Castellum AB
STO:CAST
Castellum AB
Nestled within the realms of the Nordic real estate market, Castellum AB stands as a prominent figure, weaving through the intricate urban landscapes of Sweden and neighboring regions. Founded amid the bustling '90s—an era marked by substantial economic transitions—Castellum has meticulously constructed a reputation as a stalwart in commercial real estate. The company's ambitiously diversified portfolio stretches across the expansive territories, capturing the essence of thriving business environments through a strategic collection of office spaces, warehouses, logistics centers, and public sector properties. By investing heavily in sustainable practices, Castellum positions itself not just as a landlord, but as a steward of modern urban growth, enhancing its assets to mirror the evolving needs of contemporary society with a sustainable edge.
The beating heart of Castellum’s revenue machinery lies in its robust rental income, a stream continuously bolstered by their adept ability to manage, lease, and expand their real estate holdings. Their business model capitalizes on urbanization trends, technological adoption, and environmental stewardship, ensuring their properties remain attractive to both tenants and investors. With a keen eye on geographical and sectoral diversity, the company navigates market fluctuations, maintaining steady income through strategic leasing agreements and prudent property acquisitions. This agile approach, combined with a commitment to sustainability and digital integration, propels Castellum as a dynamic entity in Europe’s property landscape, drawing from its long-standing expertise while charting courses through the contemporary realm of real estate evolution.
Earnings Calls
In Q1, Castellum faced challenges with a net leasing loss of SEK 184 million, primarily due to Northvolt's bankruptcy, impacting revenue by SEK 100 million. The occupancy rate declined to 90.6%. Despite these short-term setbacks, Castellum's focus on high-quality property investments remains solid. They initiated significant new projects in logistics and office spaces with continued commitment to sustainability targets. The company's financial stability is reinforced by a low loan-to-value ratio of 35.3% and a strong investment pipeline. Looking ahead, management aims for a gradual recovery in leasing and is ready to capitalize on future acquisitions.
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Good morning, and welcome to this presentation of Castellum's Q1 report. My name is Christoffer Stromback, Head of Investor Relations. There will be a Q&A session in the end of the webcast. [Operator Instructions]
Let's start. Go ahead, Joacim.
Thank you, Christoffer. Good morning, everyone, and welcome to this presentation of our Q1 results.
As you are fully aware of the last months, the financial markets have once again been more volatile and following larger uncertainty with regards to global trade, the U.S. tariffs and subsequent countermeasures from Chinese tariffs. It is difficult to predict how this will translate into the Nordic economies and more specifically, into our tenants. But we are humble, also optimistic.
As you may have noticed, we are very active on the leasing market and have announced some significant contracts, more on that later. We have a strong financial position and have capacity to invest in attractive opportunities. So far, we have invested in our existing portfolio and increased the pace within project development but also increased our position in Entra.
During the quarter, we have announced that we are starting the Infinity project in Hagastaden in Stockholm, where we are developing some 20,000 square meters top-class office space in one of the most vibrant areas of Stockholm. During the quarter, we have also decided to start a logistics project in Brunna, outside Stockholm, with a total investment volume of SEK 229 million.
After the end of the period, we have also announced an investment of SEK 200 million in Jönköping, coupled with a good 20-year lease with the hotel chain Scandic. In Jönköping, we will also invest more in Werket and have signed a 7,700 square meter contract with a Swedish police. And in Gothenburg, we have signed a lease agreement with Knightec Group. We also concluded the mandatory offer for Entra and have bought shares in the market and managed to increase our position at a very attractive price.
During the first quarter, we printed a large SEK bond in the beginning of March, that's SEK 4 billion, good timing and very good terms. And after the period, we have updated our climate target. It has been validated by the Science Based Targets initiative. More on that later.
