Welcome to Sveafastigheter Q1 earnings call 2025. For the first part of the presentation, 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 the company. Please go ahead. Welcome to Sveafastigheter's earnings call and presentation of our Q1 2025 results. My name is Kristel, and I'm Head of Treasury and IR. Today's presenter is CEO Erik Hävermark. After the presentation, we are opening up for Q&A. Now, I'm handing over to Erik. Please go ahead. Thank you, Kristel. Also from my side, good morning and welcome to the presentation of the results for the first quarter of 2025. Despite our short history, our results in the first quarter demonstrate clear progress in executing on our strategy, with focus on increased profitability and organic growth. I'll start the presentation with a quick overview of Sveafastigheter and then move on to the performance in the first quarter. Sveafastigheter is a value-based company striving towards our vision to become Sweden's leading residential company. Our mission, which describes what we do every day, is to manage and develop homes for more people, where current and future generations can thrive and feel safe. Let's have a look at our history on the next page. Sveafastigheter was established in June last year by combining properties and organizations from three separate companies. In October, we did an IPO and were successfully listed, and from January this year, we manage all of our properties with our in-house property management organization. Managing all our properties is essential in our strategy to reach the full potential from the property portfolio. Let's move over to our business model showcased on the next slide. Sveafastigheter's business model is based on two strong business areas: property management, with 14,794 apartments under management, and new constructions, with 908 apartments under construction and 6,658 apartments in development. The combination of the two business areas provides Sveafastigheter with a clear path towards continued profitable organic growth. The total property value of our portfolio is SEK 28.2 billion. The strategy for Sveafastigheter is to reinvest our strong and stable cash flow from standing assets in new constructions and value-adding investments in our standing assets, and by doing so, create profitable growth of the business and a solid total return. Our growth strategy is behind our operational targets to start new construction of 600-800 apartments annually and to upgrade 2,000 apartments by 2029. With that short summary of Sveafastigheter and our history, we move over to the next slide and have a look at our performance in the first quarter. Sveafastigheter continues to deliver strong growth. Our rental income grew by 20.4% to SEK 376 million, and our net operating income increased by 31.3% to SEK 270 million, meaning our income grew faster than our operating expenses, leading to a strengthened NOI module. Profit from property management amounted to SEK 56 million, a profit that was impacted by non-recurring administrative costs of SEK 11 million, attributable to the formation of Sveafastigheter. Compared to the previous quarter, our administrative costs have decreased by SEK 12 million, and the administrative costs will continue to decline as the organization now is adapting to the new phase Sveafastigheter is in, post the formation of the company, with focus on operational efficiency and organic growth. The value change for the quarter was SEK -72 million. During the quarter, we invested SEK 178 million, and the average yield requirement in the quarter was 4.43%. In the prior quarter, it was 4.38%. The result for the first quarter was SEK 39 million. Let's move over to the next slide. As I mentioned, we have had a strong increase in rental income and net operating income, partly driven by completed new construction, which amounted to 442 apartments since the same quarter last year. In the like-for-like portfolio, the rents increased by 6.1% and net operating income by 13.9%. The growth in the like-for-like portfolio mainly derives from the yearly rent increase that for 2025 now is completed and landed at 4.9% on average for the portfolio. About 70% of the rent increase came into effect gradually during the first quarter. The rest will kick in during the second quarter, of which the absolute majority was in April. The NOI margin, 12 months rolling, has increased by 3 percentage points to 64% compared to 12 months rolling the same quarter last year. With property administration included, it is 57%, an increase by 2 percentage points. We are targeting to reach an NOI margin of 70%, including property administration in 2029. We have several tools in the toolbox to achieve this: adding new builds with higher NOI margin than older buildings, upgrading apartments, lowering our energy consumption, and last but not least, increasing our occupancy rate. On the next slide, you can see how the occupancy rate has developed. We now see that the measures we have implemented to increase the occupancy rate are starting to have an effect. The occupancy rate for buildings older than three years has increased by 0.7 percentage points compared to the prior quarter, and for the portfolio as a whole, it has increased by 0.3 percentage points to 94.9%. We see potential to further strengthen the occupancy rate going forward by continuing on the same path. We usually don't comment on the leasing situation in individual cities. However, I believe it's relevant to say a few words about the situation in Skellefteå due to the Northvolt situation. The demand for housing in Skellefteå is naturally affected by the job cuts in Northvolt, and we are observing signs of rising vacancy rates in Skellefteå. Sveafastigheter's portfolio in Skellefteå primarily consists of older properties with low rent levels, or to be a bit more precise, 51% of our apartments have high new build rents, corresponding to 3% of our apartments in Skellefteå. We believe that it is in new builds with higher rents that will be affected the most by an increase in vacancies. Also important to point out is that our properties had a good occupancy rate even before Northvolt established their business in Skellefteå. Sveafastigheter had two ongoing constructions in Skellefteå. In one, with a final phase of three, it is estimated to be completed in the second quarter this year. We have low rents due to governmental subsidies. In the other, we have an agreement on which the municipality-owned housing company will become the long-term owner of the property if Sveafastigheter chooses to use this option. We also believe that potential vacancy increases in Skellefteå can be offset by continued strong occupancy in