Wihlborgs Fastigheter AB (publ) (WIHL) Earnings Call Transcript & Summary

Hello, and welcome to Wihlborgs Fastigheter Audiocast with Teleconference for Q4 2021. [Operator Instructions] Today, I am pleased to present CEO, Ulrika Hallengren; and CFO, Arvid Liepe. I will now hand over to the speakers. Please begin.

Hello, and welcome to the presentation of Wihlborgs' year-end report 2021. I'll start with some figures. 315, as in SEK 315 million in new leases signed during 2021; 115, it's SEK 115 million is the net letting for the full year; 67, as in SEK 67 million in net letting in Q4; and 50, that's our SEK 50 billion property value; 4.8%, it's 4.8% as the increase in rental income in like-for-like portfolio; and finally, 2.8, is SEK 2.8 billion as the value of ongoing projects. All records in a historical perspective, but of course, just the starting position for the future. And now I'll go back to the standard presentation mode, a summary of Q4 2021. Even if the positive trends in the middle of the autumn was a bit slowed down by restrictions in the end of the year, we had a very strong finish of 2021; all-time high quarterly operating cash flow, all-time high new leases and net letting, both quarterly and for the full year. Cash flow and earning is our focus and the strong cash flow also creates opportunities. We continue to start projects when the timing allocation is right, and we now have an all-time high project portfolio, SEK 2.8 billion. And rental income increased by 4.8% in the like-for-like portfolio, a good temperature measurement of increasing rent levels. Results for the full 12-month period, 2021. Rental income amounts to SEK 3.60 billion, still affected by our divestment in Malmö in December 2020, but also from the one-off compensation from Danske Bank termination in Q3. The operating surplus summarized to SEK 2.195 billion and income from property management amounts to SEK 1.815 billion. The result for the period amounts to SEK 3.348 billion, which corresponds to SEK 21.78 per share, and EPRA NRV increased by 17% to SEK 172.65. A comparison between rental income 2020 and 2021. Divestments, minus SEK 82 million; COVID discounts, SEK 17 million less in 2021, a better year for many tenants overall. Currency effects, minus SEK 19 million. 2020 was a poor year for service income and 2021 was SEK 5 million worse. Vacancy, SEK 51 million higher, an extra income from early termination from Danske Bank adds on SEK 69 million, and other increase in higher rents and new leases, plus SEK 57 million. Still affected by the divestment in comparison, but picking up in higher rents and when new projects are completed. Future positive effects will come from higher service income such as the Danish cantinas now when the COVID restriction ends. And of course, when we sign new leases and vacancy decreases, the most important factor. Here are some of our new tenants that we have signed during 2021. Some large one like Trygg-Hansa, Oatly, and Visma that are really positive for our project volume. [indiscernible] in Lund together with Institute of Human Rights, but also smaller but important tenants like Brödernas of Helsingborg Central Station, giving other tenants the right service. Record levels on new leases, SEK 350 million for the full year and SEK 115 million net letting. Positive net letting in every quarter during COVID is good. Breaking records and reaching for new levels is a signal that the market is strong. We have built a really strong organization, working hard being close to our customers, and that pays off. Some large leases are part of these figures, but it's significant that the large number of smaller tenants is what makes the business enduring and strong. We have new leases of 186,000 square meters and termination of 168,000 square meters. That's a difference of 18,000 square meters, but a positive value of SEK 150 million. So the signals of increased rent levels and higher quality in the portfolio are definitely there. Here we have the net letting in a historical perspective, positive figures for the last 27 quarters. Letting in light blue and termination in dark. The dark gray line is the net letting. The number of new leases during the year is 564. Still no guarantee that we will never be below 0, but I see many positive signals further on. A list of our 10 largest tenants in alphabetic order. They