Welcome to Castellum Q1 Report 2024. 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 pound key five on their telephone keypad. Now I will hand the conference over to CEO Joacim Sjöberg and CFO Jens Andersson. Please go ahead. Good morning, everyone, and thanks for joining us. I'd like to start by drawing your attention to the picture on the first page of our presentation. It shows one of our recently started projects, the complete renovation of three buildings in Stockholm, of which one the one with the reddish façade is designed by the renowned architect Ralph Erskine. Thus the project is named Erskine and Friends in his honor. That was just a glimpse of what we are going to hear more about later. So our main strategic decision last year, the rights issue of SEK 10 billion and the divestment of properties worth SEK 5.2 billion, can be seen in the P&L when comparing this quarter with the same period last year. The rental income is not increasing as much as could be predicted, but that is due to divestments, and the cost base is also favorably affected by the lower interest rates. This combined with a good cost control, the income from property management is up 13%. Looking at our rental income, we also see that the negative leasing from last year translated into the like-for-like figures. But as mentioned in the Q4 report, it was expected and that the interest rate hike has left a mark on the economy with somewhat poorer demand. However, our net leasing for this period is positive, not much, but at least positive. We have during Q1 sold non-strategic properties for a significant amount, and 347 of those are in the retail segment. After the quarter, we have sold a portfolio of nearly SEK 1 billion. Again, non-strategic properties, and we are selling because we want to, not because we have to. These proceeds will be used to top up our new investments in addition to those volumes communicated earlier. For those of you who are new to Castellum, just a brief overview: Castellum is one of the largest listed property companies in the Nordic region. We're a fully integrated company with local hands-on presence where our assets are located. The property portfolio is located in attractive growth regions in the Nordics, and we're exposed to the robust Norwegian market via our associated company Entra. On this map, you can see the location of our property portfolio. Property values as of last March sums up to SEK 159 billion, including our share of Entra. Of these 159 billion, 76% is located in metropolitan areas, meaning urban areas with at least one million people in them. 52% of our 5.5 million sq m are sustainability certified, and we have a yearly contract value of approximately SEK 9.7 billion. As you probably all have seen yesterday evening, we announced revised financial targets and a revised dividend policy. The overall financial target is to deliver a return on equity of at least 10% over a business cycle. The new dividend policy is at least 25% of the income from property management, but safeguarding the financial position of the company. The targets shall be seen in the context of how we work with capital allocation and capital efficiency, our focus on profitability and our long-term perspective, but still being able to return to attractive total returns, including through dividends. It also allows for a larger yearly investment volume than the old dividend policy. The strategy remains unchanged, and also our financial policy, including the targets of an ICR above 3x and an LTV below 40%. The operational focus of the company is to retain existing tenants and lease vacant spaces, to recycle capital through divestments, and to reinvest proceeds in our existing project portfolio. We are streamlining our business to realize synergies. These investments are made to manage both vacancies and to fight higher energy costs. We are still selling assets, not because we need to, as mentioned, but because we want to. We are not focused on retaining every single revenue krona by clinging onto every single asset we own, but to improve our profitability and to create value over time. We have a very attractive project portfolio of more than SEK 40 billion. That includes opportunities for new logistics, but also refurbishments of existing buildings. We will have a continued focus on reducing our costs where possible. Examples of that are a newly implemented complete procurement organization. We are reviewing our business processes, and we are streamlining central administration. More on that at the later stage. Our tenants represent a cross-section of Nordic business and authorities, and our exposure to individual tenants is low. Our 10 largest tenants stand for less than 14% of our total contract value, with no tenant generating more than approximately 2.3%. We have a very strong tenant base, with a number of our largest tenants being publicly funded. Approximately 25% of our total contract value stems from public sector tenants. Our largest tenant is the Swedish police. As of last of March, the remaining average length of our contracts was 3.7 years. I'd like to give you just a brief overview of what we are steering at and how we do manage the company. As you see from this P&L in brief, our total income is in line with prior year. Divestment has reduced the top-line income by some SEK 100 million, while completed projects contributed positively with SEK 44 million. Our direct property costs decreased by SEK 77 million. That equals about 10.6%, mainly driven by lower electricity costs. Leasing and property administration, together with central administration