Welcome to Fabege's conference call. With me today, I have our new CEO, Bent Oustad, and our CFO for many years, Åsa Bergström. The purpose of this call is actually to just introduce Bent to the market. He's very familiar and many of you know him since the past, but for some of you, he's new. So please, Bent, tell us a little bit about your background. Thank you. Pleasure being here. Thank you for joining this. I have to maybe start because a lot of you, at least all your companies, have contacted me and wanted to have meetings with clients and interviews, et cetera. I know Peter, as an employee in Fabege, motivated, highly enthusiastic, wanted me to book all these meetings, but I said no. Now he has booked for today, so I'm really happy that you showed up. My background, I'm a Norwegian citizen. I have moved to Stockholm now from 1st of December. Very, very happy to be in the city. My education is from the university in Bergen, the Norwegian University of Business Administration. I started to work in Arthur Andersen when I finished my studies. I worked there until they went bankrupt in 2002. Then ABG Sundal Collier called me and asked if I would join them. So I joined the corporate finance department. They were building up a new real estate arm and asset manager. So I started that business in 2002. Worked there for eight years, building it up. Had properties. I was asset manager for different real estate funds. We had properties in Norway, Sweden, Baltics, Germany, Denmark, U.S., more or less around the world. We were about 30 employees in ABG, and we had several contacts with different managers around the world. After eight years, I joined or I was repositioned to head the real estate corporate finance team in ABG Sundal Collier, stayed there for another eight years. That was more core corporate finance, like M&As, IPOs, financing, different financings, both debt, not so much debt, mostly equity then. From 1st of January 2018, I was asked if I would take on the CEO position in Norwegian Property. It was a listed real estate company at that time. I said yes, new challenge. I've been there now for eight years. We have done several things, and I see lots of similarities with the position I have joined right now, actually. Can you some similarities, differences between Norwegian Property and Fabege? Yes. The similarities is when I joined Norwegian Property, they had sold several properties on forward contracts. So more or less, a lot of the cash flow was sold. So we had to do something with the firm. We had also some properties that had been vacated by larger tenants, single tenants. So we were in a position that we had to transform them, finding a new single tenant or do it multi-tenant buildings. So we had some challenges. We started the work there just to try to meet all the stakeholders, a little bit like what we do today. I had to meet all the stakeholders, get an overview of the company, meet all the employees, see our strengths and weaknesses, and try to put a plan up after that, and the years ahead, we started to do some smaller transactions. We bought a very large when the pandemic hit the market. We bought a large property just outside Oslo city in Fornebu. The Fornebu Telenor headquarters is 200,000 sq m. Opportunity, the way we saw it during the pandemic, Norway had quite strong restrictions on foreigners coming into the country. So we thought that we don't see any foreign investors buying that property without being on a property tour. So that's a real opportunity for Norwegian Property at that time. 200,000 sq m was several tenants. The ABB head office in Norway is there, Telenor, and several good credit tenants. We also used the time to start to invest in some debt in properties that the return on the debt itself, junior debt, was good for us, was okay. But we had the ambition that maybe they will fail on the debt because the interest rate and inflation started to kick off. Then we would have the property. And that happened around one year after. So they got a new property, the neighboring property to the Telenor headquarters, also with credit-worthy tenants, credit-rated tenants, long leases. So we tried to use this period to do a lot of opportunistic moves and other things, very centrally located, newly refurbished building in the CBD of Oslo, owned by the syndicate, the SPV syndicate. More problems when the interest rates started to increase. So we also placed a bid on that and got that in a favorable position for us, at least. And I think that's the way we also have to start to think in Fabege. So that's the similarities I see. We have to stay informed. When I'm telling this, it's more or less if you look back to Fabege when it was founded by the Paulsson family, it was maybe that way it was founded. It was driven by a lot of transactions. They bought properties, they did some refurbishment, they got the leases in place, they sold it, bought a new one. It was more or less driven by that in the beginning. And then, of course, you all know real estate are in different cycles. And the cycle, maybe it's not favorable to buy it because it was too expensive. So the new management in Fabege, they started more development, was really developers, bought land, and they made a fantastic job in Arenastaden. It's a superb area. I really love it. And then they did that for several years. When the pandemic hit, more or less, you started a more consolidation phase for the company. Always