Catena AB (publ) (CATE) Earnings Call Transcript & Summary

Welcome to Catena Q4 Report 2024. [Operator Instructions] This call will be conducted by CEO, Jörgen Eriksson; and Chief Treasury Officer, David Silvesjo. Now I will hand the conference over to CEO, Jörgen Eriksson. Please go ahead.

Hi, and welcome, everyone, to this Q4 presentation by Catena. Here is the agenda for today. A short summary of business overview and a business update, followed by sustainability, the finance and a short takeaway before we're opening up for Q&A. So next slide, please. Let's dive into the summary of the Q4 of 2024 report, where we report 21% increase in rental income, ended up at SEK 2.193 billion driven by acquisitions, projects and by our CPI-linked contracts. Profit from property management increased by 14% in total and per share, it was up to SEK 22.59 per share. Adjusted for the value change in the property value in our joint venture, we have an increase in income from property management per share with almost 8%. We report an increase in NRV per share up to SEK 425. The balance sheet remains very solid with an LTV at 38.4%. And 2024 has been a record year in terms of the investment volume totaling to SEK 11 billion and a year where Catena made a major footprint in Denmark. Those investments in combination with successful equity raises and attractive financing has significantly boosted the earnings capacity per share. So all in all, we are comfortable to generate strong cash flow going forward. And as the headline says, a very strong performance and as always, with a long-term focus. Next slide, please. The transaction market seemed to pick up at the end of 2024, but activity has slowed down somewhat, which can certainly be explained by the volatility of the interest rates and the uncertain geopolitical situation. With that said, we are looking into potential acquisitions and hope to continue our growth journey in 2025. The numbers for e-commerce for 2024 show growth for the first time in 3 years, and the growth was 5% compared to 2023 and the segments that's shown the strongest numbers are pharmacy, fashion and food products. Regarding new developments, we can summarize it to that the discussions take longer time, and we thought that we would have some new projects to present before year-end, but for various reasons, we did not succeed. We have LOI signed in one case, but it has challenges with the ground conditions. And in another case, there are challenges with natural values. However, the situation is somewhat brighter now than before the turn of the year. So we are fighting on and have full focus to be able to sign new construction projects in the coming quarters. Lastly, as far as we know and what we have heard, there is the same situation regarding all the vacancies around the Stockholm- Mälardalen and the Jönköping area as in previous quarter. Next slide, please. Looking into the customer base, there has been a major change regarding the top 10 customers in 2024. After the transactions during this year, DSV is our biggest customer standing for 20% of our contractual value. Logistics and Transport has at the same time increased as a segment that is now standing for 52% of the contractual value. Next slide, please. A look at our portfolio shows that the value has increased by almost 35% compared to the Q4 2023. Both Denmark and South have taken big leaps in terms of value during the year as a result of the acquisitions. Next slide, please. Next slide for the business update. We have presented this project with Elgiganten before, but would like to mention it again as we received a nice award during Q4 when the project was named Logistics Establishment of the Year in Sweden. Elgiganten has been up and running since the summer with its operations on the approximately 90,000 square meters. Next slide, please. The Ramlösa project in Helsingborg is progressing, and we completed one of the buildings in 2024. The large high-bay warehouse is under construction and is expected to be completed in Q1 2026 when the waste is also expected to move in. The third building is being designed at this time, and here, we expect to submit the building permit shortly. Next slide, please. One of our most recently completed project in Jönköping where we welcome Mestergruppen on 50% of the surface as a tenant to the state-of-the-art logistic warehouse constructed in [ LULA ] frame. And so it's also the high-bay part, which includes a crane warehouse automation. From the turn of the year, both Nowaste and Mestergruppen operate in the facility. Next slide, please. Our most recently presented new construction project is at Mappen 4 in Lindsköping, where we will build a new logistics facility for San Sac. The total area will be about 10,000 square meters and will be certified according to BREEAM Excellent. San Sac will move in, in Q4 2026. Next slide. Our ongoing project portfolio totals to around SEK 1.6 billion, where SEK 800 million is remaining investments. When all is completed, we will add another 130,000 square meters to the portfolio. And the yield on cost is around 7%. And for new projects, we are also aiming for around 7%. Next slide, please. With regards to our land bank, there are no updates and the processes for getting zoning plans are ongoing. But worth mentioning here is a great potential in the long run to continue growing with profitable new construction projects on our land bank. Next slide, please. Looking at our leasing operations, our net leasing was plus SEK 8 million for the quarter and plus SEK 74 million during 2024. Our WALE is now at 6.7 years and the letting ratio is almost at 97%. Next slide for some sustainability. The environmentally certified area is now at 46% and will increase further as projects and new acquisitions that are in the process of being certified is finalized. The Scope 3 is at a high level compared to last year due to finalizing many big projects. We report the Scope 3 when the buildings are completed, which means that the Scope 3 will increase once projects are finalized. We work with carbon dioxide budgets in all our projects to limit the CO2 emissions. And we continue to maintain a high level of EU taxonomy alignment, for example, our CapEx at 93%. Here is a big difference compared to the number in the Q3 report, which explains that we did not have all the documents in place at that time, but now we are confident that all the acquisitions made during 2024 are green. Produced energy from solar panels increased 24% since last year and reached almost 10,000 megawatt hour, and we achieved EPRA goal for sustainability reporting. And now over to David for some financial updates on the next slide.

