Logistea AB (publ)

Thank you so much. Good morning to all of you and welcome to the presentation of Logistia's Q3 report. Myself, Niklas Uckerman, CEO of the company and sitting next to me is Philip Löfgren, who is CFO of the company. As said, we'll answer any questions after the call. The merger with KMC Properties is completed and we are today presenting a full quarter for the new combined company. Before we dig into the numbers in detail, it's worth to highlight the main advantages with the merger and how the company looks today. With the merger, we found a company that is, or with KMC, we found a company that had very similar types of properties as the former Logistia had. Focus on logistics and industrial properties and both companies favored long and triple net leases. We see a clear economy of scales when it comes to, first of all, cheaper financing from banks and the debt capital market, broader shareholder base and much better liquidity in the share, better tenant diversification and more potential tenants to do add on investments with. We saw synergies both on the short and medium term and medium term is much driven by potential lower interest costs, a task we're working hard with at the moment. We have more markets to operate in, meaning that we could take advantages of good investment opportunities in more markets. The property portfolio now amounts to a bit more than 13 billion SEK, a split between 1.4 million square meters of lethable area and 343,000 square meters of building rights. And the NRV today stands at 15 SEK per share. As a result of the merger, we're presenting large improvements in income, NOI and income from property management. Notable is that the increase in income from property management is much higher compared to the increase in NOI. And as you can see on this slide, we are presenting 169 million SEK in profit or income from property management for the period. Still a long vault, meaning long leases at 9.7 years. The net initial yield from income producing properties is at .9% and the LTV is slightly lower compared to the last quarter and now at 48.5%. A few words on the property portfolios and here are a couple of examples. And the portfolio comprises a good mix of logistics and light industrial properties. To the far left we have a few examples of logistics properties, fully leased, long leases and we have those at yields of 7 to 8% these two examples. In the middle we have two examples of light industrial type of properties, also fully leased, also long leases, in most cases triple net leases, meaning that the tenants are paying for all operating and maintenance costs. And here we're talking yields of 7.4 to 7.7%. Developments is an important factor and we are hoping to do more. And when we say developments, it will be a mix of add-on developments as is the case for the first one in Arlingsås where we bought an existing property at a yield of 7%. We are currently completing an extension for the tenant NKT. The extension is 160 million SEK and we get a yield on cost of 10% on that investment. And at the same time we are prolonging the lease with NKT for another 22 years, meaning that we increase the wall from previous 7-8 years to 15 years. And the last one is a green field development that we completed the other year. 14-year triple net lease and the yield on cost on that one is 7.4%. As you can see, 80% of the properties are located in Sweden and Norway. The properties outside of the Nordics are triple net leased properties with long leases. And all of those properties are also leased to Nordic tenants, meaning that we can manage the properties outside of the Nordics. Yields in the portfolio as you can see varies between 6.4 to a bit more than 10% in the various markets. Main tenants in the portfolio are Bevi, Insula and NKT. And to the far right you can see the split between the different industries. And there's a good diversified mix between insulation and construction, industrial and production and some others like e-commerce and the fish industry. More on the property portfolio. 91% of the leases are triple net and as I said, meaning that the tenant is responsible for operating and maintenance costs. Also obviously meaning that we as a landlord have less risk when it comes to increases in operating expenses. The occupancy rate is high and now at 97.4%. If we're looking down to the left, you see the net lettings and we're reporting 3 million SEC of net positive net lettings in the quarter and 4 million SEC for the first three quarters of this year. Very strong vault as we've said and notable when you look to the right that 88% of all our leases expire in 2029 or later. Talking a bit on the market for our type of properties and starting with the transaction market where we can see that for the third quarter the volumes were slightly lower compared to the previous quarter. However, we're 50% higher compared to the same quarter of last year. We foresee higher activity the coming six months driven by the fact that investors seek high yielding assets with strong underlying demand from tenants. And obviously higher activity in combination with lower interest rates would probably push the yields down over time. And the higher initial yield compared to previous is much driven. As you can see we're reporting much higher net initial yield of .9% as I said much driven by the merger with KMC. And just to give you some background to the .9% that should be compared to an all in financing cost today in Sweden of approximately 4%. The valuation yield is up .25% from year end and .02% from the last quarter

meaning flat.

