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Edited Transcript of WIHL.ST earnings conference call or presentation 28-Apr-20 6:30am GMT

Q1 2020 Wihlborgs Fastigheter AB Earnings Call

Malmö May 5, 2020 (Thomson StreetEvents) -- Edited Transcript of Wihlborgs Fastigheter AB earnings conference call or presentation Tuesday, April 28, 2020 at 6:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Arvid Liepe

Wihlborgs Fastigheter AB (publ) - CFO & Secretary

* Ulrika Hallengren

Wihlborgs Fastigheter AB (publ) - CEO

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Conference Call Participants

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* Andres Toome

Green Street Advisors, LLC, Research Division - Research Associate

* Erik Granström

Carnegie Investment Bank AB, Research Division - Financial Analyst

* Philip Hallberg

Danske Bank A/S, Research Division - Analyst

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Presentation

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Operator [1]

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Welcome to the Wihlborgs Fastigheter AB Q1 Report 2020. Today, I am pleased to present Arvid Liepe, CFO; and Ulrika Hallengren, CEO. (Operator Instructions)

I'll now hand over to our speakers. Please begin.

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Ulrika Hallengren, Wihlborgs Fastigheter AB (publ) - CEO [2]

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Thank you. Welcome to the presentation of Wihlborgs Q1 2020. It is a special time for all of us. And we've large respect for those who struggle hard and suffer from medical or an economic perspective. I'm still confident that we will have brighter times to come. And in hard times, it can almost be a relief to focus on our main task, and our main task is to make sure that Wihlborgs can continue to stand strong and be ready for further growth.

As said before, stability is our foundation and growth is our mission. The schedule of our mission must be a bit flexible, but our foundation stands firm.

During Q1 2020, we increased our rental income by 9% to SEK 781 million, the operating surplus increased by 11% to SEK 555 million, and income from property management increased by 13% to SEK 460 million. During Q1, we have had a surplus ratio of 71%. The net results amounted to SEK 344 million, which corresponds to SEK 2.24 per share, and the Board proposed a dividend of SEK 4.50 per share.

Page 3. We have, during the quarter, signed leases at a value of SEK 61 million and the net letting was SEK 8 million. March was, for obvious reason, a quiet month on new lettings, both the will and ability to act diminished when sudden and uncertain circumstances emerged. But we have seen several positive signals now in April, and we have now signed a few of these leases that we were expecting in March.

And the net letting in a historical perspective, at Page 4. These positive figures continues, and the contribution comes from all of our 4 cities.

Page 5, our largest customers are the same as before. A good portion of tenants from the governmental sector is important in a long-term perspective, 22% of our rental income is from public tenants. But also examples, as Ericsson is a large tenant, and they have rather signaled increased needs than anything else during this period. The widespread of many sectors in our region is also a strength in these times.

Page 6. Rental value is up 7.7%, and rental income is up 7.8% to SEK 3,130 million per year. As usual, we follow the rental growth in like-for-like portfolio closely to evaluate our efficiency. Our goal is to achieve 1% above index. Here, we have achieved plus 4.2% rental value and plus 4.4% of rental income, which is very good. Our organization, #TeamWihlborgs, that gets a high grade in achieving and exceeding our goals.

Page 7. The occupancy rate is still high at levels 94% for offices, both in Malmö and Helsingborg. In Lund, we have vacant premises, both in the properties we bought last year, near Nya Vattentornet 2 and 4. But also vacancies that we have actually created in Raffinaderiet and Studentkåren, properties where we are planning for large refurbishment to meet future demand. The operating surplus from offices summarized to SEK 1,939 million and a running yield of 5%. And we see the same kind of figures in occupancy rate in logistics and production. Copenhagen is now up to 94%, and we have 93% in total occupancy rate. For the entire property stock, the occupancy rate is 92% and operating surplus SEK 2.4 billion, running yield up to 5.2%.

Page 10. Changes in market valuation of our properties. We have made acquisitions for SEK 140 million, invested SEK 337 million, changes in valuation of SEK 59 million. And together with currency translation of SEK 504 million, that summarized a property value of SEK 46,559 million.

Page 11, and that means that our positive development continues.

The map of our value is at Page 4 -- Page 12. 42% of the value is in Malmö, 19% in Copenhagen, 22% in Helsingborg and 17% in Lund, just small changes since the last report.

