Welcome to the Cibus Q2 2024 Report Presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to CEO Christian Fredrixon and CFO Pia-Lena Olofsson. Please go ahead.
Good morning, everyone. Welcome, and greetings from a very summer empty Stockholm today. We're talking to you live, and my name is Christian Fredrixon, and I am joined here, as always, by the company's long-term CFO, Pia-Lena Olofsson. Let's move into summary of the period. Rental income, up 3%, and net operating income, up about 9%. But that includes a one-off insurance payout for a burnt-down property in Finland of about EUR 1.8 million. And without this one-off, income point, then we have a stable increase in net operating income of about 2%. The profit for the period, about EUR 2.2 million, and the property values increased by about EUR 4.4 million in the quarter through acquisitions and through FX rate movements.
But in that figure, we have an unrealized change in value of about EUR -8.3 million, which is 0.5 months. Then moving on to this, the favorite slide, Cibus, with our slogan, and we love our slogan 'cause it says exactly what we do. We create value for our stakeholders by investing in daily goods properties, so converting food into yield, that's what we like to do, and are continuing in doing. This is a slide many of you will remember and recognize. I think, our mantra, of course, converting food into yield, and I thought I'd like to share a story from earlier this year when we had a company kickoff.
When I, ahead of the kickoff, asked one of those AI song bots or song apps to write a song about Cibus Nordic Real Estate. The lyrics were actually great. So, hats off to the bot. But... and the song was titled Supermarket Love. That's not gonna be our new slogan. I think converting food for you does the job fine, but it, it's amazing to see how AI can help in the creativity and the moving along. So the lyrics are great. The beat was terrible, so I won't play the song for you. We're sticking to our slogan, "Converting food into yield." On the map to the right, I'm happy to show you the five red dots, which are our new acquisitions in Sweden. Coming back to those a bit later.
Otherwise, things are pretty much the same. We aim to create stable cash flows. We're focused purely on daily goods properties, listed since June 2021 on the Stockholm Mid Cap, we're sole listed pure daily goods, real estate vehicles in the Nordics. We have a semi peer now through listed Prisma Properties, which owns about 20% grocery assets, but they're more of a development company than we are. It's great to have a peer also in the market. We've grown from our Finnish supermarket portfolios into pan-Nordic pure grocery player, and we pay monthly dividends to our shareholders. This is our expansion timeline, established 2018 in Finland, moving on to 2020 when we entered into Sweden, then entered into Norway in 2021, and then entered into Denmark in 2022.
So looking at our properties at the end of the last quarter, we now have 455 assets, which is up from 451, as we did the acquisitions. We'll be adding one more asset soon as we take possession of the last asset, shortly. Our property values are up EUR 4.4 million, as mentioned. And for the fourth consecutive quarter, our earnings capacity has increased, and that's about 3% up quarter-on-quarter. And then our lettable area, it has also increased by 9,000 sq m, which is from the acquisitions. On the tenant side of things, no change. We still have, of course, the largest daily goods players in the Nordics as our tenants. So moving on to a bit more about the assets we carried out in this quarter.
We acquired six grocery stores in Western Sweden, in an area called Värmland. The assets are 88% daily goods in rental income. The rest, which is not daily goods, is in the property in Bengtsfors, which is the ICA property there up to the top left of the six photos. Where the other, which is not daily goods, is the Swedish state monopoly for alcoholic beverages, which is Systembolaget. There's a restaurant and an IT store. The agreed property value was SEK 87.5 million, approximately EUR 7.6 million, and the price per sq m paid was about SEK 9,800 per sq m, which is about EUR 855 per sq m.
And worth pointing out that that's about half or less, or less than half of what it costs to reinstate a supermarket property in Sweden right now. So it's we think we've done a very nice deal in acquiring these properties, which fit well in our portfolio and give us increased cash earnings per share. Looking at the assets, there's one ICA store that has a low OCR. OCR, of course, being occupancy cost rate, and that's one of the key metrics when looking at supermarket stores. What's the share of rents towards turnover in the store? And this store has a very low OCR, very happy about that. The rest of the other five assets are leased to a company called Pekås. Pekås is a discount grocery brand present only in Värmland. They have 15 stores.
