Fabege AB (publ)

Good morning, and welcome to the presentation of our report for the first half of 2024. As usual, I've had our CFO and Vice-CEO, Åsa Bergström, here with me today. And after our presentation, of course, a good opportunity to ask questions. Next slide, please. In one way, it's difficult to summarize the first half of 2024, mainly because of the geopolitical situation we're also in. But what has been positive is that we see many of our markets developing in a positive way. For example, the transaction market in Sweden is more liquid today than it was a while ago. The financial market, we will tell you more about that, is absolutely much more healthy. But on the rental market where there are some more challenging, mainly also because of the struggling economy in Europe and in Sweden. But we'll tell you more about this later. What is positive for the quarter and for the first six months is that we're increasing our rental income. We have essentially unchanged gross profit. We have some during the Q4. to a very small write-down, so 80 million. And so we see, as you said, a stabilizing transaction market and value in the markets. And I will tell you more about that later on, too. What is negative, of course, is that our net lettings were weak. I will tell you a little bit more, we'll come back to this, both the net letting and the view of the market a bit later. But I will start by handing over to Åsa to go through our numbers in more detail. So please go ahead, Åsa.

Thank you, Stefan. Slide three, please. The first part of 2024 showed stable numbers with increased rental income and improved net operating income, despite the sale of two properties at the end of 2023. Rental income amounted to 1.7 billion, which is slightly higher than the previous year. A decrease due to property divestment in the autumn was offset by index increases and the taking of possession in previous project properties, of which Convendum's occupation in Hägen-Mindre was the largest one. On a like-for-like basis, income increased by 8%. Increased operating expenses were mainly due to increased heating expenses and higher administrative expenses. This is a class ratio came in at 73%. gross profit amounted to minus 5 million as one project was completed and where final recognition occurred during the first quarter, and the second quarter was only charged with administrative expenses. Central administration costs came in at 60 million. Interest expenses increased somewhat compared to the previous year, which was mainly due to a slightly higher average interest rate. The average interest rate was 3.17% at the end of June. After having increased during Q1, it fell back slightly during Q2. Our active work with interest rate derivatives have delivered good results. In addition, loans are currently refinanced at improved margins. The result in associated companies amounted to minus 38 million, of which 49 million, minus 49 million related to a capital contribution to Arianna Belaget, and plus 9 million related to a profit from the JV project in Haganora. We therefore reported profits from property management of 659 million compared to 703 million in the previous year. Unrealized changes in value amounted to almost minus 1.5 billion. I will come back to this very soon. We also recognized a small realized profit of 4 million, which was a time lag from the transaction with NRF. The surplus value in the derivatives portfolio, which increased during Q1, decreased again in Q2. Overall, the surplus value increased by 29 million during the first six months. And the tax expense, which related to deferred tax only, was positive and amounted to plus 137 million. Please turn to slide four. The yield requirements leveled off and were essentially unchanged during the quarter. The transactions in our markets during the period confirmed the yield requirements and property values in our portfolio. In the quarter, we have again independently valued a large proportion of the portfolio, just over 50% this time. The rest of the properties have been valued internally. The average yield requirement in our portfolio increased due to a sudden time lag by three basis points during the quarter to 4.54%. Since the value peaked in Q3 2022, we have now written down the property value by approximately 15% in total. And the total change in value amounted to minus 1.5 billion, and we are now reporting a property value of 77.6 billion. Slide five, please. The simulation here shows that we can withstand breakdowns of a further almost 15% based on today's market valuation without impacting our internal target. And the margin is even higher in relation to the covenants in our bank agreements. Next slide, please. Reported equity decreased during the quarter and amounted to 121 Swedish crowns per share, and the long-term net asset value, the EPRA NRV, amounted to 146 crowns per share. The equity asset ratio amounted to 46%, and the loan-to-value ratio was 43%. Both of these key performance indicators confirm our continued strong balance sheet. And the interest coverage ratio amounted to 2.4, only a small decrease of 0.1 since year end. Now, please turn to page seven. The access to and pricing of financing have continued to improve during the spring. This applies to both the capital market and banks, even though the biggest improvement has taken place in the capital market, where margins are currently competitive with or better than banks. The commercial paper market is continuing to function well. We have reduced the margin in a couple of steps and are now issuing three months commercial paper at 50 basis points compared to 70 basis points at the year end. As stated, the bond market is also functioning well. Overall, during the first six months, we have issued 3.7 billion, of which 1.2 billion to be settled early in July. The margins have continued to improve. In February, we issued a three-year bond at the margin of 148 basis points. And most recently, the corresponding margin was 110 basis points. And we also issued a smaller five-year bond at the margin of 135 basis points. Under all revolving credit facilities, a total of 6 billion. In addition, 1.2 billion will be received in proceeds from the latest bond issue which will be used for repayment of other loans. Overall, we have good preparedness for upcoming financing needs and refinancing. We have facilities in place to cover the upcoming bond maturities during 2024 and 2025. We intend to refinance our bond maturities with new bonds. Our bank facilities are continually refinanced through extensions. And now please turn to slide eight. Of the loan portfolio, 55% is fixed, mainly based on long-term maturities and mostly through straightforward interest rate swaps, supplemented by some fixed rate bonds. Approximately 40% of the current loan portfolio is matched by fixed rate terms beyond 2025. We have continued to work actively with callable interest rate swaps with the aim of reducing our interest expense. The average fixed term amounts to 1.8 years. Adjusted for the estimated maturity of the callable swaps, the fixed rate term increases to 2.8 years. Fixed term rates provide us with protection against rising market interest rates. In the short term, the higher market interest rates will thus have a more limited effect on our interest expenses. For a moving 12-month period ahead, an increase in the market interest rate will generate a higher interest expense of approximately 145 million per year, all else unchanged. And now back to Stefan.

