Fabege AB

STO:FABG

Earnings Call Transcript 2022-Q1

[Stefan Dahlbo, executive]

Welcome to Fabege's presentation of the first quarter 2022. And I'm sitting here with Asa Bergstrom, our CFO. And also, we'll ask you to use the time after the presentation to ask questions. I can hope for a dialogue today.

Please go to slide -- the second slide, please. Despite a turbulent external environment with, of course, the war in Ukraine as a main event during the first quarter, the rates, we have had the inflation and interest -- rising inflation and rising interest rates, I think we delivered a strong report. And I'm very satisfied with that. We perceive that the stock market is stable, with good demand for office premises in all our areas. New lettings and renegotiations are being completed at good levels. And the transaction markets in the market where we are active have been [indiscernible] during the autumn and the winter and now in the beginning of this year at record levels. And I think it's reflected in lower yield requirements and positive changes in our value -- in the value of our portfolio. We have also carried out 2 strategic acquisitions during the first quarter on the south side of Stockholm, and we will come back to that a little bit later.

So Asa, will -- can you please start to go through the result in a little bit more details, please?

[Åsa Bergström, executive]

I will. Thank you, Stefan.

And please turn to Page 4. I agree that we can be very satisfied with the start of the year. We reported a better result right across the board compared to the previous year: higher income, improved net operating income and profit from property management.

Rental income amounted to SEK 762 million, of which around SEK 6 million was of a nonrecurring character. In an identical portfolio, income increased by 8%, roughly half related to occupations in our project properties and the remainder mainly related to index adjustments, lower discounts and increased reinvoicing of property tax.

Increased operating expenses were mainly due to higher property tax and higher electricity costs. Meanwhile, other winter-related expenses decreased compared to the previous year. And the surplus ratio came in at 73%. SHH gross profit amounted to minus SEK 7 million, of which SEK 8 million related to costs for central administration. Income recognition takes place in connection with the completion of projects, and final recognition did not occur in any projects during this period. We will review the methodology for allocating administration costs to the projects in order to ensure more even income recognition in the future.

Central administration came in at minus SEK 25 million. The previous year's expense also included nonrecurring costs for Fabege's new head office. Interest expenses increased slightly compared to the previous year, which was due to an increased loan volume. The average interest rate fell slightly to 1.69% from 1.71% at the year-end.

Earnings in associated companies amounted to minus SEK 3 million, and mainly related to capital contribution to Arenabolaget during this period. And we therefore reported profit from property management of SEK 381 million, an increase of approximately 10% compared to the previous year.

The strong property market is reflected in continued declining yield requirements and positive changes in value, as Stefan just mentioned. Total unrealized changes in value during the quarter amounted to almost SEK 2.2 billion. The average yield requirement decreased further by 6 points to 3.70%. The yield levels at which transactions were carried out late last year and early this year have now affected the yield requirements in the valuations with some time lag. The deficit value in the derivative portfolio changed to a surplus value, which means an unrealized positive change of value of almost SEK 900 million. And finally, the tax expense amounted to minus SEK 730 million and related to deferred tax only.

Please turn to Page 5, key ratios. Reported equity increased by SEK 4 per share to SEK 145 per share. And the long-term net asset value or the EPRA NRV amounted to SEK 179 per share. The approved but unpaid dividend of almost SEK 1.3 billion has been entered as a liability. The only key ratio that does not currently meet our target level is the debt ratio, which amounted to 14.3. However, this has improved somewhat since year-end. Otherwise, the key ratios are in line with our goals and expectations. Our balance sheet is still very strong with a high equity asset ratio and a low loan-to-value ratio.

And now please turn to Page 7. We were finished with the year's refinancing of bank loans before the year-end. In February, we issued bonds of SEK 400 million with a 3-year maturity at a spread of 100 basis points. Furthermore, we issued bonds of SEK 600 million via SFF with a 2-year maturity at a spread of 69 basis points. Since the end of February, the war in Ukraine has created turbulence and has led to rising spreads in the banks and the capital market, even though there is still good demand for Fabege's commercial paper and bonds, issues have been carried out at higher spreads. Current commercial paper maturities have been rolled over at short maturities. In April, we issued a further SEK 550 million in a 2-year bond at a spread of 110 basis points. We maintain a reserve of unutilized facilities in the form of revolving credit lines of just over SEK 3.6 billion. We did not enter into any new fixed interest terms since year-end. Of the loan portfolio, around 75% is now fixed, mainly based on long-term maturities and mostly through straightforward interest rate swaps, supplemented by some fixed rate bonds. The plan is to replace maturities with new long-term fixed interest terms.