After this transaction, we own seven of these, and they were acquired by Coop Värmland in 1999, and Pekås is doing very, very well. They've been growing steadily throughout the last years to 8% in last year, 2023, and 12% up in 2022, and that they have very healthy margins, so we're very happy about this tenant. There's an ongoing project in Hagfors, which is the asset up to the top right, and that's the property which we haven't taken possession of yet. We're waiting for the project to finalize. But I was reading in the media that Pekås, they're investing about EUR 1 million in that asset. And you can do the math by yourself there, kind of figure out what we've paid for these various assets in on average.
So I think that shows how important these stores are, and stores in general are for the grocery players. They invest heavily in the stores, and therefore are long term in many stores, even though the world may say something else. So, happy to have got that acquisition under our belt, during Q2. And then moving on back up to the slide, see this top level, what do we mean by creating stable cash flows? Well, if you look at the left part of this slide as an income statement or a profit and loss, we try and create stable cash flows on every single line of the income statement. So starting from the top line, we focus only on daily goods properties, create stable income. It's strong tenants, as you know, a story well told.
It's also very non-cyclical daily goods business, of course, proven to be resilient in all terms, all times of economic volatility. People might need to buy food in all terms of the market, up and down term. 84% of our rental income is from daily goods tenants, and 97% of our 455 properties are anchored by daily goods tenants. And when we say anchored, we, we often, that means the only tenant. As you see, our average property size is 2,200 sq m, and what we have there is, in effect, a single standalone supermarket. And standalone could be in a building with residential on top, et cetera, but the, the tenant is, 100%, in most properties, a daily goods tenant.
Looking further down the P&L, then, we protect our growth through having 99% of our rents linked to CPI, and that's worked very well throughout this high inflation season. We have a steady WALT. It's now come up from 4.8 in the last quarter, up to five years again, and Pia-Lena will tell you a bit more about that later. One of the most important things also is, of course, store location stability, which is prevalent in supermarkets. Store locations are very important for the grocery chains. They need to make sure that people can find the store, get into the store, purchase things, and leave in easy, accessible places. Very important for the chains, often many decades in one place.
A unique characteristic of supermarkets and daily goods assets is that if a chain or grocery decides to move out, often one sees that there's someone else banging on the door, ready to take over. Maybe one of the other chains or maybe a more local or independent player working on a small one to two shop basis. But what is important is that sometimes there are vacancies in supermarkets. Some locations do become obsolete. It's cutthroat competition among the grocers. Perhaps there's infrastructure changes or demographic changes in the region, which means that a store is obsolete. That's a natural part of our business. What's important to remember is to have a very big portfolio. Otherwise, risks can be big if you only own a few supermarkets.
But owning 455 assets in four countries, where they're all very small, means that we have a great diversification of our income stream. Well, again, we have 90% of net, because that's from property increases. So on the cost side, we try through these lease structures, which is that we get the increase in, but have a stable cost basis. We also want to make sure we have stable income when it comes to the bottom line, so we are 97% interest rate hedged, and we use diverse funding sources. Next slide, please. Thank you. Earnings capacity, as mentioned many times before, is one of our key metrics and drivers, and I'm very happy to share with you that for the fourth consecutive quarter, we've now managed to increase our earnings capacity per share.
So in total, since the dip in Q2 to, or the first of July 2023, we've now increased the earnings capacity per share by 7%. And this quarter, what has happened were the main changes? Well, we have the top line, top line indexation growth coming through in certain of our regions. In Sweden, for example, indexation only comes through once a year, but in other countries, it comes through on a rolling basis. So we can see that we have top line indexation growth, we've done a couple of rent renegotiations. What's also coming through is the outcome of the bond refinancings that we've carried out and told you about earlier, and then the acquisition in Sweden also helping earnings capacity per share. Of course.
Looking at our share price performance and the traded volumes, it's a very liquid share, about SEK 60 million of turnover per day, about 2,400 transactions per day, which is a very high number liquidity for a company of our size. I'm happy that we have the liquidity in the market. Looking at our shareholder list, you will recognize many of the names. It's a very stable shareholder list, and we're proud of our shareholders, with many are well known professional investors, but we also have a very large number of smaller investors. Looking at the number of shareholders we have now at the end of the quarter, it's about 51,000 shareholders, which is up 3,000 shareholders since the end of last quarter. Handing over to Pia-Lena for the financial overview.
