Catena AB (publ)

Hi and welcome everyone to this Q4 presentation by Catena. Here is the agenda for today. A short summary, a business overview and a business update, followed by sustainability, the finance and a short takeaway before we opening up for Q&A. Next slide, please. Let's dive into the summary of the Q4 of 2024 report. where we report 21% increase in rental income ended up at 2,193,000,000 SEK driven by acquisitions, projects, and by our CPI-linked contracts. Profit from property management increased by 14% in total, and per share it was up to 22.59 SEK per share. Adjusted for the value change in the property value in our joint venture, we have an increase in income from property management per share with almost 8%. We report an increase in NRV per share up to 425 SEC. The balance sheet remains very solid with an LTV at 38.4%. 2024 has been a record year in terms of the investment volume totaling 11 billion SEK and a year where Catena made a major footprint in Denmark. Those investments, in combination with successful equity raises and attractive financing, has significantly boosted the earnings capacity per share. So all in all, we are comfortable to generate a strong cash flow going forward. And as the headline says, a very strong performance and as always with a long-term focus. Next slide, please. Next slide. The transaction market seemed to pick up at the end of 2024, but activity has slowed down somewhat, which can certainly be explained by the volatility of the interest rates and the uncertain geopolitical situation. With that said, we are looking into potential acquisitions and hope to continue our growth journey in 2025. The numbers for e-commerce for 2024 show growth for the first time in three years. The growth was 5% compared to 2023. And the segments that shown the strongest numbers are pharmacy, fashion and food products. Regarding new developments, we can summarize it to that the discussions take longer time. And we thought that we would have some new projects to present. before year end, but for various reasons, we did not succeed. We have LOI signed in one case, but it is challenges with the ground conditions. And in another case, there are challenges with natural values. However, the situation is somewhat brighter now than before the turn of the year. So we are fighting on and have full focus to be able to sign new construction projects in the coming quarters. Lastly, as far as we know and what we have heard, there is the same situation regarding all the vacancies around the Stockholm, Mälardalen and the Jönköping area as in previous quarter. Next slide, please. Looking into the customer base, there has been a major change regarding the top 10 customers in 2024. After the transactions during This year, DSV is our biggest customer, standing for 20% of our contractual value. Logistics and transport has at the same time increased as a segment that is now standing for 52% of the contractual value. Next slide, please. A look at our portfolio shows that the value has increased by almost 35% compared to the Q4 2023. Both Denmark and South have taken big leaps in terms of value during the year as a result of the acquisitions. Next slide, please. Next slide for the business update. We have presented this project with El Giganten before, but would like to mention it again as we received a nice award during Q4 when the project was named Logistic Establishment of the Year in Sweden. El Giganten has been up and running since the summer with its operations on the approximately 90,000 square meters. Next slide, please. The Ramlösa project in Helsingborg is progressing and we completed one of the buildings in 2024. A large high bay warehouse is under construction and is expected to be completed in Q1 2026. when the waste is also expected to move in. The third building is being designed at this time, and here we expect to submit the building permit shortly. Next slide, please. One of our most recently completed projects in Jönköping, where we welcome Västergruppen on 50% of the surface as a tenant to the state-of-the-art logistic warehouse constructed in Luleå, frame, and so it's also the high bay part which includes a crane warehouse automation. From the turn of the year, both Norway's and Mestergruppen operate in the facility. Next slide, please. Our most recently presented new construction project is at Mappen 4 in Linköping, where we will build a new logistic facility for SunSac. The total area will be about 10,000 square meters and will be certified according to Brigham Excellent. SunSec will move in in Q4, 2026. Next slide. Our ongoing project portfolio totals to around 1.6 billion SEC for 800 million is remaining investments. When all is completed, we will add another 130,000 square meters to the portfolio. And the yield on cost is around 7%. And for new projects, we are also aiming for around 7%. Next slide, please. With regards to our land bank, there are no updates and the processes for getting zoning plans are ongoing. But worth mentioning, here is a great potential in the long run to continue growing with profitable new construction projects on our land bank. Next slide, please. Looking at our leasing operations, our net leasing was plus eight millions for the quarter and plus 74 millions during 2024. Our whale is now at 6.7 years and the lifting ratio is almost at 97%. Next slide for some sustainability. The environmentally certified area is now at 46% and will increase further as projects and new acquisitions that are in the process of being certified is finalized. The Scoop 3 is at a high level compared to last year due to finalizing many big projects. We report the Scoop 3 when the buildings are completed, which means that the Scoop 3 will increase once projects are finalized. We work with carbon dioxide budgets in all our projects to limit the CO2 emissions. And we continue to maintain a high level of EU taxonomy alignment, for example, our CAPEX at 93%. Here is a big difference compared to the number in the Q3 report, which explains that we did not have all the documents in place at that time. But now we are confident that all the acquisitions made during 2024 are green. Produced energy from solar panels increased 24% since last year and reached almost 10,000 megawatt hour. And we achieved EPRA goal for sustainability reporting. And now over to David for some financial updates and the next slide.

