Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dios Fastigheter AB (LTS:0GTM, Financial) reported a strong performance with income remaining flat compared to the same quarter last year, despite selling properties worth 1.6 billion Swedish Kronas.
- The company achieved a positive net letting of 8 million Swedish Kronas for the quarter and 20 million Swedish Kronas for the period, marking 21 consecutive quarters of positive net letting.
- Dios Fastigheter AB has been active in the capital market, issuing new bonds and buying back short-dated bonds, which has helped in reducing financing margins.
- The company has made strategic acquisitions, including six centrally located office properties, which are expected to enhance their portfolio and offer potential for value-creating investments.
- Dios Fastigheter AB has a strong cash flow and a competitive advantage in its market, with a significant demand for high-quality office spaces in prime locations.
Negative Points
- The economic occupancy rate decreased slightly to 91% from 92% last year, partly due to the sale of fully occupied residential properties.
- The company faces challenges in the short term, including some lease terminations and higher costs for electricity and heating expected in the next year.
- Dios Fastigheter AB's financial costs increased due to the expiration of a derivative with a negative swap rate and early redemption of bonds, impacting the quarter's financial costs by 5 million Swedish Kronas.
- The company's loan-to-value (LTV) ratio increased to 52.6% with recent acquisitions, which may pose a short-term leverage challenge.
- Despite a positive outlook, the company acknowledges potential challenges in 2025, including economic uncertainties and geopolitical factors affecting the broader market.
Q & A Highlights
Q: Hi, good morning. Thanks for the presentation and thank you for taking my questions. First one on Stockholm and Gothenburg versus the northern cities. So if you look at Stockholm and Gothenburg, they're quite weak in terms of operations and also perhaps under pressure and then the performances show contrast that quite extremely. So where do you think lies the difference?
A: Hello Nancy, please. Thank you for your question. That's a very good one. Since the overall market that impacts this business is approximately the same concerning banking and so forth. We think that our market is not that affected. When we talk about working from home and so forth, we see that in our cities, we don't have the commuting problem, for instance. And we see that people office, people, they work from the office, and they want to work from the office. So, we don't see that problem in our city, so to speak. Of course, we have a two but not, not in the way that we see in the bigger cities. That's, that's one thing and, and another thing is of course, that we often in our cities, we have one city center. And its people that work in office wants to have the service around their working place in office. And one thing you have to mention is that the unemployment in our cities in our regions are much lower, much, much lower, the lowest in Sweden for many years. So, of course, people, people are at work, of course, and we also see that the growth in, in the businesses, the industrial businesses in the, in the, in the green transition and so forth are very strong, there are more cities in Sweden that has a strong impact and a strong growth from, from the green transition, but we see it a lot. So, I think that is the answers to your question.
Q: Okay. Thank you very much. And then I this quarter compared to the previous quarters here, operating metrics even improved. So the like for like rental growth is increasing but also the like for like NOI growth. Is it, do you think it's going to get better from here or how do you see it?
A: A good question and when we look into next year, we have some challenges also now it is regarding some termination of leases that will affect us in the short term. If we look in the longer term, 2 to 3 years, we see the market is very strong, but next year we have some challenges and we also have slightly higher cost for electricity and heating that we know will come in next year. We have a positive view on the coming years, but some challenges for 2025.
Q: Okay. Thank you very much. And then I think we'll see each other soon. That's it from my side. Thank you.
A: Thank you.
Operator: Thank you. As a reminder. If you'd like to ask any further questions, please press star followed by one on your telephone keypad now.
Knut Rost - Dios Fastigheter AB - CEO: Okay. Thank you. Okay.
Operator: I can confirm we currently have no further questions, so I'd like to hand it back to Johan and the management team for some final remarks.
Knut Rost - Dios Fastigheter AB - CEO: Thank you very much. I was too quick there. And thank you all. This is my last call. Next time you have a call with us is together with you are and David Colson, who is my successor. And I think that will be really good. I thank you all for this time, nearly '11 years, 43 interim reports. And I hope you follow us in the future as well. So, with this, I will thank you all for this time and I will, I wish you a great weekend when it comes. So, Bye everyone.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
