Welcome to Sveafastigheter Q2 earnings call 2026. 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. Good morning, everyone, and thank you for joining us today. My name is Erik Hävermark, CEO of Sveafastigheter, and today I'll take you through our results for the second quarter and the first half of 2026. Following the presentation, we'll be happy to take your questions. With that, let me begin by highlighting the key developments during the quarter. The second quarter was characterized by the transformative transaction with KlaraBo, marking the beginning of the next phase in Sveafastigheter's development. During the quarter, shareholders in both Sveafastigheter and KlaraBo approved the merger, and we are now preparing for the integration ahead of the expected completion in September. The transaction is about much more than increased scale. It creates a stronger company with a larger share of income-generating assets, meaningful operational and financial synergies, a stronger financial profile, and ultimately better opportunities to increase profit from property management per share, strengthen our dividend capacity, and create long-term shareholder value. At the same time, the underlying business continued to perform well. Rental income and net operating income increased strongly, supported by annual rent adjustments and the completion of new development projects. I'll return to the financial performance in more detail on the next slide. The quarter also demonstrated the value embedded in our development portfolio. During the quarter, we completed the divestment of the Solhusen project in Nacka, and after the quarter end, we signed agreements to divest two additional development projects to SR Bostad. Together, these three transactions represent a property value of approximately SEK 1.2 billion and a project margin of 26%. Also, in connection with the latest transaction, we established a strategic property management partnership with SR Bostad. This creates a new source of recurring capital-light income while further strengthening the scalability of our operating platform. Once completed, the transaction will provide additional financial flexibility and further support our disciplined approach to capital allocation. Finally, Fitch Ratings placed Sveafastigheter on Rating Watch Positive following the announced merger with KlaraBo, reflecting the expected strengthening of our financial profile. This is another important step towards achieving BBB flat credit rating. With that overview, let me now take you through the financial performance for the quarter. The underlying business continued to develop well during the second quarter. Rental income increased by 6.5% compared with the second quarter last year, while like-for-like rental growth amounted to 4.4%. The increase was primarily driven by annual rent adjustments, continued operational improvements, and the contribution from recently completed new development projects. NOI increased by 7.1%, outpacing rental growth, reflecting our continued ability to improve the profitability of the portfolio and maintaining disciplined cost control. Profit from property management amounted to SEK 110 million. The second quarter includes period-specific higher administrative expenses, primarily related to the payment of variable compensation. These are timing effects and do not change our view of the underlying cost base reflected in our earnings capacity. Changes in property values amounted to a positive SEK 33 million. Profit for the period was negative SEK 26 million, primarily reflecting unrealized changes in the value of derivatives resulting from movements in market rates during the quarter. Overall, the quarter demonstrates continued strong operational performance supported by continued rental growth and improving underlying profitability. Let me now turn to our operational focus areas. Before turning to the individual metrics, I'd like to briefly summarize the areas that have been at the core of Sveafastigheter's development since the company was established. From the outset, our ambition has been to build a company that combines efficient operations with disciplined investments. On the operational side, we have focused on increasing occupancy, improving cost efficiency, and building a scalable organization. Together, these initiatives strengthen earnings while allowing us to grow without cost increasing at the same pace as the portfolio. At the same time, we have consistently invested in initiatives that strengthen both earnings and the long-term quality of the portfolio. Apartment upgrades and energy efficiency projects generate attractive returns within the existing portfolio, while new development continues to create value in markets with strong underlying demand. Together, these initiatives have strengthened the company's earnings capacity over the past two years and created a solid platform for the next phase of Sveafastigheter's development. Let me now take you through each of these focus areas in more detail, starting with occupancy and administrative costs. Occupancy ended the quarter at 95.4%. While this is marginally lower than in the previous quarter, it is 0.4 percentage points higher than in the second quarter last year. Quarter-to-quarter fluctuation should be expected, but the overall trend remains positive, and we continue to see opportunities to further strengthen occupancy over time through proactive management and focused letting efforts. Turning to central administration, our