Fabege AB (publ)

Good morning and welcome to the presentation of our report for the first half of 2024. As usual, our CFO and Vice-CEO, also best, are 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've seen many of our markets in a positive way. For example, the transaction market in Sweden is more liquid today. And it was a while ago. The financial market, we will tell you more about that. It's absolutely much more healthy. But on the rental market, where there are some more challenging mainly because of the striving economy in Europe and in Sweden. But we will tell you more about this later. What is positive for the quarter and for the first six months is that we're increasing our rent of income. We have essentially unchanged gross profit. We have some during the Q2, a very small write down, so 80 million. And so we see as we said, a stabilizing transaction market and valuing forms in the markets. And we 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 about that. We'll come back to this, both the net letting and the view of the market later. But we start with handover 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 Commendum's occupation in Hägen Mindre was the largest one. On a -for-like basis, income increased by 8 percent. Increased operating expenses were mainly due to increased heating expenses and higher administrative expenses. The surplus ratio came in at 73 percent. The Bostad's gross profit amounted to minus five 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 percent at the end of June. After having increased during Q1, it felt that 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 minus 49 million related to a capital contribution to Ariana Boulaget 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. Unrealist 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 NREF. 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. This turns to slide four. The yield requirements leveled up 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. The property equity decreased during the quarter and amounted to 121 SWEDISH KRANZ per share. And the long term net asset value, the EPRRA NRV, amounted to 146 KRANZ 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 set up 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. Overall, revolving credit facilities totaled 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 swap, 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.

Also, it would have been nice to see how the margins for the last six months have developed. And I think that's important to see that liquidity has been really good in the bond market. So, next slide is mentioning some of the transactions that have been done in our core market. And as you see, your list is long. It could have been even longer because there are quite a lot of the transactions done. We saw yesterday also a really big one. At the top of this list, you see Mentoron 1, 18,000 square meters sold by AMS, the pension fund, and bought by Forksum actually, the KPA pension. They are part of the Forksum group and it was a 3 billion deal. And all those transactions have been at very good levels and very well in line with our valuations. So, it's at some point even lower. There are some of those that have been done at least lower yield levels, maybe below 4%. And then mainly you can look at the asset trove for assets, closed to the work plan, or some of them bought by family offices. So, it's more liquid, more activity in the transaction market. And we also see that in other segments like the residential, there are more activity over the Sweden and as you know, the logistics have been for quite a while. So, it's nice to see how it's developing. Next slide please. Those graphs are from the last quarter. It's only a couple of weeks, so it seems at least to be reported for QQ1. And the last update we got from Citymark. But I think it's the same trend. The rental development, the rents in the city of Stockholm, the CBD are still stable. We saw some complex sign of the, I think, new record levels close to NK, from -5,000 square meters in offices rented by a lawyer, a law firm. But we also see a must struggling in some sub-areas. We can see a continuing vacancy rates growing in some of the suburbs. We especially see, 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 still takes a long time to get a decision, especially from the private companies. And they're limited in 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 become better at using space and determining how different workplaces are used. The interest in the different services is continuing to increase. And we are therefore also taking further steps to better cutting edge when it comes to acting as advisor to our existing and potential talents. 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 entirely gloomy as we can hear from sometimes from markets, London, Paris, New York and other new 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 we said before, the location, the public transportation and so on. And I think that the areas are in good location and good transportation. So 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 a renegotiated telecom contract and that will mean that the wind that we set would be down to two and a half percent instead of three and a three point six percent. On the other hand, we will also say some of our other news tenants coming up here, for example, Alfa Laval and Saab within the next 12 months. So we're talking about here. Maybe you can say you have seen the press release with 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 letting negative of 23 million. At the same time, they will also have to pay some extra compensation, which will be allocated over the term of the lease agreement. And with this agreement, they are releasing 25,000 square meters. We also prolonged the contract, maybe it's a little longer, nine months. So it's the end of 2031. But in total, when we see also we're able to take this space, this area, and for better runs than we've got so far, and we're expecting it. We have an investment expected to about 60, 70 million. And we will. But we will when we have signed a full new contract, we 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 think 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 will be 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. That will be luck with some of the larger product discussions we have. But it's more likely that this year will end on an acme with plus figure when we're ending it up. So a good second half, but not the whole year. We don't really dare to think it will be the positive we normally expect it to be. And as I said, we have several good discussions in progress. So 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 point eight or something. So relatively unchanged, but it's not a stable rent levels in most of the areas. In some of the areas, there was some upside for women renegotiating. But in some, of course, there can be some small ones that are over-rented also in some areas. So our occupancy rate of about 90 percent is still not what we are where we like it to be. As you know, we are working for getting up to 94, 95 percent again. It will take some time before, but that's where we will be. We would like to be in the capital of the next four or five years or three to five years. And when we see vacancies, it's mainly in Swannabrissnes Park. And that's new, but we feel we are good in Swannabrissnes Park now. And when we are able to visit next time, we will see a lot of new activity, a new office. But also a lot of retailers that are now opening up for the buy cycle. And we all have Bosch, we will have Miele there. So it's happening a lot there. And we all learn. So we see positive feeling about that. As you know, we like to aim to be as transparent as possible, which is 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 letting the targets and the indexation. It's a decrease in the fourth quarter of 2023 as you know, because of what we sold and also the vacancy properties we had. It's a bit lower than before and it's mainly because of the... If we would have added another two quarters here, for example, if it would be end of 2025 or 3, beginning of 2026, I would say that the goal for us, this should be started with a

nine.