Thank you. Okay, let's start with some significant events during this quarter. We had the AGM, the 15th of April, where the board was re-elected. The 1st of May, it was announced that the board had repurchased warrants of the 2020 program. It was conditional of that the holders reinvested their repurchase consideration in Cibus shares using the retaining warrants, and 1,396 new shares were subscribed. On the 28th of May, Cibus acquired six grocery anchored assets in Sweden for SEK 87.5 million, that Christian talked about just a minute ago. Then, on the 29th of May, Cibus announced that Cibus wanted to exercise the right to prematurely redeem its senior unsecured green bond loan 102, and it was made early July.
On the 31st of May, Cibus announced that we had increased the total number of shares and votes due to the aforementioned exercise of the 2020 warrants. Here are some key figures for the quarter. Rental income was EUR 30.4 million, and net operating income, also EUR 30.4 million. Net financial items was -EUR 16.7 million, and profit from property management, EUR 10.3 million. We do have items affecting comparability on several lines in the P&L, so let's look at the next page. In the second quarter, service income include an insurance compensation of EUR +1.8 million for a fire-damaged property in Finland. The property was subsequently sold in the second quarter.
Cibus reported a non-recurring expense of EUR -1.1 million, of which EUR -0.4 million was based on the resolution by the AGM to subsidize the option premium for the 2024 warrant program. And, EUR -0.6 million was based on the board's decision to repurchase the previous paid premiums for the 2022 warrant program. All warrants for the 2022 program were subsequently canceled. Net financial items include a non-recurring expense of EUR -3.6 million for tender offer when buying back bonds that mature 2024, 2025. Net financial items also include a positive exchange rate change of EUR +1.3 million. Profit from property management, excluding non-recurring items and exchange rate effects, amounts to EUR 11.9 million.
Unrealized changes on property value was EUR -8.3 million . The negative change in value was mainly attributed to Finland and Denmark. Unrealized changes in value of derivatives was EUR -0.3 million . Our current earnings capacity shows a net operating income of EUR 114.7 million. Property expenses is the same since the last quarter, due to gains through energy efficiency in our ESG investments. Indexation and acquisitions has increased the rents. Profit from property management, plus expenses from the hybrid bond, was EUR 52.7 million, adding back non-cash items. Profit from property management was EUR 0.97 per share, which is an increase of EUR 0.01 per share since the last quarter.
Looking at the net operating income in a comparable portfolio, we see that the effects of indexation and other rent increases amount to +4.4%. Indexation going forward will increase the NOI and cash flow, while financial expenses are 97% capped. Cibus segments are countries, and Finland is the largest market, with 70% in the second quarter. NOI this quarter is, however, somewhat inflated for Finland due to the insurance compensation. So without it, Finland would be contributing with 68% of the NOI, Sweden and Denmark, 14%, and Norway, 4%. Cibus' strategy is to give its shareholders strong dividends on a monthly basis. The AGM in April decided on unchanged dividend of 0.90 EUR per share, divided into twelve payment occasions.
The dividend yield on the closing share price of SEK 157.8 at the end of the quarter was 6.5%. Looking at the balance sheet, property value was EUR 1.768 billion. Secured debt was EUR 889 million, giving a loan-to-value on secured debt of 50.3%. Unsecured bonds amounted to EUR 241 million, and this includes the Loan 102, that we called and repaid early July. Also, the other bonds that can be callable during 2024 are included. So if they were to be called, paying the cash that we have on hand, the bonds would amount to EUR 192 million.
Our next asset value, EPRA NRV was EUR 676 million or EUR 11.80 per share. Our remaining lease term was back five years at the end of the second quarter. We have extended nearly 50 grocery and daily good leases during the quarter. Regarding funding, 77% is bank financing, with a weighted average floating credit margin of 1.6%, and an average weighted capital maturity of 1.5 years. All bank loans with remaining terms of less than 12 months are currently being refinanced, and we estimate that they will be all refinanced during the second half of 2024. Close to 21% of external funding was, at the end of the second quarter, unsecured bonds.
Taking the called bond in July, plus the callable bonds during 2024, out with the cash that we have on hand, unsecured bonds would be 17% of the funding sources. Our hybrid bonds amount to 2.6% of funding sources and have first call in September 2026. Based on the earnings capacity and taking all interest rate hedges into consideration, an increase of the market interest rate with one percentage point would affect profit with about minus EUR 0.5 million annually. An increase with two percent points would affect profit with about minus EUR 1.1 million annually. Looking at some key metrics, LTV was 58.9% at the end of the second quarter. We continue to operate in the lower part of our internal policy range, between 55% and 65%.
