Earnings Call: Q3 2019

Sep 30, 2019

Thank you very much. And we can start with Slide number 2, period highlights. We see that we are continuing to increase our income base for the 1st 9 months. We have rental income of SEK1.4 billion and NOI of SEK9 03,000,000. Profits before tax landed at EUR 1,526,000,000 and after tax EUR 1,300,000,000,000.3 37,000,000,000. Important here is that we see that profits from property management is increasing very strong and adjusted for nonrecurring cost compared to the Q3 of 2018, we see the profit from property management increased with 59%. And it should be adjusted EUR 658,000,000 for the 1st 9 months. And in this sense, in the Q3 of 2019 is the best quarter ever in terms of profit from property management, which in presented numbered more than doubled for Q3. Cash flow from operating activities before changing in working capital is also increasing very strongly by for the 1st 9 months by 99% to EUR 577,000,000. But even more positive is that we are continuing to deliver recurring profits from our 3 value creating areas for renovations, investments in our properties, from building rights and from transactions. And our renovation rate is now even better than the plan, because we have started renovation of 4 76 apartments. And at the same time, we have signed agreements for renovation to commence in the Q4 for 232 apartments. And this in total maybe that we land this year at 700 apartments started renovation, which is above our target of 600 apartments a year. In the 1st 9 months, we have been also very active in transaction market. We have done transactions for EUR 16,000,000,000 and transactions are continuing to deliver the profit for the company. Also property development continued to deliver. At the end of the Q3, we had more than 1 1,000,000 square meter on building rights in different development phases. And also after the end of the quarter, we sold additional building rights for EUR 150,000,000 in NIES Shipping. If you look at our financial position, it is being stronger for every day. In the last 12 months, we have lowered our average interest rates from 2.49% to 1.75%. And at the same time extended our fixed interest coverage. And today 100 percent of our loans are interest hedge with average duration of 4.9 years. And our debt maturity is actually among the longest at the market at 4.9 years. If you look at net debt in relation to total capitalization according to S and P's definition, we landed at the end of Q3 at 55%, which is also a strong sign of strength. And actually, the days after quarter, we are selling some assets and continuing to improve our financial metrics. At the beginning of September, SPB was the 1st private property company to become an term commitment to this very, I should say, very unique in broad sense, very unique combination of Lourdes assets in terms of elderly care homes, schools, municipal buildings and Swedish rent regulated residential. And finally, our estimated on this capacity adjusted for cost of cash around in 12 months landed at SEK 1,141,000,000, which is increased with 48% to the end of 7.70 to the end of 2018 where we were at 7.70,000,000. And cost of cash in this case is that we have SEK 8,500,000,000 at balance sheet in cash. And on top of that, we have cash equivalents or were replaced the excess cash of SEK 1,500,000,000. And on top of that, we have more than SEK 4,000,000,000 in unutilized backup facilities. That means that we had actually available SEK 14,000,000,000 in cash at the end of Q3. This is completely unique and never seen at least in Swedish property market. And this pure cash that we are not that we are not, how to say, having any return on, but paying for it of SEK 8,500,000,000, this is what we use in this adjustment of earnings capacity. Next slide please. A few numbers on financial performance. As I already mentioned, continuing increase in rental income of SEK 1,400,000,000 at the end of Q3, strong NOI of NOI 903,000,000, surplus ratio of 65%. It is better than that because we had like 10,000,000 probably more using to move to completely 100 percent renewable electricity and we have some other costs. However, interim profit of SEK 1,337,000,000 still one of the strongest yield in property market at all, not only in the Nordics, 4.7 percent in yield for this kind of low risk assets is amazingly low and gives very nice potential for upside. Of course, as we pointed out in the introduction, very strong increase in cash flow and landing at EUR 507,000,000 despite using EUR 130,000,000 for the repayment of relatively expensive bonds. I used to say that this is cost of success and we are happy to repay everything that is expensive because our journey is still continuing and is still continuing towards lower interest rates. Property value, SEK 30,800,000,000. And in this quarter, we have actually sold more that we have both adjusted EPRA NAV, adjusted for D Shares and Perpetuals EUR 17,300,000,000 and EPRA NAV long term net asset value of EUR 9,900,000,000. Earnings capacity SEK 1,100,000,000 loan to value ratio, 38%, equity ratio, 36%. Both of those measures are, of course, affected by this big cash that we have on the balance sheet. And adjusted equity ratio, 39% and strong earnings per ordinary shares of SEK 1.41 per share. Next slide, please. For you that have not been listening before, Slide 4, we are showing our assets, important message here, 94% of total value is coming from social infrastructure in the Nordics. 