Cibus Nordic Real Estate AB (publ)

Good morning, everyone. Welcome and greetings from a very summer empty Stockholm today. And we're talking to you live. And my name is Christian Frederiksen. And I am joined here as always by the company's long term CFO, Tia-Lena Olafsson. So let's move into summary of the period. Rental income up 3%, and net operating income up about 9%. But that includes a one-off insurance payout for a burnt-down property in Finland of about 1.8 million euros. And without this one-off income point, then we have a stable increase in net operating income of about 2%. The profit period is about 2.2 million and the property values increased by about 4.4 million in the quarter through acquisitions and through FX rate movements. But in that figure, we have an unrealized change in value of about minus 8.3 million euros, which is 0.5 minus. And then, moving on to the favourite slide, Seabus, with our slogan, and we love our slogan because it says exactly what we do. We create value for our stakeholders by investing in daily goods properties, so creating food into yield, that's what we like to do, and are continuing in doing. And this is a slide many of you will remember and recognize. I think our mantra, of course, converting food into yield. And I thought I'd like to share a story with you from earlier this year when we had a company kickoff, when I, ahead of the kickoff, asked one of those AI songbots. or song apps to write a song about seamless Nordic real estate. And the lyrics were actually great. So hats off to the bot. And the song was titled Supermarket Love. That's not going to be our new slogan. I think converting food for yield does the job fine. But it's amazing to see how AI can help in the creativity and moving along. So the lyrics were great. The beat was terrible, so I won't play the song for you, and we're sticking to our slogan, converting food into yield. On the map to the right, I'm happy to show you the five red dots, which are our new acquisitions in Sweden, coming back to those a bit later. But otherwise, things are pretty much the same. We aim to create stable cash flows. We focus purely on daily goods properties. Listed since June 2021 on the Stockholm Mid Cap. We're the sole listed pure daily goods real estate vehicle in the Nordics. We have a semi-peer now through a listed Prisma Properties, which owns about 20% grocery assets, but they're more of a development company than we are. but it's great to have a peer also in the market. We've grown from our Finnish supermarket portfolios into Pan Nordic Pure Grocery player and we pay monthly dividend to our shareholders. So this is our expansion timeline established 2018 in Finland moving on to 2020 when we entered into Sweden and then entered into Norway and then entered into Denmark in 2022. So looking at our properties at the end of the last quarter, we now have 455 assets, which is up from 451 as we did the acquisitions. We'll be adding one more asset soon as we take possession of the last asset shortly. Our property values are up 4.4 million euros, as mentioned, and for the fourth consecutive quarter, our earnings capacity has increased, and that's about 3% up quarter on quarter. And then our letterable area has also increased by 9,000 square meters, which is from the acquisitions. On the tenant side of things, no change. We still have, of course, the largest daily goods players in the Nordics, as are tenants. So moving on to a bit more about the asset we carried out in this quarter. We acquired six grocery stores in Western Sweden in an area called Värmland. The assets are 88% daily goods in rental income. The rest, which is not daily goods, is in the property in Bengtsfors, which is the Ica property there up to the top left of the six photos. Where the other, which is not daily goods, is the Swedish state monopoly for alcoholics beverages, which is sustainable. There's a restaurant and an IT store. The agreed property value was 87.5 million Swedish, approximately 7.6 million euros. And the price per square meter paid was about 9,800 kronor per square meter, which is about 855 euros per square meter. And worth pointing out that that's about half or less or less than half of what it costs to reinstate a supermarket property in Sweden right now. So we think we've done a very nice deal in acquiring these properties, which fit well in our portfolio and give us increased cash earnings per share. Looking at the assets, there's one ICA store that has a low OCR. OCR, of course, being occupancy cost rate. And that's one of the key metrics when looking at supermarket stores. What's the share of rent towards turnover in the store? And this store has a very low OCR. Very happy about that. The rest of the other five assets are leased to a company called Pecos. Pecos is a discount grocery brand, present only in Värmland. They have 15 stores. After this transaction, we own seven of these. They were acquired by Coop Varmland in 1999 and Tecos is doing very, very well. They've been growing steadily throughout the last years to 8% in last year, 2023, and 12% up in 2022. And they have very healthy margins. We're very happy about this tenant. There's an ongoing project in Hartfors, which is the asset up to the top right. That's the