Welcome to the Balder Q3 Report 2025. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing #5 on their telephone keypad. Now, I will hand the conference over to IR Jonas Erikson. Please go ahead. Good morning, everyone, and welcome to the run-through of Balder's Q3 results for 2025. With me in the room, I have Erik Selin, CEO, and Ewa Wassberg, CFO. I'll hand over to Erik and Ewa to run through some slides, and then we'll open up for questions. Thank you, Jonas. LoOking at the big picture of Balder, this is kind of similar to how it loOked last year. We have 54% residential of the total portfolio value. That stands now, the portfolio value right now stands at SEK 229 billion. Rating has to be flat from S&P, 95% occupancy, and a very good liquidity position of SEK 24 billion. LoOking in more specifically to the Q3 numbers, you can see a rental income increase as well as NOI increase of 7%. Profit from property management per share is only 2% up, but loOking at earnings capacity, it's 8% better than the same period last year. Net debt to assets is slightly down at 48.3%, and like-for-like rental growth now is 2.9%. NAV per share is right now SEK 93. LoOking at the earnings capacity compared to last quarter, basically no changes. On the bottom line, exactly the same. We have a bit higher NOI and slightly higher financial costs. That comes from some new financing, a lot of liquidity, and also old fixed instruments that expired. The portfolio, as I mentioned many times before, is very well diversified if you loOk at the geographies, property categories, and so on. You can see that the majority is in capital and larger cities. We have Helsinki, Stockholm, Gothenburg, Copenhagen dominating this. On categories, as I mentioned in the beginning, residential 54%, and then we have office, retail, other properties, and logistics. Office is 15% of the total. LoOking a bit longer back in time, we had since the inception 20 years ago focused on cash earnings, basically. That over time increased earnings capacity and cash flow. With that follows NAV increases over time also. We have had now a couple of years with a flat earning, and as you all know, that is because of rising interest rates. Hopefully, we can see a bit better trend when interest rates now seem to be stabilizing at the current level. Also, if you loOk at the longer term and loOk at property value, debt to asset, or occupancy, you can see a very stable development in occupancy and debt to asset, even if we loOk back 10 years. Property portfolio value has been increasing gradually since we are normally investing the cash flow. Yes, loOking at the financing, the current mix of funding is largely where we want to be, which is a 50/50 split between bank and bond financing. The level of available liquidity is in line with last quarter, which is a little bit higher than usual. This is in line with our planning for upcoming maturities since we have some larger Eurobond maturities during the beginning of 2027. If you loOk at the interest rate fixing and hedging ratio, it's stable. The average interest rate is now 2.9% compared to 3.0% last quarter. As you can see here, net debt to total assets is a little bit stronger than last quarter. The encumbrance ratio is stable. It's a little bit down since last quarter since we have more unsecured financing. We have said that we think it will be around this level over time based on our strategy of funding mix. Over to the maturity structure. If we start with the bank loans, the maturity structure is a result of the fact that Swedish bank financing is typically quite short, even though we have bank financing in other countries as well. If you loOk at the bond side, we have talked about smoothening the maturity structure. We have one year left in 2027 with clearly more maturities. On the other hand, we are trying to top up with new funding in the longer maturities, like we did this quarter with the issuance of the seven-and-a-half-year Eurobond. Ideally, we want to have one Eurobond benchmark outstanding out to seven, eight years. Going forward, we will also continue our path of issuance in the Swedish market. We updated our green and social financing framework recently. The next longer maturity bond issue in Sweden will probably be under that framework. Here is more sort of a structural overview of the funding and capital side. As we have said before, we will continue to have a balanced capital allocation until reaching our target of 11x net debt/EBITDA. Here you can also see an updated calculation on the convertible bond, which when that is converting, assuming that we're above strike price, obviously will have a very positive effect on the indebtedness numbers as well. In terms of the funding strategy, there's really no change compared to previous quarters. That was all from us. On that note, we will leave the floor open for questions. If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #6 on your telephone keypad. The next question comes from Jan Ihrfelt from Kepler Cheuvreux. Please go ahead. Ok, thanks. Good morning. I have three questions. I kick off with the cash position here. It's coming up from SEK 4 billion in the second quarter to SEK 11 billion in this quarter. You're talking about maturities