contribute with 21% of our rental income. Also, the rental income from public tenants continue to be high, 24%. And as usually, I keep mentioning that it's a wide diversity across many sectors in our region that is the strength that brings stability over time. Rental value, it's now SEK 3.472 billion per year; and rental income, SEK 3.128 billion, that's plus 6.2%, and our project portfolio will keep that growing. And looking at the like-for-like figures, we can see that rental value is up 4%, and the rental income is up 4.8%, a high level and again, beating our vision to exceed index by at least a percentage point. The vacancy will decrease further when our new tenants move in. And a summary of our office portfolio. The market value is SEK 40.749 billion, and overall, the occupancy rate is 92%. It's 94% in Malmö, 89% in Helsingborg, 91% and improving in Lund, and 94% in Copenhagen. And as I said, this figure will continue to improve when our new tenants move in. There might be a slightly lower value in Q1 due to the period for refurbishment in some of the objects, but improving well during 2022. The operating surplus from offices summarized to SEK 1.996 billion and a running yield at 4.9%. I would go to logistics and production. The demand continues. And here the occupancy rate is now at some kind of top level in Malmö, 99%; 90% in Helsingborg; 93% occupancy rate as a whole; with a running yield at 6.3% and a total value of SEK 6.445 billion. And the demand continues to be strong throughout this sector in all our cities. For the entire property stock, the occupancy rate is 92%, excluding projects and land, and the operating surplus SEK 2.401 billion gives a running yield of 5.1%, excluding projects and land. Total value of the portfolio is SEK 50.033 billion. Changes in market value of our properties. We started the year with SEK 46.072 billion in accordance with our external valuation, which once a year values 100% of the stock at the same time. We have made acquisitions for SEK 429 million, invested SEK 1.290 billion, divested SEK 3 million, just a small piece of land at [indiscernible] in Lund. We had changes in valuation of SEK 2.153 billion and the increase of value in Q4 comes approximately 50% from lower yields, 30% from new leases and increased rents and 20% from project development. Together with currency translation of SEK 163 million, that summarized a property value of SEK 50.033 billion. And the value of the portfolio has developed. As you can see on this slide, since 2005, a bit flat last year due to the large divestment, but now back on track, seeking for further transaction possibilities though. The right product is of great importance, but also the right price, of course. The last one, trickier than ever to figure out, I would say, a catalog of our value and properties in our 4 cities, 42% of the value is in Malmö, 24% in Helsingborg, 17% in Lund, and 18% in Copenhagen. These cities belong to the same region. They are connected, but they also have differences, so that they, in their own special way, contribute to the whole. Universities and good opportunities for good housing and living environments are common opportunities in all cities. Our total business model includes profit from projects and income from property management for 2021. These results amount to SEK 379 million, and SEK 1.815 billion, respectively. The business model since 2005 has created SEK 4.5 billion as profit from projects and SEK 15.8 billion from property management. In total, SEK 20.3 billion, of which SEK 7 billion have been distributed as a dividend. Net profit from projects varies over time in line with the time schedule for our projects and when they are filled with tenants. That's a very good part of our operation. And what about the office? Do we have any news? Will the office be remastered in any way? We have done a sequel of our artificial intelligence report produced a year ago, now measuring people's change in behavior and what they may be a little more sub-cautiously asking for. The conclusion is that the expectation of the office increased; employees will ask for flexibility, balance in life, and that will put up new demands on leadership and organization, but also new demands on our products. We love seeing people, again, and we also love what people talk about us. And finally, some real figures. Over to you, Arvid.