And over to Arvid.

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [3]

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Thank you, Ulrika, and good morning, everyone. If we move to Page 13, you see the income statement in a bit more detail than Ulrika related to earlier. A few of the figures Ulrika has already mentioned, so I won't be repetitive. But I think it's worthwhile noting that our operating surplus gives us a surplus ratio in the quarter of 71.1% and that is actually 1.5% higher than the corresponding quarter during 2019, mainly driven by mild winter weather, but obviously, we also have a continued strong focus on being cost efficient.

The change in value of the properties in the first quarter was plus SEK 59 million. And you should note that we basically had unchanged yield requirements during the quarter. As always, we do the property valuations by external appraisers as of calendar year-end, and during the quarterly reports, we do internal valuations of the properties. In the quarter, we also had a negative effect -- or negative change in value of derivatives amounting to SEK 92 million.

Moving to Slide 14. As Ulrika said at the start of the call, these are, of course, special times. And we wanted to highlight a few figures regarding rent collection because of that. We have currently approximately 200 tenant discussions ongoing tenants, which to a larger or lesser extent have run into economic difficulties or have problems in their own operations. The exposure that we have to the segments which are immediately affected by the corona crisis, like hotels, restaurants and retail is below 6% of our total rental income.

When it comes to the rent collection, and that, of course, relates to the rents for Q2, which were due to be paid end of March, we have agreed to rent deferrals amounting to SEK 16 million, and we have approved discounts to certain tenants amounting to, in total, SEK 6 million. And of the rents for Q2 which were due at the end of Q1, 96% of those rents have now actually been received.

Moving on to the balance sheet on Page 15. I won't go through all of the details. But I think it's worthwhile noting that in a 12-month perspective, the value of our investment properties has gone up by SEK 2.7 billion or a bit over 6%. And in the same period, on the liability side of the balance sheet, we see that almost all of that increase is represented by an increase in equity. So equity has gone up in the same 12-month period by SEK 2.4 billion and borrowings have actually gone down by approximately SEK 200 million. So I think that is a good development for our shareholders.

Moving to Page 16. Our key figures. As of end Q1, the equity ratio stands at 38.3% and our LTV at 52.1%. The interest cover ratio is still very strong at 6.8x. Looking at the value per share, the probably most relevant to highlight is the EPRA net asset value per share, which now stands at almost SEK 144 per share.

Based on this, if we move to Slide 17. As Ulrika also mentioned at the beginning of the call, the proposal for this afternoon's AGM is an increase in the dividend per share to SEK 4.50 per share, which would mean 14 years of rising dividends.

On Page 18, you see the historic development of the EPRA net asset value per share, and adjusted for dividends, the increase -- the annual increase has actually been 17%.

On Page 19, you see the historic development of a few of the financial ratios that we monitor. A sharp increase in the interest cover ratio as of end 2018, beginning 2019 and now at an all-time high at 6.8x. The equity/assets ratio is basically as high as year-end 2019 at 38.3%, also basically the highest level that we've been at. And the loan-to-value at 52% is also very close to the lowest level we've been at during Wihlborgs' history.

Page 20 shows you a stable development of the net debt in relation to EBITDA. It now stands at 11.4x, and we feel that, that is a sustainable level for us.

On Page 21, you see the sources of financing as of end Q1 2020. The turbulent time -- in these turbulent times, it's, of course, very important to have different sources of funding. And the mix is not very different from the mix that we've had over the past couple of years. The proportion coming from the bond market has decreased somewhat. When it comes to the bond market, you should remember that we both have our own MTN program, and we also have the possibility of issuing bonds via Svensk FastighetsFinansiering, SFF.

Our dialogues with the different banks that we work with is, of course, very close during these times, and that is also true for our contacts with the Danish mortgage lenders. And I think it's worthwhile noting that the signals that the banks are sending to us currently is that they continue to be open for business. And you're also probably well aware of the fact that the bond market was pretty shaky during a few weeks, but the bond market has opened up again, but still at not as attractive levels as we saw 2, 3 months ago.

On Page 22, you see the structure of our loan portfolio. The average interest rate now stands at 1.28%. And our average fixed interest period is at 3.6 years and the average loan maturity at 6 years. Worthwhile noting when looking at this slide is that we currently have approximately SEK 2.8 billion in unutilized bank facilities. And that basically means that all the bonds that we have falling due during 2020, we can repay without having to issue any new bonds if market conditions are not favorable.

