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

So welcome to the presentation of Wihlborgs' 9 month '24. Our tenants continue to need development, and as long as we continue to develop at least at the same pace, we will continue to be relevant. A really good volume of the rental business also in Q3, and Q4 has already started in a good way. But nothing is done by itself. And now it's important for several businesses to be persistent. Every day has new challenges and new opportunities. I love the Japanese expression, kaizen and, of course, I love Wihlborgs. Let's go to our report and a summary of Q3. A new record in rental income for 1 quarter, SEK 1,043 million, net letting positive and record gross letting for third quarter. The demand for good quality in the location continues. Higher financing costs but ICR, 2.5x, and average interest rate declining quarter-on-quarter. And we continue with our investments for future growth. The results for 9 months '24. Rental income increased by 7% to SEK 3,115 million and operating surplus also increased by 7% to SEK 2,244 million. Income from property management amounted to SEK 1,329 million and the result for the period amounts to SEK 846 million, corresponding to SEK 2.75 per share. And EPRA NRV has increased by 5% to SEK 90.47 per share adjusted for paid dividend. A comparison of the rental income first 9 months, '23 and first 9 months '24. Indexation, plus SEK 137 million; termination fees from the Danish portfolio, SEK 31 million; acquisition, plus SEK 9 million; property tax has increased in Denmark, and that gives extra income of SEK 10 million; currency effect, minus SEK 5 million; supplementary billing and income from canteens decreased by SEK 12 million; and completed projects, new leases and renegotiations, plus SEK 33 million. We have signed new leases for the last quarter of SEK 96 million, which is a record-high level for a third quarter, normally with a bit lower activity due to the summer holiday. In total, SEK 367 million in the period and actually, SEK 513 million for the last 12 months. The positive net letting for the quarter is SEK 28 million and SEK 78 million for the period. Pretty high activity continues in all 4 cities, and I'm very grateful to the whole organization that will work hard, are close to our customers and sometimes find what I would call brilliant solution. Arm in Lund is one of my absolute favorites from Q3, and Q4 have started really good with the Thule agreement in the Dockan area. Moving around tenants is a special kind of game. For Dockporten 1 with Thule, I really appreciate that we could find a solution for the current tenant, Mercedes, so that they accepted to leave Dockporten earlier than the plan was, and by that, we can start the refurbishment for Thule right away. That means that Mercedes will move twice in a year, a bit of a challenging exercise. We're very grateful for their flexibility and we thank them by a rent-free period during '25 until they enter our project Vista and the new permanent address. I think the pretty high activity continues and I'm positive also ahead. We have a lot of interesting discussions ongoing. And here are some of the tenants that we have signed during Q3. Some of them are new and other have new leases. And as always, a wide spread of many tenants in many sectors and they contribute to a growing market. We have lawyers, consultants, public prosecutors and tech companies represented, for example. Here, we have a net letting in a historical perspective: letting in light green; termination in light blue; and dark blue stacks are the net letting. Now 38 positive quarters in a row and definitely a record on volume for new leases, the last 12 months, as I mentioned, SEK 513 million. And I keep repeating myself on this slide. No promises ahead, but we do everything we can every single day to continue. We love our core operation, and this is the heart of the core. And the list, our 10 largest tenants in alphabetic order, strong customers, and they contribute with 19% of rental income. 7 out of 10 are governmental tenants. The rental income from public tenants in that is a total 23%, and they contribute to long-term stability cash flow. The rental value as of 1st of October is SEK 4,562 million per year and rental income, SEK 4,180 million, plus 6.8%. A good part is, of course, indexation. And let's remember that indexation in Denmark and Sweden have been quite different during '23, approximately 1% in Denmark and 6.5% in Sweden. In Sweden, the indexation is made once a year with October CPI asset base, but in Denmark, the indexation is made all year around depending on when the lease was signed. So low inflation in Denmark affects these figures. Looking at like-for-like figures, comparing all the properties we owned a year ago with updated figures. We can see that the rental value is up 6.1% and rental income is up 5.7%. If you just look at offices in Sweden, the rental value is up 6.9% and rental income is up 6.8% in the like-for-like portfolio. And changes in market value of our properties. We started the year with SEK 55,872 million in accordance with our external 100% valuation. Acquisition adds on SEK 