property which we haven't taken possession of yet. We're waiting for the project to finalize. But I was reading in the media that Pecos, they're investing about 1 million euros in that asset. And you can do the maths. by ourselves there, kind of figure out what we've paid for these various assets on average. So I think that shows how important these stores are and stores in general are for the grocery players. They invest heavily in the stores and therefore are long-term in many stores, even though the world may say something else. So happy to have got that acquisition under our belt during Q2. And then moving on back up to the top level, what do we mean by creating stable cash flows? Well, if you look at the left part of this slide as an income statement or a profit and loss, we try and create stable cash flows on every single line of the income statement. So starting from the top line, we focus only on daily goods properties, create stable income, it's strong tenants, as you know, it's a story well told. It's also a very non-cyclical daily goods business, of course, proven to be resilient in all times of economic volatility. People might need to buy food in all terms of the market, up and down term. 84% of our rental income is from daily goods tenants, and 97% of our 455 properties are anchored by daily goods tenants. And when we say anchored, we often that means the only tenant. As you see, our average property size is 2,200 square meters. And what we have there is, in effect, a single standalone supermarket. A standalone could be in a building with residential on top, etc. But the tenant is 100% in most properties, a daily goods tenant. Looking further down the P&L then, we protect our growth through having 99% of our rents linked to CPI, and that's worked very well throughout this high inflation season. We have a steady vault. It's now come up from 4.8 in the last quarter up to five years again, and PLN will tell you a bit more about that later. And one of the most important things also is, of course, store location stability, which is prevalent in supermarkets the store locations are very important for the grocery chains they need to make sure that people can find the store get into the store purchase things and and leave in easy accessible places very important for the chase for the chains often many decades in one place and a unique characteristic of supermarkets and daily goods assets is that if a chain or grocer decides to move out often one sees that there's someone else banging on the door ready to take over. Maybe one of the other chains or maybe a more local or independent player working on a small one to two shop basis. But what is important is that sometimes there are vacancies in supermarkets. Some locations do become obsolete. It cuts through competition among the grocers. Perhaps the infrastructure changes or demographic changes in the region, which means that a store is obsolete. That's a natural part of of our business and what's important to remember is to have a very big portfolio otherwise risks can be big if you only own a few supermarkets but only 455 assets in four countries where they're all very small means that we have a great diversification of our income stream um well again um we have 90 net property increases. So on the cost side, we try through these lease structures that we get the increase in but have a stable cost basis. We also want to make sure we have stable income when it comes to the bottom line. So we are 97% interest rate hedged and we use diverse funding sources. Next slide, please. Thank you. Earnings capacity, as mentioned many times before, is one of our key metrics and drivers. And I'm very happy to share with you that for the fourth consecutive quarter, we've now managed to increase our earnings capacity per share. So in total, since the dip in Q2 or the 1st of July 2023, we've now increased the earnings capacity per share by 7%. And this quarter, what has happened? What are the main changes? Well, we have the top-line indexation growth coming through in certain of our regions. In Sweden, for example, indexation only comes through once a year. But in other countries, it comes through on a rolling basis. So we can see that we're top-line invitation growth. We've done a couple of rent renegotiations. What's also coming through is the outcome of the bond refinancing that we've carried out and told you about earlier. And then the acquisition in Sweden also helping earn capacity for share. Looking at our share price performance and the traded volumes, it's a very liquid share, about 60 million Swedish kronor of turnover per day, about 2,400 transactions per day, which is a very high number of liquidity for a company of our size. And so I'm happy that we have the liquidity in the market. Looking at our shareholder list, You will recognize many of these names. It's a very stable shareholder list, and we're proud of our shareholders. Many are well-known and professional investors, but we also have a very large number of smaller investors. And looking at the number of shareholders we have now at the end of the quarter, it's about 51,000 shareholders, which is up 3,000 shareholders since the end of last quarter. And handing over to Bea-Elena for the financial overview.