Thank you very much, Ulrika. Good morning, everybody. Moving to the next slide, the income statement for Q4. we recorded rental income of SEK 770 million during the quarter. We had a positive impact included in those numbers coming partly from a SEK 5 million COVID reserve, which has been reversed during the quarter. And we also had a reserve relating to the one-off payment from Danske Bank regarding [indiscernible], which an agreement were reached in Q3, and that reserve has also been reversed. So a total one-off effect of SEK 10 million effect in the quarter. One should also bear in mind, looking at the SEK 751 million in rental income in Q4 2020, that during 2 months we had income from the divested properties as that divestment was effected on the 1st of December 2020. With an operating surplus of SEK 537 million, included in those numbers and in comparison with Q4 2020, we had winter-related costs of SEK 5 million more than we had the corresponding quarter a year previously. With income from property management amounting to SEK 443 million, slightly lower interest costs than in the previous quarter, I will get back to that in a few slides, with positive value changes of almost SEK 1.6 billion in the quarter. As Ulrika said, 100% of the properties have been valued by external appraisers as of year-end. In rough terms, you could say that about half of the value increase comes from lower valuation yields, about 30% from increased rents and lettings, and about 20% from profits from projects, with a positive change in value of derivatives, giving us all in all, a profit for the period of SEK 1.668 billion. Looking at the balance sheet. You can see that during the year, property value has gone up by SEK 3.9 billion. At the same time, borrowings increased by SEK 1.1 billion and equity was up by SEK 2.5 billion. And looking at the change in equity, you have to also, of course, bear in mind that during 2021, we paid a dividend of SEK 800 million or just above that. It's not huge numbers, but I think it's interesting to note that as you've seen for a few quarters, we have derivatives both on the asset and the liability side of the balance sheet. And for the first time, the market value of our derivatives on a net basis actually has a positive value of SEK 31 million. Moving to the key figures, which the balance sheet translates into our equity assets ratio, now stands at 42.9%. And we have an LTV of 46.5% and an interest coverage ratio of 6.7x. And these are, as I will show you in graphic form, actually the strongest balance sheet numbers that we've been able to show also in stark perspective. The EPRA NRV, as Ulrika related to, has increased by 17% to SEK 172.65 per share. On the back of strong balance sheets and on the back of strong cash flow generation during the year, the Board proposes a dividend of SEK 6 per share, and that is up 14% versus last year and thereby continues the trend of continuously being able to increase our dividend now for the 16th consecutive year. The EPRA net asset value or EPRA NRV in a historical perspective, you can see on the slide in front of you. The increase during the year was 17% and measured from 2009, adjusted for dividends, the average annual growth has actually been exactly 17%. So we think that is a strong track record, which we are happy to continue. Looking at the financial ratios in a 5-year historical perspective, you can see a gradual increase in the equity assets ratio, a gradual decrease, especially over the past 2 to 3 years of the LTV, and a very strong interest coverage ratio, not least since year-end 2018, where the interest coverage ratio went up to about 6x and we've been above that since. Even more important, looking at our financial stability, then looking at the LTV, we think it's important to look at our net debt in relation to EBITDA. During the year, we strengthened this ratio further, and it now stands at 10.7x. Our financing sources as of end December are roughly the same as they have been over the past year. Roughly half of our external financing comes from bank loans, a bit over 1/3 from the Danish mortgage loan system, and a bit under 20% from the bonds market, both via our own MTN program and via SFS [Foreign Language]. The structure of our loan portfolio, you can see in detail on this slide. The fixed interest period now stands at 2.9 years, and the average loan maturity at 6 years. I think it's worth noting that the average interest rate at 1.27% we feel actually is a very competitive level in an industry comparison. Looking at the loan maturity and the fixed interest period in a 5-year historical perspective, loan maturity has been very stable. The fixed interest period has come down slightly. And according to our financial policy, it's likely to remain around 3 years going forward. Finally, looking at available funds. As you can see in this graph, we have during the pandemic period had larger unutilized credit facilities than we have had historically. And that has been, in our view, a good precaution in uncertain times. We have, though, consciously, over the past couple of quarters, brought down unutilized credit facility somewhat. So they now stand at between SEK 2.5 billion and SEK 3 billion. And we feel that is a comfortable situation to be in when it comes to seizing investment opportunities. So with that, I'll hand back the word to you, Ulrika.

