Earnings call transcript: Catena sees rental income surge in Q4 2024

Catena AB reported a robust performance in the fourth quarter of 2024, highlighted by a 21% increase in rental income to SEK 2.93 billion. The company maintains a "GOOD" financial health rating according to InvestingPro analysis, with an impressive track record of maintaining dividend payments for 18 consecutive years. Despite these strong results, the company’s stock fell by 2.8%, closing at 451 SEK. The decline suggests investor caution amid interest rate volatility and a slowing transaction market.

Key Takeaways

• Rental income increased by 21% to SEK 2.93 billion.
• Stock price dropped by 2.8%, reflecting potential investor concerns.
• Profit from property management rose 14%.
• Strong project completion and ongoing developments.
• Transaction (JO:TCPJ) market slowing due to interest rate volatility.

Company Performance

Catena AB demonstrated solid performance in Q4 2024, with rental income climbing 21% and profit from property management increasing by 14%. The company completed key projects, including the Ergigaonton project and a new logistics facility for SunSak. Despite these achievements, the stock price fell, indicating a cautious investor outlook.

Financial Highlights

• Rental income: SEK 2.93 billion, up 21%
• Earnings per share: SEK 22.59
• Profit from property management: Up 14%
• Loan-to-Value (LTV) ratio: 38.4%
• Total (EPA:TTEF) investments in 2024: SEK 11 billion

Market Reaction

Catena’s stock price decreased by 2.8% to 451 SEK, moving closer to its 52-week low of 417.6 SEK. According to InvestingPro analysis, the stock appears slightly overvalued based on its Fair Value assessment. Analyst targets suggest potential upside of 21%, with a consensus recommendation of 2.33. The decline suggests investor wariness, possibly influenced by broader market conditions and interest rate volatility.

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Outlook & Guidance

Catena projects a 15% increase in earnings capacity per share for 2025 and expects a CPI indexation of 1.6%. With analysts forecasting continued sales growth and profitability, as highlighted in InvestingPro’s analysis, the company remains focused on acquisitions and project developments, with an ongoing project portfolio valued at SEK 1.6 billion.

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Executive Commentary

CEO Juergen Eriksson expressed confidence in generating strong cash flow moving forward. He emphasized the company’s financial capacity to pursue both acquisitions and developments. Chief Treasury Officer David Silvishow highlighted Catena’s ability to source capital at historically low costs.

Risks and Challenges

• Interest rate volatility affecting the transaction market.
• Potential challenges in new project developments.
• Market saturation in key segments.
• Macroeconomic pressures impacting investor sentiment.
• Uncertainty in EPS and revenue comparisons.

Q&A

During the earnings call, analysts inquired about potential for lower financing costs and the challenges in new project developments. Catena addressed these concerns, emphasizing their strategic focus on acquisitions and project expansions.

Full transcript - Catena AB (CATE) Q4 2024:

Conference Moderator: Welcome to Catena q four report 2024. For the first part of the conference call, the participants will be in listen only mode. During the questions and answer session, participants are able to ask questions by dialing 5 on their telephone keypad. This call will be conducted by CEO, Juergen Eriksson and chief treasury officer, David Silvishow. Now I will hand the conference over to CEO, Juergen Eriksson.

Please go ahead.

Juergen Eriksson, CEO, Catena: Hi, and welcome everyone to this Q4 presentation by Catiana. 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 and A. Next (LON:NXT) slide, please. Let’s dive into the summary of the Q4 of twenty twenty four report where we report 21% increase in rental income ended up at SEK2.93 billion, 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 SEK 22.59 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 four twenty five. The balance sheet remains very solid with an LTV at 38.4%.

And 2024 has been a record year in terms of the investment volume totaling to SEK 11,000,000,000 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 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 twenty twenty four, 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 and 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 Maladale and the Jundsherping 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 twenty twenty three. 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 the Ergigaonton before, but would like to mention it again as we received

: a

Juergen Eriksson, CEO, Catena: nice award during Q4 when the project was named Logistic Establishment of the Year in Sweden. Ergoganton has been up and running since the summer with its operations on the approximately 90,000 square meters. And the next slide, please. The Zamplaza project in Helsingborg is progressing and we completed one of the buildings in 2024. The large high bay warehouse is under construction and is expected to be completed in Q1 twenty twenty six 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 project in Janschoping where we welcome Vestagerpen on 50% of the surface as a tenant to the state of the art logistic warehouse constructed in Lule frame, and so it’s also the High Bay part, which includes a crane warehouse automation. From the turn of the year, both NOEIS and Mestergopen operate in the facility. Next slide please.

