Wihlborgs Fastigheter AB

STO:WIHL

Earnings Call Transcript 2020-Q4

[Operator]

Welcome to the Wihlborgs Fastigheter AB Q4 Report 2020. [Operator Instructions] Today, I am pleased to present Arvid Liepe, CFO; and Ulrika Hallengren, CEO. I'll now hand over to our speakers. Please begin.

[Ulrika Hallengren, Chief Executive Officer]

Thank you, and welcome to this presentation of Wihlborgs' year-end report 2020. We see stability and more like insights. We continue to strengthen our key figures. Net setting positive in every quarter. And we have, during 2020, continue to improve things we do in every detail we have been able to figure out. Our goal is to be even more prepared when we can meet again. And so far, we follow that path. When corona tried to keep us apart, we find other methods to stay close, close to our tenants and close to our dedicated employees. As said in Q3, Wihlborgs has both stability and grit. For the full year 2020, we increased our rental income by 3% to SEK 3.74 billion. The operating surplus increased by 4% to SEK 2.222 billion. And income from property management increased by 3% to SEK 1.830 billion, a new record. But we have to keep in mind that Q4 included both saving EBITDA on our cost on the positive side, but we also had some extra discounts and reduced revenues in this specific quarter.The net result amounts to SEK 2.222 billion, which corresponds to SEK 14.46 per share, and the Board proposes a dividend of SEK 5.25 per share. During 2020, the EPRA NAV increased 12% to SEK 152.44.Page 3. We continue with positive net letting also in Q4, plus SEK 16 million. We have signed leases for SEK 246 million during 2020 and termination summarized to SEK 215 million. For the full year, plus [indiscernible]. This is not a record, but in this very special year, I'm very proud of our organization finding good deals in every city and with both governmental tenants and private companies.The net letting in a historical perspective at Page 4. Positive figures in every quarter. Regarding the terminations we had to keep in mind that some of the termination actually are chosen by us. In a long-term perspective, we would like to improve some of our properties into a new future. And during this time, we have taken the opportunity to try to enter them.For example, Brydehusvej and the project Slagthuset in Malmö and [indiscernible] in Lund. Taking this into consideration, the positive net letting is in a stronger signal that it's possible to make new deals in this market.Page 5. Our tenants that makes it all possible. Seven out 10 large tenants are from the governmental sector, and that's important in a long-term perspective. The rental income, which comes from public tenants, is 23%. Public tenants are important in our portfolio. But as said many times before, and worth mentioning again is that we, in this region, have a widespread of many sectors, and that is also a strength.Page 6. Rental value is now SEK 3.268 billion per year and rental income, SEK 2.946 billion, a bit down due to both divestment and vacancy. As usual, we especially point out our like-for-like values. And in rental growth like-for-like, the rental value is up 1.7% to SEK 3.187 billion. Our goal to peak index with 1% is achieved since index this year was 0.3%. We performed well in relation to index, and the rent level is growing, but of course, slower than a more normal year.Page 7. The occupancy rate is a bit lower in Malmö and Helsingborg than last quarter, 92% and 91%, but 1% better in Lund, 87%. As mentioned, we have chosen some terminations, both in Malmö and Lund transforming properties towards a better future, Slagthuset and Brydehusvej in Malmö, and Raffinaderiet 3 and Bläckhornet 1in Lund, for example. The operating surplus from offices summarized to SEK 1.865 billion and a running yield at 4.9%. Total value, SEK 38.433 billion.Page 8. We see continuous high demand in logistics and production. And here, occupancy is slightly up. In total, 92% occupancy, a running yield at 6.8% and total value of SEK 5.736 billion. Lower value since the last report due to divestments, but now we expect that the remaining portfolio will deliver good value and good cash flow in the future. That's part of our plan.For the entire property stock, Page 9. The occupancy rate is the same as in Q3, 91%. Operating surplus, SEK 2.253 billion and a running yield of 5.1%.Page 10, changes in market value of our properties. We have made acquisitions for SEK 327 million. We have invested SEK 1.231 billion. Sold properties at a value of SEK 1,540 million and changes in valuations of SEK 826 million. And together with currency translation of minus 299 -- SEK 291 million, thus summarized a property value of SEK 46.072 billion. Changes in valuations are affected by new leases, lower inflation forecast and a bit lower yield in logistics and social infrastructure properties like Kranen 2, for example.Page 11. And that means that despite the large divestment of 21 properties and a negative currency translation, we increased the value a bit also during 2020. So the curve continues in right direction, but we will increase that tempo further.The mark of our value at Page 12. 42% of the value in Malmö, 18% in Copenhagen, 23% in Helsingborg and 17% in Lund. The value is highest in Malmö, but now the volume is highest in Copenhagen. Interesting to see that the discussion with possible tenants continue in all our core cities. We announced a new lease to [indiscernible] bank in Hermes in Helsingborg last week, and we also have opportunities with, for example, governmental tenants in Lund. Nya Vattentornet 4 in Lund is almost the only object on that market that can offer large open spaces. It will be interesting to see when we sign next merger agreement that might be in Lund.Page 13, a glance of the general situation. Copenhagen has been more in a lockdown situation, and the border has been closed except for work commencing. We still have the possibility to keep a healthy space, both on our way to work and at work. So we can, to some extent, actually work in the office. More and more people feel that the situation of working at home with school children and the rest of the family at home, at the same time, has its challenges. This means that the office hotels have a high occupancy rate, especially when separated rooms are offered.We have, together with [ Naves ], made an investigation not only by asking people what they think about their future demands, but also by measuring how people's behavior has changed. It's an interesting method where we can use our technology, and that's a prerequisite for success in this method. We can, for example, see that while 80% in their cost stake that they are neutral or positive about working from home. Searches for mental illness also increased sharply. The lack of social question is massive, and we also see that many feel lack of confirmation regarding how effective they actually are at work. We are absolutely convinced that we will work at work also in the future, but in a good combination with other places at home or an extra office close to home.Now over to you, Arvid.