The covenant in the MTN programme is LTV of 70%. Interest coverage ratio was at 2.2 x and will continue to be stable even if we would get higher interest rates due to the high degree of hedging. The covenant in the MTN programme is 1.5 x. As an alternative to the LTV, we look also at the net debt to EBITDA. We have high-yielding properties, and net debt to EBITDA was 9.8 x during the second quarter. Over to you, Christian.
Thank you, Pia-Lena. Looking a bit into the future now. In the outlook, it's been a busy time in grocery and daily goods. There's lots of things happening in the market, takeovers, fight for market share, food prices moving. I've written a bit about that in the CEO comments in the report, so I won't dig into too much about that now. The outlook going forward, for us, earnings capacity started to grow in the second half, as mentioned, and our strategy is to continue this development. There's still inflation in our markets, so the figures look to support continued growth in rental income through indexation, which proves our business model, that we have inherent growth built into our business model.
There's stable development in the daily goods business, and what can be seen in the market is there's several new retail growth initiatives that could lead, among other things, to more same-level impacts. What we see, and there are examples of that, is, for example, in Sweden, Lidl have said that they want to increase their number of stores by 50%. They've, they've been around for a long time in Sweden and, and been managed to build 200 stores. They've now said they want to increase by a further 100. So that's a significant investment for them. Listed tenant Axfood, with Willys, their discount brand, is doing very well in the Swedish market, and they want to grow that substantially.
And they also want to grow by City Gross, which is a small, privately held hypermarket player in Sweden with about 3% market share. So Axfood have bought that structure, looking for more stores, apparently, and they're waiting for the competition authorities to give them the green light later this year. In Finland, we've also seen that the very cutthroat and strong competition between S Group and Kesko together have more than 80% market share in Finland. And Kesko has stated that they want to grow, and they have stated that they want to do a store investment program, approximately EUR 250 million per year. So, I mean, that's a significant number.
So my take on all this activity, and there's also other activity, activity in Norway and Denmark, is that if the grocers are building balance sheet now, then sooner or later there may be more opportunities for sale and lease backs as the grocers are building up their balance sheet and want to offload assets going forward. There's also transaction volumes are starting to pick up in the market in general, which also helps things. And one thing also I just want to mention, and Pia-Lena mentioned, we moved out our WALT back from 4.8 to 5. It's been around the 5-year mark since inception of Cibus, as you've seen. I think a great strength for us being such a large company and specialized in one asset class, is that we can renegotiate leases in packages.
Our tenants are big corporates used to procurements, and they're used to negotiations. That's what they do, right? Buy groceries and daily goods and sell them on. By being a large player like ourselves, we can manage to negotiate packages, which is a win-win for both our tenants and us. So, for example, in Finland, we have negotiations, one of those 50 leases, which we mentioned, were with our three main tenants in Finland. So it's good to negotiate in packages, we feel, and it's good to be big. Looking at the market in general, falling interest rates should mean stabilized valuations and increased transaction volumes across our markets, all other things being equal. I think there's evidence of falling interest rates right now as well, as seen.
This should also create business opportunities for us. We've seen, in general, an increased investor appetite for stable cash flow operational sectors. I think there's evidence of that through the IPO of the Prisma Properties I mentioned earlier. Then multiple transactions in several markets, especially Sweden, has seen a much more liquid transaction market for in our segment, both from institutional players, but also from private capital. In general, of course, a strong support from equity and bond markets, as well as support from senior banks, which in general in the market, I think will facilitate transactions and movement going forward. We feel strong support from our backers as well, which is great. We have a motivated, competent, and agile organization ready to react.
We've done one transaction, as seen, and we are looking to do many more in all of our Nordic markets and also following other key European markets closely.
Yeah, Cibus is working with different ESG activities, all to reach the goal to be climate neutral in 2030. In the second quarter, we have completed our double materiality analysis and is preparing for including ESRS reporting in the sustainability report for 2024. During 2024, we have issued three bonds under the new, more ambitious green framework that was launched during 2023.