here. Was that in the fourth quarter? Could we expect that the cash position could come down a little bit at the end of the year? Hi, Jan. No, the main maturities that we're planning for now are Q1 2027. We have two Eurobond benchmarks maturing in the same quarter. We would expect to have sort of around this SEK 25 billion mark of available liquidity pretty much up until then. It's going to be a bit of work to prepare for that. Once that's over, we move into sort of a very smooth maturity structure that we've now worked on for a couple of years to establish. This is sort of the last more lumpy quarter in terms of maturities, and then it's going to be pretty smooth from there on. Ok. My second question relates to the residential business in Sweden. There have been some negotiations already finished in Gothenburg, as I see. Do you have any comments on where you expect the outcome could be when it comes to rent uplifts in Sweden? You mean for next year, or? Yes. No, I think it's a bit too early for us to know that right now. What do you see on the market? I mean, this is part of the annual negotiation schedule. I think it's a bit premature to have a good view on that today. What we have said, Jan, is since 1970, pretty much you've had an average increase of Swedish rents of about CPI plus 1.6%. The pattern that we typically see is that in high-inflation years, rents lag a bit, and then in low-inflation years, we catch up. We're obviously in a catch-up phase right now. We would expect it to be clearly above inflation for the coming two to three-year period if it should follow the previous patterns. To be more precise than that, I think, is to jump to conclusions. Ok, fair enough. The last question regards Finland, of course, the residentials. How has the vacancy situation on the market developed during the third quarter? If you loOk for us, it's more or less the same, Jan, as the quarter before. I don't remember, maybe one tenth up or down, I don't remember. 95.8. Yeah, 95.8%. If you loOk at the total vacancies, it's actually started to melt, especially in Espoo, also in Vantaa, and a little bit in Helsinki. I think you will see that in Kojamo's number because I think they had a peak on like 9% vacancy. Even if I don't know, I think they will soon be down on 3%, 4%. After that, hopefully, the overall market gets even stronger. There are actually positive signs finally, especially in Espoo. Ok, thanks. These were my questions. Thanks. The next question comes from Fredrik Stensved from ABG Sundal Collier. Please go ahead. Thank you. Morning. I have two questions. First, on the large cash position, as you talked about earlier, what kind of interest rate do you get on that? How is that reflected in the earnings capacity? You can say that our available liquidity is made up from both cash, financial investments, and available credit lines from banks. It obviously depends very much on how the mix is between the available liquidity and the asset side of the balance sheet. We specify in the report, so you can see the split there when we have the run-through of all the key ratios in the back of the report. Typically, you could say that the funding cost is what the funding cost is. You can just loOk at sort of market prices for bonds. We've been pretty transparent about our bank funding costs as well. When we do invest the liquidity, I would say it's between 50 basis points and 100 basis points net expense vis-à-vis our own funding cost, a little bit depending on what opportunities we can find. The bank committed lines are anywhere between 20 basis points- 40 basis points in commitment fee. That's sort of the net expense for that part of the available liquidity. Depending on the mix of it, you can run those numbers and get to an estimate. Yes, thanks. That's also how you do it in the earnings capacity financials line item? Yes, we try to loOk at roughly where we are, what kind of liquidity positions we hold, and make an estimate from that. Yeah, that's fair. Just one follow-up on this. I think in the quarter, you acquired financial assets for SEK 2.5 billion, give or take. Is that these kind of short-term liquidity positions, or is that something else? No, that's absolutely right. Commercial paper money. Ok. Yeah. Yeah, thanks. That was one or that was several, but one topic. The other topic, buybacks. Erik, you alluded to buybacks or share buybacks being a good complement in terms of capital allocation in the CEO letter. In terms of timing, and I appreciate this is forward loOking and so on. In terms of timing, how do you see the possibility to start with buybacks? Or when do you think you can start with buybacks? We don't know exactly because we cannot decide what happens. This is more of how we are thinking in general. The first step is Norion dividend, as you know. If you just make the numbers, you can see that if we don't do anything special over time, we will be very over-capitalized. I think it's reasonable to inform how we are thinking that we will compare investment, deleveraging, and share buybacks in the toolbox. The exact timing, I think it's I don't want to say that exactly. It's more of the long-term thinking I'm talking about. Yeah, that's fair. That's all for me. Thank you. Thanks. Sorry, Fredrik, let