Welcome to Sveafastigheter Q3 earnings call 2025. For the first part of the presentation, participants will be in listen-only mode. During the Q&A 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. Good morning, everyone, and welcome to Sveafastigheter's earnings call and presentation of our Q3 report 2025. My name is Kristel Eismann, and I am Head of Treasury and IR. Today's presenter is CEO Erik Hävermark. After the presentation, we are opening the lines for Q&A. Now I'm handing over to CEO Erik Hävermark. Please go ahead, Erik. Good morning, everyone, and a warm welcome to the presentation of Sveafastigheter's results for the third quarter. I will walk you through our performance in the quarter, as well as our performance for the period January to September. After the presentation that will take about 20 minutes, we open up for questions. We start with an overview of our business model, presented on the next slide. Sveafastigheter is Sweden's largest listed pure-play residential company, with residential assets totaling SEK 28.9 billion. Our business model stands on two strong pillars: property management, with about 15,000 apartments providing stable and resilient cash flow, and new developments with more than 7,000 apartments driving profitable growth. We are operational-focused, with a strategy to enhance profitability in our standing assets and drive growth through new construction and investments in standing assets. This is reflected in our targets, some of which I will mention later in this presentation. Above all stands our vision, which is simple yet ambitious: to be Sweden's leading residential company. Our mission goes hand in hand with that vision: to manage and develop homes for more people, homes where current and future generations can thrive and feel safe. Let's now move to the next slide and take a look at some key financial figures from the third quarter. Rental income amounted to SEK 390 million, an increase of 9.3%, and NOI grew by 9.7% to SEK 277 million. Profit from property management totaled SEK 123 million, corresponding to an increase of 45%. PFPM was impacted by significantly lower administrative costs, down SEK 80 million, which I will come back to later. Profit from property management was also affected by higher interest costs due to bond issuance at the beginning of the quarter and repayment of existing debt at the end of the quarter, hence a one-off effect in the third quarter. The weighted average yield requirement in the quarter was 4.46%, a slight increase compared to the previous quarter. Strong NOI development mitigated this effect, and we recorded a positive value change in the quarter, accounting for SEK 104 million. A stable profit from property management and a positive value change contributed to a profit for the quarter of SEK 230 million. As outlined earlier, our strategy is to strengthen profitability through improved operational efficiency. On the next slide, we show how this strategy continues to deliver during the first nine months of the year. For the period January to September, rental income grew by 14% to SEK 1,150 million, and net operating income increased even more strongly by 18.4% to SEK 764 million. In the like-for-like portfolio, rental income increased by 5.3% and net operating income by 6.9%. As a result, our NOI margin continues to strengthen. The NOI margin for the last 12 months is 65.2%, and when including property administration, 58.8%. An increase of 4.2 percentage points compared to the previous year. Our target is to reach an NOI margin including property administration of 70% by June 2029, and we are on track to achieve that goal. To strengthen profitability and the NOI margin, we have several focus areas. Some of the most important are presented on the next slide, slide seven. Sveafastigheter was established in its current form in June last year, with the objective of performing better as a standalone large and pure-play residential company. As an operational-focused company, we strive to deliver strong shareholder value and a high level of tenant satisfaction. From the very beginning, one key focus area for Sveafastigheter has been to strengthen occupancy rate, since we knew we had a strong potential to lower vacancies through our progressive and local property management philosophy. Secondly, the scalability and simplicity of our platform are expected to create favorable conditions to expand our portfolio without increasing administrative costs at the same pace, thereby lowering our administrative costs in relation to the portfolio size. Also important for Sveafastigheter's journey forward is our sizable and profitable investments. Naturally, the majority of our investments are allocated to our new development business, but we also have strong profitability in our investments in standing assets through apartment upgrades and energy efficiency projects. In total, Sveafastigheter invested SEK 692 million during the first nine months and SEK 246 million during the quarter. I will provide more details on our investments shortly, but first, let's look at how occupancy rate and administrative costs have developed in the quarter on the next page. For three consecutive quarters, our occupancy rate has increased, now amounting to 95.7%, up 1.4 percentage points since the second quarter last year when Sveafastigheter was established. In the quarter, we divested a smaller portfolio with high vacancies at book value, which contributed 0.3 percentage points of the total 0.7-point increase during the quarter. The formation, establishment, listing, and subsequent uplisting to the main market have led to one-off administrative costs in previous quarters. This