So welcome, welcome to this webcast where we will present the transaction that we just announced this morning between Logistea and KMC Properties. On this call, we have myself, Niklas Zuckerman, who is the CEO of Logistea, Patrik Tillman, chairman of Logistea, Bjørnar Ulstein, who is chairman of KMC Properties, and Christian Linge, who is CFO of KMC. Happy to, after the presentation, take any questions, and that obviously could be in either of the languages. I'll start to leave the word to you, Bjørnar.
Thank you, Niklas. Let me just start by stating that it's exciting times for all us at KMC and Logistea. From a KMC perspective, we look forward to joining forces with Logistea, and believe that the combined company will be able to accelerate accretive growth beyond what two individual companies can achieve. The capabilities of the combined organizations will most likely create added platform value that should increase market pricing beyond the net asset value to the advantage to all shareholders. BEWI Invest has been involved from the start of KMC, and will continue as the largest shareholder to support the combined company. With that, I will leave the word to Patrik.
Yes, thank you. Thank you. My name is Patrik Tillman. I'm the current Chairman of Logistea, and also the proposed new Chairman in the combined Logistea-KMC Group. To follow up on Bjørnar, we see also this announced transaction as a strategic milestone for both Logistea and KMC, creating this new combined company. We will be one of the leading listed logistics warehouse and industrial real estate companies in the Nordics. We start this foundation from a very strong financial and operational standpoint, where we see that we can continue to deliver strong best-in-class shareholder value and capture future growth opportunities from excellent platform for everyone's benefit. I will now leave the word to Niklas, who will present the transaction a little bit more in detail before we take questions.
Perfect. Thank you. We will start with, as said by Patrik and Bjørnar, we were extremely satisfied to announce this transaction. After this combination, we will be a Nordic leader within logistics and industrial properties in the Nordics. On this slide, lots of information, but to highlight, the transaction is as executed by Logistea acquiring the shares in the property owning subsidiaries within KMC, and those subsidiaries are the property holding companies. So we're buying effectively all of the properties in KMC. The payment will be newly issued Logistea shares, and that will represent the same proportion of A and B shares as we have today.
We'll come back to a lot of numbers, financial numbers and property information data on the following slides. But to highlight briefly, and it's should be stated that completion is expected on July 11, and that's the date when the Logistea shares are delivered to KMC Properties. The transaction is subject to customary conditions being approval from both companies' extraordinary general meetings, where 2/3 majorities is needed, and we'll come back to how the support for the transaction looks as of today. We'll need approval by the bondholders of KMCP, and finally, that the prospectus regarding the admission to trade the new shares will be approved by the Swedish Financial Supervisory Board.
We have already presented a transaction to many of the larger shareholders on both sides. As you can see on this slide, Over 2/3 of the respective companies have shown support for the transaction. And as we see, that's another proof that we're creating something more than just adding one plus one. On this list, you see the main shareholders on both sides, and in addition, we have many of the Swedish and Nordic pension funds and institutional investors such as Länsförsäkringar, Fjärde AP-fonden, and Carnegie Fonder. A few words on the indicative timetable. So 14th of June, today, we announced the transaction. Written bondholder resolution from the KMC Properties bond on the 28th of June.
There will be an extra general meeting in KMC on July 5, in Logistea on July 9. We will get the prospectus approved and published on July 11, and on the same date, as I said, we'll deliver the shares to KMC Properties. And on this slide is that 80% of the shares will be delivered directly, and then the remaining 20% of the shares will be delivered to the shareholders in KMC, late Q3 or beginning of Q4. And that's basically because you need an audited interim balance sheet to deliver all of the shares.
Very brief on the two respective companies, because we'll spend more time on how the combined company will look. It strikes you that when presenting Logistea and KMC as individual companies, the story is very much the same. In the former Logistea, we have reached a bit more than SEK 6 billion in property values. We have +8 years in WALT. We have roughly SEK 400 million of rental income, and we have a net initial yield, as you can see, of 6.3%. Almost everything is indexed. We can move on to KMC. KMC have reached almost SEK 7 billion worth of properties, even longer WALT, 11.5 years.
Higher rental income of SEK 521 million per annum, and high initial yield of 7.5%. And also here, you have, as you can see, you have 99% of the leases are CPI or linked to CPI. As I said, better to spend more time on the combined company, because that's where we are today, or at least will be in a couple of weeks' time. We'll own 145 properties at a value of more than SEK 13 billion . We'll have 97% occupancy rate, and over 10 years remaining lease term. And that's, you know, by far best in class when it comes to listed real estate companies in Sweden.