earnings capacity reflects an underlying cost base of approximately SEK 42 million per quarter. As always, quarter fluctuations should be expected. While administrative costs were below this level in the first quarter, they were above the underlying run rate in the second quarter, primarily due to the payment of variable compensation relating to last year, which I mentioned earlier. These are timing effects and do not change our view of the underlying cost base. Overall, we continue to execute on our strategy of strengthening occupancy while building a scalable and cost-efficient operating platform. At the same time, we are now fully focused on preparing for the merger and ensuring a successful integration. Let me now turn to our investments in the standing asset portfolio and how they continue to strengthen earnings. Investments in the standing asset portfolio remain an important source of earnings growth and value creation through apartment upgrades and energy efficiency initiatives to continue to strengthen both the profitability and the quality of the portfolio. These investments also represent an attractive use of capital, combining strong financial returns with a gradual improvement of the portfolio's long-term earnings capacity. Apartment upgrades remain a key priority. During the quarter, we upgraded 99 apartments and continue to generate yield on cost exceeding 6%. These investments increase rental income and NOI, net operating income, while enhancing the attractiveness of our apartments. Energy efficient investments continue to generate yield on cost about 10%. During the quarter, we invested SEK 20 million in these projects, reducing operating costs while improving the sustainability performance of the portfolio. In total, investments in the standing assets portfolio amounted to SEK 117 million during the quarter and SEK 230 million during the first half of the year. Around two-thirds of these investments were allocated to apartment upgrades and energy efficiency initiatives, with the remaining investments primarily directed toward measures that strengthen NOI, such as tenant adaptations and improvements to common areas. While these investments continue to deliver attractive returns and represent an important use of capital, they account for only part of our investment activity. The majority of our capital continues to be allocated to new development, which I'll discuss on the next slide. Our development portfolio is concentrated in attractive micro locations, primarily in the Stockholm region, where we continue to see strong underlying demand for both rental housing and newly developed residential properties. Around 90% of the portfolio is located within a 40-minute commute to central Stockholm, supporting both strong letting activity and long-term value creation. Over the last 12 months, we have started construction of 345 apartments and completed 766. As always, construction starts and completions vary between periods, depending on the timing of individual projects. We only initiate new projects when they meet our profitability requirements, and we believe it creates the greatest long-term shareholder value. We continue to see a high level of activity in the direct property market, particularly for newly developed residential properties in attractive locations. As we've already discussed, the three project divestments announced during and after the quarter demonstrates the value embedded in our new development portfolio and the continued demand from investors for these type of assets. Our starting point is always to develop properties for long-term ownership and management. At the same time, we will also always consider divestments when they create greater shareholder value than continued ownership. We believe that this disciplined approach to capital allocation is in the best interest of our shareholders. With that, let me turn to our financial position. We continue to maintain a solid financial profile. At the end of the quarter, loan-to-value amounted to 45%, while average interest rate was 3.33%. The increase in LTV compared with the previous quarter mainly reflects the completion and long-term financing of project Enhörningen, which was previously financed by the contractor. Liquidity remains strong, amounting to approximately SEK 2.4 billion, providing significant financial flexibility. As we announced earlier this year, we established our EMTN program and issued our inaugural EUR 300 million bond, further diversifying our funding sources and broadening our access to debt capital markets. Since issuance, the credit spread on the bond has tightened significantly, reflecting strong investor confidence in Sveafastigheter's business model and credit profile and further strengthening our access to capital markets. Finally, Fitch's decision to place Sveafastigheter on Rating Watch Positive following the announced merger with KlaraBo further underlines the expected strengthening of our financial profile and represents another important step towards achieving a BBB flat credit rating. With that, let me turn to our earnings capacity on the next slide. Compared with the previous quarter, rental value has increased by SEK 50 million. This is primarily driven by the completion of project Enhörningen in Kista, adjustments to parking fees, and rent increases from apartment upgrades. At the same time, net interest expense has increased following the completion of Enhörningen. As I mentioned earlier, during construction, the project benefited