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Introduction & Market Context
Fabege AB presented its Q2 2025 interim report on July 7, 2025, highlighting the company’s performance amid ongoing challenges in the Stockholm office market. The Swedish property company, which focuses exclusively on the Stockholm region, reported a stable financial performance despite rental pressure and occupancy challenges.
The Stockholm-based real estate company’s stock price responded positively to the results, rising 2.39% to close at SEK 79.55 following the presentation. According to the earnings call, CEO Stefan Dahlbo emphasized the company’s continued belief in the Stockholm market, describing the results as "a stable result in a continued weak market."
Fabege’s portfolio consists of 99 properties valued at SEK 78.3 billion, with a lettable area of 1.3 million square meters and a rental value of SEK 4.1 billion. The company maintains its strategic focus on key Stockholm areas including Arenastaden/Haga Norra, Solna Business Park, Stockholm Inner City, Hammarby Sjöstad, and Flemingsberg.
As shown in the following map highlighting Fabege’s strategic concentration in Stockholm’s key districts:
Quarterly Performance Highlights
For the first half of 2025, Fabege reported rental income of SEK 1,717 million, slightly down from SEK 1,731 million in the same period of 2024. The company’s profit from property management remained relatively stable at SEK 657 million compared to SEK 659 million in the previous year. However, the bottom line showed significant improvement with a loss of SEK 267 million, substantially better than the SEK 862 million loss recorded in the first half of 2024.
Key performance indicators reveal both strengths and challenges. The company reported a surplus ratio of 72% against a target of 75%, while property values experienced a modest decline of 0.8%. Rental growth in identical portfolio was approximately -3%, reflecting the challenging market conditions in Stockholm’s office sector.
The following table presents Fabege’s key financial ratios, showing the company’s performance against targets:
Occupancy rates have declined to 87% in Q2 2025, down from historical rates that were consistently above 90%. This trend reflects the broader market challenges in Stockholm’s office sector, as illustrated in the following chart:
Net lettings for the first half of 2025 were negative at SEK -6 million, with new lettings of SEK 124 million offset by terminations of SEK 130 million. The company reported that SEK 161 million was extended on unchanged terms, while SEK 103 million was renegotiated with a 3.1% decrease in rates.
The following chart illustrates Fabege’s net letting performance from 2015 through Q2 2025:
Financial Position & Outlook
Fabege maintains a solid financial position with a loan-to-value ratio of 43% against a target of less than 50%. The company has successfully maintained 99% green financing, with a fixed-term maturity of 3.2 years and a fixed-interest term of 1.5 years. The average interest rate as of June 30, 2025, was 2.89%, reflecting the impact of rising interest rates on the company’s financing costs.
The company highlighted strong access to financing in the market, having refinanced a bank facility of SEK 1.5 billion and issued bonds worth SEK 700 million during the second quarter. Fabege also launched an updated Green Framework, reinforcing its commitment to sustainable financing.
The following financing overview details the company’s debt structure and key metrics:
Looking ahead, Fabege aims to increase occupancy rates to 95% and is optimistic about improving net letting in the second half of 2025. The company’s rental development chart shows a projected gradual increase in rental income from existing leases over the coming quarters:
Strategic Initiatives & Project Development
Fabege continues to advance its project development activities, with total investments of SEK 1,044 million in the first half of 2025. These investments were allocated across management properties (SEK 408 million), property improvements (SEK 26 million), and project properties (SEK 610 million).
The company completed several significant projects, including Kvarter 1 (Ackordet 1) in Haga Norra, Alfa Laval (Separatorn 1) in Flemingsberg, and Textiltorget (Påsen 1) in Hammarby Sjöstad. Ongoing projects include developments in Solna Strand, Hagastaden, and Arenastaden.
As shown in these images of completed projects:
Fabege’s residential development arm, Birger Bostad, is progressing according to plan with the Haga Nora project. The company has completed Brf Alma with 20 out of 23 apartments sold, while 40 of 50 owner apartments have been sold with access expected in December. Additionally, 78 rental apartments are nearing completion for occupancy in autumn 2025.
The company’s building rights portfolio as of June 30, 2025, includes 701,000 square meters of commercial rights (45% legally binding) and 523,400 square meters of residential rights (37% legally binding). These represent significant future development potential with booked values of SEK 6,800 per square meter for commercial and SEK 7,600 per square meter for residential.
Competitive Industry Position
Fabege emphasizes its strategic positioning in Stockholm, which it describes as Sweden’s largest growth region. The company highlights that Stockholm generates 30% of Sweden’s GDP and has been recognized as a best place to visit in 2025 by CNN. The presentation also notes Stockholm’s status as a highly innovative region with strong business clusters and recognition as the world’s most sustainable city.
The following slide outlines the key reasons for Fabege’s continued belief in Stockholm’s growth potential:
Despite current market challenges, Fabege maintains its conviction in the office sector, noting that while work patterns are evolving, the office remains crucial. The company cites increasing numbers of people in Stockholm’s office-intensive sectors and a clear trend of workers returning to offices. Fabege believes its well-positioned properties with good transport links will continue to attract tenants.
The company’s long-term growth strategy focuses on completing existing projects, increasing occupancy rates to 95%, pursuing new investments and value-creating transactions, and maintaining cost-effectiveness. The ultimate goal is to grow management profit and achieve the best total return on the property portfolio.
As market conditions remain challenging, Fabege’s stable customer base provides some resilience. The company has approximately 700 customers, with the 25 largest representing 45% of rental value. The average contract length is 4.8 years, providing visibility on future rental income. Office space accounts for 84% of total rent, as illustrated in this breakdown:
In conclusion, Fabege’s Q2 2025 presentation demonstrates the company’s ability to maintain relative stability despite headwinds in the Stockholm office market. While facing challenges with occupancy rates and rental growth, the company’s improved bottom line and strong financial position suggest resilience. The focus on sustainability, project development, and Stockholm’s long-term growth potential forms the foundation of Fabege’s strategy to navigate current market conditions.
Full presentation:
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