Thank you. And just a few words on this sustainably theme. Since the last report, another 5 properties have been approved and classified as Miljöbyggnad iDrift. All of the buildings certified from the older stock have reached the silver level, which is really good. We have also 2.3 megawatt solar cells installed by the end of 2021. And once again, I would like to mention the work we do with changing our cooling machines and the fluorocarbon gas, that is the most common gas in cooling machines, and we changed that into propane gas instead. We have, by that, in 2021, reduced risk of 1,200 tonne carbon dioxide emissions, and that change will be sustainable over time. Now let's go to investments in progress. We have, during 2021, invested SEK 1.290 billion in ongoing projects, and it remains SEK 2.299 billion to invest in already approved projects. So we have projects up for over SEK 2.8 billion ongoing. Overall, the projects continue according to plan in a good way. Some smaller delays due to COVID, but nothing that will affect our customers. A quick review of our largest projects. The largest one up to now is Pulpeten 5 in Hyllie, a project that we call Kvartetten. We invest SEK 696 million and we'll get 16,000 square meter lettable floor area at the highest certification standards with Miljöbyggnad go well and [indiscernible] zero carbon dioxide. Leases are signed with Trygg-Hansa for 12,000 square meters, together with Mindpark and SPILL, this project is 85% prelet. With no other vacancy in the area and Pulpeten almost filled up, it's time to start next project in Hyllie. It's Bläckhornet 1, and the project that we call VISTA, a large mobility hub with 400 parking spaces. Although the block is right beside the train station, parking is still an important sales factor. And on top of the mobility hub, there will be 16,600 square meters office and restaurants. And now we can start the whole project at the same time. An investment of SEK 884 million. So now Pulpeten next door is only the second largest one. Completion in Q1 2025, but the mobility hub will be ready earlier. And at Hindbygården 7, we're doing a project we will let to Beckhoff Automation, a state-of-the-art office at a good transport location in Malmö, completion in Q3 '22. In Raffinaderiet 3 in Lund, we continue with this commercial project. We have signed several leases at top levels in those over SEK 3,000 per square meter, completion in Q4 '22, and I know that the investment will be a bit over SEK 140 million, but still with a yield on cost at approximately 6%. This investment will give us 5,800 square meters of modern offices with this industrial touch right beside the central station. And since we have good discussions with possible tenants seeking for larger areas than we can offer at Raffinaderiet, we also have decided to start Posthornet 1, Phase 2, in Lund; 9,900 square meters just beside the railway station. The investment is SEK 448 million and completion in Q4 '24. And Science Village right beside the research facilities, MAX IV and ESS, we have started our project SPACE, where Oatly will be the main tenant with their research and development team. They have options for the whole building and we have more building rights just beside this one. The food tech sector is, of course, interesting, and we will invest SEK 244 million and the building will be completed in Q3 '23. In Helsingborg, we have started a multitenant services project at Huggjärnet 13. The building permission expects to be approved now this week, 17th. We will build this project in 2 phases, and first one will be completed in Q2 '23. And Snårskogen 5, also in Helsingborg, we will build a facility for Doka, 2,200 square meters, in less than SEK 60 million and completion in Q1 '23. A large ongoing portfolio. Let's mention something about the future investments. Here we have 4 possible projects in our 3 Swedish cities. Vetskapen 1 is new on business just beside Kunskapen 1 and Science Village area. And at Ideon, we can build approximately 16,000 square meters just beside the tram station. Polisen 7 with offices in the city center of Helsingborg and Plåtförädlingen 15 and 18 is also in Helsingborg. Here we can offer up to 22,000 square meters gross-floor area in logistics. A few other projects from the industrial and logistics segment; Rausgård 21 in Helsingborg, approximately 20,000 square meters. Grustaget 1 also in Helsingborg, also here approximately 20,000 square meters. Bilrutan 5 in Landskrona, 14,000 square meters right beside the highway. And in Sunnanå in Malmö, where we have built for Region Council of Skåne and Veho Bil, we can add on an extra 17,000 square meters logistic for production. The planning of Nyhamnen in the city center of Malmö continues, but the largest zoning plan was delayed due to infrastructure planning by the municipality, but we can continue our design and planning with ongoing zoning plans, for example, Smörkajen. Here we see an improved design for our 13,000 square meters. And the Kranen 15 just at the entrance to Dockan area from Malmö. The work with the zoning plan is about to be started. We will see new design here as well. And architectural competition will be a part of this process. Naboland 3 in Dockan, just a few hundred meters from Kranen 15. Here the planning submission is ready and we can submit building permit application whenever we think the timing is right. 8,000 square meters at Västerbro in Lund. The zoning planning is ongoing, and we can develop approximately 70,000 square meters in this area. And something about Denmark. At Ejby Industrivej 41, the area where Danske Bank plans to have its termination, and we can continue to develop this area for mixed-use. We have a very large area here very close to the new tram station just to the left on the map, Letbane, and we can develop something like 100,000 square meters housing, school and workplaces here. In Hørkær, also in Copenhagen, the zoning plan is just approved and we can continue to develop the area for mixed use here as well. The offices are already built, but increasing the density and combining offices with housing in this area will create an even more attractive area. We own part B to F in this picture. One of the buildings, we are already developing a preschool for the municipality at the moment. And let's summarize Q4 once again, a very strong finish of 2021, all-time high quarterly operating cash flow, all-time high new leases and net letting, both quarterly and for the full year. All-time high project portfolio, SEK 2.8 billion, and rental income increased with 4.8% in the like-for-like portfolio. And by that, we are open for questions.

