Catena AB (publ)

that has a turnover of more than 8 billion SEK has only this location for all of the outgoing goods. And next slide, please. And the other day, or actually yesterday, we signed an agreement to acquire El Giganten's distribution and central warehouse in Jönköping. The property is located opposite our newly built facility that El Giganten rent from us. Closing will take place on 1st of September and after that we will have about 200,000 square meters of logistic space leased to El Gigante. And the investment is 1,275,000,000 SEK before deduction of deferred tax and has an estimated net operating income of approximately 80,000,000 SEK. And this transaction was an off-market and shows that we can act as fast-footed as anyone else. And we really enjoyed doing the transaction together with Neon. Next slide, please. Our ongoing project portfolio totals to around 1.2 billion SEC, where 400 million is remaining investment. When all is completed, we will add another 91,000 square meter to the portfolio, and the yield of those projects is around 7%. Next slide. Regarding our land bank and future development, we are approaching the adoption of new zoning plans for two of the areas, namely Skjæra in Ängelholm, which the municipality will decide on in September, and in Örebro, where the municipality is expected to adopt the plan at the end of Q4. So that's positive for us. Next slide, please. Looking at our leasing operations, our net leasing came in with plus 63 millions for the first six months, and for the second quarter, it was plus 16 millions. Our whale is at 6.6 years, and the letting ratio is at 96.5%. Next slide, please. And over to the sustainability. Next slide again. The environmentally certified area is now 57% and will increase further as projects and new acquisitions will be finalized. The scope three is now decreasing on 12 month rolling basis due to less projects. We continue to maintain a high level of EU taxonomy alignment. For example, our turnover came in at 76%. Produced energy from solar panels reached around 23,000 megawatt hour on rolling 12-month basis. Total installed output on our roofs is now above 71 megawatt. And now over to David for some financial update. Next slide.

Thank you, Jörgen. And good morning to everyone. This slide highlights the continued strength in our underlying earnings with solid year-on-year growth across all key metrics. Rental income, as Jörgen mentioned earlier, is up by 26%, mainly driven by acquisitions. Net operating surplus increased by 31% and profit from property management rose by 32%, reflecting both scalability and cost control, which we expect to continue going forward. Earnings per share from property management grew by 16% to 13.27 crowns, underlining our ability to translate top line growth into shareholder value. While not shown here, our earnings capacity, we should say, implies 26.3 crowns per share on a full year basis. That's 15% above the level we presented a year ago. The model continues to deliver predictable, resilient earnings with operational leverage. Let's move to the next slide. And this slide breaks down the key drivers behind our rental income growth for the first half of 2025. As I just mentioned, total rental income, which increased by 26% year over year, the largest contributor was acquisitions, accounting for more than 22% of that growth. Our completed development projects added 4.5 percentage points, including new facilities in Jönköping and the Gothenburg region, both leased to well-known tenants in retail and food service. Like for like, rental income rose by 2%, mainly reflecting CPI-linked indexation. Altogether, this outlines our ability to grow through multiple channels, strategic acquisitions, value-adding development, and strong day-to-day operations. Next slide, please. And then let's turn to the capital structure. The second quarter brought a noticeable pickup in real estate transactions and increased activity in the credit markets as well. Toward the end of the quarter, we saw growing optimism, partly fueled by a reallocation of capital flows from the US to Europe. That said, long-term structural uncertainties remain, and we are prepared for potential renewed volatility. At the end of the second quarter, our equity ratio stood at 52%, which we believe is a balanced level that supports strategic flexibility. EPRA NRV per share increased to 428 crowns, calculated after reserving nine crowns per share for dividends, half of which was paid out in cash during the quarter. And this reflects continued value creation, even as shareholder returns are being realized as well. In short, we see a market that's beginning to open up and we remain our focus on readiness. Passing on to next slide, please. And then let's move on to our financial position. We continue to demonstrate strong financial control with all key metrics well within policy levels. Net debt to EBITDA came in at 7.6 times, interest coverage at 4 times, and loan-to-value at 38.6%. These are healthy figures and they reflect both a solid capital structure and strong underlining cash flow. Importantly, this gives us significant headroom to our financial covenants and the ability to move on new investments without compromising financial resilience. Next slide, please. Let's take a look then at our debt and liquidity management specifically. We remain our focus on maintaining and securing funding on competitive terms. During the quarter, we updated our MTM program and increased the framework to 8 billion, strengthening our platform for both future growth and refinancing opportunities. We issued 450 million in secured bonds during the quarter with a two year maturity and pricing at STIBOR three months plus 83 basis points. In early July, after the end of the second quarter, we also completed a 1 billion senior unsecured bond transaction split across three and five year maturities. The terms reflect the market's continued confidence in our credit quality. This issuance is not included in the balance sheet of Q2, but was structured to give us additional flexibility for our upcoming investments or refinancing activities. Our average debt maturity remains solid at 4.8 years. Liquidity is strong with 3.1 billion in cash and liquidity ratio well above 1%. We're also generating positive returns from the liquidity with 30 million in interest income during the quarter. Passing on to next slide, please. We entered Q2 with an upward sloping yield curve again. Markets are pricing that Riksbank, the Swedish one, is nearing the end of its cutting cycle. The two-year swap now trades below the policy rate. Meanwhile, long rates remain a bit more elevated, reflecting more stable expectations on growth and inflation, as well as a return on risk premium in longer maturities. As of the balance date, 61% of outstanding debt carried fixed interest. Our current and average interest cost of 3.2% broadly reflects prevailing market conditions for a full refinancing of the portfolio, including derivatives. This reflects a timely and balanced interest management approach, though there still remains headroom for further optimization. Next slide and back to you, Juergen.

