Samhällsbyggnadsbolaget i Norden AB (publ) (SBBB) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the SBB Q2 Report 2021. Today, I am pleased to present CEO, Ilija Batljan. [Operator Instructions] Sir, please go ahead.

Thank you very much, and welcome all to this earnings call presenting SBB's first half of 2021 earnings. Slide #2, please. If you look at our earnings, I think it's fair, given the large amount of the transactions that we have done during the quarter and also given the repositioning company in terms of strengthening our focus on rent-regulated residentials and elderly care home, to start presentation by looking into our current service capacity for the 12 months rolling. You will see that we are having a rental income of SEK 6.1 billion. And as you all -- all of you know, we take to the P&L all of the cost of the maintenance and other property costs. And then we have NOI of SEK 4.4 billion and operating profit of SEK 4.1 billion before our value-add strategy. And if we add the income or guiding for income on value-add strategies that is on a yearly basis SEK 2.2 billion, we are being delivering much stronger than that. But if you add those SEK 2.2 billion and then if you subtract the dividends to D shares and hybrids and profit attributable to minority interest, you will land in earnings capacity of SEK 5.4 billion or SEK 3.8 per Class A and B shares, which is very strong profit generation that has been fueled by strong growth and our activity to our value-add strategies. For the first half of 2021, we are delivering profit after tax of SEK 9.3 billion, which is a strong increase compared to the corresponding period of the previous year, and this corresponds to SEK 5.94 per A and B shares comparing to SEK 1.8 last year. If you adjust for some nonrecurring costs, you will land the adjusted profit for the first half of 2021 of SEK 6.09. So a very strong profit for the first half of 2021. If you look at profit from property management, also here, we see strong delivery, our profit from property management adjusted for nonrecurring cost increased by 33% in comparison with the first half of 2020 to SEK 1.7 billion. And as I said, the -- given our strong increase in earnings capacity and our strong profit in Q2, we are adjusting our forecast for earnings for 2021 to SEK 7.8 per share. Next slide. SBB is in a very unique real estate business in Europe, delivering strongest growth and also strongest NAV growth the last years. In 2019, we grew NAV with 79%. We continued last year with 41% and for the first half of this year, we are already at 10% despite booking all dividends in Q2. So even continuing performance, we will continuing strong growth in NAV per share. And this has been combined by 100% is growth in earnings capacity. If you see, despite the large deals and like in late 2019 through transformation with Hemfosa having short-term effects, but in long term, seen growth that has almost been 8x in earnings capacity since Q2 2017. And as I said in press release this morning, we do not see right now anything that may affect this growth. Rather, the opposite is the case. We have very strong value potential. And our valuation yield is 4.34% in a market where you have to pay up to leverage of 2.5%, 2.75% yields in order to get assets that are comparable to our low-risk assets. And also in an environment where we are, the average interest rate for SBB at the end of Q2 of SEK 1.13 (sic) [ 1.13% ]. Next slide please. Just to give you some more flavor on our position, mentioning a few highlights about our portfolio. You can see at the end of Q2, we have a portfolio of SEK 117 billion at the book with almost SEK 90 billion in Sweden, SEK 17 billion in Norway, SEK 9.4 billion in Finland and continuing to grow in Denmark with SEK 1.1 billion at the end of first half of 2021. We, as I said, at the introduction, operates in the world's safest real estate asset classes, which we have proven throughout pandemic with 100% with rent collection. And also, we are continuing to decrease risk in our portfolio by focusing even more on residential space. Today, almost half of our book value is related to residentials either through rent-regulated residentials or residentials for elderly people. Our 3 value-add strategies are delivering strong growth. I will come back to that. We continue to invest in sustainability, and we have strong relationship with municipalities. And today, we have Europe's largest property development portfolio with 59,000 apartments. And if we add to that, that we also are controlling owner of JM with 37,000 apartments with mainly exposure to Stockholm region, we have a very strong position in a market with very strong demand for residentials. Our passing rent, SEK 6.1 billion, still after book and with our cost, probably the highest net initial yield in comparable -- for comparable assets. We continue to have strong growth with 9 years, but effectively almost perpetual and strong locations where, by today, almost 80% of our assets are located in major cities and university towns with largest exposure