• Property Transactions: Divested 45 properties for SEK1.9 billion; acquired 9 properties for SEK1.1 billion.
• Rental Income Impact: Transactions affected rental income by minus SEK24 million.
• Like-for-Like Rental Growth: 1.6% supported by indexation and rent reversion.
• Economic Occupancy Rate: 91%, down from 92% last year.
• Operating Surplus Ratio: Down 6% to SEK414 million due to one-offs and higher maintenance costs.
• Energy Efficiency Improvement: Increased by 3.2% for the full year.
• Net Letting: Positive in 22 of the last 24 quarters, SEK10 million in the last quarter, full year net letting SEK32 million.
• Market Value of Properties: SEK31.4 billion.
• Investments: SEK232 million in projects; acquired 7 properties for SEK965 million; divested 5 properties for SEK281 million.
• Unrealized Value Changes: Slightly positive, SEK19 million.
• Average Yield: 6.14%, one basis point lower than last quarter.
• Interest Rate: 4.3%, 10 basis points lower compared to last quarter.
• Loan Maturities: SEK2.9 billion in the next 12 months, excluding commercial paper.
• Dividend Proposal: SEK220 per share to be paid out on four occasions.

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

Release Date: February 14, 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 good result for the fourth quarter, considering transaction and one-off effects.
• The rental market in northern Sweden shows resilience with stable or rising rental levels.
• Access to financing remains good, with lower interest rates and margins during the quarter.
• Property values are somewhat positive, with a marginal adjustment in the yield.
• The company has a strong cash flow and a competitive advantage in its cities due to local management and market leadership.

Negative Points

• There was a marginal increase in vacancies due to completed new production, impacting rental income.
• The operating surplus ratio for the quarter decreased by 6% due to one-offs related to high electricity costs and higher maintenance.
• Financial costs are slightly higher due to matured derivatives and restructuring, leading to increased short-term financial costs.
• The economic occupancy rate decreased to 91% from 92% last year.
• The company faces challenges from the weak macroeconomic development and some setbacks in the green transition.

Q & A Highlights

Q: Could you clarify the changes in the dividend policy and the rationale behind it? A: Johan Dernmar, Investor Relations, explained that the new dividend policy aims to fund further growth by lowering dividends compared to the previous policy. This change is intended to simplify understanding for shareholders and reflects opportunities for market investment.

Q: Can you quantify the extra costs in net finance for Q4 due to derivatives changes? A: Rolf Larsson, CFO, stated that the derivatives changes and increased debt from property acquisitions in Lule and Yam resulted in a total additional cost of SEK9 million for the quarter.

Q: What is the outlook for net letting and occupancy levels in 2025? A: David Carlsson, CEO, indicated that current vacancies are due to ongoing projects, with income expected to improve in the second half of 2025. The company anticipates a positive turnaround in net leasing and occupancy levels.

Q: Why was the like-for-like rental growth lower this quarter compared to previous quarters? A: Johan Dernmar clarified that the lower growth was due to finalized projects and tenant relocations to new premises, which created temporary vacancies. Despite this, the rental market remains resilient, and the company expects to maintain or increase rental rates.

Q: Do you expect the current trend in vacancies to continue, and what is the outlook for indexation in 2025? A: Johan Dernmar noted that while there may be some movement in the first half of 2025, no new commercial projects are expected to be completed in the second half, leading to a potential decrease in market vacancies. The company anticipates a positive turnaround in H2 2025.

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