As usual, we have this short overview for those of you who do not know us that well. We are one of the largest listed property companies in the Nordic region with a property value of SEK 154 billion, including our share in associated companies, that is Entra and Halvorsäng. We focus on 3 segments: Office, which is our largest segment; Logistics, which includes warehouses and light industry; and Public Sector Properties. The property portfolio is located in attractive growth regions in the Nordics. We have a yearly contract value of approximately SEK 9.3 billion. We are a fully integrated company with local hands-on presence where our assets are located. In all our 4 markets, we have boots on the ground. Customer activities such as leasing, tenant improvements, relationships, et cetera, are all done locally. With the backbone of Castellum, supporting regional business with centralized functions, we create synergies and utilize economy of scale.
Over to our portfolio. It is located in the Nordic growth regions. Some 74% is located in Nordic metropolitan areas, meaning urban areas with at least 1 million people. And the remaining 26% is in growing regional cities in Sweden. The largest market measured by property value is Stockholm, followed by Gothenburg and Malmö. In addition, we have a decent portfolio in Copenhagen and Helsinki as well as very well-positioned and profitable portfolios in a number of Swedish regional cities, including Västerås, Örebro, Uppsala and Linköping/Norrköping. Our regional markets have proven strong resilience and even rental growth during the downturn. We have a solid market position in our regional markets where we are #1, 2 or 3 in each of them. That makes us relevant for tenants and for the city's councils.
This is our fully owned and consolidated portfolio. As mentioned, we have also a 35% stake in Norwegian Entra, and our share of Entra's portfolio is approximately SEK 20 billion, and Oslo would be our third largest market if we added our share of Entra. We will come back to Entra later in this presentation.
Castellum tenants represent a cross-section of Nordic business and authorities, and our exposure to individual tenants is very low. Our 10 largest tenants represent less than 15% of our total contract value, with no tenant generating more than 2% -- 2.6%. The strong tenant base with many of our tenants is publicly funded operations. 26%, as I mentioned, of our total contract volume stems from public sector tenants. The largest tenant is the Swedish Police Authority with 2.6% of our contract value, and we have them as tenants in 12 different cities in our portfolio. The remaining average length of our contract is 3.6 years.
Those of you with a sharp eye and a good memory have noticed that Northvolt is no longer on this list. Reason is, of course, that Northvolt is in bankruptcy. We will comment more on Northvolt later in this presentation.
The results compared to the same period last year is negatively affected by the fact that we have sold standing or yielding assets during last year as well as slightly higher vacancies. In addition, income from property management is negatively affected by higher financial costs. We will look into these figures in more detail later in the presentation. A disappointing figure is the net leasing of minus SEK 184 million. It is a large figure. A large part of it is the bankruptcy of Northvolt, and we are confident to be able to rent those premises to someone else, either through someone actually acquiring the business or through the signing of a new lease.
We have continued quite stable property value, although slightly negative on the margin. About half of the negative revision comes from the Northvolt properties. Occupancy rate stands at 90.6%.
We have made some investments of net SEK 358 million, and we have continued to reallocate proceeds from divestments into new investments, in line what we have said before. Short term, it is punishing our income growth, but long term, we are convinced that this asset rotation into more high-quality projects and properties will be positive for Castellum.
As already mentioned, total income decreases and investment divestments affect income negatively. We have good cost control, reduced property costs. Admin costs also reduced. Summing up, we report income from property management minus 7.3%. Jens will cover this in greater detail.
Over to you, Jens.
Thank you, Joacim, and good morning.
Looking at development of income during the period, the like-for-like portfolio income decreased by SEK 4 million, equivalent to 0.2%. The change in the like-for-like portfolio is mainly driven by indexation, but offset by higher vacancies. The direct property costs for the like-for-like portfolio decreased by SEK 7 million, equivalent to 1.2%. Costs related to heating and snow removal are the key drivers. Central administrative and property administrative costs increased by SEK 2 million, equivalent to 1%. However, the increase in administrative costs are lower than salary indexation due to ongoing cost review.
On an aggregate level, NOI decreased by SEK 46 million with divestments and vacancies as key drivers. Development properties add only SEK 8 million due to reduced project investments during last 2 years.