Thank you, Jörgen. On this slide, we showcased our consistent earnings growth, highlighting improvements across rental income, net operating surplus and profit from property management. During the year, rental income increased by 21%, reaching SEK 843 per square meter with growth driven by indexations, lease negotiations and overall portfolio improvements. Net operating income grew by 24% and profit from property management rose by 14%. Our earnings capacity now indicates a projected increase of approximately 15% in profit from property management compared to 1 year ago, highlighting continued growth. Despite market turbulence over the last couple of years, driven by rising interest rates and higher inflation, we have continued to deliver increased revenues with strong profitability, which highlights our ability to navigate challenges and maintain performance. Next slide. This slide highlights the key drivers behind our rental income growth and how our diversified approach continues to create value with 11%. Project development added 3.3%, and like-for-like growth reached 7.6%. Like-for-like performance has been strong, both throughout the year and in the last quarter. While the market remains cautious compared to a few years ago, there are pockets for positive rental adjustments in certain areas. Property sales had a minor impact, reducing income by 0.6%. A key strength of our business model is our ability to shift capitalization between acquisitions and project development, allowing us to focus on where we see the greatest value creation opportunities. In summary, our balanced growth strategy, combining acquisitions, development and operational improvements continues to drive value. Going over to next slide. Let's take a closer look at how our capital structure has evolved and how we are positioning ourselves going forward. Our equity base has continued to strengthen, supported by 2 successful share issues of SEK 5.1 billion and retained earnings from our disciplined operations. This has contributed to a solid capital structure, while maintaining a healthy equity ratio. We remain committed to a balanced approach, leveraging the balance sheet to support growth while safeguarding financial resilience through strong solvency levels. Turning to net reinstatement value per share. Our NRV has reached SEK 425 per share, and this reflects the value we continue to build for our shareholders. In summary, our capital measures during 2024 through equity strengthening, disciplined dividend distribution and solid earnings position us well to seize opportunities while maintaining robust financial health. And next slide. Let's walk through our key financial metrics as well, which highlight our disciplined leverage and commitment to sustainability as well. Our net debt to EBITDA stands at 7.9x, well below our policy limit of 9x, reflecting solid earnings relative to debt levels. The interest coverage ratio is at 3.6x, comfortably above our policy targets of 2x, demonstrating strong capacity to cover interest payments. With the loan-to-value of close to 38%, well below our 50% policy limit, we maintain a prudent leverage profile. Our secured loan-to-value close to 30% and the unencumbered assets ratio stands at 4.3x, reflecting a robust and flexible asset base that enhances our financing options going forward. Sustainability is integrated in our financing as well. Currently, 70% of our debt is considered green surpassing our 2025 target of 50%. In summary, our financial position is strong with all key metrics well within policy and covenant limits. Next slide, please. On this slide, we focus on our proactive approach to debt management and liquidity. In Q4, we successfully refinanced SEK 3.3 billion, demonstrating continued market confidence in our business model. Additionally, we replaced our previous SEK 600 million revolving credit facility with a new SEK 750 million facility on improved terms, enhancing our funding flexibility. Our capital maturity profile is well balanced and diversified, reflecting a prudent approach to risk management. With liquid funds and commitments totaling SEK 3.7 billion, we maintain a strong liquidity buffer keeping our liquidity ratio well above 1x. Our effective liquidity management strategy delivered SEK 57 million in interest income for the year with SEK 30 million earned during Q4, an example of how we maximize returns from available resources. Next slide, please. On this slide, we highlight our proactive interest risk management strengthens financial stability amid shifting market conditions. The Nordic regional positioned with central banks prioritizing economic support in an uncertain inflation environment. In Q4, we reduced our cost of debt by 30 basis points to 3.4%, driven by lower risk premiums and market rate cuts. And Catena has never before been able to source capital as cheap as we do right now if we're looking for new sources of funding, and there is a significant portion of our existing debt that we should be able to get cheaper in the future. We also had SEK 250 million in interest rate swaps at 1.9% fixed rate with a 3-year average term, enhancing cost predictability. With 61% of our interest exposure fixed on balance day, we have effectively reduced sensitivity to rate fluctuations, supporting earnings stability. Next slide and handing back over to you, Jörgen.

