Thank you very much, and thank you all for listening. I will present results from Q3 for Samhällsbyggnadsbolaget i Norden or SBB, which today is a social infrastructure champion in Europe. The first slide you see some of our beautiful buildings. Among those, also Europe's most sustainable building cultural center with 26,000 sq m building in the north and with top environmental certification. You will see through our report that sustainability is core of our business, and this building is very good representative of our focus. Next slide, please. On slide number two, you can see our earnings capacity, where we are continuing to deliver an even stronger operating profit than our rolling three months.
If you look at our rolling three months, you can see that, on three months forward, we are counting to have SEK 6.2 billion in rental income, and SEK 4.5 billion in NOI and adjusted operating profit of SEK 4.3 billion or SEK 3.04 per share. If you, on top of that, add our income from value-add strategies on all that also in this quarter are showing that they are delivering over plan and exceeding the plan. We are counting on yearly basis result from value-add strategies of SEK 3.2 billion. Then we have some costs relating to equity instruments and to profits attributable to minority interests.
You will land in the adjusted operating profits from earnings capacity of SEK 4.67 per share. Including also our project business where we will deliver extra profits from construction and project development. You see that there is additional SEK 0.5 in additional earnings. We should be able to deliver between SEK 4.67 per A and B ordinary shares and SEK 5.24 per A and B ordinary shares. For the first nine months, we are delivering profit of SEK 13.3 billion corresponding to SEK 8.56 per share. An important message from this report is our strong underlying increase in rental income. As you know, our income is inflation linked or CPI linked.
On top of that, we are delivering for this period 140 basis points over base inflation that last year was 0.3%. On NOI, we are delivering even better than that. There we are exceeding inflation with 270 basis points, delivering 3% like-for-like increase of NOI. This is affecting our view for all of 2021, and that is why we are increasing our forecast for full year 2021 and adjusting it from SEK 7.8 per share that we announced in connection to second quarter to SEK 9.8 per share.
We are estimating that we will deliver SEK 9.8 per share or ordinary A and B share for full year of 2021. Next slide, please. Our delivery in Q3 is very strong just in order because I saw some mismatches in some comments so everyone has the full picture. On this slide, you can see that we are delivering a rental income of SEK 1.459 billion. However, in this quarter, we still don't have income from Unobo, which is SEK 110 million. In total, adjusted numbers including Unobo are SEK 1.569 billion, which is exceeding our earnings capacity presented at the end of Q2 with SEK 35 million.
On operating income, we are exceeding with SEK 58 million. This is also an important message for this quarter that we have very strong increase in margins. Margin year-to-date is now at the level of 70%, and it was very strong in Q3. Then if you go down to profits from property management, the adjusted profits from property management, we land at SEK 1,055 million. We are delivering SEK 995 million. The numbers are actually much stronger and exceeding earnings capacity at every line.
Even profits from property management, excluding joint ventures, if you take into account the cost for non-recurring costs, even that is exceeding much more than those SEK 6 million shown here. Our team is delivering very strong at every business line. Also if you go to our value add strategies, I mean, we adjusted our guidance just in beginning of September. Already now we are overdelivering even over the adjusted guidance.
We are almost doubling the profits from our two value add strategies, value add from establishment. I also want here to comment to other questions when we are at this slide that I have not put in presentation, but I will put them in update after presentation. That is our valuation yield. Our valuation yield was 4.55%. That is decreasing for 4.73%. In our Q2, I think we wrote that 4.33%. That was misspelled in the report in Q2.
Our yields are coming down 20 basis points, but still extremely high yields for this kind of high quality, low risk portfolio.
The second adjustment that is, of course, not significant, but good to know, and that is, as I said before, we do not focus on EPRA earnings because we do think that kind of measure is more adjusted for commercial real estate, but there is actually one misspelling there also because profits attributable to minority interest, which is coming from minority interest, all of that profit is coming from value changes, has been included in and affecting negatively reported EPRA earnings.
That is like SEK 151 million, that should be there zero—almost zero there, because that is mainly related to Unobo and that means EPRA earnings for the quarter will land at SEK 0.5 instead of SEK 0.39. Then it's also of course wrong for the first nine months.
