Good morning, and welcome to Fabege's interim report to second quarter for 2026. We have a well-known agenda, and we just kick off.

We own and develop and also manage our own properties, and we have the focus on creating attractive working places and a good living in superb locations in Stockholm. We have a modern portfolio occupied by high-quality tenants.

We get a little bit back to that later on. The rental value is 4.4 billion, and it's divided here into different segments.

The square meter, 1.3 million square meters, also divided into the different segments. The property value is 79 billion at the end of the quarter, divided with 37% in inner city, close to 50% in Solna, 10% in Hammarby Sjöstad, and 3% in Flemingsberg.

Also repeat from the last quarter, it's important for us that our biggest strength is definitely our customers. We have a high consumer satisfaction index highlighted by strong track record in serving our customer needs.

And 95% of our tenants say they would recommend Fabege as a landlord, and we are very, very proud of that. We have long-term lease contracts as a foundation in the business.

We have our own employees across the entire value chain, and we have clusters giving us advantages like economies of scale and creating engaging meeting places, meaning we take the full responsibility for the ground floor, for the offices, for the living, etc. We also invest a little bit in the community for safety, etc.

We have an excellent capability when it comes to deliver large and complex projects from start to finish. We have done it before, and we will do it going forward.

Also strong capabilities and best-in-class practice within ESG initiatives and environmental results when it comes to CO2 pollutions, etc. If we just have a short summary of the second quarter stand-alone, the rental income grew by 5.9%.

The surplus ratio in Q2 was 74%, and we had a profit from residential development of 39 million, meaning a margin of 21%, and we are very satisfied with that. The net letting was -86 million in the quarter.

We have commented on that also during Q1. It's two large terminations when it comes to Max Matthiessen and Telenor represent this figure.

Value changes, more or less flattish, +0.15%, +120 million for the quarter. We have improved our occupancy rate from 86 to 87%, and we have some new large leases in Solna Business Park in the quarter.

Get a little bit back to that also. We finalized the acquisition of Gadden 1 in Sveaplan from the municipality of Stockholm, and we also press released this morning that we have signed a construction contract for block 4 in Haga Norra, at 132 residential units.

With that, I hand over to you, Åsa.

Thank you, Bent. The rental income came in at just under 1.8 billion.

Looking into rental development in identical portfolio, it was -17 million or -1.1%, mainly due to terminations that were previously announced in the negative net lettings from previous years. On the other hand, we had a net of +100 million from finalized projects that have kicked in during the first 6 months of this year.

The properties' expenses were very much in line with last year, and we saw an operating income from property management of just over 1.3 billion, with a surplus ratio of 73%, 1% up from last year. The residential part of the business was also contributing with 79 million, as you can see here.

We have finalized approximately 85, 86 apartments during the period and recognized the income from those finalized projects. If we look at the net interest expense, it increased a little bit in comparison with last year.

The Stibor has gone up, and it has been to some extent not so much, because we have seen also less margins, and we have had some interest rates that have matured during the period, but all in all, up from 2.82 to 2.89 during the first half-year. The share in profits from associated companies of -42 million relates to contributions to Arenabolaget.

Then we saw, in total, unrealized changes in the values of -139, but as Bent just mentioned, it turned positive during the second quarter. We saw a plus of 120 million.

The tax is a little bit also different from normal. We have sold one property, which contributed to positive tax of 24 million.

We also had a finalization of the outcome in the court that gave us another 550 in carryforward losses that we have now taken up to valuation, and that meant a little bit more than 100 million plus in the tax. All in all, a profit of 521 million during the first 6 months.

During the quarter, we have externally valued 43% of the portfolio, and we saw that the yield in the valuations have come down two bips, from 4.5 59 to 4.57. Thus, we also saw, as I mentioned, the value change of 120 million plus in the second quarter.

We had an opening fair value of 78.5 million. We have disposed Paradiset 31, construction for building rights to Besqab.