201 million; investments, SEK 1,538 million; divestment, minus SEK 5 million; changes in valuation, plus SEK 71 million; and together with currency translations of SEK 221 million, that summarize to a value of SEK 57,898 billion. The value of the portfolio has developed, as you can see on this slide. Since 2005, without raising any new equity with investments, new leases and a few transactions, we have also during the last years been able to increase the value somewhat. Valuation is interesting, but most of all, we think it's interesting to measure how well we actually perform in relation to these values. And these figures, the running yield show how we actually perform. So this is not the valuation yield. For the whole portfolio, the occupancy rate is 93%, excluding projects and land and with an operating surplus of SEK 3,173 million, that gives a running yield of 5.8%. Fully let, the portfolio would give a running yield of 6.4%. Good earnings capacity in relation to the value of the portfolio. In the office portfolio, the market value is now SEK 46.9 billion. And overall, the occupancy rate is 93%: 96% in Malmö; 90% in Helsingborg; 91% in Lund; and 94% in Copenhagen. When we add new projects, the market -- to the market or we buy vacancy, that can affect the figures downwards a bit, but we have kept the numbers at good levels despite that in the best day, we can improve a bit, except in Malmö, maybe. But we see positive changes over time, not least in Lund, where the improvement has been ongoing for some years, and I'm sure that will continue. The operating surplus from offices summarized to SEK 2,648 million and a running yield of 5.7%, 6.2% fully let, bring stability, of course, and resilience. The demand for logistics and production continues to be good. Occupancy 94% in Malmö; 87% in Helsingborg, improved somewhat, but still a bit lower than we want it to be, mainly during changes between tenants; 99% in Lund; and 98% in Copenhagen. 9% occupancy rate as a whole with a running yield of 6.6%, 7.5% fully let, and a total value of SEK 7,991 million. My take on this segment is the same as before. The logistics sector asked for high flexibility and changes at a faster pace, while production seems to be a bit more persistent and focused on high quality. The development of our total portfolio running yield, 5.8%, brings stability, not least since the portfolio overall has a high quality and good location. As noticed before, a quick increase of the running yield since '21. ESG performance on this slide. We continue with our certification program. 85% of the Swedish office portfolio is approved and additional 8% is ongoing. I'm convinced that we will reach our goal for 2025, and we will continue with certification programs for the rest of other properties at the same time. Energy savings are also high importance, but always a bit tricky to measure in exact terms in a shorter time perspective, but improving, and that's good. The carbon dioxide figures are at low levels for Scope 1 and 2, but we are dependent on our energy suppliers, especially in Denmark. To reach our targets, we continue to work on this together with them. Other sustainability highlights in Q3. High score in GRESB, with improved numbers, 5 stars and now #1 in listed diversified 5 properties, office industrial globally. We have a new sustainability-linked loan together with Handelsbanken, where our total emissions in Scope 1, 2 and 3 are measured and taken in as a factor. And we have also been targeted as one of Skåne's best workplaces, all industries, all sizes, an important factor also for being relevant to our tenants. There is actually an interesting correlation between having a good workplace with satisfied employees and our customer satisfaction. We have very high scores on both and keep working to improve this never end. And let's remember that really good results doesn't mean that everybody is happy every single day, but the correlation is interesting. A catalog of our value and properties in our 4 cities. 40% of the value is in Malmö; 22% in Helsingborg; 16% in Lund; and in 22% in Copenhagen. I have already repeatedly talked about the massive ongoing infrastructure investment in Denmark and the construction of the Fehmarn Belt tunnel. So at this time, I would like to mention the strategically important increase in the number of direct flights to and from Copenhagen Airport. All of this doesn't automatically contribute to lower carbon emission, but it will definitely contribute to the attractiveness of our region. Direct flights to 184 cities in the world and 52 countries. I also would like to comment the growth in workplaces where the development seems to look a bit different in different regions. Part of this could, of course, be timing, but this shows an interesting growth in the Southern parts of Sweden. I'm convinced that the demand and -- for the best workplaces continues and that the trend we see today, when companies ask for higher presence at office, we will see increased needs for areas rather than the opposite. There must be room for focused work at work. Anything else is a failure by the employer. And time for financials. Over to you, Arvid.