Thank you. Okay, let's start with some significant events during this quarter. We had the AGM, the 15th of April, where the board was re-elected. The 1st of May, it was announced that the board had repurchased warrants of the 2020 program. It was conditional that the holders reinvested They repurchased consideration in Sibus shares using the retaining warrants and 1,396 new shares were striped. On the 28th of May, Sibus acquired six grocery anchored assets in Sweden for 87.5 million SEK that Christian talked about just a minute ago. And then on the 29th of May, CBUS announced that CBUS wanted to exercise the right to prematurely redeem its senior unsecured green bond loan 102. And it was made early July. On the 31st of May, CBUS announced that we had increased the total number of shares and votes due to the aforementioned exercise of the 2020 warrants. Here are some key figures for the quarter. Rental income was 30.4 million euros and net operating income also 30.4 million euros. Net financial items was minus 16.7 million euros and profit from property management 10.3 million euros. We do have items affecting comparability on several lines in the P&L, so let's look at the next page. In the second quarter, service income included an insurance compensation of plus 1.8 million euros for a fire damaged property in Finland. The property was subsequently sold in the second quarter. Debus reported a non-recurring expense of minus 1.1 million euros, of which minus 0.4 million euros was based on the resolution by the AGM to subsidize the option premium for the 2024 warrant program. And minus 0.6 million euros was based on the board's decision to repurchase the previous paid premiums for the 2022 warrant program. All warrants for the 2022 program were subsequently cancelled. Net financial items include a non-recurring expense of minus 3.6 million euros for tender offer when buying back bonds that mature 2024-2025. Net financial items also include a positive exchange rate change of plus 1.3 million euros. Profit from property management excluding non-recurring items and exchange rate effects amounted to 11.9 million euros. Unrealized changes of property value was minus 8.3 million euros. The negative change in value was mainly attributed to Finland and Denmark. Unrealized change in value of derivatives was minus 0.3 million euros. Our current earnings capacity shows a net operating income of 114.7 million euros. Property expenses is the same since the last quarter due to gains through energy efficiency in our ESG investments. Indexation and acquisitions have increased the rent. Profit from property management plus expenses from the hybrid bond was 52.7 million euros. Adding back non-cash items, profit from property management was 0.97 euros per share, which is an increase of 0.01 euros per share since the last quarter. Looking at the net operating income in a comparable portfolio, we see that the effects of indexation and other rent increases amount to plus 4.4%. Indexation going forward will increase the NOI and cash flow, while financial expenses are 97% capped. These segments are countries. Finland is the largest market with 70% in the second quarter. NOI this quarter is, however, somewhat inflated for Finland due to the insurance compensation. So without it, Finland would be contributing with 68% of the NOI, Sweden and Denmark 14%, and Norway 4%. Sybil's strategy is to give its shareholders strong dividends on a monthly basis. The AGM in April decided on unchanged dividends of 0.90 euros per share, divided into 12 payment locations. The dividend yield on the closing share price of 157.8 SEK at the end of the quarter was 6.5%. Looking at the balance sheet, property value was 1,768,000,000 euros. Secured debt was 889 million euros, giving a loan-to-value on secured debt of 50.3%. Unsecured bonds amounted to 241 million euros and this includes the loan 102 that we called and repaid early July. Also the other bonds that can be callable during 2024 are included. So if they were to be called, paying the cash that we have on hand, the bonds would amount to 192 million euros. Our net asset value was 676 million euros or 11.8 euros per share. Our remaining lease time was back at five years at the end of the second quarter. We have extended nearly 50 grocery and daily good leases during the quarter. Regarding funding, 77% is bank financing with a weighted average floating credit margin of 1.6% and an average weighted capital maturity of 1.5 years. All bank loans with remaining terms of less than 12 months are currently being refinanced. I would estimate that they will be all refinanced during the second half of 2024. Close to 21% of external funding was at the end of the second quarter unsecured bonds. Taking the called bond in July plus the callable bonds during 2024 out with the cash that we have on hand, unsecured bonds would be 17% of the funding sources. Our hybrid bond amount to 2.6% of funding sources and had first call in September 2026. Based on the earnings capacity and taking all interest rate hedges into consideration, an increase of the market interest rate with one percentage point would affect profit with about minus 0.5 million euros annually. An increase with two percent points would affect profit with about minus 1.1 million euros annually. Looking at some key metrics, LCV was 58.9% at the end of the second quarter. We continue to operate in the lower part of our internal policy range, between 55 and 65%. The covenants in the MTM program is an LTV of 70%. Interest coverage ratio was at 2.2 times and will continue to be stable even if we would get higher interest rates due to the high degree of hedging. The covenant in the MTM program is 1.5 times. As an alternative to the LTV, we look also at the net debt to EBITDA. We have high yielding properties and net debt to EBITDA was 9.8 times during the second quarter. Over to you.