Looking at renegotiations, corresponding to an annual rent of SEK 73 million, which translates to 9% of total lease stock up for renegotiation work conducted during the period, with an average positive change in rent of 4%. Additionally, contracts with an annual rent of SEK 447 million were extended during the period with no change in terms, equivalent to 53% of total lease stock up for renegotiation.
Looking at net leasing, we are starting the year with negative net leasing, and we are far from satisfied with the outcome. At the same time, it reflects the cautious sentiment in especially our metropolitan areas. Gross leasing remains in line with previous years, but we are impacted by more and more lease terminations and in addition, more bankruptcies, mainly related to Northvolt. However, rental loss is still at low levels and our outstanding receivables continues to be low.
The economic occupancy rate, as already mentioned by Joacim, at 90.6%, a decline of 1%. The decline is attributable to an underlying increase in vacancy corresponding to 0.6% as well as the effect of a general review of vacancy rents, which contributed an additional 0.4%.
Looking at lease contracts during the quarter, no major lease contracts signed during the quarter. However, a good portion of medium-sized bread-and-butter leases. In Linköping, we have leased out to a gym operator, Friskis & Svettis, 2,000 square meters, a 12-year lease contract. We are very pleased to have a gym in the building where we have converted previously dark and older mainly office areas.
In Copenhagen, we have found a great tenant in Vipps MobilePay, who have signed a 1,400 square meter office contract. In Stockholm, we have signed a new contract with Fremantle, 1,400 square meters, 7-year contract. It's a fit-out for office. Interesting to know that they are a production company that, among others, produce TV shows for TV4, a tenant which we have rented out our current headquarter to very recently.
We have also signed a lease in Linköping, 1,400 square meters, 6-year contract, expansion with existing tenants that are increasing with 500 square meters. We have also signed a 2,600 square meter contract for retail office and warehouse with AllOffice Nordic. And the list goes on and on. In Västerås, we've signed a public sector tenant called Swedish National Agency for Higher Vocational Education, a 5-year lease, almost 1,900 square meters.
Looking at rental income and net leasing, as mentioned, negative net leasing during the period due to larger lease terminations and an increased number of bankruptcies. Income, on the other hand, is more stable and increases over time, however, affected negatively by 2 years of divestments and a general slowdown in the economy. Ongoing and new projects will grow rental income over time. In addition, we continue to scout for acquisition possibilities in the right locations. Joacim will tell you more on the topic of new projects later in the presentation.
Looking at property values. During the period, Castellum has written down property values with approximately SEK 0.4 billion, equivalent to 0.3%. The value changes is driven by the default of Northvolt and somewhat lower cash flow expectations in our valuations in the short term. The valuation yield is, in all essence, the same as the fourth quarter 2024. Our projects, in addition, continue to show stable positive value add.
We also see continued higher investment volumes in Sweden real estate sector and the transaction volume in Sweden ended up at SEK 13.2 billion in the first quarter '25 compared to SEK 6.4 billion in the first quarter '24, all according to Newsec, where buyers and sellers' price expectations continued to align easier. However, the ongoing trade war have created uncertainty in the market, which might impact investment volumes in the coming quarters.
Segueing into the financial side of the business. Loan-to-value now at 35.3%, very low. ICR currently at 3.2x, and average interest rate currently at 3.3%. We expect the average interest rate to be stable around 3.2%, 3.3% during 2025. We see a potential to reduce the average credit margin in our loan portfolio this year by refinancing secured debt on better terms and increase the use of commercial papers.
During the quarter, costs related to FX fixing of Entra have impacted financial net by approximately SEK 32 million, a direct effect of the historically high interest rate differential between Norway and Sweden.
During the quarter, we've also received a BBB rating from Standard & Poor's, which we're very glad to have. In addition, we have a positive outlook from Moody's, 1 notch below.
Looking at debt maturity, we are proceeding with our focus on extending duration, now reaching an average debt maturity of 4.6 years, expected to reach closer to 5 years in the second quarter.