Thank you, David. Our capital deployment is for the first half year divided into acquisitions, 414 million SEC, and development, 570 million SEC. And we have at the same time divested properties for 98 million SEC. And next slide, please. Property values stayed stable and ended up the period with a positive value change of 174 million SEC, which correlates to 0.4% 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 EPRA net initial yield came in at 5.6%. And next slide, please. So a couple of takeaways from today. And for the first, Catena closes the half year with solid numbers in a somewhat cautious market. And second, we have presented new acquisitions for almost 2 billion SEC during 2025 so far. So our growth journey continues. 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.

Yes, thank you and good morning. Firstly, I have a question on the net lessing. So it was 16 million in the quarter. And first of all, what was the net effect from the renewed boost agreement? And also, secondly, how is this speed agreement, which is together with PLATSER, treated in the net letting figures in the quarter?

Good morning, Kevin. First of all, the boost is a prolongation, so it's no net letting. The joint venture it has no impact in our net leasing. It's a joint venture, so it's not in our numbers.

Because I think that Boost, it was also an extension, which I would assume is... Yeah, I mean, those 6,000 square meters, yes, they are there.

I thought you meant the the renegotiation or the prolongation of the another five year. Sorry.

Yeah. Okay. And how much is that in the million?

Yeah. I mean, we don't guide exactly about the rent in that case, but it's fair to assume it's the rent is like the other one around 800, something, 8, 900, Per square meter.

Thank you. And also another question on the share of profit loss from associates at negative 2 million. Could you maybe elaborate on what that includes?

It's from the joint venture Food Hills where we have had struggling with keeping all the tenants. So it's basically that joint venture.

Okay, because I noticed in the earnings capacity that you have included 2 million there. So is this a reoccurring item going forward as well?

We hope to find some new tenants which can balance it. It's tough to say, but we hope that there will be no more negative impact during this year.

Okay. And then I also have a question on the 385 million divestment that you made also with Platzer. Could you maybe say something about the yield on this transaction?

The yield was definitely below 5%.

And is this below our book value?

Well, this joint venture... We don't disclose that. We don't have that as a book value. It doesn't have any impact on the P&L for Catena. It's within this M&A we did with Boka a couple of years ago. So there is no impact for Catena in the P&L.

Okay, thank you. And then I have the last question. Do you have any type of indicative volume on the current acquisition pipeline?

No, we are, as you know, all the time looking into new opportunities, but we cannot disclose any numbers.

Okay, thank you. Those were my questions.

Thank you.

The next question comes from John Vong from Van Lansch at Kempen. Please go ahead.

Hi, good morning. You mentioned that the market vacancy continues to grow. It's now at 9% driven by week 10 in the month and supply still being added. Just looking at the current developments being added and your own discussions with tenants, what's your take on the trend in vacancy in the next 12 months? And maybe also following on this, how much of this vacancy is actually driven by the Let's say, what's the vacancy without this vacancy here?

Good morning, John. It was very hard to hear you. It's a bad, bad line. I heard something about the vacancy and we said 9% in total. Can you try to repeat the question? Sorry, we don't hear you, John. Maybe you have to email the question or call us later.

Sorry, can you hear me better like this? Otherwise, I'll take it offline.

