Report 2025. During the Q&A session, participants are able to ask questions by dialing #5 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 everyone, and welcome to this Q2 presentation for Catena. Here is the agenda for today: a summary, a business overview, update followed by sustainability, finance, and a short takeaway before we end up with Q&A. Next slide, please. A summary of the Q2 2025 report, where we report a 26% increase in rental income ended up at SEK 1,288,000,000, driven by acquisitions and by our CPI-linked contracts. Profit from property management increased by 32% in total, and per share it was + 16%. Our NRV came in at SEK 428. The balance sheet remains very solid, with an LTV at 38.6%. We expect to generate strong cash flows in the coming quarters. With that said, in combination with our robust balance sheet, we are in a favorable condition for more growth. Next slide, please.
Business overview, and the next slide, please. We have witnessed more transactions this spring, and we have also noted that in some cases, yields have ended below 5%. We are talking about prime yields, and we were actually involved in one of those transactions when our joint venture, together with Platzer, disposed of a property in Gothenburg with Volvo as a tenant. E-commerce continues to develop in the right direction. In the first quarter of the year, it grew by 9%. In addition, digital trade has a stronger growth than physical, which means that the sales channel is taking market shares in the retail sector as a whole. This growth is the highest since 2021, when e-commerce was at a historical peak. We continue to struggle to find new projects, but the market remains cautious.
We have some dialogues going on, but do not expect any major change in the demand for the next six months. The Swedish logistics market has continued to see increases in the vacancy rates, currently at 9% as of Q1 2025. On a national level, the continued rise in vacancy rates is mainly driven by the extensive development of new logistics assets, of which a high proportion have been built speculative. Of course, there is a weaker demand also. All in all, it is a quite struggling market. Next slide, please. There are no major changes in our customer portfolio, but worth mentioning that Elgiganten will stand for a higher share in the coming quarters. More about Elgiganten later on in this presentation. Next slide, please. There have not been bigger changes in our portfolio compared to Q4 and Q1.
We have disposed of smaller assets in Region South, and the rental value is up a bit, and the surplus ratio is now + 84%. Next slide, please. A business update. In May, we acquired a PostNord property in Copenhagen. The location is very strategic, and there is a 10-year lease agreement with PostNord. We look forward to continuing and deepening the cooperation with PostNord with this transaction. The total GLA is around 25,400 sq m. Next slide, please. During the quarter, we agreed with Boozt to expand our facility by approximately 6,000 sq m. In connection with this, the lease for all 82,000 sq m was also extended by five years and is now valid until 2037. Boozt, that has a turnover of more than SEK 8 billion, has only this location for all of the outgoing goods. Next slide, please.
The other day, or actually yesterday, we signed an agreement to acquire Elgiganten's distribution and central warehouse in Jönköping. The property is located opposite our newly built facility that Elgiganten rent from us. Closing will take place on 1 September, and after that, we will have about 200,000 sq m of logistics space leased to Elgiganten. The investment is SEK 1,275,000,000 before deduction of deferred tax, and has an estimated net operating income of approximately SEK 80 million. This transaction was an off-market and shows that we can act as fast-footed as anyone else, and we really enjoy doing the transaction together with Niam. Next slide, please. Our ongoing project portfolio totals to around SEK 1.2 billion, where SEK 400 million is remaining investment. When all is completed, we will add another 91,000 sq m to the portfolio, and the yield of those projects is around 7%. Next slide.
Regarding our land bank and future development, we are approaching the adoption of new zoning plans for two of the areas, namely Kära in Ängelholm, which the municipality will decide on in September, and in Örebro, where the municipality is expected to adopt the plan at the end of Q4. That is positive for us. Next slide, please. Looking at our leasing operations, our net leasing came in with plus SEK 63 million for the first six months, and for the second quarter, it was plus SEK 16 million. Our WAULT is at 6.6 years, and the letting ratio is at 96.5%. Next slide, please. Over to the sustainability. Next slide again. The environmentally certified area is now 57% and will increase further as projects and new acquisitions will be finalized. The Scope three is now decreasing on a 12-month rolling basis due to fewer projects.
