Welcome to the conference call. 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 star five on their telephone keypad. Now I will hand the conference over to the speakers. Please go ahead.
Hi, and welcome everyone to Catena's presentation for the Q3 report. Here is the agenda for today. A summary, a business overview, and an update followed by sustainability, finance, and a short takeaway before ending up with Q&A. Next slide, please. First, the summary of the Q3 report. We reported 20% increase in rental income, ended up at SEK 2,347 million, driven mostly by acquisitions, but also by our CPI-linked contracts. Profit from property management increased by 18% in total, and per share, it was up 7.8%. Isolated for the third quarter, the increase per share was up almost 13%. Our NRV came in at SEK 468.87 per share.
The balance sheet is very solid, with an LTV at 43.2%, and we closed the Finnish transaction totaling SEK 2.15 billion, which will lead to an LTV around 45%, and that is the level we do not aim to be above going forward. The occupancy rate is back at above 95%, to be exact, 95.3%, due to good leasing operation in this quarter. Our WALE is now at 6.9 years, which means that we have a very strong cash flow secured for many years ahead. Next slide, please. Next slide, a business overview. Statistics shows that the transaction volume in the industrial segment amounted to SEK 23.5 billion during the first half of the year. This indicates strong interest in the segment, and the high volume was expected to continue during the second half. But due to higher interest rates, we expect the activity to slow down a bit.
We experience higher activity among customers as well as potential customers regarding dialogues around our vacancies and about some new projects on our land bank as well. A result we have seen from this are the lettings we have finalized in Q3, which led to higher letting ratio, as I said before. Swedish e-commerce grew by 8% year-on-year in Q2 2026, with all measured categories growing for the second consecutive quarter, indicating broad-based momentum rather than growth driven by a few segments. Growth was particularly strong in logistics-intensive categories, including pharmacy +13%, grocery +10%, and consumer electronics +10%. For Catena, this is supportive for the long-term demand outlook for modern logistic properties. Continued e-commerce growth increases the need for well-located warehousing, fulfillment, and infrastructure close to major population centers. Next slide, please. Regarding our customer portfolio, we have no major changes to report for this quarter. Next slide please.
The total value of the portfolio is now in the report SEK 55.7 billion, , and the average lettable square meter has a value of SEK 13,694 . On October 15, we closed the deal in Finland, meaning that we add SEK 2.15 billion to this portfolio. Next slide please. Business update. Catena entered Finland in April 2026, establishing a new fifth region through the acquisition of logistic portfolio valued at approximately SEK 2.1 billion, comprising around 152,000 sq m of lettable area. Since then, we have continued to expand its Finnish platform, including acquisitions of logistic properties at Helsinki Airport, and most recently, a portfolio of 10 properties for approximately SEK 2.15 billion from Urban Partners. The latest portfolio adds around 142,000 sq m and is fully let with tenants including Posti, DSV, and Varasto, and has a 7.3-year WALE.
In less than a year, Catena has built a Finnish logistic portfolio with a value approaching almost SEK 6 billion , creating a meaningful new platform alongside Sweden and Denmark. Here is one of the newly acquired buildings with Posti as a tenant, located in Lieto and has a GLA of about 16,000 sq m. We are also very happy to present a development project in Finland, investing approximately SEK 131 million in new 5,800 sq m logistic facility in Pirkkala, strategically located close to the E12 motorway at Tampere Airport. The facility is fully let on a seven-year lease to a Finnish industrial automation company and is expected to generate an annual NOI of approximately SEK 9.7 million . The project complements Catena's two existing properties in Pirkkala and further strengthen our position in Tampere logistic region.
Upon completion, it will become Catena's 20th property in Finland, illustrating the speed at which the Finnish platform has developed since entering the market this year. The table present Catena's earnings capacity on a 12-month basis, and note the increase in the earnings capacity per share to SEK 30.72 per share, compared to SEK 27.25 one year ago, an increase of almost 13%. Worth to mention in this table is that we have included the latest Finnish acquisition that we closed at October 15. Our ongoing project portfolio totals to around SEK 359 million , where SEK 72 million is remaining investments. When all is completed, we will add 18,000 sq m to the portfolio. As I just presented a new project in Finland, that will of course be included in the coming reports. Next slide please.