[Arvid Liepe, CFO & Secretary]

Thank you very much, Ulrika, and good morning, everyone. Moving to Slide 14. We'll have a look at the income statement for Q4. Rental income in the quarter was SEK 751 million, which was down 2% versus same quarter 2019. That was, of course, affected by the divestments, which took effect on the 1st of December, which decreased the rental income during the quarter with SEK 8 million. We also had a few negative effects, which we didn't really see coming going into Q4. We have negative currency effects of SEK 4 million. We gave additional discounts due to the second wave of the corona pandemic, amounting to SEK 5 million in the quarter. We also had decreased income from parking of SEK 3 million and decreased income from our restaurants in our Danish operations of SEK 3 million, also affected by the second wave of the corona pandemic.Looking at the operating surplus. That amounted to SEK 523 million in the quarter, roughly flat versus the same quarter 2019. I think what is positive is that the surplus ratio actually increased by 1 percentage point versus 2019. Income from property management amounted to SEK 419 million, down 8% versus Q4 2019. You should remember, however, that in Q4 '19, we had a one-off effect in -- of SEK 34 million coming from applying a new accounting method when it comes to income from joint ventures. So that should -- so the SEK 419 million and the SEK 456 million are not completely comparable. We had positive value changes in the quarter of just over SEK 400 million, and we ended up with a profit for the period in Q4 2020 of SEK 694 million.Moving to Slide 15. Looking at rent collection for the Q1 rents. As of end January, 99% of the rents due end of December have been paid, which is a bit better than normal. It's also worth mentioning, we feel that rent deferrals due to discussions with tenants affected by the corona pandemic amounted with SEK 20 million in outstanding deferrals as of end December, and those -- payments of those deferred rents are due during 2021. Total during 2020, we approved discounts of SEK 19 million net of state reimbursements during 2020.Moving to Slide 16, looking at the balance sheet. During 2020, the investment property value increased by SEK 0.6 billion. And as Ulrika said, that is despite divestments of SEK 1.5 billion and negative currency effects of SEK 0.3 billion. On the other side of the balance sheet, equity increased by SEK 1.5 billion and borrowings decreased by SEK 1.4 billion.Moving to Slide 17. That translates to a number of key figures. Our equity assets ratio now stands at 41.3% and our LTV at 48.2%. And the balance sheet has actually never been stronger. Our interest cover ratio continues to be very strong at 6.5x. Looking at numbers per share. I think the most important number to look at is probably the net asset value per share, which adjusted for dividends increased by 12% during the year to SEK 152.44.Moving to Slide 18. Against the background of our earnings and our balance sheet, the Board proposes an increase of the dividend to SEK 5.25, which is an increase of 17% versus last year. And if the annual shareholder meetings decides on this, it will be 15 years of rising dividends in the history of Wihlborgs.Continuing to Slide 19. You can see the historic development of EPRA net asset value per share. And since 2009, the annual average growth has been 17% adjusted for dividends.On Slide 20, you see the historic development of our financial ratios where the equity assets ratio continues to go up, the LTV continues to go down. And the interest cover ratio, as I mentioned earlier, at 6.5x continues to be at a very, very healthy level.Our financial stability is also, we think, important to look at in terms of the key number net debt in relation to EBITDA. And on Page 21, you can see the historic developments. And during 2020, you can see that our financial position has strengthened and the net debt-to-EBITDA now stands at 10.9x.Looking at our financing on Slide 22. The sources of financing is roughly the same as previously. The proportion of bond financing at 19% is slightly lower, but generally, the split between bank loans, Danish mortgage loans and bonds remains stable.The structure of our loan portfolio, you'll find on Slide 23. The average interest rate in the portfolio now is 1.32%. And the average fixed interest period is 3.6 years and the average loan maturity, 6.1 years.The stock development of those 2 key numbers you find on Slide 24, so where you basically can see that the loan maturity has been around 6 years for the past few years. And the fixed interest period over the past couple of years have been rather stable at between 3 and 4 years.My last slide is Slide 25, where you can see our available funds. That is unutilized credit facilities plus liquid funds as of quarter end since 2015. And we have a strong liquidity position and available credit facilities at approximately SEK 3.6 billion currently.With that, I hand back the word to you, Ulrika.

