie are a good negotiators. I don't feel it's over-rented, this building, at all. We have high ambitions there on this location.
Yep. Values came down a little bit in Q1, not very much. I think it was like SEK 250 million or something. You're pointing at the high vacancy in a few properties, and you also say that big part of the high vacancy is actually in three properties in Solna Business Park and also the premises for Eken Telia. Are those the ones that actually leads to lower property values in Q1? It's Solna Business Park primarily, or is it something else?
It's Solna primarily.
It's Solna primarily, I would say. Not pointed out, especially on the Solna Business Park.
If you exclude those properties, those three in Solna Business Park, and also take Eken Telia into account, those premises, what is the underlying vacancy rate or occupancy rates, if you like, excluding those three properties primarily?
Do you mean the occupancy rate in each different market area?
No, in the company. Yeah.
In the company?
You're reporting 40% vacancies, and you say that much of the vacant space is on those three properties.
I don't know that number in my head, but of course, that's an improvement if you exclude those properties.
Mm-hmm.
Yeah. Also say, we have the projects now ongoing with the Wenner-Gren Center. We have vacancies there, but that's not in that portfolio. We have the two just got into the portfolio, like Ackordet 1 and Påsen 1.
Mm-hmm.
There are signed leases in this year already, and as I said, Atea is moving in 1st of April.
Mm-hmm.
It maybe should have been adjusted from the Q1 figures, but it happens in Q2, so we book it in Q2.
I'm also impressed to see the surplus ratio at 72%, the best Q1 ever. I think very many of your peers say Q1 was a pretty tough quarter in terms of weather and snow. I guess it would have been even higher if we had a normal Q1.
Yeah. We have worked a lot on the energy side, for example.
Mm-hmm.
I think all the efforts that we have put in in previous years also pay out now with the energy consumption.
Mm-hmm.
Actually, we didn't spend more energy in total, but prices were coming up.
Mm-hmm.
That's the difference from that. We have also managed to get some property tax back, which had a positive impact, and then a little bit less maintenance cost.
Mm-hmm.
We are very thoroughly looking over when to do things in the properties and not to spend when we don't have to spend.
Mm-hmm. The reversal tax, for example, is that a one-off that has a positive impact in Q1 now?
It has a positive impact in Q1.
Is it a small number, a big number?
It's a small number.
I just read, and I guess it's common information, but it seems like there are many companies out seeking for new premises in Stockholm right now. I saw an article summarizing 70,000 sq m for eight companies with and without names, searching for something primarily in the inner city or CBD, but also maybe potential outside. Would you say it's more activity than normal? I realize I don't know what normal is, but do you see more activity now than you did maybe in the fall last year or in the beginning of this year? Do you feel those companies? Do you speak to those companies?
Yeah. Now we are referring to those that are officially out searching for premises. Also, a lot of companies not being that much out in the press. For us, our mission is to be out there, talk to different companies. Talk with their management team. Try to put in place a plan for when your lease expires in three years, we have this, can match an exit from a potential tenant in our premises. What I really feel the market now is a lot out there. There's a lot of potential tenants in the range 500 sq m-3,000 sq m. You have some much, much bigger ones as well in the 10,000 sq m-50,000 sq m, 60,000 sq m.
Mm-hmm.
There are movements ongoing in the market, and I think if you have been quiet for two or three or maybe five years more than you had anticipated to be, you really do things these days. I'm optimistic, but still, we have to sign the leases.
Mm-hmm.
I think also when we go back to your first question, if we sign the leases and we rent out more, we also have a better share price. I can wish for a better share price, but we have to do our work first.
I don't know if it's a reasonable question, but I'm trying to look for the delta between, for the sentiment in the rental market, but also the demand from maybe Q4 late last year and the beginning of this year. Now a lot of things have happened in the geopolitical area, and lots of new turbulence or potential uncertainty. Can you say something, what you experience when you talk to clients? Do you have negotiations that are actually halting or something that is different now, or are you still positive on 2026? Given what you-
Yeah.