quarter, they were substantially lower, only at SEK 2 million. The next quarter, Q4, will be the last quarter where we are impacted by non-recurring costs related to the establishment of Sveafastigheter, with non-recurring costs in line with or slightly above those in the third quarter. More importantly, our organization is now adapted for the new phase, Sveafastigheter Center, what we can call our normal business phase, and consequently, we are now operating at a lower administrative cost base. Administrative costs are usually lower in the third quarter due to how costs related to summer vacations are accounted for, and our administrative run rate is reflected in our earnings capacity with a quarterly cost of SEK 63 million. Let's now move to the next slide, slide nine, and look at our investments, starting with our two main investment categories in standing assets, apartment upgrades, and energy efficiency investments. Our target is to upgrade 2,000 apartments by June 2029, starting from July last year, 2024. This year, we expect to upgrade 250 apartments, and during the quarter, we completed 58 apartments. The renovation this year has delivered a yield on cost above 6%. We are concentrating our upgrades in larger cities, where we are seeing strong demand for renovated apartments. In fact, in several cities, we signed new tenant leases even before starting the upgrades. Our second main investment category in standing assets is energy efficiency projects. By lowering our energy consumption, we reduce tariff-based costs, generating a strong return on investment. We invested SEK 42 million in the first nine months, with a yield on cost above 8%. These investments not only provide strong returns but also prepare our portfolio for upcoming national regulations based on the EU legislation, EPBD. In total, Sveafastigheter has invested SEK 172 million in standing assets during the first nine months, of which SEK 142 million, or 83%, has been allocated to apartment upgrades and energy efficiency projects. The remaining investments include various types that improve NOI, such as tenant adoptions and fiber installations. We continuously evaluate the best option for capital allocation to create the strongest shareholder value. As long as our upgrades and energy projects deliver a yield on cost above 6% and 8%, respectively, which can be compared to our average yield requirement of 4.5%, we intend to continue with these investments. As mentioned earlier, the majority of our investments are allocated to new developments, presented on the next slide. We did not complete or start any new developments during the third quarter, but over the last 12 months, we have completed 403 apartments and started construction of 234 units. We currently have 656 apartments under construction, which will add an estimated NOI at completion of SEK 84 million and an NOI margin above 85%. All of our ongoing construction is in the Stockholm-Mälardalen region, with 76% in Stockholm County. We see a strong demand for newly built apartments. The occupancy rate for developments completed between 2020 and 2024, about 3,000 apartments, is clearly above the portfolio average. Our aim is to start 600-800 apartments annually. Needless to say, our overall objective is to start projects that deliver strong returns, not simply to meet a volume target. However, given our strong development portfolio, we are confident that we will be able to launch projects that meet our profitability requirements and volume ambitions. I also recommend looking at our project Näckrosen in Haninge, Stockholm County, which we highlight in our interim report, a good example of the strong value creation our new developments deliver. We now move on to our property portfolio, starting with an overview on the next page, slide 11. We divide our assets into three categories: properties under management, properties under construction, and properties in project development and building rights. The portfolio totaling SEK 28.9 billion provides a strong combination of stable and resilient cash flow and growth potential in the Stockholm region. Let's start with the foundation of the portfolio, properties under management. We hold solely residential assets with a total value of SEK 25.7 billion. 94% of our properties are located in Sweden's three metropolitan regions and university cities, and 24% in Stockholm County. It's also worth noting that 72% of our portfolio is concentrated in our 10 largest cities, a clustering that supports operational efficiency. As mentioned earlier, we disposed of a smaller portfolio this quarter, consisting of assets with high vacancies. We will continue to evaluate alternatives to strengthen the portfolio's operational efficiency. Let's now move to the development side of our asset portfolio, properties under construction and in project development. As mentioned earlier, we currently have 656 apartments under construction. The value amounts to SEK 1.2 billion, with an estimated value at completion of SEK 1.9 billion. All projects are in the Stockholm-Mälardalen region, with 76% in Stockholm County. Going forward, we aim to launch additional projects from our development portfolio, which consists of 6,387 apartments with a value of SEK 2 billion. 