expenses, decreased by SEK 9 million, equivalent to 3.5%. The decrease is primarily explained by cost efficiencies through a reduced number of FTEs and a strategic decision to discontinue our innovation company. The loan volume is significantly lower after we have repaid some SEK 16 billion of debt last year, and as a result, our interest expenses are lower compared to last year. Summing up, we report income from property management up 13% from last year. Jens will walk you through all these numbers in greater detail, but this was just to give you a brief overview. Jens. Good morning, everyone, and thanks, Joacim. And I think that you covered most of it yourself, really good. But for the like-for-like portfolio, income increased by SEK 63 million, equivalent to 2.9%, 3.9% looking at Sweden isolated. Castellum, as you might know, in some cases has limitations in the lease agreements, which means that full indexation is not achieved, while indexing in Denmark and Finland was lower than in Sweden. And as Joacim already mentioned, electricity costs were down significantly due to unusually high costs in the first quarter previous year, excluding one-off effects of electricity costs, like-for-like increased by 9.4%, equivalent to SEK 42 million. And this is primarily explained by higher costs for snow removal and heating due to the colder and snowier winter compared to previous year. Next slide. The rolling 12-month rental income is in line with previous quarter despite divestments. Net leasing SEK +3 million for the first quarter and SEK -12 million rolling 12, and continue to be rather volatile while income is more stable over time. Bankruptcy is significantly lower, SEK 3 million, compared to the same period last year. Tenant quality is deemed very stable, and outstanding receivables are low and decreasing. In addition, we've done an assessment of tenant quality together with Dun & Bradstreet this quarter that clearly confirm the stability of the tenant base. Only SEK 25 million of the outstanding receivables are older than 30 days. Next slide. Looking at property values during the quarter, Castellum has written down property values with approximately SEK 1 billion, equivalent to -0.7%. Since the peak in 2022, down with close to SEK 22 billion. The value changes this quarter are mainly driven by negative cash flow as a result of a more cautious view on vacancies. Valuation yield is in line with last quarter. However, almost 1% upward shift since the peak in 2022. Approximately 10% of the property value has been externally valued during the first quarter by Cushman & Wakefield, confirming internal values and our valuation process. Property sales communicated in the second quarter of circa SEK 1.3 billion further confirm our book values. Next slide. Nominal valuations are down to 2019 levels. However, looking at the yield shift isolated, we are back at the 2017 level. The difference is explained by higher cash flow, mitigating some of the negative effects from the yield expansion. With falling inflation, we saw a sharp decline in underlying interest rates at the end of 2023. However, during the first quarter, interest rates have gone up again. Though with the completed rights issue and successful sales, we are prepared for higher for longer. Stable valuation yields compared with year-end. However, too early to see a trend, highly dependent on the development of the Swedish and global economy. Also important to mention is Castellum's ongoing journey to improve asset quality and location through divestments in metropolitan cities in the Nordics and through divestments of properties in non-prioritized areas and segments, which over time is expected to generate higher total return, though it's harder to see when only looking at the spread between government bonds and our valuation yield. That gives little guidance on the quality shift of our portfolio. Next slide. Yes. Highlights from the quarter: Loan-to-value is still on a historically low level of 38%, somewhat increasing during the quarter due to lower property values. ICR is currently at 3.2 and will most likely continue to improve in the second quarter when rights issue will have full one-off effect on our numbers. On the other hand, expiring interest rate derivatives will put some downward pressure on the ICR, however, still expected to remain on comfortable levels at around 3. Average interest rate is currently at 3.1%, up from 3.0% at year-end. Please note that the average interest refers to a point in time at the end of the quarter and not an average interest cost for the first quarter. Hedging ratio has decreased, however, will be held on a comfortable level going forward. Rating is stable, and we feel that we have a reasonable headroom to move these requirements. Yeah. Next slide. During the quarter, we have issued SEK 3 billion in SEK bonds and SEK 5.65 billion since market opened in the third quarter last year. Bond spreads have tightened gradually during the quarter and continued to improve in the beginning of the second quarter. Glad to see demand for our bonds with both short and long-term duration. The European market is still wider than the SEK market. However, with continued repayments of Euro bonds by Nordic names, we expect the gap to gradually close. It, however, remains to be seen if we re-enter the European bond market this year or next. We also see continued good interest from Nordic banks and a downward shift in pricing from the peak in 2023, our spreads down with 25-50 bips on longer tenors. In addition, we see interest funds and institutions slowly increasing their presence in the Swedish