A question also. That works both ways, doesn't it?

It does work both ways.

it does work those ways yes right so and also what's really have been nice is to see how the margins for the last during this six first six months have developed that we've said and I think that's important to also see that this liquidity has been really good in the natural the bond market so next slide is to mention some we're listing some transactions that had been done in our core market and as you see your list is long it could have been even longer because it's quite a lot of the transactions done we saw yesterday also really a big one when at the top of this list you see metron one 18 000 square meters sold by ams the pension fund and bought by Forksum actually, the KPA pensions is a part of the Forksum group, and it was a $3 billion deal. And all those transactions has been at very good levels, very well in line with our valuation, so it's at some even lower. There are some of those that has been done a little bit differently. lower yield levels below four percent, but they're mainly, you can look at them as a trove for assets close to the work on, or in some of them bought by family offices. So it's a more liquid, more activity into a transaction market, and we also see that in other segments like the residential, there are more activity over Sweden, and as you know, in the logistics that has been quite wide. So um it's it's nice to see how it's developing um next slide please um those uh graphs are from the last quarter essentially it's only a couple of weeks and it's just instantly can we report it for q1 and the last the last update we got from citymark but i think it's the same trend The rental development, or the rents in the city of Stockholm, the CBD, are still stable. We saw some contract sign of, I think, new record levels close to NK, some 45,000 square meters in offices rented by a lawyer, a law firm. But we also see a mass struggling in some sub-areas. We can see continuing vacancy rates growing some of the suburbs. We especially seized as we know. We also see that the number of employees are flattening out of the growth for more than 20 years. But on the other hand, very little new office space is under construction. So I would say it's still a good market. It's It still takes a long time to get a decision, especially from the private companies, and a little bit more decision-making in the public sector. But in general, we have a lot of discussions going on, but it will take some time. On the other hand, we also see that the trend of fewer square meters per employee is continuing. but that's mainly because we've become better at using space and determining how the different workplaces are used. The interest in the different services is continuing to increase and we are therefore also taking further steps to get a cutting edge when it comes to acting as an advisor to our existing and potential tenants. and all to help them to create places for human meetings, conversations, concentrating and doing business on that. And I also like to stress that the situation in the Stockholm office market is different. It's not as gloomy as we can hear sometimes from markets in London, Paris, New York and other US cities. As you know, all markets have their own characteristics, which make all of us different. And I'm still a great believer in Stockholm's long-term development for the office market. But it will be even more focused on, as you said before, the location, the public transportation and so on. a good location with good transportation. So in the long term, I think there will be a lot of reasons to be positive. This list you have seen before, and long term, I think it's important to show how stable and strong long-term customers we have. As you know, we also signed and renegotiated the Telia contract, and that will mean that In a while, that would be down to 2.5% instead of 3.6%. On the other hand, we've also seen some of our other news. Tenants coming up here, for example, within the next 12 months. So we're talking about here, maybe you can say, you have seen the press release we sent out some weeks ago. We did an agreement with them that they're reducing the space with about 12,000 square meters. The initial effect of this quarter is a net netting negative of 23 million. At the same time, Telia will also have to pay some exit compensation, which will be allocated over the term of the lease agreement. And with this agreement, Telia is leasing almost, will be leasing 25,000 square meters, will also prolong the contract a little longer, nine months. So it's in the end of 2031. But in total, when we see also that we were able to take this space, this area, for better rents than we've got so far, and we're expecting it, we have an investment expected to about 60, 70 million, and we will, when we have signed the full New contracts will add another positive net letting of 20 million. So in total, we're expecting it to be more than 40 million in new contracts. So long-term, it will be negative positive. This quarter, it was negative on the figures. Here we see the net letting minus 74 for the first six months, minus 36 for the second quarter. And, of course, that's a disappointing figure. We had, as I said before, a lot of