60% community sales properties, and the care homes, schools, municipal buildings in the Nordics and 34% Swedish rent regulated residential and in total 94% social infrastructure in the Nordics, unique combination of assets, 100% in the Nordics, of which 84% in Sweden, 10% in Norway or 9% in Norway, 6% in Finland and 1 Denmark. 91% of the income coming from either Nordic welfare states in terms of government director, indirector, municipalities and Swedish rent regulated residentials, only 9% coming from commercial tenants, which is unique position in these times when we are heading to recession. And that means that we are not affected by economic downtown, having this direct assets to direct access to tax funded income and 60% or more exactly 58% of total property value in the Nordic Larger Cities. Next slide, please. More information about the portfolio, SEK 18,300,000,000 or 60% includes school salary care, LSS Housing and municipal and government buildings, SEK 10,300,000,000 regulated residential. Here, after the quarter, we announced a deal with a must spend that is strengthening our residential portfolio and actually making us number 1 listed independent listed Swedish residential player. And this is additional, how to say, flavor to our low risk activity. However, at the end of the Q3, 34% of portfolio. And then you have our add value business from property development or development of building rights, value of it at balance sheet, SEK 2,100,000,000 or 7%. And as you can read in the report with beautiful upside potential. Next slide, please. Slide 6, giving you more flavor on our income and our relationship with municipalities. We have done this with Swedish largest municipalities and our biggest tenant is actually Norwegian government and then some Swedish large cities and regions. And we look forward to announce more municipal deal in times to come. However, if you look at at our income, you will see, as I mentioned before, that 91% is coming either from government direct or indirect, mainly from government direct or Swedish rent regulated residential. Next slide, please. Our business is very stable. And as I'm pointing out in the senior letter, completely different than the rest of commercial real estate and supported by strong underlying mega trends of demographic change and the organization and underpinned by focusing on sustainability and energy efficiency. Next slide, please. Q3, strong net operating income and the main message, strong profits from operations. Our net income after tax for the period amounted to SEK 404,000,000, slightly lower than last year, mainly related to derivatives because the rents were or swaps were very low at the end of Q3. That means that we have the strong net income after tax for the period for Q3 and almost double operating profit to EUR 254,000,000 before one off costs. We also delivered strong cash flow that is continued to be supported by long term reduction of financing costs and cash flow from operations before changes in working capital amounted to SEK 263,000,000 comparing to SEK 99,000,000 last year. And finally, on this slide, our estimated earnings capacity landed adjusted at EUR 1,100,000,000, which is an increase of 400 of 48% from EUR 770,000,000 at the end of 2018. All in all, our strongest quarter ever. Next slide, please. And this just to give you a flavor how our earnings capacity is counted and you see all different position here that are resulting in adjusted operating profit on 12 months rolling of EUR 1,000,000,000 and observe that this is when taking cost of capital for the cash that is on the balance sheet of 175%. As you know, we are buying properties at higher yields than that. So there is a strong potential to continue to grow earnings capacity and combine that with strong credit metrics. Another important message for our international listeners is that in property cost, we have relatively big chunks of maintenance. And despite and I mean, difference to some of our international competitors is that we are not capitalizing maintenance. We are taking it through the balance sheet. And if we should capitalize the maintenance, our adjusted operating profit will probably be like almost EUR 100,000,000 higher. So this is important to know. Next slide, please. Our property development is continued to deliver. As you can see, at the end of Q2, we had 1,020,000 square meter building rights and we have strong cash flow from those properties where we are developing building rights. And also after the quarter end, we succeeded to sell the building rights for SEK 150,000,000. So we have a strong inflow on cash in next 24 months coming from already sold building