Operator

Ladies and gentlemen, welcome to the Fabege's Q1 Report 2026. My name is Betsy, and I will be your conference moderator for today's call.

During the presentation, all participants will be in a listen-only mode. We will be facilitating a brief question and answer session towards the end of the conference.

Should you need assistance during the call, please signal a conference specialist by pressing star zero. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn today's call over to Bent Oustad. Please go ahead.

Bent Oustad

Good morning, and welcome to Fabege's Q1 Report 2026. My name is Bent Oustad, I'm the CEO of Fabege.

And with me today, I have Asa Bergstrom, our CFO. We run through some presentation first and then we go over to Q&A after the presentation.

Just a short recap from last quarter. We still own a modern portfolio with focus on Stockholm occupied by high-quality tenants.

And as you all know, we own, we develop and we manage our properties with in-house personnel. We are focusing on creating attractive working places and a good living in superb locations in Stockholm.

And as you also know and are very much aware of, that's the best growing region in Sweden.

Our rental value at the end of Q1 is SEK 4.4 billion in the portfolio and the number of square meters is 1,300,000 approximately. The property value is at SEK 78.6 billion at the end of the quarter.

Just to go through again some of our strengths in the company that I see out there my first four months. It's definitely our customers.

We have a very high customer satisfaction index. It's highlighted there by a strong track record in serving our customers' needs, and that's important also going forward and in all our renegotiations.

95% of our tenants say that they would recommend Fabege as a landlord. That's positive for us, and we have to keep that number up.

And we have a long-term lease contract as a foundation for our business with our customers.

We have our own staff across the entire value chain, meaning we have property caretakers, we have the leasing departments, we have the project team, everyone employed by Fabege and even have CFO and CEO in the company also, that's great.

We have -- our properties are in clusters, giving us some advantages. I really see a lot of economies of scale like that when we are doing the management of them.

And it makes us -- makes it possible for us to create engaging meeting places in our portfolio, and that's important also going forward. We have an excellent capability to deliver large and complex projects from start to finish.

We have done that several times, and we will do it in the future as well.

So if you then go to the Q1, this is a short summary. Positive numbers on most key figures.

Rental income, service ratio, profit from residential development and net letting, all positive and more or less flattish on the value change. Also, we'll come back to those figures later on.

On a positive, very good positive side, we have signed a lease track with Stockholms Sjukhem for an eldercare facility in Haga Norra in Arenastaden. They sent out a press release yesterday with us.

It was signed in Q1 and is included in our figures. Permobil has also moved into Arenastaden.

That makes us a little bit proud because they have consolidated all its operations from Greater Stockholm to one location in Arenastaden, a very nice premises there. The vacancy rate is unchanged from last quarter at 14%.

Then Asa?

Åsa Bergström

Thank you very much. So I will go through the figures in a little bit more detail.

As you can see here, the rental income came in at SEK 892 million. That's an uplift of SEK 27 million in comparison to last year.

We have a negative impact from identical portfolio relating to negative net letting from the previous years. We also sold one property, Ynglingen, which we had some income from in the first quarter last year.

But on the other hand, we have a lot of new income from finalized projects during last year, for example Saab, who occupied in Q4 last year.

The net operating income came in SEK 39 million above last year. We had higher winter costs.

But on the other hand, we have managed to reduce property tax and also some lower maintenance costs. And that meant that we had a surplus rate of 72%, which is really, really good for a first quarter.

We could also see that there were some finalized apartments in Birger Bostad that contributed to an income of SEK 172 million and also a surplus of SEK 40 million and in total, that also contributed to the income from property management, which ended up at SEK 370 million. So that's almost 30% up from last year.

As Bent mentioned, we also saw some negative value changes. I will come back to that very shortly.

And we had some positive impact from value changes in the derivatives portfolio relating to higher interest rates. Tax is only carryforward losses.

So it's not paid tax. The big positive amount from last year was related to the sale of Ynglingen and reversal of tax in that case.

Property valuation. We ended up with a property value of SEK 78.6 billion.

We have externally valued 44% of the portfolio. The average yield in the portfolio was unchanged at 4.59% from year-end.

But there were some changes in the city properties, a little bit reduced. But on the other hand, in the suburb locations, we saw a little bit higher yield in the valuations.

So here, you can see a split from value changes in the management portfolio, minus SEK 191 million and value changes in the improvement in project portfolio of minus SEK 68 million.

You can also see the division between the different market areas where both residential and inner city provided positive value changes this quarter.