Thank you very much, Ulrika, and good morning, everyone. Looking at the income statement for the third quarter isolated. You could see that rental income amounted to SEK 1,043 million, up 7% versus the same quarter previous year. The operating surplus was SEK 762 million, also up 7%. Income from property management amounted to SEK 445 million, up 3% despite the financial net being SEK 35 million higher than Q3 2023. We had positive value changes in properties of SEK 102 million in the quarter and negative value changes in our derivatives portfolio, minus SEK 335 million. All in all, a profit for the period at SEK 148 million. Looking at the balance sheet on the next slide. Investment properties now have a value of SEK 57,898 million. That is up approximately SEK 1.9 billion in a 12-month period. Equity stands at SEK 22.3 billion, a touch down versus 12 months previously. We have, of course, during the year, paid almost SEK 1 billion in dividends to our shareholders. Borrowings amount to SEK 29,641 million as of the end of September. Using those metrics to look at the key figures. The equity assets ratio now stands at 37.6%, slightly down versus 12 months but the same number as in Q2. The leverage or the LTV at 51.2% is slightly weaker than 12 months ago, slightly stronger than 3 months ago. And the interest cover ratio at 2.5x. The EPRA NRV, as Ulrika mentioned, in the 12-month period increased by 5% adjusted for paid dividend to SEK 90.47 per share. On the next slide, you can see the historic developments of the EPRA NRV. And over the time period, from 2009, the average annual growth adjusted for dividends paid has actually been 15%. Looking at the historic development of our key financial ratios. You can see that on this slide, the equity/assets ratio was, for many years, around 30%, and now it's at almost 38%, although it has come down slightly over the past couple of years. The interest cover ratio was at extremely high levels when interest rates were extremely low and negative. So coming down to around 2.5x in the historical perspective is actually quite reasonable. And the loan to value, as you can see also, was for many years around 60%. And we've gradually taken it down to now just above 50%. On the next slide, you can see the metric net debt in relation to EBITDA. And it's good that we, over the past few years, gradually have managed to strengthen this ratio. It now stands at 0.1x. On the next slide, you can see the split of our financing sources. Just over 1/2 of the loans come from bilateral bank agreements with Swedish Nordic banks, 37% from the Danish rail mortgage system and around 10% from the bond market. I'd like to highlight also what Ulrika mentioned that we, during the quarter, have signed a sustainability-linked loan facility with Handelsbanken, where we have tied the conditions to our performance when it comes to energy usage, when it comes to CO2 emissions, both Scope 1 and 2, but also, very importantly, including Scope 3, which, of course, is a very large -- the very largest effect of CO2 that we have in our industry. So we're happy to have concluded such an agreement and hope that, that will show our commitment to actually making a difference. On the next slide, you can see the details of our loan portfolio. The average interest rate at 3.79% is down 26 basis points versus 3 months previously. That has primarily been driven by lower STIBOR. We've had -- lower bank margins have impacted a little bit. And expiring attractive old interest rate swaps have moved the number slightly upwards. But the main effect has basically been the STIBOR decrease during the quarter. The average interest period now stands at 2.6 years, and the average loan maturity is 5.6 years. On the next slide, you can see the interest rate sensitivity. This basically shows what would happen momentarily in an assumed change in market interest rates, that is the underlying STIBOR/CIBOR rates. Important to bear in mind is that the underlying interest rate can momentarily go up by 2.5 percentage points, and we would still be at our targeted interest cover ratio of 2.0x. Now everybody expects the underlying interest rates to move down, but theoretically, this is still an important exercise to go through. On the next slide, you can see the historic development of the fixed interest period and loan maturity, and that remains, over the past few years, relatively stable. So I don't think I need to comment on that more particularly. And lastly, among the number of slides, I want to show you the status of available funds, that is unutilized credit facilities plus liquid funds as of the end of the quarter, which now stands at SEK 2.7 billion. And with that, I hand the word back to you, Ulrika.