During the quarter, we have also issued green bonds with 3 different maturities, totaling SEK 4 billion. Average credit spread amount to 107 bps, the issue of the largest evergreen real estate bond in the domestic market. In the second quarter, the bond market has been volatile and illiquid, but is gradually recovering. We expect to be active in the bond market going forward, but we see no need to rush back to the market when we have limited bond maturities in the short term and healthy liquidity.
We plan to increase the volume of commercial papers, hopefully reaching SEK 3 billion already in the second quarter to reduce funding costs further. We also expect to refinance SEK 8 billion to SEK 9 billion in secured debt during the second quarter, hopefully reaching 15, 20 bps lower credit margin. All in all, a very good financial position for Castellum.
Over to you, Joacim.
Thank you, Jens, and thanks for all the good work on the financing side.
Castellum works towards clear sustainability targets in the short and the long term to contribute to a sustainable development. Energy efficiency was minus 5% like-for-like the rolling 12 months. And I'm very proud of the organization. We are actively engaged in reducing our climate impact through enhancing energy efficiency, one of the most important factors that we can contribute with.
Last month, we announced our updated climate target. This target means that Castellum commits to reach net zero greenhouse gas emissions across the value chain by 2040. It has been validated by the Science Based Targets initiative and is based on the new standard for the construction and building industry.
Looking at our investments. Quality is one of our most important value drivers. Rotation of our portfolio is an integral part of our value creation. In Q1, we have continued to invest in projects, but we have also invested in Entra. Net investments are, as I mentioned earlier, NOK 358 million for this quarter. We have invested SEK 517 million, almost everything in projects, including new constructions as well as extensions and renovations.
Net investments only relate to investments in our consolidated property portfolio. That means it does not include investments in associated companies such as Entra, which we invested in, in Q1 and in Halvorsäng in Gothenburg, which we invested in last year. In Q1, as mentioned, we acquired shares in Entra for approximately SEK 400 million, which translates into an indirect property acquisition of SEK 1.1 billion. We intend to continue to be net investors going forward, and we are also evaluating acquisitions.
On the investment side, projects represent the major part so far. We have 8 larger ongoing projects and 2 to be started in 2025. One of them is Sorbonne, which is the project that we call Infinity; and another one is Örnäs, which is a logistics property in Brunna, north of Stockholm.
Larger projects for us means investments larger than SEK 50 million, 5-0. It's a mix of metropolitan areas and regional cities. The average occupancy rate is 93% for the ongoing projects with a total rental value of SEK 215 million and an average lease duration of approximately 14 years.
Just a few words on the 2 projects that you see on the pictures. The top one is Gullbergsvass, also known as Lilla Bommen in Gothenburg. It's a 4,500 square meter hotel, fully let to Scandic hotels on a 20-year lease, and they will move in first quarter 2026. And the lower one is Gladan in Kungsholmen in Stockholm. It's 3,900 square meter multi-tenant office building. It's in the western part of Kungsholmen, an attractive area. We started with 0% occupancy rate and now signed the first agreement, taking it to 11%. We are quite confident that the leasing process will continue to improve, and the project is to be completed at the end of this year.
One of the strengths of Castellum is the large number of opportunities throughout our portfolio and the sum of a large number of small- and medium-sized development opportunities adding up to a large total. Having said that, we have a couple of major development opportunities. The largest one is in Gothenburg, where we bought an airport in 2018 and where we have the opportunity to create a substantial logistics hub in an excellent location. In Gothenburg, we also have a very central office development opportunity. We call it Noon, and it's situated between Nordstan and Lilla Bommen.
In Stockholm, we have a number of development opportunities in Hagastaden, including Infinity that we mentioned before; and in the central city around Torsgatan and in Slakthusområdet, just south of the city.