The key ratios not so much change, but equity per share, as you can see, came out at SEK 120 per share, and the NRV at SEK 145. We saw a positive total return in spite of the negative value changes.

Surplus ratio, as I mentioned, which is the best, I think we have ever reported in the Q1 actually. Equity ratio and loan-to-value ratio remain at the same level as the year-end, but we also saw an improvement in the debt ratio to 13.1%.

And I don't know if you're familiar with the target that we have to be below 13%. So we are very close to that target now these days.

On the financing side, the year started really, really strong. We saw a very, very good access to financing from both banks and from the capital market.

We also saw reduced margins, especially in the beginning of the year. It's been a little bit more volatile after the conflict in the Middle East started, but we still see that we have very good access to financing.

We were lucky to do some bond issues in mid-February, where we could come out on 3-year maturities at around 84, 85 basis points. We did another bond issue last week, where the same 3-year maturities came at 97 basis points.

So I would say that we are more or less back to the levels where we were at the year-end.

The ongoing refinancing with the bank facilities is according to plan. So we are moving some securities, changing some securities, which has taken some more time, but everything is according to plan.

And we still have the undrawn facilities of SEK 6 billion, which is good for us and gives us a lot of stability looking forward.

The average interest cost came up a little from 2.82% at the year-end, up to 2.85%. It's actually been below 2.80% at some time during the quarter, but higher STIBOR is, of course, reflected in these figures.

A little less than 50% of the portfolio is fixed according to plain vanilla swaps. And if we include the callable swaps, the fixing rate is nearly 70%.

You can see also that the older swaps are at very good levels, most of them. So they are, of course, contributing to the positive cash flow for Fabege.

Higher STIBOR has had a little negative impact during the quarter. On the other hand, when we are refinancing debt, most of them come in at lower margins than we had before.

Most of those debts are signed 3 to 4 years ago at margins that were at that time higher than what we see today. So that will continued to have a positive impact.

Also to conclude a few words on sustainability, energy consumption remains in focus. We were very, very lucky last year with a mild winter to come down at 65-kilowatt hours per square meter.

This year, we've had a much more wintery, lots of snow, much colder, but the 23-kilowatt hours per square meter, as you see reflected in Q1 is actually the same figure as we had last year. So we are on a good level also for that.

Now last week here in April, we actually sold the recycling hub that we have produced to Ragnsells. The hub was in itself established in 2023, and we have used it mostly internally to reuse materials that are taken from one property into another property.

And the idea from the beginning was to ensure that we can scale up this business. And with Ragnsells and a number of other property owners also connected to Ragnsells, this will be a system that can have a lot more impact going forward.

So I think that's what I say for now, and I'll leave back to you, Bent.

Bent Oustad

Thank you. So we then move on and look into the occupancy rates.

It's at the same level as last quarter. And it's, as we said then, including the previous projects Ackordet 1 and Pasen 1 that were included in the portfolio from year-end.

As I mentioned earlier on, in the beginning, Permobil has moved into the properties -- into our portfolio. And as I mentioned earlier on as well, Arenastaden is moving in at first of April, that will be reflected in the second quarter.

We also have an improvement portfolio of properties partly or fully vacated for potential project development. It's 102,000 square meters, of which 31,000 is let out.

They are properties for future projects for us.

Look at the net letting in Q1, it's ended up a positive of SEK 24 million. New lettings ended at SEK 69 million and terminations at SEK 45 million.

Some of you have mentioned in different reports that Max Mathiessen will terminate the lease with us. They haven't terminated it yet.

And as you all are aware of, there are some special Swedish rules around that. So we include the figures when we have a termination or when we have a signed contract.

So normally, we will not comment on the speculations, but we have read that in the press as well and we think they will move. But as just to point out, it's not terminated yet.

That said, we would be very happy to have Max Mathiessen as a tenant. We have had them for a long time, and they are a good tenant.

On the other side, it's maybe also good that they are moving out of that building in this time. I don't want to comment much more on that right now.

When it comes to the renegotiations, we have totally -- we have renegotiated for a total of SEK 100 million in the quarter and SEK 104 million of the maturities in 2026 and onwards has already been renegotiated.

So if you then dive into the renegotiated numbers of SEK 100 million, the rents are minus 0.4% of that, 65% extended on unchanged terms and SEK 35 million is a small decline. That means that the reduced yearly rent is SEK 375,000.

So it's more or less flattish. As I said, the renegotiated rents are still above the estimated rent levels used in the external valuation.

So we are quite happy with the renegotiations we have done. They have been dominated by several smaller tenants.