discussions, negotiations, with the thing. We will end up in a signed contract, I hope, at least. We didn't get them to sign it before the summer, so with that said, I'm looking forward to the rest of the next six months here for the year. We have a goal, as you know, for reaching a positive netting of about 80 million annually. But after the start of this year, I don't really dare to believe that we can manage this for 2024. I hope, but I'm not really going to leave it right now. Then we'll be lucky with some of the larger product discussions we have. But it's more likely that this year will end when ending it up so a good second half, but not the whole year. We don't really dare to think it would be the possibility we normally expect it to be. And as I said, we have several good discussions in progress, but we're coming back after the summer. Next slide, please. Yeah, as you see, we do know about the renegotiations now that we know normally in most of the cases that we just prolong the contracts on unchanged terms, and that has continued during the beginning of this year. We had some small renegotiations with negative outcome. In the second quarter, I think it was minus 0.8 or something, so relatively unchanged, but it's not a... It's stable rent levels in most of the areas. Some of them still have some upside for women re-energizing, but in some, of course, there can be some small ones that are over-rented also in some areas. Occupancy rate of about 90% is still not where we like it to be. As you know, we are working for getting up to 94-95% again. It will take some time, as before. But that's where we would like to be in the next four or five years. Or three to five years. Where we see the vacancies is mainly in Svalbard Business Park. That we know, but we feel that we are a good investment business partner. And when we are able to do business next time, we will see a lot of new activity, new office tenants, but also a lot of retailers that are now opening up, for example, on Bicycle. And we also have Bosch Siemens there, and we will have Miele there. So it's happening a lot there. and we see a positive feeling about that. As you know, we like to aim to be as transparent as possible, which may always include this graph in our reports and presentation. It shows the development of contracted rental income, including what we noted about occupations, relocations, renegotiation, but it's excluding lending targets and indexation. It's decreased in the fourth quarter of 2003, as you know, because of what we sold, and also the vacant properties we had. It's a bit lower from before, and it's mainly because of the . If we would have, I'd like to add in another two quarters here, for example, it should be end of 25 or three, beginning of 26. I would say that the goal for us, this should be starting with a nine. It will be what we know now, Saab, Alfa Laval, other discussions we have, The Haganora accorded some indexation, so it would definitely, I hope, be more than 900-something in the end of 2025 and beginning of 2026. So far this year, we have invested about 1.3 billion. It will be similar next six months, and after that, it will be less. We haven't started any new commercial products, and a big one. I think what we see today, it will also take some time before the next big ones will be started if we haven't got any more signed contracts done. Yeah, our projects are progressing in line with the plans. We have completed the Regulator 4 for the Royal Opera and the Royal Amanda Theatre. As you can see, we're missing that on this list this time. And the other ones, that's also why the occupancy rate has been a little bit lower, because that was 100% occupied, of course. We have, that was working with filling up the pool, signing a new contract post. We know that Regenauton 3 is on its way now, and it's next door to the Åklandramaten. Separaton 1, Alfa Laval, is actually a little bit higher than that, but we don't have the contract signed with the restaurant. Alfa Laval have options to take more area, so that's why we don't work with that. So I think this will be... Here you can also see that it's a rental value for only those projects with almost 400 million, 366 million as it looks today. So the negative is the building costs. And as we said before, the business costs are still too high. I think we can see a little bit of easing. It's easier to negotiate in some of the new condos when we're out there right now. It's not big changes, but still a little bit too expensive, I think. to be able to have a positive view on new products. But with that said, Yrjö Bostad, next slide, please. Start residential products and the way we started in Hagenora. I think that looks good, actually, because of the demand of apartments in good locations. And I think Hagenora is a very good location. We will start to sell the two. uh owner apartments after summer and we still we have very good list of interest for that so we hopefully we can have some positive news during the second half of this year um and that that that looks much much more attractive right now as it is but then in the home We will continue also to work with future projects. But as you know, it's a small part of our business. But it's a positive part. Next slide, please. Åsa.