Our most recently presented new construction project is at MaPEM4 in Linkoping, where we will build a new logistic facility for SunSak. The total area will be about 10,000 square meters and will be certified according to BRIM Excellent. SunSak will move in in Q4 twenty twenty six. Next slide. Our ongoing project portfolio totals to around SEK1.6 billion or SEK800 million its remaining investments.

When all is completed, we will 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. New construction projects on our land bank. Next slide, please. Looking at our leasing operations, our net leasing was plus 8,000,000 for the quarter and plus 74,000,000 during 2024. Our whale is now at six point seven years and the letting ratio is almost at 97%.

Next slide for some sustainability. The environmental is 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 scope three is at a high level compared to last year due to finalizing many big projects. We report the scope three when the billings are completed, which means that the scope three 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 with 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 next slide.

David Silvishow, Chief Treasury Officer, Catena: Thank you, Jorgen. 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 SEK $8.43 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 and 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 5,100,000,000 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 SEK $4.25 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 making 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 3,300,000,000 demonstrating continued market confidence in our business model.

Additionally, we replaced our previous 600,000,000 revolving credit facility with the new $750,000,000 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 3,700,000,000.0, we maintain a strong liquidity buffer, keeping our liquidity ratio well above one time. Our effective liquidity management strategy delivered 57,000,000 in interest income for the year with 30,000,000 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 bank’s priorities 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, Catiana 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 $250,000,000 in interest rate swaps at 1.9% fixed rate with a 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, Jorgen.

Juergen Eriksson, CEO, Catena: Thank you, David. Our capital deployment divided into acquisitions of 8,600,000,000.0 with the large property in Horzens in Denmark, the sale and leaseback with DSV that came in the last day in the Q3 and also acquisitions from previous quarters of, among others, Jan Holmen, south of Copenhagen and the other two sale and leaseback transactions with DSV in Helsingborg, Las Kona, totaling to eight new properties. During the year, we divested four properties located in Brondby, Denmark, 2 in Kufanstain southern part of Sweden and a smaller one in Gothenburg, totaling to almost 700,000,000. Development CapEx ended at 2,500,000,000.0. These investments related among others to our large ongoing project with El Gigant and Jonkoping, which were finalized during Q2 and the project in Stegamo also in Jonkoping to no waste and the large project at Ramlasa in Helsingborg.

So total CapEx for the year rounded up to SEK 11,000,000,000. Next slide, please. Property values stayed stable at ended up the period with a positive value change of SEK114 million, 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 EPRA net initial yield came in to 5.5. 90 five percent 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, Katya and I 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 and A. Please.

Conference Moderator: The next question comes from John Ehrfeldt from Kepler Cheuvreux. Please go ahead.

: Okay. Thanks. Good morning. And I’m just starting to kick off by your bank margins. Could you comment on what you have currently and what you probably could expect in the future as you mentioned that you’re probably going to get some cheap financing going forward?

David Silvishow, Chief Treasury Officer, Catena: Thank you. Yeah, that’s a good question. I think that sort of reflects the long term trajectory of Catiano the last five years or so. I won’t get into specific details, but I could say that I think what we do expect is looking for five year commitments today, I would expect to be somewhere between one hundred and thirty and one hundred and forty basis points, somewhere like that. And going to the capital market, we would probably see even lower margins.

And for Katerina, that’s a big leap forward, a big positive leap forward.

: Okay. Thanks. My next question regards your earnings capacity. And as the financial income swings up and down between quarters, what kind of level from the financial income do you include in the financial net in your earnings capacity?

David Silvishow, Chief Treasury Officer, Catena: Yes, that’s a relevant question. Usually, we look at our cash position over the last couple of years. And we make an assessment of how much money we expect to have during a year. The reason it’s been shifting over the last two years, I would say, we have had lots of share issues, new share issues, which has meant we have stayed within oversupply of cash. But usually, you could say that we expect to have somewhere between SEK300 million and SEK500 million in cash in a normal year.

: Okay. Great. And then as you mentioned here that projects, it’s a little bit harder to convince the customers to sign on. What kind of level for your investments do you expect for this year? And also if you could comment on 2026?

