Castellum AB (publ)

Castellum reported property value of SEK 134 billion, with approximately SEK 116 billion excluding the not-yet-closed Alecta and Wihlborgs transactions. Signed divestments in the first half totaled SEK 24 billion, and total signed disposals were done at a value just below SEK 500 million, or 2% above fair value. During the period, the company invested SEK 2 billion in its existing properties, and value changes were +SEK 236 million for the period, including +SEK 401 million in Q1 and -SEK 165 million in Q2. Like-for-like in-place rents declined 1.3%, like-for-like income growth was -2%, and NOI was -4.8%. Vacancy rose to 87.5%, net leasing for the first six months was SEK 110 million, and the Ericsson lease contribution was around SEK 140 million. Loan-to-value was 37.3%, average debt maturity was four and a half years, and interest-bearing liabilities were SEK 57.3 billion, down from SEK 59.5 billion in Q1. The average interest rate was 3.5%, up from 3.1% in Q1, and Castellum said annual running financial net will increase by approximately SEK 200 million from eurobond redemptions. On capital allocation, 39 million shares were bought back for SEK 4.6 billion, and the board approved a new buyback program of up to SEK 3 billion. Management expects interest-bearing liabilities to fall to roughly SEK 49 billion-SEK 51 billion after the Wihlborgs and Alecta closings, assuming about 40% of those proceeds are amortized.

Pål Ahlsén’s tone was pragmatic and execution-focused. He emphasized that Castellum sold assets because the prices achieved were attractive enough that the company could not meet its return targets at those levels, and he framed the remaining portfolio as still having meaningful potential for further transactions if fair value can be realized. On leasing, he stressed the company can only focus on signing contracts and cannot forecast demand, while noting that Stockholm activity has improved but Gothenburg and some regional markets remain weak or sluggish.

Christoffer Strömbäck focused on the mechanics of the balance sheet and capital deployment. He highlighted SEK 24 billion of signed divestments, SEK 2 billion of investment in properties, and a quarterly valuation impact of -SEK 165 million offsetting earlier gains to bring the period to +SEK 236 million. He also walked through funding actions: SEK 2.3 billion of secured RCFs refinanced, SEK 3.9 billion of unsecured SEK bonds issued at an average credit margin of 99 basis points, SEK 1.7 billion of shorter bonds repurchased, and one-offs of SEK 48 million in financial net. He said loan-to-value was 37.3%, ICR was 3.2x, the average interest rate was 3.5%, and interest-bearing liabilities were SEK 57.3 billion, with a path toward SEK 49 billion-SEK 51 billion after closings.

Analysts pressed management on the impact of the AP7 divestment, the attractiveness of share buybacks versus other capital returns, and what to do with the excess capital from the Wihlborgs transaction. Management said all options remain open, but decisions on Wihlborgs proceeds will be made later when the market and share price are known. Questions also focused on leasing and occupancy trends: management said Stockholm is more active, Gothenburg is still weak but may have bottomed, and there are no other large tenant terminations expected beyond the ones already reflected. On hybrids and the recent S&P rating termination, management said proceeds are viewed as more likely to support traditional debt, while hybrid treatment is still being evaluated ahead of the December call date and March reset date.