I mentioned Brunna before, we have decided during Q1 to start a new construction of 13,100 square meters of modern logistics in Brunna, north of Stockholm, next to our existing assets. The investment volume is SEK 229 million, of which SEK 163 million remains to be invested. We have a positive view on the local market for logistics and warehouses. And since we already have 60,000 square meters in the area, we can manage the added volume easily.
I mentioned Entra before. In February, we announced that we had acquired more shares in Entra and thereby passing the 1/3 threshold, which means an obligation to present a mandatory offer for the remaining shares. Acceptances in that mandatory bid, combined with shares that we acquired in the market during Q1, meant an increase of our shareholding from 33.3% to 35.2%, and this was done at an average share price of NOK 115.5 or approximately 30% discount to Entra's reported net asset value. We think acquiring shares at these levels is a good investment for us, and passing the threshold and having concluded the mandatory bid also gives us better flexibility going forward. As mentioned, the acquisition of shares of almost NOK 400 million means that we indirectly acquired properties worth approximately NOK 1.1 billion.
Entra has a high-quality portfolio, mainly in Oslo, a strong customer base with a strong lease and a large and attractive project portfolio, and we still believe that the company is well positioned for the future.
Looking forward, we see global trade being affected by tariffs. The American President keeps surprising the market, resulting in high volatility. The rental market is stable in our regional cities, however, more cautious in the metropolitan areas. Still, the fundamentals for the Nordic economies exist to pick up, but it's more difficult to predict.
After 2024 with positive net leasing, the Q1 figure is, as I mentioned, a disappointment. Not so much that it's negative, that just reflects the cautious market, but the figure is simply too large. At the same time, our rock-solid financial position gives us ample room to maneuver if the market continues to deteriorate, and we can afford to ramp up our leasing organization. As we have said before, we are ready for new investments, both projects and acquisitions, because we have the financial position that we have. And we have increased the investment pace, including start of several development projects and the acquisition of shares in Entra.
That's it. Over to questions.
[Operator Instructions] The first question comes from Lars Norrby.
Not surprisingly, regarding net leasing. Out of the SEK 184 million, how much is Northvolt?
It's SEK 68 million.
And if I recall correctly, I think at the end of Q4, you had a total contract value of SEK 128 million to Northvolt. Can you say something about the other contracts that have not been affected so far?
You mean that there's a -- we don't have any remaining Northvolt contracts reported.
But you had a contract value, I think, SEK 128 million at the end of Q4. And now you're saying that the impact of Northvolt is SEK 68 million. So what about the remaining volume?
Yes. It relates to investments on behalf of the tenant expected to be paid back during the course of the contracts. In total, SEK 157 million. The SEK 68 million that we referred to relates to the positive effect of net leasing that we reported when we signed the contract. So there is a difference between the 2 numbers.
Okay. I'll stop there. I guess there might be some follow-up question on that one. Let me just turn to 2 leases that you announced so far in the second quarter, the one with Knightec and the one with the Swedish Police. Just so I understand, mid-April, you announced some 5,900 square meters, in addition, taking that contract, to 9,288. And then you mentioned a rental value of SEK 27 million. Is the SEK 27 million for the total area of 9,300 square meters.
For the Knightec lease, let me see if we can find that out for you during the call. I don't have that number exactly in my head here.
And since it is an extension of an existing space, what's the net effect in terms of net leasing? That's a follow-up on that one.
Yes, we can come back on that. Unfortunately, I don't have that number here.
And then please, same question regarding the press release you put out on the 5th of May, the contract in Jönköping, some 7,700 square meters, with a total rental value of SEK 23 million. But they are existing tenants with you. So the same question there, what's the net effect?
Yes, they are an existing tenant, but not for those premises. So they are an existing tenant across the street, but this is a completely new lease where 2,200 square meters is to be constructed. So the SEK 23 million only relates to new space.
The next one is John Vuong.
Just a follow-up on Northvolt. What is exactly the time line of the bankruptcy? Have you already received the keys of the asset? And how are you looking at reletting this?