real estate debt space, which is also a good sign. Also, SEK 25 billion in cash and unutilized credit facilities are available at the end of the quarter. Still important to keep a healthy volume till the Euro bond market opens up for Nordic names on good terms. Thank you. Yeah. Over to Joacim. Yeah. Thank you, Jens. We're trying to look also and describe to you all our view on the future. Therefore, we've decided to make a somewhat more elaborate overview of our projects. Two larger projects have been completed during the quarter. One is a logistics project fully let in Malmö called Tistlarna and an office project in Jönköping, Werket. These two projects give us a rental value of SEK 69 million with a good occupancy rate. We have seven larger ongoing projects at the moment. The average occupancy rate is 87% and a rental value of SEK 180 million, with the average lease duration of approximately six years. The total rental value from completed projects during 2024 sums up to SEK 104 million, of which SEK 49 million will be recorded as income during 2024. Just a few words on two recently started projects, and they are in the picture here. Ampere 1 in Västerås is a logistics property, a new construction, 37,000 square meters, efficient new premises with AA Logistik as a 100% tenant. This is an example of us densifying our existing land for an existing client who's expanding its business. That is about as good as it gets. Bägaren 5 in Norrköping is an office building that's been vacant for quite a while, and it's now being refurbished and completely renovated with the Swedish government authority as a 100% tenant. One of our ongoing projects that is entering into the final phase is Tusenskönan in Mölndal in Gothenburg. It's a new construction, fully let to a veterinary hospital. It's an investment of approximately SEK 400 million, of which SEK 100 million remains to be paid. We're doing very good project progress, sorry, in that project, and we have good cost control. Another of our ongoing projects that I'd like to highlight is Backa in Gothenburg. It's a 9,000 square meter completely new construction with the Swedish Police Authority as tenant. It's a 15-year lease, 100% let, and the total investment is about SEK 500 million. These are examples of projects that we do prioritize: existing clients, fully let, and good size and a stable return. We like that. I already mentioned our project pipeline, which we take great pride in. Our project pipeline includes projects in all of our core markets with a focus on our metropolitan areas. It's a total of 700,000 square meters and an investment volume of up to SEK 40 billion. However, these will be executed gradually over a number of years and in line, of course, with demand from tenants. A few of our projects can be seen in these pictures. The first one is, of course, Gateway Säve in Gothenburg, a very large logistics opportunity, which has probably one of the best logistics locations in the Nordics. We also have Infinity, an office project in Hagastaden in Stockholm of approximately 20,000 sq m. Then we have Noon, an office in central Gothenburg projected to be around 25,000 sq m. Over to the prioritized area of our sustainability. So far, we've been steering very clear towards our sustainability targets, both in the short and the long term. We will continue to do that. We are actively engaged in the reduction of our climate impact through enhancing energy efficiency. The energy efficiency was down some 3% in the like-for-like on the rolling 12 months. We have a target of 50% of our square meters to be sustainability certified by 2025, and we already achieved that goal last year. The outcome for this first quarter is, as mentioned, 52%. We also had a target of 100 solar systems installed by 2025. That was also achieved last year. The outcome from the first quarter is a total of 110 solar systems installed, and we are considering new targets to be updated. We advance our commitment to climate-cautious construction by installing some pioneer ventilation ducts made from fossil-free steel made by SSAB. These innovative ducts were incorporated into a property in Stockholm as a part of a pilot initiative involving Lindab, who's produced them. We're making significant progress towards Castellum's ambitions to be climate-neutral. So the key takeaways from this session is that we're focusing on our core business. We're letting properties, we're reducing costs, we're being more efficient, thus improving our net operating income. This is a never-ending process. Through capital discipline supported by our shareholders chipping in, we have been able to amortize and to invest at the same time. The LTV of 38% is now very stable, and we have a very resilient business. Measures have been taken to withstand the negative effects from a weaker market, but we will continue to improve our profitability and our returns. Despite the investment volume being lower than in previous years, we still have a very good and exciting project portfolio of SEK 14 million. SEK 40 billion, sorry. The new financial targets and dividend policy is a reflection of how we work with capital allocation and capital efficiency. Our focus is on profitability, and the long-term perspective is to be able to provide the market with attractive total returns, including through dividends. The new and revised targets also allow for a larger yearly investment volume. The strategy remains unchanged, and also our finance policy, including the targets of an ICR of 3x and an LTV below 40%. That is what we had to say today. So we leave it to you guys for any questions. 