We will update that table with alternative measures, but it's good for you to have that so you understand those numbers. We will go to slide four. Of course, our NAV is continuing to grow. As you know, we said before that we will have the strongest net asset value growth in 2019-2021. We are delivering even stronger than expectation. We report EPRA NRV or EPRA NAV per share of SEK 34.55 .
On this slide, you can also see our strong building long-term earnings capacity. If you look a few years back from Q3 2017, we started with only capacity of SEK 0.67 per share. At the end of Q3 this year, we are at SEK 4.67 per share. It is an amazing profit and shareholder value creation that our team is delivering. We are very proud that we also are, as our numbers for Q3 shows, that we are also exceeding earnings capacity for the group. Next slide, please.
At the end of the quarter, we report SEK 125 billion in property value and also continuing to have long WAULT. We are at nine-year WAULT and I'm expecting that we will increase the WAULT in the quarters to come. We also have even stronger presence in largest Nordic cities. Next slide, please. Our earnings are more and more concentrated to the core of social infrastructure, to the rent-regulated residentials, to the publicly funded residentials in terms of public care homes, special apartments for people with disabilities and schools.
That is also part of our strategy, continue to strengthen our presence in the larger cities in the Nordic, and at the same time, continue to focus on core of social infrastructure. We are still the premier buyers from the municipalities, and we are seen as trusted partner for municipalities in all four Nordic countries. Next slide, please. Our joint ventures, as you can see, we have a very strong position in a joint venture space with majority of income coming from social infrastructure and also continuing to increase our shareholding in JM and reporting 25.1% at the end of Q3.
Very nice assets with big potential and potential to continue to deliver strong value creation to our shareholders. Next slide, please. Just to summarize for you that are new, SBB, our business model focusing on value creation and vision to be climate positive by 2030 is delivering profits from property management from the safest real estate assets in Europe, and topping up with profits from our three value-add strategies from building rights, development, new constructions from investments in existing portfolio or refurbishments and from value-adding transaction. Next slide, please. Here we have two teams that are delivering strong profits from building rights development and new construction.
Ilija and team within SBB and the second with the name of Sveafastigheter that is also owned 100% by SBB is today Europe's largest property developer with 64,000 apartments in project portfolio and with an amazing value still outside of the balance sheet. Building rights portfolio estimated value potential of SEK 34 billion versus book value of SEK 3.4 billion. Next slide, please. On this slide, you can see that we have continued to deliver strong profits in this business. As I said, we increased the target from SEK 1 billion to SEK 1.4 billion. That was before in September this year at Capital Markets Day to SEK 2 billion- SEK 2.5 billion.
Already for the first nine months of the year, we are exceeding that, delivering SEK 2.7 billion in profit. Next slide, please. Investment in existing portfolio, focusing mainly on sustainability and refurbishments. Here we have as a target to renovate 600 apartments. Already for the first nine months, we have renovated 562 apartments. Next slide, please. This is merged with our focus on sustainability, where we announced in connection to Capital Markets Day our vision to be climate positive in entire value chain in 2030. You will see in the report that we are on good way to achieve that. Next slide, please. At slide 13, you see more in detail our road to become climate positive. For us, this is, as I said before, core part of our business.
We feel that we already in this quarter showed that we are on track to continue to deliver to be climate positive and effective. Next slide, please. This has been also followed up by rating agencies. We have today the highest industry-leading score in social sustainability by ISS ESG. We have among the highest scores from Sustainalytics, where we are also the leading in among the companies in our size. We have A rating from MSCI. This is not good enough for us. We will continue to invest in sustainability. As you can see on the next slide, we are succeeding to combine investment in sustainability with also having strong return.
You can see that at slide number 15. Please go to slide number 16. Slide number 16 emphasizing our experience as number one real estate M&A team in Europe, enabling of market transaction and asset evaluation, also having local presence. But at the same time, as I emphasized before, being the number one acquirer of Nordic community service properties, also from municipalities. I'm sure that you will see through this course that us showing excellence in delivering these with municipalities. Next slide number 17, please. This is just to give you a flavor about the market and also about, because many people are asking us about how much we can buy in the Nordics.