It will be what we know now, Saab, Alfa Laval, other discussions we had, 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 doing this. I think what we see today, it will also take some time before the next big ones will be started. We haven't signed contracts. Yeah, the projects are progressing in line with the plans. We have completed the Regulatron IV for the Royal Opera and the Royal Dementia Theater. As you can see, we're missing that on this list this time. And the other ones, that's also why the occupational rate has been a bit lower because that was 100% occupied, of course. We have the other ones working with filling out the signing contract portion. We know that Regulatron III is on its way now and is next door to the Opera Dremata. So part of one, Alfa Laval is actually a little bit higher than that. But we don't have the contract signed with the restaurant and also Alfa Laval have options to take more areas. That's why we don't work with that at the moment. So I think this will be, you can also see that it's a rental value for only those products with almost 400 million, 366 million as it looks today. So the negative is the building costs. And as we said before, the building costs are still too high. I think we can see a little bit easing, a little bit better. It's easier to negotiate in some of the new condos when we're out there right now. But still, it's not a big change, but still a little bit too expensive, I think, to be able to have a positive view on new products. But with that said, here in Bostad, next slide please. Start residential projects and the way we started in Haganora, I think that looks good actually. Because of the demand of apartments in good locations. And I think Haganora is a very good location. We will start to sell the two in a 10 owner apartments after summer and we still have a very good list of interest for that. So hopefully we can have some positive news there in the second half of this year. And that looks much, much more attractive right now as it is. But in the home, we continue to work with future products. But as you know, it's a small part of our business. But it's a very nice and positive part. Next slide please. Awesome.

Yes. Back to sustainability. And 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. And the 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 wintery 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 percent 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 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, Läxhjälpen in Swedish, to which we provide funding for Annestadsskolan, a school in Flemishberg where we supported students with requirements to enter upper secondary school. Now we have received feedback that 96 percent of these pupils passed the entry requirements and that our Homework Help group had higher marriage ratings than the rest of the school in average. Also, our engagement in Talang Akademin 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 Farb To summarize

before I open up for questions, it's a stable report. It's a stable report of the first six months, I think. The negative, of course, the net letting. We have focused now on the cost control. We have continued, of course, a huge focus on the rental work. The financial market has been, I would say, I think that is normal. It's stabilizing and it's back to normal. The 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, finance, we said, bias. And there are money sitting on the sidelines still, I think. And we will see that with the pension funds. So the transaction market is okay. The financial market is okay. The rental market. Stockholm is attractive. It's more focused on the, even continuing to be focused on the good locations, the public transportation, as we said. And we are focused on now signing new contracts and reducing the vacancy rates for food. So with that, questions please.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. 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 sub-markets where you see better demand than others? And could you perhaps also zoom in on the letting progress for the Hagenora and Hammaby-Höster development?

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 Hammaby, maybe you have a little bit more of creative companies. And they have also a little bit more struggling with the economy and so on, challenging times. So maybe you see a little bit more turnover there. But there's still also good interest for the future. We have Hagenora and Hammaby in Porsund and Accord, I think, is really mainly the thing off. We haven't had any new sign conflicts this quarter, but we have good discussions going on in both of them. So hopefully within the next, after some, we'll have some good news there. Hopefully, if everything is, well, what I can tell you right now, at least good discussions, but no sign conflicts.

Okay, Claire, and when you're talking about more, 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 we have very often smaller companies. So it's not a big issue. We had in Hammaby, as you know, the last 12 months, some companies that are striving to 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 of good areas. But it's normal when you have a little bit more negative economic outlook for those companies. So now 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?

Oh, we continue the planning processes and the planning discussions in the arena start-up, where we also, as you know, we normally say we're only half ways, but we need some time and some time before we realize that. And also in Plemingsberg, of course, we are continuing this planning process with the city of Budingham and taking things to 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 that we can get better, hopefully cut the investment or the project investments a little bit. So to make it possible to build. It has been too expensive. Of course, well, the building costs has been coming up. But also maybe we have to look at the products. What are we building and how are we building 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 Toto-Manhoff 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 percent on 59 million sek 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. And as we said before, we are the most of the renegotiations, 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 few. No specific sector, no specific area. And it's some, no. So the short answer is no.

Thank you. Thank you. And one question probably for also. Fabike has expanded the portfolio of colorable swaps to seven billion from six billion previously. Could you give us an idea of the breakdown of the portfolio? Like are volumes approximately equally spread out? Say two billion in 1.8 percent, two percent, two billion, two percent, two point two percent, maybe three billion, two point two percent, two point five percent? Or is it skewed in one way or another?