Juergen Eriksson, CEO, Catena: Yes. Hi, Jan. That’s a good question, but it’s very hard to mention any specific numbers. We are looking into some acquisitions cases and we are also working with new projects. But I mean, we have a strong balance sheet, a very low LTV.

There is headroom for quite many billions to invest and that depends when the opportunities arise. So I can’t give you any more specific than that.

: Okay. My final question really regards to your acquisition capabilities. You mentioned here 38% LTV, but what could a kind of level LTV level are you happy to deliver or to have regarding your acquisition?

David Silvishow, Chief Treasury Officer, Catena: Yes, that’s understood, Jan. The answer is, I think, I believe, is pretty much the same what we have told the market over the last twelve months at least. I would say around 45% is what we aim for. If we end up at 45%, I would expect that we also stay pretty much close or just under the nine times of net debt to EBITDA as well. So, but of course, that depends on the terms of the acquisitions, of course.

But that’s the way you could look at it.

: Okay. Thank you. Thanks for taking my questions.

David Silvishow, Chief Treasury Officer, Catena: Thank you.

Conference Moderator: The next question comes from Kevan Shervanpour from SEB. Please go ahead.

Kevan Shervanpour, Analyst, SEB: Thank you and good morning. I could maybe start with a follow-up question on the development CapEx. So you don’t really give a figure for the whole year, but could you maybe say what will the development CapEx for 2025 be as it stands now in your current projects? Because I note that one of your projects has been put on hold, so I would assume that there will be no investments in the Harrieda project.

Juergen Eriksson, CEO, Catena: Good morning, Kevin. That’s correct. We don’t expect that there will be any success with the traffic market in the coming year about that one. Otherwise, as I said about the Ramlaasa project, we will work on that. We will not spend all the money during 2025.

And then the SANSAC is, I mean, you can divide it in two years. That’s roughly what we will spend about in the existing pipeline.

Kevan Shervanpour, Analyst, SEB: Okay. So that’s maybe about $500,000,000 or so roughly in the year?

Juergen Eriksson, CEO, Catena: Roughly.

Kevan Shervanpour, Analyst, SEB: Yes. And I have also another question regarding you said that you have an LOI for a new project. Could you say anything about the size of this project?

Juergen Eriksson, CEO, Catena: Yes, I can say it’s about 30,000 square meters, but I can’t mention any financial figures about it.

Kevan Shervanpour, Analyst, SEB: Okay, good. And also another question on you mentioned that you have a one off in the net financials of SEK 5,000,000. Could you maybe elaborate what that is due to?

David Silvishow, Chief Treasury Officer, Catena: Yes. Yes, Keimel, thank you for the question. Of course, you could say it’s divided in three parts, you could say. Approximately SEK 2,000,000 refers to temporarily higher costs related to the acquisition of Moswey, the Danish acquisition. The second part is simply an accounting technical measure of close to 2,000,000, which is related to the acquisition of Bocaheuer and is related to the projects that we still wait for completion and sale.

So that’s a temporary effect and only an accounting technical measure. This will balance once these projects are completed and sold. And then you have also the third party’s dissolved fees due to early repaid loans.

Kevan Shervanpour, Analyst, SEB: Okay, good. And I also ask one final question, and that is related to the central administration costs. So they were up by 3,000,000, so 17,000,000 in the quarter. And I’ll just look at the earnings capacity, so it implies 13,700,000.0 per quarter. Does the Central Algin contain any type of extraordinary fee or one off or anything else that you indicated?

Yes.

Juergen Eriksson, CEO, Catena: That’s a good question. There are also some reservations because of a colleague who ended the career here. So we have to, to reserve some money there. There were also been some extra costs regarding the two equity raises. Normally we have one per year.

This year we had two and somehow there are reporting rules that more or less 1,000,000 has to be in the P and L, otherwise the costs are activated, so to speak.

Kevan Shervanpour, Analyst, SEB: Okay. So adjusted, would you say that it’s more in line with last year then?

Juergen Eriksson, CEO, Catena: Correct.

Kevan Shervanpour, Analyst, SEB: Okay, good. Those were my questions. Thank you.

David Silvishow, Chief Treasury Officer, Catena: Thank you. Thanks.

Conference Moderator: The next question comes from John Vuong from Van Landshut, Kempen. Please go ahead.

