2025. For the first part of the conference call, the participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. This call will be conducted by CEO Jörgen Eriksson and Chief Treasury Officer David Silvesjö. Now, I will hand the conference over to CEO Jörgen Eriksson. Please go ahead.
Hi and welcome everyone to Q1 presentation for the first quarter 2025. Here is the agenda for this conference call, as always: a summary of the quarter, a business overview, and then following a business update, going over to the sustainability and the financial update, and some takeaways from today before the Q&A session. Next slide, please. Here is the summary of Q1 2025. We have a stable progress in a what's a somewhat cautious market. We report a 31% increase in rental income, ended up at SEK 644 million, driven by acquisitions, projects, and by our CPI-linked contracts. Profits from property management increased by 40% in total, and per share it was up to 18%. Now we can really see the full effect from the last year's acquisitions.
We report an increase in NRV per share up to SEK 429, and the balance sheet remains very solid with an LTV at 37.8%. We expect to generate strong cash flows in the coming quarters. In combination with our robust balance sheet, we are in a favorable condition for more growth. Next slide, please. Next slide for the business and the market update. We can note that a few transactions have been carried out in our segment, but a rather low activity in the first quarter. At the same time, we also see that more interesting objects will come out in the coming quarters. We are constantly looking for more properties that fit in our strategy, which sets good locations, strong customers, and high quality. I mentioned the e-commerce figures.
They have declined in January and February, but in March, there was a significant boost of 14% compared to March 2024. Regarding new developments, we can almost repeat what we said in the last quarter. We have ongoing discussions and still ongoing LOIs, but it takes time, and we sense a cautious approach from the customers. Add to that the volatile market, uncertainty in the geopolitical situation, and tariffs issues, and so on. On top of that, it is easier for many players to put on hold instead of taking new investment decisions. We have mentioned many times the regional oversupply. For many quarters, we have mentioned it, and the situation is the same today. Mälardalen and Jönköping have large vacancies. However, it is pleasing that Catena continues to maintain a high occupancy rate. Next slide, please.
Regarding our customer portfolio, Menigo has taken place in the top 10 after moving in at Landvetter in our new project. DSV, our biggest customer, has moved from 20%- 19% of our contractual value. Logistics and transport is our biggest segment, standing for 50% of the contractual value. We can see that food and beverage moved to 18%, which relates to Menigo, as mentioned before. Next slide, please. Regarding the portfolio, there has not been any bigger changes in that compared to Q4. We have disposed of two smaller assets in Region South. The rental value is up a bit, and the surplus ratio is up from 82%- 83%. Next slide, please. A business update. Next slide. Here we can see one of our ongoing projects, Rugvista in Malmö, where we will complete a state-of-the-art logistic facility of about 14,000 sq m.
The project will be completed in May when Rugvista will begin its occupancy as well. Next slide, please. In the beginning of April, we announced a new deal in Denmark, where we signed a contract to acquire a new modern logistic building of 26,000 sq m. The construction work starts as we speak, and the closing is expected to be in December 2025. No lease agreement is signed at this moment, but we have started the letting job, and we hope to be successful with that during this year. The asset is located in Køge, which is one of the top logistic locations in Denmark, and that will be our first footprint in that region. Next slide, please. Our ongoing project portfolio totals to around SEK 1.3 billion, where SEK 400 million is remaining investments.
When all is completed, we will almost add 90,000 sq m to our portfolio. The yield on cost on those projects is around 7%, and for new projects, we are also aiming to be around 7%. In the current market, we will not start any speculative projects at our land bank. Next slide, please. The situation with our land bank and ongoing zoning plan processes is the same as last quarter. We feel very confident that the land we have is in attractive logistic locations and that we can create profitable growth in the future. At the same time, we see that it is becoming more and more difficult to get more zoned land, so the value of the land should also rise in the long term. Since there are no questions of any land allocations, we are not in a hurry to get started with construction.
We do this together with our customers when they are ready to sign new leases. Next slide, please. For a leasing update, we can see that our net leasing was strong in Q1. It came in with plus SEK 47 million for the quarter. Our WAULT is now at 6.5 years, and the letting ratio is at 96.5%, which is a really strong number. Next slide, please. For an update around the sustainability. Next slide. The environmentally certified area is now at 53% and will increase further as projects and new acquisitions that are in the process of being certified are finalized. I am happy to see that we are more than halfway to our 2030 goal. The Scope 3 is at a high level and reported on a rolling 12-month compared to last year due to finalizing many big projects.