Not good enough. Sorry. Try to call me after.

The next question comes from Pierre-Emmanuel Cluard from Jefferies. Please go ahead.

Yes, good morning. Thank you for taking my question. So the first one is actually, I think, a follow-up of John's question. As you will have to renegotiate 9% of your tenant base next year, I was wondering if you already received any early redemption from tenants, where you will... Where do you see landing the vacancy by the end of this year and the end of next year?

We don't have any guidance of what we see next year. What we disclose in the report is our earnings capacity for the coming 12 months. And that one is included all the lease agreements that is valid for the coming 12 months. we are humble for the, for the future with those kind of dynamics that are in the market. So we are doing all we can to keep our, uh, customers, but, uh, you never know, uh, we can lose some, but, uh, that's also part of the game where tenants are moving in and moving out. Uh, but, uh, yeah, it's, uh, it's a bit struggling in the market right now.

But, uh, just to quantify how many, uh, earlier redemption request that you received so far since the beginning of the year?

We have no redemptions to disclose at this point. And when we have, we will disclose that.

Okay. Thank you. And my second question is on your life on iGrowth. It would be super useful if you can give us a more precise breakdown on your like-for-like rental growth with the contribution of indexation but also the contribution of the reversion. And a quick addendum on that is what is the reversionary potential today on the portfolio? And given the fact that the inflation is decelerating rapidly in Sweden, Where do you see the like-for-like growth landing by the end of the year?

Yeah. Hi again, Pierre. That's obviously a very relevant question. But from our standpoint, first of all, most of the 2% is index-based. We have some cases where we have been able to raise the rent levels. Going forward, what we have said before, and that is the same story going forward, is that we expect rent levels to stay stable, and that goes then I'm counting in our portfolio to begin with. We expect a stable level going forward. We know that there are some cases where we can lift rents, of course. But overall, it's in line with market rents. That's basically the story that you should take into account. Yeah, but there is clearly what we have seen over the last 12 months is clearly there is a bigger difference between the quality, overall quality in the market. And that's what we expect we continue to show. We have no specific numbers to hand.

Okay. And just to fully understand that maybe you have a better view than I do on the quality of vacancy that is in the market today. But from what I understood, you had a lot of new deliveries with a brand new platform that has been delivered over the past 12 months. So the quality of the vacancy is pretty decent now.

The quality of what has been built is of high quality, yes. I think one of the relevant things to think about going forward is where is it built, in what locations? So I think a lot of the things that have been built over the last three or four years is perhaps not because you expect the demand in that particular location is where the demand is highest it's probably because that's where you have been able to source land so i think what we will see is different supply demand dynamics for for different regions So some regions will structurally have difficulties going forward, whereas other regions will still have undersupply, basically. So you have to dig deep. You have to know the regions because there will be varieties in different regions, basically.

Okay. Thank you very much. Thank you.

The next question comes from Fredrik Stensved from ABG Sundahl Collier. Please go ahead.

Thank you very much. Good morning. I would like to ask a couple of questions on financing costs, if I may. Firstly, can you say anything about sort of where bank margins are, either in absolute terms or in change this year or year over year?

Yes. Hi. And thank you for the question. Well, the bank margins, I would say it's between a five year. I would expect to be somewhere between 125 and 140 percent. And the bond market, as I mentioned, and what we disclosed in this report was 135 for five years right now.

That's clear, thank you. And on that second point, sort of bond margins, currently looking a bit lower than bank margins. You currently have 42% in bank debt. How much or how high share of bonds would you be comfortable with having?

Yeah, that's also a relevant question. Right now, if we isolate us to the Swedish market, because historically we have so far used Danish mortgage bonds for our Danish property. We are at around 50% if we isolate looking at the Swedish portfolio, and that's where we are pretty comfortable with. But with that said, we are not religious about this. It's always something that we are assessing, basically. What's important at the end of the day is that we have a good control over the spread of maturities. that's first of all and the most important thing and also in combination with always knowing that we have many options available because at the end of the day when we have to refinance it's all about making sure that we have options available so it's all about financial control then you know, how many percentage points you have in the capital market or in the bank market is perhaps not the most important question.

Perfect. Thank you. That's all for me, and thanks, David, and good luck going forward as well.

Thank you so much.

There are no more questions from the telco at this time, so I hand the word back to Jorgen and David.

Thank you very much for listening. We wish you all a very nice weekend and a very nice summer and stay in touch. Thank you. Goodbye. Thank you. Bye.