Only one contract is above 1,000 square meter in the quarter. So this is back to what we also said before, it's the bread and butter that's been renegotiated this quarter.

New leases are a mix of all kinds of categories. We have 2 contracts above SEK 10 million in yearly rent and the rest are on the smaller side.

So if you see all the figures divided by the different areas, Stockholm inner city is 59% of the renegotiations, Solna is 29% and Hammarby Sjostad is 12%. And a note on the Solna figures, it's not included -- the Stockholm Sjukhem contract is not included in these figures -- it's in the figures, but not in the percentage for each area.

The new leases are also divided by the same area, 36% in Stockholm, 49% in Solna and Hammarby Sjostad at 14% and Flemingsberg 1%.

What we find very healthy for us is the mix of renegotiations and new customers. Saab is from early days a large tenant for us.

They have signed also a new lease in another building. So that's -- we are very happy with that.

And we have Atea sign some more areas and Skistar moved within our area. Willhem is a new tenant.

So we have a nice mix of different customers this quarter.

That also underlines what I tried to comment on in my CEO letter that we see decisions being taken, especially in the smaller, more or less bread and butter leasing. So this is the rental development.

And just to point out, it's only for the existing leases that we have in the portfolio at the end of Q1. So if nothing happens, the rental income would be like this.

But we have higher ambitions and we want to improve this throughout the year.

One of our key strengths is our customers, and we have very long agreements, lease contracts with them. And on the right side, you see the 10 largest tenants.

They account for 30% of our contracted rent, and we have a vault of close to 10 years for those tenants and that's more or less the foundation. And the 25 largest customers represent 43% of the rental value then.

And in total, 700 customers. So it's a busy day for the leasing department within Fabege.

On the project side, ongoing projects, we have Farao-Kairo, it's taken a decision to invest up to SEK 613 million. We have dismantled existing buildings, ground and foundation work are on the way and we are doing the preparation for our construction documents to the municipality, et cetera.

So we have taken the decision to do construction work up to the ground floor level. It's just 20 meters from the new metro station arriving in Arenastaden.

We have in Wenner-Gren Center an investment up to SEK 609 million. We are doing the facades, the roofing and also do the refurbishment of the different floors.

If you have visited Stockholm or if you live in Stockholm, I'm sure you've seen it, you see the building from all over the cities. It's pre-let 30% and marketing to be started now during Q2 2026.

It will be finalized and moved in, in second quarter 2027.

And a new project on this list is the project Mimer 5. It's 100% pre-let on a long lease to AcadeMedia.

That's a school building, investment up to SEK 217 million and a rental value of close to SEK 50 million. It will be finalized next summer, summer 2027.

So that's ongoing projects. In the ongoing projects within Birger Bostad, we have talked about this also last quarter, but block 5 is then progressing according to plan.

It's a total of 288 units completed in '25 and Q1 '26. The Cooperation Alma, 23 apartments, 20 are sold.

The 3 remaining are used as showrooms when potential buyers are visiting this area. We have produced and rented out 78 rental apartments and 50 owner-occupied apartments have been finalized of which 47 are sold, possession to the final owner during Q1 was 42 odd units.

So 5 is still to be delivered.

Also to be completed in 2026, that's a cooperation residential. It's Brf Mathilda and Ingetora, 137 apartments in total, which actually this morning, they are sold, but this 57, that was yesterday.

So it's a good area. It's progressing according to plan.

We have the last block there in the next phase, is block 4. We are doing the construction work or handling up the construction work in these days.

It looks promising. In total, 132 cooperative apartments there.

Investment approximately SEK 315 million. And we have 260 rental apartments, elderly care facility, as I mentioned, in Stockholm Sjukhem and a preschool and total of close to 20,000 gross leasable area in block 3 coming up.

And that will be an investment up to SEK 860 million. Estimated completion for the whole Haga Norra, block 4 and 3 will be end of 2029.

We also have the land allocation at Sveaplan. No more is totally agreed there.

Possession date will be mid-June 2026, building rights, 8,800 square meter gross area, a purchase price of SEK 210 million. Planned moving there could be during 2029.

And this is definitely one of Fabege's core areas, and that's the entrance to Stockholm inner city. As you see on the picture on the right-hand side, you see in the red line, that's our existing portfolio in this area and the purple one is a new building in Sveaplan.

In addition to this, we also have the quarter with Mimer as I just mentioned, the school. It's also in this area.

So in total, we have more than 100,000 square meter gross area in this area.