We work with carbon dioxide budgets in all our projects to limit the CO2 emissions, and here we have made some really impressive improvements. We continue to maintain a high level of EU taxonomy alignment. For example, our turnover came in at 76% compared to 71% in last quarter, and produced energy from solar cells reached almost 10 MW. On rolling 12 months, that was, sorry, on rolling 12 months, and total installed output on our roofs is now almost 70 MW. Now over to David for some financial update.
Thank you, Jörgen. Good morning, everyone. This slide illustrates the strength of our underlying earnings with year-over-year growth across all key metrics. Rental income increased by 31%, as Jörgen pointed out earlier, largely driven by acquisitions. Net operating surplus grew by 36%, and profit from property management rose by 40%, reflecting continued scalability and cost control. Earnings per share from property management increased by 18% to SEK 6.6 compared to last quarter, underlining our ability to convert top-line growth into shareholder value. Even in a volatile macro environment, our model continues to deliver resilient earnings with operational leverage. Next slide, please. This slide highlights the composition of our rental income growth from the first quarter of 2025. Total rental income, as I just mentioned, grew by 31% year-over-year, and as you can see, it's primarily driven by acquisitions, which contributed over 25%.
Our completed development projects added a further 5.3%, including the recently finalized 42,000 sq m facility in the Gothenburg region of Härryda, fully leased to Menigo. Like-for-like rental income increased by 2.2%, mainly reflecting CPI-linked indexation, but also some rent negotiation uplifts. These results underline our ability to drive growth through a diversified approach of combining strategic acquisitions, selective development, and solid operational performance. Let me start with an overview of our capital structure and the broader macroeconomic context. As everyone is aware of right now, this remains a market shaped by elevated geopolitical uncertainty with selective capital availability. While these dynamics present clear challenges, they also reward disciplined capital allocation and long-term focus, which is what we tend to focus on. From our perspective, the first quarter offered relative stability.
Our earnings contributed positively to equity, even after a drag from currency effects driven by a stronger Swedish currency on our Danish net assets. Our EPRA NRV continues to show steady improvement quarter after quarter. We see this as a reflection of our underlying resilience and the quality of our assets. Although we did not execute any major capital movements in this quarter, we've maintained a strong focus on readiness. Our financing strategy remains anchored in diversification, and we are continuously assessing opportunities to optimize cost and flexibility. Looking ahead, we believe volatility is likely to persist, but so will opportunity. Our approach is to stay proactive and well-capitalized. Passing on to next slide, please. Our financial position remains strong, with all key metrics well within policy and covenant limits.
During the quarter, we made the strategic decision to consolidate our credit ratings and continue with Fitch as our sole provider. This streamlining reflects our confidence in both our credit profile and in our ability to communicate it clearly to the market. Fitch also reaffirmed our BBB rating in February, a recognition of our prudent financial management and long-term focus. Combined with our stable balance sheet, this ensures continued access to capital on competitive terms. Next slide, please. We continue to recycle debt during the quarter, refinancing SEK 650 million in bank loans and issuing a new SEK 500 million bond at favorable terms, three years, STIBOR plus 95 basis points. This reflects our strategy of actively optimizing our funding costs while maintaining a diversified maturity profile. Our liquidity position remains strong at SEK 3.6 billion, and we continue to manage it actively.
In light of ongoing market volatility, we deliberately maintain a healthy liquidity buffer, not only to safeguard operations, but to remain agile and ready to act. At the same time, we ensure efficient use of that capital, generating SEK 8 million in interest income during the quarter. Passing on to next slide, please. As economic uncertainty grows and European central banks move toward rate cuts, managing interest exposure remains, as always, a top priority. In the first quarter, a SEK 700 million forward started interest rate swap was activated, bringing our hedge ratio currently to 63%. This reinforces our ability to navigate rate volatility and supports stable cash flow generation ahead. Next slide, and back to Jörgen.