I mean there is absolute interest for the premises, but we do not know for certain to which extent the current operation in those premises will be continued by someone acquiring the operation. We also see good interest in the properties that they have left, but we do not have any new information to report. We hope to lease those premises that they have left as soon as possible.
So how many premises have they exactly left then?
Sorry?
Come again?
How many premises have they exactly left? How many are still under contract by them?
It's a bankruptcy, but they've left one of the properties where they had their head office, Effekten 13. So it's a new build office in excellent location in the area, and we deem that it will be leased out again on reasonable terms. The remaining ones, they are still using, but they are handled by the bankruptcy estate.
Okay. Clear. And then on the remaining SEK 100 million of negative net letting, could you provide a bit more color on these? Are these concentrated in any specific region? Or any specific asset class? And also, where do you see opportunities to work on net letting over the coming year?
They are fairly spread out. Some of them are larger. And just to give you some color, one of them is terminated for the reason of a client relocating their business outside of Sweden. And it has still a 2-year remaining contract term. So that's one end of the scale. And the other end of the scale is, of course, small businesses that simply cannot cope with the uncertainty in the market. So it is a combination of a number of terminations that have accumulated, but they're fairly spread out over our geography.
And on the positive side, where do you see opportunities to improve net letting over the coming year?
Across our geography, to be honest. Of course, the largest vacancies that we have is in the Stockholm area, and that's also the area where the growth will pick up first in the Swedish market. We have a very strong development in Copenhagen and the Greater Copenhagen area. So we figure that if and when the uncertainty that affects business decisions is maybe not gone, but at least something that we all can live with, then we assume that, that part of our markets will also pick up. And once again, Gothenburg is a very strong market. It has been affected over the last couple of years with an increased volume, new projects that have entered the market, and we see a slower pace in new office space in Gothenburg. And with the growth of the industry there, we believe that, that is also an area of opportunity for us.
Next one is Markus Henriksson, ABG.
I will also ask a question on Northvolt. First off, did you get full rent from Northvolt in Q1 2025?
Yes. Yes, we did.
All right. So what is the top line effect on this bankruptcy for Castellum in Q2 2025?
I mean it is actually a difficult question to answer. But looking at the total effect going forward, I would say that we are looking at SEK 100 million in reduced NOI if we do not lease out any of the space. Due to our accrued accounting, there are some parameters that will actually limit the impact for the remainder of the year. The total effect, I think, is around SEK 45 million for the remainder of the year.
There's a lot of different figures here from the previous questions. And I assume that it's not super easy for you guys to give us a certain answer. But what is the immediate effect in Q2? That should be quite clear to answer. The full effect, I understand, could be complicated given if you lease out or not and other factors.
But first, you have to take into consideration that we actually have received some money during the second quarter, SEK 9 million, that will have to be netted out. We also have some investments that we actually will -- when looking at this during the second quarter, we will have a positive effect of around SEK 50 million in income relating to those accounting measures that will be concluded. I think that you have to rely on the total number of SEK 128 million for the full year and then with an NOI effect of SEK 100 million. That is the worst-case scenario with no one paying any rent for a normalized full year. For the second quarter, it's difficult to give you a more clear answer.
That's clear enough. Then a bit on the terminations. I see there's a quite significant one in Öresund. You highlighted, Joacim, that one of your clients were reallocating outside Sweden. So first off, is that in Öresund? And second question, is it many small leases in Öresund or any larger ones you can highlight for us?
The one in the Öresund area is a larger one. I don't think that anyone has disclosed, neither us nor the tenant, so I'm not sure it's appropriate to comment on that. But that is one larger lease, and it's going to affect our top line in 2 years. But we report it as a negative leasing this quarter. The others are, as you mentioned, fairly spread out just across geography and across sectors.
All right. So if I get you here, the total negative net leasing, a lot of that will occur in 2 years' time. That's what you're saying?
No, no. I don't have the figures. I'm looking at my colleagues here if we have that figure, how much that individual termination is.