Thank you, Elina. So looking a bit into the future now.

In the outlook, it's been a busy time in grocery and daily goods. There's lots of things happening in the market, takeovers, fight for market share, food prices moving. I've written a bit about that in the CEO comments in the report, so I won't dig into too much about that now. But the outlook going forward for us, earnings capacity started to grow in the second half, as mentioned, and our strategy is to continue this development. There's still inflation in our markets, so the figures look to support continued growth in rental income through indexation, which proves our business model that we have inherent growth built into our business model. There's stable development in the daily goods business, and what can be seen on the market is that several new retail growth initiatives that could lead, among other things, to more sane and aged backs. What we see in their examples of that is, for example, in Sweden, Lidl have said that they want to increase their number of stores by 50%. They've been around for a long time in Sweden and they've managed to build 200 stores. They've now said they want to increase by a further 100. So that's a significant investment for them. Listed Tennant Axfood with Billy's, their discount brand, is doing very well in the Swedish market. They want to grow that substantially. And they also want to grow by Citigos, which is a small, privately held hypermarket player in Sweden, with about 3% market share. So Axfood have bought that structure, looking for more stores, apparently, and they're waiting for the competition authorities to give them the green light later this year. In Finland, we've also seen the very cutthroat and strong competition between S Group and Kesko, who together have more than 80% market share in Finland. Kesko stated that they want to grow and they have stated that they want to do a store investment program of approximately 250 million euros per year. So, I mean, that's a significant number. And so my take on all this activity, and there's also other activity in Norway and Denmark, is that if the grocers are building balance sheets now, then sooner or later they may be more opportunities for sale and leasebacks as the grocers are building up their balance sheets and want to offload assets going forward. There's also transaction volumes that are starting to pick up in the market in general, which also helps us. And one thing also I just want to mention, and I mentioned we moved out our walls back from 4.8 to 5. It's been around the five-year mark since inception of CBIS, as you've seen. I think a great strength for us, being such a large company and specialised in one asset class, is that we can renegotiate leases in packages. Our tenants are big corporates used to procurement and used to negotiations. That's what they do, right? Buy groceries and daily goods and sell them on. And by being a large player like ourselves, we can manage to negotiate packages, which is a win-win for both our tenants and us. So, for example, in Finland, we have negotiations. One of those 50 leases, which we mentioned, were with our three main tenants in Finland. So it's good to negotiate in packages, we feel, and it's good to be big. Looking at the market in general, falling interest rates should mean stabilized valuations and increased transaction volumes across our markets, all other things being equal. I think there's evidence of falling interest rates right now as well as seen. This should also create business opportunities for us. We've seen, in general, an increased investor appetite for stable cash for operational sectors. I think there's evidence of that through the IPO of the Prisma properties I mentioned earlier, and then multiple transactions in several markets, especially Sweden has seen a much more liquid transaction market in our segment, both from institutional players, but also from private capital. In general, of course, strong support from equity and bond markets, as well as support from senior banks, which in general in the market, I think will facilitate transactions and movement going forward. And we feel strong support from our backers as well, which is great. We're a motivated, competent and agile organization, ready to react. We've done one transaction as seen, and we are looking to do many more in all of our Nordic markets, and also following other key European markets closely.

Yeah, Sibus is working with different ESG activities, all to reach the goal to be climate neutral in 2030. In the second quarter, we have completed our double materiality analysis, and it's preparing for including ESR reporting in the sustainability report for 2024. During 2024, we have issued three bonds under the new more ambitious green framework that was launched during 2023. Thank you.