During the first quarter, we continued to repurchase shares, approximately 2.3 million shares in total. Our own holdings now amount to 11.8 million shares, equivalent to almost 3.6% of the total number of registered shares. The shares have been repurchased at an average price of SEK 125.81 per share, and we will retain those treasury shares until further notice.

And please turn to Page 8. The strategy of long capital maturity and the high proportion of fixed interest terms remains unchanged. In other respects, we aim for a distribution of our loan stock among several sources of financing. Other loans in the chart, apart from bank loans in the Nordic banks, also referred to loans from Brunswick and European Investment Bank.

And now back to Stefan.

[Stefan Dahlbo, executive]

And thanks, Asa, for the excellent review of the results.

I think -- maybe let's go through a little bit about -- tell you a little bit more update of our property portfolio. Go -- please go to Slide 10. As Asa mentioned, our value growth was almost SEK 2.2 billion, which means that we now have a property value of approximately SEK 86 billion. Our project and development properties accounted for about 17% of the value. And during the first quarter, approximately 40% of the portfolio was independently valued by external valuers. The increase in the number of properties from 4 -- 94 to 100 was mainly due to the property division in Haga Norra and to the fact that our redeveloper SHH expanded its portfolio by property.

Slide #11, please. While the world around us is so turbulent, it's reassuring to have stable customers with long or even very long leases. We see in the daily work an emerging trend that the smaller customers in the new renegotiations would like to have shorter leases, lease terms or shorter lease terms, but larger customers are not afraid to and would very often would like to have long-term commitments. And that's also what we saw in our last -- latest major lease with Alfa Laval that, for example, expires in 2047.

Slide 12, please. When talking about -- if we look at the Stockholm inner city where we have almost 40% of our property value, this submarket is showing very, very strong demand. And I also can say that that's what we have seen when we have -- and our colleagues in the sector who came with our report that the demand in the inner city is very strong. We see a trend -- a continuing trend that the customers are requesting good locations. And they are willing to pay high rents, but perhaps with a little less floor space for good location -- when talking about the good locations. And this is, of course, due to the fact that the companies will very often have to have an office that can attract employees to -- for them to be an attractive employer. So that's what we see now, and we think it will continue and will even be so.

On this picture you see the [indiscernible], we said it before. They also announced a new project in the future. We think it will start about 2025, 2026, where you see in the middle the run -- the traffic coming out from inner city. That we will have a building of 9,000 -- a new building of 9,000 square meters in the future.

Please go to Slide 13. As you know, we see a huge future potential in Hammarby Sjöstad. And it will continue to develop very well for the next years and in the next decade. The district has a good mix of housing, offices and services. And the area will grow together with the Stockholm inner city in the longer term. During the quarter, we took the decision to start the reconstruction of the property Påsen 1, which we acquired in the Q2 2020.

Slide 14, please. In Arenastaden in Solna, we see very good rental levels and strong demand. The problem is that we don't just -- just right now don't have any major modern space that is available. We are working on getting our approved zoning plan so that we can start new projects. During this year, the focus will be on letting the final floor space in Poolen. Tieto Evry is right now moving in, in the major space of the property Poolen and they will be right now and during the May, especially in May. And a lot of focus will be during this year to be on letting the final floor space in Poolen. In longer term, we will also have a better mix in the whole area, in the whole of Arenastaden, a better mix of properties that will also mean that we'll construct about 750 new apartments by 2026.

Slide 15, please. In Haga Norra, which is part of Arenastaden, you can actually see here see our properties that we are starting right now in the middle of the picture. Then we have started an office project, House 1, of 43,000 square meters. This will be a multi-tenant building involving an investment of approximately SEK 1.4 billion. We haven't been worried about starting the project without any anchor tenant like we usually do -- have. The property will be suit in a very attractive location in -- between the center of Arenastaden and Haga -- the Haga park. We aim to complete the project by mid-2024. And we hope to sign the first new contracts during end of this year and during 2023. There will also be another additional amount for up to 600 apartments in this -- in the Haga Norra area.