We have bought Gadden 1. The 211 also includes the tax paid.

We have invested almost 900 million. We had the value changes of 139 million minus.

We have the reclassifications when we have reclassified Haga Norra block 4 from property management portfolio into development properties that will be carried out by Birger Bostad. All in all, the positive value changes referred to city properties, as you can see here, +157 during the first 6 months, while we also saw positive from the residential part of the portfolio.

The key ratios came in 119 Swedish crowns per share compared to the same figure last year and EPRA NRV of 145 crowns per share, positive total return on the properties 1.5%, and surplus ratio, as I mentioned, increased, and equity-asset ratio and loan-to-value ratio in comparison with last year and also year-end. The debt ratio improved from previous over 14 to less than 13, which also in line with our internal target for that.

The interest coverage ratio ended up at 2.6 for the full period and 2.7 if we look at the second quarter alone. Financing remains very strong for us.

We have very good access to financing both from the banks and the capital market. The margins on the capital market have been a little bit volatile during the period, but ended up in very good levels towards the end of May and the beginning of June.

We have refinanced everything that we are supposed to refinance during 2026 when it comes to bank loans. We are intending to refinance the 2 billion remaining on the capital market with new bond issues during the autumn.

The last bond issue was done now in June, where we took in 350 million in a 5-year bond at a margin of 110 bips, which I think is very good level. We have also increased the interest fixing by entering into new interest rate swaps of 1.4 billion, 5-year terminations, and at levels between 2.5 and 2.6%.

We now have an average interest cost of 2.88% compared to 2.82 at the year-end, and approximately a little bit less than 50% of the portfolio is fixed, and the average interest fixation is 1.4 years, but if we also take into account the callable swaps, it increases to 2.1 years. All in all, I feel confident with the financial situation.

Over to you, Bent.

Thank you. If we look at the occupancy rate in the management portfolio at the end of Q2, it's up to 84 87%, up from 86%.

That's also includes remaining vacancies in the previous project that has entered into the management portfolio. In addition, we have the improvement portfolio, close to 8 to 9 9 billion.

It's 127,000 square meters, of which 71,000 square meters is let out to different customers. The yield on that portfolio is it covers its own debt costs, the interest cost for the debt, 100% financed.

That's how it works. The net letting for the first half, -62 million; new lettings of 132 million, and terminations of 193.

The two large ones there, it accounts for more than 80 million, as I mentioned in the beginning. Telenor is moving out in third quarter 2028.

I think it's September 28. It's they have given notice in very, very good advance.

We have the renegotiations. Totally 230 million was renegotiated with -1.7%; 109 million is renegotiated, and 121 is prolonged on existing terms.

I think that's also what we see in the portfolio. A lot of the renegotiations are more or less companies now maybe sold off a subsidiary, sold off a division, etc., and in that sense also doing putting on a new lease.

And 156 million of the maturities in 26 and onwards, I think it's 26 and 27, has already been renegotiated for the total portfolio. If we just look at Q2 separately, it was a healthy mix among all market areas that we have and all segments, meaning from hotels, from restaurants to offices.

Six contracts above 1,000 square meters during Q1 has been renegotiated. All the new leases, also a mix of all kind of categories, from hotels and everything.

One contract is about SEK10 million in yearly rent. We have divided here the renegotiations by area and also the new leases by areas.

As you see, it's a healthy mix all over for us. Just want to mention, since I also had that in the beginning, that a lot has happened in Solna Business Park this quarter, and it's taken more than one year for the puzzle, but the Swedish National Agency and the Swedish Work Environment Authorities have reduced some of their space just to have space for the Swedish Transport Agency.

Everything finalized, the Swedish Work Environment Authority leases approximately 4,000 square meters on a 6-year lease, and the Swedish Transport Agency leases approximately 3,000 square meters, also on a 6-year lease. Really, the governmental tenant has cooperated together and leased spaces in Solna Business Park.

With that finalized, our property Fräsaren 12 is more or less fully let. A nice mix of different tenants being active in the market.