me just add on the financial side as well. The fluctuations that you see in our net financing cost this quarter are not only because we built up the liquidity position. There are also a few other fluctuations that are more temporary in its nature. Just to be aware of that. Are you able to quantify how much that is? I would say a bit more than half of the differential between Q2 and Q3. Very good. Thank you. Thanks. The next question comes from Lars Norrby from SEB. Please go ahead. Good morning. Morning. Regarding your ownership in Entra in Norway, you are close to 40% and Kristallen around 37%. What's your view about that ownership situation? Is that a sustainable long-term ownership? Would you be open to sort of find some kind of long-term solution on that one? Yes, we are absolutely always open to good solutions, of course. I think over time, the situation will change. It's very difficult to know exactly when and how. Kristallen recently changed CEO, and the largest owner became very active. I think we also have to see a little bit what they want to do over time. Any discussions with them? Have you had any discussions with them? We come back to that if something interesting happens. My second question regarding Norion, you're talking about it as a distribution to shareholders. That's the intention of the board. Yeah. Is divestment still an alternative? Yeah, in theory, Lars, if somebody pays a very good price, we can sell. Absolutely. When we made the dividend decision, the share price was, in our view, way too low. I didn't want to have the responsibility to sell it at the, as I thought, totally wrong price. If there is a buyer that pays a lot, we can sell also. You know it's a bank. It's a bit more complicated for a buyer to buy all our shares because you have to buy the whole company. You become a financial holding company, and you have to have permissions and stuff. It's a bit more complicated than normal companies, as you know. I think Lars as well. Ok. If our stake would have been 5% of the bank, then it would have been an easier decision. Now being 44%, it's not a stake that you just place that easily. You also have to consider that if we were to sell instead of distributing as a dividend, we would probably have to do that in several tranches. You would create a pretty in-time sort of long overhang of the Norion stock instead. It's a solution where we found, I think, a balanced way of doing it. It's up to each shareholder to decide whether to keep the stock or not. Ok, thank you. Those are my questions. Thanks. The next question comes from Stefan Buhlo from Nordea. Please go ahead. Good morning. Thank you. I have a couple of questions, starting off with a follow-up on share buybacks. We had three questions on that. What valuation level do you find attractive for considering share buybacks? Do you have a balance sheet level that you're comfortable with? Finally, in terms of volumes, how much do you find reasonable to do? Is it the entire cash flow generation or just part of your cash flow generation? Some flavor on valuation, balance sheet, and share buyback volumes. Very smart questions that I will not answer specifically. You know the share price, that will depend on alternatives and how the situation is when that happens. I would not like to say a specific price. Obviously, if we have a discount and we think the values are Ok and we don't find anything better, we will be very keen on buying back. Balance sheet, we have to sort of guard the S&P grid, mostly debt equity. We want to have some headroom. That number, you can watch. You can also get specifics from Jonas, for example. That will be sort of a limitation not to risk the rating. Amounts will, I mean, if we don't find anything to buy and the share is at, as we think, a good price, then we can buy back a lot, obviously. We will see as we go along. Ok, perfect. Thank you. Another question. In Q3, you pressed the release that you started a residential project in Gothenburg. I'm just wondering, was this a special situation? Have conditions improved for residential project starts suggesting that we should expect more of that going forward? Conditions are a bit better. It's not super good, but it's a bit better. We think we can do some small activity. In this case, we already own the land, and it's an area that we sort of want to complete. You have a couple of different dimensions. We have some similar cases, and we also have some condominium cases. You will not see any massive investments. That will not happen. We've been almost at zero, so maybe we start a couple per year or something like that. Thank you. When it comes to transactions and the competitive landscape and the transaction yields for property acquisitions, do you think that has changed in the second half of 2025 compared to the first half of 2025, or is it the same situation? We see a lot of transactions, actually, in the market that you could do if you want to. I also have a very big demand for investment from many institutions that want to co-invest. There's a big appetite. My feeling is that there are no sellers really at the sale prices. I cannot find anything super cheap. My guess overall is that yields are pretty much the same. It is better because you