Regarding our land bank, we had, unfortunately, a negative decision from the Land and Environment Court regarding the plan outside Ängelholm. We must amend some things in the process together with the municipality of Ängelholm. With that said, it will probably consume a couple of more years before we have a plan there. In Örebro, the municipality decided on the zoning plan during the quarter, and the decision was positive. But the opinion, there is some more weeks that they can appeal this decision, so we have to wait and see whether it will gain legal force during November or not. As we said in the last report call, in Järna, we have found a lot of challenges regarding nature values, and we expect a delay of 2-3 years before we can intensify the zoning job there. Next slide please.
Looking at our leasing operations, our net leasing in terms of moving in and moving out came in positive with SEK 20 million for the quarter. For the first nine months, we are still at a negative level, SEK -22 million. Our WALE are now at 6.9 years, and the letting ratio is at 95.3%. Next slide, and some sustainability. The environmental certified area is now at 85%. The scope 3 is continuing to decrease on a 12-month rolling basis due to less projects. We continue to maintain a high level of EU taxonomy alignment. For example, our turnover came in at 80%, and total installed solar panels output has increased on our roofs, so it is now above 94 MW. Now over to Magnus for some financial updates. Next slide.
Thank you, Jörgen. This slide highlights the strength in our underlying earnings, with strong year-over-year growth across all key metrics. Rental income is up 20%, mainly driven by acquisitions. Net operating surplus increased by 21%, and profit from property management rose by 18%. Profit from property management per share is up 7.8% to SEK 21.46 per share, a clear mark of our ability to translate top-line growth into shareholder value. We can conclude that the Catena model continues to deliver predictable, resilient earnings with strong profitability. Next slide, please. This slide highlights the composition of our rental income growth in Q3 2026. As just mentioned, total rental income increased by 20% year- over- year. The largest contributor was acquisition, accounting for 16 percentage points of the growth.
Our completed development projects added 2.2 percentage points, consisting mainly of new facilities in Ramlösa, Helsingborg, Malmö, and Gothenburg, all leased to strong and well-known tenants. Like-for-like rental income rose by 2.8%, built up by CPI-linked indexation, renegotiated rental agreements, and as well, increased property tax and media costs, which are reinvoiced to our tenants. All in all, 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 have a look at our capital structure. As you know, although economic growth is picking up, this remains a market shaped by geopolitical uncertainty with rising global interest rates. These dynamics, of course, present challenges for a real estate company, and factors like disciplined capital allocation and long-term focus are growing in importance.
At the end of Q3 2026, our equity ratios stood at 47%, what we consider to be a balanced level that supports our strategic flexibility. Our EPRA NRV per share continues to show steady improvement quarter after quarter, and during the third quarter increased to SEK 469, excluding dividends, an increase of 7.1% compared to a year ago. This shows our ability to create shareholder value over time, even as shareholder returns are being realized. 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. This is a sign that we continue to maintain a prudent leverage profile, and in connection with our latest acquisition, we communicated that we do not intend to increase our leverage above 45%.
For Q3, net debt to EBITDA came in at 8.3x , interest coverage at 3.6x , and loan to value at 43.2%. These figures reflect both a solid capital structure and strong underlying cash flows that ensures continued access to capital on competitive terms, if needed, when opportunities arise. Next slide, please. Let's have a look at our debt and liquidity management. We remain focused on maintaining and securing funding on competitive terms. As mentioned before in connection with the Q2 report, we drew down a 12-to-6-month term loan bridge facility when we closed the acquisition in beginning of Q2. We immediately started the process of replacing the bridge facility with long-term funding through the bond and bank market. That process was finalized in early July, and the bridge facility is now fully repaid and closed.
Our average debt maturity is at 4.2 years with an average cost of debt at 3.2%. Liquidity is strong with a liquidity ratio above 1. Next slide, please. Interest rate management. 2026 so far has been characterized by geopolitical uncertainty, which has led to volatile energy prices and disturbances in the energy distribution system. Rising expectations on inflation and increased state borrowing needs in many economies have impacted the interest rate, pushing up long-term interest rates. Both the ECB and the Fed raised their policy rates during the quarter, while the Swedish Riksbank kept its policy rate unchanged, although it raised the prospect of impending rate hikes. Catena closely monitor the rate volatility and continue to navigate and act in line with the framework set out in our finance policy.
