Investor Update

Dec 21, 2020

Good morning, everyone. This is Henrik Saxbun at Castello, the morning of the 12/21/2020. We would like to give you, updated the same introduction actually as we did Friday afternoon about our sales to Blackstone as well as our new bid on Entra. So we'll simply go through this quickly and then open for q and a. So we can take the next slide, please. Okay. We're doing two things here now, and I think it's good for explanation that we go through them, rapidly again. We simply have agreed with Blackstone to sell 214 assets in two ranges. The first 5,000,000,000 is sold, whatever happens, is 39 assets. And the second part is then up to $13,000,000,000 It's that we're selling when if we are acquiring Engdra. This is done to a value uplift of 20% combined compared with our booked value billion Swedish SEK. So the first part of that is signed, and, of course, this will affect our balance sheet in the Q4. And then you have the reversed offer on Entra. Here, we simply increase our bids to approximately 185 crowns and and the Norwegian crowns, and it's done by that we have you can we're gonna issue eight new Castellum shares to every 13 shares of Sentra, and we will also pay approximately 54.4 crowns to the shareholders. So that's the simple thing. So simply selling to Blackstone uplift of 20% and then increasing the bid to enter to $1.85. The next slide, please. The rationale behind doing this is, of course, that it gives us a fantastic company. It gives us the possibility to create something that hasn't been done before, and it also creates a possibility to to be one of the strongest actors in The Nordics in office and logistics. Looking at the numbers, you can see then that we're creating synergies approximately 300,000,000 SEK. We are creating a portfolio approximately to a 132,000,000 billion SEK. This gives us a new rating for the Castellan part that will be positive. It will give us b a a one target to the total company, and that's part of largest or the largest actor in The Nordics. We also have done the tenant side creating something with 40% of income coming from the public sector. And on top of that, we are giving us the opportunity to be more active in the logistics sector with the building rights we already have there because we are saving approximately 5,000,000,000 SEK in the portfolio, and we are also saving the development pipeline in Stockholm and Gattenberg especially up to 1,000,000 square meters. And this is not two companies that is in need of doing this. This is two companies that come together to create something fantastic. It's the sustainable champions. It's blue chip companies somewhere who is on the top of also creating the next future on property upside. So the next slide, please. On the next slide, you can see simply what we are selling and uplift on the values. And I think it's extremely important to understand, of course, that we we are selling only $5,000,000,000 if the entry doesn't go through. But of course, we are targeting the entry and then not selling up to in value then $19,000,000,000 And this is the 20% uplift from the booked values we have. It's achieved on approximately 4.7%. If anyone thinks they are high, if you can also imagine that this is the mix of different assets quality, and that is some of the assets is is something that we have been in the have had in the back the new ones we have been building. Someone is not logistics, in our view, is more obvious or some is is retail. So this is a mixed portfolio. And the yield is, of course, going from approximately plus 4% to a little bit plus 5% in the mixed part of the portfolio. So this is showing the value that we're carrying in the existing okay. We can take the next next slide, please. And then the future of logistics in Casella. With the sales, I think we actually can accelerate being more into new constructions, being a better partner for the existing logistic factors, and we already have a development pipeline approximately to one one million square meters, and we are can close the next coming years. So that combined that is is that it gives us opportunity to create almost the same volume that we are sailing going forward, up to 1,400,000 square meters. And as you know, we can create them building approximately at 6.8 to plus 7% yield when we do a new constructions. And with this, we have proven that the profit of doing that development is around then 30% and upwards. Next slide, please. And the vision of what we're doing is the same as one month ago. As I said earlier, this is simply something we can't refuse of trying to do. It's creating one of the best that's in there, a blue chip company in The Nordics on the office and logistics sector. It will create new, investment opportunities, but we already together in the combined new company create have a development a pipeline that is the largest and office side in Nordics. The sustainable, road that is one of the leading ones in in Europe, maybe in globally. We will also try to create the best prop tech comp, future for these companies and for our customers. We strongly believe that it's not about buying and selling assets going forward, but actually serving the customers to be attractive on flexibility, on prop tech, on sustainability. And this will give us the opportunity that gives us the opportunity to give that back to the shareholders in some way going forward. Next slide, please. And with that, I open for questions from the audience. Thank you. We have one question here, Henrik. Are you working only with the board or also with owner not on the board? No. We have been in contact with the largest owners in Castelleman, very good process from our side. We have to be on the sideline a little bit during two, three weeks here. But in spite of that, we have seen a very, very calm and good process. Another question. How do you intend to address the 50% blocking state value has in Empire given this new bid is not much higher than their average enterprise? All shareholders is approximately 100,000 shareholders in the two companies, and Valder is one of them. And, hopefully, we they will see the value that we see in doing this deal. Then a question here regarding the sole portfolio, the 4.7%. Is the 4.7% yield on the sole portfolio the net initial yield or the valuation yield? If it's not the net initial yield, what is it? That 13,300,000,000.0 in the two different parts. Yes. It's a natural net yield, and the combined one is more or less the same as the small portfolio we were selling. So there are no differences, and the value uplift is the same on the two parts of the portfolio as well. A new question then. How long would Telen shareholders need to wait for the target synergies to here, but you you can calculate it like we did a all put in deal. Approximately two years is the the calculated time for this. Yes. We have one more question. Is the 50% loan to value, long term charge intact after percent? I can say here that we have the 50 as a policy, but in reality, we also have a rating that says that we should be around or not above 45%. However, calculated in a more conservative way, of course. And that means that it's more the guidance. The deal as it is now is more that we target the same LTV as Castellan has today after the deal is done. But since we, of course, dispose a lot of assets, that means that we are going down in the LTV level even further. And that, of course, indicates that we have a lot of liquidity that could be used in the strong balance sheet to do further investment for the new group or or or give some of it back to our shareholders. So we have a very, very good another question. Would you expect the ENTRA board to be recommending this revised offer? That is still to be seen. I can only say that during this process, we have had dialogue with board of board and the management from it. Another question. What's the lowest acceptance threshold you would be willing to go to if some of the larger EMTA holders don't want to accept the bid? We have one bid out in the market, and it's 90%. Now it seems like there are no more questions coming into to us. That was the last one. Okay. And then we thank you everyone who has been listening this morning, 12/21/2020, and wish you a Merry Christmas. Thank you very much.