Thank you, David. Our capital deployment has been at very low levels during this quarter, which means no acquisitions, just a few divestments of two smaller properties totaling to SEK 25 million, and development capex ended at SEK 264 million. These investments relate, among others, to ongoing projects in Ramlösa and Malmö. Next slide, please. Property value stayed stable and ended up in the period with a positive value change of SEK 103 million, which correlates to 0.2% 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 5.6%. Next slide, please. Some takeaways from today. For the first, Catena closes a quarter with very stable progress in a somewhat cautious market.
Secondly, now we can see that all the profitable investments that we did last year generate a much higher income from property management per share, up 18% compared to last quarter. The third point is we are very well positioned with favorable conditions for continued growth. With that said, we will open up for Q&A, please.
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 six on your telephone keypad. The next question comes from Oscar Lindquist from ABG Sundal Collier . Please go ahead.
Thank you. If we start on in the P&L, you mentioned a one-off in property costs. Can you quantify that number?
That one from with the insurance. Yeah, there are around.
Yeah, with the insurance claim.
Yeah. We had those up in the property cost as well, but that's an accounting matter, so you cannot have the income on the top line. They are within the P&L on both sides, so to speak.
Okay. How much?
It was close to SEK 5 million, I think.
Okay. On transaction, you mentioned better activity in the Danish market. Can you elaborate on sort of how it differs from the market in Sweden? You mentioned it better aligns with your strategic view with acquisitions in Denmark. Is it related to asset quality or liquidity or pricing or everything?
Yeah, I think it's a mix of what you mentioned, but we can all in all see also when we also take the financing perspective, it will be a better deal for us. It's more profitable. With that said, we are looking into a lot of cases, both in Sweden and Denmark. As I said before in this call, we do see that there will come out some more opportunities in the Swedish market going forward as well. On the other hand, you never know what's happened tomorrow now in this volatile market. Some sellers, they have decided to go try the market, and then they withdraw it again. It's almost from day to day, actually. It's quite uncertain out there.
On the acquisition you've done now in Q2 in Denmark, do you have a tenant for that building, or is it on speculation, or?
It's on speculation when we signed this SPA. No tenant signed, but now we are out with the working with the letting job, and it's looking good. We have a quite long period of doing that job. We feel confident with the case.
I think just adding to that, it's a very rare opportunity to find a property like that. That's basically the reason we are doing this, because usually, and what Jörgen mentioned about the development, we would rather not pursue any speculative developments, but this is a fantastic opportunity given the location.
Yeah. Adding to that also, we hadn't had the opportunity to just acquire the land. It was a total package deal. In Denmark, we have 0% in vacancy. We do need to have something to work with for the sales team.
Yeah. Sounds good. I mean, your net LTV is seven times, your LTV is 38%. You have quite some headroom to your financial targets. On sort of a long-term basis or normalized level, where should we expect you to be?
Yes, that's a very good, fair question, of course. We try to assess the market on a daily basis, basically. Given how the market tends to shift these days, what we know now and what we feel very comfortable about is to stay around 40%. With that said, it could be 45% in six months from now if we feel that, if we feel confident about that, and if we can find profitable enough investments. I think how you should read it from our perspective is we have our financial policy, and we will make sure to stay within that framework. Other than that, we assess this on a daily basis.
Okay. If we move over to projects then, can you share any insights on ongoing discussions? How is it progressing compared to Q4?
Absolutely. At a certain moment, we felt that now it's rather quiet. Then just a couple of weeks ago, there is a lot more ongoing discussions again. It is shifting very fast. As I said before, it takes time. We do not hear in the market that customers are very eager, and they really need to have something finalized within 10 months or 12 months. It is more discussions on the longer run, so to speak. A bit more activity again. We are hopeful. At the same time, we have to respect the volatile market and the uncertainty there is as well. That is the kind of flavor I can give to that discussion.
Okay. Do you think it's reasonable to expect any larger project starts in, say, the coming three to six months?
We hope, and there could be some, but I mean, that depends also what you mean larger. I don't expect a new Elgiganten of 90,000 sq m in the coming quarter, but some projects is possible.
Okay. Perfect. Thank you. That's all from me.
Thank you.
The next question comes from Keivan Shirvanpour from SEB. Please go ahead.
Yes. Thank you and good morning. I asked one question first on this Danish acquisition that you made in the quarter. You mentioned that you also have some type of extra land, so you will be able to maybe add some lettable area on that. Could you maybe elaborate on how much lettable area could be added on the land that you have?