[Ulrika Hallengren, Chief Executive Officer]

And it's time for acquisitions and divestments. Page 27. As mentioned, we agreed in Q3 to sell 21 properties in Outer Malmö to Blackstone. Transaction Day was 1st of December.Page 28. And the 1st of October, we bought Baldersbuen 5 in Hedehusene, Copenhagen. 55,000 square meter land and 6,300 square meter lettable area, who we let to GSV Materialudlejing A/S with whom we also have signed a new lease from the 1st of January.And let's go to investments in progress, Page 30. We have, during 2020, invested SEK 1.231 billion in ongoing projects, and it remains SEK 1.311 billion to invest in already approved projects. Overall, the projects continue according to plan without any effects from corona. We also see that this is a contribution actually to a region that we can continue with our investments, not at least since we used mainly local suppliers.Page 31. We have just started this project, Kvartetten at Pulpeten 5 in Hyllie with 16,000 square meters lettable floor area, large floors and a good interest from several larger tenants. We really like how we have been able to create great efficiency and warm in the core, Page 32. Higher sustainability standard, both in carbon dioxide footprint, environmental classification and well certification. We call it a human-certified building. Discussions with possible tenants will continue along with the production phase that will be ongoing until Q2 2023. Patience is really a gift in this industry. We have no vacancy in this area, so it's important for us that we can offer the market a good product.Page 33, and that's Sunnanå 12:54. These 2 projects are under completion: One for Region Council of Skåne, which is a transport hub; and one facility for Veho Bil, which, among other things, will include a state-of-the-art service center for electric tracks. Investment, SEK 96 million plus SEK 58 million. Completion Q1 2021.Page 34. At Hindbygården 7, we have just started a project for Beckhoff Automation. The state-of-the-art office at a good transport location in Malmö. It's a long lease and a new tenant for us. Completion in Q3 2022.Page 35. In Kranen 2, we signed a new lease in October for Region Council of Skåne. In total, we invest SEK 237 million for Regional Council of Skåne and University of Malmö. A building fully let to public tenants and long leases.Page 36. Ursula 1 or Prisma is now in its last phase of completion. We invest SEK 405 million. Our tenant hedge is already a success, and together with SUP46, Resurs Bank, KPMG and Atkins, they will soon fill this building with creative meetings. 60% less, and we will continue to fill the building and complete the last parts of work for our tenants.Page 37. Next large project in Helsingborg under completion is Terminalen 1, Helsingborg Central Station. Since Q2 report, we have signed another restaurants. And of course, that's a challenging time for that. And now we are waiting for the last small decisions with a possible public tenant that hopefully will put the last pieces in place.Page 38. We are in the first phase of the commercial project at Raffinaderiet 3 in Lund. The old tenants are moving out and our preparation and planning for the building base continues. We invest SEK 114 million in 5,800 square meters in offices with an industrial touch. And the place for that is just beside the Central station. Yield on costs, approximately 6%, which also is in line with what we expect from our normal average project in offices, 6% yield on cost, and we can -- when we can, of course, a bit higher.And a short update in future investments. Page 40. We continue our planning regarding the project Polisen 7; and Plåtförädlingen 15 in Helsingborg; and Posthornet 1, Phase 2; and Ideontorget in Lund. Zoning plan is in place. And all these projects -- and we can -- at least one of them, we have very interesting discussions at this very moment.It's important for us that we can create opportunities in many places so that we can be ready. And here at the right, you can also see a glimpse of the final design of Zenit in Lund. That is the place where brightest will concentrate in the future after the [ employees ].And Page 41, Bläckhornet 1 in Hyllie. The project that we now call Vista. Procurement is ongoing, and we're planning to start the first phase with 400 parking spaces and a great sport hub in 2021. It's a new unique opportunity to offer both good parking and direct access to the translation for both Pulpeten 5 and Bläckhornet 1.Page 42, Nyhamnen, the largest and next development area in Malmö. We have all seen this picture for a long time as things are progressing. But as said before, patience is a special kind of skill. Now the municipality of Malmö has put in more resources in all the 4 zoning plan processes that we have ongoing in this area, and that is at least at hope for action. Our first opportunity with a new zoning plan in this area is at Page 43. Smörkajen, where we at least will be able to produce somewhere between 10,000 and 13,000 square meters offices in this first project. Nyhamnen in the city Central Malmö has our highest focus in a long-term development perspective.And Page 44, this is Kranen 1, just at the entrance to the Dockan area. We have applied for planning permission some time ago, and now at least we have promised a time schedule for that this spring. So a plan of a plan is also a start.Let's summarize. Growth and increased result despite challenging circumstances; we have seen positive net letting in all 4 quarters 2020; stronger balance sheet than ever; and we continue our focus, both increasing the project portfolio, but also signing new investment opportunities and delivering in our ongoing projects and, of course, also continuing to invest in existing portfolio.One year ago, when we presented our full year 2019 at place in Stockholm, we couldn't imagine that something ever could happen that could prevent us from seeing you all at place this year. But we have all adapted and we find ways to solve what arise, and we will continue with that as long as it takes. But even if we can cope, we are really longing to see you live soon.So now we are open for questions.