We will have office co-working ground floor activities, food and beverage, high-class conference center, looking into different training facilities, et cetera, all kind of services in this area. So this will be important for us, and we have high ambitions here.

When it comes to our building rights in our balance sheet, we have commercial building rights of a little bit above 500,000 square meters, 65% of them are legally binding and it's booked at SEK 8,100 per square meter. And the residential building rights is 445,000 square meters, approximately 43% legally binding, also booked at the same price per square meter.

As you can see the reduction, there are some reduced numbers from last quarter, and that's more -- as we did last quarter when they have terminated the land allocation in Flemingsberg. We also looked over the building rights in the same area and reduced those according to what we think is most likely that we will develop.

So the project opportunities in the near term, we have the Farao-Kairo, just mentioned, 77,000 office gross leasable area. And there, we are also in the same area have approximately 500 units of residentials.

And in the phase 1 of this residential, there will be 185 apartments in one of the Farao buildings. And Haga Norra, already produced 519 units, in production 187 units and another 390 units on the way.

That also includes the elderly care facility that I mentioned several times now.

We have Tegelterassen in Vastra Kungsholmen, that's 36,000 square meter office. Its partly demolition has started during Q1, and we see nice interest in the market for this building.

A handful of good discussions. So also high ambitions there and will be more decisions taken just after the summer in this building.

Solna Business Park, we have the Parkhuset, that's an office building. We have the land allocation, 22,000 square meters and have Yrket next to it, the one in the red line, 320 residential units.

These are a little bit on hold just because the other building marked there with the green roofing has to be finalized before we can start doing construction work on our plots, but they are on the way.

So to summarize up, our short-term priorities, also long-term priorities is definitely to decrease the vacancy is to continue to be a preferred partner for our customers. We have to be always available, accessible and try to be solution orientated.

We had to secure value creation in our ongoing projects. It's important when they're starting projects, and we don't have the final tenants already in place.

We have to do some extra work there then.

We have to analyze our land bank like we hope you can see we have done the last quarter as well and made this eldercare facility, have to look through it and try to create value for both our customers and our investors.

We will continue to be active in the financing markets. As also mentioned, we have already done some work there during the second quarter, and we are always looking for opportunities to further develop our company.

And that concludes our presentation, and we'll go over to the Q&A.

Johan Edberg

My name is Johan Edberg. I'm from Handelsbanken Capital Markets.

I will have the pleasure to lead this Q&A and ask some questions to Bent and Asa. I will not do that all by myself.

I will also let the web conference in to ask questions. And I think you have the opportunity also to post questions on the conference website.

I will do my best to read them up to the management here.

But to kick it off and starting with a very easy one before we dig into the Q4 numbers. Bent, you promised in an article that I read this week to increase the share price since the main shareholder, Mr.

Fragerson, is not happy with SEK 80 per share. So the question, a very simple question.

How will you do that?

Bent Oustad

I promised, I promise. We have to do our work and then the investors have to decide that.

Because I'm also a shareholder, so I'm not happy with it either. But we are doing that, and that's what we try to present right now.

We have to do the -- to take down our vacancy, have to be -- try to be a little bit more creative going forward, meaning we are -- or at least a lot of people talking about us just as an office and pure Stockholm, but we are creating working places. We see the leases that we have done the last time here have been a mix.

It could be some offices, could be showrooms, et cetera, and that's what the tenants today are searching for.

When we see Permobil taking all the different premises around Stockholm, establishing a new hub in Arenastaden, it makes me really proud. And we see more search for areas from tenants doing exactly the same.

We see also Atea moving into Haga Norra. They want to rent a block of apartments.

They want to rent working spaces, et cetera. So they are requesting more and more services in addition to the lease contracts.

And I think we -- when we have all the properties in our clusters, we have the possibility to really -- to give them what they are searching for.

Johan Edberg

You've been in the company, as you said, four months now. Have you changed anything substantially how you work with lettings or marketing in order to do what you want to do, I mean decrease -- sorry, decrease the vacancies?

Or is it just more like working on as normal or...

Bent Oustad

The thoughts are getting more and more grown in me and I try to communicate some of it. It takes a little bit more time.

We also have new Board members in place in the company. But I think we are getting forward and definitely, it's focus within Fabege.

I think you can ask anyone employed in Fabege, what's job #1 right now, and that's leasing, that's to reduce the vacancy.

And to reduce the vacancy, meaning the property caretakers have to be a little bit more on the front foot. When they get up in the morning, has to look nice in front of the buildings, has to be -- everything is working on the ground floor, has to work in the building.

We have to listen to our tenants. We have done that before as well.