with a strong balance sheet through the cycle, the last cycle. It's fantastic. This company has a lot of opportunities going forward. Yeah, over to you, Åsa. Bent will be your third CEO. What was your first reaction when you heard it was going to be in Norwegian? Oh, my God, not another one. No. I know Bent since a couple of years, since you've been on the board and you are very familiar with the company already. So I'm very much looking forward to continue working with Fabege together with you. So I think from my point of view, the change is not that big. Of course, there's another person to sit and have these daily conversations with, but I'm sure it will be very good. Do you want to comment anything about the Stockholm office market? We were quite a little bit more optimistic after the last call. You want to have a comment? Not to tell too much in front of the Q4 report, which will be released in February. But yes, so far in the fourth quarter, and we are coming close to the end of December, it still looks positive. So I'm much more optimistic about the future than I was a year ago. And I was somewhat optimistic even a year ago. So I think we are looking forward to better times. Yeah, one last question to you, Bent, before we open up for the audience. We had a new owner this week. We read in the paper. Can you have a comment about that? You also ask about that. Everyone asks about that. I am more or less familiar with the question. I had it for five or six years, I think, but it's nothing changed in that. Every time it's the press asking me the question, and I say, okay, what do you know? I ask. No, no, all the researchers are telling me this, so probably it's you guys telling the press that something will happen. As I said, I'm still on the Board of Norwegian Property. I'm also on the Board of Fabege and now even the CEO of Fabege, and I'm pretty sure I would have known if that was on the steps right now, so quite comfortable with that. I don't spend a lot of time discussing who are my main owners or owners at all, but I don't think that will happen now. What happens in the future, I don't know. But I've taken this step. I've moved from Norway, moved from my family, moved here. I go all in for this job. And to say it in an American way, I would do Fabege great again. But I really have high ambitions for this job. This is where I will try to make a good return going forward. Any questions from the audience? Okay, Lars Norrby, SEB. Couple of questions from my side. First, a follow-up on that transfer of ownership, which was done, as I understand, earlier this week on Monday, wasn't it? Now, why now? Why was the change done at this point in time? I understand it obviously strengthens the balance sheet of Norwegian Property, but why this week and not earlier? When they are doing things, it's out of my hand. I have nothing with that to do. But it's like you said, you have probably also read the credit reports for Norwegian Property. So everyone is asking if they would strengthen the balance sheet, just show the support from the owners, I think. It comes to are there any synergies between different countries, et cetera, and one synergy is maybe financing, so to have some Swedish assets in Norwegian Property, I think that sounds good. Okay, fine. And just then turning to Fabege. Of course, like in any property company, the composition of the property portfolio is something that, well, that's what you work with, basically. So you've been on the Board for, what is it now, one and a half year? And now you're in a different position in the company. What's your view of the composition of the portfolio? Would there be potentially parts that could be of material size that could be up for sale going forward? It should never say never. Everything is in the toolbox at all times. But I'm not very a fan of selling properties when I feel the market is not super hot. But if it's a hot market, it's easier to do it. But otherwise, if the stock is trading good, you as an investor can also decide to sell or not. The composition of the portfolio, I like it a lot because you have several properties here in the city. That's not so concentrated. I would have preferred to have an even more concentrated portfolio in the city because then we can have full control over the area like we have in Arenastaden, like we have in Haga Norra, and also partially in Hagastaden. Then we have more control. We can have a gym, we can have parking, we can do everything together. So we have a lot of synergies when we have more in one spot. But our main concern, or my main concern these days, are just the vacancy. So that's what we really have to focus on. We have to take away the vacancy. We have to be best on renting out, leasing. So operations, operations, operations. And I see if we have a cluster or a core area with properties, it's easier to have the real focus on the same. Okay, thanks. I'll leave the microphone to somebody else here. Thanks. This is Fredrik from ABG. A couple of questions as well. First, you talked about kind of a couple of similarities between Fabege and Norwegian Property. And during your time at Norwegian Property, you did some acquisitions, you invested in credit, talked about being opportunistic. What do you think that sort of means for Fabege to be more opportunistic? In what way? Maybe opportunistic is the wrong word. But in my work, I have two things. I'm addicted to details. I really am hands-on. I