[Operator]

[Operator Instructions] Our first question comes from the line of Tobias Kaj of ABG.

[Tobias Kaj, Research Analyst]

I would like to start to ask about the occupancy rate. It fell almost 3 percentage points during 2020. Are there some specific larger premises that has been vacant? Or is it more like many smaller changes that explains the increase?

[Ulrika Hallengren, Chief Executive Officer]

I would say that we have, for example, Sparven 15 here in Malmö, which come into a project phase that it's part of the vacancy. We have Nya Vattentornet 4 in Lund, where access had a part of that -- waiting for their own projects to be finished. Terminalen 1 in Helsingborg, of course, where we have some spaces. And of course, the project that I -- the products that I mentioned, [indiscernible], where we have chosen to empty these spaces.So the most part of that is pieces put together that will give us a better position in the future, but we have to make some refurbishment in these projects. So we have taken the opportunity to empty these buildings now.

[Tobias Kaj, Research Analyst]

And based on known determinations and signed leases, do you think the occupancy rate will continue to decline in 2021? Or do you expect a stabilization or recovery?

[Ulrika Hallengren, Chief Executive Officer]

Recovery. Of course, we don't see this -- we don't have any news. Sparven 1 -- Sparven 15, for example, is filling up now. And we had 1 project in -- 1 building in Helsingborg, [indiscernible], which we also have good discussion on, but it was a quite large premises. So -- but no...

[Tobias Kaj, Research Analyst]

And the recoveries [ forward ] in Q1? Or is it later on during 2021?

[Ulrika Hallengren, Chief Executive Officer]

Hard to predict exactly when tenants move in, but -- and we won't fill them up all at once, of course. But during 2021, of course, things will happen.

[Tobias Kaj, Research Analyst]

And do you see any signs of lower rent levels due to the higher vacancies?

[Ulrika Hallengren, Chief Executive Officer]

No. We don't see that nor in the office side or in the logistics and production. The rent levels continue to rise a bit, but in a slower tempo.