rights. Next slide, please. Trying to summarize, increased by 9% to EUR 507000000 for the 1st 9 months this year, adjusted for nonrecurring costs for, among other things, the repayment of expensive loans. Cash flow for the 9 months period lands at SEK 657,000,000. Profit before tax amounted to SEK1.5 billion. Profit after tax was SEK1.3 billion. Important here is that adjusted for nonrecurring costs for repayment of expensive loans, the 9 months earnings per ordinary A and B shares after profit paid to preference shares, Class D Shares and Hybrid, and this is important, after profit paid to preference shares, Class D shares and hybrids were SEK1.61 a share. And then you can just do your math and compare that is the multiplier on current share price. After all payments on SEK 1.61 per share for the 1st 9 months. Number 3 point, sustainability is a central part of our business model and we are happy that we now are moving 100 percent of our electricity consumptions to origin certified renewable electricity. And this is unseen change. If you look at CO2 foot print, the carbon dioxide emissions will be around 15,000 tonne lower per year than if the energy according to so called Nordic residual mix were used. And Nordic residual mix is much lower than European residual mix. So in this sense, all SPD is like green bond and I should say like green municipal bond. On top of delivering the strong cash flow and strong earnings capacity from property management, we are continuing to deliver from 3 recurring value creating areas: renovations, investments in our properties, development of building rights and transactions. In the 1st 9 months, we began renovating 4 76 apartments. And together with planning 232 apartments that we have signed the deals to commence in Q4, that should be 700 apartments, which is like 100 apartments more than our target. So I'm very happy that this business line is continuing to develop well. Of course, as always, we have the strongest transactions team in the Northern Europe and we are delivering strong profit from transactions. The same is true from Property Development that is continued to deliver the profit. Then if you look also that in the quarter or more precisely on 24th September, the Board presented new targets for the company, both focusing on strengthening financial metrics or credit metrics by increasing target for equity ratio to higher than 45% and also targets on the interest coverage ratio to be no less than 3 times. The important thing here is that you can see from our numbers that our interest coverage ratio is improving very fast. And according to my estimate, we will pass 3 times already in the beginning of the next year. We also launched the new growth target expressed as a property portfolio of EUR 55,000,000,000 in 2021 with retained BBB plus rating. And important here is that the board is committed to focus on achieving a BBB plus rating in the next 12 months. And we see also this as a prerequisite for strong growth. We also announced our new dividend policy saying that goal is to generate a steadily increasing annual dividend. And in connection to that, the Board of Directors is expected to propose an initial dividend according to the new dividend policy of Swedish Claus 0.6 per ordinary A and B shares, which is much higher than the market has been expected for the next year. And it's additional message of strength of this strong cash flow producing assets. And then finally, as when writing in CEO letter, our secured cash flows are only marginally affected by the economy and external factors. And our focus on social infrastructure in the Nordics that the need for investments in social infrastructure in the next 10 years period are the highest ever is amazing strength. That is also why for 2019, 2021, My assessment is that we will be able to deliver the highest annual increase in Eterna among all Swedish listed property companies. And this stronger journey of growth will also be supported by the fact that our B and B shares have been trading on NASDAQ stock of large cap list since 7th September this year. It's just like slightly more than 1 month old, but also the potential growth fueled by attracting new investors investors will be following the inclusion of FBC shares in Eptra index. And my expectation is that when the next quarter index review will be published on 5th December 2019 that we will be part of the index because according to my view, we belong there and we will be there in connection with the next index review. And I will stay there and thank you very much for listening and please questions. Thank And our first question comes from the line of Nicholas Hoglund from Nordea. Please go ahead. Your line is now open. Yes, good morning. Nicholas Herglund here from Nordea. A couple of questions from my side. If you could maybe start a little bit on the sort of give us a market update on how you view the pending transactions. You talked a lot about municipality deals previously and that might be depending on the school side and things like that. And also in connection with