• Income from Property Management Growth: 10% increase for the quarter.
• Like-for-Like Rental Growth: 0.7% supported by indexation and rent reversion.
• Economic Occupancy Rate: 90%, down from 92% last year.
• Operating Surplus: Up 5% to SEK427 million.
• Income from Property Management: Increased by 10% to SEK221 million.
• Net Letting: Positive in 23 of the last 25 quarters, including SEK1 million in the last quarter.
• Market Value of Properties: SEK31.6 billion.
• Investment in Projects: SEK202 million during the quarter.
• Average Yield: 6.13%, one basis point lower than last quarter.
• Interest Rate: 4.2%, 10 basis points lower compared to last quarter.
• Acquisition in UMO: SEK1.6 billion, with completion expected in June.
• Vacancy Rate: Expected to improve in the second half of 2025.
• Tenant Concentration Risk: 10 largest tenants account for 20% of total rental income.
• Loan Maturities: SEK2.3 billion in the next 12 months, excluding commercial paper.
• Unused Credit Facilities: SEK2 billion.
• Loan to Value Ratio: 41%.
• Yield on Cost for Investments: 9%.

• Warning! GuruFocus has detected 7 Warning Signs with FRA:D1F.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Dios Fastigheter AB (FRA:D1F) reported a 10% growth in income from property management for the first quarter.
• The company has a strong cash flow with a secured loan to value ratio of 41% and SEK2 billion in unused credit facilities.
• Net letting has been positive in 23 of the last 25 quarters, indicating strong demand for their properties.
• The acquisition of properties in UMO for SEK1.6 billion aligns with their growth strategy and is expected to increase management result per share by approximately 4%.
• The company has a well-diversified portfolio with 33% of rental income derived from public sector tenants, providing a stable foundation.

Negative Points

• The economic occupancy rate decreased to 90% from 92% last year due to divestment and new construction.
• There is an increase in vacancies due to asset rotation and completion of new developments, temporarily raising vacancy rates.
• The bond market has been more volatile recently, with rising margins impacting financing costs.
• High CPI and subsequent rent adjustments have impacted tenants' profitability.
• The average lease maturity for newly acquired properties is relatively short at 2.3 years, which may pose a risk if not extended.

Q & A Highlights

Q: Can you clarify your strategy on divesting non-core assets? Are there specific geographies or types of properties you are focusing on? A: We plan to be net sellers in the near term to create room for growth. We are primarily selling non-core assets across our cities, such as warehouses, light industries, and non-prime office locations. It's not specific to any city but rather across our portfolio. - David Carlsson, CEO

Q: How do current bank margins compare to your portfolio's average, and what are your refinancing plans? A: Current bank margins are lower than those in our portfolio, which will reduce interest rates moving forward. We have around SEK2.3 billion to refinance in the next 12 months, expecting somewhat lower interest rates. The margin difference is between 5 and 20 basis points. - Rolf Larsson, CFO

Q: Could you explain the drivers behind the rental income increase from Q4 to Q1? A: The increase is due to a combination of factors. While vacancies reduced rental income by approximately SEK13 million, positive uptake came from indexation, renegotiation, and investments. - Rolf Larsson, CFO

Q: What volume of divestments are you planning in the near future? A: We aim to divest about SEK500 million in the next six months. - David Carlsson, CEO

Q: Regarding the SEK1.6 billion acquisition, what is the average lease maturity, and how does it compare to your overall portfolio? A: The average lease maturity for the acquisition is about 2.3 years, which is shorter than our overall portfolio average of 3.8 years. However, this is typical for office portfolios, and we are confident in extending these leases due to strong demand. - David Carlsson, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.