On the next slide, Slide 23, you see the historic development of our loan maturity as well as our fixed interest period. And there are no big changes. We basically continue to have long loan maturity at 6 years. And the fixed interest period has over the past couple of years been between 3 and 4 years where it currently stands as well.

So I'll, with that, hand back the word to you, Ulrika.

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Ulrika Hallengren, Wihlborgs Fastigheter AB (publ) - CEO [4]

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Thank you. And let me talk a bit about acquisitions and divestments, and investments, of course. We have acquired Banemarksvej 50, 19,500 square meters offices in Brøndby, Denmark, an opportunity we couldn't resist. It's not the architectural level that hit us most, but the tenant milestone system is really interesting. And the price was definitely suitable.

Let's go to investments in progress, Page 27. We have, from January to March, invested SEK 334 million (sic) [SEK 337 million] on ongoing projects, and it remains SEK 819 million to invest in already-made decisions. Now it's more important than ever that we can continue our investments also to support the business in the region. We use mainly local suppliers. And when we invest, more people have a job to go to. The level for the whole year will not be as high as the record year 2019, but we will still have a good tempo. Examples of this is Ursula 1 or Prisma. It's under completion. HETCH, SUP46, Resurs Bank and KPMG are some of the tenants. For obvious reasons, we are receiving very positive attention for this project. A spectacular building in a neat spot in Helsingborg.

Page 29. Another spectacular project is Terminalen 1, the Helsingborg Central Station, where between 30,000 and 40,000 persons pass through the project every day, at least that was the mode until middle of March. The project continues as planned. And at the end of the year, we can hopefully welcome back all these people passing through a totally refurbished central station.

Musköten 20 at Page 30 is according to plan. We invested SEK 97 million for our tenant MilDef with completion late 2020.

On Page 31, at Medeon Science Park, Forskaren 1 is under production. A new picture, but the plan is the same as before. Completion later this year, and we see this building as a start of our innovation and an upgrade for the whole site of Medeon Science Park. We see no signs of less needs for medical innovation, and these companies need both more area and modern premises. Expected yield on cost 6% as seen in the most of our office projects.

Page 32. At Stenåldern 7, we are building a new building for voestalpine weldCare. Investment, SEK 78 million; 15 years lease; and yield approximately 6.5%.

Page 33, actually 2 projects, Sunnanå 12:54. Soon to be started, 1 for Region Council of Skåne Transfer Hub and 1 facility for Veho Bil. Investment, SEK 96 million plus SEK 58 million.

And a short update on future investments. Page 35, we have completed Raffinaderiet 5, besides the sugar cube. And now when that is completed and for let, we can go to the block decided. It's Raffinaderiet 3. It's an old block where we now can start a total refurbishment. To make that possible, we have emptied these buildings from tenants, and now the planning is going on at full speed. Expected investment at SEK 114 million, and that gives us 7,800 square meters modern offices with a sweet taste out of the past, just in the city center. From Raffinaderiet 5 to Raffinaderiet 3 and another step closer to the railway station, we can find Posthornet 1, Phase 2. The zone plan expects to be established in June. In this picture, you can actually see the central station at the right, Posthornet 1, the first phase, and then Phase 2 in color.

Page 37 is just the same project from another angle. In December, there will also be Green Trains passing up to Ideon, MAX IV and the ESS, where the new (inaudible) will start running.

On Page 38. This is the new square of Ideon, which is one of these tram stations. Our planning for the project Zenit right in the center of this innovation site continues. Also, here, the zone plan is expected to be established in June. And when we -- then after that, we will be able to apply for building permission. But the right timing for that will, of course, be together with the right tenant.

Page 39. In Helsingborg, we continue the planning of our new next possible project, 6,000 square meter offices right next to the District Court of Helsingborg. It's in early stage, of course, but we will be prepared.

Page 40, at Plåtförädlingen 15, we already have a building permission for 10,000 square meters logistic area. Timing, as I said, is important, and here we can be ready as soon as the right tenant is ready.