[Operator Instructions] Our first question comes from Markus Henriksson with ABG.

First question regarding like-for-like rental income, here up 4.8%. Do you have any one-offs or could you highlight significant drivers behind that figure? And have you already included the indexation for '22 in the analysis per property category you have in the report?

Yes, the indexation is included as the property table reflects the situation as of 1st of January 2022. But as Ulrika said in the presentation as well, we're, of course, happy that we are able to beat index. And our ambition continues to be to beat index by at least 1 percentage point on this metric.

But there's no extra one payoff in that in such way. It's only the indexation and the normal hard work.

Okay. Perfect. But could you highlight what drivers do we have if we look at, excluding the indexation, and look at different geographies or submarkets or logistics offices, where do we have the strongest contribution?

You don't have any significant difference in the development in industrial and offices. And also the geographic spread of the increase is fairly even among our 4 cities.

Okay. Then you highlighted SEK 10 million here in extraordinary items. You also have around SEK 4 million in higher snow removal costs. Do we have any other one-offs or figures affecting comparisons here going forward?

I think we tried to highlight what sticks out a bit. So no, there's nothing in addition to that which I think -- well, we tried to be specific with the presentation in the revenue development slide, and also in the report, but no other extraordinaries.

Okay. You also mentioned the service income from the Danish canteens. So what have you got from that during a normal year? And what has been the impact roughly in 2020 and 2021?

On the operating surplus level in the income statement, the negative effect from the canteens has been between SEK 10 million and SEK 15 million in 2021 and slightly less in 2020.

And we are really happy to at least even that figure out.

That's clear. Also regarding projects, you have 2 large project starts here. Do you think it's likely that you will have any other large or several small project starts in 2022?

I think that we will continue to add on projects. As you can see in the portfolio for the future, we have some possibilities that we can start quite quick. But it's hard to predict which one will go first and exactly when the timing is. But if you look back in historical, we have been able to find new projects all the time. So we will continue with that.

Last question. Looking at the bilateral market, Danish mortgage system or the bond market, what do you see right now? And do you expect financing costs to come up somewhat here in 2022 all else equal?

What we're seeing currently is that bank margins are stable or maybe moving slightly downwards. The bond market, as always, is much more volatile than the bank markets or the Danish mortgage system market. And as everybody has seen, the bond market margins have gone up over the past couple of years based basically on geopolitical uncertainty. I would expect bank financing costs to be rather stable during the year. The increase that we've seen in the 10-year interest rate swap, for example, has not yet been reflected in STIBOR. STIBOR has remained very stable at just below 0. Everybody can listen to the Riksbank as well as we can. But I don't expect STIBOR, and I don't think people expect STIBOR to increase sharply during the coming 6 to 12 months.

Our next question comes from Niklas Wetterling with DNB.

I got 2 questions. First, you have a long debt maturity, while the average interest rate maturity has fallen down a bit during the year here. And I believe about 50% of the debt is as a floating interest rate or interest rate that matures in 2022. Is that a level that you are comfortable with going forward as well?

We are comfortable with the average interest maturity and our financial policy basically stipulates that a certain proportion, measured in percent, of the interest maturities [indiscernible] during the coming 1, 2, 3, 4, 5 and so on years. The policy has been formulated in that way rather than being formulated in terms of an average interest rate maturity measured in years, since that number can be, so to speak, manipulated by individual very long interest rate swaps. But we are comfortable with the financial policy that we follow.

Okay. And my second question is, what's the key argument for the share split?

The share split has no real economic or financial effect as we all know. We have effected a share split on a number of occasions historically since we were spun off in 2005. For us, it's basically a signal that since the last share split we have basically doubled the value of the company. And it sends our signal both externally and internally that we've actually accomplished something which is not all bad. It's actually pretty good, we have been able to double the value. So it's more of a signal that we've done something over the past few years. Last share split, I believe, was in 2018.

Our next question comes from Erik Granström with Carnegie.

I have a few questions as well. I think I'll start off with the project portfolio and your investment level. I believe you invested about SEK 1.2 billion in 2021, which is about the same level as the year before. Could you say something about what you expect to invest this year given that your project portfolio is growing?

Yes. We have a few large projects that are asset volume and some of them just in the start. So I expect us to be above SEK 1 billion this year as well, but not reaching the highest levels that we saw in 2019, close to SEK 1.7 billion, but over SEK 1 billion.

Okay. And also, in terms of profit from the projects, I believe you stated it was SEK 379 million in 2021. You had a number of projects that were also completed. You have about SEK 170 million in investments to be completed for 2022 and then you have more going on the coming years. Should we expect the profits from projects will be slightly lower in '22 because of fewer completions? Or will you continue to report profits from these projects as you start to rent them out even in sort of early to mid-stages?

Yes. We calculate them as profits along with the way when we do sign leases. But I think you should expect the same level approximately.

Okay. And also, what are your outlooks for potential acquisitions? You mentioned something about prices being difficult to sort of get your hands around. What do you see in terms of outlook there? And what have you noticed in the market so far?

I think that we now see some possibilities on offices in Sweden, which is interesting. But of course, Denmark is always of great interest. So we go where we have possibilities, but we are cautious both with the quality, location and of course, the price.