have lower interest rates and hopefully a bit more positive outloOk on the economy overall in 2026 and going forward. You also have a very strong financing market. Banks are very keen on protecting their balance sheet, meaning they want to have sort of increased loan boOks if possible. You have a strong bond market. If you combine all of these things, I would say the market is actually much better if you want to do transactions. I would guess yields are pretty much the same, but everything else is better. Ok, interesting. Thank you. Those were my questions. Thanks. Thanks. The next question comes from Andreas Thum from Green Street. Please go ahead. Hi, good morning. A couple of questions from my end. Firstly, what was the driving factor behind the year-over-year decline in profit from property management coming from the associated companies? Maybe you can give a bit more color around that because I also see that in the earnings capacity, that amount has not changed. No, we decreased the holdings in associated companies. We sold one of the larger ones, Centur, and we sold some small, I think. That's in general a smaller part of, even if you loOk at the boOk value compared to the equity or whatever measure you take, the part of JVs are slowly getting smaller. Understood. Thanks. I guess on occupancy rate across your portfolio, that's been sort of very steady over the years at 96%. It dropped down to 95% last quarter and seems to be sort of sticking there now. How do you see the outloOk for that? I do recall from the last call it was sort of mentioned as being like a rounding error. Do you see any chance of clawing back occupancy? Which are the segments where you've actually seen occupancy come down? I guess is the outloOk in certain aspects also more difficult when it comes to perhaps Swedish offices or Swedish residential, at least in terms of the more regional Swedish residential, which has been intermediate? My guess is it's not so hard for us to have 96% again because it's, you know, we say in whole percent, but it's actually tenths of a percent. I think it was 95.41% or something like that. I think it was a small fraction better than last quarter. I guess that you will most often see 96%, and occasionally, it can be 95%. If you loOk at the different segments, I mean, as you know, we have a pretty diversified asset side. You obviously have slightly different drivers. Sweden and Denmark, generally, there are no vacancies. That's been sort of very stable for quite some time. So far, we haven't seen anything that suggests that would change. We are not really present in the parts of Sweden where you might have slightly higher vacancies in the residential market. If you loOk at the Finnish residential side, as you know, if you've followed us for some time, there's been higher vacancy rates in the past in the market. As Erik mentioned before, we're seeing that slowly improve as the new construction of residential properties comes down. Obviously, you have the commercial segments, which are more difficult to predict. There, you've had a little bit of delta in the last couple of years. Again, we're very diversified. Offices are less than 15% of our total portfolio, which means that we don't have the same kind of sort of dramatic fluctuations on the commercial side as you might see in someone more specialized in offices only, especially in the big cities. It's a very diverse portfolio. That's why it's also moving pretty slowly. If we do get a sort of better economic outloOk for next year, then typically cyclicality goes for commercial premises as well. Let's see. Yeah, understood. Maybe coming back to your last point about that fiscal boost coming next year, and also monetary policy becoming or already has become quite accommodative, are you seeing any effect of that on the ground in terms of just business sentiment, things of that nature that would be leading indicators for perhaps better leasing next year? You have a time lag, you know. I guess you will see more of it. If I'm just guessing, I think you will see some signs there maybe in a quarter or two. You always have a time lag. When it gets better, it lags, and when it gets worse, it lags as well. I think everything points in that direction. You do see better consumer sentiment and consumer spending. We're currently at the highest savings rate in Sweden in relation to disposable income that we've seen for, I think, 40 years or 50 years. Consumers have been extremely cautious for many years now. Now we're starting to see a little bit better consumer spending and overall more optimistic views on the future. I think that's typically what triggers a more positive business sentiment eventually as well. It's hard to predict the timing, obviously. Yeah, makes sense. Thank you very much. That was it. Thanks. The next question comes from John Vong from Van Lanschot Kempen. Please go ahead. Hi, good morning. Just a couple of slides from my side. You're quite positive on the economic backdrop and the turnaround there. At the same time, you said that you're not seeing too many cheap assets available. It feels a bit counterintuitive that you would be sitting still going into 2026. What should we expect in terms of investment activity on your side? It's