that, talk a little bit about your investment capacity short and medium term? We see that we are preferred by to announce the new deals in that space. So that is very, very good development for us. And at the same time, we are doing that by also continuing to strengthen our balance sheet. And we do continue to produce building rights that we sell. So I can summarize that with our target that at the end of 2021, we will be SEK 55,000,000,000 with BBB plus rating. And we used to deliver what we said. Right. And a follow-up on that. How do you view these sort of yield requirements at this point? Or are you still expecting to follow-up buying these municipality deals around 5%? Or have yields come up to be down at this point? We used to say that we buy in the space between 4% 6% and that is the space that we are targeting. And we feel pretty good that we can continue to do our deals in that space. Okay. And then another question on the divestiture share issue that you announced in €400,000,000 Could you maybe elaborate a little bit on also the satisfaction premium, Tannevi? And is it a one time or do you see further opportunities to do these kind of directed issues in order to meet your targets? So your thoughts? So, Nicolas, I think that NIV is completely misleading for our company. And that is that if you look that we are delivering SEK1.61 SEK1.61 for the 1st 9 months after payment for the hybrids, for D shares and preference shares, then you just then you can just do your math. And that means that this direct issue that we did, it was done like at multiplier of 10. And that is I should say in a normal business, it is very difficult to find a company where you can buy shares at multipliers at 10 or below 10. So we are very happy to have a new shareholder, long term shareholder and one of the Swedish super entrepreneurs, the F. Welle and so on. And as you know, all of our shareholders are very focused entrepreneurs, and we are happy to broaden that space. Okay. And then my next question would be more related then to revaluations and your project, properties and land. I appreciate more clarity on the sort of book values per share and what have you. But maybe I mean, we are we continue to see maybe slightly lower evaluations per quarter than your full year guidance. It was SEK 25,000,000 now in the quarter and SEK 60,000,000 for 9 months. Could you help us a little bit on how the time line looks on the sort of planning permits? And when will you get planning in place for the conditionally sold units? As you know, Niklas, we have like SEK 1,200,000,000 or more than that in cash that is waiting on us. And this is in this business, we have, I would say, now focusing to get all of this cash out. And that is why you have slightly lower evaluations from the building rights. So but in the average terms, we are pretty confident that we used to say that we deliver as a target EUR 250,000,000 to EUR 400,000,000. I mean, if we look right now since the beginning, we are still at the levels that we have been delivering about EUR 500,000,000 on average, on yearly average since part. So that is that will always be the case in for this property development business that you have some and that is why also our target is expressed as average. But I'm very happy to see continuing focus on the cash deliveries and we see that we will have very strong cash deliveries in the next 6 to 9 months. Okay. And a follow-up on that. You're talking about a surplus value of SEK 750,000,000 as the book goes right now. You have it the book value is around SEK 1,800,000,000 on your projects into the cash properties that, well, you need to pay down in order to get access to the building rights. And while you already sold conditionally for SEK 1,500,000,000 in building rights, How much of the SEK 750,000,000 is actually related to, you can say, conservative accounting of the conditionally sold building rights, I. E. Already given or just waiting for the planning permits to come in place? It is a relatively big part of it that is related to the value that are higher than in the book, but also connected to that we use this building rights in different joint ventures where they were, how to say, valued and sold with discounts. So this is I should say, this is the potential that we see will be delivered. But this is not on the books right now. Okay. I'll step back in line, and those are my questions for now. Thank you. Thank you. Thank you. Our next question comes from the line of Martin Nielsen from Carlsquare. Please go ahead. Your line is now open. Bertil Nielsen actually. I imagine that when you have cash on SEK 10,000,000,000, it will be relatively easy to reach your target of SEK 5,000,000,000 in property value. But when I look in the report, I think it's on Page 18 or something, 18 years, when you illustrate the construction shortage in the social infrastructure, I get the impression that you are tilting even more towards new construction. Is that a correct assumption? No. I mean, Betel, we are, how to say, partner to Swedish municipalities. And this means that we