At this slide, you can see that we probably have just the 3% of the total market. There is a continuing strong opportunity for us to grow the business in the Nordic as the safest place in the world. At the same time, we are doing some job in Germany, building infrastructure, preparing to be ready to do the deals there. We have an amazing opportunity to build our home market in the Nordics. Next slide, please. This is just to sum it up. As I said before, SEK 6.2 billion in profit in passing rent from property management, from management of the lowest real estate risk in Europe.
99.8% of income coming from social infrastructure and backing by AAA economies and rent-regulated residentials. On top of that, delivery of SEK 2 billion-SEK 2.5 billion in profit from building rights development and new production, SEK 6 billion profit from existing portfolio, and SEK 6 million in profit from existing investments in existing portfolio and SEK 400 million in profit from value-adding transaction. Next slide, please. To try to start to sum it up, SBB, we see ourselves as the social infrastructure champion in Europe. We have stable cash flows backed by AAA countries with long leases. On top of that, we have a growth fueled by unique investment platform combining property management with our three value-add strategies and building rights development and new production, investment in existing portfolio and value-adding transaction.
As you have seen in this quarter, all of these are exceeded the plans and over-delivering. We have also been able to increase our dividends. The board has announced ambition to propose monthly dividend next year of SEK 1.32 A and B class shares. In terms of ratings, this is additional quarter showing that we have the safest assets in the world. Our assets are continuing to deliver over inflation, over CPI, and that we at the same time are de-leveraging. We are at 12 months rolling numbers at adjusted net debt to net debt plus equity below 50%, actually 48%. Also at reported numbers, we are firmly below 55%.
In terms of ICR, we are delivering ICR of 5.7x . In terms of unencumbered assets, we are among the highest ratio for unencumbered assets in Europe with more than SEK 130 billion in unencumbered assets. Very strong position and very well-positioned for BBB+ rating. Finally, core of our business model, strategic core sustainability. We have seen through the quarter announcements that we are starting new solar power plants. You will see more of this in coming quarters. We opened a new school in Haninge Municipality, 12,200 sq m , with municipal school as a tenant.
That is something that we would to encourage everyone to visit and to see also how we have succeeded to refurbish the old buildings to get a new building, which is environmentally certified with high environmental certification. We are as difference to many institutional investors that are how to say tearing down buildings in our cities in order to build new buildings to get good environmental certification. That is the biggest joke ever. We are refurbishing and in that that both using old materials recycling and also using other businesses around our properties to recycle their energy. I would like to challenge the institutional investors on this because there is a large part greenwashing out there.
For us, this is really core of our business. Another part of this is also that many institutional investors are putting their money in tax havens and escaping to pay taxes in our countries. That is also an important part of G in ESG, an important part for all of the sustainability. We are very focused on this, and we are going to be leader in sustainability strategically, and we'll also continue to lead by example here. Next slide, please.
To sum it up, new guidance forecast for 2021, we are increasing with SEK 2 per share from SEK 7.8 in the second quarter to now guiding that we will deliver earnings per ordinary share A and B to be estimated to be SEK 9.8 per share. SBB is now a well-oiled machine, where all segments of the property management business and all our three value- added strategies contribute every quarter to deliver and exceed the plan. Profit after tax was SEK 13.3 billion, an increase of 133% compared with the first nine months of last year. The surplus ratio for the first nine months was 70% for the period. Our return on equity over the past 10 months is the highest in the Nordic real estate market is 33%.
We are beating all of the logistics businesses. We are beating everyone, in the market on return on equity. Number two, our value add strategies continue to deliver quarter after quarter. All the profit from our two value add strategies, development of the building rights and new production, and investments in existing portfolio, ended up delivering profit of SEK 3 billion for the first nine months of 2021, corresponding to earnings per shares A and B ordinary shares of SEK 2.23 for the nine-month period. For those of you that are not counting this as recurring income, please go back, and follow since we start SBB, and you'll see that, we have been delivering this recurring income for every quarter since start of the company.