Thank you, Jörgen. On this slide, we showcase our consistent earnings growth, highlighting improvements across rental income, net operating surplus, and profit from property management. During the year, rental income increased by 21%, reaching 843 crowns per square meters, with growth driven by indexations, lease negotiations, and overall portfolio improvements. Net operating income grew by 24% and profit from property management rose by 14%. Our earnings capacity now indicates a projected increase of approximately 15% in profit from property management compared to one year ago, highlighting continued growth. Despite market turbulence over the last couple of years, driven by rising interest rates and higher inflation, we have continued to deliver increased revenues with strong profitability, which highlights our ability to navigate challenges and maintain performance. Next slide. This slide highlights the key drivers behind our rental income growth and how our diversified approach continues to create value. Rental income increased through multiple channels. M&A activities contributed 11%. Project development added 3.3%. And like-for-like growth reached 7.6%. Like-for-like performance has been strong both throughout the year and in the last quarter. While the market remains cautious compared to a few years ago, there are pockets for positive rental adjustments in certain areas. Property sales had a minor impact, reducing income by 0.6%. A key strength of our business model is our ability to shift capital allocation between acquisitions and project development, allowing us to focus on where we see the greatest value creation opportunities. In summary, our balanced growth strategy, combining acquisitions, development and operational improvements continues to drive value. Going over to next slide. Let's take a closer look at how our capital structure has evolved and how we are positioning ourselves going forward. Our equity base has continued to strengthen, supported by two successful share issues of 5.1 billion and retained earnings from our disciplined operations. This has contributed to a solid capital structure while maintaining a healthy equity ratio. We remain committed to a balanced approach, leveraging the balance sheet to support growth while safeguarding financial resilience through strong solvency levels. Turning to net reinstatement value per share, our NRV has reached 425 crowns per share, and this reflects the value we continue to build for our shareholders. In summary, our capital measures during 2024 through equity strengthening, disciplined dividend distribution, and solid earnings position us well to seize opportunities while maintaining robust financial health. And next slide. Let's walk through our key financial metrics as well, which highlight our disciplined leverage and commitment to sustainability as well. Our net debt EBITDA stands at 7.9 times, well below our policy limit of nine times, reflecting solid earnings relative to debt levels. The interest coverage ratio is at 3.6 times, comfortably above our policy targets of two times. demonstrating strong capacity to cover interest payments. With a loan-to-value of close to 38%, well below our 50% policy limit, we maintain a prudent leverage profile. Our secured loan-to-value close to 30% and the unencumbered assets ratio stands at 4.3 times, reflecting a robust and flexible asset base that enhances our financing options going forward. Sustainability is integrated into our financing as well. Currently, 70% of our debt is considered green, surpassing our 2025 target of 50%. In summary, our financial position is strong with all key metrics well within policy and covenant limits. Next slide, please. On this slide, we focus on our proactive approach to debt management and liquidity. In Q4, we successfully refinanced 3.3 billion, demonstrating continued market confidence in our business model. Additionally, we replaced our previous 600 million revolving credit facility with the new 750 million facility on improved terms, enhancing our funding flexibility. Our capital maturity profile is well balanced and diversified, reflecting a prudent approach to risk management. With liquid funds and commitments totaling 3.7 billion, we maintain a strong liquidity buffer, keeping our liquidity ratio well above one time. Our effective liquidity management strategy delivered 57 million in interest income for the year, with 30 million earned during Q4 an example of how we maximize returns from available resources. Next slide, please. On this slide, we highlight our proactive interest risk management strengthens financial stability amid shifting market conditions. The Nordic region is well positioned with central banks prioritizing economic support in an uncertain inflation environment. In Q4, we reduced our average cost of debt by 30 basis points to 3.4%, driven by lower risk premiums and market rate cuts. And Catena has never before been able to source capital as cheap as we do right now if we're looking for new sources of funding. And there's a significant portion of our existing debt that we should be able to get cheaper in the future. We also added 250 million in interest rate swaps at 1.9% fixed rate with the three-year average term, enhancing cost predictability. With 61% of our interest exposure fixed on balance day, we have effectively reduced sensitivity to rate fluctuations, supporting earnings stability. Next slide, and handing back over to you, Jörgen.

Thank you, David. Our capital deployment divided into acquisitions of $8.6 billion with the large property in Horsens in Denmark, the sale and leaseback with DSV that came in the last day in the Q3, and also acquisitions from previous quarters, among others, Jan Holmen, south of Copenhagen, and the other two sale and leaseback transactions with DSV in Helsingborg and Landskrona, totaling to eight new properties. During the year, we divested four properties located in Brønby, Denmark, two in Kristianstad, southern part of Sweden, and a smaller one in Gothenburg, totaling to almost 700 millions. Development capex ended at 2.5 billion. These investments related, among others, to our large ongoing project with Elgigant in Jönköping, which were finalized during Q2, and the project in Stigamo, also in Jönköping, to no waste. and a large project at Ramlösa in Helsingborg. So total capex for the year rounded off to 11 billion SEK. Next slide, please. Property values stayed stable and ended up the period with a positive value change of 114 million SEK, which correlates to 0.3% of the total portfolio before adjustments. The average weighted valuation yield exit yield for the portfolio is at 5.9% by the end of the period. And the EPRANET initial yield came in to 5.5%. 95% of our portfolio has been externally evaluated during 2024. And next slide, please. And then we'll have our takeaways from today. And for the first, Catena closes a year that can be summarized with very strong growth. And secondly, the earnings capacity for 2025 that we present in the report is 15% higher per share compared to one year ago. And the third and last point is with our balance sheet in combination with strong cash flow, we have very, very good conditions to continue our growth journey. And with that said, we open up for Q&A. Please.