Welcome to Prisma Properties Q4 2025 Report Presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Fredrik Mässing and CFO Martin Lindqvist. Please go ahead.
Good morning, everyone, and thank you for joining today's presentation of our Q4 report and full- year results. In the final quarter, we continued to have strong momentum. Prisma and our organization continued to delivering results, and we're growing in both in size and profitability. 2025 was Prisma's full year as a listed company, a year in which Prisma delivered growing earnings, stable cash flows, and continued portfolio growth in a well-performing segment. Let's go through the key highlights. During the quarter, we communicated our updated financial targets, where we adjusted our net LTV target to 55%, with a possibility to short term go up to 60%. This decision is part of our strategy to increase our investment capacity and create long-term shareholder value as we have moved to a more capital-optimized growth phase.
Our target is to reach SEK 16 billion portfolio by the end of 2028, which we intend to achieve through development projects, acquisitions, and asset contribution deals, while still maintaining financial stability. During the quarter, we've been very active in building up our portfolio in Finland. We have made several acquisitions of both groceries and discount retail. With this work, we have now reached the initial volume we set out to achieve. It's two acquisitions I would like to highlight is our acquisition from Kesko, a portfolio of 10 grocery stores across Finland, and also the acquisition of two new ICA Maxi stores in Sweden. Both these acquisitions are in line with our strategy to increase our share of groceries in our portfolio. Finland will continue to remain our primary focus for acquisitions as we see attractive opportunities in the market.
I'm also pleased to share that our earnings capacity increased by 11% this quarter, by 41% year-over-year, and by 63% since our IPO in 2024. This is a result of a strong operational performance, effective capital allocation, and great teamwork across the company. In Q4, we continued to see strong rental income growth, up 34% year-over-year. Rental income reached SEK 138 million, compared to SEK 102 million last year, a growth that was a result of acquisitions, completed projects, and CPI-adjusted leases. Net operating income increased by 32%, reaching SEK 180 million, compared to SEK 89 million in Q4 2024. Profit from property management increased to SEK 67 million, up 42% year-over-year.
We have not seen any impact on our valuation yields this quarter, which were mainly unchanged, even though the latest transaction involving the APG Fastigheter portfolio, which provided good market comps. That said, we're seeing increased investor interest and improving sentiment for our segments, which supports our view that the market conditions may continue to improve the coming quarters. We also continued to sign several new long lease agreements. Net letting in the quarter amounted to SEK 15 million, and Prisma have now delivered positive net letting every quarter since the metric was introduced in the beginning of 2023. Our WAULT increased from 7.8 years in Q3 to 7.9 years in Q4, and our occupancy rate increased to 98.6%. Our property management team will continue to focus in the coming quarters on letting the few vacancies that we have.
In November, we successfully completed our first bond issuance on SEK 500 million under our green bond framework. We also did a tap issue of SEK 250 million after the period ended. This transaction improved our financial position and gave us additional flexibility to continue growing. I'm also pleased to see the strong interest from credit investors, who confirmed their confidence in Prisma, our business model, and our strategy. In Q4, we also booked a SEK 3 million bad-debt provision related to one tenant. It's NRJ Pizza, which operates Pizza Hut in Sweden. The positive part is that the tenant has informed us that they want to continue to operate in our highway locations. This is a very clear confirmation of the quality of our locations and how important it is for QSR tenants to be located in high-traffic sites.
Pizza Hut only represents 2% of our rental income, but at the same time, we're being cautious, and we are preparing to sign conditional leases with other tenants who have shown strong interest in taking over these locations. With the latest acquisitions, our share of groceries and daily goods have increased to 44%. Kesko is now our third biggest tenant, and we also continue to grow with Rusta, two tenants that we aim to continue to further expand with in Finland. This quarter, Lager 157 has entered the list, and we've also continued to grow with Jula. Our WAULT increased this quarter, and our property management team continues to work actively to renegotiate as many lease agreements as possible to defend and extend our already long WAULT.