impossible to forecast because it's totally depending on if we find good investments, we are interested. Otherwise, we will do nothing. It's absolutely impossible for me to forecast. We just focus on capital allocation and increasing the long-term value of the share over time. I feel optimistic that we can do good things next year if nothing new happens. In terms of capital allocation, would you be considering changing your overall asset split or geographical split? No, I think that will not change much because it takes such big amounts to change it. That will be, I think, roughly the same. Ok, that's clear. Just on your financial investments, it increased by SEK 2.5 billion compared to Q2. Could you provide a bit more color on that? Also, what's a more normalized level of these holdings? Now, we have very much liquidity because we are preparing for maturities that come in 2027. That's why we have a bit too much cash, you can say, that we primarily buy commercial paper or stuff like that. This is preparation for 2027. Ok, so it's mostly short-dated debts that you have? Yeah, absolutely. We have to get some interest on it. That's a mix of different commercial papers, basically most of it. Ok, that's clear. Thank you. The next question comes from Stefan Andersen from Danske Bank AS. Please go ahead. Thank you. A couple of questions from me, starting with this target you have. I'm trying to understand the direction here because I get different signals from you in a way. I mean, you're talking about reaching the net debt CBGA of 11. We've heard that before. I guess you could have more or less been there now if you were really eager to get there. You've had quite a pace from the investment side again here now, and you're talking about repurchasing of shares and the bump with Norion. I'm just trying, and you have a high liquidity. Some of it will go to quite a lot for the refinancing, but you still have that. That's a good question. What we've been trying to say is that we can do a mix of this. We have no specific timeline on the 11 target. We are flexible there. It's our own target, so we can always make a combination of strengthening the numbers, do some investments, do buybacks if you want to. Think more of a sort of a combination over time. The long-term trend is lower debt/EBITDA, but not necessarily quarter by quarter, if you understand what I mean. We've also said that in regards to the distribution of the Norion shares, we've also said pretty clearly that the leverage metric that we currently see as the most restrictive one is debt through debt plus equity, according to S&P's definitions. There, we're currently at about 56.5%. S&P requires us to be below 60%. The Norion distribution would have about 1% negative impact on that measure. Theoretically, we could do Norion already today. We've said that it's probably a good idea to build perhaps a couple of percent, a couple of tenths of a percent more before we do it. I think we've also said that that's sort of the more restrictive one that we steer on more short term. I think view the net debt/EBITDA target as something where you should watch for the trend rather than the absolute level in the short term. Ok, perfect. Just continuing as you have been continuing when it comes to activity, given that you find into that interesting targets then. Absolutely, exactly like that. Ok. The second question, as you mentioned, is a new CEO at Kristallen. I spOke to Paul. I get the impression that he is open for a solution is a stupid word, I guess, on the Entra situation. Of course, you could keep it as it is. I get the impression he is eager to clear that up one way or another. This is just hypothetical. Can you see any situation where you're buying that stake? I think that is unlikely because it will be such a big expansion for us in the Oslo office. I think it's very unlikely. Of course, everything is priced right, but I think it's very unlikely. Perfect, thank you. The final question, we touched a little bit on the residence side. If we go to the co-op owner apartment side, Carla Thunen and others, do you see any—it has been a tough market. Do you see any signs there in any direction? It's not getting worse, at least. It's still slow, I would say. I'm optimistic about next year because if they have better consumer sentiment, that is what it takes, I think. Hopefully, we have a better 2026. You never know. Right now, it's still slow. Prices are stable or maybe trending upwards anyway. It's not bad, but it's a slow market. I think it's important to remember here that there's nothing wrong with the affordability. That's not where the issue lies. It's more on the sentiment and belief in the future on the consumer side. Affordability is good. Savings ratios are, I mean, we have a savings ratio in Sweden of 16% of disposable income at the moment. There needs to be a bit more consumer confidence, I think, for that market to get going. All right, thanks. That's all for me. As a reminder, if you wish to ask a question, please dial #5 on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments. Ok, thanks, everyone, for listening in. You know where to reach us. If you have any follow-up questions, we'll obviously be available throughout the day. Thank you very much.