Please go to Slide 16. In Solna Business Park, we have the highest -- right now, the highest vacancy rate in our areas. We have in -- not carry out some investments in the areas and we acquired it 15 years ago. And we are now working with 2 new projects to previous and even also produce more of the residential buildings in the area to get a better mix, to have a lively 24/7. But also with having the high vacancy rate will also mean that we have the highest -- maybe the highest potential in this area. Right now, it's an area that becomes quite deserted after office hours. It's -- not that good range of services for our office customers. But that's something we're now working on. We're aiming to add another 350 partners by 2026. We go with a better mix of services and list on activities is long.

Please, Slide 17. Flemingsburg is going from strength to strength. And so that's also where we see so huge potential here. We have during the first quarter acquired a little bit more land here by Skanska -- from Skanska. So now everything you see is -- what should say clear here in the picture is what we own today and what we're working with. We have the Alfa Laval. Probably, there will be -- we will start the construction end of this year, the acquisition of Generatorn 10 and the project started by Operan/Dramaten.

Next slide, please, is showing how we started to construct -- the first step of Operan/Dramaten building, and we finalized in -- and is finally now underway, building it. And the project will be completed during Q2 2024.

So when talking about Flemingsberg, we have now the focus on the plan process -- planning process. We have a total of more than 0.5 million square meters development rights, which is approximately about 50% of that are residentials. And we -- I think we -- when I said we are so positive is we start to now see the potential out there, which I hope we'll bring. I hope we can tell you much more about in the next coming quarters and the coming years.

Next slide, please. When talking about the transaction market and also Asa started earlier and said that it has been a very strong transaction market in our areas. A few transactions in the city, but the one that have been very low yields. Yields much lower than actually even the updated valuation yields. So it's a strong -- few properties but strong market.

We have -- if you go to the next slide, please. Here, you see the Kabelverket 2 in the south of Stockholm, which we -- which we acquired during -- beginning of April actually. But we haven't -- we'll have it in this -- we now like to tell you about -- a little bit more about it because we acquired it for about SEK 800 million. It's fully rented, but there is possible building rights. So there is such a potential to develop it. We think it has a good potential also in the rental levels. And it's close to Hammarby, and it's on its way to Flemingsberg. So it's -- I think it's 22,000 square meters. It's -- I think this will be a really good deal for us in the future, will put a good potential in the south. And as you know, we believe in the south of Stockholm since before.

Next slide, please. The -- I already told you about our acquisition, Generatorn 10. You can see here in the picture, we acquired Generatorn 11 last year also from Skanska. And they're both important for the development of the future city center in Flemingsberg.

Next slide, please. In the rental market, and we go to the Slide 23, please. The positive trend is continuing in the rental market from the previous quarter. And there have been -- there is a lot of inquiries and viewings. But we still see a little bit wait-and-see attitude when it comes to taking decisions among the larger discussions. So we see an uptick in the -- continue to see uptick in the rent levels. It's a strong market, as we said, And that's mainly in the CBD, but also in the other areas we have. Arenastaden, as I said, very strong. Hammarby Sjöstad, good demand. Maybe in the Solna Business Park, there's still good demand, increasing demand, but we -- as we know, we know we have the vacancies there.

Next slide, please. In the Stockholm market as a whole, relatively low vacancy rate. We have seen a relative modest growth in the office market -- office stock market for office stocks for the last 15 years. There are projects going on, but it's a very healthy market, you can say, and still a good market in many ways.

Next, please. And that's also what we can see in our net lettings for -- we have a positive letting of SEK 8 million. We had last year a record level at more than SEK 160 million. And we are positive for the rest of the year. We have said that we have a goal of at least SEK 80 million and I think that's what we hope to at least reach.

Next slide, please. Leases of about SEK 20 million, where we negotiated during the quarter a good increase on those with plus 17%. We also extended a little bit more, but there were contracts at good levels and without doing any maybe -- when talking about unchecked change terms, it also without doing any investments. We have started the year with plus 2.8%, with -- it's very -- was a very good start for us, of course, on the whole of the portfolio. We -- but it also makes set some limit for the whole of the renegotiations, especially when you also see increasing energy costs and also tax costs.

Next slide, please. As expected, vacancy rate increased in connection with the fact that the Swedish tax agency has now left the premises in Nöten 4. The property will be adapted in order to be rented out to several tenants. And then I would tell you a little bit more about that because yesterday, we published our plans. I don't see any -- so I still don't see any structural vacancy in the portfolio long term. And I'm certainly not -- but I'm not certainly not set for the occupancy rates of 89%, and we'll work actively with that. We see it as a potential. As I said before, it's larger vacancies are mainly in Solna Business Parks.