in Stockholm and the university cities around it. But also if you look at our building rights portfolio, you will see that we have 42% of our 59,000 apartments located in Stockholm region, and in total, 81% located in major Nordic cities and university towns and 19% in other growth cities in Sweden in and Norway. Next slide, please. As I said before, our low-risk sales income of SEK 6.1 billion, we have almost half of the value coming from residentials. And you can see here that 41% of the income is coming from residentials either for regulated residentials or residentials for elderly people. And on top of that, 26% coming from education and 7% coming from hospital and health centers. That means that almost 80% of our income is coming from the core of the low-risk assets in terms of residentials and schools. We are just a partner for municipalities and states throughout the Nordics and exposure to the Nordic countries is, in a way, unique that we have 3 or 4 Scandinavian countries that are AAA-rated, Sweden, Denmark and Norway; and Finland, AA+. So exposure against very strong sovereign credit. We have a beautiful -- you can say, a beautiful illustration of our lease expiries when you can see that 1/3 of our leases are longer than 2031. And in this third quarter, I invite all of you to visit Skellefteå on 8th of September where we are opening the new cultural center, most sustainable building ever built in Europe and where we have 50 years, 5-0, 50 years municipal lease. Next slide, please. Yes, strong profits from property management with low-risk assets as the foundation of our business model providing passing rents of SEK 6.1 billion and with the highest rent collection in the European listed real estate universe. And on top of that, we have 3 different teams that are delivering value and profit from our 3 value-add strategies. Building rights development and new production, we are guiding that this deal should deliver around to SEK 1.4 billion on a yearly basis. Sustainability and investment in existing portfolio should deliver SEK 600 million on a yearly basis. And we just -- we are making much more money from the transactions that we just make as a placeholder profit of SEK 400 million from that business. Next slide, please. This slide just to give you illustration how our holistic model works where we are both applying different teams, a different part of the market, but also at the same time, combining those different teams in a strong delivery of profit where we are both acquiring single assets and portfolios and being able to transform those to high-quality assets through long-term ownership of top-quality social infrastructure assets, but also, at the same time, disposing mature or noncore assets and applying, through value creation, building rights development, new production as well as a team that is doing the refurbishments, renovations and investment in existing portfolio. Next slide, please. Few words about building rights development and new production. Strong profit for the first half of the year, SEK 1.5 billion in profit for the first half of the year. And as you can see, we are guiding -- and as you know, we have been guiding for SEK 1 billion to SEK 1.4 billion for the whole year. We delivered SEK 1.5 billion for the first half of the year and -- via almost SEK 1 billion in Q2. Here, we have the most experienced teams in Europe in property development. This is run through the both SBB trademark and Sveafastigheter trademark and those highly skilled and experienced team are creating very strong profits. We are today, I should say, without competition, #1 European property development -- developer with 59,000 apartments in our project portfolio and also if you add to that 37,000 apartments in JM, which is almost 100,000 apartments, very strong position in a market with very strong population growth. Importantly, it is to mention that the Nordic is probably one of the few regions in Europe that still have -- and is projected to continue to have strong population growth. This is often omitted in the European comparisons, but very important to understand demographics and how the population is developing, how the income is developing for this low-risk assets. Our building rights portfolio is a story for itself. We have today, according to external estimation, a value potential in our business portfolio of almost SEK 30 billion. That could be compared to book value of slightly below SEK 4 billion. So amazing potential left in building rights portfolio. And if you look at the next slide, please, you will see the potential for the total delivery from building rights development and new production. And you can see, if you look at the breakdown, as we said, almost SEK 30 billion value potential from building rights. And then if you look at our developments for own management, you will see that we -- we see that we will be able to deliver profits from property management or NOI of 900 -- almost SEK 1 billion on a yearly basis. And if you just apply conservative market yields given that I think we have