Welcome to the Fabege fourth quarter 2022 conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer sessions, participants are able to ask questions by dialing star then one on their telephone keypad. I'll hand the conference over to the speakers, CEO Stefan Dahlbo and CFO Åsa Bergström. Please go ahead. Good afternoon, welcome to Fabege's presentation of the year-end report 2022. As usual, we will finish up with a Q&A session, and it's also possible to submit mid-questions by the email of ir@fabege.se. You can do that during the question and the whole session. Today, we have a little bit more than 100 properties worth a little bit over SEK 86 billion. As you know, we have a very modern portfolio with very good locations with rails and the infrastructure is very good in our areas. We really, and continue to believe in that being close to the market we are working on, being close to our customers. That's why we are so much focusing on this area, and also the way we're handling all the property management internally. With our own staff stages. Please go to next slide. Summarizing 2022 is not so easy for anyone. It's easy to think of 2022 as a annus horribilis when that was a horrible year with a pandemic, with a war, with rising inflation, and rising interest rates. After the summer, the market was relatively dominated by concerns about the possibilities for property companies in general to find financing. It was a different year. I'd just like to already now clarify that I am not worried about our refinancing possibilities this year and next year. Also will tell you more about that later. There are also some positive things to look back on during the 2020. We had positive net lettings through all four quarters, and in identical portfolio, we increased our income by approximately 3%. We also started and continued on several new products. We have de-developed and continue to develop Flemingsberg, we continue to de-develop Solna. Also, when talking about the sustainability work, we continue to be at the cutting edge and taking step by step, especially in energy. We'll talk about efficiency. But now we will start, and I will do the figures, and I will hand over to Åsa to report a little bit more about what's happened last quarter, especially. Thank you, Stefan. Please turn to page four. Our business is going well, with increased rental income and positive net lettings, as Stefan mentioned. Inflation and rising market interest rates led to falling property values during the fourth quarter, and I will come back to this shortly. Rental income amounted to SEK 3.3 billion. In an identical portfolio, income increased by 5%. The explanation was the same as the last quarter, increased rental income from completed project properties like Nationalarenan 3 and Poolen 1. Positive effects from indexation, new lettings, and renegotiations, which were offset by reduced income after the Swedish Tax Agency's relocation from Nöten 4 in Solna. Increased operating expenses were mainly due to higher property tax and higher electricity costs. On the operations side, we still managed to reduce electricity consumption by 11% during the fourth quarter compared to the previous year. Meanwhile, other winter-related expenses decreased compared to the previous year. The surplus ratio came in at 74%, which is better than what we expected at the start of the year when we assumed a higher property tax than what was the outcome. Birger Bostad's current earnings amounted to SEK 2 million before write-downs. We have written down the value of Birger Bostad's development properties by SEK 81 million, which resulted in a gross profit of minus SEK 79 million. Income recognition takes place in connection with the completion of projects, and partial recognition of a few projects occurred in connection with taking possession in 2022. Ahead of 2023, we expect a positive contribution from housing development's ongoing projects. Central administration costs came in at minus SEK 102 million. The previous year's expenses included also non-recurring costs for Fabege's new head office. Interest expenses increased compared to the previous year, which was due to an increased loan volume and higher average interest rate. The average interest rate increased further during the fourth quarter from 2.13% to 2.39%. High market interest rates and slightly higher spreads are having a gradual impact on our average interest rate. The result in associated companies amounted to minus SEK 32 million, of which minus SEK 56 million related to the capital contributions to Arenabolaget. This was partly offset by income of SEK 30 million relating to final recognition of the co-owned housing project in Lågen in Solna. We therefore reported a total profit from property management of SEK 1.4 billion, a decrease compared to the previous year, which was almost entirely due to higher interest expenses. Unrealized changes in value amounted to minus SEK 233 million after the fourth quarter's write-down of almost SEK 3.4 billion. I will come back to this very soon. The surplus value in the derivatives portfolio decreased slightly during the quarter. All interest rate derivatives show surplus values, and overall, we reported a positive change in value of almost SEK 1.8 billion during the year. Finally, the tax expense amounted to minus SEK 588 million, of which SEK 3 million related to current tax and the remainder to deferred tax. Now please turn to next page. During the fourth quarter, the increased market interest rates had an impact on yield requirements and valuations. There continues to be few transactions in