Finally, together with profits for property management, this will sum up to SEK 4.67 in profit in earnings per ordinary A and B shares, or an increase with 63%. When talking about profit from property management, as you know, we are targeting to deliver on average over cycle 15% per year increase in profit from property management per ordinary shares A and B shares. Over the past 10 months, our increase has exceeded 60%. I think it was 62%. The increased profits from property management per ordinary shares A and B shares last 12 months rolling with more than 60%. I think it's 62%.
For the first nine months of the year, and this is an important message, that we have not been good to emphasize in the past, that we are always given our operational excellence, delivering stronger rent or stronger income increase than CPI, despite our income being linked to CPI. For the period, our income increased with 1.7%, which is 140 basis points above CPI, which is the principal base for the rent increase. Following this, the net operating income increased even more. It increased with 3%, which is 270 basis points over CPI. It is also seen in the increasing margins.
Number four, the interest coverage ratio continues to increase. At the end of the period, it was 5.7 times. We have now SEK 130 billion in unencumbered assets, long average debt maturity, long fixed interest rate maturity, and we will be happy to see more inflation. Our ratio of unencumbered assets is among the highest in Europe, and we show that we have the condition for BBB+ rating. Our average interest rate was 1.1% at the end of the third quarter, which is also this strong decrease from 1.4% to 1% at the end of the third quarter last year. There is still potential here because we have the lowest risk assets in Europe. We should have BBB+ rating, and we should have lowest average interest rate.
Finally, the quality of our assets, both in terms of the security of the rental flows and the liquidity in the transaction market, has proven to be among Europe's most secure in challenging times. Please remember 2020. This commits us to continue building Europe's largest property company focused on secure assets. We continue to deliver strong results and shareholder value. Thank you very much, and please questions.
Our first question is Johan Sjöberg, Kepler Cheuvreux.
Johan Sjöberg, Kepler Cheuvreux . Yes. Good morning. I have a couple of questions. I'll start with the earnings capacity. If you look at the JVs and the associates, the combination of these are. If you divide it by four, you get a run rate, so to say, for the quarter SEK 161 million, and you delivered SEK 187 million on these lines. So there's SEK 26 million extra there. Are there any extraordinary or could it maybe suppose that that will be recurring to some extent?
Yeah. We have been slightly conservative in our capacity in joint venture. It may be better than the numbers in the earlier groups.
Okay. The next question regards rating. Are there any news on an upgrade of your rating? If you maybe could elaborate a little bit on what kind of positive effects it will have on your average interest rates when it comes?
I mean, for us, we have said before that our job is to deliver the numbers and to deliver good profit and strong financial position. That is up for the rating agency to do their job. I mean, the market is already pricing our instruments and it could be flat. It's only rating agencies that are lacking there. You know, we do think that we still have with adjusted 18-20-25 basis point in an extra lower interest rate.
That is what we are going to work hard to achieve.
Okay. The next question on your cash position, quite high. It's almost SEK 16 billion if you include the cash equivalent. Should we expect that you will stay on these levels or you have any target of having a little bit lower cash position going forward?
We will probably have slightly lower cash position. We are also repaying some debt in this quarter. At the same time, we do think that is in the times that we had, like, 2020, we were working hard to be prepared for whatever happens. That is why also we did equity raises in the summer of 2020, and that is why we think that is additional strength with our position that we have strong cash position.
Okay. Looking at your guidance for the full year, this SEK 9.8 per A and B share, is there any property uplift included in that or how should we interpret that figure?
That is pure profit from earnings capacity. There will be probably better than that. We always want to give our shareholders like basic guidance and then they can make their view.
Okay. You stated here that your valuation yield is 4.65% if I remember correctly. Could you maybe give us a split between your two different segment tiers, the residential part and the community service part? Are the community service around 5% or so?
Yeah. Absolutely. The residential part is below 3%, but below 4%. This is still, of course, wrong. I've said before that this will be adjusted over time. Every time people listen to me, I said that it'll be adjusted over time. Then when the quote comes and we get just part of that valuation, then people ask, "Why you got valuation increase?" I mean, you cannot buy those kind of assets at yields of 4.5%-6.5%.