John Vuong, Analyst, Van Landshut, Kempen: Hi, good morning team. I think your European logistics peers are talking a lot about being close to an extraction point in terms of demand. At the same time you’re talking about that these dialogues are still taking long, but at the same time you also have some issues with potential pre lapping. Could you comment on what you’re now actually seeing in the market and how that has compared to last quarter?

Juergen Eriksson, CEO, Catena: Yes. Good morning, John. Good question. I mean, I tried to elaborate a bit more about it. But as I said before, there are some more activities in the dialogues with potential customers now than before Christmas, but it’s not that it’s urgent for the customers to sign.

It’s planning for the long run. And we have, as you know, long term relationship with customers. So we are they and we are not stressed in terms of time. There is also another dynamic in the market with all the oversupply there is. So of course, customers can look into various opportunities.

That is not the same case as it was during the pandemic. What we also see is that while the e commerce has taken off again, as I said, 5% uplift compared to 2023, We still wait for the consumption to to kick off. I mean, the Swedish households, they have more money now. They pay lower interest rates. They have had some easements in in the, in the taxes as well.

But I think we have to wait some more quarters before the consumption kicks off better again, so to speak. So it’s a wait and see market. But on the other hand, it it doesn’t reflect in in our vacancy rates. They are at the same level. We don’t see that there will be any dramatic changes during 2025.

And also we said before the land bank we have, it’s fantastic. Sooner or later, we will present projects on it. But right now, it takes time.

John Vuong, Analyst, Van Landshut, Kempen: Okay. Very clear. Just on the oversupply, I think you previously mentioned that these are on high watermark asking rents. I’ll just now compare to underwriting for projects that you could start in a similar region?

Juergen Eriksson, CEO, Catena: There are still the developed the spec developers, they still ask for high rent levels. Maybe they offer some discounts in the beginning. But if we were about to start off, kick off a new project in the same regions, we can definitely compete with the rent levels.

John Vuong, Analyst, Van Landshut, Kempen: Okay. That’s very clear. Thank you.

Juergen Eriksson, CEO, Catena: Thank you.

Conference Moderator: The next question comes from Emil Ekholm from Pareto Securities. Please go ahead.

Emil Ekholm, Analyst, Pareto Securities: Yes. Hi, morning. Thanks for taking my questions. I missed a question from Kevin and maybe this is what you discussed, but you came in a little bit higher than our estimate on net interest in this quarter. And can you say anything about how much of the financial costs that are accrual or borrowing costs?

Or is this apart from the $5,000,000 in one offs that you had?

David Silvishow, Chief Treasury Officer, Catena: Yeah. If you’re referring to the non recurring items, is that your question, Emil?

John Vuong, Analyst, Van Landshut, Kempen: Yeah, exactly. Yeah,

David Silvishow, Chief Treasury Officer, Catena: I just answered the questions earlier, but that’s perfectly fine, Emil. So there are three parts you could say. The first part is approximately 2,000,000 refers to temporarily higher costs related to the acquisition in Denmark. And secondly, we have an accounting technical measure of close to 2,000,000, which is related to the Bocaheuer acquisition, where we await projects to be completed and sold. So that’s a temporarily, temporary effect.

This will balance out once the projects are completed and sold. And then finally, the third part is dissolved fees due to early repaid loans.

Emil Ekholm, Analyst, Pareto Securities: Okay. That’s perfect. And do you have any number on recurring items for accruals and borrowing costs?

David Silvishow, Chief Treasury Officer, Catena: Well, you could can you elaborate what exactly you are looking for?

Emil Ekholm, Analyst, Pareto Securities: Yes. I guess that you have some accruals each quarter referring to borrowing costs that you write off during the tenure, I expect. Can you say anything about that run rate level?

David Silvishow, Chief Treasury Officer, Catena: No specific numbers. No.

Emil Ekholm, Analyst, Pareto Securities: Okay. Okay. Thanks. And then we’re more than half through Q1 now. Can you give any guidance on net debtting so far in 2025?

David Silvishow, Chief Treasury Officer, Catena: I’m sorry, we have trouble hearing you, Emil. Could you, please speak up somewhat?

Kannad Mitra, Analyst, Barclays (LON:BARC): Sorry.

Emil Ekholm, Analyst, Pareto Securities: Okay. Maybe is this better?

David Silvishow, Chief Treasury Officer, Catena: Yes. That’s better. Thank you.