So next slide, please. Our projects -- and we can go directly to Slide 29. We invested a little more than SEK 400 million during the first quarter. We have said that with the volume for this year, we'll will be approximately -- in total, SEK 2.4 billion. Last year, it was a little bit less. It was about SEK 1.9 billion. In addition to the SEK 2.4 billion, it will -- you had to add the housing development that the SSH is working with. But we also have some challenges, of course, when talking about the project and that the costs. High inflation and turbulence in the world around us, it's the longer -- will, of course, imply a risk for long term -- long delivery times, material shortages and higher construction costs, both in terms of material and labor. This will not have any major impact on our ongoing projects, which are progressing according to the plan. But it will and can have effect on the future projects. Hopefully, it will not prevent us much from starting projects. But we must think outside the box, and we will have an extra focus on the costs. I think we will, as a larger company, be able to solve a lot of the challenges we have. But of course, there are a lot of question marks about the cost situation right now.

When talking about -- if you go to the next slide, I mentioned earlier Nöten 4. The huge vacancies we got during this quarter, 50,000 square meters of office space in Solna Strand. We are now -- we -- and published yesterday the plan for how we will develop this. And I think it's very exciting. We will start the project during this year and it's called Staden under tak. I think the English translation was the city under the roof. Then we will see it's a huge property and it will be a property that you can find -- you can have an office. You can have a gym. You can have flexibility. And as you see here, it's very close to the waterfront. It's -- I think it is going to be a very attractive building. We have to invest in it. We have to work hard with it. It's a huge vacancy, but it's a huge -- also huge potential.

So next slide, please. Another large product is residential product. We have a joint venture with [indiscernible] in Tumba, south of Stockholm, close to Flemingsburg, where we will have a -- start to build approximately 100 -- 1,050 apartment and then also approximately 50,000 square meters.

Next slide. On the top of that, we can also add some other residential projects that we are working with right now in SSH. It's in Flemingsburg, also it's -- in some other small cities in Sweden: Billsta in Västerås, [indiscernible] south close to [indiscernible]. And that's what SSH has been good at in the past and what they have a strength in building smaller projects with good return. So we will continue to do that. But we have focus on the Stockholm area. We have focus on the large residential projects that we will tell you more about within the next -- during the year in Solna and Flemingsberg, well, which -- where we're talking about hundreds of apartments.

So please, next slide. We already said Alfa Laval will be -- project start in Q3 2022. We will invest a little bit more than SEK 800 million. And then it's in total 27,000 square meters and will be completed during summer 2025. So this is what we're working very -- spend a lot of time on right now, of course, in Flemingsberg.

Next slide, please. And now I will ask Asa to tell you a little bit more about our sustainability work, all the activities we're doing there.

[Åsa Bergström, executive]

Yes. Thank you, Stefan.

And we can move on to Page 35. Sustainability is an ever more important factor and external interest in sustainability issues and Fabege's sustainability strategy is increasing. Only during the last 2 weeks, I have received several e-mails with questions regarding data from our sustainability work. And also, the new EU taxonomy will impose additional reporting requirements and will hopefully also encourage further improvement of processes, both in Fabege and in the surrounding world.

In next slide, please. In 2019, we set a goal that our property management should be climate neutral by 2030, referring to Scope 1 and Scope 2 and the carbon footprint in Scope 3, which is project operation should be reduced by 50%. Since 2020, we are measuring and following up with the ambition to gradually reduce our carbon footprint through various measures and innovation. It is an educational journey towards a tough goal, but also very inspiring.

Please turn to Page 37. We also have an ambition to contribute to the community around our city districts through various measures. This work has become even more important with the investments that we are carrying through in Flemingsberg. A number of engagements in Huddinge are therefore shown at the list here, and there will be more examples going forward. Aiming -- among them, aiming to help pupils in local schools to be eligible for high school and also initiatives which aims to provide internships and work experience for people who are far removed from the labor market also in these areas.

And with that, I think we are ready for questions.

[Stefan Dahlbo, executive]

So to summarize, we have had a -- in -- where we can -- did what we can impact. We have a very good start of the year, of course. But on the other hand, we have what's happening in the world. And that's both terrifying and will have -- will -- are impacting our business, of course.

So -- but with that, thanks for listening, and the questions.

[Operator]

[Operator Instructions] The first question we've received is from [ John Wong ], Kempen.

[Unknown Analyst]

Yes. Perhaps on the valuation side, it's a bit surprising to see further yield compression at this level. Is this predominantly driven by the external appraisal, the 40%? Or are there also adjustments to your own internal valuation model?