[Tobias Kaj, Research Analyst]

And regarding your balance sheet, your net LTV has declined by some 3.5% in 1 year and almost 6% in 2 years. Do you intend to keep the lower leverage? Or do you see opportunities of being more active in terms of acquisitions?

[Arvid Liepe, CFO & Secretary]

I'd say that we are keen to look at investment opportunities or acquisition opportunities. And we feel that with the current balance sheet, we have the opportunity to seize such opportunities if they arise. So that is, of course, the ambition.

[Tobias Kaj, Research Analyst]

And if you're looking at acquisitions, what kind of yield should we expect that you can be able to buy it? Can you buy offices at some 5% net initial yields without diluting the quality of the portfolio?

[Arvid Liepe, CFO & Secretary]

That is very tricky to answer. I mean, yes. I'd say you can't really answer that. I mean, we look at acquisition opportunities basically all the time, and we do it in all our 4 different submarkets. And we'll just see which opportunities will arise and what we feel is an attractive price to actually pay.

[Tobias Kaj, Research Analyst]

And regarding your logistics, your value at 6.8% net initial yield, while you divested at some 200 basis points lower yield. Did you sell the best part of the portfolio? And is the remaining portfolio at a much lower quality?

[Ulrika Hallengren, Chief Executive Officer]

No, I would say the opposite.

[Arvid Liepe, CFO & Secretary]

And it's also -- I mean, if you look at the table in the report on -- I believe it's on Page 10, the number you relate to, 6.8%, that is not completely comparable to the valuation yield in the portfolio because that basically relates to a certain moment in time when it comes to what the properties are booked at and which expected operating surplus. Those properties actually generate. When you value the properties, you look -- you're more forward looking, looking at normally a 5-year cash flow forecast and then you put a valuation yield on the terminal value, making assumptions about long-term vacancies, et cetera. So I mean it's not completely comparable.

[Tobias Kaj, Research Analyst]

So you're saying that we should expect that the income from that portfolio should decline?

[Arvid Liepe, CFO & Secretary]

Why?

[Tobias Kaj, Research Analyst]

Since you said the reason for the high yield in the table is that -- is because of the current situation. While when you look at the long-term development, that's how you get the valuation yield.

[Ulrika Hallengren, Chief Executive Officer]

But we don't expect the running yield to go down.

[Arvid Liepe, CFO & Secretary]

Well, the running yield could go down if the valuation changes.

[Operator]

Our next question comes from the line of Markus Henriksson of Pareto Securities.

[Markus Henriksson, Research Analyst]

Arvid and Ulrika, Ursula and Terminalen, did they contribute anything in Q4 2020?

[Arvid Liepe, CFO & Secretary]

You mean to rental income? Or what's...

[Markus Henriksson, Research Analyst]

Yes, exactly. In the last report, it was the completion in Q4, and it was moved now into Q1. So I guess it's because of the remaining vacancies. But did I...

[Ulrika Hallengren, Chief Executive Officer]

I think the rent...

[Markus Henriksson, Research Analyst]

Anything to P&L here in Q4?

[Ulrika Hallengren, Chief Executive Officer]

I think the rent will start to be paid in Q1.

[Markus Henriksson, Research Analyst]

Okay. So no...

[Ulrika Hallengren, Chief Executive Officer]

But there's some -- we had some tenants moving in, in December. So some rent there...

[Markus Henriksson, Research Analyst]

Very slim slightly.

[Arvid Liepe, CFO & Secretary]

But very limited, yes.

[Ulrika Hallengren, Chief Executive Officer]

Yes.

[Markus Henriksson, Research Analyst]

Yes. Okay. Could you also share some insights on the delta in rental levels between your current portfolio and then what you're currently tendering to tenants, and if we have some geographical and property segment differences that you experienced?

[Arvid Liepe, CFO & Secretary]

I'd say that the rent levels as shown in the like-for-like number of the rental value, rents are moving upwards, but at a rather slow pace or a slightly slower pace than previously. But we don't see, in our tenant discussions, any pressure on rents from what we saw beginning of 2020. And that basically goes for all segments.

[Markus Henriksson, Research Analyst]

Okay. So there's still like decent reversion potential in the expiring leases that we have in 2021 and 2022?

[Arvid Liepe, CFO & Secretary]

Well, I think we continue to expect -- expect us to be able to increase rents. But as we've stated many times before, I mean, the changes in the rent levels in our markets is normally, and over time, smaller than in, for example, what we've seen over the past 5 years in the Stockholm market. So we continue to expect a positive development, but not that at a very rapid pace.