Page 41. Let's go to Malmö and Hyllie. We completed Gimle and Burlöv during 2019, fully let to Custom of Sweden and IKEA. Our next project is Pulpeten 5 and Bläckhornet. Pulpeten 5 is presented as Kvartetten, Page 42, or the quartet, 20,000 square meters in gross floor area. We can offer very large efficient floors, which is attractive, especially for larger tenants. I actually think that no one can offer as large floors as we can with this project in Malmö today.

Page 43 shows where the name Kvartetten comes from. It's related to the architectural design, which has taken inspiration from local materials from the region of Skåne, limestone, bricks and ceramic.

Page 44, just 70 meters from Pulpeten, we can offer a parking garage and model offices in Blackhornet 1.

And then we go to Nyhamnen, Page 45. In the city center of Malmö and, of course, in a long time perspective, the highest focus. We continue the planning in all these circled areas. And #1 is the large orange one.

And in the next slide, Page 46, shows the early plans of our first project. The zone planning continues, and we will at least be able to produce 10,000 square meters offices here.

And last picture of future project portfolio, Page 47, is Kranen 1, just at the entrance to the Dockan area from the Hamnen. We have applied for planning commission for approximately 14,000 square meters.

Let's summarize. And first, in economic terms. We had another strong quarter with rising income and profitability. We have positive net letting and continued forward-looking good tenant discussion. The strong balance sheet and large available credit facilities make us strong also in the future, and we continue our commitment to develop the Öresund region.

But also, let me say something on the focus areas in the current situation. Page 50. In Q3, we talked a bit about collecting hay in the barns, but we had had a good harvest and that we felt ready even if the winter might get cold. We didn't then know what -- that it wasn't a cold winter that would change things. Instead, it's a virus that affects us all. Wihlborgs is only affected in minor ways compared to many others and compared to many other regions, but we don't know what is ahead of us. We have prepared in all the ways that we can think about. Of course, we have a close dialogue with our tenants, those the ones that struggle these days are the ones that have extended needs in terms of growing demands in their fields. This situation gives example of both.

We early enabled our employees to keep on working, but in different ways. Some of us more digital and some secured in other ways. We can do small things like purchasing some 1,000 lunches from restaurant tenants and distribute them to hospitals, (inaudible) and others who might be supported by this. But most important, we can continue with our investments in the region. That supports that more people can continue to go to their work, and we will also be better -- in a better position when things come out in a new kind of normal situation.

We continue with planning for different kind of scenarios, both in short- and a long-term perspective. At the moment, we don't know if a short term is 3, 6, 9 or 12 months, for example, but we are resistant and prepared. One of our key values is drive. And we will find our way, we will read the math carefully, and that makes it possible both to brake and accelerate in the right time.

Thank you, and we are open for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Andres Toome of Green Street Advisors.

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Andres Toome, Green Street Advisors, LLC, Research Division - Research Associate [2]

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I had a question regarding the balance sheet and kind of how you would think about your balance sheet management in these uncertain times. Would you consider being more defensive and reducing your leverage to weather any future downturns?

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [3]

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I think that over the past years, we have gradually strengthened our balance sheet. And I also think that we have over the past few years or basically all along had a very strong focus on cash flow generation. Looking at the balance sheet, you mustn't forget that the best credit insurance you can have is to have a good cash flow. And we've always been more focused on improving our cash flow than on pushing the property valuations quarter-by-quarter.

Given the uncertainty currently, first priority is, of course, to look at the liquidity situation. And I think that the available credit facilities that we do have, and as I would describe it, the long-standing good relationship with our major banks as lenders, we feel confident that our liquidity position also going forward is good.

I think, whether to bring down LTV from the current levels or not, I think it's -- you basically have to start making assumptions about where the property values will go over the coming few years. I think our current leverage of 52% is on a good level. And I think that's -- we've basically never -- apart from actually the last quarter, we've never had a lower leverage.

Obviously, in uncertain times, you need to be responsible when you take investment decisions and also when you take financing decisions, but that we think we are. So I wouldn't foresee us taking any drastic measures to further reduce leverage. But if we assume that investments, as Ulrika stated earlier, will be slightly lower than the record year of 2019 and if we assume that will continue to generate the cash flow that it looks like we're going to generate, basically our balance sheet will gradually continue to strengthen, basically presuming unchanged property values.

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Andres Toome, Green Street Advisors, LLC, Research Division - Research Associate [4]

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Fair enough. And if you think about kind of -- you mentioned the cash flow strength. And if you think about leverage based on net debt to EBITDA, which seems quite high, how do you think about that metric?