Thank you, David. Our capital deployment divided into acquisitions of SEK 8.6 billion with a large property in Horsens in Denmark, the sale and leaseback with DSV that came in the last day in the Q3, and also acquisitions from previous quarters, among others: Jernholmen, South of Copenhagen; and the other 2 sale and leaseback transactions with DSV in Helsingborg and Landskrona, totaling to 8 new properties. During the year, we divested 4 properties located in Brondby, Denmark; 2 in [indiscernible] in Southern part of Sweden and a smaller one in Gothenburg, totaling to almost SEK 700 million. Development CapEx ended at SEK 2.5 billion. These investments related among others, to our large ongoing projects with Elgiganten, Jönköping, which were finalized during Q2 and the project in Stigamo, also in Linköping to Nowaste and the large project at Ramlösa in Helsingborg. So total CapEx for the year rounded up to SEK 11 billion. Next slide, please. Property value stayed stable and ended up the period with a positive value change of SEK 114 million, which correlates to 0.3% of the total portfolio before adjustments. The average weighted valuation yield -- exit yield for the portfolio is at 5.9% by the end of the period and the EPRA net initial yield came in to 5.5%. 95% of our portfolio has been externally valuated during 2024. And next slide, please, and then we'll have our takeaways from today. And for the first, Catena closes a year that can be summarized with very strong growth. And secondly, the earnings capacity for 2025 that we present in the report is 15% higher per share compared to 1 year ago. And the third and last point is with our balance sheet, in combination with strong cash flow, we have very, very good conditions to continue our growth journey. And with that said, we will open up for Q&A, please.

[Operator Instructions] The next question comes from Jan Ihrfelt from Kepler Cheuvreux.

And I'm just starting to kick off by your bank margins. Could you comment what you have currently and what you could expect in the future, as you mentioned that you're probably going to get some cheap financing going forward?

Yes, that's a good question. I think that sort of reflects the long-term trajectory of Catena over the last 5 years or so. I won't get into specific details, but I could say that I think what we do expect is looking for 5-year commitments today, I would expect to be somewhere between 130 and 140 basis points somewhere like that. And going to the capital market, we would probably see even lower margins. And for Catena, that's a big leap forward -- a big positive leap forward.