As of the balance date, 50% of the outstanding debt carried fixed interest, and our current average interest cost is, as said, at 3.2%. Next slide, and back to you, Jörgen.
Thank you, Magnus. Our capital deployment is for the period divided into acquisitions SEK 10,175 million, development SEK 847 million, and divestments of SEK 990 million. Next slide, please. Property value stayed stable in this quarter and ended up the period with a positive value change of SEK 622 million, which correlates to 1.2% of the total portfolio before adjustments. The average weighted valuation yield, the so-called exit yield for the portfolio, is at 5.8% by the end of the period, and the EPRA net initial yield came in to 5.4%. Next slide, please. Some takeaways for today. For the first, we witnessed increased activity in the letting market, and we are very happy about that. Compared to six, nine, and 12 months ago, it's much more activity. We are happy to discuss more with potential customers in the future.
Secondly, we continue to report decent growth in profit from property management per share and isolated for the Q3, as I said before, +13%. That is a very impressive number. The third and last, we are very happy to report solid operations with higher earnings capacity than ever going forward. With that said, we open up the Q&A session.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Oscar Lindquist from ABG Sundal Collier. Please go ahead.
Hi, good morning. First question on your commentary on demand. How do you expect this will translate on occupancy for the coming quarters based on the discussions you have now and the timing? Then also on project starts, should we now expect any material project starts in the near term?
Good morning, Oscar. Good question. It is hard to predict the letting ratio and the timing. What we are very clear with this, that the activity, the discussions, there are more ongoing discussions, more players asking for our vacancies compared to, as I said before, a year ago. Hopefully, we will sign some of those discussions. We have earlier mentioned Denmark, for example. This is still ongoing and very positive dialogue. Then it is hard to predict whether it is an increase in the letting ratio already in Q4 or Q1 2027. We have to wait and see. Regarding new projects, hopefully, we can sign at least one project on our land bank before Christmas, and then we have to come back when we have the excavator on ground, so to speak.
Could you give me the guidance on what sort of investment volume you are expecting for that project?
We have to come back on that. Not sure yet.
Okay. I guess you were referring to the Køge property. Is your expectation that you will sign that now in Q4, or can you give an update on how the process is going?
Part of it, but we have said it before. Also my colleague, Mikael, has said it, and believe before now it is close. Based on the discussions, we really hope to sign a part of the spaces before Christmas.
Okay. My final question on, with the announced M&A, you are around 45% now. My interpretation is that you do not want to push that further. How should we think about more divestments of non-core assets? What is your thinking on that?
That could absolutely be a scenario going forward. There are a lot of players looking into some of our assets. As we told the market before, there could be some asset rotations and the capital we can perhaps deploy in Finland as we speak. We see more opportunities over there. On the 45% note, we also have very strong earnings. There will be a strong cash flow going forward. So there are possibilities to invest going forward.
Okay. Thank you. That is all from me.
The next question comes from John Vuong from Van Lanschot Kempen. Please go ahead.
Hi. Good morning. Thanks for taking my question. I just want to follow up on your comments on the occupier demand. Just based on your leasing discussions, are you seeing more demand for, say, existing space, or is it also balanced with real new developments? Just on the occupiers, is it really expansionary demand that people are looking for, or is this really going towards better locations, more modern assets that we are seeing? So shifting around in their current supply chain.
Good morning, John. I think generally speaking, there is a bit more optimism among the segment and our customers. The consumption has increased in the Nordics the last six months, so they expect perhaps a bit more demand going forward. But it is also a question about rotating from perhaps bad quality to better quality in some cases. At the same time, we also discuss with some players about new projects on our land bank. But it is hard to say whether the total demand is much higher now than for, let us say, six months ago. I am not sure about that. But the activity, that is for sure. That is much higher now.
Okay. That is clear. Just on the industries that they are active in, is this end users that you are talking about, or is it also 3PL players that are expanding?
No. It is a mix. So you cannot say that it is just e-commercers or 3PL players. It is a mix of all customers.
Okay. That is clear. Thank you.
Thank you.
The next question comes from Erik Granström from DNB Carnegie. Please go ahead.