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 Erik Granström from Carnegie. Please go ahead. Thank you. Good morning. I had a few questions, and I think perhaps start with where you ended, Joacim, with the changes to your financial targets. Could I just ask, what was the rationale for scrapping the previous targets of a yearly growth rate of at least 10% as well as your percentage in terms of property value in the yearly investments? Well, the old targets have served us well, and I think that the market has appreciated them. They are, however, designed for a low-interest market, and we don't foresee that going forward. The other reason is that it became quite clear when the market turned that the investment volume and the dividend simply didn't match. I think that being more cautious and making sure that we can deliver without any negative surprises is critical to the board and to us in management. So that's the reason for the change. Okay. If I could come back to that, you also stated towards the end here that the overall target or goal is to allow for larger yearly investment volumes overall. You mentioned the SEK 40 billion over time. But what do you expect for this year? And what do you mean by larger volume, what should we compare that to in terms of your project pipeline? Because currently, I think it's just SEK 1 billion left to invest, at least for large projects. So could you help us out there a little bit? Of course. Yeah. Well, compared to the investment volumes that were in place 2018, 2019, and 2020, I'd say it's a lower volume, of course. But compared to the investment volumes that would have been applicable should we have stayed with the 50% dividend policy, this new policy allows us to invest more. We have communicated some investment volume of SEK 2.5 billion yearly. So for this year, we have freed up investment space by being more cost-cautious and selling assets. That has allowed us to invest some SEK 800 million more. And so it's the 2.5 that is the base, and we will try to make room for further investments over and above that. Okay. Thank you. Then in terms of what you see in the rental market, you've mentioned for quite some time that obviously there's an economic downturn. If you will look at your vacancy, it increased slightly Q-on-Q. What do you expect for vacancy going forward for this year? Do you think you can recapture some of that, or should we expect vacancy to creep upwards for the remainder of this year? Well, normally, we don't give prognoses, and I won't do this in this instance either. But I mean, it is quite clear that the ongoing trend where companies review their cost base and are moving to more efficient, modern buildings will put downward pressure on demand, especially in the Stockholm area. We don't see the same kind of pressure in other areas, except maybe for Gothenburg. But the rest of our markets perform very well. So it's very hard to say whether the vacancies will be on this level or if they will increase slightly. However, it is important to note that, as you mentioned, we've been seeing this coming for quite some time. That's one of the reasons for us being so cautious on our balance sheet, making sure that we are able to meet these challenges without jeopardizing our investment possibilities or taking advantage of business opportunities. Okay. Thank you. And then my final question regarding overall investments. You've been selling assets that are non-core, and you mentioned, obviously, your project pipeline. Do you see any opportunities to make bolt-on acquisitions at all, or is that sort of something you're not looking at? Yes, we are looking at that. We are comparing investments and making sure that we allocate the capital that we have to the most sort of long-term profitable cases. We are reviewing, of course, investments in standing assets. But so far, our investments in our own existing portfolio, especially refurbishments and renovating, is outperforming all standing assets that we have reviewed. But that may change over time. And there's, of course, strategic locations where we'd like to grow, both in Sweden and in Helsinki and in Copenhagen, where it's not only today's yields or returns that are decisive. Okay. Thank you. Those were my questions. The next question comes from Lars Norby from SEB. Please go ahead. Good morning, Joacim. Good morning, Alice. I came in a bit late into the call, sorry about that. So anyway, I'll try to ask you a similar question that I asked on the Boulder call, and that is concerning holding back on growth versus, you can say, pushing the accelerator. You mentioned here about some indicated base level for CapEx. I think you said some SEK 2.5 billion, and it's still down in the first quarter. When do you expect to sort of push the accelerator again? When can we see an increase in CapEx quarter versus the same quarter last year? Yeah. Thanks for that question, Lars. I mean, we are effectively taking our foot off the brakes. And the question is whether to push the accelerator. I think it's way too early to say that we are pushing full throttle, but we are certainly investing more now than we predicted a year ago when we hit the brakes completely. As mentioned, we have communicated an investment volume of SEK 2.5 billion. We have freed up some more space through earnings and through investments. That has allowed us to invest with strategic investment decisions on SEK 800 million more so far. And I mean, to us, that is actually leaning slightly forward. I'd say it's too early to say that we will push heavily for growth, but we are definitely considering when the right