My next question regards your earnings capacity. And as the financial income swings up and down between quarters, what kind of level from the financial income do you include in the financial net in your earnings capacity?

Yes, that's a relevant question. Usually, we look at our position over the last couple of years, and we make an assessment of how much money we expect to have during a year. The reason it's been shifting over the last 2 years, I would say we have had lots of share issues -- new share issues, which has meant we have stayed with an oversupply of cash but usually, you could say that we expect to have somewhere between SEK 300 million and SEK 500 million in cash in a normal year.

Okay, great. And then as you mentioned here that projects, it's a little bit harder to convince the customers to sign on. What kind of level for your investments do you expect for this year? And also if you could comment on 2026.

Jan, that's a good question, but it's very hard to mention any specific numbers. We are looking into some acquisitions cases, and we are also working with new projects. But I mean, we have a strong balance sheet, a very low LTV. There is a headroom for quite many billions to invest, and that depends when the opportunities arise. So I can't give you any more specifics than that.

Okay. And my final question really regards to your acquisitions capabilities. You mentioned here 38% LTV. But what could a, kind of level -- LTV level are you happy to deliver or to have regarding your acquisition?

Yes, that's understood, Jan. The answer is, I think, I believe is pretty much the same what we have told the market over the last 12 months, at least. I would say, around 45% is what we aim for. If we end up at 45%, I would expect that we also stay pretty much closer just under the 9x of net debt-to-EBITDA as well. So -- but of course, that depends on the terms of the acquisitions, of course, but that's the way you could look at it.

The next question comes from Keivan Shirvanpour from SEB.

I could maybe start with a follow-up question on the development CapEx. So you don't really give a figure for the whole year, but could you maybe say what will the development CapEx for 2025 be as it stands now in your current projects? Because I note that one of your projects has been put on hold. So I would assume that there will be no investments in [indiscernible] project.

Yes. Keivan, that's correct. We don't expect that there will be any success with the [indiscernible] in the coming year about that one. Otherwise, as I said about the Ramlösa project, we will work on that. We will not spend all the money during 2025. And then the San Sac is -- I mean, you can divide it in 2 years, that's roughly -- but we will spend about in the existing pipeline.

Okay. So that's maybe about SEK 500 million or so roughly in the year?

Roughly.

Yes. And I have also another question regarding -- you said that you have an LOI for a new project. Could you say anything about the size of this project?

It's -- yes, I can say it's about 30,000 square meters, but I can't mention any financial figures about it.

Good. And also another question on -- you mentioned that you have a one-off in the net financials of SEK 5 million. Could you maybe elaborate what that is due to?

Of course, you could say it's divided in 3 parts, you could say. Approximately SEK 2 million refers to temporarily higher costs related to the acquisition of Mossvej, the Danish acquisition. The second part is simply an accounting technical measure of close to SEK 2 million, which is related to the acquisition of Bockasjö and is related to the projects that we still wait for completion and sale. So that's a temporary effect and only an accounting technical measure. This will balance once these projects are completed and sold. And then you have also the third parties dissolved fees due to early repaid loans.

Okay. Good. And I have to ask one final question and that is related to the central administration costs. So they were up by SEK 3 million -- so SEK [indiscernible] in the quarter. And I just look at the earnings capacity, so it implies SEK 13.7 million per quarter. Does the central admin contain any type of extraordinary fee or one-off or anything else that's...

That's a good question. There are some reservations because of a colleague who ended the career here. So we had to reservate some money there. There have also been some extra costs regarding the 2 equity raises. Normally, we have 1 per year. This year, we had 2 and somehow, there are reporting rules that more or less SEK 1 million has to be in the P&L. Otherwise, the costs are activated, so to speak.

Okay. So adjusted, would you say that it's more in line with last year then?

Correct.

The next question comes from John Vuong from Van Lanschot Kempen.

I think your European logistics peers are talking a lot about being close to an inflection point in terms of demand. At the same time, you're talking about that these dialogues are still taking long. But at the same time, you also have some issues with potential preletting. Could you comment on what you're now actually seeing in the market and how that is compared to last quarter?

