Fastighets AB Balder (publ)

Balder said Q2 rental income increased 5% and profit from property management declined 10%; adjusted for the Norion distribution in the comparison base, profit from property management would have increased 3%. Current earning capacity was SEK 6.1 billion, or SEK 5.21 per share, and like-for-like rental growth was 1.2%. The portfolio was valued at SEK 241 billion, occupancy was 95%, NAV per share was SEK 94.3, net debt was SEK 50 billion, and average interest rate was 2.9%. On leverage, net debt-to-total assets was 50.4%, ICR was 2.5%, and rolling 12-month net debt-to-EBITDA was 12.8x. For guidance/forward commentary, management said the target of 11x net debt-to-EBITDA remains unchanged, funding is already largely pre-funded, and they do not plan to force deleveraging quickly; the SEK and euro funding mix is expected to stay broadly similar, with no major change in hedging policy.

Sharam Rahi emphasized Balder’s diversified portfolio, noting it is roughly half residential and half commercial, with 80% located in capitals and larger cities. He said occupancy weakened modestly versus earlier levels mainly because of softness in offices, and framed the quarter as one where the underlying business still showed healthy growth once Norion effects are adjusted out. His tone was constructive but candid about higher central costs and the need to keep improving occupancy and operating efficiency.

Ewa Wassberg said the funding mix is roughly 50/50 between bank and bond financing, with slightly more bond funding than last quarter, and liquidity remains elevated because of large maturities in early 2027. She highlighted that the average interest rate was unchanged at 2.9%, the hedging ratio was stable, net debt-to-total assets rose to 50.4% partly due to Norion and share buybacks, and current encumbrance was 24.5%. She also noted SEK 1.6 billion of new SEK bonds issued during the quarter and reiterated that Balder will keep a balanced capital allocation until net debt-to-EBITDA reaches 11x.

Analysts focused on higher central costs, digitization spending, capital allocation versus deleveraging, and refinancing/hedging. Management said the digitization program may cost a few tens of millions of SEK annualized this year and about as much next year, with some periodization noise between Q1 and Q2 and a multi-year timeline. On capital allocation, they said they remain rational and opportunistic: buybacks look more attractive when the share price is lower, but they are comparing returns across buybacks, debt reduction, CapEx, and acquisitions rather than following a fixed rule. On refinancing, they said the EUR 1 billion bond maturity next January is already essentially pre-funded and the SEK/euro mix should not change materially.