We continue to maintain a high level of EU taxonomy alignment. For example, our turnover came in at 76%. Produced energy from solar [panels] reached around 23,000 MW-hour on a rolling 12-month basis. Total installed output on our roofs is now above 71 MW. Now over to David for some financial update. Next slide.
Thank you, Jörgen. Good morning to everyone. This slide highlights the continued strength in our underlying earnings, with solid year-on-year growth across all key metrics. Rental income, as Jörgen mentioned earlier, is + 26%, mainly driven by acquisitions. Net operating surplus increased by 31%, and profit from property management rose by 32%, reflecting both scalability and cost control, which we expect to continue going forward. Earnings per share from property management grew by 16% to SEK 13.27, underlining our ability to translate top-line growth into shareholder value. While not shown here, our earnings capacity, we should say, implies SEK 26.3 per share on a full-year basis. That is 15% above the level we presented a year ago. The model continues to deliver predictable, resilient earnings with operational leverage. Let's move to the next slide.
This slide breaks down the key drivers behind our rental income growth for the first half of 2025. As I just mentioned, total rental income, which increased by 26% year over year, the largest contributor was acquisitions, accounting for more than 22% of that growth. Our completed development projects added 4.5 percentage points, including new facilities in Jönköping and the Gothenburg region, both leased to well-known tenants in retail and food service. Like for like, rental income rose by 2%, mainly reflecting CPI-linked indexation. Altogether, this underlines our ability to grow through multiple channels: strategic acquisitions, value-adding development, and strong day-to-day operations. Next slide, please. Let's turn to the capital structure. The second quarter brought a noticeable pickup in real estate transactions and increased activity in the credit markets as well.
Toward the end of the quarter, we saw growing optimism, partly fueled by a reallocation of capital flows from the U.S. to Europe. That said, long-term structural uncertainties remain, and we are prepared for potential renewed volatility. At the end of the second quarter, our equity ratio stood at 52%, which we believe is a balanced level that supports strategic flexibility. EPRA NRV per share increased to SEK 428, calculated after reserving SEK 9 per share for dividends, half of which was paid out in cash during the quarter. This reflects continued value creation, even as shareholder returns are being realized as well. In short, we see a market that's beginning to open up, and we remain our focus on readiness. Passing on to the next slide, please. Let's move on to our financial position.
We continue to demonstrate strong financial control with all key metrics well within policy levels. Net debt to EBITDA came in at 7.6 times, interest coverage at four times, and loan-to-value at 38.6%. These are healthy figures, and they reflect both a solid capital structure and strong underlying cash flow. Importantly, this gives us significant headroom to our financial covenants and the ability to move on new investments without compromising financial resilience. Next slide, please. Let's take a look then at our debt and liquidity management specifically. We remain our focus on maintaining and securing funding on competitive terms. During the quarter, we updated our MTN program and increased the framework to SEK 8 billion, strengthening our platform for both future growth and refinancing opportunities. We issued SEK 450 million in secured bonds during the quarter, with a two-year maturity and pricing at STIBOR three months plus 83 basis points.
In early July, after the end of the second quarter, we also completed a SEK 1 billion senior unsecured bond transaction split across three- and five-year maturities. The terms reflect the market's continued confidence in our credit quality. This issuance is not included in the balance sheet of Q2, but was structured to give us additional flexibility for our upcoming investments or refinancing activities. Our average debt maturity remains solid at 4.8 years. Liquidity is strong with SEK 3.1 billion in cash and liquidity ratio well above one. We're also generating positive returns from the liquidity with SEK 30 million in interest income during the quarter. Passing on to the next slide, please. We entered Q2 with an upward-sloping yield curve again. Markets are pricing that the Riksbank, the Swedish one, is nearing the end of its cutting cycle. The two-year swap now trades below the policy rate.
