Welcome to Logistea Q2 earnings call 2025. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now, I will hand the conference over to CEO Niklas Zuckerman and CFO Philip Löfgren, please go ahead.
Good morning and welcome to the presentation of Logistea's first half year of 2025. Here to present is myself, Niklas Zuckerman, and our CFO, Philip Löfgren. We will answer any questions after this presentation, and you can submit questions written as they pop up. As some of you might remember, we had an old goal to reach SEK 15 billion worth of properties, and we are today at a bit more, SEK 15.2 billion. Total rents for the first time exceed SEK 1 billion, and we continue to report high occupancy and high net initial yield of 6.8%. Looking at the financials for the first half year, we are reporting income of SEK 511 million, representing an increase of 131%. The NOI amounts to SEK 456 million, and the profit from property management amounts to SEK 246 million, an increase by an impressive 267% compared to last year.
Maybe most important, the profit from property management per share has increased by 74% compared to last year. The WALT remains high at 9.6 years, and the net LTV is down to 47% following the rights issue undertaken a few weeks ago. It's been a very active 2025 for us at Logistea. We have, during the last quarter, purchased two properties. The first one is a 36,000 sq m property fully leased to e-commerce company Lyko on a 19-year lease, the one to the top. The second property is in Hämeenlinna in Finland, a lettable area of 22,000 sq m, and the property is fully leased to a strong tenant on a 10-year lease. We have furthermore, this morning, announced an acquisition of two properties in Ulricehamn and Tranemo in Sweden.
Both properties are leased to AP&T, and they are a leading industrial company providing production lines, automatization systems, and servo hydraulic presses. The two properties, of which the one in Ulricehamn is by far the largest, comprise 19,000 square meters, and AP&T has signed 15-year new triple net leases for both sites. The properties are not taken possession of yet and are therefore not included in the run rate. As I said, a very busy start of the year. We are actually reviewing almost one property per day. The transactions undertaken add, looking at the profit from property management, SEK 0.19 per share. If we include the last transaction we did this morning, we could add SEK 0.22 per share. More expansion on this slide.
As I said, we have reached a bit more than SEK 15 billion, and we are currently reporting a yield gap of 2.2%, being the difference between what the properties yield of 6.8% and the cost of debt being 4.6%. We continue to see good opportunities to expand the portfolio even further, and that is the main reason why the rights issue was undertaken during the spring. Looking at the run rate, we could see that the NOI, including the project for Intersport, amounts to SEK 1.14 billion. The profit from property management has increased by 184% in one year to SEK 571 million. As mentioned, the main drivers for the changes are acquired properties that account for SEK 0.19 per share. We have seen decreased costs in the debt portfolio, and that has improved the numbers by SEK 0.05 per share.
On the negative side, we have seen an effect from the rights issue, which lowered the profit from property management per share in the run rate by SEK 0.08. Also, we have seen a negative effect that lowers the numbers by SEK 0.02 per share. Earnings per share, obviously a very important measure. You can see that we've seen an increase by 35% in one year, and the growth for this year is 12%. In order to make sure that we have dry powder to take advantage of the current transaction market, we undertook a share issue in June. The share issue was directed to professional and institutional investors. We have noticed and noticed good interest in the share, and we decided to issue roughly SEK 500 million worth of new shares.
As I said, the proceeds will be used for, among others, new investments, like the one we did this morning, or yielding CapEx investment into our own and existing portfolio. To the left, our updated list of largest investors post this rights issue, and notable is that Brummer & Partners and Clearance Capital are new on that list. Both of them, as well as Fourth AP Fund and Länsförsäkringar, took large lot sizes in the direct issue. No material changes here, other than that we have decreased the share of BAB from previously, or from what was 31% post merger. That is now down to 26%. Otherwise, as you can see, still the vast majority of the properties located in Sweden and Norway, high net initial yields throughout, and long leases, and especially long leases when outside of the Nordics.
We continue to report a high proportion of triple net and CPI index leases. Occupancy stands at still high, 97%. The net letting for the quarter is negative at SEK4 million, mostly driven by two terminations. We do not see a trend that the leasing market is softer now compared to six months ago, and we are in good leasing discussions, but the processes are still fairly slow. Before passing on to Philip, I will say a few words on the market. We have seen a good pickup of transactions in Sweden the last weeks. Transactions within the logistics segment, as well as the light industry segment. Interested that both domestic and international investors are active on both the buying and selling side. Sweden is the market with the highest turnover, and it's still fairly slow in the other Nordic markets when it comes to our type of properties.