Emil Ekholm, Analyst, Pareto Securities: Perfect. Thanks. My headphones are, I guess, not working. Yes, so we’re more than half through Q1. Can you give any guidance on net lending so far in 2025?

Juergen Eriksson, CEO, Catena: No, not more than I mean, it’s fair to assume if there had been any dramatic changes or any any major defaults by customers, we have told the market that. So otherwise, you have to wait and see to to next report. But I also said before that we don’t expect any dramatic changes during 2025.

Kannad Mitra, Analyst, Barclays: Okay. That’s clear. Thanks.

Emil Ekholm, Analyst, Pareto Securities: And in 2025, you have SEK 184,000,000 in lease value debt matures. What’s your expectations on rental uplifts in these discussions?

Juergen Eriksson, CEO, Catena: Could be in some cases, we can see a potential. But I mean, overall, I think we are pretty much on the market rents. It could be some up and maybe some down, but confident with the rent level in generally speaking in our portfolio.

Emil Ekholm, Analyst, Pareto Securities: Okay. That’s clear. And also referring to your earnings capacity, have you included any contributions from projects that are currently ongoing? Or can we expect a boost as SOKK four is completed this year?

Juergen Eriksson, CEO, Catena: In the earnings capacity, those projects that will be finalized during the year, they are in the earnings capacity for that rate show of the year that they are where we have the rent, so to speak.

Erik Granstrom, Analyst, Carnegie: Okay. Okay.

Emil Ekholm, Analyst, Pareto Securities: That’s clear. And lastly, you have around SEK 1,000,000,000 in cash. You touched upon this a little bit earlier, but how do you expect to use them in the near term?

David Silvishow, Chief Treasury Officer, Catena: Yeah. That’s a very good question. It’s a very relevant question. I think we always view our liquidity position as, at least for the last couple of years, as a strategic resource resource, especially now in times of market uncertainty. And And we prefer to stay ahead being swift about potential transactions.

But with that said, we always carefully consider our approach going forward on capital structure. But there are interesting discussions ongoing. So I’m pretty confident we will make good use of the money.

Emil Ekholm, Analyst, Pareto Securities: That’s perfect. Thank you. One more question as well. We saw now in January that Kathmand and Panatorni acquired a property in Zumalnikke from Mitsubishi and they are set to develop for the 50,000 square meter there on speculation. Is this a deal that you had looked into and considered?

Juergen Eriksson, CEO, Catena: Yeah. I can just comment that we looked into that, but we didn’t use the same calculator as they did.

Emil Ekholm, Analyst, Pareto Securities: Okay. That’s very clear. That was all for me. Thank you.

David Silvishow, Chief Treasury Officer, Catena: Thank you. Thanks. Thanks, Emil.

Conference Moderator: The next question comes from Erik Granstrom from Carnegie. Please go ahead.

Erik Granstrom, Analyst, Carnegie: Thank you very much and good morning, Jorgen and David. Could I just ask you to remind us about the Rom, the Rom Lhasa project in Helsingborg. How do you view the occupancy rate there with the contract of no waste? Because occupancy went up seven percentage point quarter over quarter, but it seems strange that you would have 93% still to be let?

Juergen Eriksson, CEO, Catena: In the Ramblas project, we just have signed a smaller part of it, but it’s an ongoing project, one billing finalized during 2020, at the end of twenty twenty four. The other ones are ongoing and we have to come back during the coming quarters with an update and we are also in ongoing discussions with NOSIS to and to clarify a bit more for the market.

Emil Ekholm, Analyst, Pareto Securities: Okay. But it is

Erik Granstrom, Analyst, Carnegie: I mean, when you first press release the project, there was a cooperation between you and no ways to develop it together, them as a tenant and you as a developer and owner.

Juergen Eriksson, CEO, Catena: Correct. But we were also very clear with we hadn’t signed any lease agreements when we kicked off the project.

Erik Granstrom, Analyst, Carnegie: Okay. All right. I understand.

Juergen Eriksson, CEO, Catena: Thank you. And then coming back We had an LOI, so we were agreed on the head of terms. But by various reasons, they couldn’t sign a lease agreement at that stage.

Erik Granstrom, Analyst, Carnegie: Okay. That’s clear. And then coming back to sort of the projects that you mentioned that you were hoping to start in Q4 that didn’t pan out. Could you explain that a little bit more in detail? It sounded almost like it was more to do with permits and land issues rather than discussions with tenants.