our market, but the valuations have also been influenced by transactions that were not completed. In the fourth quarter, we have independently valued just over 80% of the portfolio. All properties with us independently valued during the second half of 2022. The average yield requirement in our portfolio increased by 12 basis points during the quarter to 3.99%. The increased yield requirements were partly offset by higher inflation assumptions. Green Street and Cushman & Wakefield now expect a 4% inflation in 2023. In total, unrealized value changes during the quarter amounted to minus SEK 3.7 billion, which including the previous quarter's upward revaluations, meant a write-down of minus SEK 233 million for 2022 as a whole. The changes in value in Q4 have been driven by the following factors: yield, SEK -4.7 billion, cash flow, including inflation, SEK +1.7 billion, and project and development properties, including development rights, a write-down of SEK -0.7 billion. Now turn to the next slide, please. The simulation in this slide shows that we can withstand write-downs of further almost 25% based on today's market valuation without impacting our internal targets. The margin is very high in relation to the covenants in our bank agreements. Next slide, please. Reported equity amounted to SEK 145 per share at year-end, an increase of SEK 4 during the year. The long-term net asset value, the EPRA NRV, amounted to SEK 173 per share. The loan-to-value ratio increased to 38%. The equity/assets ratio decreased to 49%. However, both key ratios continue to demonstrate a very strong balance sheet. The interest coverage ratio, as expected, has decreased in line with increasing interest expenses. Last week's transaction with JM, when we sold development rights, will strengthen our key ratios somewhat. Now please turn to page Financing. Financing continues to be a topical question in the current market situation. However, I believe that the pressure on property sector has eased since the bond market improved for A-rated companies. The commercial paper market is working, and the banks have shown that they have more capital to lend to the sector. Just last summer, the spreads in real estate bonds have gone sky-high. Now we see that there is interest from investors and that the margins are declining, however, still at levels which mean that we prefer to replace bond maturities with bank loans. We replaced the June and September maturities with bank loans. We will do the same with the maturity now in February. The commercial paper market is now functioning well again, and we have increased the proportion of outstanding commercial paper. We are currently borrowing almost SEK 3 billion in the commercial paper market at an interest rate of STIBOR plus 70 basis points. During the third quarter, we raised new bank facilities, and in the fourth quarter, we agreed on a further SEK 2.4 billion in new facilities. Existing bank facilities of SEK 3.5 billion were also extended. This means that at year-end, we had SEK 7.3 billion in unutilized facilities, including the backup for outstanding commercial paper. We get a lot of questions about what levels we sign, but as usual, we do not communicate the terms of individual agreements. However, the bank margins have only changed marginally during the autumn. Please turn to the next page. As this slide shows, we are working with several different financing sources. Among other lenders apart from the Nordic banks, we also see Nordic Investment Bank, European Investment Bank, and Brunswick. As I mentioned just now, the exposure to the capital market has decreased as bond maturities have been replaced by other sources of financing. Please turn to the next page. We have worked for many years to spread our loan maturities. The slide here shows how the maturity profile looks. The strategy of long capital maturity is unchanged, and we aim for distribution of our loan stock among several sources of financing. When it comes to short-term commercial paper, the green bar in the chart, then we have a full backup. In 2023, we have a total bond maturities of SEK 2.4 billion, of which SEK 1 billion in Q1 and the rest in the second half of the year. The Q1 maturity will be replaced with bank loans, of course we hope that the capital market will gradually offer more competitive terms. The work on refinancing bank debt that matures within 12 months is continuing. Please turn to slide 11. 65% of the loan portfolio is fixed, mainly based on long-term maturities and mostly through straightforward interest rate swaps, supplemented by some fixed rate bonds. We will now hold off with further fixed rate terms, the plan in the longer term is to replace maturities with new long-term fixed rate periods. The high proportion of fixed rate terms today gives us protection against rising market interest rates. In particular, this is reflected of course in the derivatives valuation. In the short term, the higher market interest rates will thus only have a more limited effect on our interest expenses. For a moving 12-month period ahead, an increase in the market interest rate of 1% generates an increased interest expense of just over SEK 100 million, all else unchanged. Now please turn to slide 12. Our own holding of treasury shares now amounts to 16.2 million shares, equivalent to 4.9% of the total number of registered shares. The shares have been repurchased at an average price of SEK 120.23. We will retain these treasury shares until further notice. We have currently paused the buyback. Now back to Stefan. Thanks for the review, Åsa. Slide 13. As we