By that, I will hand over to Philip.
Thank you, Niklas. My name is, as most of you already know, Philip Löfgren, and I'm the CFO of Logistea. As you heard Niklas saying, and Logistea has grown a lot during the quarter, both in the balance sheet, but also in the earnings, which I will now present further into the financials. Logistea's revenue for the quarter increased to SEK 263 million compared to the previous quarter of SEK 248 million. The increase is linked to the finalized acquisitions during the quarter and a smaller increase of the revenues in the like-for-like portfolio. The net operating income came out at SEK 242 million, an increase from last quarter's SEK 216 million, which is linked to both the acquisitions and a warmer quarter, which kept heating and electricity costs down.
The period was affected by the FX effect of around SEK 2.5 million. The operating margin increased to around 90%, and the adjusted operating margin, where we exclude the rent supplements from the revenues, came in at around 95%, an increase from 90% a year ago. The figure we tend to put the most focus on is the profit from property management, which increased to SEK 131 million. Apart from a higher NOI, we have managed to, through negotiations and completed refinancing in the current loan portfolio, to decrease the average interest rate from 4.8% to 4.6% in the quarter. That is a drop of around 40 bps this year. I will explain more in the upcoming slides.
Profit from property management per share, one of our financial targets, increased by 58% on the last 12 months basis and increased by 74% comparing the first half of this year with the first half of 2024. As we heard earlier in the presentation, we issued 36 million new shares in June with the purpose of financing our future growth. The issue brought in SEK 500 million, which balances the capital structure in a good way. Even though the issue price was slightly below the net asset value per share at the time being, we've proved that we invest our capital in good yielding property transactions and projects that create more shareholder value. In order to maximize the return on equity, we aim to secure a loan-to-value in new transactions of 50%- 60%, which we have managed during the period.
At the end of the period, our LTV was stable at 48.4%. As I mentioned, both on the last page, but also in previous earnings calls, we have had good negotiations with banks during the quarter, which has resulted in, apart from the lowered margin, longer credit maturities. Loans that mature within the upcoming 12 months are a manageable SEK 187 million, and the average capital maturity came out at 2.9 years compared with last quarter when we had SEK 1.3 billion in debt maturing in one year. The hedging ratio is stable at 73%, and the interest cover ratio has increased to 2.3x compared to 2.1x at the beginning of the year. Our hard work with our finance portfolio, especially looking at the terms with the banks, is paying off as we have decreased the average banking margin from around 200 to 180 bps in the period.
During the quarter, we have refinanced around SEK 1.9 billion with better terms. SEK 600 million of those had a margin decrease of 85 bps. Apart from the decreased margins, the market interest rates have helped the average interest rate to decrease to 4.6%. Looking back at the earnings capacity we saw before, even though we have increased the loan amount by 17% this year, the net financial income has only decreased by less than 8%. We have still unencumbered assets in Germany, Poland, and the The Netherlands, amounting to around SEK 940 million, which we are working on getting into the banking system. To sum up, the transactions made in the quarter, together with the work with the loan portfolio, have given us a good position to deliver on our financial goals and limitations.
The profit from property management per share on the last 12-month basis, adjusted for one-time effects, is up 58% in one year, while growth in the NRV per share is up 14% from a year ago. The loan-to-value ratio remains low at 48%, while the interest cover ratio continues to increase. If we deduct the income from the not yet finalized project property we have in the earnings capacity, our ICR is projected to increase from 2.3 x to 2.5 x. The key takeaways from this finance side are the decreased average interest rate from 5.0% to 4.6%, the improved credit maturities, strong growth in profit from property management per share, and a position to fund more transactions with a cash balance of around SEK 500 million. Back to Niklas.
Good.
To summarize, as I said, we have managed to grow the portfolio by approximately SEK 2 billion only this year, including the property announced this morning. Those together will add 22% on our profit from property management per share. We do believe there are still good deals to be done, which is one of the main reasons why we decided to undertake the rights issue in June, meaning that we now have dry powder to act if we find value creating investments. Opening up for questions, please.