So that, that's extremely positive and attractive. We'll have an NOI at almost SEK 900 million per year, and the net initial yield will be 6.9%, which is also high compared to, I would say, all of the other listed real estate companies in Sweden. We'll have the majority located in Sweden and Norway, a fairly large portfolio in Denmark, but as I said, Norway and Sweden, by far the largest locations. We'll continue to have offices where we're located today, being in Stockholm, Trondheim, Borås, and Oslo. And looking at the type of properties and type of tenants, there will be a good mix of industrial type of properties and tenants within the logistics segment.
As described or said, we'll more than double the size of the company, and we'll have the SEK +13 billion worth of properties. The market cap will increase to SEK 6.5 billion, putting us in a situation where the possibility to enter the EPRA Index is much more likely to happen. And obviously, a larger market cap would also improve the turnover in the share, and the possibility to attract more international capital is greatly improved. We have said on our end, and I know that KMC have said the same on their end, it is a great benefit to create a proper company with, you know, a decent or good size of the portfolio.
And with that said, if you're larger than we are now, you will owe everything equal. You will get cheaper financing from the capital market. You will get, hopefully, cheaper financing from the banks. You'll have more tenants, meaning that you could find more CapEx investment. We could, as we'll show on the next slide, there are synergies, so the, you know, the cost for central administration per square meter will decrease. So overall, it, it's a perfect match, and it will create benefit for the company going forward, being larger.
Financial benefits, there will be many, I would say, both in terms of looking at and structuring the bank financing, being a larger company, and maybe more importantly, to look at the secured bond of NOK 900 million that KMC has outstanding. And hopefully, we can do something good with that and obviously increase the cost of financing overall. Looking at the short-term day one operational benefits, we foresee a decrease of roughly SEK 14 million per annum, and that's, as you can see, based on.
We only need one, well, obviously, one board of directors and a smaller management, or not a smaller management team, but not a double management team combining the companies, listing fees, auditors, et cetera, et cetera. So at least SEK 14 million per year. Yeah. The management and board of directors, we can start with the board of directors. As Patrik and Bjørnar said, they will stay along and take a big part of the new board of directors, where Patrik will be Chairman and Bjørnar, Deputy Chairman. We'll have representatives from M2, Mia Arnhult.
We'll have Karl-Erik Bekken , who is from BEWI, Erik Dansbo representing Slättö, Jonas Grandér from Nordika, and then we'll have Anneli Lindblom, who's representing herself, so to say, being not connecting to any of the major shareholders, and the same goes for Patrik. On the management side, we'll have an executive management group consisting of myself, Anders Nordvall, who will be CIO and Deputy CEO, and Stig Wærnes, who is today the CEO of KMC. He will take the COO role in the new company and will also be an Integrational Manager. But there are more, obviously, more colleagues on board, and there is just everyone will, you know, stay on board.
We will not need to do any layouts or layoffs as a result of this combination, which is good, and good for the future. Looking at the capitalization, and it's not maybe worth for me to present it to you. It's a lot of numbers, but we'll have a new top four shareholder list being BEWI Invest, Nordika, Rutger Arnhult being, as I said on the previous slide, M2, and Slättö. But we have many others, a fair amount of good institutional long-term investors, such as Länsförsäkringar, the Fjärde AP-fonden , and Carnegie Fonder.
As I said before, we will look to increase the ownership in or the investor base, and that is you have more likely to do so, especially when we're talking to international investors, if you have a larger market cap and if there is better liquidity in the share, which we'll have now. Some rationales for the merger or the combination, and we have mentioned many of them, but you know, larger company, I've told you a Nordic presence, meaning that we can operate in more locations. For instance, we could decide that one or two of the markets look more interesting one year and you know take benefit of that, and vice versa the next year.
Extremely long WALT, as I said, increased share of triple net lease agreement. The KMC portfolio is, I would say, extremely triple net with very, very high or very, very low leakage when it comes to operational cost. By far, best in class when it comes to Nordic real estate. We'll have a high yield gap, and obviously, that's something that investors are very fond of today, provided the turbulence that we've seen on the financing market. We'll have a strong base of shareholders that could support continuous growth for the combined company. Some key metrics, and I just need to take a slide in front of me because there is.
The text on the, on the screen is too small for my eyes nowadays. So worth, I would say, worth to highlight the SEK 13+ billion worth of properties, high occupancy rate, long WALT, the total NRV of almost SEK 6.6 billion. We'll have a net LTV following the combination of 46.6%, and average interest cost of 6%, but with the intention, obviously, to take that down over time. On the next slide, we're presenting the earnings capacity for the two companies and the combination.