This is even difficult for our people that are writing the report if it's difficult to understand. That is why they last quarter misspelled and wrote 4.33% instead of 4.73% or 4.77%. It's us because those are still strange numbers given the market and the low risk in our assets.
Okay. My final question regards your building right value potential of SEK 34 billion. Is that anything of it included JM or is it just what you have on your balance sheet?
That is just on our balance sheet.
Okay. Thank you very much for taking my question.
Thank you.
Next question is Staffan Bülow , Nordea.
Yes. Thank you. Staffan from Nordea here. I have three to four questions, starting off with a clarification question. When in Q3 did you start to consolidate the rental income from the Riksbyggen Unobo acquisition?
We did actually not include any account from Riksbyggen. Rental income will start from first of October. It will come first in the fourth quarter.
Okay. No income consolidated there from in Q3. Clear.
Yes.
You mentioned in the report that your rental income is linked to CPI and that you have historically outpaced CPI. Do you think in a high inflation environment that rental income from rental apartments can't be fully compensated for CPI given negotiations with the tenant association?
Absolutely. Because that is the system. That is stuff that I particularly for our how to say for people from abroad. This is very important. This idea that we have low rents on average is exactly connected to that, but the system is called how to say utility cost system or where you should be paid for if there is a high inflation or if water costs more or if electricity costs more. I'm expecting that we will always have full in negotiations full coverage for inflation no matter how large inflation is.
That is the base of the system. On top of that, what we have been preaching for years is this underlying machinery that is working to work with establishments on community service properties in its ventures, working with negotiations and being able to deliver stronger than inflation. Inflation is basic and we have shown that we can deliver more than 100 basis points over inflation since starting the company.
Thank you. Speaking of lease structure, how large share of your community services properties is triple net leases?
That is, I think it is around 70%, but there are also some leases where we are just taking in costs and then sending directly to the. So but I mean, we look at that in our Q4 report and-
Okay.
...put the numbers out because we need to just go back and also take into account those that are where we are just intermediary, where we are just sending the invoices, forwarding the invoices. An important point here is also when you ask that because now we have discussion about the high electricity prices. We have actually boxed in our electricity prices. We did it in the first half of 2020. So we have boxed in everything up to 2023.
That has of course not been because we have been expecting anything like it's happening now, but that is more our long-term focus on always securing cash flows when there is good opportunity and when the insurance premium price is so low as it was in 2020 to buy contracts on electricity. that is also why we have locked in our interest rate and we have a fixed interest rate duration between four and five years, and we will continue to increase that.
Okay. Thank you. Finally, a question regarding the property development segment. Have you noticed any delays or impact from cost inflation or foresee any delays for that matter, cost inflation impacts, given the inflation we see, supply chain problems, cement issue, et cetera?
We have been managing that, but we are probably not comparable because we are very large business. I mean, if we build 3,000 apartments, that means that we are one of the largest businesses buying the service fees. We do not still see any larger effects. However, we are of course expecting that those issues will be dealt with. We are also focusing to build in wood, and that is also why we bought 15% in a factory so we make sure to have guarantee to get 1,000 apartments on yearly basis from there.
We have done some precautionary measures, but we still not see any effects.
Okay. Thank you. That was my questions.
Thank you.
Our next question is Fredric Cyon from Carnegie.
Good morning, Ilija and team. One question from my side. SEK 2 billion-SEK 2.5 billion is your target on building right the new production profits per year. I noticed in the table on page 24 in the report, you make an illustration of potential results based on a 3% yield. Is that the assumption that you use to get to the SEK 2 billion-SEK 2.5 billion? If not, what kind of average yield assumption do you assume?
Yeah. That is, like, as you put it, that is a part of assumption that we are more in terms of illustration. We are at the same time also selling building rights in the market and making very nice profit. Every year we have like more than SEK 1 billion in cash from selling building rights. Now on top of that, we have also the situation where we have a joint venture with Kåpan that is also paying us to acquire the building rights or for the property development.