will both buy the new buildings, but also help municipalities with demand. So those graphs also show how big demand here it is in the situation where the other commercial real estate is expressing concern for net netting. We are in completely different division. We cannot deliver what is needed and despite working together with municipalities. And the other message from from the Page 18 is how low rents we have at our balance sheet. And if you just look at Henrik Care Homes or educational facility, you will see that our rents are like half of the price for the newly built. So there is large potential from both streams, both from helping municipalities, providing them with new properties. And of course, we are always concerned of the construction risk and we do not want to take the construction risk. But we are long term owners of the new properties for the municipalities and at the same time having very large upside from the rents. But if you compare now in the current market where you get return on residential development, selling building rights or perhaps even compared to the ordinary yield from properties, would you say that, that gap has changed somewhat? Yeah. I mean, this is a combination of us having a large number of building rights in central location is, as you're saying, also giving us opportunity to deliver the new schools, the new elderly care homes to municipalities. And of course, that will also deliver better profit from the building rights rights. That is completely true. But at the same time, this also strengthen our relationship with municipalities, giving us opportunity to even buy more properties. So this will also help to drive increasing earnings capacity going forward. That's all. Okay. Thank you. Thank you. Our next question comes from the line of Louis Landeman from Danske Bank. Please go ahead. Your line is now open. Yes. Hi. Thank you. Yes, I was wondering if you could clarify because I think you said that you don't capitalize any of your renovation costs. So you take everything upfront on the income statement, is that so? No, no. We do capitalize the direct investments because this is investments in refurbishments of the apartments. But the rest of the maintenance, planned maintenance that is improving quality of the properties, which for example in Germany, Austin is capitalized. We do not capitalize that part. That is in our case because we are long term owners. So we are investing a lot of money in our properties that is improving quality of the properties and in and this is taken through P and L. And this is big difference, for example, because you are doing credit analysis. And if you compare it no matter if it's around town or Vonovia or Grand City Properties or whoever you want to look at. Okay. So out of this SEK 978,000,000 that you invested in your properties in Q3, how much was like transaction and how much was, let's say, renovations or upgrades or what you call it? I mean, if you look in Page 17 in the report, you will find that we have invested SEK 474,000,000 in our properties and which is investments in refurbishments of the in the publishments of rent regulated residential and increasing rent, which is investments in building new LSS housing, which is investments in refurbishments or renovations of elderly care homes and municipal houses. But that is investments connected to income in terms of either new rents or increased rents. But the part of investment that is classified as maintenance. And I think we have invested in maintenance, taking it through P and L this year. In the first line in the 1st 9 months, you will see that it's EUR 78,000,000, which is considerable amount. And we are proud of that we invest in quality in our properties, but this from comparisons perspective also from a credit point of view important to know about it in relationship to, for example, German companies. Yes. Then you mentioned some figure like an S and P figure for leverage. I guess not that the capital you said like it would be like 55 percent? Yes. That is the exact number is 55.3%. Okay. And that would include 50% of the hybrid LRR? That includes 50% of the hybrid. And what do you think to get to the I think they have a target for 50%. Do you I mean, do you expect that you need to do some additional asset sales? So similar to get to that number or what's like your plan to get to the 50%? You see that we have for us 2 lines. The one is and I think that we are on the way that for every day as goals and with the portfolio today and with planning to expand the portfolio, We see that we should be in the space to have strong business profile. And on this road combined with strong business profile, we will go for in next 12 months to be below 50% on debt to total capitalization according to S and P and that should be BBB plus So when we said to market that our focus is BBB plus in next 12 months, that means that we mean that. And we have shown that every time when we have took forward the target, we have shown that we really do what is needed to deliver on that. And that means also that we will