started with the only focus we have are and continue to be the focus on the Stockholm market. On this slide, you can also see the average growth of the Swedish counties for the last 9, 10 years, but also what are expected for the next 10 years. The Stockholm has been growing very well and will continue as expected to continue that growth. Stockholm is the real center of Sweden in many ways, even if we can see country grow higher growth in both the north of Sweden, and some part in the south of Sweden. Stockholm is still center. Next slide, please. Slide 14. The rental market in Stockholm and in our districts remained relatively strong during the autumn. I say relative because at the end of the year it was a little bit softer. The number of viewings is still at a good leve,l and that also true for the first quarter of this year. It may still take time for the customers to take the decisions. When we started the year, as we said, we had the COVID-19 situation then which came the war, and now we have all the question marks about the economy and how it will develop. I think it's quite natural if you're sitting, and making a decision of moving, for example, or renting, signing a contract, you take some time to some discussions before you make the decision. The one of the effects of the pandemic was that many companies stayed up. They stayed and have waited with taking decision, also how much office they need. We see both companies that are reducing areas, but we and somehow increasing after coming back to the office. Many are still discussing how to maybe not change the area, but how should the area be used. I think that's the most common question right now, I think, how to use the area. That's also we are really in close to supporting our tenants in that. T,he rental development for Stockholm is that is very stable. We have seen increasing rents in, especially in the CBD over the even at the end of the year. The rental market and the rent level is still at a very good level and also expected to continue to be so. Next slide, please. Slide 15. With that said, we think we'll expected to see a little bit higher vacancy rates in the Stockholm area. Especially in we're not talking about the CBD, we're not talking about the areas with good transportations or public transportation. It's more in the less attractive areas with less flexible offices that we think and also agree with this forecast from Cushman & Wakefield that will continue to grow a little bit even in the Stockholm area. Next page, please. We had for the whole year a net letting of +SEK 86 million. We had all positive net letting all the four quarters. We haven't seen our sector colleagues reported yet, but for the three, quarters, most of the companies have positive net letting. I would say that that is also the best answer where we are expecting the office market to go. Next page, please. Page 17. This is, we have this showing this every time because we think it's very important that showing you that our customer base is very long, very stable, it's strong companies, and it's long leases. As the lease we announced with AFA Fastigheter last year is, for example, running to 2047. It's not yet here because they will move in 2025. The SCB is 2037, and so on. Long contracts with stable and strong customers. That also will, of course is, highly regarded in our discussions with the banks and the capital market. Next slide, please. This is of a little bit more than SEK 170 million, where we negotiated with an average increase in the rent, rental value of 7%. In addition, leases of more, a little bit more than SEK 340 million were extended on unchanged terms. That's a little bit different from the years, the early years, 2020, 2021. That was also mainly because of that we saw that the indexation was helping us increasing the rent. It was... That's one of the reasons that we just extended on unchanged terms. The indexation from year-end will limit it also the future potential for the renegotiations. There we have to be realistic and expect around 0%, and the majority of the leases will probably be renegotiated on unchanged terms. It will look a little bit different from now, thanks to the indexation. Slide 19, please. Occupancy rate. We have, as we said before, we are about 90% occupancy rate. We're not satisfied with that. We have a focus in the coming years on increasing to the more normal, what we say, 95%. It will take, we can't expect that to come, it will take some time, and it will order step by step. The larger vacancies is mainly related to three properties in Solna Business Park. However, it feels positive with what's happening right now in Solna Business Park, and we have several good discussions going on. I'm optimistic. We also have some vacancies in Hagastaden that we have. I think lot we have also. We have a very good group working with this now right now, and I'm. It's really will be focused there for the next years. Next slide, please. This is a rental development for the existing lease portfolio. Here we can see very clear that it's we increasing from the first of January with about 10%. For the whole year, it looks very a good growth. We started the year with a total about SEK 250 million in increased rental incomes because of thanks to the indexation. Next slide, please. Slide 21. The investments increased by approximately SEK 400 million at 2021 and came in at about SEK 2.3 billion. We have a long-term goal as of forward being at an average SEK 2.5 billion in the existing market climate, and so we will of course be cautious about starting new projects, mainly because of