85% of this portfolio is located in Stockholm County and 49% within the City of Stockholm. The estimated yield on cost for this portfolio is 5.3% and project margin 20%. The transaction market for new builds in the Stockholm region is currently very strong, and yields are continuing to decline. Just this week, a transaction in Tyresö in Stockholm County was announced at a value of SEK 66,000 per sq m. In terms of capital allocation, we believe we will create strong shareholder value over time by continuing to initiate new projects from our development portfolio. In addition to starting new construction, we are also looking to obtain additional building rights in the Stockholm region to optimize construction volumes and ensure we launch projects where the demand for new housing is the strongest and those that deliver the strongest returns. Now that we've covered the portfolio, let's take a look at our earnings capacity on the next slide, slide 14. Rental income in the standing assets has increased by SEK 7 million compared to last quarter, driven by lower vacancies and offset to some extent by the recent disposal. Property expenses are slightly lower overall as a disposal reduced cost, while in the remaining portfolio, somewhat higher tariff costs had the opposite effect. Sveafastigheter also manages an external portfolio of almost 4,000 apartments. The income from this assignment is presented on the line item "Other Income," and the corresponding costs are included in central administration, totaling SEK 44 million. This means our total central administration cost of SEK 156 million relates to managing both our own 14,915 apartments and the external portfolio. Let's now continue to our financial structure on the next slide. During the quarter, Sveafastigheter further strengthened its financial position, particularly its liquidity. At the beginning of the quarter, we issued green bonds totaling SEK 1.3 billion. Later in the quarter, we redeemed outstanding SEK bonds of SEK 412.5 million and repaid secured debt. In total, our interest-bearing debt decreased slightly compared to the previous quarter. However, the timing difference between the issuance and repayment of debt resulted in somewhat higher financial expenses during the quarter. Our liquidity resources amounted to SEK 2.5 billion, of which SEK 1.6 billion is undrawn credit facilities. Compared to the previous quarter, our ICR increased to 2.0, and our average interest rate decreased to 3.35%. As mentioned, Sveafastigheter has strengthened what was already a solid financial position. Sustainability is at the core of everything we do at Sveafastigheter, and it is fully integrated into our business. On the next slide, we take a look at our sustainability efforts during the quarter. Our focus on sustainability is driven by our strong belief that it strengthens the profitability. As mentioned, we have invested SEK 42 million during the first nine months and SEK 11 million in the quarter to reduce our energy consumption. In some projects, we have reduced the use of district heating by more than 40%. During the quarter, the Science Based Targets Initiative, or SBTI, approved our commitment to develop climate targets in accordance with its framework. We also continued our work to reduce the climate impact from new developments. During the quarter, we entered a collaboration with a concrete manufacturer to reach zero concrete waste in production. We believe it's important to base decisions on facts, especially when it comes to sustainability. In the study "Wood vs. Concrete," conducted together with a consultancy firm Plant and IVL Swedish Environmental Research Institute, we aim to determine the actual environmental impact of the two main framework materials for residential buildings. The first part of the study was published during the quarter, and we are now sharing our findings with the industry. Finally, to create homes for more people, in line with our mission outlined at the beginning of this presentation, we have entered a collaboration with an association of women's shelters and support to prioritize women and children in need of housing. Let's now turn to our focus areas going forward. The rent negotiations for 2026 are ongoing, and it is still too early to predict the final outcome. The two-year agreements that some companies made last year, which also covered 2026, resulted in an average increase of about 3.5%. Some parties have referred the negotiations for next year to arbitration, and the rulings so far have landed around 3.5%. Our position in the ongoing negotiation is that rent should increase by around 4%, although it's not likely that we will reach that level in the final outcome. We plan to start at least one new construction project this year and approximately 640 apartments over the next 12 months. We are also interested in obtaining additional building rights in selected locations to optimize production volumes and profitability in new developments. To further enhance operational efficiency, we are evaluating alternatives in both directions: to increase our presence in cities where we are currently small, or to divest in those where our footprint is limited. In the near term, we do not expect to be a net buyer of standing assets. Finally, we will continue to focus on strengthening our capital structure and improving our credit rating to BBB flat. That was our prepared remarks. Operator, could you kindly open up for the Q&A session? If you wish 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 Keivan Shirvanpour from SEB. Please go ahead. Yes, good morning. I have a couple of questions. First of all, on the financial net, you mentioned this one-off that you have in the quarter. Could you maybe quantify how much that was? I do not have a specific figure for the one-off, but looking forward, you can see that our average interest rate is 3.35%, and also, of course, our interest-bearing liabilities. On top of that, we capitalize some interest. In the second quarter, our interest cost was SEK 100 million. As you can see, our interest cost in this quarter is SEK 150 million, and it is likely