both buy and sell assets and hopefully making additional profits from transactions. Okay. So you within 12 months, you should get below the 50% basically? Yes. That is basically we count that already the end of Q4, we will be firmly below 55%. And within next 12 months, we count that we will be below 50% in all S and P terms. And that is why the Board put this strong message in press release and in the report that we are focusing on BBP plus in the next 12 months. Okay. Thank you. Thank you. Thank you. Our next question is a follow-up from Niklas Herglund from RIDEA. Please go ahead. Your line is now open. Yes. Thank you. I have a couple of follow ups. Firstly, you talk about 1 off costs in Central and Administration. Could you maybe elaborate a little bit on what happened there? And I mean, it's not reflected in your earnings capacity, so I don't expect well, it doesn't look like you expect any more costs, but can you give us more on that? Thank you. We have very high activities, including as we said, including change of listing to the main markets, to the large cap. So those are one off costs for very high activities in the companies during Q3. Okay. All right. And then my second follow-up is on the earnings capacity. Could you also clarify the sort of higher joint venture contribution the higher financial income, which I suspect is related to JEs as well. Yes, we are doing good activities in our joint ventures and there is one of our joint venture is pure cash flow and it is developing well. The others are mainly focusing on residential and they've been performing well. Also doing renovations. We are in one of these joint ventures in one of the strong municipalities have very high activities on the refurbishment side. So that is where the current numbers are. But is it driven by acquisitions within this joint venture? Or is it connected to lower finance? Yes. It's driven by acquisitions, but also by refurbishment. Okay. But this is income from property management, right? It's not revaluation? Yes, but it is 1 if you have refurbished apartments in the beginning of the Q1 and Q2, the money is coming now. And this is I mean, we do this very mathematically, what is there per 31st September, then that is in the numbers. Fair enough, And then I have some other a lot to dwell, if I may. You're talking about the pure cash adjustment in your income prop to management. You have SEK 8,500,000 in cash balance, SEK 8,700,000,000 in cash balance. So when will you deploy? Yes, we have SEK 8,500,000,000 in cash balance. And on top of that, we have actually EUR 1,500,000,000 in cash that is that we have parked. For example, I can do, for example, we bought JPMorgan's ETF, which is short balance. I mean, it's cash. So we can take it so it's sort of our total cash, because this is important is actually as we are reporting EUR 10,000,000,000. We have additional cash that we can pull out from the joint ventures and we have lines of more than EUR 4,000,000,000. So we have, without competition, the strongest balance sheet in the Nordics. Okay. Right. And then maybe a follow-up on the sort of Amazten ownership, which you've entered into this quarter. It's a touch below 20%. So I assume you will treat it as associate income. Could you give us some help and guidance on the sort of annual contribution from that investments on the joint venture associate line? We have not I mean, this acquisition has been done after the end of Q3, and we will wait for the Masters Q3 report. So I think that is fair to weigh to that. And then my final follow-up, if I may. On the you have now the buyback back of hybrids and bonds, which well, clearly, we'll let you bring in financing on a lower level. But do you have an updated number on this sort of costs for doing this redemption? As I said before, I mean, that is cost for success that has been serving us very well because if you look at our buybacks that we've done last year, we've done it at a much lower level. And I'm sure that we will be at even lower level next year. So those buybacks are very beneficial for our company. For the buybacks of the bonds, we have bought back like EUR 1,200,000,000, EUR 1 point 2,000,000,000 in the bonds in Q4. And as we announced and it's very easy. You can see the more exact price is in the press release there and just do the multiplier. So that is and we will continue to do that because that is very beneficial for us. On hybrid side, we have bought back SEK 1,500,000,000. But we have also announced yesterday that we will buy back everything of those 2 old hybrids. This is very good for our shareholders because we are exchanging the hybrid supplies at 7%, EUR 700,000,000 at 10% and EUR 1 point 2,000,000,000 at SEK 6.35,000,000 to a new hybrid of SEK 3.5, so 3.5%. Right. Okay. I'll do the math on the sort of cost for those redemptions, which is, of course, also important. But on the sort of average funding costs coming down to 1.75% already in the sort of end of Q3, given the refinancing you have already undertaken on the bond side, where do you sort of where are you right now on