[Markus Henriksson, Research Analyst]

And then my last question, what kind of rental level do you hope to get in your new project now in Hyllie? We saw Kungsleden mentioned a new lease of -- I think it was SEK 2,950 per square meter. What do you expect for Pulpeten?

[Ulrika Hallengren, Chief Executive Officer]

We don't expect that as a standard for the whole building. I would say that in our calculations, we have 2,700. But of course, we expect more in some areas, but we have -- and that's the rent level today. So that depends on when the lease are negotiated, of course, but a bit lower than Kungsleden expected, I would say.

[Markus Henriksson, Research Analyst]

Yes. I guess they mentioned the [indiscernible] property. Last one there. What's your average rental level now in Hyllie in your current premises?

[Ulrika Hallengren, Chief Executive Officer]

I would say approximately 2,600 without any calculations behind that, but somewhere that.

[Operator]

And our next question comes from the line of Erik Granström of Carnegie.

[Erik Granström, Financial Analyst]

I have 2 questions. One, regarding investments for 2021. You managed to invest about SEK 1.3 billion in 2020. What's your expectation for '21 given your project portfolio?

[Ulrika Hallengren, Chief Executive Officer]

Well, I expect us to be above SEK 1 billion, but not at any record level like 2019. But we will continue in a good pace, I think, but I don't have any exact figure.

[Erik Granström, Financial Analyst]

But do you think that you can actually beat the 2020 figure? Or is that 2020 level sort of acceptable in your view?

[Ulrika Hallengren, Chief Executive Officer]

It's definitely acceptable.

[Erik Granström, Financial Analyst]

All right. And then my last question was actually regarding the dividend. Is there any part of the dividend that is related to the divestment that you made towards the end of the year?

[Arvid Liepe, CFO & Secretary]

Our dividend policy states that we shall basically look at the income from property management and take into account realized profits from divestments apply a full tax on the sum of those 2 and distribute approximately 50%. The discussion regarding dividends also try to take into account a predictability and the possibility of year-by-year increasing the dividends. So the dividend proposal is not only a mathematical function of the factors, which I mentioned. Does that answer your?

[Erik Granström, Financial Analyst]

Yes. I believe the answer to the question is yes. Is that correct? Yes, there's...

[Arvid Liepe, CFO & Secretary]

Sorry, if we're using many words.

[Erik Granström, Financial Analyst]

It is part of your dividend policy because the reason why I ask is because if we look at the running results and just apply the 22%, you would be up towards 60%, which is high for [indiscernible] historically. And that's why I figured that you also take into account the realized gains, but also the fact that this is a point from where I assume [indiscernible] would not like to lower its dividend going forward.

[Arvid Liepe, CFO & Secretary]

That's a correct assumption.

[Operator]

And we have one further question in the queue so far, it's from the line of Max Nimmo of Kempen.

[Maxwell Wilson Nimmo, Analyst]

I think most of my questions have probably been asked there. But just one last one, if I can, on some of the unexpected costs that you talked about in '20 Q4, particularly around rebate. I know it's a difficult question to answer, but how do you see that progressing, particularly in the early part of this year? Do you think that there will be more in the way of rebates that you need to give going forward and what the impact will be on earnings, of course?

[Arvid Liepe, CFO & Secretary]

Well, as I mentioned, going into Q4, we did not expect the situation to develop as it actually did. And what we see in our tenant discussions currently is that discounts should not be at the same magnitude as they were in Q4. I think it feels pretty hard to say that we won't need to give any discounts during 2021, looking at how the pandemic developed over the year 2020 and its unpredictability. But we don't expect the same numbers in Q1 or Q2. And -- but how the pandemic evolves, we'll just have to see.

[Ulrika Hallengren, Chief Executive Officer]

It hit this region a bit harder in Q4 than expected, and we have also -- some of the discounts were given for solving the situation for a long-term perspective with some of our tenants. So I think, as Arvid mentioned, we won't be at the same level from now on.