really like to understand everything. I like to keep myself informed of what's happening in the market and see if there is something that we can do to grow the company, to have better operations. Can we have some economies of scale by having more properties together in one area? We can divest some and invest in something else. Of course, we can. And we probably will do going forward. But I think that's what I tried to say is that I think going forward, you will see more happening in Fabege than you have seen in the last five, six years. There are some very large differences between Norway and Sweden in my view so far. I will come back to that later on also. But in Norway, you don't have the large corporations that you have here in Sweden. So here we have several tenants renting 50, 60, 100, 150,000 sq m. We don't have that in Norway. Only have the governmental tenants being that big. So that means that when you do some structural changes, every corporation is more or less in a cycle. So maybe they have rented 10,000 sq m too much. Maybe something's happening then. So they may be reduced from 100 to 80,000 sq m. It's still a fantastic tenant to have. It's fantastic. You have all possibilities. All our tenants are not only in Stockholm. Maybe they need some help other places around Stockholm or even other places that we can have some opportunities to follow them. We have to look into that to see what can we do. So when I see here in Stockholm, we see an increasing vacancy more or less all over. That's probably because they are reducing. They don't have excess square meters, et cetera. That we don't see that in Norway yet. But still, Norway is behind Stockholm in the cycle. And what you see in the cycle, more or less what's happened in at least Paris, a little bit in London, where the office market also is waking up, I think that will transform into Stockholm as well. And when you see at the IPOs in Stockholm Exchange this year, like Klarna, Verisure, very, very large IPOs, also tells a lot about the market and what's going on. We don't see that in Norway this year. Thanks. And then second question on, do you have sort of a view of the balance? You mentioned the balance sheet being strong in Fabege and that sort of sets up for good opportunities ahead. Do you have a personal view of where the balance sheet should be? Should it be where it is today, or can you increase leverage and so on? I didn't mean it that way, actually. But I think to be in a position to eventually look at opportunities, you need a strong balance sheet. That's the base. And Fabege has had that through this cycle. So I think this company is ready for everything. That was my meaning. How strong should the balance sheet be? That varies through the cycles. And it's important to be there. And if you don't have a strong balance sheet, you miss the opportunities. But we have centrally located properties. Close to 50% of our portfolio of yielding assets are here in the center. It's not a lot of cash flow. So that's why also we need a strong balance sheet. The balance sheet has to be adjusted for the kind of properties you own. Yes, you have a very strong balance sheet, and you also have a big discount valuation to net asset value. And you talk about buying new properties, etc. Isn't it more profitable from a net asset value enhancing perspective to buy back your own share? That's absolutely a good opportunity these days. More or less the toolbox is there. Do we have enough cash flow, or do we have enough free cash to do it? I think first of all, we have to focus on the operations the way we are today. That meaning reducing the vacancy we have. We have above 500 million SEK in yearly rents in vacancy. That's job number one for all of us. Of course, should we borrow money to buy back shares? I don't know. More or less my opinion is that the shareholder should have at least a small portion of dividend. That's what they have in Fabege, not a lot. And then I'm not deciding, even if I'm a part of the Board, but you can be quite sure that that's also on the table in the Fabege Board if you should use that mechanism or not. But before we do purchases of eventually properties, that also has to be evaluated, definitely. Okay, thanks. And on the vacancies, I think you have like 13%-14%, and it's been quite high for quite some time. One of the higher ones among the real estate companies. What are you structurally going to change to actually get this vacancy down to a more normal like 4%-5% level? Yeah. I've been in this position for two and a half weeks and a Christmas party, as I say, and probably I learned more during the Christmas party than I did the first weeks. I started on Monday, and we had to send the papers to the Board on Friday, and luckily, I got it postponed two days during the weekend, so I had some more time, so we haven't done enough work to really answer in detail that question, but that's job priority number one, and every time I speak to some of our employees, I say, don't wait for me. Work on the vacancy. That's job number one for all of us. I tell it every time I meet our employees, so there are different ways we can do it. Today, we do most of the work ourselves, and we are very, very good at it. But still, when the vacancy gets at this number we are now, we have to look into different possibilities how to work on that. But definitely job number one before everything else. Yes, hi. Emil from Pareto. How familiar