Logistea AB (publ)

Welcome to Logistia Q3 Earnings Call for 2025. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Nicholas Zuckerman and CFO Philip Lofgren. Please go ahead.

Good morning, everyone, and welcome to the presentation of Logistea's Q3 report. As always, myself, Niklas Zuckerman, and next to me, Philip Löfgren, we will present and we'll be happy to take any questions after the presentation. Even though we've had a fairly quiet quarter when it comes to new acquisitions, we have during the year been active and we have expanded the portfolio to 15.6 billion SEK. As always, and since we started the company a couple of years ago, full focus on logistics, warehouse and light industrial properties. We favor long leases, triple net leases, and the occupancy currently stands at 97% and the vault at 9.4 years. Growth during the year has been in the Nordics and currently 91% of the properties when it comes to value are located in the Nordics. We're once again reporting record high income, net operating income and profit from property management. The profit from property management is up by 139% in real terms. and 48% when it comes to comparing the property from property management per share compared to the same period of last year. As I said, we've continued to grow. And we have so far this year required properties worth 2 billion sec. Also worth mentioning is that the cash flow from operation is up by 65%. And we're reporting an operating margin of 92%. A few words on the market where you can see that Sweden is the only Nordic market where transaction volumes are up thus this year. The other markets have been fairly quiet, but we foresee a pickup in all of the Nordic markets for the remaining of this year. This is mainly driven by lower cost of financing, lately driven by lower margins especially, and an overall appetite for stable and long cash flow with a clear yield gap. And talking about yield gap, we have during the year acquired properties at an average yield of 1 or 8.3%. And this should be compared to our average cost of debt of 4.6. And the cost for new financing in Sweden and Finland at 4% or lower. The transactions undertaken have contributed 0.22 sec per share, which is equal to roughly 22%. We are under no pressure to buy, but we have a very good pipeline presently, and we still see good opportunities in the Nordic market. As communicated before, we look to grow the portfolio from acquisitions obviously, CapEx investments in our own portfolio and new developments. And our project for Intersport in Näsjö is progressing as planned and it's expected to be finalized in December of this year. So hopefully we can show you more or pitches of outstanding assets when reporting the full year number. The run rate also continues to improve by the quarter. The NOI is up by 17% in one year, and the profit from property management is up by 33% for the same period. And the change per share is up 23% compared to a year ago. Notable is that the net financial cost is down in one year, even though the debt portfolio is much larger compared to a year ago. More on the run rate per share. The improvement has been stable in 2024 and 2025, following a decrease in 23 when we did the rights issue. And the growth is obviously driven by acquisitions, improved financing terms and finalized property projects. No major changes in the leasing portfolio over this quarter. The BRV share has decreased to 25%. And as we've said in the past, will continue to decrease even further. if and when we do new acquisitions with properties leased to other parties. Otherwise, still long leases, and as we've said in the past, even longer leases when it comes to most of the non-Nordic markets. Very happy to present a net letting that is positive for the quarter, one million SEK, mainly driven by a new lease signed in the property that became partly vacated following a bankruptcy in Q3 of last year. We have had two smaller terminations during the quarter where tenants will leave in 2026 and 2028. But I said a positive number when it comes to net letting for the quarter. And finally, from my end, we have said that one of the benefits of being a larger company and one of the reasons why we did the merger with KMC was to improve liquidity in the share. and now a bit more than a year post the merger you can see that the liquidity has improved dramatically. So we're now seeing a turnover of per day of call it 10 to 30 million sec and that wasn't to be compared with numbers you know at maybe one or two million sec before the merger. and even higher obviously in some periods when we've seen larger block trades. And with that, I'll hand over to Philip.

Thank you, Niklas. I will now move over and talk about the strong earnings and the finances for the period. Logistea's revenue for the quarter increased to 288 million compared to the previous quarter of 263 million. The increase is linked to the finalized acquisitions during the period and a smaller increase of the revenues in the like for like portfolio. The net operating income came in at 269 million, an increase from last year's quarter, last quarter of 242 million, which is linked to both the acquisitions, but also one quarter, which kept the heating and electricity costs down. The operating margin increased to around 91% and adjusted operating margin where we exclude the rent supplements from the revenues came in at 97%. An increase from 93% at the beginning of the year. And triple net year leases and an active asset management are two main drivers for these strong key ratios. Over to the profit from property management. In the quarter, we have reserved a cost of 10 million as a central administration cost following an agreement that was signed in connection to the recruitment of Anders and Niklas, our CEO and deputy CEO. More about this can be found in our report. But if we exclude this one time cost from the profit from property management, the result came in at 140 million, which is aligned with the estimates. The main driver for the increase, which was the much stronger net operating income for the period. If we look at the profit from property management per share, one hour financial target, it increased by 54% on a last 12 month basis, which is an increase of 52% period on period. Over to the key metrics, the loan to value ratio decreased a bit following the increased value of our property portfolio. As I've told you before, we have a lot of headroom increasing the loan to value up to our financial limitation of 60%. So together with the current cash balance of almost half a billion, we have a lot of firepower when it comes to acquisitions and yielding investments in our own portfolio. A quick comment on the discussions we've seen in the Swedish newspaper Dagens Industri regarding CAPEX investments in the property portfolio. So year to date, we have had 201 million in investments. More than 80% of that number is linked to the ongoing project we have in Näsjö for Intersport. And almost all of the rest is linked to yielding tenant renovations. The interest cover ratio increased to 2.4 times on a rolling 12 month basis. This is an increase from 2.0 times a year ago following a greater property portfolio together with improved financing portfolio. So here you can see overview of our loan portfolio divided into currencies. Our basic funding strategy is to have loans in the same currency that we have rent in and in the currency that we can trade the assets. So this gives us a limited currency risk in the group. The hedging ratio of the group was around 73% in the end of the third quarter. The absolute majority of the SEAC loans are hedged, while the hedging ratio for our NUC loans is around 40%, which opens up for lower interest rates following the recent cut in NIBO. On new loans for all markets except Denmark, we're securing a margin of around 140 to 160 bps, depending on the region that property is located in, which is lower than the average margin in all of those markets. Over time, this will affect the average interest rate, which per the end of the period amounted to 4.6%. And just for comparison, as we see on the diagram to the right, note loans are pushing the interest rate up. And if we exclude the note loans from our portfolio, the average interest rates would be around 400 bps. Continuing on our debt portfolio, during the quarter we've renegotiated a bank loan in Norway of 328 million, where the new margin decreased by 25 bps. We've continued to improve our loan portfolio and we can see that over the year we've decreased the average loan margin or the average interest rate from 5.0% to 4.6%. We'd also have in the end of the quarter unencumbered assets in Germany, Poland and Netherlands of around 940 million Swedish. And we are in long term discussions regarding financing in one of those countries. Wrapping this up, we must look at our financial targets. Annual growth in profit from property management per share adjusted for one-time effects came in at 54%, well north of our target of 15%. One should not expect to see these kind of increases going forward, but looking at the growth rate in our earnings capacity together with the transaction capacity, we expect to deliver on this target. The NRV per share increased 10% from a year ago, and the LTV is in the conservative zone, and the interest cover ratio is continuing to increase. So the key takeaways from the finance side are that we have a good position to continue to grow the business using the cash balance, but also increasing the loan portfolio. We have a strong underlying earnings capacity and we've also improved the operating margins on annual basis. Back to you, Niklas.