[Åsa Bergström, executive]

Yes. It's a combination. We use the external valuations and the data we get from the external valuers in order to also carry out internal valuations. So during this quarter, we valued externally around 40%. And many of the remaining properties have been internally valued. And one of the reasons for the positive value changes is that we saw a declining yields, another decline by 6 basis points from 3.77 to 3.70 during the quarter. And this is -- one explanation for that is that there is a time lag between what is actually seen on the market and until it is also reflected in the valuations.

[Stefan Dahlbo, executive]

You also can say that the yields in the transaction markets and the especially yields you've seen in the CBD, for example, in the few transactions have been far below what we have in the valuations. There was some transaction between 2 of the Swiss insurance companies, AMF and Folksam, for 3 properties close to -- in the CBD. End of last year, they were at 3% yield about. And we have -- so the values are still conservative compared to the transaction market, but they have lowering the yield during the quarter. So -- but yes.

[Unknown Analyst]

Great. That's a fair comment. Perhaps as a follow-up on that. What are you seeing in the investment markets in the current quarter then? Is it slowing down? Or are we still seeing transactions to be finalized? Perhaps if you could comment on that.

[Stefan Dahlbo, executive]

You can say that the first quarter were very active transaction market in Sweden as a whole, but mainly in the logistics and residentials. If -- there are one large property out for sale right now but it's a family-owned, 20,000-something square meters in the city. And I think there are at least a huge interest for that. And we will see -- probably, we will see that transaction closed in May, I would say. And I think it will be at very good levels. But there have been very few office buildings out in -- for sale in our core markets or in stock commercial, you can say.

[Unknown Analyst]

Okay. That's clear. And then perhaps on the capital structure. I appreciate that you are doing share buybacks given the large discounts to your NAV. But given your debt ratio still being a bit higher, and well, as you just mentioned, the strong investment market, should we expect more disposals going forward to manage your average?

[Stefan Dahlbo, executive]

You can say that -- we are looking -- we have been in the last years been looking at -- for how to invest, of course, and how to allocate the capital best. We're always doing that. And of course, as we said, the buyback has been one good. We have been a little bit too -- sometimes, we said we have been boring, but we have been active in some of the bids and for the properties that have been out of sale in the last month. We were, of course, bidding for the buildings that I just mentioned that was sold in the CBD, but we haven't been close to what the insurance companies have been willing to pay. The property we are buying in [indiscernible], south of Stockholm, in the south. I think it's a good example of where we think it could be interesting. It's low -- relatively low rent. It's a relatively large building or property, 22,000 square meters. It's -- we think it's a good yield. It's a little bit better than 4.5%. And it's in an area where we think we have a good growth, and we also see future opportunities to -- for projects. So I think that's a good example when we look at -- when we would like to look at to acquire in the market. But otherwise, it's the buybacks or it's one tool in the toolbox. And as you said, it's -- the levels has been attractive for us.

[Unknown Analyst]

But then on the disposal side, I could imagine that there's quite some assets in your portfolio, which are a bit dryer, where you don't necessarily have the upside for you as an office redeveloper.

[Stefan Dahlbo, executive]

In the past, we have been from time to time selling some property where we think we can't develop them more or we -- but we also have -- I think in most of our areas, we still see an upside -- long-term upside on the rents. And we also have a good cash flow from them. So it's about -- of course, we have it as an alternative if we find better investments. We have -- Asa said also earlier that we have a very strong balance sheet. We still have a low loan to value. The debt ratio is also an internal value. So we have very good room for the covenants we have. So it's -- we have a lot of -- we have the strong situation in the balance sheet.

[Operator]

The next question is from Jonathan Kownator, Goldman Sachs.

[Jonathan Kownator, analyst]

Thank you also for the color on lettings and occupancy. I wanted to come back to that point, please. So you've highlighted obviously areas where you want to invest and reduce vacancy. Can you help us perhaps understand a bit in more details what needs to be done to reduce that vacancy? And what sort of reduction you think you can target? Are you going to have to redevelop properties and invest CapEx? Is it just a letting effort? Is it just that the area doesn't attract tenant at this stage? So that's question number one.

And the second question, which is a bit of a follow-up. To some extent, you've highlighted pretty strong demand for Arenastaden and for CBD. You're right now investing in the south when you're finding opportunities. And you're saying that it's difficult, obviously, to find opportunity elsewhere because there's nothing on the market. Can you help us understand the demand for this type of area to the sales of Stockholm at this stage? Appreciate maybe the product is just not there yet. But in many markets, we tend to see throughout Europe the concentration of tenants towards the center of the cities, and there, as you were describing, ready to take less pay, but they're no longer really that interested in some premises in the outskirts. So do you think it's going to be different in Stockholm?