time is going to happen. Then one more question, which is somewhat linked to the first one, but it also takes into account what's happening in the capital markets. I'm thinking about your unutilized credit facilities. I think it's some SEK 24 billion, and I think you had some SEK 25 billion in connection with the previous quarterly report. And seen in the context of that, you've also announced some divestments in the past couple of weeks. So what's your view on the size of your unutilized credit facilities, and are you planning additional divestments of any size going forward? Thank you, Lars. I will begin, and then I think I will hand it over to you, Joacim. I mean, the size of the revolving credit facilities, I mean, it's a very cheap life insurance. As we all know, we have a rather impressive volume of European bonds out in play, and we need to take that into consideration. So when the Eurobond market opens up on reasonable levels, and especially on longer duration, I think it definitely is time to decrease the amount of undrawn revolving credit facilities, but not today. Then I think I hand it over to Joacim regards how we will handle it in relation to possible divestments. We will keep on divesting assets that are not prioritized to us. And that goes both for assets that within a prioritized area are somewhat odd. It could be that they are too heavy to manage. They could be located as a single asset somewhere, or they could be within a segment that we feel is less prioritized. So we will continue to trim our portfolio and to sell off. Whether that will happen at the same pace as now or if it will be a slower pace, that really depends on both the market and our ability to reinvest those money into new projects. But I think it should be clear to everyone that since we have the combined portfolio of Castellum and Kungsleden, there are a number of assets that we like to recycle and use the proceeds for new investments. That will continue. Okay. Thank you, Alice. I'll leave the floor to somebody else. All right. The next question comes from John Vuong from Van Lanschot Kempen. Please go ahead. Hi. Good morning. Thank you for taking my questions. With the new financial targets, I suppose you want to focus a bit more on developing the portfolio quality, as you stated, which I suppose also implies that you'll be looking at restarting the pipeline, also in line with your comments. At the same time, you have a new dividend policy that depends on the financial conditions. Looking at your LTV, that is within targets of 40% on your metrics. Does this imply that you're comfortable with the balance sheet as it is to restart the pipeline as well as reinstate the dividend for this year? The dividend question is way too early to answer. I mean, that is something for the AGM in 12 months. So a lot of things can and will happen between now and then. So that question is too early. But yes, the revised policies are meant to free up space in our balance sheet for further investments. Are we happy with the 38? Well, I think that we are in a much more comfortable zone today than we were a year ago. We need to make sure that we safeguard these 38%. That means that, as we answered Lars Norby's questions, we will be cautious about how much pressure we will apply on the accelerator. But for sure, we have sort of left the austerity and the complete holding back. But how much we will accelerate and at what pace, that is something for us to manage over time. Okay. Just to understand it correctly, to talk about the dividend, I suppose you need a bit more visibility on also shaving off the tail end of your portfolio in terms of non-core disposals as well as the overall macro environment. Correct. Okay. That's clear. Maybe moving on to like-for-like rental growth. My apologies if I missed this, given that I joined the call a bit later. It came in a bit weak at +2.9%. Could you provide a bit more color on that? Is there also a bit of an impact from service costs that you charge back to tenants? I mean, it relates to the fact that we couldn't achieve full CPI indexation due to limitations in the indexation clauses that we have. We were able to get 2.9%. However, looking at Sweden isolated, it was somewhat higher. And then the indexation was mitigated largely by increasing vacancies. And divestments. And divestments. Yeah, yeah, but not life-to-life. Not life-to-life. Sorry. Okay. That's clear. So there's no impacts from the electricity costs that you charge back to tenants, given that that came in quite so much lower than last year. Yeah. That's a one-off effect. A small, small portion of it will come later during the year, but the absolute bulk of it giving a positive effect came during the first quarter. Okay. That's clear. Thank you. That's it from my side. The next question comes from Albin Sandberg from Kepler. Please go ahead. Yes. Hi. Three questions for me as well. On the occupancy, one, whether there were any impact from that given the divestments. I mean, was there a mixed effect? And also how you view, let's say, the vacancy now. Is there any part of that that is, let's say, structural that you will find very hard to fill, or is it a matter of just finding the right tenants? And if so, any potential timing of when that can be seen? So our divestments, at least from the reporting figures, are probably sort of reflecting our average occupancy rate. So we have not sold off, at least that is shown in these figures, any vacancies or anything like that. I'd say that the sale that we communicated just last week has a higher average occupancy rate than the remaining volume. And