booked those at the books today at SEK 6 billion, you will see that there is a potential for more than doubling that value. And if you should use this, the same valuation to that some of our competitors, then we should already have the large part of this center book. And then you see illustration for our expected profits from joint venture. So if you just sum it up, SEK 7 billion extra from developments for own management, SEK 2 billion from joint ventures, that is SEK 9 billion. And then SEK 25 billion extra from building rights, that is almost SEK 40 billion. That is doubling our NAV value. So that means we have today under our own control to double our NAV value. And that is unique, both in terms of credit and I hope that the rating agencies will spend time -- some time on this comparative perspective and also following this because we already today fulfill criteria for BBB+. And if you add on top of that, this large value that will be delivered in the next year, then you have an amazing low-risk company with strong values that are not yet on the book. As I mentioned before, we have been guiding for this value-add strategy profit of SEK 1 billion to SEK 1.4 billion per annum, and we have already delivered here by delivering profit for the first half of 2021 of SEK 1.5 billion. Next slide, please. Just a few more words about -- and illustration about our position in the market. You can see that we are, today, outstanding leader in the Nordics. And if you put our numbers in European context, you will see that we are a leader in Europe with very strong growth potential, both securing long-term income from this development and also on the very -- already in short time, having large value that will be transferred to our equity and our balance sheet. Next slide, please. Investments in existing portfolio with strong focus on sustainability. Here, we have 2 targets where one is focusing on rent-regulated residentials where we are guiding to run rate 600 apartments on yearly basis. For the first half of 2021, we delivered 375 apartments. And the second one is delivering SEK 600 million in profit on a yearly by -- basis. Here also, we have a highly experienced specialist team with strong relationship with the tenants to understand the needs and requirements but also with a long track record of delivering sustainable investments and strong profit. Next slide, please. On this slide, you can see that we are continue to deliver also profit from our investment in sustainability. And we have a vision of becoming the world's most sustainable property company by 2030, and this has been the -- and also we expect in that we should be climate-neutral by 2030. However, given how importance of sustainability is increasing, we will probably look to update our ambitions with even more ambitious goals in connection to our Capital Market Day in the summer. Also here, as I said, we guide earnings effect a year of SEK 600 million. For the first part of the year, we had SEK 233 million. But given that we have a higher pace of refurbishment, we are also here in line with our goals. Next slide, please. A few words on sustainability. As I mentioned, this is core part of our business. We are having a strong vision 2030, we will work to updated it with even more ambitious goals to present in connection to our Capital Market Day. Today, we are one of the largest, if not the largest, issuer of social bonds in Europe. And I'm very happy and I will always emphasize this, that in this summer, the summer of the pandemics, that we could offer 200 young people summer jobs. That is how it should be, and that is how business community will -- should work together with communities to create best long-term value for the shareholders and best value for the society. Next slide, please. Then concluding our 3 value-add strategy with our transaction team delivering strong also this quarter. Also here, we have the #1 real estate M&A team in Europe, and we have been able to both acquire at attractive levels and sell at attractive levels. Few sales that we did in Q2, we did some of those 20% over our latest valuation. And there is more to be done. And just to give you a flavor, if you look at our journey, you will see a journey with a very strong presence in M&A market and for the first half of 2021, we did transactions for SEK 36.3 billion and delivering strong growth. You see also in this market large undersupply of community service properties in the Nordics. And this is, of course, giving us additional opportunities to continue to support the Nordic municipalities to deliver best social infrastructure. And we used to say, we have like a placeholder here, estimated recurring earnings effect on yearly basis of SEK 400 million on a yearly basis. We have been delivered much more than that every year since start of the business. Next slide, please. Just putting those together. As I said, SEK 6.5 billion in rental income from -- of which like 98% are coming from AAA economies and then regulated residentials. On top of this, profit -- estimated recurring profit from