And over to the financials. Looking at the increase of all these figures on this page they are huge. Though the property portfolio is up almost 150% almost entirely linked to completed term transactions to 13.1 billion where KMC stood for around 6.8 billion. The revenues are up 67% for the period with a .4% increase in the like for like portfolio. The net operating income is up 83% with a better operating margin of 82% on the last 12 month term compared to 78% a year ago. And the profit from property management which increased to 91 million in the quarter is up 106% for the period. This result is excluding the transaction costs of 12 million which is related to the business combination with KMC. And the increase is almost entirely linked to a greater property portfolio. Profit from property management per share increased 44% on the rolling 12 month period and the increase for the quarter was 11%. During the quarter we have focused a lot on the loan portfolio for optimization and to take advantage of both the current financing market but also Logistia's new market position. We've seen some changes of bank margins and have completed some new interest rate swap agreements seeing a 5 year Swedish swap rate down to below 2%. The average interest rate is now down to .6% from .9% in the beginning of the quarter. We have a current hedge ratio of around 74% which leaves some room for coming expected interest rate decreases. Our loan portfolio consists of 85% senior secured bank loans and a 14% mix of secured and unsecured bonds. The Swedish bond of which 75 million were outstanding in the period and was sold on the 7th of October. Having around a minor share of the loan portfolio consisting of bond loans is not an issue for us. We see interesting pricing on the capital markets with peers issuing or tapping on appealing levels. The remaining secured bond of 900 million Norwegian can be called in January 2025 or even earlier. The best case is to refinance that loan with either 100% new bank loans or a mix with new bond and bank loans resulting in a -50% drop in the credit margin on that loan amount. Logistikas EPA NRV, the net reinstatement value increased from 14 to 15 kronor per share during the quarter and is now up 13% this year. Looking at the earnings capacity, new for the quarter is the currency exchange which have some effects on the numbers. The net operating income in the earnings capacity is down slightly due to the FX effects. The net finance costs are down with 32 million which is correlated with the decreased average interest rate going down from, as I said before, 5.9 to .6% in the quarter. Altogether we see a stronger profit from property management per share of 4% for the quarter.

Looking a bit on the outlook, we will start with the new financial targets that we presented a few weeks ago. The first two ones increase in NAV per share and income from property management per share is the target is 15%. That's higher than the former logistikas have. On this slide we are presenting, as you can see, the NAV for the first or the previous two quarters to the far left. The second one is from the run rate for the same period. We kept the LTV target or hurdle of 60% which today is somewhat below 50% and we feel comfortable that at or around 50% is where we will probably be at for the coming quarters. ICR is moving upwards quarter over quarter. We are today at two and a good headroom towards the .8% which is the target. To summarize, we have done the merger. It was very good for both companies. We have now a good stable financial platform to continue to build on from. We got long leases, stable tenants. We have good support from all our banks, now being more than we had in the past. We have a good and proven track record that we can do deals both in good and bad times, both buying single assets portfolios and look at M&A deals. As Philip said, we will continue to do a lot of work on the debt portfolio the coming quarters where we see large cost reductions. Obviously, we will continue to work on our ESG commitment. Any questions from...

There are no telephone questions at this time. I hand the conference back to the speakers for any written questions and closing comments.

Good. We have a few. They are in Swedish but we will do a quick translation. The first one, how do you see upon the KEMC shares that will be distributed on November 12? Is there a risk that there will be a lot of sales? Yes. It is correct that the remaining shares held by KEMC properties will be distributed to the shareholders of the company on November 12 following a general meeting on November 11. It is a smaller part compared to the last distribution we took place following the merger. At that time, we actually saw a high liquidity in the share but not necessarily... It didn't affect the share price negative at that time. For everyone's sake, it is good that this is taking place now. We don't have any views on how much will be sold or not following that distribution.

Also, a question why the result before tax is down. That result is affected negatively by changes in value of derivatives. As I said before, this is the first quarter that we have effects rate affecting the P&L and derivatives where interest rate derivatives we've seen drop in market interest rates which affects the values of the derivatives holdings.

Next one is will you buy more properties to reach the old growth goal of 15 billion SEK? Starting with the growth goal, the 15 billion SEK was for the former logistic. Now we have said that we will continue to grow. We have not set the number but just to be clear, one shareholder of logistic should expect us to grow this business. It will be a combination of buying standing assets. It will be add-on investments in our own portfolio. We will hopefully do more green field developments and will continue to look at M&A. There is no set growth target but one should expect us to grow the business that's for sure. I don't think we have any more written questions.

There are no more questions at this time. I hand over to Niklas and Philip for any closing comments.

If there are following questions, just let Philip or myself know. We thank you for today and thanks for the interest and we will continue to deliver growth. Thank you. Thank you.