And when it comes to environmental impact, the best thing we can do is work and have energy in focus. We have net leases, as you know, so we're working side by side with our tenants to create energy efficient buildings. During the quarter, we've added additional two solar cell panels on two of our roofs. We have installed about 50 of our locations, loading bays or charging bays for electric vehicles. So 50 store locations in Finland and Sweden, we've signed during the quarter. For the S in ESG, of course, daily goods, real estate, important part to play in everyday life. It's part of a sustainable and resilient society that people can get edibles and can go to the store and both meet people. and buy food of course and it's also an important physical meeting place in the modern world and by some it's considered social infrastructure and a very important part of society and what are we working on there well again together with our tenants focusing on important social aspects of daily goods portfolios creating accessible and safe marketplaces So what are our focus areas going forward? To continue to grow earnings capacity per share, our main focus, to continue to provide stable cash flows and dividend paying capacity, looking at and carrying out cash earnings per share accretive potential transactions, and continue to optimize our balance sheets. And on the ESG side of things, continue to work with social infrastructure. We want to retain and create accessible daily goods locations as a meeting place, work with energy efficiency, become climate neutral in 2030, and then, as Pia mentioned, preparation for the European Sustainability Reporting Standards. Primary reasons to invest in the CB share, high and stable yield, potential for favourable value growth, market dividends, segments with long-term resilience and stability. And just to summarize, then, what should be the main takeaways from the Q2 report? Stable underlying cash flows, as mentioned. Daily sector still doing very well. Of course, we're receiving index growth, renegotiating packages. Our wall has moved up. The earnings capacity continues to grow. Very happy with that, of course. We feel the strength of tailwinds. from the financial market, which should allow us to carry out more transactions going forward. And we're back in growth mode. We've done one acquisition and looking for more. Thank you from us.

And we open up for questions.

If you wish to ask a question, please dial pound key five 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 Svante Krokfers from Nordia. Please go ahead.

Good morning, Christian and Pia-Lena. Thank you for the presentation. I have to ask first if we can find the Sibus bot song anywhere or do we have to do it ourselves?

I'm not quite sure of the copyright rights for this AI song bot, but we had a lot of fun, so try it during the summer. Just put in a link of what you think the song should be about and in about one minute you get a song. Amazing.

Great. Then on a more serious note, you have some bank loan renegotiations coming up and I guess you had a 1.5% margin on those on average. What should we expect about or what do you expect about the discussions now for H2?

Yeah, the margin is 1.6% because it's margin on the bank loans. Yeah, I mean, we have very good discussions with the banks and there's large interest with the banks that they have a cooperation with today and also a new interest also. So we have, we are looking really good in the, we're looking at a good negotiation with the banks, but that we'll see. And we have the, aim to finalize the refinancing in the second quarter, the second half year of 2024. But really good discussion with the banks. They're happy to support us going forward. And also since the bond market has opened up and shown so strong, that also gives us negotiation power with the banks.

I mean, in general, one could say that supermarkets and groceries are a very likable asset class from banks. Stable tenants, semi-long walls geographically and by number diversified portfolios, which creates stability in cash flow. So, no, it's a very preferred asset class in my feeling when it comes to this asset class.

Thank you. And then your refinancing has been quite extensive. Do you want to comment anything about hedging activities after Q2?

I mean, we will continue to have a high degree of hedging. That's important for us to continue to deliver stable cash flow. And hedging is a part of that. So that's something that we will continue to do. And the refinance activities that we did with the bonds, of course, is giving us a good platform to start from and to grow from going forward. And we will have benefits going forward also in the earnings capacity when we're able to call the bonds when they become callable. So we have one loan, 103, that will be callable in early September, the 2nd of September. then the other loan, 104 loan will be callable in December. So replacing them with lower margins on the existing bonds and having longer maturity.

Thank you. And you had quite a lot of renegotiated lease agreements. Can you describe the tone in those discussions? Has it been tough as usual or even tougher?