We also show this every quarter. This is just signed leases today with no further activities in the future.

These are the development on the leases we have signed. I mentioned we have a healthy and nice customers.

They are definitely one of our key strength. We have approximately 700 customers.

The average lease contract is 5.5 years, and the top 10 largest customers represent 29% of the contracted rent. We have them on the right side there, all of them.

One new is on the list is Tieto, moved into a 10th place. They just signed a new 7-year lease contract with us.

The top 10 largest customers represent 29%, and over actually the real number is 38 largest customers is 50% of the contracted rent. The duration on the 40 largest is 7.4 years, it's very, very stable revenue stream.

We've added one new slide this quarter, more or less Fabege's view on the market trends. If we look at the rental market first, we see strong and continued activity in the CBD market, especially for larger leases.

The alternatives is not that many. We see rent levels slightly started to increase in areas with less alternatives for new production and low vacancies.

We see stable rents level in Greater Stockholm. As I mentioned, a handful of tenants reduce the square meter in existed leases, more or less, if you read in the press, sold a subsidiary, sold a division, doing some M&A, there are always some renegotiations.

We also see startups and AI companies coming to the leasing market, more or less in the city so far. For the construction markets, we see free capacity among almost all construction companies, good demand to compete for potential building contracts, both in office and in residentials.

Far, we mentioned this morning that we have signed a new construction contract for residentials in Haga Norra, and we are happy with that. Far, I will say, we see limited or close to no price implications from the disruptive world outside Sweden.

When it comes to transaction market, it is active, but it's not at the same level as in more or less old days. Disposals made public during the quarter include both portfolios and individual assets.

Buyers, I will say, is dominated by pension funds and insurance companies. Then I'm sure some of the listed companies and private investors are not happy with me saying that, but it's dominated by pension funds, and investors are being pension funds.

All kind of companies are active in the market. And Åsa commented on the financing market.

We see healthy activity and competition among investors, banks, everything in all kind of financing markets. It's been very active financing market when we see the Nordic with all the data centers, massive financing and also in all kind of segments.

If we look at our ongoing projects, Farao Cairo, investment of 630 million. We are doing the ground and foundation work and construction work up to the ground floor level.

The decision for this investment was more or less taken 15 years ago when we went into the Arenastaden. We have to do this work now because Solna municipality are trying to finalize their work with the roads and everything and just be prepared for the new opening of the metro station at the entrance of this building.

The Wenner-Gren Center, investment of 610 million, rental value approximately 58 million, is pre-let 30%, marketing to start more active in Q3 '26. We have started shortly, and we see nice interest in this building coming to the market in Q2 '27.

Also Mimer 5 is an investment of 217 million, rental value close to 50 million, is 100% let on a long, long lease to AcadeMedia, and it will come to the will be finalized in August next year, for the next school year it will be open. Here you also see some of the growth in the top line the coming year.

Completed and ongoing project in Birger Bostad, our residential builder: Haga Norra block 5 is right now under construction and is progressing according to plan, total of 288 units. We have completed 193 units, and during second half of 2026, the last 95 units will be completed.

Far, of the total 288 units, 20% are unsold, meaning 59 units to be sold rest of the year. It feels very comfortable from our side.

With that, we also move on to the next phase, preparations are underway, and as we mentioned in the press release this morning, it will be 132 units in block 4, estimated investment approximately 360 million, and move-in is planned to start in first half of 2028. If we are lucky, it will also be the first half of the first half-year, meaning first quarter, I will say.

After that, block 3, we have 260 rental apartments and elderly care facility and a preschool there, approximately 20,000 gross leasable areas, with an investment close to 860 million. I just mentioned and show it for you.

Then we will, with those two last projects, we will finalize the quarter. Block 7 and block 6 are finalized.

Block 5 to be finalized this year and sold out hopefully this year. Ackordet 1, the offices are completed and part of the management portfolio, and we have signed on the construction contract for block 4 this morning.