Is that correct? How should we

Juergen Eriksson, CEO, Catena: That is correct. I would say that both we and the customers want to do the projects. Of course, we are negotiating, but there were some some issues with permits, especially here in the southern part of Sweden where where a neighbor to the land area saw some some very rare birds called in English, in Swedish, and then there was a major hiccup from the Landstirls County of Administration. So we have to sort that out before we are allowed to kick off any activities on that land area. On the other one, there was more of a discussion also together with municipality about risks in the land, in the ground, and we have to also to solve those issues before we can move on.

So I think there are some some things that we can’t control, I’m afraid.

Erik Granstrom, Analyst, Carnegie: Okay. But do you think that that will be resolved during 2025 or is this sort of something that’s gonna take years to work?

Juergen Eriksson, CEO, Catena: I think that will be solved in one way or another during 2025.

Erik Granstrom, Analyst, Carnegie: Okay. Thank you. And then my final question perhaps to David, it’s the cost of debt. You mentioned that the average interest rate cost came down during the quarter. Given what you know already today, do you expect this level to sort of be maintained during ’25 or do you expect it to move in any direction?

David Silvishow, Chief Treasury Officer, Catena: That’s a very good question. And I expect that we should be able to do more. I expect to have better terms whenever we source new funding or if we do refinances. So we should be able to remain and even push it further down. That’s the trajectory we are looking for.

Erik Granstrom, Analyst, Carnegie: Okay. Thank you. Those were my questions.

David Silvishow, Chief Treasury Officer, Catena: Thank you.

Conference Moderator: The next question comes from Pierre Emmanuel Clouard from Jefferies. Please go ahead.

Pierre Emmanuel Clouard, Analyst, Jefferies: Yes, good morning. Thank you for taking my questions. So the first one is on the like for like expected for 2025. So what is the estimated impact of indexation for 2025? And maybe just coming back on your reversionary potential, do you mean that your average reversionary potential is basically zero today?

Or you are only mentioning Q1, just to fully understand what is your current reversion today?

David Silvishow, Chief Treasury Officer, Catena: Yes. Thank you for the question. On the first question, we know in 2025 that the CPI change is 1.6%. So that’s the print from October. Secondly, on the other question, which is very interesting, of course, to think about, I think the key point here from our perspective is that what we tend to see in the market right now, specifically, since we have oversupply and things like that, we do see that there is a bigger gap between high quality assets and assets that doesn’t hold the quality that logistics companies are looking for.

So from that perspective, we do expect for those properties that are located perfectly, we should see a trajectory of positive reversion potential. But then if is it in, you know, two years time, three years time, four years time, that’s difficult to tell. So what we have said to the market and been very clear to the market right now, we think that overall our rent level is in line with market rents. But given the quality of our portfolio, we do expect that there is a positive, long term. That’s how we view the overall market and our portfolio.

Pierre Emmanuel Clouard, Analyst, Jefferies: Okay. Thank you. That’s interesting. And maybe a follow-up on that. On ERVs, so what has been the change of ERVs in 2024?

And you seem super positive in 2025. So maybe if you can give us more color on the potential evolution of EAVI in 2025?

David Silvishow, Chief Treasury Officer, Catena: Yes. We won’t disclose a specific number or guide any specific number on that. Thank you.

Pierre Emmanuel Clouard, Analyst, Jefferies: All right. And a final one, it’s a quick technical question, but you have made a total of SEK 11,000,000,000 of investment this year for last year, so in 2024, but I only see SEK 4,400,000,000.0 of your cash flow from investing activities. So how can we reconcile the two figures?

David Silvishow, Chief Treasury Officer, Catena: Yes. That’s I think that’s the question. I understand your question, but I think it’s better to take that aside from this. I can explain that there are just different ways in how you structure your cash flow. Basically, you can have a gross kind of explanation and you can have a net kind of explanation.

We have a net kind of explanation. That’s why you have troubles, seeing the links. But I, me and Jorgen can are glad to explain that to you in a separate call.

Pierre Emmanuel Clouard, Analyst, Jefferies: Okay. Thank you very much.

Juergen Eriksson, CEO, Catena: Thanks.

Conference Moderator: The next question comes from Kannad Mitra from Barclays. Please go ahead.