The property values are up by SEK 1.6 billion in Q4, mainly related to the investment in Finland. The Finnish assets came in late in the quarter, thus has limited impact on the earnings, but full impact on the balance sheet. So the actual property yield looks on the low side if you look individual on that key number. Acquisitions in 2025 landed on SEK 1.8 billion, and projects investments landed on SEK 600 million, with a tempo increase in project investment in Q4. Value changes amounted to SEK 86 million, mainly related to project profits, as the yield, compression was quite limited.
Currently, we have nine ongoing projects with an expected average yield on cost of 7.5%. We continue to ramp up our development activity, and we will add several new projects the coming quarters. This quarter, we have completed two projects in Gothenburg, where we have finalized the extension of our retail park, where Dollarstore have now opened up their new store. In Eksjö, where we have completed and opened up a new McDonald's. During the quarter, we have started two new projects, in total, 13,000 square meters of discount retail in Holstebro and Aarhus in Denmark. We've added another five new projects this quarter. Some projects, that is set to already start from Q2 2026 and forward.
We've added Simrishamn and Osby, where we are planning to develop groceries and daily goods, and in Ikast, Sandviken, and Laholm, where we are planning to develop QSR in a good location next to high-traffic routes. We have done some minor adjustments in the timeline this quarter. Tierp has been moved from Q2 to Q1 2026, and we've also downsized this project with 3,000 square meters. Jönköping has been moved from Q4 2025 to Q1 2026, as we have not yet received the building permit. Our battery project in Huddinge has moved from Q4 2025 to Q1 2026, due to that, we're still waiting for a decision from the grid owner, Vattenfall. Our QSR project in Aalborg, Denmark, has been moved from Q1 to Q3 2026 due to prolonged zoning process, and our Lidl project in Uppsala has been moved from Q1 to Q2 2026.
New projects will continue to be added to the pipeline over the coming quarters.
The shareholder list looks basically the same as in our last report in Q3, with the KS Kapitalutveckling moving upwards on the list and actually have continued to take another spot upwards during the first weeks of 2026. Some words on the financial performance. As we mentioned, the rental income is up 34% versus last year. The incremental increase versus Q3 is, of course, mainly related to the Finnish investment and completed projects from full effect from Q3 and effect from start or completions in Q4. NOI is up 32% versus last year, and surplus ratio is at 86%, but in line with the earnings capacity guidance of 90%, if excluding the segment one property and the bad debt provisions for NRJ Pizza. Profit from property management is up 42%.
I promise to come back also on the tax position. We have guided initially when we made the IPO, where we saw low, low potential for tax depreciation from building fixtures. We have made some analysis during 2025, and we have concluded that there is good potential for depreciations on the fixtures. So, we can actually guide close to zero paid tax during 2026 to 2028. On the capital structure, the average interest is down 107 basis points since last year, and we have, well, as Fredrik mentioned, we made a successful bond issue in November, followed by a tap in January. The November issuance was at 250 basis points on three and a half years.
The net LTV stands at 47%, in that we have made an advanced payment for the ICA projects in Arvika, Mariestad. So if we allow ourselves to adjust for that, we stand at 46% net LTV, and the ICR is at a healthy 2.4%. The earnings capacity in Q4 is taking a big step upwards based on the acquisitions in Finland. And we have, from this quarter, included a forward-looking earnings capacity, where we take the current capacity as starting point and increase with ongoing project NOIs, plus communicated forward funding and forward purchase projects. Then these NOIs are reduced with an assumption of 100% financing of the remaining investments at 4%, i.e., the current interest rate.
And then in Q4 2026, we also make an assumption of 2% inflation and CPI adjustments. The forward-looking statement does not include planned projects and does not include any future acquisitions over and above what we have already communicated. And with that, we go into the Q&A. Operator?
If you wish to ask a question, 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. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you for joining today's presentation. We wish you all a great day.
Thank you so much.
Thank you.