The wave of AI has swept through the stock market and into the latest CEO statement from Fastpartner. This development did not go unnoticed by X, and Sven-Olof Johansson notes that AI provides “enormous opportunities for rationalization.”
His assessment is that office spaces will decrease as companies require fewer employees and consultants due to AI. However, this is not a concern for the real estate veteran at the moment.
“In today’s context, it is purely a cyclical phenomenon that vacancies are increasing slightly,” says Johansson.
Meanwhile, Fastpartner has not been severely affected.
“We have managed quite well so far. This is because we have had a duration on the lease agreements that prevents any of the major contracts from expiring during this period. There is a bit of optimism growing again among some of our tenants.”
“Smaller companies are facing problems”
Only a few of Fastpartner’s customers have gone bankrupt, according to Johansson.
“But it’s still a bit challenging. Many are struggling with the deferred taxes they received on employer contributions and corporate taxes during the pandemic, which are due now. Many smaller companies are facing problems,” he adds.
Sven-Olof Johansson states that properties in central locations are easy to rent out, but it is a bit tougher in Frösunda in northern Stockholm. Johansson explains that their customers have long lease contracts, so they are not affected by the lower interest.
Looking at the numbers for the fourth quarter, Fastpartner’s management result more than doubled compared to a year ago: 171.8 SEK million.
Fastpartner aims to achieve a rolling management result of 1.1 billion SEK annually by the end of 2025.
“It’s purely an interest effect,” notes the real estate veteran, who predicts that the Riksbank will continue to lower the interest rate to 1.5% during the year.
“I could have increased the dividend more”
In the regular dividend, 1.10 SEK per A-share (1.00) is proposed, along with an unchanged dividend of 5.00 SEK per D-share (5.00).
“We have secured a good cash flow for the entire next year. We have control over the interest rate development, and we have made some interest swaps, which have become cheap now. We have said that we will distribute at least one-third of the management result, and we actually distribute less than that. We could have increased it more,” Johansson explains.
“Why don’t you do it?” I ask.
“I think a 10% increase is enough. It shouldn’t stand out too much in my opinion. This might leave room for more increases in the future,” he replies.
Sven-Olof Johansson believes that the company has good financing opportunities to make deals when they arise.
“Do you see plenty of good business opportunities right now?” I inquire.
“No, I don’t. I don’t think so,” says Sven-Olof Johansson, continuing, “I think the yields are too low. You don’t get compensated for the risk.”
Instead, Johansson believes it is better to invest in renovating and working with the existing property portfolio.
“Wants to enter other sectors”
Sven-Olof Johansson is the largest shareholder in Fastpartner, owning almost 69% of the company. But in his own private stock portfolio, he has also started building a small position in Fredrik Lundberg’s Hufvudstaden. According to Holdings, 50,000 shares were acquired in December.
“I think they are cheap,” he remarks.
However, in Neobo, Sven-Olof Johansson has sold 1.8 million shares, although he still holds 5.5 million shares.
“I wanted to reduce my exposure to real estate and enter other sectors instead,” he explains.
Boliden and SCA are the stocks in which Johansson has increased his investments the most recently. In Boliden, he has, according to Holdings, increased his holdings by 100,000 to 315,000 shares. Additionally, Johansson mentions that he has more Boliden in a private portfolio.
“Boliden is a bet on higher metal prices. They are supported by the idea of a reconstruction in Ukraine and the increased demand that can come from there. I also generally think that metal prices have held up well while the dollar has had a fairly good performance,” says Sven-Olof Johansson.
Since January 29, he has owned over 1 million shares in SCA. Johansson believes SCA’s stock has been undervalued, while there has been a shortage of sawn timber and logs.
“SCA has a slight advantage in that they have a lot of their own forest. There is also a reconstruction phase there. There is a lot of wood construction needed when rebuilding a country, even though that wasn’t the intention in my case behind SCA,” he explains.
“But maybe that’s why you’re holding on to it now?” I ask.
“Yes, I think it’s a good company and cheap. I also bought some Stora (Enso, ed. note) today,” he adds.
Sven-Olof Johansson’s holdings
| Company | Value (SEK million) |
|———————————-|———————|
| Fastpartner | 8,895 |
| H&M | 438 |
| Samhällsbyggnadsbolaget i Norden | 296 |
| Handelsbanken | 196 |
| Swedbank | 187 |
| SCA | 155 |
| Boliden | 121 |
| Neobo Fastigheter | 100 |
| SKF | 23.2 |
| Ericsson | 17 |
| Hufvudstaden | 6.29 |
| Intervacc | 0.37 |
| Nordic Whisky Capital | Unlisted |
| Northmill Group | Unlisted |
(Note: The list may be incomplete as not all of Sven-Olof Johansson’s holdings are shown in the ownership database Holdings. Data is as of February 13.)
This comprehensive overview of Sven-Olof Johansson’s insights, investment strategies, and the performance of Fastpartner provides a deep dive into the real estate industry and the broader market trends. Johansson’s balanced approach to diversification and long-term growth highlights the complexities and opportunities present in the investment landscape. As he navigates the evolving economic landscape, Johansson’s perspectives offer valuable insights for both seasoned investors and those new to the market.