Then the last one, block 3, with both the elderly care facility and the preschool, will come in the last phase, and then we will finalize Haga Norra. Project Gadden, it's in Sveaplan, Stockholm inner city.

We bought it in June 2026, building rights approximately 8,800 gross square meters. Purchase price, 202 million plus tax to buy it, 211 million, Åsa.

We have a planned move-in during 2029, late 2029, maybe early 2030, in that range. This is definitely one of Fabege's core areas, also it's the entrance to Stockholm inner city.

We will have approximately 90,000 square meters here, working places including coworking, ground floor activities, food and beverage, high-class conference center, etc., etc. Will be everything in this area.

We have a lot of questions from you. What happened with the large Ericsson lease in this area?

Just try to put it on a map. The leases that Ericsson made was number 1 to number 6 as building to be constructed.

Maybe number 2 is already constructed or underway, but rest is to be constructed. Over Fabege's 90,000 square meters are number 7 to number 12 in the same area.

We see good interest in this area and very happy that Ericsson showed the way and took the decision to move the businesses into to Stockholm. It comes to building rights.

Not much has happened since last quarter. Commercial building rights, approximately 500,000 square meters, with 65% legally binding and a book value of SEK8,200 per square meter.

The residential building rights has decreased slightly since last quarter because we sold some building rights in Kungsholmen. It's 435,000 square meters left, and approximately 40% is legally binding.

Book value is SEK7,800 per square meter for the building rights. Then other projects, opportunities in the near term.

We have talked about it also several quarters now. Tegelterassen in Kungsholmen, 36,000 leasable square meters.

Partly demolition started in January, and leasing activity is definitely ongoing in this building, and our ambitions are quite high. It's the same in Haga Norra.

We just went through that. Already produced 611 units, 95 units in production, and the last two quarters is another 390 units, including elderly home and a preschool facility.

We're looking forward to complete these projects, and Tegelterassen is booked in improvement properties in our balance sheet, just so you are aware. If we try to summarize, we have to conclude different leasing initiatives that's ongoing and decrease vacancy.

It's always top priority. As I said in Solna Business Park, it takes time, took us 12 months.

In the old days, it would have taken 2 months, but that's how it is right now. We want to continue to be the preferred partner for our customers.

We have to be available, accessible, and solution-orientated, and I think we are and have a very good feedback on that, and that makes me proud for whole Fabege. We have to secure value creation in ongoing projects.

I hope you see that we are working with the balance sheet, working with the projects that's ongoing, and we have to continue to do that. Also, analyze the value creation in our land bank, both commercial and residential, and continue to be active in the financing markets.

Had some questions about that last quarter, but that's more or less of course, I have to say, we are always that, and Åsa has already done different things in Q3 already. With that, let's conclude our presentation.

I hand it over to you, Fredrik.

Thank you, and thank you for having me. My name is Fredrik Stensved.

I'm an equity analyst with ABG. I will walk you through the Q&A of the day.

I'll ask a couple of questions myself, but also let the audience in through the web conference. If I may, before we sort of jump into the Q2 numbers and the Q2 results, you started 6, 7 months ago.

I think we're all aware that leasing, leasing, leasing, that's top priority, but if we think about portfolio composition and strategy and capital allocation, is there anything that you have sort of learned during these 6 months that is different from what you thought when you took the CEO position?

Luckily, I learn something every day, so that's good thing. I think we have done quite a lot as well.

We have looked through the balance sheet. We have sold off different smaller plots that's been part of balance sheet.

We have also signed some LOIs on different plots we have across Sweden when it comes to elderly care facilities, etc. You will see we do more of that.

Just try to clean up the balance sheet and just focus on the core assets for us. We have done some organizational changes when it comes to the market area.

We have said that Flemingsberg and Hammarby Sjöstad being one market area for us, that will come into effect in Q3. We are focusing on costs all the time, lucky to see also the surplus ratio going up to 74%.