building rights development and new production of SEK 1 billion to SEK 1.4 billion, we already overachieved in the first half of 2021, plus profit from investments in existing portfolio through refurbishments and on top, adding profit from value-adding transaction. So this will give you understanding how we and why we are delivering the strong profit and also why we are increasing our forecast for this year. Next slide, please. Just 2 slides and trying to summarize the main messages and starting with message highlights. We have the most stable cash flows in Europe backed by AAA countries. On top of that, we have a strong growth fueled by 3 value-add strategies: Building rights development and new production, investments in existing portfolio and value-add transactions. We are also a dividend company. We think that it is having, as in our case, 100,000 shareholders is also strength of this company, and that is also our dividends that are currently SEK 1 per A and B Class shares and we will also do investigation for starting to pay dividends on a monthly basis after next year's Annual General Meeting. On the ratings, we think that we have delivered all key ratios and had strong year both financial position and the income position and are in the space with stronger growth that the majority of BBB+ companies in Europe. And we look forward to be updated to BBB+ and then to continue to perform to -- in long term, achieve A- rating. And as I said, sustainability is not, for us, something separate. It is a strategic core of our business model. Next slide, please. Let me summarize with a few lines. And as I said before, for the full year 2021, we are guiding for earnings per ordinary share, A and B shares, to be SEK 7.8. We have a strong and stable cash flow backed by AAA countries where SBB continues to deliver strong profit, secure cash flows and high growth. Profit after tax for the first half of 2021, about SEK 9.3 billion, which is an increase of 258% compared with the same period last year, 258%, and also that's following strong growth from the previous year. Adjusted for nonrecurring costs for repayments of expensive loans and including deductions or payments of earnings attributable to preference shares, Series D shares, hybrid bonds and minority interests, profit for the period amounted to SEK 6.09 series A and B shares. It is important to mention that we have paid back all of our preferred shares. Number two, SBB Board has decided to investigate the possibility of monthly dividend of the ordinary A and B shares from the next Annual General Meeting. The inquiry's conclusion together with the Board's assessments of the scope of dividend in the next year will be presented in connection with Capital Markets Day, which is planned to take place during autumn 2021. At this occasion, we will also present our update on our sustainability vision 2030 with increasing the bars on sustainability as a main issue for long-term value creation. Highlight #3. All our value-add strategies are performing better than guided. Profit from building rights development and new production for the half -- first half of 2021 amounted to SEK 1.5 billion compared with the target of SEK 1 billion to SEK 1.4 billion on annual basis. And at the end of the second quarter of 2021, SBB's portfolio of building rights amounts to 42,000 apartments, which together with project portfolio, which means ongoing projects and production and part of it in joint ventures, is totaling 59,200 apartments and makes SBB the leading residential property developer in Europe with amazing potential for value creation and long-term income. And to summarize the main message, SBB's 12 months rolling earnings capacity rose by 30% during last during year compared with the second quarter of 2020 and amounting to SEK 3.79 per Series A and B shares. As I mentioned before, we do see that we have a great potential for value creation. Our valuation yield is 4.34% in a market where the yield requirements for our low-risk assets are more often below 3%. And as I said, they are more often at the 2.5%, 2.75%. And also that should be put in a context where our average interest rate is 1.13%. Our value-adding strategies continue to outperform at all levels by itself. The profit from our 2 value-added strategies, development of building rights, new production; and investments in existing portfolio ended up at SEK 1.7 billion in profit for the first half of 2021. And here, our scenario analysis shows that we have potential for tens of billions of Swedish crowns in added value from our building rights portfolio. And I mean if you look in our report, you would see that we have refinanced like SEK 50 billion of debt. We are running portfolio of almost 100,000, 59,000 apartments by ourselves and our associated company, JM, of 37,000 apartments. And we are running a company with -- on a yearly basis of SEK 6.1 billion. So our 300 employees are doing a great job, and we are ready to continue to outperform the market. I will stay there and thank you very much for listening, and we can take questions.