You mean for the seven billion? The seven billion, they are all 10 year swaps. So the risk we take is to be, to maintain these swaps for a period of 10 years. And they are at levels between one point eight and two point five percent. So we pay somewhere between one point eight and two point five percent and we receive a cyber, which today is roughly three point seven. 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 one point eight and how much is two point five. But I think to make it more close to two, I believe it's about two point two, less than two higher levels.

Thank you.

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

Good morning. Two questions on my end. I just wanted to double check on Telia. I think you were saying that it's going to be from three point six to two point five percent 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, just on the ICR of two point four times, obviously you've done refinancing where the margins have improved. You've increased also commercial paper. So I just wanted to understand whether you were comfortable at this stage with the two point four times ICR or whether we had looked 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 OK 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 Sab 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 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.

OK. But 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, we're talking about if you look 80 months from now, the total rents will start with nine above 900 per quarter years. And they also mean that the project portfolio, as it looks today, with the Porsche and Accordet, Accumulator and Alfa Laval, they're moving in. And also Saab. So almost seven million will be moved from there to 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. And when I said 2.5, it was maybe a little rough. But it will move more that it will be decreased. What we have said there, as you know, is that we have a net negative net letting this quarter of 23 million. We hope and what we're aiming for is that it will be plus 40, plus positive 40 in the future when we sign new contracts in the same area. So a negative 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. But so we will we work with areas now. We couldn't show them for anyone before or for someone before we announced it some weeks ago. And but now we have good interest. So I hope that we can make some send out some positive news about signing contracts for that area. At least after the next six to 12 months. So positive. What's negative today will be positive and add value a little bit longer.

OK, very clear. And just to be clear, I mean, looking also at slide 15, there's no new Telia in the sense that you don't have within your top tenants any big expiries in the near term. And you're forecasting 30 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.

OK, thank you. 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 Q1 earnings where you said that the currency you would guide to be roughly five percent and therefore occupancy at around 95 percent in the in quarters or years. There's been, I believe, a reduction in the occupancy towards 90 percent out 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, going to 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 even been good in Stockholm in the last year. So, yes, it's flattening out and hopefully it will be uptick too. We're talking about the occupancy rate. Of course, the long-term goal is 95. It will take some time, of course. It can be over time, it can be up a little bit or even down a little bit, as we saw in quarter from quarter. But long-term, we're working with that in all our areas. The area where we have the lowest occupancy rate right now is in the business park, where we also moved, as you know, some times from a business park to a real estate and increased our sales, caused those vacancies. But I think the Swannan Business Park right now is in good interest. We have announced some good contracts there in the last six months with Miele, Bosch Siemens and some other ones. So I think we will. It can be up and down a little bit between the quarters, but 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, I was 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, should 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 still relatively muted transactional volume, you know, a couple of deals does not necessarily mean the whole portfolio is worth X. And just wondering your comments on that. I think you see that transaction market improving, noting June was down year on year, for example, relative to last year across Sweden. And then secondly, linked to that is 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. But we start with the first one. I think the transaction market is difficult to compare between the years. Since we also had a very transaction markets some years ago, what maybe if you just look at the total total turn of transactions that were made, we also include a very M&A activities and so on. So it's difficult to talk generally also about the because some some some portfolios that were with saw some years ago, maybe it wouldn't be that easy to sell. Now, I think the stock market, I think it's a healthy market. We have said all the time that there are there are money investors on the sideline, the pension funds, some other fund managers, some foreigners are active. Folk some has been acquired, which insurance companies has been quite free properties. Now we have some family offices that are quite some some trofe assets almost at very low yields. So the stock market, I think the stock market is not back to what we saw some years ago, but quite a healthy market. And we that said, we also see, as you know, we have valued external value more than 50% even this quarter. Last quarter, it had been more than 75%. And we feel comfortable that we values are well. The other transaction we see in the markets more than well. Support our variations. If I would buy all the properties, no. Because we would have to any other questions would have. But most of them, yes, would have been buying in the same area. Absolutely. We think the focus we have on the CBD or inner city, we have also have the total best total return the last 15 years. We have good assets at Sturre Blanc, Kungskaten and so on. We have a part of the big assets, big properties in a very good location. Arenastaden is a great area. And we all see still a lot of different things we see in this development area. A huge potential. Solarbisnespark, as you know, is struggling in the short term. But Stockholm's second best public transportation spot. And Flemmingberg, it's a future long term project where we have quite small investments right now. And Hammarby Sjöstad is also an old industry. So the areas definitely, of course, there are some properties. But you can't like all of them. Of

those

of

them. Thank you for your honesty. And as a result, should we be expecting more disposals over the coming, say, six, twelve 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 not the most liquid. Of course, there are some assets that are not that liquid as the other ones. And that may be the ones I was thinking about. We have no discussions about the disposals right now. As you know, a history of doing that, from time to time, some also to be able to invest in the projects and so on. So we should not say it could be impossible, but we have no discussions

right now. I'm sorry. One last one. Just on that. The debt ratio continues to sit above your target. I think thirteen point nine now slightly increasing versus the thirteen target that you have. How would 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. The LTV is still one of the strong sides. The debt ratio is more a 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 before, I think even if the negative net letting was in focus, it's been 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.