Thank you. And an update on our investments in progress and a quick overview of our largest projects. During the first 9 months, we have invested SEK 1,538 million, and it remains SEK 3,184 million to invest in improved projects. We have quite quickly been able to improve the yield on cost, and we are now at better levels than we saw during the quick change for higher yield requirements. A good volume and really good quality in the portfolio ongoing ahead of us. First, my latest favorites. At Vätet 1 in Lund, we will refurbish and add on areas for our new tenant, Arm. 5,700 square meters and 7 years lease. Investment, SEK 136 million, excluding value of the land. That means 10% yield on cost for the investment and 6.6% yield on cost, including ingoing property value. The investment gives Arm a new modern facility, and we also improve the impression and the attractiveness of the whole Ideon area. At Galoppen in Malmö, we got the opportunity to buy land on the municipality of Malmö, and the production is ongoing in full speed to reach completion in Q3 '25 for Caldic. Approximately 10,000 square meters, production, logistics and office. Total investment, SEK 264 million and yield on cost, 7%. In the Dockan area in Malmö, we continue the refurbishment for University of Malmö and the police education. We invest SEK 106 million, 10 years lease and yield on cost, 11%. Completion in Q3 '25. Börshuset 1 in Malmö is an iconic building, right beside the train station, 6,000 square meter offices, restaurants and co-working and absolute top rents in a Malmö perspective. Approximately 90% pre-let and completion in Q4 '25. And the last signed tenant, Delphi, will move in, in August '26. Our largest ongoing project is Bläckhornet 1 in Hyllie, and it follows the schedule well. The mobility 1/2 part of the project has just been completed actually, and for the office part, completion starts in Q4 '25 or Q1 '26. Yield on cost, 6.2%. Posthornet 1 Phase 2, a newbuild office of 10,100 square meters right beside the Central Station in Lund. Investment, SEK 448 million includes the value of the land; SEK 374 million excluding land. Completion with start Q1 '26 and yield on cost, 6.5%. [indiscernible] will be one of the first tenants in place. And in Hørsholm, Copenhagen, we invest in a new school for NGG. 25-years lease, 11,600 square meters and investment SEK 390 million. Completion expected, end '25. At Sunnanå 12:54, we build 17,000 square meter logistics, 100% pre-let, 15 years lease. Completion, Q3 '25. Yield on cost, 6.4%. And Bilrutan 5 in Landskrona, including in our Helsingborg portfolio, here, we will complete a facility for Dachser late this year with a 15-year lease and yield on cost, including value of the land, 6.7%. Here, we can add on some extra volume to increase the value further, and discussions are ongoing. That was some of the ongoing projects. Let's also mention something about future investments. I've shown this picture before. It's Amphitrite in Malmö, where we have signed an agreement with the University of Malmö after a Public Procurement Act to create a project together. The architectural competition is completing, and during the process with the zoning plan, the volume has increased a bit. So today, I think we will reach approximately 18,000 square meters, and completion in '27 might still be possible. Four possible projects in Lund and Helsinborg. Here, we can develop some 70,000 square meters in the future. Zoning plan is improved for the first 3 projects and are ongoing at Västerbro in Lund, the last picture. And some of these possibilities in Malmö in the area of Nyhamnen and Dockan continues to have high attention from us. Time will tell about the time schedule. And our summary again. A new record in rental income for 1 quarter, SEK 1,043 million. Good positive net letting and high gross letting in the third quarter. The demand for good quality in good location continues. ICR at 2.5x and average interest rate declining quarter-on-quarter. And our product volume gives a good potential for growth. And not at least, SEK 513 million in new leases last 12 months, one of my favorite figures today. With that, we are open for questions.