Okay. And then also perhaps just to clarify, do you believe that your vacancy will come down in 2022, all else being equal?

It will come down. Actually, it will get a bit higher in Q1, but then lower as further the '22 comes, so get lower.

Okay. And then also looking at the proposed dividend. Your income from property management was more or less unchanged in '21 versus 2020. But despite that, the proposed dividend is 14%. How should we view that. Your balance sheet is rather strong. Is this an indication that you can't find any investment opportunities? Or what's sort of the rationale for the hiked dividend in relation to the unchanged income from property management?

It basically relates to, as you state yourself, that the balance sheet is stronger than ever. We also feel that the cash flow generation capacity that we have continues to be strong. And we have had, over the years, and still have the ambition to be able to increase the dividend each and every year. So against that backdrop, the Board proposes the increase to SEK 6 per share.

Okay. So I believe the payout ratio then in the proposed dividend is somewhere around 50%, which I think is a little bit higher than historically for Wihlborgs. Is that a level that we should expect going forward as well? Or do you see cash flow generation increasing and thus you can still hike the dividend, but still have a payout ratio that's slightly lower?

Historically, the payout ratio, in relation to the income from property management, has been between 40% and 50%. And with this proposal, it's at the higher end of that spectrum. And our ambition is to be able to run the company in such a way that we can continue to increase dividends.

Our next question comes from [ Stephane Bello ] with Nordea.

Yes. I have a couple of questions, starting off with one question on the net letting figure. Is the Trygg-Hansa list included in the Q4 net letting figure?

Yes. It is. But it's a part of it, of course. But as I mentioned, the large numbers is from the many leases that we have done.

Okay. That is clear. And you started a new project in Hyllie, Bläckhornet. Could you explain the rationale for starting this project on speculation?

I would say that it's the same thing that we started Kvartetten. We need something to put out in the market. We have almost no vacancy in the area, just 2,000 square meters in Kvartetten. And the production time is long. And of course, I think it's a good thing that we can start with the mobility hub because it's also attractive for Kvartetten and the other objects that we have in the area. So long production time, and we know that the market is there. So then it's the right time to start.

Okay. That's clear. What kind of development profit margin do you expect to achieve in these projects in Hyllie, both for Pulpeten and Bläckhornet, if you could specify that?

We can put it this way that we expect us to have a yield on cost at approximately 6%.

Okay. And how does the rent level stand for a new produced office in Hyllie?

At good levels, reaching a good increment, I would say. So tenants are willing to pay for the right product in the location, and this is a good spot to be. And so...

So it is like top brands in Malmö in Hyllie?

Yes, yes.

Yes. And finally, I have a question regarding yield compression. You mentioned that 1/3 of the value uplift comes from yield compression. Could you specify how many basis points that is, and in which segments?

I would not like to specify the number of points. But to correct you slightly, around half of the value increases, both in Q4 and for the full year, come from valuation yield compression. We've seen a larger yield compression in the industrial logistics segment than we had in the office segment.

[Operator Instructions] Our next question comes from Anton Wilen with Bloomberg News.

You're right in the report that inflation may impact the property transaction market. What kind of impact?

Well, if you look at inflation and the valuation of properties, we basically say that an increase in inflation will feed through to increased rental income since most of our rental contracts are linked to consumer price index on an annual basis. So with a higher rental income, you also get increased value of the properties.

And may this like slow down the activity, you think? Or what kind of impact could it have on the actual activity?

You mean the activity in the transaction market?

Yes, because you say the red hot property transaction market may be impacted by inflation. So is it...

I think from our perspective, a potential increase in inflation, for our operations, is not necessarily a bad as I relate it to the rental income effect. But increased inflation does create increased uncertainty, and that may essentially have a negative impact on the transaction market, as uncertainty always is a drawback.

Okay. Have you seen any such signs already in the market? Has it slowed down from last year?

What we've seen is actually a good activity in the transaction market and also basically high prices being paid.

So a continuation from last year more or less or...

Yes, that's what I would describe it as.

Okay. Do you think it could impact your acquisition activity in 2022, higher inflation?

I don't think so. It depends if it becomes new numbers in any way. But I hope that we can find the right transactions during 2022, and positive signals definitely from the office side.

At this time, we have no further questions. I will now hand back to the speakers for a final remark.

Okay. Then we'd just like to thank you all for listening in and wish you a good day.

Thank you.

Bye.