I'd say on the contrary, it's business as usual. In most cases, one simply extends the lease. We get the index growth, the tenant gets the stable store location so they can carry out their core operations, which is selling daily goods. My feeling is that it was, and what I hear from our team, is that of course it should be a tough negotiation, right? That means everyone should be happy when they leave the table. But I understand we have a good cooperation with our tenants and reached some good negotiation points for everybody.

Thank you. And then a question regarding valuations. Do you want to give some comments on the property valuation cycle and differences between countries?

Yeah, sure, sure. Now, as seen, we had a value decrease this quarter, also 0.5%. In general, I think there's a lag in the market. The valuers inherently and the way that the value should work is they need transaction data. So therefore, in both upturns and downturns, valuations are lagging, in my view. We've seen it turn in Sweden, just as in many other sectors, as seen among our listed peers who have reported over the last week. We see that values in Sweden have stabilized and are starting to grow. Transaction volumes in our sector are picking up, as the several buyers on the buy side have mentioned. And we see that valuations have bottomed out and are just slightly starting to pick up. In the other countries we have, that's Norway, Finland and Denmark, then we see that we're still lagging, this development in Sweden. The largest movement we saw was in Denmark. And why are yields still moving up when interest rates are falling and there should be more confidence in the market and financing costs are going down in general? I think it has to do with the lag, as mentioned, the need of transaction data. But in general, As interest rates continue to fall, there should be more and more buyers willing to put and assume lower financing costs going forward in their calculation and their investment ideas. No one wants to catch the falling knife, but if the knife has hit the floor, then there should be more people wanting to come and pick it up. So I think we're at a turn of the market. I think that's the sentiment in the market. And when it comes to valuation decreases, I mean, even if it were to continue with the lag, then we still counteract this with extending leases, as mentioned. which extends the world which moves things a bit in our direction. Indexation is coming through of course in our sector and then we carry out some new lettings and trying to create new income streams for example from EV charging facilities.

Thank you and the last question, you mentioned the OCR occupancy cost ratio Have you disclosed what it is? I can't remember. I have seen that number. Could you elaborate a bit on that? What kind of ranges you have there?

Yeah, no, that hasn't been disclosed. Not for us and not for that transaction. In general, in the market, the retailers and the chains don't want to tell us, the market, or other competitors, what turnover is in an individual store. Because the turnover is what really drives the long-term attractiveness of a store location. But if, in example, Ica, every store is owned by an independent retailer, so you can find out in looking backwards at these annual reports what the turnover was in an individual store. And that's what we've done in this case before the acquisition, found out what the turnover is in the store and found out that the OCR looks very low, which should in the future both mean stability in store locations, because the store is doing very well, the retail is doing very well, but in time should also mean a potential for rent increases.

Thank you, that is all from me.

Thank you. The next question comes from Victor Rodstenfo from ABGSC. Please go ahead.

Hi, Christian. Hi, Pialena. Can you hear me?

Yeah, here we go.

Hi. Yes, very good. So you stay positive on your outlook for acquisitions here going forward. Any colour on what markets are looking more attractive at the moment?

A strength of CBUS being a pan-Nordic player is we look at all markets simultaneously. So it's difficult to say where we can find the most attractive yield and yield spread, but we're looking at all markets.

Very good. And you've mentioned this before and also earlier here on the call, saying that you look at other markets outside of the Nordics as well. Is that just out of curiosity, or do you see potential transactions outside of your core markets?

Yeah, we've expanded from Finland into three new geographies, so that is part of our DNA to potentially move into other markets. What's interesting about the grocery daily goods market is that it's very similar in most European economies. in that you have a number of key players fighting it out, maybe a handful, maybe three, four, fighting it out for market share. So the dynamics of the market are very similar. Shopping habits are similar in that everyone needs to buy food, and competition is restaurants, the fast food, etc., but everyone needs to eat. There are differences in the markets, of course, on the real estate side of things, real estate legislation, etc., And also, of course, in zoning planning, in some countries, it's very difficult to build hypermarkets. So hypermarkets are not there in the markets. For example, Norway, such a market. And also the consumer, the consumers themselves, hypermarkets are not really their thing in Norway, for example. So there's no customer demand. But looking across European markets, many of the characteristics are the same, and therefore further international expansion could be part of our natural growth story.