I think another question mentioned that you are capturing reversion by signing leases at higher rent levels than the rent levels that you terminated. Could you provide some more color on how much reversion you actually are capturing? And are there any specific regions where you see more reversionary potential?

I would say that the -- if you look in the quarter, signed leases versus terminated lease difference is positive. And we feel that, that gives us comfort in that we actually have market rents and that market rents are developing in a positive way. But it's not dramatic.

But it's really interesting to see actually how also the -- a bit of eldest stock, for example, in the industrial areas in Malmö, the rent levels we get there today is really good. Of course, we also contribute with a bit of a better technical standard and such. But if you ask me if any region is outperforming in any way, I think Lund is really interesting. Malmö as well, as always. And I'm really looking forward to see what will happen in Copenhagen ahead of us. There are many things that shows that maybe it's time for some changes in the market rents in Denmark as well. But we will see about that.

That's clear. And since you are quite positive on market rental growth, could you see it go beyond inflation then in the near or medium term?

I think we are a bit above inflation, yes. And the positive trend that we see tenants seeking for better quality and such, that continues. I just saw a message that we...

# Just to follow up on your view on the markets. After all, the economy, if anything, is -- people say it's low, some people say it's a recession out there. You sound pretty upbeat. If I rephrase it this way. What's your view on the market today compared to 3 months ago in connection with the previous interim? Is it the same or are things improving?

And maybe we should -- I got a message that maybe the questions isn't going through in the air. But the question was from Lars Norrby about the -- if we're in a period of regression or not and our view of 3 months ago compared to today. And I will say that, yes, it's a struggle. You need patience and to be persistent. Of course, it's not easy, but there is opportunities. And many companies want to improve things. And that means that they also have new needs for their workplace. And of course, many different sectors are in a bit different kind of mode. So there's definitely possibilities. And we have been able to meet our tenants' needs. But it's not notable that -- that, of course, it's hard times out there.

So please, just compared to 3 months ago, the situation today, is it better, the same? Or what's the status?

It's -- it might be a bit better, actually. But that doesn't mean that there's businesses that are really struggling. So -- but many positive discussions. And yes, I would say, actually, it's a bit better today than 3 months ago.

And I think you mentioned that you've had a good start to the fourth quarter. Is that what you said? And if so, we saw the press release about Thule, that contract. Is there anything else that you have signed so far during Q4?

Not at the same magnitude. But yes, we have signed leases also in October. Yes, of course, we have. And I think it's interesting to see what will happen on the industrial segment. But of course, the Thule agreement is really good. Because it's -- we get a very short -- the absolute minimum period from Mercedes moving out until Thule moves into this facility in Dockan area. And finding that solution and also work together with the ceders and they contribute by moving twice in a year, that's not easily done. But it will be very, very good.

And just a final word on the fourth quarter. In terms of sort of potential terminations or contracts running out, is there anything of magnitude that may happen during the fourth quarter?

The fourth quarter, not at any large extent. But of course, we will see termination as well. The largest termination ahead of us might be in Q1 when SAAB has possibility to leave for Lund, and they will leave for Lund. But who knows? They might stay with some facility in Malmö as well. So...

The next question comes from Niklas Wetterling from DNB Markets.

So following a recent news article about the struggling co-working firm in Stockholm, I just wanted to ask about Wihlborgs' exposure to co-working tenants. And what you are seeing in the co-working space in your key markets?

We have less than 1% rental income from general co-working actors. They are a quite small portion of the total market in our region, but interesting and a good complement to the rest of the market. I think where we have been most successful is when we have co-working with a special theme. For example, we have Media Evolution City. They have been active since 2012 with companies in the media sector. We have Medeon focused on the med tech sector. So we have been working with that kind of things for a very long time. And for the general co-working actors, of course, it's important that they continue to have a good offer. But they -- and I think they contribute in a good way to the market, but they are a quite small portion of our portfolio.