the costs. Is that still questions about the car. We're seeing the steel price coming down. We're seeing some of the prices coming down, but still it's a little bit too expensive. Also with the current question mark for the world economy developing, of course it will be much more. If we have a signed contract for a single tenant, of course, we will have new products. Hopefully we can announce later this year some new ones. We have the ongoing projects, and they are right now going into the next phase, and it's even more expensive. Well, that means that we will expect 2023 to come in with a investment of about SEK 2.8 billion. We told you we come back and show you where which projects we're talking about. Next slide, please. There have been a couple of transactions in our market during the end of the last year and the beginning of this year. There have been at very good levels. It's been a mix of buyers from the insurance companies and from private investors. Here we have some examples. AMF is a Swedish pension fund. Alecta is private. Actually, it's equity partners that has been buying some office. This is one of three, four properties that have been acquiring last years. Alecta is two of their partners behind that company. We have under scrutiny, private family company acquiring a Hotel Diplomat at Strandvägen. Maybe some of you have been staying at that hotel. We don't know exactly that price. The Vildmannen 11 was a record level of SEK 210,000 per square meter. It was quite a good yield, it was 3.6, 3.7. That mainly because it was one single tenant and it was a long contract. We also saw some other private investors buying both residentials and office buildings in the center of Stockholm at very good levels. Skotten 6 was at the building that Atrium Ljungberg are selling to Axfast in the middle of also that also very good levels in the beginning of this year. Next slide, please. The product portfolio. Here we... I will not all the figures, but we have been talking before about Noden, where we are Regulus Lorten in Flemingsberg, which is for Operakällaren. We have Haga Norra, the where we signed a contract with JM last week, and we also have signed one with a gym. It's we feel very confident that we will fill that out, fill that up during the year, and they will be able to move in during the second quarter and end of 2024. This is the projects you already know about and that we are working on. The building rights, we sold a building right for the residential last week to JM at what we think very good price levels. The rest we will continue to work with, work on. It's and especially in the planning processes. In Flemingsberg, the works continue. We, as we said before, we don't have any new decision for new projects during the last quarter. The next slide is talking about the or showing a little bit about the price development. Everything last year got more expensive. We estimated the price increase to be at about 10%-15%. It's still the same. It has changed a little bit since then. We said the steel and wood price has been coming down. The energy prices are still at very high level, even if it's very volatile. We expect salaries to increase by maybe... Best guess right now is 4%. The uncertainty surrounding construction cost, together with the falling prices of tenant owners apartment in the residential market here, there are very few progress started. We will see, but we're working on. We're also defining the product to be able to cut the costs for new product, both in the commercial and in the portfolio. I will hand over to Åsa and tell you a little bit more about the sustainability. Please turn to page 28, Sustainability. Sustainability continues to be a prioritized issue in Fabege. We are working to contribute to a more sustainable Stockholm. What is now new is that we have set targets on the path to net zero emissions. By 2025, the carbon footprint of our projects shall be reduced by 20%. After that, a gradual reduction on the way to a goal of halving the carbon footprint by 2030. We have also established a circularity target, which means that 20% of the material in reconstruction projects over SEK 20 million shall be reused material. Saving electricity has been in the focus during the autumn. Supported by digitalization and target efforts, we have managed to reduce consumption by a total of 11% compared to the previous year. This is good both for the climate and for the financial position. Our social initiatives, mainly in Flemingsberg with young people in focus, are continuing. This is all from us today, and we are now pleased to open up for questions. Thank you. Oh, sorry to interrupt. Maybe we should, leaving over the questions, say a little bit about the dividend we're proposing. Well, the board of directors are proposing a dividend of SEK 2.4 per share. It's a little bit down from the last years, where we have acquired quite a high payout rate compared to the cash flow. It's in line, the proposal is in line with the dividend policy that Fabege has, and have had for many years. We think or the board thinks it's a balanced when talking also seeing what opportunity can be in the market and what's all the uncertainty that is in market. As I said, it's staying around our proposal of dividend in line with the dividend policy should be. It's 2.4 is a little bit higher than the policy, but it's below the last years and balanced we think or the board thinks. With that, maybe we can leave over for questions. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw a question, please press star then two. At this time, we will pause just momentarily to assemble our roster. Our first question here will come from Paul May with Barclays. Please go ahead. Hi, team. Thanks for the presentation. Just I've got four questions. First one's on the fixing period for the debt. I think it notes an average maturity of 2.7 years, but just wondered how much of that fixed proportion is expiring each year. Just to get a sense as to how the cost of debt will evolve. Shall I ask all the questions or do you wanna do one by one? One by one. We have to remember all the questions. Well, to start with the interest fixing, actually, on page 11 in the presentation from the Q4 report, there is a table explaining which interest rate swaps will come due over the next 10 years. I think the full explanation. Okay. is in that picture. Okay, cool. Thank you. I'll take a look at that one. You note, I think in the report that market expectations are for property yields to expand further. Is that also your thinking? How, if it is, how do you see those yields evolving over the coming year? Oh, wow, what a question. What we said is that if interest rates continue to go up, I think we have to expect the yields to come up a little bit. I think it's very difficult to have a forecast for that. If we're now seeing a more flat interest rates, might maybe are because it's difficult, also difficult since we see the Stockholm market and especially the CBD in the city and our areas to be very attractive for the investors. The inflation rate is also continuing. We are expecting an uptick or continued uptick because of the index in the rent level. I think we have to be hum-- and say that, if it's increasing rate, it can be more higher. We have no forecast for exactly what that will mean. Okay. I suppose asked a slightly different way, what level would you think the market would be attractive again for acquisitions? I appreciate you've not acquired much in recent years. No. Because you felt things got too expensive. Just wondered where you would see it as being attractive again, given that higher interest rate environment? It's also difficult since we have so the interest, the potential we have in the portfolio of potential products. It will be me. I think in... It also depends, depending on the area. A little bit up from this levels, I think it can be attractive to look at. When we have said before that we have been bidding for some properties in the last years, that we have been, say, let's, about 10% below that values. Maybe with... Now it can be possible if people really need money. Yeah. Okay. I think linked to this, you mentioned the slowing leasing market. I appreciate CPI has been strong. I think you mentioned that the limited reversion now in the portfolio, does that play a factor? As you said, you've had people buying assets because of the inflation. If the reversion isn't there, is it as attractive to pay the low yields on those assets? Just sort of seeing how you feel that leasing market will evolve over the coming months or coming quarters. We have a lot of interest and a lot of questions, a lot of viewings, but it's still a very long time before we get the decisions. It started last year with the COVID-19 situation, and it came the war, and now it's more because of the uncertainty in the economy, I would say. I think we were positive, but we would think the, all the discussions will take some time and take time before we get the decisions. The interest is there, but it's So that's also one of the reasons we have strength, the team for, so we can work with the, even closer with the potential tenants. Is it a question of rent, or is it just simply a question of certainty or confidence? More. Different. Yeah. More the uncertainty- Sorry. To what. First of all, of course, still, it's a question about how should we use the office and how should they be? We think it's very positive. People really say that the office is important, but exactly how should we use it, and how should we plan it? Then, also that the cost, the cost for, not for the rent, I think that's probably maybe. Of course, it's always a discussion, but also taking the cost to move. Is this the right cost to take? That's a long decision, a little bit longer than normal. Positive discussions. Yeah. and a lot of them. Cool. That probably is the last one. There were a couple of additionals there. CPI, I think, was 10.9% for the Swedish leases for this year. I think annualizing your, I think you give your sort of gross rental income sort of guidance, should we say. Annualizing Q4, it looks like the forecast year is only up by about 6%. Just wondered, Have you had an issue pushing through the 10.9 for all tenants, or is it a timing factor? Has there been some occupancy change? Just trying to understand why it's not up by circa 11%... It's a very- In terms of that gross rent guide. It's a very good question. We have said before we will expect the rents for the year to come up because thanks to the index, SEK 250 million. It's a little bit less because in the Q4 also you have to add, with also some parking incomes that has been quite good in the Q4. They are not really that. We have no problems to push the index through in the contracts. As you also know, we have very stable and long-term contracts with big Swedish companies. It's mainly because of some mix, the mix of contracts and the incomes in Q4. Also can you? Well, just maybe one clarification that, in Q4, we had some extra income from parking, which is very difficult. Yeah. To forecast since, you know, they pay by the hour in many of the parking spaces that we have. The other thing was that we debited