A lot of numbers, but maybe worth to highlight is going to the bottom, where you can see that per share, we have income from property management of SEK 0.76, and that will increase to SEK 0.87 after the transaction, representing a 14% increase. And that's before financial synergies that we foresee will come the coming years. So this is as is, so to say. That was a lot of information on a large transaction. We would be happy to answer any questions now or later.
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 Jan Ihrfelt from Kepler. Please go ahead.
Okay, good morning, and a couple of questions from my side. First one is, more technical thing. I see that your reporting date for the second quarterly report is on the 11th of July. Will that be kept or will it be delayed?
It will be delayed one day. So, the former Logistea will report on July 12th.
Okay. I saw that there were some dots outside the Nordics.
The Nordic countries on the map where you show your properties. Is that going to be sold, or will you keep it, or what's happened to these properties?
No, we'll keep them. For what will happen is that we will together, the new management together with the new board, will obviously look at the strategy going forward. But these are properties typically on very long leases, often 15 years, with stable tenants and high yield. So, you know, before selling any of those, one should find even better investments, and that's not necessarily the case right now. So for now, they will absolutely be kept, and that goes for all properties. And as I said, the new board, together with the new management, will set the strategy in more details, the coming months.
Could I just add some information, Niklas?
Yes.
These properties are properties of BEWI ASA, which is, of course, the largest tenant of KMC today. And, the reason why also KMC have moved outside the Nordics is to follow BEWI, because we have had a strategy of being industrial partner for our tenants. So that's the reason. It's not a strategy as such in KMC either to move too far outside the Nordics.
Okay, thanks for that. And if I got it right, your market cap, if you combine these two companies, are going, sorry, the property value will be about SEK 13 billion. And of course, I could realize that you get the better financing terms from the banks becoming larger. And to what level is that applicable? Could you become, have even better financial conditions up to SEK 20 billion, or is this a large step down by becoming, or to have SEK 13 billion coming from, like, SEK 6 billion?
No, I would say easier is probably to answer when it comes to the bond market. And there you can see a large distinction between the companies that have properties worth, say, SEK 13 billion or SEK 15 billion, versus the companies that have SEK 5 billion or SEK 7 billion. As you know, we have seen bond issues on the Swedish market this week at, you know, + 300 basis points for companies that are smaller than we will become. And you also know that we paid 550 basis points two and a half years ago when we were a smaller company. So I would say, when it comes to the bond market, it will absolutely have an effect.
When it comes to the banks, it will have an effect, but to what extent is obviously hard to say. The good thing, though, is that we will have more banks. So, you know, more contacts and more potential lenders, which is good.
Okay. And, I think you mentioned a bond of NOK 800 million . Was that correct?
NOK 900 million.
NOK 900 million.
Secured.
Yes.
Okay.
And what kind of conditions are there in that bond?
I'll leave that to Christian instead of maybe getting it slightly wrong.
Yes. So that's a senior secured bond of, as Niklas mentioned, NOK 900 million. It has a margin of 500 basis points on top of Euribor. And that one we set in the summer of 2023, and will run until the summer of 2026. However, it does have a first call in the first quarter of 2025. So as Niklas mentioned, we do see a clear path to refinancing that with a combination of both bank and potentially an unsecured bond in the Swedish market.
Okay. And are there any step-up clauses in that bond or?
No, no step up clauses, but of course, there is a call structure, which, from the first call and up until the date of maturity, will go from 102.5 to par. And as I mentioned, the first call is already in January 2025.
Okay. And who will become the new CFO in the company?
We have not been able to discuss this with all of the employees yet, so we'll come back to that. It's clear, but we need to communicate with all of the employees before we communicate it to the market. So for now, we are only presenting the executive group management.
Okay, fair enough. And my final question in regards to the bid, and it's based on a total of SEK 3.259 billion. And I haven't got the exact market cap for KMC. So how is that related to the market cap of KMC, and could you explain the difference there?
So the transaction is based on the respective companies' NAV. And we are traded slightly above a couple of percentages, and KMC are traded slightly below a couple of percentages. As of today, that has moved over the spring. But you know, that's the rough numbers. But based on NAV for transactions made since Q1.
Okay, yeah.
That means in terms of ownership, as you saw, that Logistea, existing Logistea shareholders will own a little bit more than 51% of the combined company, and KMC's current shareholders are a little bit less than 49%.
Okay. Okay, thanks for taking my questions.
Of course.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you. And we can also notice that there are no questions in writing. So, I think we will leave it for there, and happy to answer any questions. Just reach out to either of us on the call, and we'll make sure to come back to you. But as Bjørn had said, very interesting times for KMC and Logistea, and we'll continue to create share values.