Thank you. When it comes to environmental impact, the best thing we can do is work and have energy in focus. We have net leases, as you know, so we're working side by side with our tenants to create energy-efficient buildings. During the quarter, we've added additional two solar cell panel on two of our roofs. We've also installed about at 50 of our locations loading bays for or charging bays for electric vehicles. 50 store locations in Finland and Sweden we've signed during the quarter. For the S in ESG, of course, daily goods real estate important part to play in everyday life.
It's part of a sustainable and resilient society, that people can get edibles and can go to the store and both meet people and buy food, of course. It's also an important physical meeting place in the modern world, and by some, it's considered social infrastructure, and a very important part of society. What are we working on there? Well, again, together with our tenants, focusing on important social aspects of daily goods portfolios, creating accessible and safe marketplaces. So what are our focus areas going forward? To continue to grow earnings capacity per share, our main focus, to continue to provide stable cash flows and dividend paying capacity, looking at and carrying out cash earnings per share accretive potential transactions, and continue to optimize our balance sheet.
On the ESG side of things, continue to work with infrastructure. We remain we want to retain and create accessible daily goods locations as a meeting place, work with energy efficiency, become climate neutral in 2030, and then as Pia-Lena mentioned, preparation for the European Sustainability Reporting Standards. Primary reasons to invest in the Cibus share, high and stable yield, potential for favorable value growth, and monthly dividends, segments with long-term resilience and stability. And just to summarize then, what should be the main takeaways from the Q2 report? Stable underlying cash flows, as mentioned, daily sector is still doing very well. Of course, we're receiving index growth, renegotiating packages, our WALT has moved up. The earnings capacity continues to grow. Very happy with that, of course.
We feel the strength of tailwinds from the financial markets, which should allow us to carry out more transactions going forward. We're back in growth mode. We've done one acquisitions and looking for more. Thank you from us.
We open up for questions.
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 Svante Krokfors from Nordea. Please go ahead.
Good morning, Christian and Pia-Lena. Thank you for the presentation.
Morning.
I have to ask first if we can find the Cibus bot song anywhere, or do we have to on ourselves?
I'm not quite sure of the copyright rights for this AI song bot, but it... we had a lot of fun, so try it during the summer. Just put in a link of what you think the song should be about, and in about one minute you get a song. Amazing.
Great. Then, on a more serious note, you have some bank loan renegotiations coming up, and I guess you had a 1.5% margin on those on average. What should we expect, or what do you expect, about the discussions now for H2?
Yeah. The margin is 1.6%, credit margin on the bank loans. Yeah, I mean, we have very good discussions with the banks, and there's large interest with the banks that we have a cooperation with today, and also new interest also. So, we are looking really good in the- we're looking at a good negotiation with the banks. But then we'll see, and we have the aim to finalize the refinancing in the second quarter, now the second half year of 2024. But really good discussion with the banks. They're happy to support us going forward.
Also, since the bond market has opened up and so strong, that also gives us negotiation power with the banks.
In general, one could say that supermarkets and groceries are a very likable asset class from banks. Stable tenants, semi-long WALTs, geographically, and by number, diversified portfolios, which create stability and cash flow. So no, it, it's a very preferred asset class in my feeling when it comes to this asset class.
Thank you. And then, your refinancing has been quite extensive. Do you want to comment anything about hedging activities after Q2?
I mean, we will continue to have a high degree of hedging. That's important for us to continue to deliver stable cash flow, and hedging is a part of that. So that's something that we will continue to do. And the refinance activities that we did with the bonds, of course, is giving us a good platform to start from and to grow from going forward. And we will have benefits going forward also in the Earnings Capacity when we're able to call the bonds when they become callable. So we have one loan, 103, that will be callable in early September, the second of September, and then the other loan, 104 loan, will be callable in December.
So, replacing them with lower margins on the existing bonds and having longer maturity.
Thank you. And you had quite a lot of renegotiated lease agreements. Can you describe the tone in those discussions? Has it been tough as usual or even tougher?
I'd say on the contrary, it's business as usual. In most cases, one simply extends the lease. We get the index growth, the tenant gets a stable store location, so they can carry out their core operations, which is selling daily goods. My feeling is that it was, and what I hear from our team is that, of course, it should be a tough negotiation, right? That means everyone should be happy when they leave the table. But I understand we have a good cooperation with our tenants, and have reached some good negotiation points for everybody.