You've posted an obviously positive net letting for the quarters now.
I don't think we should put too much into what you read in the press if that's affecting the leasing market here in Stockholm. Yeah, there's a war ongoing in the Middle East. One day it's a war, the next day it's peaceful again. What it can influence is the energy prices, what happens to the inflation, et cetera. That takes a little bit longer time.
Mm-hmm.
Can influence the interest cost, can influence energy prices, construction prices, et cetera. I tried to mention as well, in these days, we receive construction estimates for some of the blocks in the resi portfolio we have. It looks promising. Still, there are big deviations between the different entrepreneurs. I think we are in line with what we expected.
Mm-hmm.
Right now it's not heavily influenced, but we have to follow what happens.
Before I let the web conference in, I will do that very soon. Also, just a question on the financing side. You're sticking out as being very short on interest rate maturity. Are you comfortable with that number? It's actually declined even further in Q1 to 1.3 if you exclude the crystal.
Yes, it is.
Yeah.
We are comfortable. Of course, we are following the market to take the opportunity when we find that the timing and the pricing is correct for us. I think looking forward, you will probably see a little bit more hedging than we have right now. I'm not worried.
Q1 was on the right timing for doing more hedging at least on this report.
We should have been-
In the beginning.
acting in the beginning of Q1.
You said in Q1 call, I don't know if it was an answer on a question or if you said it yourself, but your best guess on 2026 was pretty flat in paid interest rates, and that was a net of higher market rates but also compressed margins and bond spreads. Given what we see now, market rates are up. Obviously, you're doing pretty well in the bond market. Banks are pretty stable as I understand it. What's your best guess now, standing here three months later ?
This was in the Q4 presentation.
Correct.
When STIBOR was expected actually to get lower than it was at the time. Many of the banks were expecting rate cuts from the Riksbank. It's been very, very volatile during the Q1. There have been banks expecting rate hikes from the Riksbank. Now it seems more stable again. Everything depends on what Trump is saying from one day to another. To summarize, I think we have negative impact from maturing swaps. We already saw that-
Mm-hmm
in Q1 to some extent. We have now a little bit negative impact from rising STIBOR, but on the other hand, we have a positive impact from reduced margins in refinancings. I think it's fair to say stable, maybe up a little bit. Last year, I was talking about below 3%. I still think that we can hold average interest rate well below 3%, but maybe a little bit up from now, depending on how STIBOR is developing.
You're not stressed up, and you won't buy, going up from one point to something much higher just because you're being stressed. You will be able to follow the interest rate development and do smart decisions.
Yes.
Thank you. I think this is a good time to actually see if we have any questions from the web.
If you wish to write a question, use the form below. If you wish to ask a question at the phone, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Jan Ihrfelt from Kepler Cheuvreux. Please go ahead.
Good morning. I actually have three question, and the first one is if you could quantify the winter costs, this quarter and compare it to the first quarter of 2025, how much more expensive was this quarter compared to the first quarter of 2025?
A couple of millions.
Okay. Second question. Do you have any guidance for Arenastaden or investment?
Sorry.
Sorry, Jan, did you mean investments in Arenastaden?
No, investment total for the group. What do you expect kind of level for the investment for this year?
For this year, we are expecting a little bit less than SEK 2 billion. I think we are a little bit below that in the first quarter, so we will see what happens. Increasing investments will depend on board decisions for new projects.
Okay. Of course. Final question. We're now three weeks into the second quarter, and if you look at the leasing market, has anything changed if you compare April to, let's say, March?
I think like the comments we had here as well. There is a lot of tenants out there searching for potential new premises. Is it big difference from March? I will say it was a trend. Trend was also ongoing in March, so I feel it's a positive trend.
Okay. Thanks for taking my questions.
The next question comes from Lars Norrby from SEB. Please go ahead.
Good morning. First a question on buybacks. You cancel or you repurchase shares after a decision at the AGM, and you have a fresh 10% mandate. Looking at your LTV gives you some room up to your self-imposed limit, but your debt ratio does not. To do a material size of buyback, would you have to, well, do like Castellum, sell properties in order to get some volume in doing it?