our other locations. This underlines the strength of Sveafastigheter's property portfolio. Benefits from geographical diversification and thereby a lower overall risk profile. Let's go over to the next slide for an overview of our sustainability focus. Sustainability is at the core of everything we do at Sveafastigheter, and it is an integrated part of our business. Our focus on sustainability strengthens our profitability in our standing assets, and it makes Sveafastigheter a preferred partner for the municipalities and other important stakeholders for new developments. The Stop the Clock Directive that was decided by the EU Parliament will postpone the implementation of CSRD and EU Taxonomy. This will not change Sveafastigheter's focus on sustainability. Instead, it enables us to focus even more on achieving our sustainability goals and less on reporting. However, an increased transparency in our sustainability work remains a strategic priority for Sveafastigheter. During the quarter, we invested SEK 16 million in profitable energy projects. After testing and evaluating an AI control system in a selection of properties, we have decided to implement this technology on short of our properties. This technology is self-learning and automatically takes into account factors such as weather and heating systems to optimize and lower energy consumption in each building. During the quarter, we also launched a pilot initiative in seven locations where we removed the income requirement from our letting policy, an effort aimed at lowering thresholds to the housing market and broadening access to our apartments. We believe that there are unmotivated hurdles for many to get access to the market and that these changes in our letting policy will support our work on increasing the occupancy rate and also lead to less administration. Now we move over to our property portfolio, which consists of properties under management, properties under construction, and project development, which combined has a total property value of SEK 28.2 billion. Let's start with properties under management. Properties under management amount to 24% in property value and consists of 14,794 apartments. 94% are located in Sweden's three metropolitan regions and university cities, and this exposure to strong housing markets is why we see a strong potential to increase the occupancy rate. Our portfolio consists solely of residential properties. 7% of our rental value comes from commercial space, premises that are usually on the ground floor in the residential buildings. As I mentioned, we have a target of 1,000 apartments by the year 2029, renovations that are conducted with our upgrade concept called Hemlyft. We are ramping up to reach our target, and in the first quarter, we upgraded 55 apartments. We intend to upgrade at least 200 apartments in 2025. To understand Sveafastigheter, it is important to understand the geographical exposure and age structure of the properties in our portfolio, presented on the next slide. As mentioned, 94% of our properties are located in Sweden's three metropolitan regions and university cities. 72% of the portfolio are located in our 10 largest cities, with the greatest exposure to Greater Stockholm. In the upper table, you can see that approximately two quarters of the portfolio is built before the year 2010 and has a property value of SEK 20,905 per sq m. And one third of the portfolio is built after 2010 and has a property value of SEK 40,227 per sq m. In the lower table, the age structure for each market is presented. The majority of our newer buildings are in Stockholm Mälardalen, and the portfolio's exposure to Stockholm Mälardalen will increase as we continue to add new builds from our development portfolio. Let's go over to our second business area, new construction, and start with properties under construction. In the first quarter, we have completed 122 apartments in phase one of two in project Palmmorska in Umeå. The second phase, comprising 101 apartments, is estimated to be completed in the second quarter of 2025. In the same quarter, the third and final phase of our project, Gyllen in Skellefteå, with 60 apartments, is also expected to be completed. This project, as I already mentioned, has a low rent due to its being subsidized. Besides these two projects, we have four projects under construction that are expected to be completed in 2026, and after completion, add 747 apartments and SEK 113 million in rental value, of which 178 apartments and SEK 23 million in rental value is in the project Trongatan in Skellefteå, where we, as I described, have the option to hand over the project to the municipality-owned residential company. Sveafastigheter's investments in new construction give a solid return on invested capital and grows our portfolio with properties that have significantly higher NOI margin than older properties and strengthens our earnings capacity. We have an operational target to start construction of 600-800 apartments annually, and we are planning to start new projects this year. Over to project development. The transaction market has started to pick up, and within residentials, new builds in Greater Stockholm stand out as a particularly strong segment, with transactions taking place at levels that underscore the significant potential of Sveafastigheter's development portfolio, which includes 6,658 apartments, of which 93% are located in Stockholm Mälardalen region and 86% in Greater Stockholm. 5,358 apartments in our development portfolio are rentals, and 1,300 apartments are condos. Let's go over to our earnings capacity on the next slide, where our current performance is presented. Compared to the earnings capacity in the previous quarter, the rental value has increased, mainly due to the 122 apartments that were completed in our project in Umeå. As said earlier in the presentation, our focus on increasing the occupancy rate has already given results, and the vacancies consequently have decreased. Our property expenses have increased, largely because of higher tariffs for district heating and water and waste collection than estimated. We also have made a slight adjustment upward for administration costs. Sveafastigheter has an external property management agreement where we manage a portfolio of about apartments until 2026. The income from this assignment is on the line item Other Income, and Sveafastigheter's related costs for the assignment are included in central administration with SEK 44 million. The NOI, including property administration, is SEK 937 million, and including the projects that will be completed within the next 12 months is SEK 947 million. The expected earnings from projects that will