If you wish to ask a question, please dial the pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial the pound key six on your telephone keypad.
Morning. Do you hear me?
Yes.
Perfect. I don't think I was introduced, but this is Fredrik from ABG. A couple of questions, maybe starting where you sort of ended, Philip, on margins. Talk a lot about sort of the delta and the margins coming down. Can you specify or do you want to specify the new margins you get in different countries today?
Yes, for sure. The new margins we've received on new loans on the transactions being done are around 150bps- 170 bps, and it's evenly shared in between all the countries.
Perfect. I think we've had this discussion before, and you have been on the topic of sort of moving some of the maybe bond debt to bank debt for some of the countries outside of the Nordics. Is there an update on that?
Yeah. It's actually not a move from bond to bank debt. The properties located outside of the Nordics are unleveraged, apart from Belgium where we received bank financing. Where we're trying to get bank financing are the properties located in Poland, Germany, and The Netherlands. It's nothing signed, even though we are in progress in one of the countries where we've come pretty far, I would say, but nothing signed yet.
All right. If, let's, in theory, assume that you don't get bank financing in those markets, would you sell those properties or continue to finance it or keep it unlevered, as you point out?
What we've said is that now we're in the process trying to get as much and as good bank financing as possible, and we'll probably give ourselves at least the coming quarter to see how far we get and on what terms. Then we'll need to decide, you know, based on the financing received, should we keep or not. The process is on the three countries. It's progressing pretty well. We'll give ourselves at least another quarter to see where we get.
Fair enough. Good. On letting, I do appreciate that the quarterly figure and the year-to-date figure is very small in relation to the total property portfolio, but is there anything to call out on the terminations, either in sort of, you know, when are these tenants leaving? Maybe, you know, if there's anything specific in here, one region or one country doing accounting for the majority?
Yeah. The two terminations that we have had during this quarter, one is left and one will leave at the end of the year. There is no trend as such that the leasing market is worse compared to the previous six months, probably rather the opposite. We are in a couple of good leasing situations. It takes longer, but it's not like that we have lost potential new tenants during the quarter. Obviously, we are facing a small negative net letting, but it's not nothing. There's no trend as such when it comes to our type of properties and our type of tenants, I would say.
Understood. Finally, last question, maybe partly on the same theme of longer discussions, and I guess we hear this from several companies in the space as of right now. You have previously sort of concluded that you do want to start, you know, significant projects. Now, the transaction market, to you at least, seems to be very liquid and open, and you're very active. Is the project leg of the business of lower priority now, or should we expect something in terms of project starts for the next, say, 6- 12 months?
We're hoping to do one or maybe two projects the coming 12 months. Nothing is signed, obviously, because then we would have let you know. Going back to the discussion where you started, obviously, if we are to do projects, the yield on those needs to be sort of in line, or hopefully, yield should be hopefully a bit higher compared to buying a similar type of property standing with the lease. One should also remember that projects, they obviously brand new buildings, etc. You could live with slightly, not lower yields, but yields that are in line with what we are buying existing properties. It's not intentional that we have slowed down the process of trying to find new development tenants. It's just the case that we haven't signed any leases yet, but we're still trying to do so.
Yeah, understood. Thanks, thanks. That's very clear.
Thank you.
As a reminder, if you wish to ask a question, please dial the pound key five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any written questions and closing comments.
Good. We actually just got a written question. You reported a fairly sizable positive property value change in Q2, which was mainly explained by yield contraction of 1 bps. Can you please elaborate how the small yield shift can explain such value change? Yes, sure. This is from David Flemmich at Nordea. You're correct in the sense that the yield compression is fairly low, and that is part of the positive property value change. The other part is that basically we have, as explained, we bought properties of SEK 2 billion over the past five or six months, and basically, those properties have been bought at higher yields compared to the average yield in the portfolio. That would also make a value impact on the total portfolio, even though overall the change on yield requirements is just slightly down.
It seems that we don't have anything in writing, and no one is in the queue for asking questions. I guess that has to do with the time of the year or that the report was self-explaining or maybe both. Obviously, if there are any questions popping up during the day or during the summer, just let Philip or myself know, and we'll do our best to answer those. Otherwise, we'll wish you all a great summer holiday.
Yeah. Perfect. Thank you.