Titania publishes 2025 year‑end report

This English text is an unofficial translation of the original Swedish release. It is provided solely for convenience. If any differences arise, the Swedish version shall prevail and is the only official information.

* The comparative figure has been restated.
** As the calculation has been amended compared with previous reports, the calculation for prior periods has been corrected.

CEO COMMENTS
Titania has begun construction on 1,915 residential units in the past year, more than any other year in the company’s history. All of Titania’s projects are based in Stockholm County. It is likely that we launched the most projects in the county in 2025, as well as having started on building the most residential units in Stockholm in the past year.

We have begun so many construction projects in 2025 because we feel the timing is right. We have been able to procure contractors and suppliers on favourable terms due to the weak construction market. Stockholm has also been in a long period where there were few construction startups, and this will lead to a deficit of finished residential properties in the next few years. Many of the residential projects we began in 2025 will be finished by 2028. Even with a pessimistic outlook involving no economic upswing or rising demand in the next three years, the declining number of residential properties on offer will be enough to push rents and home prices up.

Having said that, the right timing doesn’t automatically mean that projects can get started. Each individual project requires large amounts of capital over a long period, and access to f inancing is crucial in determining whether, and when, we can begin construction. Another of the reasons behind the high number of projects started in 2025 is that conditions for financing property development at Titania have improved dramatically. We have been able to finance every project we wanted to begin through a combination of new share issues, bonds, new mortgage loans on existing properties and construction loans. This access to financing is largely due to the fact that we, as a company, have managed to establish a higher level of trust among the capital markets. In a few years that have been relatively tough for property developers generally, Titania has been able to demonstrate that it can carry out projects with decent profit levels. We have also been able to demonstrate strong finances generally, and have not failed to pay interest on bonds and loans, even in years when interest rates were well above what earlier forecasts predicted.

The general conditions for property developers to obtain f inancing improved dramatically in 2025. Capital is now available to finance projects both through lenders capable of providing large-volume construction loans and through equity investors willing to take on risk. By equity investors, we mean actors who acquire companies or parts of companies (i.e. traditional share investors), as well as those who invest in individual projects through shares, preference shares, or otherwise purchase an ownership stake – essentially, the type of actors who do not lend money but instead assume risk in exchange for a share of the profit. One of the factors behind the general change is the interest rate reductions that began in 2024 and started having an impact in 2025. Buyers of rental properties have returned to the market and individual sales reached record highs in 2025. There has not been the same high number of buyers as in the years prior to the interest rate hikes, and the market has been quite tentative, but the trend is clearly an upward one. For the capital markets, which focus more on assessing future scenarios, the trend has been obvious enough to start financing property development in earnest.

The change in access to financing compared to previous years is palpable. In 2023–2024 many lenders and equity investors said, contrarily, that it would soon be the right time to invest in property development in Stockholm, but when push came to shove very few actually did anything. Titania met with many actors during this period, both in Sweden and abroad, and saw all kinds of ‘firm’ proposals, from straightforward construction loans to joint ventures, forward purchases and pure equity investments, yet almost all of them fell through. Reasons included everything from the actor’s own financiers pulling out and attempts to adjust contractual terms in the actor’s favour far into the negotiation process and even international actors claiming not to understand the Swedish rental system. But with hindsight, the main reason always came down to the same thing: there simply weren’t enough actors ready to enter the market at the same time. Most of them were holding back, afraid to be one of the first to take a leap. Now, conversely, many actors are now already in the Swedish market and those that aren’t are afraid of missing the boat.

The increased activity among equity investors was typified, for example, when Starwood, a global private investment f irm in the US, bought the Swedish arm of property developer Nordr in early 2026. For Titania, a sharp increase in interest from major share investors during the autumn meant that we could bring in capital via a new share issue towards the end of 2025. Activity among lenders has increased to an even greater extent, and access to capital for construction loans positively exploded in 2025. In Q4 alone, Titania signed agreements worth in excess of SEK 1.8 billion for project financing. When it comes to construction loans, access to capital is not the only factor enabling large-volume construction, the underlying terms are important as well.

During the no-interest era, prior to 2022, construction loans were mainly sourced from major Swedish banks. These banks were relatively cheap and would grant loans for large projects generally, but for a player of our size there was almost always a requirement to split the loans into tranches of no more than SEK 500 million each, over two years maximum. This meant that larger construction projects had to be split up and completed in stages, rather than jointly in tandem, an approach that was rarely favourable and usually led to higher production costs. The interest on the loans also had to be repaid continuously, which meant that projects swallowed a lot of liquid assets during the construction period. Furthermore, the loan amount relative to overall project costs was comparatively low. The alternative to lending from the major banks was to borrow from smaller actors, who could lend a higher proportion of the project costs. The problem there, however, was that due to capital adequacy requirements, they could only lend capital for projects worth around SEK 200 million at most, rendering them even more unfavourable for large projects. The only other option for financing a large project in one go was to raise funds through equity investors directly in the projects, which meant giving away a share of the profits. Equity investors are generally quite good at demanding a large ownership stake to guarantee f inancing for a project, and they often impose a cost cap on the developer. This essentially reduces the developer to a contractor, bearing the execution risk while giving away a higher share of the profit.

But with the new market conditions in place since 2025, these kinds of approaches are now a thing of the past. During the year, we have raised capital via straightforward construction loans on individual projects up to SEK 1 billion, with no tranche requirement. Moreover, the loans finance a high proportion of the project costs, they run for almost three years, and interest is not paid continuously but is capitalised and only paid when the loan matures. With these parameters, we can efficiently begin all aspects of a project simultaneously, while not being burdened with negative cash flows to pay interest along the way. Interest falls due for payment only when construction is f inished, by which time we are very likely working with a value that’s higher than the production costs, a value we can realise either by taking out a final placement loan secured against the rental income, or by selling the property. Interest rates for this ‘new’ type of construction loan are slightly higher than the very cheap loans from major banks, but because the loan finances a higher proportion of the project costs, the volume of more expensive bond financing required on top of the old type comes down. So overall, financing is now cheaper than it was under the old model, at least for Titania. Above all, financing a higher share of the project costs in this way means that we don’t have to pass on any project profit to equity investors, but have still been able to begin construction in large volumes. A structure like this seemed completely impossible as recently as 2024.

Thanks to the large volumes, the absence of ongoing interest payments and the long maturities, for us the money from these construction loans is more like money that fund structures or private equity companies were traditionally able to raise, but without any obligation on our part to share profits at the project level. The reason we enjoy such favourable terms for these construction loans is, of course, that the investors behind them have come to the same conclusion as us with regard to timing linked to the future housing shortage and rising demand for residential properties in Stockholm. Investors essentially perceive this lending as low risk, and accept a lock-up of their capital and a relatively modest return in exchange. So just what proportion of all construction in Stockholm do the 1,915 residential units Titania started last year represent? While statistics are not yet available for 2025, figures for 2024 reveal that Titania began 8,979 residential units in Stockholm County, which equalled 21.3 percent. The forecast for 2025 is that slightly more were started, but not a huge increase. If we cautiously assume that Titania accounted for 15 percent of all construction startups of residential units in 2025 then, bearing in mind project times, we may well represent 15 percent of all f inished residential units in Stockholm in 2028. We look forward to the pricing power that this will give us in a market with an ever-growing housing shortage. 

Einar Janson
CEO