You can be sure I think about that every day, I think we are on the right path. Still, of course, a lot of things to do, and it should be in a company like this.

When it comes to the capital allocation, we are a developer as well as a operator, and that's like I tried to say here in Arenastaden, the decision was taken to do some investments when we entered the area 15 years ago. More or less, we have to do what we need to do in our areas to comply with what we have promised to the municipality.

We are hunting for new tenants, and I think the pipeline looks promising, I will say, yeah.

If we talk about that, you added some slides during this presentation showing sort of the geographical split of the renegotiations and the new leases. My impression, and correct me if I'm wrong, but has been during the past couple of quarters that city has been working, Arenastaden has been working, but this graph shows a fairly broad picture.

Is that something new? Do you think sort of the rental market recovery is spreading?

It is recurring, but not in a dramatical way. Of course, when Ericsson say they will move 100,000 square meters into the Hagastaden area, of course, something happens.

It's not a lot of available premises there going forward. We see a better leasing market in that area immediately.

Of course, it's a little bit more difficult maybe for Kista, but they will move out, probably be moved out in '35 or something, I don't know. It's a lot of time.

I think that's also some reason why we took Flemingsberg and Hammarby Sjöstad into one market area, and it's close to the same size as Solna Business Park. As soon as you have competition within the company, it's perfect.

Then you see activity both areas, and shouldn't be in Arenastaden and look at city. They should try to fight for city looking at Arenastaden, yeah.

Speaking of Ericsson, you showed a picture of Hagastaden. I think it's pretty obvious that this is a positive for Hagastaden.

How do you think about Solna Business Park or Arenastaden for that quite dramatic change?

It's in the same neighborhood. It's not far away.

The leases in Hagastaden and Sveaplan, it's a totally different level than in Solna Business Park, I think also that's why you see all the municipalities, the governmental tenants, etc., moving to Solna Business Park. When it comes to Arenastaden, it's another story.

The largest lease last year ended in middle of Arenastaden, AFRY moving in there. You have all the activity, you have the Mall of Scandinavia, you have the arena, a lot of things ongoing and happening.

Right now we have a construction site in one end of the Arenastaden, and Skanska is building on the other one. Just have to finalize those, and I think it looks nice going forward.

One of your colleagues or peers, competitors, was out last week saying that there's maybe more so than in the past, a large amount of large tenants looking for quite significant space. We have seen in the media, 5 to 10 different companies maybe searching for 6 to 15,000 square meters each.

Are those looking at all of your areas or any specifics?

It's difficult to say they're looking at all of our areas all the time. As you saw the mix here, also quite nice mix between all the different market areas, but I follow that insight that if you say that 6 to 15,000 are a large tenants, a lot of activity ongoing in the market.

We are also part of the discussions,

yeah. All right, I will open up the telephone conference and also you have the opportunity to write questions, and I will try my best to read them.

Hi, guys. Thanks for taking the questions.

Just a couple of quick ones. When you talk about the investments on the ongoing properties, I think you highlight on slide 17, I assume the figures you quote are just marginal investment and don't include the existing value of the buildings.

If you could give us a color on what is the kind of total cost, that would be great on that. Then the second one, just around the like-for-like NOI and the renegotiated leases, obviously getting slightly worse quarter-on-quarter, when do you see that changing?

You talk to a slightly more positive market. Just wonder when do you see that feeding through into your operational performance in the business?

Thanks.

When it comes to the investments, that's the remaining CapEx that we showed on the slides here. I don't have the incoming balance right now, we can come back to that.

This quarter was slightly more negative on the renegotiations. I think it's one or two leases, a little bit special leases when it comes to that, I don't think you should think of that as something ongoing in the market.

I'm not sure about your question about the investment, but if you take the remaining investment and add it to the booked value or the market value, that's the value that is going to be recognized once the investments are finalized. We have the end-value valuation, which includes also hopefully some uplifts in valuation towards the end.