I don't really follow you on that one, that we had more.
You mentioned, yes, for the acquisition that you made for the property under construction, you mentioned that you have some excess land, which was included in this acquisition. With the excess land, how much lettable area could you maybe add if you made some type of extension or another building on that premise?
I think you have misinterpreted me. We will go for those 26,000 sq m. That is all we can build on that land. Sorry if I said something else, but I do not follow you there.
Okay. Okay. I have a question on the acquisition itself. You say that is a rental value of DKK 17.5. If we assume 90% NOI margin, the yield is about 5.5%. Is that something that is in line with your estimates also for this one?
It's higher. You should assume a much higher margin, actually.
Okay. Also on this new project that you with the contract with Speed, do you have any type of investment value for this project and yield on cost?
On the Speed project, that's in that joint venture that we have together with Platzer, that is a part of the acquisition when we acquired Bockasjö. That one will go into Catena, and then it will go out again. That will not end up in our balance sheet, as we have done with some of the other deals in that former Bockasjö, if you can recall that setup.
Okay. I just have a final question on the NOI margin. Also, just a follow-up on this insurance claim that you had of SEK 5 million. If I interpret correctly, it is SEK 5 million which is netted out from costs and income, or how should we interpret the effect from this?
Yeah. There is SEK 5 million in costs, and they are in the property costs. The NOI, all else equal, should be SEK 5 million higher, and then there should not be the income of SEK 5 million.
Okay. Also on the NOI margin, it says it looked very strong, and it's, of course, driven by Denmark, which has a quite high margin. Are there any other factors other than that that is contributing to this quite significant improvement versus last year?
I think that's what you said, spot on. The newly acquired building, it's not only in the Denmark asset. It's also the other assets that we acquired during 2024. At the same time, we disposed of one asset in Copenhagen last summer, which had a rather low NOI margin. I think that's the explanation.
Okay. Thank you, those were my questions.
Thank you.
More phone questions at this time. I hand the conference back to the speakers for any written questions and closing comments.
Yes. We have a couple of text questions. One from George Nikolaou from Blackfinch Invest. He's asking about Blackstone. They have announced this morning the establishment of a pan-European logistics platform. As per their public announcement, they are looking to expand significantly in the Nordics. He's wondering how we think about this and how we think about the way this might shape competition going forward.
Good question. All else equal with more players, higher competition, it will also lead to maybe sharper yields if there is a strong demand for acquiring more assets. Blackstone and Mileway, as we speak, they have not done a lot of new projects. What I know, they do not own a land bank. I think that will be more on the transaction side. Yeah, if they come in with a lot of money, there should be a higher demand. At least that could be, and again, all else equal, it could lead to higher values in our portfolio.
Good. There is one question from Pierre-Emmanuel from Jefferies. His first question relates to a breakdown of our like-for-like rental growth. What we can say is that of the 2.2% that we have presented in the report, around 1.6% is related to indexation. The rest is a mix of reversion rent negotiations, basically, and some vacancy changes as well. There is also one question from Jefferies related to if we have any current negotiations on significant acquisitions. I would just like to say we are always in dialogues on acquisitions, but there is nothing that we can present at this stage. There is also a question on tenants, if there are any changes to the wait-and-see attitude that we have presented earlier. I would say it is pretty much the same, but there are dialogues ongoing.
Maybe a bit more positive the last few weeks.
Yeah. We have one question from Kempen. There was no, I think that was it.
Oh, no. It was some issues with the telecast, but then you asked about the balance sheet. You clearly have balance sheet headroom. Could you elaborate more on investment opportunities, please? The occupier environment is still sluggish, but how do you currently look at acquisitions? Should we expect you to be more active, similar to last year? As we said earlier in the call, we are always looking for new opportunities. Who knows what will appear in the market? Yes, we have headroom. As David said before, we do not know if we end up at 40% or 45%. We assess that on a daily basis, so to speak. This quarter was very quiet. We will have to see what is happening in the coming quarters. Those of you who know Catena, for sure, in the long run, we will grow further on.
Yes. Thank you, Jörgen. That was the last question by text. If no more questions, we'd like to say thank you.
Yeah. Thank you all for listening and have a wonderful day. Thank you and goodbye.
Goodbye.