But we're always trying to make a little bit new stuff and maybe we'll see some other changes going forward.

Johan Edberg

Okay. Interesting.

It was very good to see -- dig into report now. I think that we should focus on, it was very nice to see the occupancy rate being flat from Q4, standing at that vacancy at 14%.

Of course, you want that number to be smaller, but at least it's not getting worse. The net letting, positive second quarter in a row now, SEK 24 million in Q1, starting to make a new trend.

Is it a new trend that we see for net letting?

Bent Oustad

I hope so. And what I also see all the more or less bread and butter actions we're taking within leasing these days.

I think if you have waited for 2 or 3 years to see what happens, now we take the decisions and we move on. And probably you see that in all kind of countries.

Even if there is something happening in the Middle East, the daily life here in Sweden and especially in Stockholm is still moving on. And something is happening in the world and Sweden -- the tech industry in Sweden is definitely on that train.

So you see someone are quite optimistic doing expansions and some other have to adjust to a new reality. It's a mix.

Johan Edberg

I think what's leading up to the positive numbers for net letting is more lettings and a smaller amount of terminations. If you look at the lettings, what's the composition there?

Is there anyone -- anything that sticks out as a big new lease? Or is it more like broad-based?

Bent Oustad

Very broad-based. I tried to show that on one of the slides as well.

You have -- but you have some tenants within the municipality or within Stockholm or Solna. There are always large tenants in our portfolio.

But you also saw some venture funds focusing on security interest, what you -- tech securities. They're also in an industry that's growing these days.

Johan Edberg

You mentioned Max Mathiessen and the lease is expiring in the beginning of '27, and you expect the termination to be -- to reach during Q2 this year. I mean, you also have a big property and big premises very close to Max Mathiessen, Carnegie for example.

What's your -- you made me interested when you said it might be positive that actually leaving, though he is a good tenant. Can you please try to say something more because that sounds interesting, what you mean?

Bent Oustad

Max Mathiessen is now in the same building as Carnegie. And everyone knows that Carnegie, if it's a merger, they have been bought by DNB.

And maybe they want to grow in their existing premises as well. I think they have high ambitions for their business going forward.

So that could be an opportunity.

And of course, the location of this building, it's on the map for a lot of potential tenants. And if you want to lease 15,000 square meter in Stockholm CBD, you don't have a lot of options.

So we see that from different requests we have from potential tenants.

Johan Edberg

So what is the potential to actually match the termination with the new lease in the same quarter, is it possible?

Bent Oustad

It's possible? Definitely possible, but we also take another quarter, and we are booking the terminations when we receive a formal termination and we book the new lease when it's signed.

And of course, as I said, here in Sweden, the tenants have some rights. If they don't want to leave the premises, they can stay there for a longer time.

So it's difficult to sign before you have the termination in hand.

Johan Edberg

It is, but since you kind of alluded to the potential that it might be a positive with Max Mathiessen leaving. I mean, looking at the market rent at this time, looking at what Max Mathiessen is paying and also the standard or what you might be able or forced to do with the premises in order to rent them up again.

I guess what you said that it could be a positive, I guess, the net effect on those items is probably something that could be more value enhancing for the premises than you see today?

Bent Oustad

Definitely, probably as you are as well, but Carnegie are a good negotiator. So I don't feel it's over-rented this building at all.

So we have high ambitions there on this location.

Johan Edberg

Values came down a little bit in Q1, not very much, I think it was like SEK 250 million or something. You're pointing at higher or the high vacancy in a few properties.

And you also say that a big part of the vacant spaces are in these 3 properties in Solna Business Park and also the premises for ICA and Telia. Are those the ones that actually lead to lower property values in Q1?

So it's Solna Business Park primarily or is it something else?

Åsa Bergström

It's Solna primarily.

Bent Oustad

It's Solna primarily, I would say, not pointed out, especially on the Solna Business Park.

Johan Edberg

If you exclude those properties, the 3 in Solna Business Park and also take ICA and Telia into account as premises, what is the underlying vacancy rate or occupancy rates, if you like, excluding those 3 properties primarily?

Åsa Bergström

You mean the occupancy rate in each different market?

Johan Edberg

In the company?

Åsa Bergström

In the company? I don't know that number in my head.

But of course, there's an improvement if you exclude those properties.

Bent Oustad

But also, we have the projects now ongoing with Wenner-Gren Center. We have vacancies there, but that's not in the property of that portfolio.

But you have the two just look into their portfolio like Ackordet 1 and Pasen 1. There are signed leases in this year already.