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [5]

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I think being around 11x, we think, is quite okay. In the slightly longer historical perspective, we would've rather been around 10 than around 11. But I think being around 11x is -- we're quite comfortable with that level. And then you can also -- of course, you need to think a bit about what do you assume about the interest rate environment going forward. And that is, of course, in a sense, anybody's guess. But I think chances are that interest rates are not going to go up significantly given the crisis situation that we've ended up in.

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Andres Toome, Green Street Advisors, LLC, Research Division - Research Associate [6]

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Fair enough. And my last question then also as you mentioned, the interest expenses. Do you have any indication at this stage, what's the kind of credit spread for Wihlborgs versus what it was beginning of the year? Have you done any issues in the month of April, for example, or have you gotten any indication from your credit partners for that matter?

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [7]

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I think we've -- we concluded a renegotiation of the bank margin in one of our major bank agreements during March. And in that renegotiation, the bank margins went up, but very -- by a very small number. It was a few basis points up. We've not done any issues in the bond market since February, basically since before the whole crisis started affecting Europe. So I don't want to guess when it comes to which levels we would be able to issue bonds currently. But I think if you talk to the dealers on the DCM teams of the banks, they could probably give you a hint of where bonds are trading currently. But the way we think is really that -- the bond market was basically closed for a few weeks. Now it's open, and that is very positive. But if we don't have to issue bonds in a turbulent market, we don't want to issue bonds. And hopefully, in a few months' time, markets will be more calm, we will see some sort of way forward. And obviously, we monitor the bond market continuously to have a sense for -- is it time to act or not. But we don't have to act at the moment. So we basically -- well, we're not doing anything right now.

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Operator [8]

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Our next question comes from the line of Erik Granström of Carnegie.

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Erik Granström, Carnegie Investment Bank AB, Research Division - Financial Analyst [9]

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I have a few questions as well. Perhaps we could start with the rental market. You mentioned that there was a bit of a standstill at the end of March, but it's been improving now in April in terms of your leasing activity. Could you go in a little bit of more depth on that part? How are tenants reacting? And what sort of sectors are you seeing actually coming back to the market now?

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Ulrika Hallengren, Wihlborgs Fastigheter AB (publ) - CEO [10]

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Of course, we see different kind of reactions, but what we saw in March was, I think, that many companies and many tenants were standing still waiting for what will happen. But I think now things are -- we see lights from many point of views, actually. The largest ones are from governmental sector, but we also have other larger tenants with discussions. And if they are ready to make a decision now or they have to wait a bit, don't know, of course, but we see positive signals, and I think that's overall positive.

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Erik Granström, Carnegie Investment Bank AB, Research Division - Financial Analyst [11]

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Okay. Also on property value changes, you mentioned that you've done an internal one in Q1, and then you do an external for the full year, which is usually the case. Have you thought about making external valuations in other quarters of this year, giving -- given the rather uncertain situation right now?

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [12]

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We've not really contemplated changing our way of working. I think it's -- I mean we're basically in the long-term business. And I think it's a good and fair way that we actually have an external valuer looking at all of our properties at the same point in time. I think that's -- in my head, that gives a credibility to the valuations.

The way -- if you look at history and during the quarters, which have not been calendar year-end, where we've had larger value or valuation changes, in those cases, we would always have been in dialogue with our external appraisers. So I mean if there are any major changes to be expected, we would do that in dialogue with external parties.

So -- and what will happen during the rest of this year is, of course, tricky to say. I mean since this turbulence started, not very many transactions have actually taken place, so we'll obviously have to keep an eye on that as well going forward.

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Erik Granström, Carnegie Investment Bank AB, Research Division - Financial Analyst [13]

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Okay. My next question is regarding your payment for -- that you've received for Q2. You mentioned that 96% was paid for Q2. And that you had SEK 16 million, I believe, in deferrals and SEK 6 million in discounts. Have you changed anything and moved over to monthly payments installments rather than quarterly that you expect to sort of be at risk for Q2? Or in your view, is the effect that you've mentioned of SEK 32 million overall are those the ones that you expect to affect Q2?