that means that just comparing numbers, we will probably see a slight increase in our vacancy numbers based on these divestments. From a general portfolio point of view, there are, of course, some structural vacancies in areas where there's a weaker demand or where our assets are in need of refurbishments or upgrading. So there are definitely, and especially in a portfolio of our size, some hairy assets that are deemed to be more or less in demand of overhaul. We are working at a steady pace to increase the quality of our portfolio and thus taking care of vacancies. That is a long-term, tedious job that is creating value over time. We are working on that. Would you like to say a number where you would be happy with the occupancy given your current portfolio? Yeah. It's certainly higher than we have now. Any real estate company would always like to have as little vacancy as possible. But we have a clear plan, and we are addressing the largest vacancies on a monthly basis within the management team. It needs to be a combination of tenant demand and our ability to allocate money properly. So we're on the case. Yeah. And then, Jens, I think you alluded to, I guess, terms on the Eurobond market not attractive enough versus the SEK market. Based on what you saw in Q1, what were the differences you feel, and at what level is the Eurobond market interesting for you? I mean, I think that the Eurobond market is very important for us over time, even if we can survive without it, considering the interest from Nordic banks and also the very high liquidity in the SEC bond market. Though to have an alternative, and if we want to keep the amount of unencumbered assets at a reasonable level, I think it's a very good thing for us to actually be able to have the euro money competing with the SEC investors pushing down prices over time. However, right now, the spreads are around 60, possibly a bit lower, let's say 50 bips for the same duration. And the Eurobond market has over time been very well known for offering longer duration. And that is, of course, something that we are eager to actually be able to acquire. For the time being, with the liquidity in the SEK market, we have the possibility to hold back. I think also both the rights issue, but also the fact that we've sold for a lot more than we actually perceived the beginning of last year, we actually have a much better position to choose when and if to enter. Yeah. Thanks. My final question is now when you had the opportunity to revise financial targets and so on, did you have any specific strategic discussion about the Entra stake and the situation around that? It's been a bit standstill now for a few years. Maybe this is the steady state option for Castellum's investment in Entra, or are there any changes in how you view that? No, there are no changes in our view. We're quite happy with the performance of the portfolio that Entra has and the management team. And of course, we are constantly reviewing our alternatives. And the entire balance sheet that we have has been in focus on reviewing our financial targets. So Entra is a part of that, but not a decisive part. We're quite happy with how the. Thank you. I might have lost you there or you lost me. We hear you. Okay. Okay. I am here. Okay. Well, thank you very much. Thanks. The next question comes from Marcus Henriksen from ABG Sundal Collier. Please go ahead. Thank you. Good morning. First, a question on property value changes. I apologize if it's already been asked. You continue to write down your assets. You're one of the companies that have written down your assets the most in the sector. Any general thoughts on your property valuations and anything to highlight from appraisers? What are they saying and thinking? I mean, not much to say, actually. I mean, as I mentioned before, 10% of the total valuations have been vetted by Cushman & Wakefield, confirming our valuations. We see a difference at around 1.5%, but that varies over time. So we are very comfortable with the situation. And of course, we focus on our own properties. And due to the model that we are using, we just apply what we see in the market and what we hear from the appraisers when assessing the value. And right now, it is cash flow that is driving down values somewhat, but still with a stable valuation yield. And I think that by looking at the overall trend, things seem to be stabilizing. But of course, then we need to see interest rates starting to actually come down sometime during this year in order to safeguard that stability. How things will develop going forward is very much a factor of how we're actually able to lease out buildings and at what rent levels. Very clear. Thank you. Then you highlight that you have an ambition or target to lower costs where that is possible. Could you elaborate a bit on that statement? You mentioned electricity costs, but where could you cut costs? I mean, there are always costs to cut in a big operation. We are looking at everything ranging from central administrative costs to accounting procedures, automation, applying artificial intelligence where possible, to actually energy efficiency investments in our properties, allowing remote control presence detection, lighting and heating, and so on. So this is a constant work that we are doing all across the company. There will be areas where we can be much sort of more transparent when we are taking certain steps, and others are simply small steps that we are taking on a monthly basis to try to improve our performance. Cost reduction in themselves are, of course, just a step on the way of improving our total