The next question comes from Erik Granström from Carnegie.

I have two questions as well. One relates a little bit to the rental market. And I was wondering if you could tell us something about your cancelable rental value for next year. I believe it's quite a lot that's up for renegotiations in 2025. SAAB seems to be one of it. But is there anything sort of large in 2025 that you're looking to renegotiate perhaps a bit earlier? I think it's a little bit more than SEK 900 million coming to term next year.

We always try to, when we have a possible renegotiation times, to be in good position, talk early to each other, finding solutions. There's nothing on my mind for 2025 except then SAAB that are of the larger extent that we think it's really important that we find the solutions quick and now. And so of course, there is things ongoing, as it always is, but it's more of a normal business, I would say.

Okay. And [Audio Gap]

For termination, except for the ones you mentioned, Ulrika. I can also reflect only that. I mean we have a rental income of about SEK 4 billion, and we have an average lease period in the portfolio of approximately 4 years. So having some sort of renegotiations of the order of magnitude that you mention, Erik, is not unreasonable, so to speak. It doesn't stick out as exceptional from my perspective.

But we have been through a lot of larger changes the last years, I would say. I mean, IKEA left Hermes in Helsingborg. We knew that when we bought Hermes. We have the big changes in Denmark for Danske Bank. We have the changes for Ericsson in Lund that we have been through, and the same for Sony. So I think that the largest ones, we have been through that already. And there's more normal operation ahead of us.

My second question sort of relates a little bit to that as well. You've mentioned that there is quite a high activity level in the rental market. And we can obviously see that in new leases and terminations as well. Do you think that, that would create some sort of opportunity for you in terms of the transaction market? As tenants are moving around, can you see that there are assets that perhaps become vacant that you don't own today that you might acquire? Could you tell us something about what the liquidity in the transaction market seems to be now? And if you're looking at anything.

We continuously look at things that we think might be of interest, both, of course, when we see that there is or will be high vacancy, maybe changes for a full change of operation. That could be of interest if the position -- the geographical position and the volume is right. But let's also keep in mind that changes from -- could be quite expensive. So it's important that the total calculation actually is good. But we continue to look both in what is already developed products that can complete our portfolio in a good way and also more of a development project possibilities, definitely.

The next question comes from Stefan Andersson from Danske Bank.

A couple of questions. First on vacancy. Your net letting has been strong here for quite a while, and you see vacancy rather fixed at the current levels. Do you expect the net letting to transfer into low vacancy ahead? Or do you expect that to be diluted by projects? And I guess you take on -- when you buy properties, I guess, you normally also have a tendency to buy things with higher vacancy. So how -- any comments on that?

Absolutely, there is possibilities that the vacancy could go up actually for a shorter time of period, and we still see that as a good thing for our growth. So that might be the case from time to time. But that depends on new projects and, of course, transactions. And also when you do larger refurbishment in existing portfolio. So I don't see any drama in that. That's more of a normal thing.

Sorry, maybe I missed...

It's, in the longer-term perspective, a quite okay level to be at. I think we've very rarely touched [ 9 to 5 ]. So I think the -- I mean, the changes should not be huge in the overall portfolio. The level where we are is quite okay for a steady-state business, so to speak. And then as Ulrika said, projects and potential transactions can alter the picture during a period of time.

Okay. Good. Then the rent-free period, I didn't -- was it Mercedes? I didn't hear the tenant there. But when Thule is moving out, you gave a tenant, the [Audio Gap] for a year? Or is it already in Q4? And what is the annual rent level roughly on that?

For Mercedes, correct, is on Q1 during '25 until they move in, in our project Vista. And the volume for that might be...

The overall volume.

Do you remember? Well, the volume, yes. Yes.

I don't have the figure off the top of my head.