And as I said, Atea is moving in first of April, so maybe it should be -- have been adjusted from the Q1 figures, but it happens in Q2, so it's in Q2.

Johan Edberg

And also impressive to see the surplus ratio at 72%, the best Q1 ever. And I think there are many of your peers say Q1 was a pretty tough quarter in terms of weather and snow.

I guess it would have been even higher if we had like a normal Q1?

Åsa Bergström

Yes. I mean we have worked a lot on the energy side, for example.

And I think all the efforts that we have put in, in previous years also pay out now with the energy consumption. So actually, we didn't spend more energy in total, but prices were coming up.

So that's the difference from that. We have also managed to get some property tax back, which had a positive impact.

And then a little bit less maintenance costs. We are very thoroughly looking over when to do things in the properties and not to spend when we don't have to spend.

Johan Edberg

And the reversal tax for example. Is that a one-off that has a positive impact in Q1 now?

Åsa Bergström

It has a positive impact in Q1, but it's a small number.

Johan Edberg

I just read, and I guess it's common information. It seems like there are many companies out seeking for new premises in Stockholm right now.

I saw an article summarizing 70,000 square meters for 8 companies with and without names searching for something primarily in the city or CBD, but also the potential outside. Would you say it's more activity now than normal?

Do you feel those companies -- do you speak to those companies?

Bent Oustad

Yes. But now we are referring to those that are officially out searching for premises.

Also, a lot of companies not being that much out in the press. So for us, it's -- our mission is to be out there, talk to different companies, talk with the management team, try to put in place a plan for when your lease expires in 3 years.

We can match an exit from a potential tenant in our premises. So what I really feel in the market now is a lot out there.

There's a lot of potential tenants in the range of 500 to 3,000 square meters. And you have some much, much bigger ones as well in the 10,000 to 50,000, 60,000 square meters.

So there are movements ongoing in the market. And I think if you have been quiet for 2 or 3 or maybe 5 years more than you had anticipated to be, you really do these things these days.

So I'm optimistic, but still we have to -- we have to sign the leases. And I think also, when we go back to your first question, if you sign the leases and we rent out more, we also have a better share price.

I can wish for a better share price, but we have to do our work first.

Johan Edberg

Before I let the web conference in, I will do that very soon. Also, just a question on the financing side.

You're taking out -- has been very short on interest rate maturity. Are you comfortable with that number?

It's actually declined even further in Q1 to 1.3 if you exclude the swaps.

Åsa Bergström

Yes, it is. We are comfortable.

But of course, we are following the market to take the opportunity when we find that the timing and the pricing is correct for us. So I think looking forward, you will probably see a little bit more hedging than we have right now.

But I'm not worried.

Johan Edberg

And Q1 wasn't the right timing for doing more hedging...

Åsa Bergström

We should have been acting in the beginning of Q1.

Johan Edberg

You said in the Q4 call, your best guess on '26 was pretty flat in paid interest rates, and that was a net of higher market rates, but also compressed margins and bond expense. Given what we see now, market rates are up.

Obviously, you're doing pretty well in the bond market. Banks are pretty stable, as I understand it.

What's your best guess now, standing 3 months later?

Åsa Bergström

When I said this, it was in the Q4 presentation and when STIBOR was expected actually to get lower than it was at the time. And many of the banks were expecting rate cuts from the Riksbank.

It's been very, very volatile during the Q1. There have been banks expecting rate hikes from the Riksbank.

Now it seems more stable again. Everything depends on what Trump is saying from one day to another.

But to summarize, I think we have negative impact from maturing swaps. We already saw that in Q1 to some extent.

We have now a little bit of negative impact from rising STIBOR. But on the other hand, we have a positive impact from reduced margins in refinancing.

So I think it's fair to say stable, maybe up a little bit. Last year, I was talking about below 3%.

I still think that we can hold average interest rate well below 3%, but maybe a little bit up from now, depending on how STIBOR is developing.

Johan Edberg

But you're not stressed up and you won't buy, I mean, going up from 1.2% to something much higher just because you're being stressed. You will be able to follow the interest rate development and do smart decisions.

Åsa Bergström

Yes, yes.

Johan Edberg

I think this is a good time to actually see if you have any questions from the web.

Operator

The next question comes from Jan Ihrfelt from Kepler Cheuvreux. Please go ahead.

Jan Ihrfelt

A clarity question. On the first one, if you could quantify the winter costs this quarter and compare it to the first quarter of 2025.

How much more expensive was this quarter compared to the first quarter of 2025?