Yes. Now you went through the toolbox, and the toolbox is of course there and should definitely be there after the AGM as well. That's why we have the authority to do that. Of course, we are now approaching discussions in the board, and the discussion should be there. I think on the broader view, buybacks is perfect if you have a lot of excess capital as well. We have 40% of our portfolio in the city with a lower yield and lower cash flow. I think dividend policy goes first, and if we have sold some properties or done other things that we have a lot of excess capital, it's definitely on the agenda. We should also ask a question to the new Chair in the Board, and new Board Members just been in place in the company as well.
Okay, thank you. One more question. Very much different topic, but residentials gave a boost to your numbers of some SEK 40 million in the first quarter. This is, of course, hard to predict, I guess, both for you and for us as analysts. If you're looking at full year 2026, based on the situation right now, what is a reasonable assumption for the full year?
I think I commented on that last quarter as well. I said around 200 units a year could be a good estimate. We stick to the same. The number of sold units, it's quite stable. There was one week during March that was a little bit quiet, but then it's back again, and I think this week alone is three or four units. I don't know. Overall, the number of units sold should be around 100 a year, and then we have some rental apartments on top of that, and we have an elderly care facility on top of that as well. Around 200 a year is a good estimate.
Okay, thank you.
The next question comes from Nadir Rahman from UBS. Please go ahead.
Hello. Good morning, and thank you for taking my questions. Just to drill into the point on the revaluation this period and the focus on the Solna properties, could you give a little bit more color on the three properties that took the revaluation hit, and what is the prospect going forward, given that we did see a one-off in Q3 last year in Solna, and it seems to have happened again. Could you give a bit of color there, please? Thank you.
It's properties where we are expecting some higher vacancies or where we already see some higher vacancies coming. We will not communicate names of specific properties because we're also in renegotiations and discussions with potential tenants for those vacancies. I think we have decided to take a hit now, and hopefully we will see a reversal of that in the coming quarters. I'm quite optimistic that we will not continue to see writedowns in the portfolio.
Yep.
On the contrary, more potential for increasing values going forward.
That's very clear. Just to confirm, so you're saying that your vacancy assumptions for those properties has declined versus where it was at full year, three months ago?
Maybe also some lagging from valuators into that figures. There are some discussions ongoing. I think listen one time more through what Åsa just said, and it was very good, Åsa. When you know everything happening. Yeah.
Of course. Wonderful. That's all from me. Thank you very much.
Thank you.
The next question comes from Tobias Kaj from Nordea. Please go ahead.
Yes. Thank you for taking my questions. First is regarding your financial expenses. The average interest rate saw a quite small increase, and the net debt also saw a small increase, but it was quite significant increase in financial expenses. Can you give some more color on that, please?
Financial expenses were somewhat up, yes. Mainly depending on a little bit higher STIBOR during the quarter, or at least towards the end of the quarter. Second half of the quarter, you can say. Also that there are less interest rate costs activated on projects since the project portfolio has been reduced, not on all. This should be met by increased income, but we still have some tenants moving in and starting to produce income. I think you will not see the same in the second quarter.
Okay. It seems like the volume of callable swaps are unchanged despite quite big increase in market rates. Is that correct, or did you enter new callable swaps in the quarter?
We have not entered any new swaps in the quarter.
Okay. Thank you. Also, you report rental discounts, and they seem to increase from SEK 44 million quarter-over-quarter and SEK 132 million year-over-year to SEK 269 million. Are there some specific contracts that explains the increase?
I don't have the detail on that. I have to come back to that, Tobias, if you don't have a.
I didn't really get the question.
When you report your rental value, you also have a note saying that you have some time limit rental discounts of SEK 269 million, and that was up from SEK 225 million in Q4. I wonder if it's some specific contract that explains the increase.
It's related to some specific contracts, yes. Also to tenants moving in that has a discount in the beginning of the contract.