[Operator]

[Operator Instructions]

[Arvid Liepe, CFO & Secretary]

I have actually received a question via e-mail here, and the question relates to how much of the property value change in Q4 relates to divestment to Blackstone.And the answer is that we took the value gain from that divestment agreement already in the Q3 report. So the Q4 value change does not relate to the Blackstone divestment.And in a second e-mail here, I have a question regarding how is net lettings, excluding projects, or much of the net lettings projects and how are like-for-like forming?The answer to that question is really that we -- in the net letting, we do not separate our new projects. And it's, of course, the case that we have, for so many years, been able to show a positive net letting all quarters, excluding one. It's, of course, due to the fact that we do create new projects. And without that, it would, of course, be impossible to have a positive net letting each and every quarter. But we do not separate that number. So I cannot be specific in the answer, unfortunately.And there's an additional question here. Both Raffinaderiet 3 and Pulpeten 5 are large developments with 0 occupancy. Are you planning for more developments on speculation? How are you going about starting thinking planning was starting with 0 occupancy rate? How do you use pre-letting requirements?

[Ulrika Hallengren, Chief Executive Officer]

I would say that we look into every situation. In Hyllie, we have no occupancy -- we have no vacancy. We have no vacancy, and we have to be able to offer the market something. And 2023 is quite far away in time schedule even for larger tenants. So it's important that we start producing this project to be able to offer that to the market.And Raffinaderiet in Lund is a kind of a special piece, a very interesting one. We have good discussions there, so we already know that we will fill that up. So we have to look at the location, the situation around it and what this product will provide the market with. And that gives us our guideline, if it's possible to start without any signed leases. And we will continue to act like that in a very responsible way, of course, but we have to, all the time, be able to offer the market new premises.

[Arvid Liepe, CFO & Secretary]

And the last question that I have via e-mail here is the 10% share buyback program proposed to the AGM, what are the plans for this? And the answer is that we have -- the Board has asked for this mandate from the AGM each and every year for many, many years. We have not used the possibility to buy back shares for the past 12, 13 years, but the Board feels that it is beneficial for the company and in the end for the shareholders to have this opportunity if a certain situation would arise. So I have no further questions via e-mail. Do we have anything more via phone?

[Operator]

We've had one further question come through on the phone lines. That's from the line of [ Alex Olson ].

[Unknown Analyst]

Prior to your presentation, I was looking through your earlier report and in your annual report from last year. You talked about the possibility of a super region between Hamburg and Malmö, Copenhagen due to the [indiscernible] connection and the possible metro line. Looking at this and your new acquisitions, does this increase your interest in Copenhagen? And are the new areas of Copenhagen, that will become interesting to you? And are you taking this position right now as to invest more in that area due to the new connection that is supposed to be ready by 2028.

[Ulrika Hallengren, Chief Executive Officer]

Yes, that's a possibility. We definitely think that Copenhagen is an important part of this -- of our portfolio. We gladly see that we can increase our value there. So -- but I think we will have opportunities both on the Danish and the Swedish side in -- what time that will come, the future will tell.

[Unknown Analyst]

Got it. Great. And do you already announced the possibility for new areas of Copenhagen that would be increasing in interest?

[Ulrika Hallengren, Chief Executive Officer]

At the moment, we mainly focus on the areas that we already have a significant part of because that's a very important factor for us that we are able to concentrate our portfolios. That's a very good thing for our tenants to be able to increase there and make changes in the areas. So it's not the fact that we, according to the string collaboration, have pointed out any new geographical areas in the Copenhagen area that we will invest more in. We think that we have chosen really good locations, and we keep on focusing on them. But of course, no, no.

[Operator]

And there seems to be no further questions from the phones at this time.

[Arvid Liepe, CFO & Secretary]

Okay. I have one more question via the web here, and that relates to our divestment to Blackstone. Logistics valuation uplift was taken, but has read across to the wider portfolio also been applied if higher quality. And you could say that, to some extent, the valuation in the portfolio that we sold to Blackstone has affected valuation of logistics properties. But you should also bear in mind that the valuations according to IFRS need to exclude any portfolio premiums, which potentially could have been paid or which probably were paid by Blackstone when they -- when we agreed on that price. So the valuations paid by Blackstone would not, by our external appraisers, be fully taken into account when looking at our existing or the remaining logistics portfolio.I have no further questions in my inbox.

[Operator]

Okay. And there are still no further questions from the phones at this time.

[Ulrika Hallengren, Chief Executive Officer]

Okay. So then thank you for today. And of course, you're welcome with questions in other media afterwards.

[Arvid Liepe, CFO & Secretary]

Thank you very much, everyone.