Kannad Mitra, Analyst, Barclays: Good morning. Thank you for taking my question. So I just have one for further growth in terms of acquisitions or project development, what are you thinking how are you thinking about the bandwidth between the two? And in case of acquisitions, what kind of if you have anything opportunity, what kind of hardy rates, how does it compare to the yield cost of 7% that you have in your development pipeline?

Juergen Eriksson, CEO, Catena: I think if I was it was quite hard to hear you, but I think you asked about how we compare projects to acquisitions, right?

Kannad Mitra, Analyst, Barclays: Yes, correct. That’s all. And how are you thinking about the balance between the two?

Juergen Eriksson, CEO, Catena: Yes, that’s a good question. But it depends on what kind of opportunity arise and we have never in the history been forced to say no to any good opportunities. We have the financial capacities. I would say we go for both. But yes, new projects on our land bank is more profitable than acquisitions, but we can do both.

And that totally depends on what kind of opportunity arise from the customer market and in the transaction market.

Kannad Mitra, Analyst, Barclays: And how does the transaction market acquisitions compare to the to your hurdle rate currently if you if you I mean, if you see the transactions that are in the market.

Juergen Eriksson, CEO, Catena: Sorry, it’s very tough to hear you actually. Maybe you can send an email and we’ll try to answer you.

Kannad Mitra, Analyst, Barclays: Sure. It’s just how does the Huddl rate compare to the acquisitions that you see in the market, if you can hear it, hear the machine just?

Juergen Eriksson, CEO, Catena: I’m very sorry, but neither me or David can hear you clearly. So please, please, email us and we will answer you. Cool.

Kannad Mitra, Analyst, Barclays: No problem. Thank you.

Juergen Eriksson, CEO, Catena: Okay. Thank you. Sorry.

Juergen Eriksson, CEO, Catena0: Can you hear me?

Conference Moderator: The next question comes from Oscar Lindquist from ABG Sundal Collier. Please go ahead.

Juergen Eriksson, CEO, Catena0: Hi, good morning. Good morning. So I have a question on capitalized interest that came down quite a bit now in Q4. Can you give any indication of a level we can expect for 2025 given current project volumes?

David Silvishow, Chief Treasury Officer, Catena: Yes, that’s a relevant question, I guess. And given that we don’t know how 2025 will turn out and the volumes, but you are correct, your analyze is correct, of course, that if the volumes tend to go down, then of course we won’t be able to capitalize as much interest. So that’s true. So we won’t be able to give you a specific number or guide you because a number would more or less suggest the guidance on the volumes going forward.

Juergen Eriksson, CEO, Catena0: Okay. I was more asking in relation to sort of the ongoing project volumes, but not any indication of new project starts.

David Silvishow, Chief Treasury Officer, Catena: Yeah. Well, as of the balance day, one way you could look at it is it’s about 800,000,000, I believe, on balance day. And then if you think about 800,000,000 going smoothly over 2025 and then capitalize an interest on that close to our average interest rate, then I would say you are probably close to where it will get. And that goes without any new projects in 2025.

Juergen Eriksson, CEO, Catena0: Okay, sure. Thank you. And then in the earnings capacity, you also have included capitalized interest for a normal project volume as you say. How much is included here?

David Silvishow, Chief Treasury Officer, Catena: Yes. Again, that’s very standardized form, but we do look at the balance from the start of the year. So pretty much the same calculation as I just suggested you could say.

Juergen Eriksson, CEO, Catena0: Okay. Perfect. And then also current tax in the quarter came up quite a bit. Is there anything to highlight here?

Juergen Eriksson, CEO, Catena: No, not much to highlight actually.

Juergen Eriksson, CEO, Catena0: Okay. So if we look at the sort of full year number for current tax, Is that something we can expect going forward as well?

Juergen Eriksson, CEO, Catena: I think we have yes, more or less.

Juergen Eriksson, CEO, Catena0: Okay, perfect. Thank you. That’s all for me.

Juergen Eriksson, CEO, Catena: Thank you.

David Silvishow, Chief Treasury Officer, Catena: Thank you.

Conference Moderator: There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Juergen Eriksson, CEO, Catena: Yeah. We have one written question, but, that’s related to to the projects and the challenges, and we answered that in in one previous question. So with that said, we would like from the Katiana side say thank you to all listeners. Thank you for all questions. Have a nice Thursday and see you again.

Thanks.

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