[Stefan Dahlbo, executive]

I don't know if Stockholm is that different, but I think there is definitely different submarkets in Stockholm. In Arenastaden, we have -- or in Solna, we have larger offices. We have lower rents. And so it's mainly when you need more space, more square meters, and you maybe don't -- can't afford to pay what is in the CBD levels. In the south, more on the -- and that's also why we continue to develop Arenastaden. We see a very -- and also, we have to remember that we have the railways and the underground in most of our areas. In the south, we have -- it's more much lower rents, normally not in Hammarby, but it goes -- if we go further south to [indiscernible], for example. More than 50% of the people in Stockholm are living -- in the Stockholm area are living south of Stockholm. There are a lack or -- of modern offices there. We know that companies need maybe like also have a small hub in the south. We know that there is a lot of companies that are already located in the south, but they need more modern offices or they need to grow. We have, in Stockholm, quite an interesting line between Uppsala, Karolinska and Södertälje. In Uppsala, you had a Pharmacia or -- which are part of Pfizer today. You had in Södertälje AstraZeneca. And you have in the middle, the world-famous Karolinska Institute. And all what that means that we also have a lot of med tech, pharmaceutical companies, the whole railway. So with that said, I think we have -- and in Flemingsberg, for example, we have a lot of them, already have a lot of students. You have a lot of people living there. But there is lack of modern facilities for offices. So that's why we're also so positive. And the price for the land, it's much, much lower in that part. So we think we will be able to develop a very interesting -- in the south, we will be able to do much better in -- when we look at what we can acquire the land for and what rents we start with. In Alfa Laval, we start at SEK 2,700 per square meter. We -- and that will be long-term upside on that. And a little bit the same story we have done in Arenastaden. We acquired land quite cheap and then we develop land area and then we hopefully can get -- have the yields to come down and the rents to go up. So it's long term, but it's very interesting. And that's also why we're positive both to the north side, Arenastaden, Solna and to the south. But it's 2 different stories. Do you like to add something, Asa?

[Åsa Bergström, executive]

No. I think you probably said most of it. You said -- you mentioned the one important thing, that it's connected to the railway system and the subway. Another thing is that in Flemingsberg, it's a large area, which is going through a major development in the coming years. So by owning the majority of the land, we have the key to make a difference, like we have in Arenastaden, where rent levels during the 15 years that we have been investing in Arenastaden have increased from around SEK 1,600, SEK 1,700, up to SEK 3,500 until SEK 4,000 per square meter. So with developing the area, we can create more than the market has created during these years. And this is also something that we are looking for in the potential in Flemingsberg.

[Jonathan Kownator, analyst]

And can you help us understand a little bit? You're working on a number of development opportunities, some of them you're launching without pre-let. Where is the demand for pre-let currently? Are you actively having discussions, having active discussions with tenants? Or is it a bit -- I mean you were saying that some decisions were taking a long time to come through. Is that related to this pre-let project in particular?

[Stefan Dahlbo, executive]

Both yes and no. If you're talking about the single tenant buildings like, for example, in the Alfa Laval, it took some time to get the signing of the contract because of the pandemic. And then now we have this a little bit of the same with really large contracts on single tenants. So I'm talking about the Ukraine situation or the war. In the -- when talking about the multi-tenant building, for example, what we have now have started to build in Haga Norra, I think it's more that as a small or midsized company, don't make the decision to move 3 years in advance. We do it maybe 1 year before or 1.5 year before. So it's quite natural where -- as to the way the market works today. So it's -- but in total, I think the Stockholm market is very healthy because they're not that many built on speculations, and it's quite -- still quite small volumes. So -- and has been that for the last 30 years almost. So it's a healthy market as a whole. But we have to build on without highly signed contracts because, as we said, the small and midsized companies don't have that likely signed closer. Any further -- or do we have anything from the main?

[Åsa Bergström, executive]

No, nothing from the web.

[Stefan Dahlbo, executive]

Okay. So thank you very much for joining us, and don't hesitate to give us a call. You're always welcome also to visit us here in Stockholm. And I hope to see you soon in real life here. So thanks for today.

[Åsa Bergström, executive]

Thank you. Bye-bye.