Summary of 2024

Vasakronan’s assignment

is to generate a high and long-term risk-weighted return for our owners the First, Second, Third and Fourth Swedish national pension funds. Though never at the expense of the environment and people. A return that will benefit Sweden’s current and future pensioners.

We take responsibility

for our environmental impact and for all the people who are affected by our business. We do so by creating safe and secure work and urban environments and by applying fair working conditions. It goes without saying that we also say no to any form of discrimination.

We create value

by developing our properties, streetscapes and areas with the goal of making them attractive and sustainable. We work strategically over the long term and take responsibility for creating environments that people want to be in. This creates significant value for our customers, owners and society at large.

A3, stable outlook

Credit rating Moody’s

SEK 9.4 billion

Rental revenue

92%

Environmentally certified properties

SEK 178 billion

Property value

Statement by the CEO, Johanna Skogestig

We are delivering stable income from property management and a higher operating surplus despite a challenging economy.

Vasakronan continued to show its strength in 2024. Despite an uncertain operating environment, and a challenging economy and lettings market, we displayed an ability to adapt and navigate while maintaining stability. We continued to develop our property portfolio and our areas, acquired one property and completed several major projects. We have also strengthened our customer relationships and we are delivering stable income from property management and a higher operating surplus.

Read the full Statement from the 2024 year-end report here

Strong credit rating

Moody’s affirmed Vasakronan’s rating of A3, stable outlook during the year. The rating is motivated by factors such as the strong ownership structure, good access to liquidity, and the property portfolio’s high quality and a large proportion of public sector tenants.

The rating is an important precondition for ensuring access to financing and reaching our goal of a diversified financing structure, and during the year a total of SEK 7 billion was raised in the bond market. The fact that we have retained our strong credit rating and that we have continuously been able to issue bonds in recent years showcases our financial strength and the confidence we have from our investors.

New lettings and renegotiations

During the year, there were new lettings corresponding to annual rent of SEK 697 million and the corresponding amount for renegotiations was SEK 1,859 million, which is a record-high for the company. The year’s largest letting was completed in the fourth quarter with If, which is leasing 8,800 square metres and moving to Nordstan in Gothenburg in 2028. The lease runs for ten years and means that If will take over the lease when the current tenant, SEB, leaves the premises to move to Vasakronan’s Kaj 16 project development, which is currently under construction at Lilla Bommen. Another large letting took place in the first quarter with Nasdaq, which will be a tenant at Klara Zenit in central Stockholm. It is a ten-year lease for 8,300 square metres.

Despite the challenging economic climate, the occupancy rate of our retail premises remains high at 96% and we completed a number of excellent lettings during the year at locations such as Triangeln in Malmö as well as at Fredstan and Nordstan in Gothenburg.

A sustainable business model

Work to improve energy efficiency is still ongoing and during the year we continued to reduce our energy consumption. We are now reporting an average specific energy consumption of 70 kWh/sq. m., which has contributed to 60% of our investment portfolio being Taxonomy-aligned. Briefly, this means that 60% of our buildings have energy performance certificates confirming that they are among the 15% most energy-efficient properties in Sweden. This is a milestone that not only benefits the environment and Vasakronan financially, but is also positive for our customers.

Refinement of the property portfolio continues

Construction projects remain an important part of Vasakronan’s business and we finalised the following three projects during the year: Hötorgshus 2 and Grev Tureplan in Stockholm; and Kronhusgatan in Gothenburg. Located at Stureplan in central Stockholm, Grev Tureplan is a good example of how our projects contribute to the development of urban environments. The project involved an upgrade and modernisation of this fully let property, with a total investment of SEK 690 million.

Transaction market activity has picked up and compared with the previous year, volumes are up in our markets. Our own activity level was also high, having acquired Sthlm HUB at Stockholm Central Station during the year for a property value of SEK 715 million.

Business model for profitability and value creation

Our vision is to create future-proof cities for everyone, where people and companies thrive. Our business model enables us to achieve profitability and create sustainable value for our stakeholders. The overriding goal is to deliver a high and long-term risk-weighted return, though never at the expense of the environment and people. Our profitability is derived from letting premises at our properties for recurring revenue along with managing and refining our properties in an increasingly sustainable way for a positive value change. This is how we achieve a high total yield that enables us to distribute dividends to our owners and reinvest in the business.