Can we come back for that maybe?

Yes. Yes. That's fine. And then a question on -- you sold the building rights in Copenhagen. Could you indicate if you had a decent profit on that? I guess that will be booked in Q4. But you mentioned the price sold -- it was sold for, but just curious about the profit on it.

The value as of Q2, if I remember correctly, was SEK 62 million, SEK 63 million. We sold it for SEK 72 million.

[Operator Instructions] The next question comes from Markus Henriksson from ABG Sundal Collier.

First, a question on investment levels. You're currently at SEK 2.1 billion on a rolling 12-month basis. What do you expect there for 2025 given the outlook you have given us today?

I think that we -- if we are able to be between SEK 1.5 billion and SEK 2 billion, that's a good zone for us to be in.

Good. Then also, I see you have entered around SEK 1 billion of interest rate swaps here in the third quarter. Given the current levels we're seeing on the swap market, are you looking into entering more here in Q4?

We may enter in some new more interest rate swaps during Q4. The driving force for that is basically to follow the financial risk management policy that we have. So -- and I think it's worthwhile repeating that the objective of our interest rate risk management policy is not to beat the market. The objective is to create a predictability and to reduce volatility in the financial net. That basically means that we've defined that a certain minimum and maximum portion of interest rate maturities shall fall due during time periods, 0 to 1 year, 1 to 2 years, et cetera. And we continue to work in accordance with that policy.

Very clear, Arvid. Could you remind us what that [ means in ] new swaps?

I think we're -- as you can see in our report, we have interest rate swaps corresponding to roughly 50% of the outstanding loans. That total order of magnitude is likely to be unchanged. But it may, of course, differ a bit quarter-on-quarter. Because as I said, we have a minimum and maximum level, not an exact level for each time period.

It's just you have very good swaps here. Could you then highlight a bit for 2025? Are they kind of back-end heavy? Or are they going to roll out early on, not at one point?

They expire during -- at different points in time during the year from Q1 to Q4 for 5 different occasions.

Perfect. Then just a housekeeping question. Börshuset 1, is that contributing at all currently? Or it's completely empty and under the renovation?

It's under renovation.

Then last question on the follow-up on the rental market in Copenhagen that you discussed previously. You mentioned that you see some positive signs potentially in Copenhagen. And I'm just a bit curious. You own mainly secondary office properties with quite low rental levels. Do you see positive renegotiations in your portfolio? Or is it more that you see positive like CBD rents increasing? Or what is it that you're actually seeing?

I see positive signals in our new leases that we signed. So I think maybe things -- I mean, not quickly raising any rents. But there might be -- I mean, Copenhagen is very special with flat rents for such a long time. But many economical factors and also what we see actually in the areas that where we are, maybe it's time now for bit-by-bit that we might be, the time now.

The next question comes from Eleanor Frew from Barclays.

Just one quick follow-up on some other questions. So now that the interest rate environment is more favorable and you seem to be quite confident in the outlook, how are you thinking about capital allocation moving forward? Will you remain disciplined? Or is there room to accelerate either in development or acquisitions?

Yes. I would say that over the period, with increasing interest rates that we've been through over the past couple of years, we've not felt restricted when it comes to our own investment projects. We've felt that we have access to capital, and we've felt that we've managed the interest rate with the cash flow generated in our core operations. So -- and today, I would say that we are happy that we have kept on investing both in new build projects and in different refurbishment projects, et cetera, in the existing portfolio. I wouldn't expect any major policy shift regarding that going forward. On the transaction side, and Ulrika touched a bit on it earlier, we have also, during the past couple of years, continuously looked at acquisition opportunities, but it needs to be the right product, the right opportunity at the right price. So it's not a huge change to be expected in our approach to those issues going forward.

There are no more questions at this time.

Okay. Thank you. So let's just check if we have any written questions.

No, nothing has arrived in the mailbox.

Okay. So thank you for today, and please come back if you have any further questions, of course.

Thank you, everybody.

Bye.