Yes. John, good question. I'll try to elaborate a bit more about it. But as I said before, there are some more activities in the dialogues with potential customers now than before Christmas, but it's not that it's urgent for the customers to sign. It's planning for the long run. And we have, as you know, long-term relationship with customers. So we are not stressed in terms of time. There is also another dynamic in the market with all the oversupply there is. So of course, customers can look into various opportunities. That is not the same case as it was during the pandemic. What we also see is that, well, the e-commerce has taken off again, as I said, 5% uplift compared to 2023. We still wait for the consumption to kick off. I mean, the Swedish households, they have more money now, they pay lower interest rates, they have had some easements in the taxes as well, but I think we have to wait some more quarters before the consumption kicks off better again, so to speak. So it's a wait-and-see market. On the other hand, it doesn't reflect in our vacancy rates. They are at the same level. We don't see that there will be any dramatic changes during 2025. And also, we said before the land bank we have, it's fantastic. Sooner or later, we will present projects on it. But right now, it takes time.

Okay. Very clear. Just on the oversupply. I think you previously mentioned that these are on high watermark asking rents just as now compared to underwriting for projects that you could start in a similar region?

There are still -- the spec developers, they still ask for high rent levels, maybe they offer some discounts in the beginning. But if we were about to start off -- kick off a new project in the same regions, we can definitely compete with the rent levels.

The next question comes from Emil Ekholm from Pareto Securities.

I missed the question from Keivan and maybe this is what you discussed. But you came in a little bit higher than our estimate of net interest in this quarter. And can you say anything about how much of the financial costs that are accrual or borrowing costs. Or is this apart from the SEK 5 million one-off that you have?

Yes, if you are referring to the nonrecurring items, is that your question, Emil?

Yes, yes, exactly.

Yes. Yes, I just answer the questions earlier, but that's perfectly fine Emil. So there are 3 parts, you could say. The first part is approximately SEK 2 million, refers to temporarily higher costs related to the acquisition in Denmark. And secondly, we have an accounting technical measure of close to SEK 2 million, which is related to the Bockasjö acquisition where we await projects to be completed and sold. So that's a temporary effect. This will balance out once the projects are completed and sold. And then finally, the third part is dissolved fees due to early repaid loans.

Okay. That's perfect. And do you have any number on recurring items for accruals and borrowing costs?

Well, if it's -- can you elaborate what exactly you are looking for?

Yes. I guess that you have some accruals each quarter referring to borrowing costs that you write off during the tenure, I expect. Can you say anything about that run rate level?

No, no specific numbers now.

Okay. Then we're more than half through Q1 now. Can you give any guidance on net letting so far in 2025?

I'm sorry, we're trouble hearing you Emil. Could you please speak up somewhat?

Sorry. Okay. Maybe, is this better?

Yes, that's much better.

My headphones are, I guess, not working. Yes. So we're more than half through Q1. Can you give any guidance on net letting so far in 2025?

Not more than -- I mean, it's fair to assume if there have been any dramatic changes or any major defaults by customers, we have told the market that. So otherwise, you have to wait and see to next report. But I also said before that we don't expect any dramatic changes during 2025.

Okay. That's clear. And in 2025, you have SEK 184 million in lease value debt matures. What's your expectations on rental uplifts in these discussions?

Could be, in some cases, we can see a potential. But I mean, overall, I think we are pretty much on the market rents. It could be some up and maybe some down, but confident with the rent level, generally speaking, in our portfolio.

Okay. That's clear. And also referring to earnings capacity, have you included any contributions from projects that are currently ongoing? Or can we expect a boost as Sockret 4 is completed this year.

In the earnings capacity, those projects that will be finalized during the year, they are in the earnings capacity for that ratio of the year that they are -- where we have the rent, so to speak.

Okay. That's clear. And lastly, you have around SEK 1 billion in cash. You touched upon this a little bit earlier, but how do you expect to use them in the near term?