Meanwhile, long rates remain a bit more elevated, reflecting more stable expectations on growth and inflation, as well as a return on risk premium in longer maturities. As of the balance date, 61% of outstanding debt carried fixed interest. Our current and average interest cost of 3.2% broadly reflects prevailing market conditions for a full refinancing of the portfolio, including derivatives. This reflects a timely and balanced interest management approach, though there still remains headroom for further optimization. Next slide, and back to you, Jörgen.
Thank you, David. Our capital deployment is for the first half year divided into acquisitions, SEK 414 million, and development, SEK 570 million. We have at the same time divested properties for SEK 98 million. Next slide, please. Property values stayed stable and ended up the period with a positive value change of SEK 174 million, which correlates to 0.4% 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 at 5.6%. Next slide, please. A couple of takeaways from today. For the first, Catena closes the half year with solid numbers in a somewhat cautious market. Second, we have presented new acquisitions for almost SEK 2 billion during 2025 so far, so our growth journey continues.
With that said, we would like to open up for a Q&A.
If you wish to ask a question, please dial #5 on your telephone keypad to enter the queue.
Yes, thank you and good morning. Firstly, I have a question on the net letting. It was SEK 16 million in the quarter. Firstly, what was the net effect from the renewed Boozt agreement? Also, how is this Speed agreement, which is together with Platzer, treated in the net letting figures in the quarter?
Good morning, David. First of all, Boozt is a prolonged nation, so it's no net letting. The joint venture, it has no impact in our net leasing. It's a joint venture, so it's not in our numbers. What was.
Okay, but yep, because I think that the Boozt, it was also an extension. Which I would assume if.
Yeah, yeah, yeah, I mean, yeah, those 6,000 sq m, yes, they are there. I thought you meant the renegotiation or the prolongation of another five years. Sorry.
Yeah, okay. How much is that in million SEK?
Yeah, I mean, we don't guide exactly about the rent in that case, but it's fair to assume the rent is like the other one, around SEK 800-something, eight, nine hundred, per square meter.
I also, yep, thank you. Also, another question on the share of profit loss from associates at negative SEK -2 million. Could you maybe elaborate on what that includes?
It's from the joint venture Foodhills, where we have had struggling with keeping all the tenants. So it's basically that joint venture.
Okay, because I noticed in the earnings capacity that you have included SEK 2 million there. Is this a recurring item going forward as well?
We hope to find some new tenants which can balance it. It's tough to say, but we hope that there will be no more negative impact during this year.
Okay. I also have a question on the SEK 385 million divestment that you made also with Platzer. Could you maybe say something about the yield on this transaction?
The yield was definitely below 5%.
Is this below or book value?
This joint venture.
[cross talk] Yeah.
We don't disclose that. We don't have that as a booked value. It doesn't have any impact on the P&L for Catena. It's within this M&A we did with Bocka a couple of years ago. There is no impact for Catena in the P&L.
Okay, thank you. I have a last question. Do you have any type of indicative volume on the current acquisition pipeline?
No, we are, as you know, all the time looking into new opportunities, but we cannot disclose any numbers.
Okay, thank you. Those were my questions.
Thank you.
The next question comes from Jon Vong from Van Lanschot Kempen. Please go ahead.
Hi, good morning. You mentioned that the market vacancy continues to grow. It's now at 9%, driven by weak tenant demand and supply still being added. Just looking at the current developments being added and your own discussions with tenants, what's your take on the trend in vacancy in the next 12 months? Maybe I'll just follow up on this. How much of this vacancy is [actually driven by the Mälardalen] region? Or let's say, what's the vacancy without this vacancy here?
Good morning, Jon. It was very hard to hear you. It's a bad line. I heard something about the vacancy, and we said 9% in total. Can you try to repeat the question? Sorry, we don't hear you, Jon. Maybe you have to email the question or call us later.
Sorry, can you hear me better like this? Otherwise, I'll take it offline.
Not good enough, sorry. Try to call me after.
The next question comes from Pierre -Emanuel Clouard from Jefferies. Please go ahead.
Yes, good morning. Thank you for taking my question. The first one is actually, I think, a follow-up of Jon's questions. As you will have to renegotiate 9% of your tenant base next year, I was wondering if you already received any early redemption from tenants? Where do you see landing the vacancy by the end of this year and the end of next year?