are you with Stockholm since before joining Fabege? Quite familiar. In the funds, when I told you about my background as an asset manager, we owned the DN-s krapan. We owned several properties in Kungsholmen. We never got the possibility to buy inside CBD because it was too low yields. We had about 50,000 rental flats in Stockholm and other places in Sweden, southern part of Sweden. So we had logistics here. We had Tomteboda in our funds. So I've done a lot here in Sweden. What's your view on Flemingsberg? Very, very small portion of Fabege so far. We have some very, very good tenants in Alfa Laval and Dramaten, Operan. Yeah, we have SEK 160 million in revenues there. We have SEK 15 million in vacancy. So that's more or less my view on Flemingsberg right now. Yes, hi, Albin Sandberg. SB1 Markets. Two questions for me. You were referring then to we should expect more activity from Fabege over the next five, six years than we've seen in the past. Obviously, the market situation is a bit different maybe, but is it that you're referring to, or is it anything that you would have wanted to see in Fabege over these past five years that didn't happen, or how should we interpret that? All the things I would like to see. There have been some opportunities in our areas as well. I think on the Q3 report, we heard the neighboring building to our headquarters was sold. In my view, it's quite a favorable price. I think if we have been very lucky, it could have been us owning it. But of course, we have a lot of vacancy. The share is priced very low right now. So I think we have to do some homework within our team first, and then I think you will see more from us again. Final question is, obviously, we've been doing a lot of property deals over your time as a banker and the CEO. What's your view on a property company in general? Would a larger size Fabege make more sense? Would it be more interesting to invest in? Would you get more favorable financing terms, or how do you see a property company enabling the best return, so to speak, in your view? Of course, how that's happening is dependent on where we are in the cycle. And that's also why I tried to go a little bit back and look at Fabege from the beginning, where they were set up the way they were, and then they got more urban developers. And right now, we still have a small land bank in our balance sheet. I think it's around SEK 7 billion. So it's not a lot now, but it's not really high valued in the investor market right now, for sure. It will come back, definitely. But when I look at a property company, I want to build it as a stable company. That's work number one. And I love to have some CBD properties, but they're not yielding more or less anything. So cash flow is close to zero. And that's why it's very, very good to have strong areas around the city, giving us a little bit higher yield, maybe 100 basis points higher. And Arenastaden is just fantastic. I took my car first day to work, and one lady there told me, "Oh, you're crazy. You're driving here. You take the tram and the train." And that takes 15 minutes from I walk out my door. It's so central, actually. You have everything. You have hotels. You have nice offices, very nice offices. When it gets finished, you already have a shopping center right there. But we need to have the security. We need to have more shops, restaurants on the ground floor. And when I visit some of the tenants there, you're not sure if you are in my living room. I'm not in the living room I have now, but living room home in Oslo, or if I'm in a hotel or if I'm in a lobby. It's very, very nice offices, so I think when you build a company, we need to have stable cash flow. And then if you only have centrally located properties, you don't have enough cash flow in my view, so we try to balance that out. And here we are close to 50% of the yielding assets in CBD, then we need something else as well. Jan Ihrfelt, Kepler Cheuvreux. I have a question on your building rights. You have a lot of residential building rights. And have you considered anything about these assets? Are you going to develop your own or going through your own ventures or even selling them? Because that's a kind of hidden asset in the company, I would say. Yep. I think you saw last quarter that we were selling some building rights in Kungsholmen, so they will be divested in the first quarter, the second quarter: first quarter next May next year, second quarter, but I think we have the building rights where we own all the properties and also own the commercial properties. We are kind of urban developer in these areas to have control of the residentials. If we are competitive, can be competitive, and we can do that job well, which I think right now that we can, we should do that at least on our balance sheet, and we have a perfect team, a very lean team, hands-on team doing very, very well in Haga Norra these days, so I think we'll come back to that actually on Q4. We will. A little bit ahead right now, but yeah, we will come back to that Q4 report how we were thinking about that. Okay. Right now, it looks like you're going to develop them yourself. Develop. The building rights yourself and doing residential construction. Not all of them, but a lot of them. Okay. Thanks. Mikael Andersson, Handelsbanken. Coming back to the question about the balance sheet and leverage. I guess Norwegian Property has been run with a bit higher leverage, at least looking