Yes, that's a very good question. It's a very relevant question. I think we always view our liquidity position as -- at least for the last couple of years as a strategic resource, especially now in times of market uncertainty. And we prefer to stay ahead, being swift about potential transactions. But with that said, we always carefully consider our approach going forward on capital structure. But there are interesting discussions ongoing. So I'm pretty confident we will make good use of the money.

That's perfect. I have one more question as well. We saw now in January that CapMan and Panattoni acquired a property in Mölnlycke from Mitsubishi and they are set to develop 43,000 square meter there on speculation. Is this a deal that you had looked into and considered?

Yes, I can just comment that we looked into that, but we didn't use the same calculator as they did.

The next question comes from Erik Granström from Carnegie.

Could I just ask you to wind us about the Ramlösa in Helsingborg. How do you view the occupancy rate there with the contract of Nowaste because occupancy went up 7 percentage points quarter-over-quarter, but it seems that you would have 93% still to be let?

In the Ramlösa project, we just have signed a smaller part of it, but it's an ongoing project, one building finalized during 2020 -- at the end of 2024. The other ones are ongoing, and we have to come back during the coming quarters with an update. And we are also in ongoing discussions with Nowaste and to clarify a bit more for the market.

Okay. But it is -- I mean when you first press released the project, there was a cooperation between you and Nowaste to develop it together, them as a tenant and you as a developer and owner?

Correct. But we were also very clear we hadn't signed any lease agreements when we kicked off the project. And we also have signed an LOI. So we were agreed on the head of terms, but by various reasons, they couldn't sign a lease agreements at that stage.

Okay. That's clear. And then coming back to sort of the projects that you mentioned that you were hoping to start in Q4 that didn't pan out. Could you explain that a little bit more in detail. It sounded almost like it was more to do with permits and land issues rather than discussions with tenants. Is that correct? How should we...

That is correct. I would say that both, we and the customers want to do the projects. Of course, we are negotiating. But there were some issues with permits, especially here in the southern part of Sweden, we're a neighbor to the land area, saw some very rare birds called [indiscernible] in English, [Foreign Language] in Swedish. And then there was a major hiccup from the [indiscernible] county of administration. So we have to sort that out before we are allowed to kick off any activities on that land area. On the other one, there was more of a discussion also together with the municipality about the risks in the ground, and we have to also to solve those issues before we can move on. So I think there are some things that we can't control, I'm afraid.

Okay. But do you think that, that will be resolved during 2025? Or is this sort of something that's going to take years to?

I think that will be solved in one way or another during 2025.

Okay. And then my final question, perhaps to David. It's the cost of debt. You mentioned that the average interest rate cost came down during the quarter. Given what you know already today, do you expect this level to sort of be maintained during '25? Or do you expect it to move in any direction?

That's a very good question. And I expect that we should be able to do more. I expect to have better terms whenever we source new funding or if we do refinance. So we should be able to remain and even push it further down. That's the trajectory we are looking for.

The next question comes from Pierre-Emmanuel Clouard from Jefferies.

So the first one is on the like-for-like expected for 2025. So what is the estimated impact of indexation for 2025? And maybe just coming back on your reversionary potential, do you mean that your average reversionary potential is basically 0 today or you are only mentioning Q1 just to fully understand what is your current reversion today?

On the first question, we know in 2025 that the CPI change is 1.6%, so that's the print from October last year. Secondly, on the other question, which is very interesting, of course, to think about -- I think the key point here from our perspective is that what we tend to see in the market right now, specifically since we have oversupply and things like that, we do see that there is a bigger gap between high-quality assets and assets that doesn't hold the quality that logistics companies are looking for. So from that perspective, we do expect for those properties that are located perfectly, we should see a trajectory of positive reversion potential. But then is it in 2 years' time, 3 years' time, 4 years' time, that's difficult to tell. So what we have said to the market and been very clear to the market, right now, we think that overall, our rent level is in line with market rents. But given the quality of our portfolio, we do expect that there is a positive long term. That's how we view the overall market and our portfolio.