Åsa Bergström

A couple of millions.

Jan Ihrfelt

Okay. Second question, do you have any guidance for investments total for the group?

What do you expect kind of level for the investment for this year?

Åsa Bergström

For this year, we are expecting a little bit less than SEK 2 billion. So I think we are a little bit below that in the first quarter.

So we will see what happens. And increasing investments will depend on decisions -- Board decisions for new projects.

Jan Ihrfelt

And final question, we're now 3 weeks into the second quarter. And if you look at the leasing market, has anything changed if you compare April to, let's say, March?

Bent Oustad

I think like the comments we had here as well, there's a lot of tenants out there searching for potential new premises. But it's not a big difference from March.

I will say it was a trend. The trend was also ongoing in March.

So I feel it's a positive trend.

Operator

The next question comes from Lars Norrby from SEB. Please go ahead.

Lars Norrby

First a question on buybacks. I mean you repurchased shares after a decision at the AGM and you have a fresh 10% mandate.

Looking at your LTV gives you some room up to your self-imposed limit, but your debt ratio does not. So to do a material size of buyback, would you have to sell properties in order to get some volume in doing it?

Bent Oustad

Yes. Now you went through the toolbox and the toolbox is of course there and should definitely be there after the AGM as well.

That's why it's -- we have the authority to do that. Of course, we are now approaching discussions in the Board and the discussion would be there.

I think on the broader view, buybacks are perfect if you have a lot of excess capital as well. We have a lot of -- or 40% of our portfolio is in the city with a lower yield and lower cash flow.

So I think the dividend policy goes first, and if we have sold some properties or done other things that have a lot of excess capital, it's definitely on the agenda. But I should also ask a question to the new Chair in the Board and new Board members just been in place in the company as well.

Lars Norrby

Thank you. One more question.

Very much a different topic, but residentials gave a boost to your numbers of some SEK 40 million in the first quarter. This is, of course, hard to predict, I guess, both for you and for us as analysts.

But if you're looking at full year '26, based on the situation right now, what is a reasonable assumption for the full year?

Bent Oustad

I think I commented on that last quarter as well. I said around 200 units a year.

It could be a good estimate. We'll stick to the same.

The numbers of sold units, it's quite stable. One week during March was a little bit quiet, but then it's back again.

And I think this week alone, it's 3 or 4 units. So I don't know, but overall, to sell a unit, it should be around 100 a year, and then we have some rental apartments on top of that and have eldercare facilities on top of that as well.

So around 200 a year is a good estimate.

Operator

The next question comes from Nadir Rahman from UBS. Please go ahead.

Nadir Rahman

Just to drill into the point on the revaluation this period and the focus on the Solna properties. Could you give a little bit more color on the 3 properties that took the revaluation hit?

And what is the prospect going forward given that we did see a one-off in Q3 last year in Solna and it seems to have happened again. So could you give a bit of color there, please?

Åsa Bergström

It's properties where we are expecting some higher vacancies or where we already see some higher vacancies coming. We will not communicate the names of specific properties because we're also in renegotiations and discussions with potential tenants for those vacancies.

So I think we have decided to take a hit now. And hopefully, we will see a reversal of that in the coming quarters.

So I'm quite optimistic that we will not continue to see write-downs in the portfolio, but on the contrary, more potential for increasing values going forward.

Nadir Rahman

That's very clear. And just to confirm, so you're saying that your vacancy assumptions for those properties have declined versus where it was at full year 3 months ago?

Bent Oustad

Maybe also some lagging from valuators into those figures. But there are some discussions ongoing.

So I think, listen one time more to what Asa just said, and it was very good Asa when you know everything happening. Yes.

Operator

The next question comes from Tobias Kaj from Nordea. Please go ahead.

Tobias Kaj

First is regarding your financial expenses. I mean, the average interest rate saw a quite small increase and the net debt also saw a small increase, but it was a quite significant increase in financial expenses.

Can you give some more color on that, please?

Åsa Bergström

Financial expenses were somewhat up, yes, mainly depending on a little bit higher STIBOR during the quarter or at least towards the end of the quarter -- second half of the quarter, you can say, but also that there are less interest rate cuts activated on projects since the project portfolio has been reduced. And not all, I mean, this should be met by increased income, but we still have some tenants moving in and starting to produce income.

So I think you will not see the same in the second quarter.

Tobias Kaj

Okay. And it seems like the volume of closable swaps is unchanged despite quite a big increase in market rates, is that correct?

Or did you enter new closable swaps in the quarter?

