UBS upgraded Swedish real estate firm Castellum to “buy” from “neutral,” raising its price target to SEK 135. The Swiss bank cites the company’s potential to deliver higher returns on equity (ROE) under new CEO Pål Ahlsén, alongside Sweden’s resilient economy.

Castellum trades at a 32% discount to net asset value (NAV), a gap UBS believes underestimates NAV growth from its asset rotation strategy. The brokerage expects the firm to be a net seller this fiscal year before returning to buying higher-quality assets by FY28.

Sweden’s GDP is forecast to outperform European peers through 2028, boosting office demand. With 70% office exposure, Castellum is positioned to benefit from AI-driven trends in prime markets like Stockholm. UBS projects 25% upside from the current share price.