electricity cost. Increased electricity cost for Fabege also meant that the income forwarded on tenants was larger than before. Those two- Right. Are the main reasons why income increased in Q4. Cool. I think you mentioned in the past that you felt you may have had some difficulty with some of the, you know, ground floor retail tenants. Have you had any issue with the rent increases there, or has that just been passed through and they've accepted? No, not, not really. We Yeah. I think in general, maybe some of our colleagues have more, but we have said we have not that much retail, so that's one of the reason. Yeah. It's very limited. I think how you may notice it in 2023 is more in future renegotiations. That the uplift of 11% will have a negative impact on rent reversals going forward. We don't really expect. Yeah. Additional income from renegotiations in 2023 since we are more on market rents now. Yeah. If, sorry, on that last bit, if inflation were to stay elevated, I mean, who knows where we'll end up in October? Do you think that might be more difficult if you're already at sort of market rents, limited reversion? I appreciate contractually you can push through the indexation, but that would take you. In that scenario, that would take you to an over-rented position. Is that a more difficult conversation, or is that just for a conversation when the lease comes up for expiry? I think we have to say it's, it will be tough for the negotiations. It will be. We still, we have long contracts, strong tenants. I think, everyone knows that inflation is cost increase for everyone. We can maybe add on that topic also that the inflation that the values are expecting for 2023 is 4%. Okay. Do they make a negative impact for then renegotiating at a lower market rent? If you're already at reversion potential, and then you increase your rents, so you're over-rented, do they then have negative rents coming through in future years? Just trying to understand how the valuers approach it. Uh, not- Maybe in some sub-markets, but generally not in the Stockholm market. Okay. Yeah. Okay. Cool. Brilliant. Thank you very much. Our next question will come from Mark Gissens with Morgan Stanley. Please go ahead. Yeah. Hi, good afternoon. I had two questions. The first question is on your dividend policy or the dividend the board has recommended recommending. I appreciate that you commented on that at the very end of the call. Can you provide a little bit more color perhaps how the board has come to that level of payout? Should we read into that that it is a certain percentage of a future earnings number that the board believes could be a credible EPS in, I don't know, two, three years' time when interest rates have normalized? Is that how the board thought about it? Uh- Any color would be really welcome. Thank you. No. I think Stefan said in the presentation that the dividend proposal was in line with the dividend policy. According to the policy, approximately 50% of the property management profit was to be paid out. This suggestion corresponds to 50% more or less. A little bit more actually, but just over 50% of the profit from property management. That's really 50%-. Okay of the cash generation from the portfolio to be paid out. Historically, we have paid out more than 50%. Now this time it's in line with the dividend policy. Why, as a follow-up to that, why do you follow your dividend policy now when it's been your official policy, but a policy that hasn't really been followed in the past? mainly because, as you said, it with a... First of all, it has been very strong markets. It has been, say also that we have a, we still have a very strong balance sheet. We, and we have thought that the market maybe has been not that attractive to acquiring. Now it changed a little bit. It's still a strong balance sheet. We feel we're still very strong in that. On the other hand, there can maybe be some more attractive opportunities coming up in the market. We need, we like to have the keep some of the cash flow. You can say also for the projects, we're increasing the project volume a little bit this year. Also it's a good signal we think to the market that when, that we, they are a little bit more careful with the cash flow. We're talking about the refinancing market because there's been so many issues about the refinance market. Even if we have a strong situation, we think it could be this year, it's a balanced proposal. That's the main reasons you can say. Yeah. No, no. No, that's clear. Then follow up on that, you write, or you state in the report on page 4 that the average rate on your debt was 2.4, 2.39%, and that's up from 1.79% at the end of December 2021. All else equal, you mentioned during the call that you think that, you know, a big change in the interest rate has now happened already. If nothing changes other than part of your debt book expiring, and if interest rates were not to change from here, where would we be in a year's time, all else equal? Where would that 2.4% be in a year's time? It will be more or less flat in a year's time if nothing else happens and everything else, like. The expectations, though, is an increase in the market rents of 50 basis points from the central bank at the next occasion they decide. We expect interest rates to continue to come up during this year. We also said in the report that an increase of 1% in the market rate has an impact of approximately SEK 100 million on the profit and loss account in Fabege over the next 12 months. Okay. Mm. All right. Thank you very much. Any further more questions? As a reminder, if you have a