at LTV than Fabege the last couple of years, and it's also rated a notch lower than Fabege. How's your view of rating agencies and your experience with them, I guess, with more transactions maybe going forward and buybacks, etc.? They might have an opinion on that, so a bit your thoughts on the rating agencies and the rating. I think they're doing their job. I don't have a lot of views on them, actually. They have to make up their opinion. I'm more into what the question from the front row here, that how is the company looking? And I prefer to have a balance there. And we need a strong balance sheet to act on possibilities and act on things happening in the market. So yeah, pandemic, inflation. We have low interest rates here in Stockholm. Look west, it's quite much higher. So I think they do their job. Why is Norwegian Property a higher loan-to-value? They were down to in the 30s sometime, and then did a lot of acquisitions, opportunistic acquisitions, both buildings also with vacancies. And then you have a higher LTV, but still supported with some new equity, but not 60% new equity. So it's going up and going down. But, my view is to have some stable balance sheet through the cycle. I'm not in my head, it has to be below this and below this. That's more or less over the cycle and see how the company is performing and how we look at it. Thank you. Do we have any questions from the telephone conference? No. Thank you. The next question comes from Stephanie Dossmann from Jefferies. Please go ahead. Hello, good morning. I would have two questions, please. One, the first one would be related to the AI adoption by corporates. I was thinking about what's your view, I mean, on the impact from AI on office demand in the long term, and especially in the situation that we see currently with lots of vacancies. I know there have been disruptions in the past, such as working from home trends and so on, so I was thinking about the mega trends on the office market. Maybe the second one correlated to the first one. When it comes to fill the vacancy, do you think about converting assets into other asset types, such as either data centers with the AI adoption or other type of assets, please? Yes. Try to start with number one, so you have to remember the question to repeat it. When it comes to AI, of course, it will influence. Hopefully, it will influence. And I'm sure it will influence. The companies really succeeding with the AI, they will get even stronger, will be better credit. They will have a lot of opportunities going forward. Some of them will be growing, some of them will be losing, and maybe really reduce. That's also why I say our job number one is to lease out. There are a lot of tenants in this city. And in my view, everyone should be at Fabege. It's the best company. And when I am out there, not so many yet, but I met some of our largest tenants. Everyone is very enthusiastic, telling so good stories about all the Fabege employees they are meeting on a more or less daily basis, and that's really one of our strengths. We have to be there for our tenants. We have to be out there hunting for new tenants, and as I said, someone will reduce, someone will grow, someone will be stable, and that's part of life. That's our work. We should be number one in renting out offices. I don't think any offices will, I don't think the offices will die. When you see the total vacancy in Stockholm is also heavily influenced by some areas with larger vacancy. We have also, as was questioned from the audience here, quite a high vacancy, but we've also done a lot of new build, new construction, and not everything is rented out 100% when you started the project. So we have a little backlog to work on there. And that's goal number one, as I said several times. The second question was about your view on converting vacancies, office vacancies to other. Yeah, it's not so much potential in our portfolio. There was a little bit question from Flemingsberg here. There can be some other. Everything doesn't have to be offices to say it that way. On the core portfolio we have in Arenastaden, Haga Norra, in Hagastaden or here in CBD, we don't see that much conversion. But of course, we have, is it six or seven hotels in our portfolio today? That's not pure offices, even though we don't market them so much as a hotel portfolio. We have a centrally located hotel in Stureplan and also several hotels in Solna. So we have different types of assets. And as I said, we have several office tenants that also want to expand into other things. That could be an opportunity for us. We see also maybe more tenants asking for combined properties with some kind of research development department, some smaller part logistics together with office, and we also have plots available for that, but the offices we already own, they're not that, not all at least, so flexible to convert to other things right now. If this was the last question, do you want a last comment before we wrap this up, Bent? Not so much, but I want to say I'm very enthusiastic. I'm humble about the task I have. I'm grateful for the opportunity, and my big, big dream is that my position is not necessary because then the management team and all employees really run the company, but I'm looking forward to this. Thank you for taking your time, and we will meet more investors. Sorry, takes more, but after Q4, I think we will be very much more available. Thank you for taking your time.