I mean, in the net leasing, bankruptcies hit us more or less immediately. And of the remainder, roughly SEK 30 million will affect us 18 months and beyond that date.
All right. That's clearer. Then a bit on vacancy rents, you updated them and then it affected the vacancy rate by 40 basis points, I saw. I just wanted to see if there's any markets or property segment that stand out when you did that review.
It actually relates to Kungsleden. And the methodology, it took time for us to align the method that we used for Castellum, and that was something that we just had to do, and that was done this quarter.
Very clear. Then a follow-up here on occupancy rate and net leasing. I understand that it's not easy to give a clear answer. But if you just look at what net leasing you've had in the past, say, 4 quarters, and we just look at new leases and terminations and we kind of exclude projects, so we look at your management portfolio, when do you think your occupancy rate will trough? And then maybe also what is the kind of timing effect on your reported terminations? You highlighted a bit before, Joacim, but is it more kind of back end? Or is it more hitting you here in 2025? So anything that can help us when the occupancy rate will trough, et cetera.
I mean I would say that, say, for the bankruptcy, the remainder, you take out the SEK 30 million, the rest will start hitting us in the fourth quarter and beyond that date. Not that much will actually hit us for the first 3 quarters of the termination.
Perfect. Clear. Then also very quick on value changes, very small figures, minor figures here, but you've had 2 breakeven quarters in a row previously. So are you seeing any trends among appraisers when you discuss with them?
I mean, first of all, the transaction market was improving and that gave the appraisers some more data points. And now it's sort of is a more cautious attitude on the transaction market with -- and that will affect, of course, appraisers' ability to find comparable transactions. But we are seeing a stabilized yield requirement and the adjustments that we made of the property portfolio value now is simply related to the cash flow. So I don't have a definitive answer on what all appraisers might see, but we are definitely ourselves seeing a stronger transaction market and thereby most likely more data points for the appraisers to use.
Next one is Adam Shapton, Green Street.
Can hear me okay? I want to ask another question on net leasing. But one comment you made in your closing remarks was about your ability to invest in the leasing organization. Could you just expand on that a little bit? Are you saying that maybe you're a bit underpowered? Do you need to have more capacity on your tenant underwriting? Obviously, you've got a lot of terminations and some bankruptcies here. What exactly did you mean? And where can you add more capabilities in that? That's my first question. I have another one as well, but maybe just on that one first.
Yes. No, I mean, traditionally, real estate companies maybe have not excelled in the area of proactivity and sales force. And we are investing both in staff and in support system and artificial intelligence and so forth to make sure that we not only have a good leasing organization, but an excellent leasing organization. This is something that will take time, and also it comes with a cost. And since we are the stable company that we are with a very healthy income despite what we focus on now, we have capacity to invest in that. So it is both an upgrade of our systems, but it's also upgrading our staff and the way we work simply.
Okay. That's clear. So it's an ongoing process.
It is. Yes.
My second question was just on you explicitly want to be a net investor. Obviously, Infinity is a sizable project. Can you say, in a year's time, what do you think the sort of project table will look like? You've got a lot of completions in the remainder of 2025. Do you think your net investment will be more on launching new projects or more on the acquisition side? How do you think that will look in a year's time?
I think that we will have a stable development of our project portfolio. As you know, we slowed down the projects or paused them quite rapidly end of '23 and beginning of '24. That is affecting us. It takes time to restart and to find contractors and to start the leasing activities again. So we are ramping up our projects because we have a healthy return on those investments, but that sort of takes time. And it's also, of course, market dependent. So I would say that we are constantly approving investment requirements from the organization. So that's an ongoing and pretty steady business where you will see us announcing new projects at a pretty stable pace.
When it comes to investments, we are looking at them. We will not be sort of pushed into doing any business just because we have to do a deal. But there are opportunities, and we'd like to make sure that they are creating value for our shareholders, not only today, but also in the future. So that is more of a coincident if the acquisitions will outnumber in volume the projects or not, but we are looking at them.
So that was the last question for today. Thank you all for listening.