question, please press star then one. We have 1 question from the web. Do you fear increased CapEx from new environmental legislations? I would say not really because we have already invested in sustainability in our property portfolio. We have a very sustainable property portfolio with very low energy consumption today. One of the lowest or the lowest among the listed companies in Sweden. Many investments have already been done. Besides that, energy efficiency investments will continue to be profitable for us. Also, all the properties in our portfolio are certified according to the BREEAM system. Of course, in project development, costs are a little bit higher with these kind of investments in energy efficiency and also in the BREEAM certifications, but still it makes very good sense. I would say no. Great. We have two more questions from on the mail from Green Street. They wonder if you also could guide them something more about net income from residential development and sales for next year. Well, we have said that income is produced from the residential part only when the projects are finalized and when they are sold to the owners. It's a little bit volatile when it happens. The net will be positive in 2023, so that's how we can guide today. I can also add a comment on the 2022 result from residential development that the result includes a write-down of SEK 81 million on the residential building rights in Birger Bostad. That had a negative impact on the property management profit. Part of the property management profit or is actually a negative write-down of SEK 81 million included. That's because of the IFRS maybe we should add too. Yes. Could you give some guidance on occupancy change like for like in the portfolio going forward? Yes, going forward, as it looks today with, we call it operational occupancy rate, it's a little bit more than 90%. 90.5%. There are more tenants moving in than moving out in the coming quarters. Occupancy rate should be improved over the next quarters. Thank you. Do we have any more questions from the telephone conference? We do. We have a question here from Jonathan Kownator of Goldman Sachs. Please go ahead. Hi. Thank you for taking my questio,n. Just wanted to come back on the occupational market, and the strategy for more development. It seems to me that there is more supply coming through and perhaps granted it's more towards the outskirt. Could you describe the situation there? If there's more supply coming in the market, already high vacancy levels and costs increasing, you know, housing market being down, it seems to me that you want to increase the volume of investments and you're cutting the dividend at the same time. I'm struggling a bit to reconcile all of this. Thank you. It was a little bit difficult to hear, but I think, I think we managed it. It's When we talk about the market, I don't know which really what supply you are referring. We see some, then we see the increasing potential increasing vacancies. It's mainly in some more attractive areas with less good public transportation. Less attractive areas. sorry, less attractive areas. where there are not that much built on speculation in Stockholm. Skanska has one project in Hammarby. We have the Haga. it's very limited in relation relative to. We still see good demand in the CBD and in the city and in Arenastaden, for example. I don't expect the supply situation to be a huge problem for the market. there were another. I think another question was or complementary question about the increase in the investment volume in Fabege and the volume in the project portfolio. I think it's just important to understand that the project portfolio includes a number of properties that are existing properties that are not new construction, but they are under refurbishment like, for example, Nöten and Påsen who are two properties both in the ongoing projects. What we're doing now is that we are making the base investment in these properties in order to be able to rent them. Even that they are not rented today, we will not make the full investment until we have signed contracts. We want to shorten the time frame from now until when it's possible for potential tenants to move in. That's why we have decided to make these base investments even though they are not rented out. We can also add that we have a long-term target of investing about SEK 2.5 billion as an average over a period of time. Last year it was a little bit less. This year, it will probably be a little bit higher according to the projects we have going on. That's what we have said before. If I may follow up, on your target of 2.5 billion SEK, what is the year on cost that you expect on these projects? And what are you aiming for for 2023? On the ones that are already we have in them, I don't know exactly what we are, but they are around 5% you can say on the existing projects. About 5%. Okay. For future product, we like it to be even a little bit higher. Okay. All right. That's helpful. Thank you so much. With no remaining questions, I would like to turn it back over to our speakers. Okay. Thank you very much for joining us this afternoon. We can summarize that we think a lot of it's quite a balanced report, strong in many cases. We know that there are some question marks about the market, about what's happening in Sweden, about the economy also. We feel that Fabege is very well-positioned to take care of the opportunities, and also handle the risks. Please give us a call if you have any more questions and visit us in Stockholm, and looking forward to see you soon. Thank you very much for your.