to expect the interest cost somewhere in between that in the fourth quarter. Okay. Also, on the administration cost, central administration was quite a bit lower. You mentioned SEK 2 million in one-off, and you expect a similar one-off in Q4 also. That is underlying SEK 31 million. In your earnings capacity, central administration is at SEK 40 million. Is that a reasonable run rate to assume at SEK 40 million quarterly, given that the costs were much lower now in Q3? That is correct. Our earnings capacity reflects our run rate in administration cost. Okay. That is clear. The same can be said for t he property administration, which is also lower than your earnings capacity implies. That's correct. Our earnings capacity reflects our run rate in admissive cost, both for central administration and property administration. Of course, it can fluctuate somewhat around the level presented in our earnings capacity. Okay. My last question is, you mentioned that you will not be a net buyer. Do you have any indication of how much of the portfolio that you would be open to divest? We're always looking into the possibility to both acquire properties to strengthen the profitability in the portfolio as well as operational efficiency and also disposal. What I'm alluding to is that we're evaluating both acquisition and disposal, but the most likely outcome in the near term is that we are not a net buyer. Okay. Just a final question, and that is on s hare buybacks. You did not comment anything on buybacks in the quarter, and we have several other companies within your segment that have recently announced that they will start to buy back shares. Is this something that you are currently evaluating? In this presentation, I commented on how we so far have chosen to allocate our capital, and we are constantly evaluating how to allocate capital to create the strongest long-term shareholder value. Since the AGM this spring, the board has a mandate to buy back shares of up to 10% of the total stock. As I outlined in the presentation, we currently have several investment categories that deliver strong returns: apartment upgrades with yield on cost above 6%, energy efficiency investments above 8%, and new developments that both generate attractive returns and strengthen the portfolio's earnings capacity upon completion. With that said, share buybacks remains an option for us going forward. However, at this stage, we believe that our current capital allocation provides the most sensible and value-creating use of capital from a long-term shareholder perspective. Okay. Thanks. Those were more of my questions. There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments. We have received one written question, and it is as follows. Why has not the All-vested transaction been communicated separately? We do not communicate small transactions, both in acquisitions and disposals. It was a very small transaction and not relevant for communication in a broader sense. We have received just one more question. Please elaborate on your return on improving apartment standards that you said in the report was more than 6% and also the return on energy efficiency more than 8%. What is your goal on returns of this kind of upgrades? First of all, we do see a strong yield on cost on our apartment upgrades than 6%, and we are aiming at delivering an average of about 7% yield on cost on our apartment upgrade. But we believe over 6% is good enough. It is the same for energy investment projects. The majority of our energy investments deliver stronger yield on cost than 8%, but at least 8%, I would say. That is more like a floor that we want the projects to deliver. And then a bout not being a net buyer, does this mean that you are trying to concentrate your assets to improve efficiency in your real estate management? And how do you look at your opportunity to expand the management of assets not owned by the company? So that is where we currently stand at. That is not our long-term objective. Our long-term objective is to create a bigger and stronger Sveafastigheter, both through new developments and acquisition. Currently, we are focusing on improving the operational efficiency in the portfolio, and both acquisitions and disposal are on the table. It is not likely in the short term that we will be a net buyer. One last written question. What was the vacancy rate in the all-vested portfolio? It was about 50%. We have one phone question, so I hand it back to operator. The next question comes from Staffan Bülow from Nordea. Please go ahead. Thank you and good morning. I just have one question, and it's on the occupancy rate. It is quite a dramatic shift, up 70 basis points Q1Q, and you explained that. One part is relating to the transaction, but then we have another 40 basis points of improvement. How come the big jump Q1Q? Have you offered any incentives to the tenants, such as rent discounts, or are there any special factors explaining the improvement? As I mentioned in the presentation, increasing occupancy rate has been a prioritized focus area for Sveafastigheter from the beginning. It takes time also to see the effects of all the adjustments we have made, both in how we manage the letting side of the business as well as organizational-wise. We now see the effect of something that we have prioritized and focused on for a very long period. Do you see that you can continue to improve this, or has this reached a normalized level now? No, we see further potential to strengthen the occupancy rate in the portfolio. Okay. Thank you. Thanks. I hand the conference back to the speakers for any closing comments. Thank you, everyone, for listening in. Have a great day and take care.