And so any specific markets that you're looking more closely at at the moment?

We're looking at several markets, just as we look across the Nordics, where we can find interesting potential situations and deals.

Right, understood. had a one-off item in the quarter relating to the insurance compensation for that fire in Finland. You sold that property. Do you have any color on the yields or anything about the transaction that you could say? It's a bit of a special case, but still interesting.

Yeah, it was very small, as you can see on the realized change in value. So the transaction was very small.

and it was sold back to to kesco um yeah so i guess i don't know i'm guessing now but i they bought back the so it was a burn down property they bought it back i guess they're opening a new store there again but this is this is guessing from mine but they bought it from us please understood and then um you also mentioned uh lidl's plans here to grow by 100 stores uh do you have any ongoing discussions with them at the moment and uh

A follow-up on that is your understanding that they will be building or growing through new development or leases in existing properties?

It's our job to speak with all major grocers, major and smaller grocers in all of the Nordic markets. But as I understand from what I was reading in the press from Lidl, it looks like it's going to be new construction, right? But I don't know exactly what their thinking is. I just saw that it was a large number and they have a pretty aggressive growth plan.

Understood. That's all from me. Thank you.

The next question comes from Victor Hockenhammer from Pareto Securities. Please go ahead.

Good morning, Christian and Helena. Thank you for taking my questions. I have a few follow-ups. If you were to continue to acquire properties in Sweden or Finland, for example, who do you view as a typical seller of your asset type?

Sorry, can you repeat the first part of your question so I can hear you?

Sorry, if you were to continue to acquire properties, who do you view as a typical seller?

Well, the market is still very fragmented in all of the Nordic regions. We are one aggregator, but there's not that many around. So there are several sources for our kind of assets. One is from the retailers themselves. If they've bought or built a new store, stabilized it, and then they sign a long lease and sell it. So the sale is back. That's kind of been one way that many of the grocery and daily goods assets we see in the market across the Nordics have come to the market initially through that route. We also see a number of private individuals and investors who, now that the market is thawing, you can actually transact again, bringing their assets to the market. So I'd say, and then there's a number of smaller portfolio builders who've kind of built a portfolio and it's been time to offload that asset. In Finland, we've seen quite a few assets being sold from funds who are, I guess, coming to the end of their life and the transaction market has come back, so they've sold. We've seen a number of listed players in Sweden, as they've been working with their balance sheets, sell off a couple of of their assets. In Denmark, we saw the big sale release back from Rema 1000, which they bought. They bought back some of it themselves, actually, but they brought in Norwegian capital. So there's a large number of different sources, but both professional, institutional, and also the chains themselves. So it's a mixed bag of sellers.

Perfect. Sounds good. And then I'll follow up from Victor's question. How does the valuation yield differ in other markets, like in Germany, for example, compared to your reported yield?

In general, it's about the same all across Northern Europe, one could say.

Okay, perfect. And then finally on financing, a question to you, Eliana. How do you reason today in terms of having a credit rating? I think it was a target of yours a few years ago.

Yeah, it was a target before, but for now and in the mid-term, we don't aim to have a credit rating. We had the goal previously to go to investment grade. That goal is no longer valid. So now for the short and mid-term, we are not looking for a credit rating.

Okay, perfect. Thank you very much. I have no further questions.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any written questions or closing comments.

Just one written question, which is a question about we have two big tenants. Do you plan to lower the weight gradually? I'd say that there's no reason to decrease weight. towards one or two or three tenants. There's no strategic reason to do so. The cash flows are very safe. And also there's the economies of scale, which I mentioned earlier about talking about being negotiated in packages. We understand them, they understand us. However, as part of a growth situation, if it is from a country where that tenant isn't located, then there will of course be kind of a natural dilution of our current tenants. But there's no strategy to lower the weight gradually. So, no other questions. Well, thank you, everyone, for listening. Thank you for your questions. We will be returning to you with our Q3 results on the 5th of November. So stay tuned. And until then, and for those of you up here in the Nordics, at least, who summer holidays are kicking off quite soon, I wish you a happy summer, and I wish everyone a happy summer who's listening. Take care. Thanks. Bye.