There will not be any negative valuations relating to ongoing projects.

Okay. I was just trying to get a sense for the return on the investment, cuz obviously the numbers on remaining CapEx look very high in terms of rents versus remaining CapEx, but just trying to get a sense of the total investment.

Then on the operational side, you mentioned it's not to be concerned about. I appreciate it's just one quarter, but occupancy is still relatively low, the market still remains weaker, despite the commentary that it's going to be better, I just wondered when do you see that actually feeding through into positive numbers?

We are not guiding on that, but what I tried to comment on is that this quarter the renegotiations were a little bit more negative than it has been the last quarters, and is one or two contracts, a little bit special contracts, just this time. That was my comment.

When it will turn to be positive, it's another question. As I commented on in the CEO letter as well, if the new leases and renegotiations are in the CBD, it will be more positive, and some other spaces can be more flattish.

Cool. Perfect.

Thank you.

All right, no more questions from the telephone. We have a couple of written questions.

You comment in the report on older and less sort of well-positioned properties attracting lower rents. What is the strategy for these properties?

Is it just a refurbishment that is needed, or is it more material redevelopment to sort of close the gap to prime assets?

It's both, actually. I think you saw also in the project you showed up here that we are doing some major refurbishment of some of the buildings, and the development in the lease when you do that is very nice.

We are looking at our portfolio and see what are the potentials. We are always looking at our properties and see should we divest something, or should we do something special with them.

That's also a question about returns we could receive. I think was a question here as well, but when it comes to resis, I think you should count for approximately 20% margin on those.

When it comes to new construction, we have a target of yield on cost around 6%. Sometimes we get much higher, and sometimes we get slightly below that, but that are the targets we are trying to achieve.

Then there's a follow-up on that question from the same person. Would you be able to sort of quantify the share of your assets that you think is to be considered as sort of older and less well-positioned, and any submarkets where they are particularly concentrated?

No, I think we do that every quarter, and that's what we call the improvement portfolio. It's approximately 9 billion in the balance sheet.

2 billion of that are the Wenner-Gren Center and the Mimer, as we just showed here. I think we have quite good control of that portfolio.

That's including the land bank we have, it's 9 9 billion. If some property should be in that portfolio, we put it there, and we see what to do.

That's clear. One just dropped in.

Given the improving demand, but also buildings being vacated, where do you see occupancy at year-end '27? Or year-end this year and going into 2027?

It's a lag on the on the on the occupancy rate. The last quarters previous quarters we had a positive net lease, so that means they are moving in after we do the lease.

We have negative net lease this quarter, but as I commented on, Telenor are moving out in September '28, it's it's more than 2 years ahead. I've also commented on Q1 that Max Matthiessen is moving out during '27.

We have high ambitions for that space, it should should going the direct or the right direction.

All right, very good. That's it for the written questions as well.

I think we are sort of running out of time, but maybe if I can just finalize with one one last one. Åsa, I think in the last conference call, in the Q1, or in conjunction with the Q1 report, you talked about Fabege taking a sort of hit to property values in Q1, but you sounded quite optimistic on leasing those in the upcoming quarters, and that would translate into positive property value changes.

Did we see any of that sort of materialize in this quarter, or is that potential still remaining for the second half?

I think most of that potential is still remaining for the coming quarters. The value uplift that we saw this quarter was mainly related to city properties and to lower yields.

If you manage to lease those, is that sort of the normal move-in a year from now, or can they

Normally somewhere between 9 months and upwards. It depends very much on what kind of premises and what company.

The latest one in Solna Business Park, they took over premises there. That happens quite fast, because they were nice and easy to just move right into.

As Åsa said, 6 to 12 months, that's more normal, I would say.

All right, then thanks for having me. Thanks for listening.

Any closing remarks?

No, just want to wish everyone good summer. Hope to see you in Båstad, and also you're not being in Båstad, probably see you in Miami in quarterfinals in World Championship next weekend.

Would be great. Have a nice summer.