Thank you, and good morning, everyone. I just had one question, split up perhaps in two, but I was just wondering if you could give us some information on when you are taking possession of Finland, what do you expect to be the impact in Q4? Because I appreciate that it is from October 15, but I do also believe that in the press release, you stated that some of it are ongoing projects. So I am just trying to get a sense of the Q4 impact from the-
Yeah.
Finnish portfolio.
Yeah. All assets except one, we closed at the 15th of October. They're basically two and a half month generating for the Q4, except one asset that we will close in the middle of November.
Okay. All right. That's fair enough. Also perhaps on that theme, the ICA project, it's finalized in Q4. Do you expect to get full rent for Q4? Or how should we see that timing in terms of the tenant starting to actually pay rent?
Yeah, good question. The project will be finalized in late December, and we expect the customer to move in at the beginning of Q1 2027. No income in Q4.
Okay. Yep, fair enough. I might as well perhaps take the opportunity to ask you about what you are seeing in terms of your average interest rate going forward. You mentioned the fact that you have about 50% hedged or fixed. What do you see going forward given the discussions that you have? If you could give us some guidance knowing what we already see in the market. Do you expect this to change substantially, or how should we view it?
Good question. Not substantially, I would say. We still see that the refinancings that we do, we can refinance at a lower margin than the ones that are expiring. Then, of course, the market as such has shifted. We will definitely have an impact based on the higher market rates. It will not be any dramatic change. Of course, with the rising base rates, that will have an impact.
Okay, fair enough. Those were my questions. Thank you very much.
Thank you.
The next question comes from Keivan Shirvanpour from SEB. Please go ahead.
Yes, good morning. I have a couple of questions. The first is on the average interest rate. We have an interest rate duration and a hedging ratio that has come down a bit, so interest rate duration below two years now. Do you plan to extend the duration and increase the hedging? What type of impact would you believe that this would have on your average interest rate?
Hi, Keivan. When we took out the bridge facility in Q2, we said that we will not do the full hedging of that in one go. Instead, gradually move it into our hedging portfolio. We are doing that. We have not done so much now during Q3 in that respect, but we will add some hedges in Q4. We will not go up to 60% in Q4. I don't think we can expect that. There will be a gradual shift increasing both the duration and the percentage hedged.
But would it be reasonable to assume maybe around 60% heading into next year?
End of. That's the long-term target, but there's no rush into it.
Thanks. We have the final question. You mentioned that disposal to potentially fund growth in Finland. Can you say anything about identified volumes within your current portfolio that would maybe be up to disposal?
Well, not as a guidance, but we have disposed for SEK 1 billion, give or take. Perhaps there could be another SEK 1 billion, but that could also be over 2027. We don't know, but just to give you some number.
Okay, good. Thanks. Those were my questions.
Thank you.
The next question comes from Emil Ekholm from Pareto Securities. Please go ahead.
Yeah, hi. Good morning, Jörgen and Magnus. Just first off, maybe if you can color on how the lease indexation is determined in your Finnish portfolio. Is it usually uptick starting in January like we have in Sweden, or when is the cutoff period and what is it based on? Is it some particular CPI month, or how is it determined?
Base case is that the indexation kicks in at the 1st of January. Not sure if it's all contract or not, but majority.
Okay, also in the portfolio that you acquired now in Q4?
Correct.
Okay. This is now 16% of your rental income, if there are also tenants in the new portfolio that you have acquired, how big of a share in that portfolio is this?
Well, all else equal, perhaps there could be an uptick of 1 percentage, that maximum in the customer portfolio. So no major changes.
Okay, that is clear. Thanks. Then just to follow up on the interest rate question on hedging. Maybe you can give some guidance on margins for new financing currently, both in banks and bonds.
Yeah, the bond market, currently the latest weeks, there has been, of course, an uptick in margins. But I would say that we would still be able to do an issuance there at or perhaps even slightly better than what we did in April. So no major change in that sense for us. Bank market still strong upside and without giving any exact guidance, we see that the refinancing we do in the bank markets, they come in at a lower margin than the ones that are expiring. That we can say.
Yeah. That sounds good. That was all for me. Thank you.
Thank you, Emil. I think that was the last question. Then we will just say thank you for listening to this call and wish you all out there a nice weekend when it comes. Thank you and goodbye.