[Operator Instructions] We have the first question from Fredric Cyon from Carnegie.

A few questions from my side. Starting off with the property write-ups in the quarter, they were rather significant at plus SEK 5 billion. What proportion of that is driven by yields? And what part is cash flows?

I think if you look at our strong profit coming from our value-add strategies and strong development in earnings capacity, you can see that it is a very small portion that is driven by yield. It is probably around 3%. And as I said, our valuation yield was 4.3% -- 4.34%, which is still very high compared to market.

My second question relates to admin costs. They were high in the quarter. What was the explanation? I expected that some of that is one-off cost -- assume it's one-off cost.

It's relatively -- relative part of that is one-off cost. One cost is that we have had strong 2 years behind us, and we have paid bonus to all our employees. We actually have bonus for all employees in SBB. And the second one is we are still taking some transaction costs through the central administration. So that is -- we see that given our large base of transaction, we increased also our cost guiding in earnings capacity for central administration to SEK 200 million. But I'm still arguing that our normalized cost in a normalized environment is closer to SEK 160 million. So it's large part nonrecurring cost.

Okay. And my third question relates to results from JVs. They were close to SEK 400 million in the first half. I acknowledge and appreciate the improved disclosure at the back of the report. But can you tell us how much in the first half was actually cash earnings that JV generated and how much is related to value changes?

It is -- I mean, we are improving disclosure here. And we have now published some numbers in the report. And in the first quarter, we have actually almost everything in cash but we will continue to increase disclosure view.

Okay. Two more questions. Regard -- you've been extremely active as you have been for a number of years on acquisitions. How would you describe the current acquisition pipeline? Are you looking into new geographies? You think you will be as active in the second half of 2021 as you were in the first half?

We are focusing on healthy growth and we have been able, in this quarter, to improve our numbers and to strengthen our rating key ratios, among other stuff also by selling some noncore assets with a 20% premium to the latest valuation. So for us, we are continuing to grow. We are working, at the same time, hard to increase our rating, and we feel that we will be able to combine those two and also given that we have a large equity outside of the balance sheet in our property portfolio.

Okay. My final question relates to the investment in JM. What is the primary potential that you see in JM as a shareholder but not having aborted? What is key reason for SBB to be interested?

We think -- I mean, if you compare both JM and SBB, we -- both of us have a very conservative valuation of our building rights portfolio. And particularly, if you compare with some of our competitors, but also if you compare to European competitors in that perspective, those building rights, both at our balance sheet and the JM balance sheets are very cheap. So we see that JM has a strong position in the market that we know well and the market that we feel pretty -- how to say, pretty confident with -- given the large potential from building rights in the central locations.

Next question from Simen Mortensen from DNB Markets.

This is Simen. I just had a few questions on my side. The earnings capacity, just wondering what is the cut of the transactions announced in the end of Q2. Which one is included and which one is not included, for instance, the -- is the Rikshem transaction included? Which state can be settled in Q3? And is the July 6 transaction included, which stated the related 3 historical transactions? Just wondering where is the cut-off in the earnings capacity? And which of the latest transactions are included in that guiding?

Rikshem is not included because it's -- it was signed after the quarter. And also the -- so that is -- I think that is probably the only transaction that was after 30th of June.

So the Stockholm and Västerås and Helsingborg transactions is included in that guidance, if I understand correctly, the July 6?

Stockholm is included. But Västerås and Helsingborg are part of Rikshem transaction so that is not included.

Okay. Just also a question here on the JM. Just part of the -- in the profit from property management is 7 -- SEK 1.7 million out of SEK 64 million in the profit guidance. Just wondering what's your rationale of using that in the profit guidance here. It seems a bit above consensus expectations actually, quite significantly.

It is coming from -- we looked at last 12 months. So we are not doing any forward-looking statements. And it's just based on last -- performance for JM on last 12 months.

Okay. My last question is the earnings guidance here of SEK 7.8. We just look at the EPRA earnings and the EPRA EPS. EPRA EPS in the quarter was down 52% year-on-year. EPRA EPS year-to-date is down 7%. I just -- If you could help me understand how much of that earnings capacity you now -- or earnings guidance of SEL 7.1 might actually relate to EPRA EPS. And if you can put that in connection or make any comment on the EPRA EPS figures for the quarter as well, which was down 50%.