from contractor financing, which has now been replaced by long-term interest-bearing debt. Finally, other income relates to the external property management agreement, while central administration includes SEK 47 million relating to the same assignment. Overall, earnings capacity continues to develop positively, with a profit from property management increasing to SEK 477 million, corresponding to SEK 2.42 per share. With that, let me turn to the merger update before concluding with our priorities going forward. Following shareholder approval at the EGMs in June, we are now fully focused on preparing for the integration ahead of the expected completion towards September. The merger is progressing according to plan. The strategic rationale remains compelling. By combining the two companies, we are cementing Sveafastigheter's position as Sweden's largest listed pure-play residential company, with a property portfolio of approximately SEK 47 billion. The combined company will have a larger share of income-generating assets, a stronger financial profile, and meaningful operational and financial synergies, providing a solid foundation for higher profit from property management per share and long-term shareholder value creation. The merger also strengthens our position in the capital markets through greater scale, broader diversification, and an increased free float and liquidity while supporting our ambition to achieve BBB credit rating. Our focus over the coming months is now on executing the integration successfully and ensuring that we begin to realize expected synergies efficiently following the completion of the merger. With that, let me conclude with our priorities going forward. The first is improving profit from property management per share. Through continued operational improvements and disciplined capital allocation, we believe there is strong potential to continue increasing profit from property management per share over time. A second priority is to continue to strengthen our financial profile and maintain a strong balance sheet, supporting our ambition to achieve a BBB credit rating. Following the expected completion of the merger towards September, management immediate focus will naturally be on the successful integration and the gradual realization of the operational and financial synergies, thereby further strengthening profit from property management per share. Capital allocation will naturally be one of the first topics for the new board to consider once the merger is completed. It will be up to the new board to determine the appropriate balance between dividends, share buybacks, and other investment opportunities based on the financial position of the combined company and opportunities available at that time. Our guiding principle remains unchanged: Capital should always be allocated where it creates the greatest long-term shareholder value. With that, I'd like to thank you for your attention, and we are now happy to take your questions. 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 just a couple of questions. The first is sort of a follow-up question on the central administration. You mentioned that this was temporarily a higher cost in Q2, and if I interpret it correctly, we should expect about slightly more than SEK 40 million per quarter in Q3 and Q4 if that's aligned with the earnings capacity. That's correct. The annualized cost base for central administration is reflected in the earnings capacity. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Keivan Shirvanpour from SEB. Please go ahead. Yeah, sorry. There was some type of issue with. You're welcome back. Yes. Thank you. The second question was also related to property administration. What type of run rate should we expect here? Is it sort of similar as in the first half of the year, or how would you see it? It is also reflected in our earnings capacity. It is, I would say on annualized basis, SEK 85 million, slightly increase since the first quarter this year. SEK 85 million is the run rate level annualized for property administration. Okay, good. Just a final question, and that is related to this new management contract that you will establish. Could you say anything about the financial implications on that contract? Well, to start with, this assignment comprises around 360 apartments, and from start it's quite small assignment. We see this as a starting point for us to further investigate the potential to create recurring additional revenue streams from our platform. Th is is a starting point for us to evaluate the potential in external property management assignments. Okay. The final thing is also when it comes to the divestment, how do you see on the capital allocation? You mentioned that you want to continue to invest in projects, do you also see some type of potential for maybe intensified buybacks following this? Well, as I mentioned in the presentation, it will be up to the new board to determine the appropriate balance between dividend share buybacks and other investment opportunities. Of course, this is a very important strategic decision for the new board to have a view on as soon as they are in place. Okay. Thank you. Those were my questions. Thank you so much. There are no more phone questions at this time, so I hand the conference back to the speaker for any written questions or closing comments. Thank you. If you have any follow-up questions, we will of course, be available. Thank you for your time today, and I hope you have a wonderful summer.