Okay. You don't want to disclose which contract it's related to?
No.
No.
Okay. Thank you for taking my questions.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from John Vuong from Van Lanschot Kempen. Please go ahead.
Hi, good morning. You mentioned that you've been rethinking your maintenance costs. Could you provide a bit more color on your thoughts there? Do I understand it correctly that you were overspending on maintenance previously, or have you changed your approach because you expect more property to move into the renovation pipeline, for example?
I think go.
We have done a lot of work for the planning of maintenance costs to make sure that we are acting with the right timing, doing things when we need to do them, and when we're doing other things in specific properties to make the best of it. I think we are a little bit more cautious these days than we have maybe been in the past. We are not doing any maintenance. We are doing what is actually needed in order to keep the properties in good shape and to be relevant for renting out to tenants.
Okay, that's clear. I think you mentioned that renegotiated rents are still above rent levels in your external valuation. I'm just trying to understand here, what does your external valuation imply in terms of rent reversion? Are these assumptions too conservative, or is there a change in the underlying trend in market rents, you'd say?
I think that was a comment on the renegotiations being done in the Q1 here. That was 1.1% down, and still the rent level in those SEK 35 million that we renegotiated are slightly above the rent in the external valuation, the estimated rent in the external valuation. I said, "Okay, the revision wasn't that much, but it was negative. It's still at the level or above, slightly above what's in the external valuations." That was a comment on that. I don't feel it dramatically that we have had a renegotiation of -1.1% and -0.4% for the whole portfolio. It was just to add some flavor to that for you.
Just to quantify. Did the external valuation imply, say, -2.5%, -5%, or is it just a small difference?
It's a small difference, but it's around 2%. Yes, 1.5%-2% difference.
Okay. That's clear. Thank you.
There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Thank you. I can't see here on my screen that we have any written questions either. Time flies, just a couple of minutes left. I think I'm doing one more question, referring a bit to one of the questions from the web here. We're seeing Castellum obviously selling something and doing buybacks. You're opening up a little bit, although it's maybe not fully your question, but selling something could lead to buybacks. Is it possible, for example, to sell building rights because that is not yielding anything at this point? If you sell something that's not yielding, creating an opportunity to actually invest in your own share that's trading at a huge discount. Would that be possible? Do you think that, or is it two different difficult markets?
Some of our building rights is possible to sell. I don't think you can take the 1 million sq m that was on one of the slides here and sell them just flat out today. Legally binding building rights is possible to sell. We also have quite high ambitions. We have a building right in Sveaplan in Middle Air in the Overcore area. It's quite healthy for us to have control of that spot, and that could also lead to better leasing level in the neighboring buildings. We are building this as a company, and it's not just to sell out one building right. Because we think there are excess value in that building right for us. At what time? What is the right timing of selling?
Normally, when it's a hot market, it's good to sell, and should rather buy when it's a more difficult market. Of course, with our share price today, I don't think you will see us buy a lot of properties right now. If it's the right property for us, we will act.
I guess my last question. I have many questions left, but I think I have time for one, maybe. We saw a transaction in Q1. It was the Swedish Fortifications Agency buying many square meters in Flemingsberg. It's pretty close to your areas or where you have properties. Have you seen already some inquiries from those tenants because they need to find something new maybe in the area?
Yeah. I think the whole city are approaching those tenants and also saw the seller of the property bought a new building in Haga Norra. It's good to see that they like our local markets. I think for all those tenants, everyone should be in Arenastaden. It's an easy view, but they have an agreement where they are using their time and looking at different opportunities, and they are very much welcome to our properties. Of course, we are also in contact with a lot of them.
I'm not very surprised you're saying that.
No.
I think time is up. I promise not to use more than 60 minutes. Thank you Bent and Åsa, and thank you for those who listened in and asked questions. Thank you. Maybe you want to say something. Sorry.
No. Thank you for taking your time. We will be back next quarter, and hopefully we see some of you also in our capital market days in Bostad. Thank you. Thank you, everyone.
Thanks.
Thank you.