Simen, as you know, you can take whatever measure you want, but I'm not in the business of measures. I'm in the business of delivering profit to my shareholders. So profit to my shareholders is going to be SEK 7.8. That is our forecast for the year. And we have for the first half of the year, SEK 5.94 per share. And for the whole of the year, we are counting to deliver SEK 7.8 per share. So I look forward to compare the numbers at the end of the year.

Okay. I was just wondering if your own EPRA figures, if you had any comments on that because it was reported.

Well, there is -- EPRA figures are having large deficiency, as you know, related where you issue the shares, where you issue the hybrids, also where the income is coming. So I look -- I do not spend a lot of time with that stuff. I'm focusing to run the business that deliver profit and that is actually the only thing that count at the end of the day.

Okay. And do you have any dates or guidance for us when we should expect the Capital Markets Day? The Autumn is quite long, yes? Just excited to hear the newest targets. Haven't the dates been set or when have you set it?

No, we have not set the date yet. We will announce as soon as we are there.

Next question from Staffan Bulow from Nordea.

Yes. First of all, nice to see that you specify the locations of your building rights. And regarding the building's rights, the book value stands at roughly SEK 1,200 per square meter. Could you give an indication if you were to sell these building rights today, what would the market value per square meter be?

I mean as you understand, the value will be many times more than that. And that is one issue that we need to look going forward because we have a large equity outside of the balance sheet, which is in the building rights, but also in our production portfolio. I mean it's not normal to build apartments in Stockholm region and having them to book at yields of 4.5% or sometimes even 5%. So there is a job that we need to do to illustrate the large undervaluation that we have on our book assets.

And you mentioned SBB's valuation yield is 4.34%, but you state that your assets have some more of -- rather below 3% if you look at the transactions. How long will it take to close the gap between your portfolio yield and market yield?

I mean I've been hoping that this gap should be closed rather sooner. Yes, and I hope that at least it will be closed in the next 6 to 8 quarters because it is a large gap and it is very easy for everyone to see the assets and also to see where the market is. And so we need to do more work on this to show our values because it is, how to say, in today environments, if you have, as I said before, like SEK 30 billion, SEK 40 billion outside of the balance sheet, those are the large numbers. So it's almost double NAV. So we need to look more at those issues.

Okay. Two more questions. You recently acquired some shares in John Mattson. Should we view this as cash management or a long-term investment?

Yes, that is cash management. Probably some of those shares are already sold, if not all. It's -- I actually don't know. That is more -- our team is making sure so we make good money from our cash. And they are very -- I actually like that question because our team that is managing this is very good. I think we have like value of financial instruments of -- in Q2, delivering profit of more than SEK 1 billion. The large part of this has been cash and they delivered some extra cash also after the end of the quarter. So that is -- so we are always very, how to say, very clear in our messaging when the assets are long-term assets, and those assets we can comment like JM that is our long-term investment.

Okay. And finally, you have delivered on a BBB+. So have you heard any indications from rating agencies?

No. I mean our job is to do our job to continue to deliver, to continue to strengthen our balance sheet, which we show once again. I mean we showed 2 pandemics that we are having the safest real estate business in Europe. So all the business in Europe having almost 100% rent collection, we showed now that we are delivering very strong equity rise with strong profit and the same time, increasing value of residential part of our portfolio to be almost 50% of total portfolio. And on top of that, we also see that credit market is reacting very positive. I mean our bonds have traded at same level and better than BBB flat to bonds. And we are close to some BBB+ bonds despite the big gap in the rating. So we hope that rating agency will do their job, and we will continue to do our job.

Next question from Martin Nilsson from Carlsquare.

Bertil Nilsson. When you look at your very, say, cautious goal for property development profits, and I looked at your operate goals and you have at least 5,000 apartments per year on a portfolio of 20,000, that is 25%. Maybe you said it during the presentation, but do you think you will increase your pace in production, since it comes similar signals from other property developers lately?