We don't have any guidance of where we see next year. What we disclose in the report is our earnings capacity for the coming 12 months. And that one is included in all the lease agreements that are valid for the coming 12 months. We are humble for the future with those kinds of dynamics that are in the market. We are doing all we can to keep our customers, but you never know. We can lose some, but that's also part of the game. Tenants are moving in and moving out. Yeah, it's a bit struggling in the market right now.
Just to quantify, how many early redemption requests did you receive so far since the beginning of the year?
We have no redemptions to disclose at this point. When we have, we will disclose that.
Okay. Thank you. My second question is on your like-for-like growth. It would be super useful if you can give us a more precise breakdown on your like-for-like rental growth with the contribution of indexation, but also the contribution of the reversion. A quick addendum on that is, what is the reversionary potential today on the portfolio? Given the fact that the inflation is decelerating rapidly in Sweden, where do you see the like-for-like growth landing by the end of the year?
Yeah, hi again, Pierre. That's obviously a very relevant question. From our standpoint, first of all, most of the 2% is index-based. We have some cases where we have been able to raise the rent levels. Going forward, what we have said before, and that is the same story going forward, is that we expect rent levels to stay stable. That goes, then I'm counting in our portfolio to begin with. We expect a stable level going forward. We know that there are some cases where we can lift rents, of course. Overall, it's in line with market rents. That's basically the story that you should take into account. Yeah. There is clearly, what we have seen over the last 12 months is clearly there is a bigger difference between the quality, overall quality in the market. That's what we expect will continue to show.
We have no specific numbers to hand.
Okay. Just to fully understand that, maybe you have a better view than I do on the quality of vacancy that is in the market today. From what I understood, you had a lot of new deliveries with a brand new platform that has been delivered over the past 12 months. The quality of the vacancy is pretty decent, no?
The quality of what has been built is of high quality, yes. I think one of the relevant things to think about going forward is where has it been, where is it built, in what locations? I think a lot of the things that have been built over the last three or four years is perhaps not because you expect the demand in that particular location is where the demand is highest. It's probably because that's where you have been able to source land. I think what we will see is different supply-demand dynamics for different regions. Some regions will structurally have difficulties going forward, whereas other regions will still, where you will still have undersupply, basically. You have to dig deep. You have to know the regions because there will be varieties in different regions, basically.
Okay, thank you very much.
Thank you.
The next question comes from Fredrik Stensved from ABG Sundal Collier. Please go ahead.
Thank you very much. Good morning. I would like to ask a couple of questions on financing costs, if I may. Firstly, can you say anything about sort of where bank margins are, either in absolute terms or in change this year or year over year?
Yes, hi, and thank you for the question. The bank margins, I would say it's between five years, I would expect to be somewhere between 125%-140%. The bond market, as I mentioned, and what we disclosed in this report was 135% for five years right now.
Yeah, that's clear. Thank you. On that second point, sort of bond margins currently looking a bit lower than bank margins. You currently have 42% in bank debt. How much or how high share of bonds would you be comfortable with having?
Yeah, that's also a relevant question. Right now, if we isolate to the Swedish market, because historically we have so far used Danish mortgage bonds for our Danish property. We are at around 50% if we isolate looking at the Swedish portfolio. That's where we are pretty comfortable with. With that said, we are not religious about this. It's always something that we are assessing, basically. What's important at the end of the day is that we have good control over the spread of maturities. That's, first of all, and the most important thing. Also in combination with always knowing that we have many options available. At the end of the day, when we have to refinance, it's all about making sure that we have options available. It's all about financial control.
How many percentage points you have in the capital market or in the bank market is perhaps not the most important question.
Perfect. Thank you. That's all from me. Thank you, David, and good luck going forward as well.
Thank you so much.
There are no more questions from the telco at this time. So I hand the word back to Jörgen and David.
Thank you very much for listening. We wish you all a very nice weekend and a very nice summer. Stay in touch. Thank you. Goodbye.
Thank you.