Yes. Back to sustainability. This quarter I thought I would go back to show some of our sustainability key performance indicators. You can see here in the table the energy performance target. Energy performance target for this year is 70 kilowatt hours per square meter, which represents an improvement of one kilowatt hour compared to 2023. However, there has been a cold and winter start of the year, an extra day in February, and very warm April and May. which means that the energy consumption has actually increased slightly during the first half year of 2024. The proportion of environmentally certified properties remain at an unchanged level. On the other hand, we have improved the rating of two properties that were recertified during the quarter. The proportion of green leases is also unchanged. Likewise, the proportion of green financing, which fell to 99% last year. In terms of total green assets, we have plenty of scope left for green financing. However, one individual mortgage property does not meet up to updated energy consumption requirements. This is a good incentive through the attractive discount on financing however, and our property management operations are working on bringing down the energy consumption, not only in this specific property, but over the whole property portfolio. Last but not least, I would also like to say that we are very proud that our commitment to social sustainability is making a difference, and I thought that I would provide two good examples of this. One example is the Homework Help Foundation, Leks Hjälpen in Swedish, to which we provide funding for Anestadsskolan school in Flensburg, where we supported students with requirements to enter upper secondary school. Now we have received feedback that 96% of these pupils passed the entry requirements and that our Homework Help group had higher merit rating than the rest of the school in average. Also, our engagement in Talang Akademien is also delivering results. So far this year, about 40 people have obtained internships, including a couple in their 60s that got permanent jobs, and a completely new life situation. A small contribution from Fabigea that makes a big difference for individuals. And by that, back to you, Stefan.

Thank you. So to summarize, before we open up for questions, it's a stable report. It's a stable for six months, I think. The negative, of course, the net letting. We have focused now on continuing focus on the cost control. We have continued, of course, a huge focus on rental work. The financial market has been, I would say, I think I'd have to say normal, it's stabilizing and it's back to normal. Transaction market is more kind of normal because it has been maybe too many transactions for some years before, but it's liquidity, good assets finders, we said, buyers. money on the uh sitting on the sidelines still i think and we receive that with the pension funds so transaction markets okay the the financial market okay the rental market stockholm is attracted is more focused on the even continue to be focused on the good locations the public transportation that was said and we are focused on now signing new contracts and reducing the vacancy weights so with that

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from John Vong from Van Lanshot Kempen. Please go ahead.

