Catena AB (publ)

Hi and welcome everyone. The agenda today is the same as we used to have. Short summary, business overview and update, followed by sustainability, finance and a short takeaway before ending up with Q&A. Next slide, please. So let's dive into a summary of Q1 2024. We report 11% increase in rental income, ended up at 493 million secs driven by acquisitions, projects, and stronger like-to-like numbers driven by our CPI-linked contracts.

Profit from property management increased by 30%. In total, and per share, it was unchanged at 5.5%. sex per share. The balance sheet is very soft. With an LTV at 34.1% as an rates in March which we will come back to later on. We report an increase in NRV per Thank you. We are comfortable to grow further. And we have already during this quarter added three acquisitions to almost 1.2 billion SEC. Next slide, please. and for business overview next time so an update from from the market and then regarding the transaction market see that it has opened up again and we expect the optimism is here to stay. The activity is for sure much higher now compared to the latest years. The numbers for e-commerce First, for Q1 2024, it shows the positive trend, and it's up 11% compared to the first quarter of 2023, although compared to very low-digit 2023,

We are not back at the levels from the pandemic, but it's a good signal and it gives some optimism within the segment. Generally speaking, I can say that there are quite many players asking for new premises, but the processes do take longer time than it used to be. We have patience and are confident that we can be successful and present new projects going forward. And lastly, as far as we know, there is the same situation regarding vacancies around the Stockholm, Mälardalen region as in previous quarters, actually. Next slide, please. Looking into our customer base, there has been a minor change regarding the top 10 customers that now stands for 43% of the contractual value.

And that's before the logistics and transport together. with food and beverage are two big segments in our portfolio. Next slide, please. Talking about our portfolio and the regions. This year, we report in four different regions called Sweden's South, West, and East, and then Denmark's. South is for Malmö and Helsingborg, exclusively Denmark. West is former Gothenburg and Jönköping and East is former Stockholm. The fair value has increased due to acquisitions, projects and amounts now to 32.5 billion steps and almost 2.4 million square meters. Next slide. This is an update further on. In March, which they would talk more about. The proceeds would be used to shift up. Here we have identified attractive opportunities in the acquisition market. market as well as we see good chances to start new projects on our land bank. And the goal is, of course, to increase the earnings share as soon as we can. Next slide, please. our ongoing project portfolio totals to around 3.4 billion tech we're 1.5 billion remaining investments and when all this is completed we we will add another 290,000 square meters to the portfolio. And the yield from cost on total is around 6.5. And for new projects, we are aiming Next slide, please.

In this quarter, as I said before, we have acquired some properties, and one is a Danish property in the Copenhagen area. The land area is 81,000 square meters, where one part is a building right enabling 17,000 of new lessable area. the existing buildings have a GLA of 32 000 square meters and ScanGlobal is the tenant and has an 11-year lease. Just before closing the quarter we acquired a new produced property in Helsingborg via a sale and leaseback transaction and DSV is a tenant for a 10-year lease.

Folks can are new into our customer . Next slide, please. With regards to the development There are no updates . Next slide, please. Some words about the leasing update. And looking into that operation, our net letting was plus $8 million in the quarter. Our way is now what's comparable to 5.4 years. The letting rate reduced. is actually down to 95.6% and it's not dramatic and it's due to one, it's a stepping area and it's a global property a completed project in Malmö where one part was speculative on speculative basis. And third, we also terminated one contract from our side to get a better solution in place. after the summer, and that was in the region east. With that said, next slide, and please, I have to hand over to Sophie. Thank you. Good morning, everyone. We have reached 44% and have over 1 million square meters of our less rural area environmentally certified. We continue to maintain a high level of youth taxonomy alignment. Although this is lower than last year, And going over some financial figures.

Next slide, please. And next slide for some income. Rental income for the first quarter came to 493 million, a growth of 11% since last year. The increase was proven primarily by indexation, some larger acquisitions and projects being finalized. Next operating surplus follows this development and rose 10% to 394 million. Profit from property management rose 3% to 285 million. Next slide, please. Rental development.

Our CPI-linked contracts that came to effect in January gave a life-long growth of 6%. . . . . . and to STD in North Sheffield were the main contributors during this quarter. And now handing over to David from the Council of Financing. And next slide, please. Thank you, Sophie, and good morning to everyone. Our capital raising efforts during the quarter across both debt and equity highlights our strength in the market. Assessing the capital structure, I would like to start by addressing the current environment briefly, specifically by volatile interest rates during the quarter. because anticipating six or even seven rate cuts from the Fed in the beginning of the year, U.S. market sentiment has shifted, indicating only one or two cuts this year, if any. In the Nordics, the landscape differs with less inflation, less aggressive fiscal policies, and more moderate growth and resource usage, the likelihood of rate cuts in the near future. is higher. Regardless of this, we remain confident in the robustness of our business fundamentals. This conviction drove our decision to amplify equity during the quarter Through a targeted share issue, raising a total of 2.1 billion, as Jürgen pointed out earlier.