Properties in prime locations

High-quality property portfolio and largest property owner in the city centre

Our property holdings are focused on modern, sustainable, flexible and attractively-located properties with office and retail space in parts of Sweden with healthy economic growth. The property portfolio focuses on attractive areas with good transport links and excellent possibilities for developing properties, streets and neighbourhoods as a cohesive whole. In all of these cities – Stockholm, Uppsala, Gothenburg and Malmö – Vasakronan is the largest property owner in the city centre.

At the end of the year, property holdings amounted to 166 properties with a market value of SEK 178 billion.

Overview of our sub-markets and our portfolio by city

The preferred choice for our customers

The core of Vasakronan’s business is letting premises for offices and city retail, in combination with offering tenants a high degree of service and flexible business solutions. Our customers are at the centre of everything we do and our success depends on our ability to understand and meet their needs. This is why we keep abreast of our customers’ development and maintain close dialogues with them. A high quality property portfolio and strong offering enables us to offer tenants new premises within the property portfolio when their needs change.

Our lease portfolio includes leases with contracted rents totalling SEK 9.7 billion, and with an average remaining maturity of 3.4 years. We strive to have a broad customer base with a high diversification of tenants and industries. The largest category is the public sector, which accounts for 24% and no individual tenant accounts for more than 3% of the contracted rent. Together, the ten largest tenants account for just 18%.

SEK 9.7 billion

Contracted annual rent

3,4 years

Average remaining lease term

89%

Occupancy rate

72%

Renewal rate

Good access to financing

For property sector operations, access to financing on favourable terms is critical for achieving long-term high yields over time. Our borrowing strategy is based on having a diversified financing base with low risk. We strive to have as broad a financing structure as possible, both in terms of loan instruments and in terms of markets, while maintaining a healthy reserve in the form of a credit facility arranged with the company’s owners.

We are Sweden’s largest issuer of green corporate bonds and commercial paper, and of the total loan portfolio, the share of green financing is 83%.

A strong credit rating is an important precondition for ensuring access to financing. In 2024, Moody’s affirmed Vasakronan’s rating of A3 with a stable outlook. The rating is motivated by factors such as the strong ownership structure, good access to liquidity and the property portfolio’s high quality as well as by the high proportion of public sector tenants.

SEK 75 billion

Total borrowings

3.6x

Interest coverage ratio

40%

Loan-to-value ratio

2.6%

Average interest rate

Sustainable urban development, places where people want to be

As a city developer, Vasakronan wants to create the best conditions for organisations who want to be seen and operate in the city. We do this in a variety of ways. Sometimes this is achieved through major structural changes, and other times by creating a favourable mix of activity, services, retail and cultural spaces at street level.

When we renovate or build new properties, we do so sustainably and with the goal of developing the best products in prime locations – and always from a holistic perspective. As one of the major property companies, Vasakronan often contributes to the development of entire neighbourhoods or areas in the cities where we conduct operations. One such area is Sergelstan in Stockholm.

During the year, the Kronhusgatan project was completed in Gothenburg, as were the Hötorgshus 2 and Grev Tureplan projects in Stockholm. Both Hötorgshus 2 and Grev Tureplan have been renovated and modernised to meet market demand for attractive and sustainable premises. At Kronhusgatan, 2,500 square metres of offices were converted into a school, with NTI Gymnasiet as the tenant.

We are also continuing to work on our major urban development areas and in Gothenburg the focus is on Lilla Bommen. Södra City in Uppsala is another of our major urban transformation projects. We welcomed companies, mainly in Life Science, to our project development Lumi during the year, and the building is fully let. It is an exciting project and one where we have successfully explored the possibilities of large-scale reuse.

At the end of 2024, the total investment volume of ongoing property projects amounted to SEK 5,394 million, of which 48% had been capitalised. The occupancy rate for the major projects was 71%.

Our responsibility

Doing everything we can to become more sustainable is a prerequisite for delivering on our owners’ assignment to generate a high and stable long-term return and for achieving our vision to create future-proof cities for everyone, where people and companies thrive. For these reasons, we started working with sustainability matters a long time ago and have integrated sustainability into our operating activities. Our high-set ambition of being one of the world’s most sustainable property companies requires everyone to continually contribute.

Our efforts are based on an extensive assessment of our operations and of how we are impacted by our operating environment, known as a double materiality assessment. In the assessment, we have identified the most material sustainability matters for our business. We have previously adopted a Roadmap to reach net-zero emissions across the entire value chain by 2030. Achieving this requires that we work together with our customers and suppliers.

Our operations affect thousands of people: our employees, suppliers and everyone in and around our properties. On their behalf, we need to ensure safe, secure and healthy environments with good working conditions free from discrimination.

Vasakronan – summary of 2024

Sweden’s leading property company