Hi, good morning, team. Thank you for the presentation. On your discussions with occupiers, is there any specific submarkets where you see better demand than others? And could you perhaps also zoom in on the Latin progress for the Hagenora and Hammarby-Heuster developments?

Thanks, John, for the questions. You can say the CBD is maybe the most the strongest market. And then I think all our markets, as you know, they have good public transportation. So I think we have good discussions in all of them. In Hammarby, maybe you have a little bit more of, what do you call it, creative companies. And they have also a little bit more struggling maybe with the economy and so challenging times. So maybe you see a little bit more turnover there, but it's still also a good interest for the future. We have Haganora and Hammarby in Portsmouth, and Accordat, I think, is what you're mainly thinking of. We haven't had any new signed contracts this quarter, but we have good discussions going on in both of them. So hopefully, within the next After summer, we'll probably have some good news there. Hopefully, if everything is what I can say right now, at least. Good discussions, but no signed contracts.

Okay, Claire. And when you're talking about potentially more turnover in those creative industries, are you talking about downscaling for these occupiers? As you know, this kind of industry is more...

sensitive to the economy, but very often it's smaller companies, so it's not any big issue. We had in Hammarby, as you know, the last 12 months, some companies that have been struggling with refinancing, for example, Cake, the motorbike company that scaled down or even went bankrupt and the Goodbye, Kansas, but that is also potential for good. We have good locations out in good areas. But it's normal when you have a little bit more negative economic outlook for those companies. So no big deal.

Okay, that's fair. And then just on the last slide, so slide 22. You mentioned as one of the priorities for 2024 is to enable future projects. Could you maybe talk about that?

We continue the planning processes and the planning discussions and zoning discussions in Arenastaden, where we also are, as I know, as Norman said, we're only halfway, but we need some time and some time before we realize that. And also in Plemingsburg, of course, we are continuing this owning process with the city of Budingen and taking it into the next steps. So that's what we mean with... And also, you can also add another dimension, it's that we work with the products so we can get better, hopefully, cut the investment or the project investments a little bit to make it possible to build. It has been too expensive. Of course, the building cost has been coming up, but also maybe we have to look at the products. What are we building and how are we building it to be able to reduce the investment?

Okay, that makes sense. That's it from my side. Thank you. Thanks.

The next question comes from Alexander Totomanov from Green Street. Please go ahead.

Good morning and thank you for taking my questions. Two questions for me. So this morning you reported a negative rental version of 2.3% on 59 million SEC of renegotiated leases. Are the negative renegotiations limited to specific submarkets or a set of submarkets in Stockholm?

Thanks, Alexander, for the question. No, it's some different... First of all, it's a very limited amount for the first six months. As we said before, most of the negotiations, we just prolong the contracts on existing terms, since we think it's good levels. There are some that have been... reduced, but it's very, very few and no specific sector, no specific area. So the short answer is no.

Thank you. And one question probably for Åsa. Fabike has expanded the portfolio of Colabo swaps to 7 billion from 6 billion previously. Could you give us an idea of the breakdown of the portfolio? Are volumes approximately equally spread out? Say, 2 billion in 1.8%, 2%, 2 billion, 2%, 2.2%, and maybe 3 billion in 2.2%, 2.5%? Or is it skewed in one way or another?

You mean for the 7 billion?

Yeah.

The 7 billion, they are all 10-year swaps. So the risk we take is to maintain these swaps for a period of 10 years, and they are at levels between 1.8 and 2.5%. So we pay somewhere between 1.8 and 2.5%, and we receive STIBR, which today is roughly 3.7%. and the bank can cancel them after a period of between three and six months, and then every three months the bank has an option to cancel the swap.

I don't really have here, because of the question, how much is on 1.8 and how much is on 2.5, but I think to make it more close to two, a little bit above 2.2, but less than 2 higher levels. Thank you.

The next question comes from Jonathan Carnator from GS. Please go ahead.