Thank you. And then a question regarding valuations. Do you want to give some comments on the property valuation cycle and differences between countries?
Yeah, sure, sure. Now, as seen, we had a value decrease this quarter also 0.5%. In general, I think there's a lag in the market. The valuers inherently, and the way that the value should work, is they need transaction data. So therefore, in both upturns and downturns, valuations are lagging, in my view. We've seen it turn in Sweden, just as in many other sectors are seen among our listed peers who have reported over the last weeks. We see that values in Sweden have stabilized and are starting to grow. Transaction volumes in our sector are picking up, the several buyers on the buy side, as mentioned. And we see that valuations have bottomed out and are just slightly starting to pick up.
In the other countries we have, as Norway, Finland, and Denmark, then we see that we're still lagging this development in Sweden. The largest movement we saw was in Denmark. And why are yields still moving up when interest rates are falling, and there should be more confidence in the market and financing costs are going down in general? I think it has to do with the lag, as mentioned, the need of transaction data. But in general, as interest rates continue to fall, there should be more and more buyers willing to put and assume lower financing costs going forward in their calculation and their investment ideas.
No one wants to catch the falling knife, but if the knife has hit the floor, then there should be more people wanting to come and pick it up. So, I think with a turn of the market, I think that's the sentiment in the market. And when it comes to valuation decreases, I mean, even if it were to continue with the lag, then we still counteract this with extending leases, as mentioned, which extends the walls, which moves things a bit in our direction. Indexation is coming through, of course, in our sector, and then we carry out some new lettings and trying to create new income streams, for example, from EV charging facilities, et cetera.
Thank you. And the last question, you mentioned the OCR, Occupancy Cost Ratio. Have you disclosed what it is? Or I have... Can't remember, I have seen that number. Could you elaborate a bit on that, and perhaps what kind of ranges you have there?
Yeah. No, that hasn't been disclosed in, not for us and not for that transaction. It's in general, in the market, it, the retailers and the chains don't want to tell us, the market, or other competitors, what turnover is in an individual store. But the turnover is what really drives the long-term attractiveness of a store location, right? So, but if an example, ICA, they are, it's owned, every store is owned by an independent retailer. So you can find out in looking backwards at its annual reports, what the turnover was in an individual store. And that's what we've done in this case before the acquisition.
Found out what the turnover is in the store and found out that the OCR looks very, very low, which it should in the future both mean stability in store locations, because the store is doing very well, the retailer is doing very well, but in time should also mean a potential for rent increases.
Thank you. That is all from me.
Thank you.
The next question comes from Viktor Rud Stenlöf from ABGSC. Please go ahead.
Hiya, Christian. Hi, Pia -Lena , can you hear me?
Yes.
Yeah, we can. Hi.
Yes, very good. So you stay positive on your outlook for acquisitions here going forward. Any color on what markets are looking more attractive at the moment?
A strength of Cibus being a Pan-Nordic player is we look at all markets simultaneously. It's difficult to say where we can find the most attractive yield, the yield spread, but we're looking at all markets.
Very good. You've mentioned this before, and also earlier here on the call. You look at other markets outside the Nordics as well. Is that just out of curiosity, or do you see potential transactions outside of your core markets?
Yeah. No, we are, we've expanded from Finland into three new geographies. So that, that is part of our DNA to potentially move into other markets. What's interesting about the grocery daily goods market is that it's very similar in most European economies, in that you have a number of key players fighting it out, maybe a handful, maybe three, four, fighting it out for market share. So the dynamics of the market are very similar. Shopping habits are, are similar in that everyone needs to buy food, and, and competition is restaurants or fast food, et cetera, but everyone needs to eat. There are differences in the markets, of course, on the real estate side of things, real estate legislation, et cetera, how, and also, of course, on zoning, planning. In some countries, it's very difficult to build hypermarkets.
So hypermarkets are not there in the markets, for example, Norway, such a market. But also the consumers themselves, hypermarkets are not, not really their thing in Norway, for example, so there's no customer demand. But looking across European markets, many of the characteristics are same, are the same, and therefore further international expansion could be part of our, our natural growth story.
So, any specific markets that you're looking more closely at the moment?
We're looking at several markets, seeing just as we look across the Nordics, where we can find interesting potential situations and deals.