Åsa Bergström

We have not entered any new swaps in the quarter.

Tobias Kaj

Okay. Also, you report rental discounts and they seem to increase to SEK 269 million.

Are there some specific contracts that explain the increase?

Bent Oustad

I don't have the details on that. I'll come back to that, Tobias.

Åsa Bergström

It's related to some specific contracts, yes. And also to tenants moving in, that have a discount in the beginning of the contract.

Operator

The next question comes from John Vuong from Van Lanschot Kempen. Please go ahead.

John Vuong

You mentioned that you've been rethinking your maintenance costs. Could you provide a bit more color on your thoughts there?

Do I understand it correctly that you were overspending on maintenance previously? Or have you changed your approach because you expect more properties to move into the renovation pipeline, for example?

Åsa Bergström

We have done a lot of work for the planning of maintenance costs to make sure that we are acting with the right timing, doing things when we need to do them and when we're doing other things in specific properties to make the best of it. So I think we are a little bit more cautious these days than we have maybe been in the past.

But we are doing what is actually needed in order to keep the properties in good shape and to be relevant for renting out to tenants.

John Vuong

Okay. That's clear.

And I think you mentioned that renegotiated rents are still above rent levels in your external valuation. Just trying to understand here, what does your external valuation imply in terms of rent reversion?

And are these assumptions too conservative? Or is there a change in the underlying trend in market rents, you'd say?

Bent Oustad

I think that was a comment on the renegotiations done in Q1 here, but that was 1% down. And still, the rent level in those SEK 35 million that we renegotiated is slightly above the rent in the external valuation, the estimated rent in the external valuation.

So I said, okay, the revision wasn't that much, but it was negative, but it's still at the level or above -- slightly above what's in the external valuation. That was a comment on that.

So I don't feel it dramatically that we have the renegotiation of minus 1.1% and minus 0.4% for the whole portfolio. But it was just a comment -- some flavor to that for you.

John Vuong

So just to quantify, did the external valuation imply a minus 2.5%, minus 5%? Or is it just a small difference?

Bent Oustad

No, it's a small difference, but it's around 1.5% to 2% difference.

Operator

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Johan Edberg

Thank you. And I can't see here on my screen that we have any written questions either.

And time flies, just a couple of minutes left. I think I'm doing one more question.

I'm referring a bit to one of the questions from the web here. I mean we're seeing Castellum obviously selling something and doing buybacks.

You're opening up a little bit, although it's maybe not fully your question, but that selling something could lead to buybacks. Is it possible, for example, to sell building rights, because that is not yielding anything at this point?

If you sell something that's not yielding, creating an opportunity to actually invest in your own share that's trading at a huge discount, would that be possible?

Bent Oustad

Some of our building rights are possible to sell. But I don't think you can take the 1 million square meter that was on one of the slides here and sell them just flat out today.

But legally binding building rights, possible to sell. But we also have quite high ambitions.

We have a building right in the Sveaplan block in the middle there in our core area. It's quite healthy for us to have control of that spot, and that could also lead to better leasing levels in the neighboring buildings.

So we are building this as a company, and it's not just to sell out one building right because we think there are excess values in that building right for us.

And at what time -- what is the right timing of selling? Normally, in a hot market, it's good to sell and we should rather buy when it's a more difficult market.

Of course, with our share price today, I don't think you will see us buy a lot of properties right now. But if it's the right property for us, we will act.

Johan Edberg

And I guess my last question, I have many questions left, but I think I have time for one maybe. We saw a transaction in Q1.

It was the Swedish Fortification Agency buying many square meters in Flemingsberg. It's pretty close to your areas or where you have properties.

Have you seen already some inquiries from those tenants because they need to find something new in the area?

Bent Oustad

Yes, I think the whole city is approaching those tenants. And I also saw the seller of the property bought a new building in Haga Norra, so it's good to see that they like our local markets.

But I think for all those tenants, everyone should end up in Arenastaden. It's an easy view, but they have an agreement whether they are using their time and looking at different opportunities and they are very much welcome to our properties.

And of course, we are also in contact with a lot of them.

Johan Edberg

I'm not very surprised you're saying that. I think time is up.

I promise not to use more than 60 minutes. So thank you, Bent and Asa, and thank you to those who listened and asked questions.

Thank you. Or maybe you want to say something.

Sorry.

Bent Oustad

Well, thank you for taking your time. We will be back here next quarter and hopefully, we see some of you also in our Capital Market Day.

Thank you.

Operator

Thank you. This concludes today's conference call.

Thank you for your participation. You may now disconnect.