Good morning. Two questions on my end. I just wanted to double check on Tilia. I think you were saying that it's going to be from 3.6% to 2.5% of your total rent after the readjustment. Did I get that correctly? And does that mean that vacancy increases in the portfolio or is that going to be put for redevelopment the rest of the space? That was the first question, please. And the second question is, Just on the ICR of 2.4 times, obviously you've done refinancing where the margins have improved. You've increased also commercial paper. So just wanted to understand whether you were comfortable at this stage with the 2.4 times ICR or whether you'd look to mitigate that and whether you're potentially looking at disposals. In particular, you highlighted there were a few transactions at good levels. So is that something that you're considering at this stage? Thank you.

I think I will start with the last questions regarding the ICR. We are okay with the ICR at this level today, but we also see that we would like to improve it. And there are possibilities in increasing rents, of course, increasing the income, and also we see that the interest cost going forward is likely to come down. So there will be an improvement going forward in the ICR. Maybe not next quarter, but at least when we have the companies moving into the project properties like Saab and Alfa Laval as an example. But we are not exactly happy with the level long term. So yes, we would like it to improve.

And of course, selling a property...

Selling a property is always an option for us, and we discussed this earlier in the presentation too, that we don't have anything specific for sale at the moment, but we are in a market where there are buyers, and especially as we have seen over the last weeks or months, that the transaction volume has increased in Stockholm, and there are buyers for properties in good locations, so that's always an option for us.

Okay, so at this stage, I mean, one of the options that you haven't mentioned is dividend. I suspect it's not an option that you're considering given these other avenues that you have currently or just essentially time will improve the metrics as you deliver buildings and as also the viable component of your interest cost helps. Is that a fair assumption?

And you can also say that, as we said when talking about, if you look 80 months from now, the total rents will start with above 900. For a quarter, yes. And they also mean that the project portfolio, as it looks today, with the Forsen Accord, Accumulator and Alfa Laval and so on, they're moving in and also Saab, so almost seven million will be moved from the start to earn money again and make return and that will also have a positive impact if you look a little bit further on from now over 25 and beginning of 26 and that's also important to have. Then talking about Telia, When I said 2.5, it was maybe a little rough, but it will know more that it will be decreased. What we have said there, as you know, is that we have negative net letting this quarter of 23 million. We hope, and what we're aiming for, is that it will be plus 40, positive 40 in the future when we sign new contracts in the same area. So a positive total of 15 to 20, if you should look at it over time. And it's all about, of course, there will be some investments linked to that. So we're working with areas now. We couldn't show them for anyone before or for someone before we announced it some weeks ago. But now we have good interest. So I hope that we can send out some positive news about signing contracts for that area at least after the next six to twelve months. So what's negative today will be positive and add value a little bit longer term.

Okay, very clear. And just to be clear, I mean looking also at slide 15, There's no new theory in the sense that you don't have within your top tenants any big expiries in the near term, and you're forecasting fairly flat, i.e. you don't have any big departures upcoming that you're aware of.

We don't have any discussions like that right now.

Okay, very good. Thanks so much.

The next question comes from Nadir Rahman from UBS AG. Please go ahead.

Hi there. Good morning. Thanks for the presentation. I wanted to ask, firstly, regarding the comment you made in your Q1 earnings where you said that the vacancy you would guide to be roughly 5% and therefore occupancy at around 95% in quarters or years. There's been, I believe, a reduction in the occupancy towards 90% as of this quarter. I wanted to ask, where do you see the numbers going forward from here as a forecast? And secondly, on a similar note, with the LTV, we wanted to ask, we've seen it becoming flat now, and where do you see that going from here? And I know there's been questions about the interest coverage ratio as well. So, regarding the LTV, where do you see that going from here, with valuations starting to perhaps bottom out and reach a trough?