Right, understood. So then you had a one-off item in the quarter relating to the insurance compensation for that fire in Finland. You sold that property. Do you have any color on the yields or anything about the transaction that you could say? It's a bit of a special case, but still interesting.
Yeah, it was very small, as you can see on the realized change in value. So, the transaction was very small, and it was sold back to Kesko. Yeah.
So I guess I don't know. I'm guessing now, but I... They bought back the— So it was a burned down property. They bought it back. I guess they're opening a new store there again. But this is guessing from my— But they bought it from us, at least.
Understood. And then, you also mentioned Lidl's plans here to grow by 100 stores. Do you have any ongoing discussions with them at the moment? And, a follow-up on that, is your understanding that they will be building or growing through new development or leases in existing properties?
It's our job to speak with all major grocers, major and smaller grocers in all of the Nordic markets. But as I understand from what I was reading in the press from Lidl, it looks like it's going to be new construction, right? But again, I don't know exactly what their thinking is. I just saw that it was a large number, and they have a pretty aggressive growth plan.
Understood. That's all from me.
Thank you.
The next question comes from Viktor Hökenhammar from Pareto Securities. Please go ahead.
Good morning, Christian and Pia-Lena. Thank you for taking my questions. I just have a few follow-ups. If you were sort of to continue to acquire properties in Sweden or Finland, for example, who do you view as a typical seller of your asset type?
Sorry, Vik, can you re-repeat the first part of your question? Sorry, I couldn't hear you.
Sorry. If you were to continue to acquire properties, who do you view as a typical seller?
Well, the market is still very fragmented in all of the Nordic regions. We are one aggregator, but there's not that many around. So there are several sources for our kinds of assets. One is from the retailers themselves. If they've bought or built a new store, stabilized it, and then they sign a long lease and sell it, so as a sale and lease back. That has kind of been one way that many of the grocery and daily goods assets we see in the market across the Nordics have come to the market initially through that route. We also see a number of private individuals and investors who, now that the market is thawing, you can actually transact again, bringing their assets to the market.
I'd say-
Okay.
And then there's a number of smaller portfolio builders who've kind of built a portfolio and it's been time to offload that asset. In Finland, we've seen quite a few assets being sold from firms who are, I guess, coming to the end of their life, and the transaction market has come back, so they've sold. We've seen a number of listed players in Sweden, as they've been working with their balance sheets, sell off a couple of their assets. In Denmark, we saw the big sale and lease back from Rema 1000, which they bought, they bought back some of it themselves actually, but they brought in Norwegian capital. So there's a large number of different sources, but both professional institutional and also the chains themselves.
It's a mixed, mixed bag of sellers.
Perfect. Sounds good. And then a follow-up from Viktor's question: How does the valuation yield differ in other markets, like in Germany, for example, compared to your reported yield?
It's, in general, it's about the same all across Northern Europe, one could say.
Okay, perfect. Then finally, on financing, a question to you, Pia-Lena.
Mm-hmm.
How do you reason today in terms of having a credit rating? I think it was a target of yours a few years ago.
Yeah, it was a target before, but for now and in the midterm, we don't aim to have a credit rating. We had the goal previously to have—to go to investment grade. That goal is no longer valid. So now for the short and midterm, we are not looking for a credit rating.
Okay, perfect. Thank you very much. I have no further questions.
Mm-hmm.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.
Okay. Do we have-
There are no more questions at this time, so I hand the conference back to the speakers for any written questions or closing comments.
Just one written question, which is a question about our... We have two big tenants. Do you plan to lower the weight gradually? I'd say that, well, there's no reason to decrease towards one or two or three tenants. There's no strategic reason to do so. The cash flows are very safe, and also there's the economies of scale, which I mentioned earlier, about talking about renegotiating packages. We understand them. They understand us. However, as part of a growth situation, if it is from a country where that tenant isn't located, then there will, of course, be kind of a natural dilution of our current tenants. But there's no strategy to lower the weight gradually. So, no other questions.
Well, thank you everyone for listening. Thank you for your questions. We will be returning to you with our Q3 results on-
The fifth of November.
Fifth of November. So stay tuned. And until then, and for those of you up here in the Nordics at least, who summer holidays are kicking off quite soon, I wish you a happy summer, and I wish everyone a happy summer who's listening. Take care. Thanks. Bye.