We were very pleased to observe the interest coming from both new and existing shareholders, highlighting our reputation in the market. On balance day, the equity ratio adds up to 53%, leaving room for capitalizing on investment opportunities. As always, we continue to prioritize the safety of margin for any environment. Passing on to the next slide. On balance day, our financial KPIs comfortably align with our policy and covenant parameters. Following the directed share issue along with new debt, the loan-to-value remained comfortable at 34.1%. Our net debt to EBITDA amounted to 7.3 times and our interest coverage ratio to 3.6 times.

The secure debt-to-value ratio reached 26%. And while our unencumbered assets offer flexibility for tapping into capital markets, it seems sufficiently attractive. Next slide, please. On March 31st, the company's weighted average interest rate on total debt was 3.8%, with a weighted average term of 3%. During the quarter, we successfully secured new debt totaling 1.2 billion, which was utilized to finance two strategic acquisitions. The average cost of this that was 4.5% inclusive of interest hedges. Simultaneously, the capital market expanded as optimism grew and uncertainty regarding risk the real estate market diminished. Credit spread has gradually narrowed over the quarter, mitigating elevated market rates. After the share issuance funds, including debt commitments, totaled $4.6 billion on the balance today. This means our 12-month liquidity coverage ratio is well covered. Passing on Next slide. Average weighted cost of that was seven basis points higher compared to three months ago, driven by the leveraged acquisitions taking place in the quarter. The timing of revenues from the acquisitions will to some degree catch up the additional costs from the new debt. During the quarter, we utilized what we measured to be a window of lower risk.

rates during March and obtained interest rate swaps and forward starting swap totaling 1.3 billion, carrying fixed interest of approximately 2.5% fixed with tenors of between six and eight years. Our consolidated interest maturity structure implies we have currently 69% of our total debt fixed with an average term of 2.9 years. Our derivatives portfolio and fixed interest loans combined have a mix of maturities up to nine years. Now, passing over to Sophie for the next slide. She will lead us through capital deployment and valuations.

Thank you, David. Our capital deployment divided into acquisitions of 1.2 billion with Jan Holmen in the lead over South of Copenhagen and the Taylor Leapback

And also a piece of land in connection with our existing . project project in Lannister and the project at Stigamo in Jönköping. Total capex for the year rounded up to 1.8 million euros. And next slide, please. The property value was written down with 199 million due to higher yield requirements. The value changes corresponded to 0.6% of the total value before adjustment. The average weighted valuation yield for the portfolio is 5.8 by the end of the period. And the extra net initial yield came to 5.6. Thank you Sophie. So the takeaways from today could be summed up in three points. First, Catena delivered a solid Q1 report. Secondly, we have a very good opportunity to continue growing through acquisitions and new projects. And the third point is with the latest

all conditions to shifting up a year in our business and with that said we would like to open up for a q a if you wish to ask a question please dial pound key 5 on your telephone keypad to enter the queue If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from John Vong from Van Lanshot Kempen. Please go ahead.

Hi, good morning, team. Thank you for the presentation. I'm looking at your like-for-like number, and I was wondering whether you could provide a bit more color on it. I mean, you have... Danish exposure, where indexation is much lower than Sweden.

At the same time, vacancy increased over the year. And still, it comes quite close to the Swedish indexation, 69.5%. So what's the bridge here? We can see some contrasts. We can see a bit higher rent, but that's as we have said many times on the margin, but we have complete projects and there's no in the comparison so we added acquisition project and then we also say that we have a total of 90 percent impact on the 6.5% indexation. So all that summarized is the numbers actually. But my question is not in the statistics. No, it's not. Those are included in the . Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Okay. the bridge between the 90% of the 6.5 to 6.4, so basically from 5.9 to 6.4.

That's from the renegotiated contracts.

Yeah, that's correct. Correct. Thank you. And then moving on to the pipeline, do you have any update on who's C? because it's been paused for quite some time now, and I still see it in the report as one that could be completed. And maybe on a different development, on a no-waste development in Jönköping, which is going to be delivered this year, it still says 38% occupied. So from my understanding, there's an option to take the entire space for them. Just wondering on how discussion starts progressing here.

Good question, John. First, to say there is the issue with the traffic department of the government. I don't know.

It's Swedish word traffic government. We have to wait to start that construction. Unfortunately, we have ongoing discussions, but as we speak, we are not agreed on if we can start earlier than they say. So we don't have any updates. As soon as we have, we will present it. Yes, they have an option. We feel very confident that we have. When the project is finalized at Q3, Q4, I'm very optimistic to have more or less all the list of areas signed with at least agreement. We have to come back with that as well. Okay. Thank you. Thank you. Good morning to all. I have a few questions. as well, perhaps starting off with the acquisition pipeline you mentioned in the presentation. You see a short-term pipeline of around $2 billion. Could you tell us something about where is this pipeline? And what kind of yields do you think that you can get in this market? Well, we are focusing on the southern part, on the west part of Sweden and Denmark as well.

It's tough to give any specific numbers about the yields and so on, but can mention that it's fair to assume that we can have identified on the same levels as the acquisitions we have made in Q1. That's just to give some sort of flavor on it.