return. But it is important, and it's important to keep an eye on our costs constantly. That is a focus area, but I cannot give you any guidance or any defined number that we are targeting because there isn't. Still helpful. I apologize if this question is already asked, but I note that Stockholm net leasing is quite weak, and I think your exposure in Stockholm is quite interesting relative to peers. So is it very isolated to, say, Kista, or do you see it in inner city, and then what do you see in those different types of markets that you are in? Of course, Kista is probably the area that long-term can be affected. But we see the increase in vacancies in the Stockholm area throughout our portfolio, to be honest. And that is, I think, more due to the composition of the Stockholm business life in general, where quite a few of the typical office tenants are businesses where a lot of people work from home. They're early in the cycle. That means that the downturn has affected Stockholm more than other parts of the country. We're quite confident that the downward shift in the Stockholm market will be reversed in the near future. But for now, Malmö and other regional areas such as Uppsala, Västerås, Örebro, Östergötland are performing somewhat better than Stockholm. But we see a broader sort of decline in demand in the Stockholm area, as mentioned. Thank you. Follow up there. You have quite interesting project possibilities in Stockholm going forward. You had the Infinity that you started and then stopped, and then you have the in Hagastaden overall in Stockholm. Is this kind of altering your view on how you should look at projects going forward? Should we expect logistics or offices in more regional cities, or you haven't drawn that lesson yet from the current development in the Stockholm market? I mean, the demand is, of course, critical when it comes to initiating especially large, very costly projects. We have a minimum level that must be met before we push the button. And since we haven't communicated that we have pushed the button, we have not met those requirements yet. But we are actually working quite actively with both Hagastaden in general, with Slakthusområdet, and also refurbishing the other assets that we have in the Stockholm area. So by no means have we stopped or put the entire business region on hold. On the contrary, but we are cautious in terms of us having minimum requirements as to pre-let areas or volumes before we initiate any new projects. But I mean, there is a considerable volume allocated in our development portfolio. It's now up to SEK 3.3 billion for this year, which is a handsome amount, at least in our world. Agree on that. Last question from me. Coworking, what do you see in your coworking business? Any update on how tenants are acting? I note that the flat sales year-over-year, Q-on-Q, it's down somewhat. How should we think about growth going forward? When are you going to make money on this business? I mean, to us, the business is supporting our general business, and coworking is an integral part of Castellum's offer to our clients. That means that we will keep on investing in areas where we deem that the coworking creates a value. There are areas where we see a weaker demand, but there are also areas where we see a stronger demand as a consequence of tenants reviewing their office space. So it's not only that we look at the exact number of United Spaces revenues because United Spaces. So we are adjusting our rents for them. Oh, connection error. Do you hear us? I lost you a little bit, but then you came back. So I didn't get the last 20 seconds, maybe. If you could add on that you adjusted rents or something. Yeah. Yeah. I mean, United Spaces is a tenant of Castellum, and it's a part of our business. So we are, of course, adjusting the rents that United Spaces are paying to make sure that we offer clients in the area best possible service. Coworking, as mentioned, is an integral part of quite a few of the buildings where we operate. So you shouldn't look too much on the exact numbers of United Spaces' sales. Fair enough. You highlighted lower demand and higher demand in different areas. Could you be a bit more explicit there? On coworking in particular, you mean? Exactly. Yeah. I think that in general, you can say that the more urban area, the more densely populated, the larger the market, the higher demand. That is probably as granular as we'd like to be. Okay. Last question. Many last questions here. Do you have any one-offs to highlight in the quarter? I didn't see any, but there's been quite a few in recent quarters. Anything to note? Yeah. But we mentioned the electricity, if you could. I mean, that is kind of a one-off, but yeah, nothing else. Perfect. Thank you for taking my questions. The next question comes from Jonathan Kownator from GS. Please go ahead. The next question comes from Paul May from Barclays. Please go ahead. Hi, guys. I'm hoping you can hear me. Just one question because I feel a bit like I'm in a twilight zone at the moment with all this talk of increasing investment when definitively the situation is worse than it was three months ago when you were more cautious. Your leverage from an equity perspective is still over 50%. Your valuation impact from cash flows is now materially negative, which is obviously very, very poor. You've got weak rental growth. You've got high vacancies. So I'm really struggling to understand one way this money's from to invest, why you're now more positive about investment and talking about a dividend reinstatement relative to three months ago when you were more cautious. I