We have also strong cash flows on that side. The part of that is for the final product and through the, how to say, construction process and the part that is coming from cash.
Yeah. No, I see your point about the building, right, portfolio generating very impressive returns. What I might question is the return assumption we use on 3% flat for new production. I would argue that you're probably assuming a higher yield assumption on new production than 3% flat, but perhaps I'm wrong there.
That is, take that for illustration purposes. If you look at those numbers. If you look at the price per sq m, you will see that the prices per sq m are still very modest. It is because we do not want to see that as, how to say, as a guidance. It's more an illustration. If you compare numbers to the sq m, which are the numbers that we are, I mean, we are, how to say, fundamental-focused people.
We focus on cash, and we focus on delivery, and we focus on residual value, and that means that we are very focused on the price per sq m .
Fair enough. That's all from me. Thank you.
Our next question is Alex Onica.
Hello?
Hello.
Hi there. Sorry, I didn't hear the moderator if he pronounced my name or not. I have a few questions. First of all, we're about to enter an election year in Sweden. Will this mean that there will be a more SBB focus towards the other Nordic countries in the coming year?
Slightly, yes. We have actually a few ongoing deals in the Swedish municipal sector that we hope to close before the year-end or in the beginning of the next year. Already now we are refocusing to do more in Norway and more in Finland. We have a, let me say, good for us in this cycle is that we have very strong organic growth. We are delivering a few elderly care homes too, and like building 3,000 apartments. We will have in Sweden strong organic growth.
Great. In looking at the other Nordic countries, you've entered JVs and become part owner of Solon Eiendom Care and PPI in Norway. Will we see more of you enter more companies as an investor? What are you looking for if you're looking to enter a new company?
No, we will do more straight deals on having 100% control over the cash. Those joint ventures that you mentioned are just supporting our strategies. Sometimes in some places we want to take position. In other places, we want to support our business that is already in place there. That is, it may seem as if like it's a few billion SEK. At the same time, we have on the balance sheet SEK 160 billion. So it's still minor.
Great. Looking at SBB as a champion of Europe, do you have a plan for when you will go outside of the Nordics and enter a new European market? What European markets do you view as most interesting at the moment?
Yeah, we have been doing. I mean, as you know, we are always first building infrastructure before doing anything. We have done in that way both in Finland and Norway and also Denmark. Now we are building infrastructure in Germany. We had our people there just a week ago. I feel comfortable that we may see the first deals in Germany already in next year.
Great. Last question. I've seen sometimes on Twitter that you talk about SBB having over 100,000 Swedes as shareholders, and it become sort of the people's share. Is that important for you and why would that be important to have that status?
That is very important. That is very important for me and for the team. We had more than 130,000 shareholders at the end of Q3. Now we have probably closer to 140,000 shareholders. We think that is showing the strong anchoring that we have in the Nordics because we deliver social infrastructure and that is also why I, in my CEO letter, am criticizing the companies that compete with us and are having their owners in tax havens.
There are also Swedish institutional investors that send money to private equity firms in tax havens. I don't think that is fair competition. I'm happy to have average Joe putting the tax money in our business and delivering strong focus on sustainability.
Great. That was all my questions. Thank you so much.
Thank you.
Our next question is Oliver Carruthers from Goldman Sachs.
Hi, good morning. Oliver Carruthers from Goldman Sachs. Thank you team for the presentation. I've got three questions. I'm on page 49 of your release. On your point of the results, impairment you referred to earlier on the call. First, can I confirm that the full nine-month number for minority interests of SEK 993 million relates to either realized or unrealized value changes? That's number one. Meaning that-
Yeah.
For the nine-month period, your reported EPRA earnings should have been SEK 1.2 billion or five times higher than the SEK 247 million that you reported.
Yeah. It is. Those, as you know, figures are for us, alternative performance measures. It's nothing that is our focus. To give you the straight answer in terms of earnings per ordinary A and B shares after dilution according to EPRA earnings will be SEK 0.91 per A and B shares for the first nine months of this year, and SEK 0.49 per A and B ordinary shares for the three-month period.
Okay.
Mm-hmm.