Okay, that is clear. Thank you. And then also, you mentioned that your balance sheet now is obviously quite strong following the share issue. The LTV is at 34%. Now, over time, what do you think, given your portfolio and the company as a whole, what do you think is a reasonable level for LTV?

your kind of company over time to have in terms of LTV. I understand that market situations can change of course, but what do you feel in terms of your LTV at this point? Yes, thank you, Eric, for the question. Well, that depends. As you pointed out yourself, We are very clear about the financial policy states. We will not overshoot the 50% level. With that said, In this interest rate environment, it's quite clear that given that we also have a net debt with a target of nine, I would say We won't be able to reach over 45% because then we would probably be somewhere between 8 and 9 times EBITDA to that. But it all depends on interest rate environment, I would say, and how we value the environment from time to time. It's very difficult to say, but we have been very clear and very consistent about the loan value We have no thinking of changing that. That's the answer. Okay, good. And then regarding the vacancies, Jorgen, I believe you mentioned that you terminated a contract in the eastern region. And you're making some adjustments after the summer. Could you just tell us a little bit of what you're doing

and how you view your ability to fill up the space, first of all of the projects that you've now included, but also this termination that you mentioned.

Yeah, well, when we do a termination, of course we do it because we can see something better is coming around the corner and for sure it will be in this case. I can't give you any numbers, but uh we are doing some adjustments and and hopefully we have a a new customer in place uh in q3 perhaps uh which will lead to to better numbers for us uh and did i hear you right you were also wondering about the uh the stadium or the speculation or what can i take it again eric

Yeah, it was the ScanGlobal. I mean, the project. Yeah, ScanGlobal. ScanGlobal, we acquired that one. There was a smaller ongoing project. And they would step into that area also. And now in Q2, actually. So the one that we don't have the answer for is the part I mentioned in model. where there was around 7,000 square meters on speculative That's the vacant area. That's the moment. Yep. Yeah. Okay. I got it. And then finally, perhaps you can say something about yesterday Boost announced some investment plans for the coming years, including expansion of the facility in Malmö. Could you say how you are, like how, what is the TANF? has rolled in all of this. I think it's quite tricky for us to mention about some specific projects that have not been presented yet. But of course, we have ongoing discussions with our existing customers. And Boost is one of our big partners, so to speak. So you have to do your speculation. by ourselves on that one, but it was a positive press release from both sides that they want to grow, and we always want to grow with our customers. Okay. That is very clear. Thank you very much. Those were my questions.

Thank you, Eric.

The next question comes from Marcus Henriksen from ABG Sundal Collier. Please go ahead.

Thank you. Good morning everyone. First a question on the ICA property in Gothenburg that we got news about last year. Any update to us regarding a breakup fee in 2024 and how is the interest for that property?

Good morning, Marcus. Good question. We have ongoing discussions with potentially new customers, and besides that, Ikea is paying the rent, and we are pretty confident that we will find a win-win solution.

during this year. That's what we hope for and aim for all parts that are discussing that one. Thank you. There's been a few questions about occupancy. Just looking at overall since Q123, it peaked at 97.5%. Now it's 95.6%. There was some explanation for the decline here in the quarter, but it's a very high starting point as well. but do you think we should read anything into this change in the past year? No, absolutely not. I think we have the three explanations, and I would say that there is any dramatic things about this. So it's fair to assume that we are hovering around those 96% that we have told the market. before. It goes up a bit and it goes down a bit. We don't see any trends. Thank you. The last question will be on property. values, a very minor negative value change here in Q1. I've seen some consultants that have adjusted the yield requirements in logistics in Sweden and Nordics for what you see in the transaction market due to stabilized yield requirements or are they continuing to come up slightly in 2021?

I think, yeah, we have to wait and see. We are, of course, close to the market and have the ear close to the rail, so to speak. And we have been in some discussions where there actually has been a bidding party, so to speak, where we can see that the yields have been very low. And then there have been other cases where it's not that interest for buyers. So still a bit I'm sure where it will end up, but for us and the external valuations we received in Q1, it's minor changes, some bips, but with the 32 billion SEC portfolio, some bips ends up at 200 million in change.

with the Latin ratio, no drama at all. Thank you. And then just one follow-up. I came in a bit late in the call, so sorry if this has already been asked. the outlook for your granted zoning plans the previous quarter. Any update on potential signings here for summer or anything to highlight? I think it's the same situation. Not much has happened since the call for the year. We are working with the zoning plans that we don't have in place, and we are also working a lot to find new projects to sign lease agreements. It looks complicated, but it takes longer time today. It's just too expensive. Thank you. That's all my questions. Have a nice weekend. The next question comes from Emil Eckhorn from Pareto Security. Good morning, everyone. Only one question from me. You've completed a position totaling almost 1.2 billion during this quarter. Should we assume that this Well, that's a part of the

the acquisitions that we talked about. But where we will end up during this year, we'll see. I mean, there could be a case where we find and can sign a lot of projects and then maybe there will be less acquisitions or vice versa. So just generally speaking, we have the capacity and we will grow. and we will shift up a gear. And then if it's a combination between acquisitions and projects, or it's more acquisitions or more projects, time will tell.

Perfect. That's very clear. Yeah, that was all for me. Thank you.

Thank you.

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