hope you can help me understand, but it just seems a bit of a strange sort of approach. But maybe I'm just not on the same page. Thank you. Well, we are actually not feeling that we're in a worse place now than three months ago. I think we have predicted the downturn in demand quite well. We are prepared for downward pressure on rent levels. That means that we have our ship in shape and are able to leverage the position that we have, increasing investments to create value going forward. I don't really share your view that we are in a darker place now than three months ago. I think if you look at the operational performance, your cash flows are negative. As you say, rents are coming down. You may be positioned to manage it, but rents are coming down. Longer rates are now higher than they were. I think you talked about hoping for rate cuts to come through or rates to be lower. They're actually higher now than they were. You look at 10-year swaps or the 5-year swaps than they were three months ago. So hence my question that it's a more difficult position now than three months ago. So I'm surprised that there's this talk of investment rather than talk of managing the ship or potentially and maybe the question is where does the money come from? It could be raising equity to invest, and that would be, I think, understandable. But I think looking at leverage and debt to invest seems a relatively punchy approach given the broader situation. But I think it's being talked about. I think that, for instance, looking at the bank market in the Nordics, it has greatly improved and is now offering longer duration at lower prices, giving us a sense that things are gradually improving. We also see that spreads on our bonds have come down considerably. We have to remember that less than a year ago, a two-year bond in the SEK market was traded at a spread of 300 basis points. Now, we recently issued a three-year SEK bond at 155 basis points. So I mean, a lot of things are actually leaning in the positive direction rather than the opposite. And then, as Joacim mentioned, we have signaled quite clearly that higher underlying interest rates will have a dampening effect on demand already last year. And I think that is what we're seeing now. But at the same time, we have to prepare and be willing to do these usually very profitable projects at high yield on cost that will, over time, improve the quality of our portfolio. So I think we keep one foot on the brake, and we are prepared to actually push the throttle when time comes. But of course, it's a very delicate balance, as you mentioned. And we are absolutely not taking unnecessary risks right now. Is there any thought about using equity given that return on investment you're targeting? No. I mean, we see the liquidity in the Swedish transaction market has been—I mean, it has been much weaker than previous years—but still, Castellum has been able to sell off assets and not the best assets that we have, but rather reasonable assets to sell. The deals that we have communicated of late have definitely been the type of properties that we want to divest, and therefore improving the overall quality and increasing our possibilities to amortize or invest without doing any type of equity-related product. But effectively, selling assets is using some equity capital you're having to divest to invest elsewhere. So is it right you're saying that you'd look to rotate capital rather than increase leverage for these investments? Paul, you're slightly breaking up, but I think you're breaking up, but I think I understand your question. Rotating our assets and selling to make space for investments is part of our strategy, and it has a lot of benefits to it. Short term, it will make us a better company by improving our quality and by adding return. Divesting non-prioritized assets is a part of Castellum's strategy, and that will continue to happen. One second. Just to say, you won't be leveraging out and make future investments. Is that right? No. No. Okay. Thank you very much. The next question comes from Jonathan Carnater from GS. Please go ahead. Good morning. Thank you for taking my question. Just one question on reversion, please. We see you pass on a fair amount of inflation. I think last, you said that you were able, essentially, to maintain the level of rents at signing. Is there any evolution on the positive side or on the negative side in terms of reversion at this stage in the portfolio? Thank you. Sorry. We didn't catch that, any of us, actually. Could you repeat the question? Sorry. I was saying it was a question on reversion and whether there had been any positive or negative development in terms of your ability to sign contracts above or below passing rent or whether it was still around the same levels as previously given the inflation. I mean, looking at the SEK 67 million of renegotiations that we conducted during the quarter, the rent levels were down only with 1%, so a very small change, actually. However, it actually differs between where you look in the different submarkets where we operate. Of course, we see a more cumbersome situation in some metropolitan areas. And as Joacim mentioned before, in the more regional cities, we've had a somewhat different development, especially in Västerås and in Uppsala with actually increasing rent levels. But most of the contracts of around SEK 550 million were just rolled over with unchanged terms. Okay. Very clear. Thank you very much. All right. I think that sort of concludes the session now after 1 hour and 15 minutes. Thank you all for listening in, and see you on the next occasion.