Okay. That's interesting. And maybe a follow-up on that. On ERVs, so what has been the change of ERVs in 2024 and you seem super positive in 2025. So maybe if you can give us more color on the potential evolution of ERVs in 2025?

Yes. We won't disclose a specific number or guide on a specific number on that. Thank you.

All right. And a final one, it's a quick technical question, but you have made a total of SEK 11 billion of investment last year 2024. But I only see SEK 4.4 billion on your cash flow from investing activities. So how can we reconcile the 2 figures?

Yes. That's -- I think that's the question -- I understand your question, but I think it's better to take that aside from this. I can explain that. There are just different ways in how you structure your cash flow. Basically, you can have a gross kind of explanation and you can have a net kind of explanation. We have a net kind of explanation. That's why you have troubles seeing the links. But I -- me and Jörgen can -- are glad to explain that to you in a separate call.

The next question comes from Kanad Mitra from Barclays.

So I just have one for further growth in terms of acquisitions or project development? What are you thinking -- how are you thinking about the balance between the 2. And in the case of acquisitions, what kind of -- if you have anything opportunistic, what kind of hurdle rates -- how does it compare to the yield on cost of 7% that you have in your development pipeline?

I think if I were -- it was quite hard to hear you, but I think you asked about how we compare projects to acquisitions, right?

Yes. Correct. That's all. And how are you thinking about this between the two?

Yes. That's a good question. But it depends on what kind of opportunity arise. We have never, in the history, been forced to say no to any good opportunities, and we have the financial capacities. I would say we go for both. But yes, new projects on our land bank is more profitable than acquisitions, but we can do both. And that totally depends on what kind of opportunity arises from the customer market and in the transaction market.

And how does the transaction market acquisitions compare to your hurdle rate currently if you -- I mean, if you see the transactions that are in the market?

Sorry, it's very tough to hear you, actually. And maybe you can send an e-mail and we'll try to answer you.

Sure. It's just -- how does the hurdle rate compared to the acquisitions that you see in the market, if you can hear it. Yes, the question is just...

I'm very sorry, but neither me or David can hear you clearly. So please e-mail us, and we will answer you.

The next question comes from Oscar Lindquist from ABG Sundal Collier.

So I have a question on capitalized interest. It came down quite a bit now in Q4. Can you give any indication of a level we can expect for '25 given current project volumes?

Yes, that's a relevant question, I guess. And given that we don't know how 2025 will turn out on the volumes, but you are correct. Your analyze is correct, of course, that if the volumes tend to go down, then, of course, we won't be able to capitalize as much interest. So that's true. So we won't be able to give you a specific number or guide you because a number would more or less suggest the guidance on the volumes going forward.

Okay. I was more asking in relation to sort of the ongoing project volumes, but not any indication of new project starts?

Yes. Well, as of the balance day, one way you could look at it is it's about SEK 800 million, I believe, on balance day. And then if you think about SEK 800 million going smoothly over 2025 and then capitalize an interest on that close to our average interest rate, then I would say you are probably close to where it will get. And that goes without any new projects in 2025.

Okay. Sure. And then in the earnings capacity, you also have included capitalized interest for a normal project volume, as you say. How much is included here?

Yes. Again, that's a very standardized form, but we do look at the balance from the start of the year. So pretty much the same calculation as I just suggested you could say.

Okay. Perfect. And then also, current tax in the quarter came up quite a bit. Is there anything to highlight there?

No, not much to highlight actually.

Okay. So if we look at the sort of full year number for current tax, is that something we can take going forward as well?

I think we have -- yes, more or less.

There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.

Yes. We have one written question, but that's related to the projects and the challenges, and we answered that in one previous question. So with that said, we would like from the Catena side say thank you to all listeners. Thank you for all questions. Have a nice Thursday and see you again. Thanks.

Thanks. Bye.