be completed within the next 12 months have decreased compared to the previous quarter because of the completion of phase one in our project in Umeå, but also because the estimated completion date for our project in Eskilstuna has been moved forward to the second quarter of 2026. Now move over to Sveafastigheter's financial position, which is solid, with an LTV at 42% and an ICR at 2.2. With our sizable and pure residential portfolio in a rent-regulated market, combined with our strong capital structure, Sveafastigheter stands solid in a turbulent macro environment. The combination of a stable residential portfolio and a strong financial position is reflected in the expected credit rating, minus the positive outlook that Fitch Ratings published in April this year. As an investment-grade rated company, Sveafastigheter will get access to even more favorable and diversified financing moving forward. To wrap it up, let's move over to the final page of the presentation, where I will walk you through the key takeaways from the quarter. We saw a strong growth, with total net operating income increasing by 31.3%. On a like-for-like basis, the increase was 13.9%, showing solid underlying performance in the portfolio. Profits from property management improved to SEK 56 million, despite one-off costs. We also saw an improved occupancy rate, which increased by 0.6 percentage points since Sveafastigheter was established. This is a positive sign that our focus on leasing is delivering results. In addition, we have accelerated the pace of apartment upgrades. That will further strengthen our net operating income and NOI margin going forward. Finally, we have received an expected investment-grade rating of BBB-, with a positive outlook from Fitch Ratings, which is a clear acknowledgment of our financial strength. That was our prepared comments, and with that, we hand over to the operator and the Q&A session. To ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Kevin Shirvanpur from SEB. Please go ahead. Yes, thank you and good morning. I have a couple of questions. First, on the financial expenses. Financial expenses were down by 14% versus Q4, and this is despite similar average interest rates and interest-bearing debt. Could you maybe explain the difference versus Q4 and also clarify what is capitalized interest in each quarter? I would say the difference between your calculations and the outcome in the first quarter is capitalized interest, as you mentioned. We do not disclose quarterly the capitalized interest. You can look at our annual report to see the capitalized interest for 2024. Yes, and that was SEK 36 million for the year. That implies about SEK 9 million per quarter, and the difference here is about SEK 15 million. That is correct. We continue to invest in mainly new developments, and of course, as we continue to invest, the capitalized interest also increases. When we complete new developments, the capitalized interest will decrease. As you know, we plan to start new construction going forward. You have to take into account both continued investment and completed, of course, development projects, but also that we start new constructions going forward. Okay. I also have a question on the one-off in the quarter. Do you believe that most of the costs have been taken, or do you expect any type of additional one-offs in the upcoming quarters? We expect some one-offs in the upcoming quarter as well. We do not have any, of course, forecast when it comes to one-offs, but I believe in the second quarter, we will have one-offs more or less in line with the one-offs in the first quarter. Okay, thanks. Also on the upgrades, you state here in the report it is 200 upgrades for 2025. Do you have any indication on upgrades for 2026 and 2027? No, but as you know, we intend to upgrade 2,000 apartments starting from July 1, 2024 until 2029. Within five years, we plan to upgrade 2,000 apartments, and we will continue to increase the pace to reach this target. It will be higher than 200 apartments in 2026, but we do not have any more specific guidance more than that. Okay, good. Also, one final question, and that is that you mentioned in the report that you plan to start new housing projects this year. Do you have any indication on how many apartments that would be? No, we do not have any indications. We will come back with more information. We need the building permits, of course, in place, and also to reach agreement with contractors. We do not have any more information more than that we plan to start new construction this year as well. Okay, thank you. Those were my questions. Thank you. The next question comes from Jan Ihrfelt from Kepler Cheuvreux. Please go ahead. Okay, good morning. A couple of questions from my side also. I'll start with a rather detailed one, but on page 26, you have a calculation of your income from property management, where you add the property value changes. That's natural, of course, as they are negative in the financial in the P&L. Then you also deduct goodwill, despite that it's already deducted in the P&L. How do you come up with an income from property management of 56? Good morning, Jan. Thank you for the question. That was a detail, as you said, a detailed question, and we will have to get back to you with the answer on that. I believe that we do the correct calculation of our property from property management, but let us come back to you with a more specific answer to your question. Okay, thanks. Also, coming back to your financial net, if we compare Q4 with Q1, were there any changes in, let's say, the financial income between these two quarters? No. No significant changes. The answer is, it is no. No. Okay. Paid tax for this year, could you provide us with any kind of guidance? No, we do not provide any guidance when it comes to tax. As you saw in our report, we do not have any tax paid in the first quarter, and we do not have any guidance more than we do not have any guidance on tax. Your earnings capacity, when it comes to NOI margin, it is a little bit downwards, revision 0.3 percentage points. Are there heating costs? Maybe that caused this rather small change in your earnings capacity regarding the NOI? The NOI margin is moderately changed to the previous quarter. I would say it's mainly due to tariff-related costs. Of course, district heating is the main cost driver when it comes to tariff-based costs in our earnings capacity. Okay, thanks. That's all from my side. Thank you. No more phone questions at this time. I hand the conference back to the speakers for any written questions or closing comments. Thank you so much, and thank you for listening and your questions. I wish you all a pleasant day.