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Ulrika Hallengren, Wihlborgs Fastigheter AB (publ) - CEO [14]

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We have agreed on month payment as well for -- especially for small restaurants and so on. And it's also worth mentioning that the SEK 16 million are not only according to Q2, that could also be agreements concerning Q3 and Q4, actually. So not all of those SEK 16 million are in Q2. But we use all those possibilities. We're prolonging leases. When we have given some discounts, for example, we have monthly payment as a method, and we try to find the right solution for each tenant. And it's also a bit different in Denmark and Sweden. We have no discount in Denmark, for example.

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [15]

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And in Denmark, you can also bear in mind that the market practice there is that the tenant is to leave a deposit of 3 to 6 months rent, which, of course, reduces the credit risk for us.

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Erik Granström, Carnegie Investment Bank AB, Research Division - Financial Analyst [16]

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Okay. And my final question is regarding the financial structure that you mentioned before, Arvid. Do you have any outstanding bonds that are maturing during this year? And if that's the case, could you give us some information on when they are maturing and your -- sort of your strategy of handling that?

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [17]

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Yes. If you look at the Slide 22, the structure of interest rates and maturities, all the maturities during 2020, SEK 1.7 billion are bonds. SEK 226 million of those have already fallen due in April and been repaid. So we have SEK 200 million falling due in June, SEK 416 million in September and SEK 876 million in December.

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Erik Granström, Carnegie Investment Bank AB, Research Division - Financial Analyst [18]

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Okay. So the majority is actually in December then?

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [19]

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Yes.

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Operator [20]

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And our next question comes from the line of [Riley Arby] of Danske Bank.

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Philip Hallberg, Danske Bank A/S, Research Division - Analyst [21]

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Philip Hallberg here. So I think that most of my questions have already been asked, but I have 2 follow-up questions. One is relating to, I think you mentioned you had 200 tenants that you were in ongoing discussions with. Is that only related to sort of the expected tenants like retail, restaurants and hotels? Or do you have any office tenants that are also included in those 200 tenants that you mentioned?

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Ulrika Hallengren, Wihlborgs Fastigheter AB (publ) - CEO [22]

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It's mostly those sectors that I've pointed out. But in those figures, we can also see that we have different kind of sectors represented and also quite a large number of them actually, when we ask for more reasons and background figures, they don't come back to us. I think also, we have a portion in that, that never will be anything. They have just reported that they want to have a discussion. But we haven't seen any sectors without those pointed out sectors that really is in need for any support at the moment.

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Philip Hallberg, Danske Bank A/S, Research Division - Analyst [23]

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Okay. And also a follow-up on the rental market. Maybe you have 2 larger projects, I think, in Helsingborg that is being completed in this year. I think it's in Q3, Q4 or something like that?

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Ulrika Hallengren, Wihlborgs Fastigheter AB (publ) - CEO [24]

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Q4.

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Philip Hallberg, Danske Bank A/S, Research Division - Analyst [25]

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Yes. Are you in any sort of constructive discussions currently for that space? Or is basically everything halted there? And could you just give some flavor on if you had any tenant discussions before this COVID-19 situation broke out and you expect that to return?

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Ulrika Hallengren, Wihlborgs Fastigheter AB (publ) - CEO [26]

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Yes, we had ongoing discussions on every surface in the -- on all the rest of the areas in these buildings. But during March, these have been slowed down. So -- and now some of them are going on again. But I don't see that we will sign any new leases the next weeks. I think it will take some more time.

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Philip Hallberg, Danske Bank A/S, Research Division - Analyst [27]

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Okay. And I think you mentioned that it was like government tenants that would still be active in the market. Is it fair to assume that you may be looking at filling up those space -- that space with government tenants?

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Ulrika Hallengren, Wihlborgs Fastigheter AB (publ) - CEO [28]

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We have such discussions ongoing since before as well, but which of them -- that will be tenants in this month, I'm not sure, maybe mixed.

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Operator [29]

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(Operator Instructions) Okay, as there are no further questions coming through at this time, I'll hand back to our speakers for the closing comments.

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [30]

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Okay. Thank you, everyone, for listening in. And if you have any further follow-up questions, you know where to reach us.

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Ulrika Hallengren, Wihlborgs Fastigheter AB (publ) - CEO [31]

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So thank you.

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Arvid Liepe, Wihlborgs Fastigheter AB (publ) - CFO & Secretary [32]

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Thank you. Bye.