Introduction & Market Context
Diös Fastigheter AB (STO:DIOS) presented its Q1 2025 interim results on April 29, showing continued growth despite some occupancy challenges. The Swedish property company, which focuses on Northern Sweden’s growth markets, reported income growth and improved property management efficiency while maintaining its conservative financial approach.
The company’s stock closed at SEK 65.70 on April 28, down 0.9% for the day, and is currently trading significantly below its 52-week high of SEK 93.25, reflecting broader challenges in the real estate sector.
As shown in the following summary of key performance indicators from the presentation:
Quarterly Performance Highlights
Diös reported total income of SEK 661 million for Q1 2025, a 3% increase from SEK 639 million in Q1 2024. This growth was primarily driven by completed development projects, despite a decline in economic occupancy from 92% to 90% year-over-year. The company achieved a 10% increase in income from property management, reaching SEK 221 million compared to SEK 200 million in the same period last year.
The detailed financial breakdown shows improvements across several key metrics:
Operating surplus increased by 5% to SEK 427 million, with the surplus ratio improving to 66% from 65% in Q1 2024. This improvement came despite inflationary pressures, demonstrating effective cost control. Net financial items remained stable at SEK 186 million compared to SEK 187 million in Q1 2024, benefiting from a reduction in the average interest rate to 4.2% from 4.5% a year earlier.
Detailed Financial Analysis
Diös maintains a well-diversified income stream across both property types and geographic regions, which helps mitigate concentration risk. The company’s portfolio is weighted toward office properties (55% of rental value) with significant exposure to public sector tenants, providing stable cash flow.
The following chart illustrates this diversification:
The company’s tenant base is dominated by government and public sector entities, with the Swedish Transport Administration, Swedish Police Authority, and Swedish Social Insurance Agency among the top tenants. This provides income stability, with the top 10 tenants having a weighted average unexpired lease term (WAULT) of 6.3 years.
Diös has maintained a strong net letting track record, with positive net letting in 23 of the last 25 quarters, although Q1 2025 showed a modest result of SEK 1 million:
Strategic Initiatives & Portfolio Management
Property valuation yields remained stable at 6.13% in Q1 2025 compared to 6.14% in Q4 2024, indicating resilience in property values despite market uncertainties. The company’s property portfolio was valued at SEK 31,621 million as of March 31, 2025, comprising 323 properties with a lettable area of 1,580,000 square meters.
Diös maintains a prudent approach to financial management with a loan-to-value (LTV) ratio of 52.8%, below its target of 55%. The company has diversified its financing sources, with bank loans comprising 69% of funding, followed by green unsecured bonds (15%), SFF bonds (8%), and commercial paper (8%).
The following slide details the company’s financing structure and key financial metrics:
The average interest rate has decreased to 4.2% from 4.3% at the end of 2024, with a fixed rate maturity of 2.6 years and debt maturity of 2.3 years. The interest coverage ratio (ICR) remains stable at 2.2, in line with the company’s target of maintaining an ICR of at least 2.0.
Forward-Looking Statements
Diös is strategically positioned to benefit from growth opportunities in Northern Sweden, which is experiencing significant investment in green industries, data centers, and infrastructure. The company highlighted several factors supporting long-term growth in its markets:
The company recently completed an acquisition in Umeå, adding 73,000 square meters to its portfolio at a cost of SEK 1,600 million. This acquisition is expected to increase income from property management per share by 4%, demonstrating the company’s commitment to strategic growth.
Looking ahead, Diös expects the rental market to continue showing resilience, with rising market rents and increased activity in tenant adaptations. The company’s local presence and scale provide a competitive advantage in capturing these opportunities.
Management remains confident in the company’s ability to deliver long-term value through its unique position in attractive markets, long-term profitability focus, and strong stable cash flow from its well-diversified portfolio.
Despite the slight decrease in occupancy rate, Diös’s Q1 2025 results demonstrate operational resilience and financial discipline in a challenging market environment. The company’s focus on Northern Sweden’s growth markets, combined with its conservative financial approach, positions it well for sustainable long-term growth as market conditions improve.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.