Thank you. We think that the valuation has bottomed out and we will see even uptick. And as we said, the transaction market has been more healthy or it could even be good in Stockholm areas this year. So yes, it's flattening out and probably hopefully a little bit uptick too. When talking about The occupancy rate, yeah. Of course, the long-term goal is 95. It will take some time, of course. It can be changed over time. It can be up a little bit or even down a little bit, as we saw in quarter-by-quarter. But long-term, we're working with that in all our areas. The area where we have the lowest right now is Svana Business Park, where we also moved, as you know, some from Svana Business Park to Arena Staden and increased ourselves, caused those vacancies. But I think Svana Business Park right now is a good interest. We have announced some good contracts there the last six months with Miele, Bors Siemens, and some other ones, so I think we will. But it can be up and down a little bit between the quarters, but the long term, I think, the trend has to be up to 94, 95 again. Thank you. That's one of the potentials.

The next question comes from Paul May from Barclays. Please go ahead.

Hi, guys. Thanks for the presentation. A couple of quick ones from me. Also, first of all, it's focused on transaction volume and valuations. I think you mentioned transaction volume is improving. I think year on year it has been, but it's still materially down versus the sort of general average, shall we say, in terms of transaction volume. And so I'm surprised the confidence you have over where the values are at the moment on the basis of that is still relatively muted. transactional volume you know a couple of deals does not necessarily mean the whole portfolio is worth X and just one on your comments on that if you see that transaction market improving noting June was down year-on-year for example relative to last year across Sweden and then secondly and linked to that is it's a question I ask all companies would you buy all of your assets today at the current book values with marginal financing costs? I'm just wondering what your response is on that.

Thank you. That's a good question. We'll start with the first one. I think the transaction market is difficult to compare between the years. Since we also had a very, the transaction markets some years ago would Maybe if you just look at the total turnover transactions that were made, it also includes all the M&A activities and so on. So it's difficult to talk generally also about this, because some portfolios that we saw some years ago maybe wouldn't be that easy to sell now. But in the Stockholm market, I think it's a healthy market now. We have said all the time that there are money investors on the sideline. The pension funds, some other fund managers, some foreigners are active. Folksam has been acquired, which insurance companies have been acquired, three properties now. We have some family offices that have acquired some trophy assets almost at very low yields. So I think the stock market is not back to what we saw some years ago, but quite a healthy market. And with that said, we also see, as you know, we have external value more than 50%, even this quarter. Last quarter, it had been more than 75%. And we feel comfortable that the values are well. And the other transactions we see in the markets more than well are support our valuations. If I would buy all the properties, no. Because that's where any other questions would happen. But most of them, yes. Would I be buying in the same area? Absolutely. We think the focus we have on CBD or inner city. We have also had the best total return the last 15 years. We have good assets at Stureplan, Kungsgatan and so on. We have Badensväder, Kvarn, Apotekar, big assets, big properties in a very good location. Arenastaden is a great area. And we all see still a lot of, since we see this development area, the future potential. Solar Business Park, as you know, is struggling short term, but Stockholm's second best public transportation spot. And Flemingsberg, it's a future long-term project where we have quite small investments right now. So the areas definitely, of course, there are some properties. You can't like all of them.

Thank you for your honesty. And as a result, should we be expecting more disposals over the coming, say, six, 12 months to take advantage of that? good transaction market. And as you say, not all the properties that you own, you would necessarily want to own longer term, should we expect.

To be honest, maybe that is the most liquid. Of course, there are some assets that are not that liquid as the other ones. And that's maybe the ones I was thinking about. We have no discussion about disposals right now. As you know, historically we have

uh from time to time sold some also to be able to invest in the projects and so on so we should not say we could be possible but we have no discussions right i'm sorry one one last one just on that the debt ratio continues to sit above your target i think 13.9 now slightly increasing versus the 13 target that you have how do you plan on bringing that back down and is that a core financial metric, or are you more focused on the LTV and the ICR?

We are much more focused on the ICR and also the LTV, although the LTV is still one of, on the strong side. So the depth ratio is more, you know, complement to the rest of the financial metrics.

Perfect. Thank you very much.

There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Okay. I don't think we have any written questions or any questions by mail now. So to summarize as we did before, I think even if the negative are net letting was in focus quite positive for the rest of the year so with that said, have a nice weekend have a nice summer and please give us a call if you have any further questions or comments thank you, have a nice day