On the second point, on the three-month period, can I ask why there were no costs associated with your hybrid bonds recognized in this third quarter?
Because that was fully booked in Q2.
You recognize this in your EPRA earnings on a cash basis and not on accrual basis?
That was fully booked. We've been struggling with this extra measure. I saw those more adjusted for commercial real estate because those measures are not even taking cash, and then we are selling building rights. I have looked at other companies that are putting those numbers. I have historically, and our CFO historically, we have not put focus on this. In connection with the annual report, we will look how the other company is doing because those numbers are still not fully representing our business.
We will put some more work to develop those alternative measures.
Okay. That was going to be my third question that you've answered on why EPRA earnings were not a key metric for you. Maybe on the dividend, can you give us some guidance as to, in relation to the dividend you're going to pay and look to pay in the future years, what key metrics are you anchoring that to, if not EPRA earnings?
No, we don't plan anchoring on EPRA earnings. We are rather looking at. That is why we are not having any, how to say, any automatic connections, because the board has said that our goal for SBB dividends is always that SBB business will develop in the way that we can increase the dividend every year. I answered in a comment that we will increase it at least in the next 100 years. Saying that means that we are being focused on to be long-term.
When the board is analyzing and these decisions are usually, how to say, it's a large work behind it, then the board is looking how much money we are delivering from our underlying income from property management. How much money we are delivering from the selling of the building rights, how much money. Of these numbers, how much we should use to continue to grow, how much we should use if we want to use and to combine with stronger rating. After all of these iterations, I should say, the board is deciding the dividend.
I mean, if you look, we are guiding the market that we will, after everything paid, that we will deliver between SEK 4.67-SEK 5.20 per share in our earnings capacity. This is still without any growth. This is still without any income increase in next year. If you just take inflation of 2% and we put 100 basis points that we are always deliver more than that is 3%. 3% on the 4.67, that is additional 15 basis points. Already there you are at SEK 4.8-SEK 5.4 per share.
I'm just trying to give you the flavor of how we are trying to combine all of our business before the board decides what kind of dividend they want to propose.
Okay. Thank you very much.
Thank you.
Now next question is Markus Henriksson, ABG Sundal Collier.
Good morning, Ilija and team. Thank you. I just have one question regarding the NOI margin. It's very strong in the quarter, 74.6%. Do we have any one-offs here? Or how do you think we should view this figure relative to your earnings capacity of 71.9%? Thank you.
I think actually there are no one-offs here. We should deliver according to earnings capacity of 71%-72%, Markus. I mean, then we can have some stuff sliding between the quarters. This was strong quarter and our guidance there is unchanged. We should be at 71%-72%.
Okay. Because historically you've been quite, like, vastly under your earnings capacity. Is this something that is filtering through some kind of synergies? Or how should we view it going forward?
Markus, that is exactly right. That is part of what I said in a comment earlier today. Now we can see operational excellence across the board. Our property management has been improving strongly under the leadership of Annika Ekström that started her tenure in last year. That we are very happy about the work that is being done there.
Thank you. One question on the direct market also. What's your view now on the deal flow in SBB and overall in the transaction market? What are you seeing right now, and what's your thoughts there?
I mean, right now everybody's chasing this asset. I mean, you saw the Heimstaden buying Akelius. You saw Heimstaden buying Kojamo more at the levels of 40x cash flow. I mean, I don't know, Markus, if you will take that into account when you look at our numbers. But we are delivering much higher profit.
Okay, fair enough. Thank you.
Thank you.
Currently no more questions. Speaker, do you have any follow-up comments? Thank you.
No, we will have just from the web. Marika?
Yeah. We have a question here from one person who asks us to comment on Denmark. It's currently 1% of the total property value. How much do we want to grow in Denmark going forward?
Denmark is still an immature market in terms of social infrastructure. Almost all assets are controlled by government in terms of local municipalities. We'll continue to grow in Denmark, but it may take some time. Denmark is a strong Nordic economy, and we will be happy to buy more elderly care homes and schools in Denmark. Now we have answered all of the questions, and we want to say thank you very much, and enjoy the day. Thank you.