the sort of cost side? I mean, I said last year that we will decrease our costs. I think I said like 50 basic points or like something like that 50, 60 in levels of €100,000,000 by then. Now we have done even better than that despite that we also in this course have all costs for the swaps. And this is very important because we have the longest fixed interest rate in the market and the longest debt maturity in the market. So I should say that we already today are on the way to have the lowest interest rate average in the market. And we think that it is it should be expected given that we have the lowest risk assets in the market, but we should pay the lowest prices in the market. And that means that our costs have to continue to be lower. I mean, it is crazy how high cost we have had, But that is the part of when you're the new company and the market needs to learn about you and to see that you're delivering. And I think that we are now in that position. So I'm expecting that those costs will be considerably lower already in at the end of this year, but particularly if you look mid next year. Okay. Those were my follow ups. Thank you. Thank you. Thank you. Our next question comes from the line of Stefan Boulov from ABG. Please go ahead. Your line is now open. Good morning. Stefan Boulov from ABG here. A couple of questions. First, the excess cash and the cash equivalents that you have, what is the strategy with this cash position? Would you like to reduce debt or use it for acquisitions? Yeah. We will combine those 2 because we have been very successful in growing company and at the same time delivery deleveraging. And we see according to our suppliers that we should be able to achieve our target of EUR 55,000,000,000 in property value at the end of 2021 with BBB plus BBB plus rating. And that means and certainly the math is also that every step and I'm sure that our bond prices will decrease already today after this report and every step we take in this direction by decreasing our financing costs is giving us stronger position to buy new properties that are delivering new income and so on. And if you have that combination and on top of that, this is just an property income for property management, but if you, on top of that, have 3 year accruing areas that are delivering profit almost every day, refurbishments of apartments, which I was expecting that I mean the message in the report is very clear. From the plan, the 600 apartments, we are probably in position to start 700 apartments this year, which is very strong. On top of that, strong profit from transactions and continuing strong profit from building rights. So you have like basic from property management, but on top of that additional 3 recurring streams that all of those are delivering profit and that give us opportunity to continue to grow and at the same time, strengthening our credit ratings. Okay. Thank you. My next question, we have seen continued strong appetite for both residential and community service properties. Do you think that you would have to accept lower yields when you acquire going forward? That is that has been historically our strength. And if you look at our team with large targets on Oskar Leclerc, Karlo, Neokimbeel, I mean, Levenshoes and me helping on a little bit. You will see that we have the strongest transaction team in Northern Europe, I should say, without competition. And our strength has been to do the deal off the market to work long term to prepare the deals. And we have always succeeded to buy at good levels. And so I see that that is continuing. And I think it is just few months ago when we did probably the largest ever free cash flow deals from a transactions when we sold DNB, we made SEK 1,800,000,000 in free cash flow from that transaction. So that is just giving you flavor on potential and where we are heading. At the same time, we are selling some assets and having I mean, we sold a message here and we get paid a smaller municipality 40,000 per square meter when we are buying at levels that are 12,000 per square meter or 13,000, 14,000 per square meter. So if you look at our total portfolio, it is still very highly undervalued, both in the residential portfolio in relationship to the police, but also in community service properties. In many of our properties, the land is more I mean, we have a school here in Wende, just as an example, the land is more valued There is more value in land than it is in that school. So that just gives you a flavor that there is large potential from undervalued assets going forward. And also this very crowded market be a long term partner to municipalities that can continue to do the off market deals. All right. Thank you for taking my questions. Thank you. Thank you. And after no further questions registered at the moment, I will hand the word back to the speaker for closing comments. Please go ahead. I just want to say thank you very much for listening. And we are being happy to present this strong report to you. And if you have any more questions, please send to our IR. Thank you very much.