I mean look, we have already good production. The big difference is that we are not taking all of the equity the day 1, which according some newspapers, some other players are doing. So that is -- so I think both our income development, we will see stronger income development coming from new production. We will also see strong value. However, we need to look at the issue that we have, as mentioned before, very, very low values at our balance sheet. So that is something that we need to look at and provide market with information and also to see how we can visualize and then get the value to the balance sheet.

We have one last question just for the moment from Oliver Carruthers from Goldman Sachs International.

Just a couple of questions on the building rights portfolio and the development there, just to check that I've understood everything correctly. And I appreciate the new disclosure in the presentation. But I'm just trying to marry up Slides 9 and 10 with Page 24 of your release. And I just want to check I've interpreted things correctly. So you have -- your building rights portfolio is 59,000 apartments. Of those in your project portfolio, that's 7,600, and if you develop that 7,600 and the community services element of what is also in your project portfolio, that will correspond to an additional SEK 969 million of NOI. Is that correct interpretation? Or have I gone wrong anywhere?

Exactly. That is correct interpretation. And Oliver, you can see that, that is -- I mean, you can see where the -- you can see estimated the investment, and you can see that in -- for this portfolio that is currently in production, there is probably an x value of like SEK 7 billion according to my view of the market by today. So it's additional SEK 7 billion that is not at the balance sheet.

And that estimated investment number that you've got, I guess, the SEK 6 billion on the stuff currently under construction, is that -- does that include some costs? Does that include the projects you've already acquired within that? Or is that cost to come?

No, this is in -- when I said that on this current portfolio, there is, after all costs and after today's book value, there is additional SEK 7 billion in profit than in some other companies should already have in -- at the balance sheet as equity. So this is very good. I mean you are asking one of the central questions that I've been thinking about when working together with my colleagues on the report. And then you can, on top of that, you can have the -- I mean this cash in this equity is very visible because those projects are ongoing. And on top of that, you can have the extra value from the building rights portfolio where the projects are not ongoing.

Okay. Okay. Okay. So that SEK 969 million, what's the, I guess, time horizon to delivery of that incremental NOI to you? And what is the required CapEx at your share?

It's going to be delivered -- this is going to be delivered in next 2 years. This is...

The full SEK 969 million? Okay.

Yes, those are ongoing projects where the -- how to say, where everything is at place and production is at place.

Thank you. We don't have any more questions by phone for the moment. [Operator Instructions] We don't have any more questions by phone.

We have one question that's come in writing. And it's as follows: I was wondering if you could give us a bit more color on SBB aims to achieve an investment-grade rating of BBB+ in the short term and of A- in the longer term. What do you see as the short term? And what are the main constraints?

Thank you. And we do think that you are already now given the high quality of our portfolio, high exposure to residentials in AAA countries and our strong numbers and financial position and also given that we have a very high rate of unencumbered assets. And also according to our numbers and according to S&P's definition of net debt related to total capitalization, we do see that we have on 12 months forward-looking net debt to total capitalization of 48%. And all those numbers are in line with having BBB+ ratings. So from our view, we have delivered the key ratios that we think are important, and we think that credit market is giving us right and we will follow up, and we have to wait for rating agencies. I mean that is a they discussion. But our discussion is to make sure that we grow healthy and that we have a strong balance sheet. And A- rating, I mean, given the quality of our -- and the uniqueness of our portfolio that has been proven through pandemics that is natural that we will strive for A- rating and -- but that is on the long-term. And as you say, that is our view on this.

Thank you. As there are no further questions, I will ask you, Ilija, to sum up the second quarter 2021 earnings call. Thank you.

Thank you, Marika. And I just want to emphasize that we are, in this quarter, increasing our forecast for the profit for year 2021 from SEK 5.15 per share last quarter to SEK 7.80 per share for -- per A and B share for 2021, and we delivered strong earnings capacity, strong profit and with large potential that is today outside of the balance sheet, that there is large value creation there. So looking forward to follow up on this. Thank you very much, and wish you great summer and stay safe. Thank you all.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.