Logistea AB (publ) (LOGIA) Earnings Call Transcript & Summary

Welcome to Logistea Q4 Report for 2025. [Operator Instructions] Now I will hand the conference over to CEO, Niklas Zuckerman; and CFO, Philip Lofgren. Please go ahead.

Presentation of Logistea's Q4 and Full Year-End Report. As always, myself, Niklas and Philip Lofgren, CFO of the company, will present today. We have, during the year, continued to deliver on our strategy to build a portfolio of properties with long lease durations, stable cash flow and profitable tenants. We currently hold 155 properties at a value of some SEK 15.7 billion. The occupancy remains high and stable at almost 97%. The WAULT also remains high and the NRV per share now stands at SEK 16.60. The leasing market has improved, and we'll give you some examples of that later in the presentation. Looking at the highlights for 2025 and 2025 was a very active year for us at Logistea. We are reporting almost SEK 1.1 billion of income for the full year, an increase by 52% compared to last year. The NOI is up 62% for the same period, and the income from property management is up even more, 142%, equals to some SEK 511 million for the full year. And the income from property management where we have purchased properties at a value of SEK 2.2 billion or 15% increase compared to the beginning of the year. We have, in addition to that, completed projects at a value of SEK 364 million, meaning that the portfolio has increased by more than SEK 2.5 billion in 1 year. The cash flow continues to improve, and we're reporting a 58% increase year-over-year. And finally, looking at the strength of the balance sheet, we're reporting a very low 7.9x net debt to EBITDA. As I said, we have continued to grow the portfolio over the year. Yields, i.e., net income over property value have remained fairly stable, whereas the average cost of debt has come down, while we are now reporting a yield gap that is 2.4%, as you can see to the right on this slide. And then moving on to the transaction market and transactions completed over the year. And here, we're starting with the properties that we have acquired during the fourth quarter. They totaled some SEK 335 million. The first one is the bus terminal that we presented on the Q3 call, located in Karlskrona and leased to Connect Bus, the company that operates all buses in that region. 10-year lease, and we bought this property at a yield of almost 10%. The second one is a portfolio of 2 leased to Svensk Cater and Argynnis, lease duration is 6 years, fully leased properties and the initial yield here represents some -- sorry, 7.4%. And finally, the third one is a small portfolio, also with lease durations of 6 years, modern and well-located properties in Karlstad, Kumla and Lindesberg and also here, initial yield of 7.4%. Looking at the total for the year, we have completed 9 transactions, and we have completed the 2 projects for NKT and Intersport. As you can see from the pictures, well located and modern properties, and we have during the year bought in Norway, Sweden and Finland. And looking what these transactions then means for the company as a whole, we can see that we have bought properties in average at a yield of 8.2% to be compared to the average running yield of 6.8%. Overall WAULT is 11 years, which is longer than our average WAULT in the company. And we have managed to increase the income from property management per share by SEK 0.26, which equals some 25%, 26%. Adding the projects, the WAULT is 12 years and the income from property management per share is SEK 0.30. This shows that the rights issue we did during the summer was creative, and we still have good dry powder to continue to take advantage of interesting deals that occur on the Nordic market. We're also proud that we have completed the development for Intersport in Nassjo, where Intersport now has taken possession of their premises. The property was delivered in time even a bit before, and the construction cost was also in line with budget. The yield on cost is 7.25% and now Intersport has started to pay rent for the building. The beginning of 2026 has started strong, and we have already signed 2 new deals. The first one are 2 logistics properties that we purchased from MyWay, completion took place earlier this week. The largest of the 2 properties is located in Trollhattan and leased to GNK (sic) [ GKN ] Aerospace, a company with turnover of more than SEK 14 billion. The 2 properties combined have a WAULT of 11 years and the purchase price is a bit more than SEK 300 million. Yield-wise, on this one, we're talking roughly 7%. The next one is a property located in Karlskrona. We bought this property also at the beginning of this year, WAULT 5.5 years. As you can see, property value of SEK 216 million. And the largest tenant in the properties is NKT, which is a company that we know extremely well from our properties in Alingsas and Falun. Yield-wise, we're talking 7.75. Also very happy to say that the -- we have seen a very strong start of the year when it comes to new lettings. We have signed a couple of new leases that shows that we have well-positioned properties that are attractive on the leasing market. The first lease is with a large company within the defense industry. We've signed a new 10-year lease for 16,400 square meters of premises in Karlskoga. Part of the space is today leased to another tenant, but so we're replacing that and expanding with this tenant. So we get a long lease with a very profitable tenant. And the total lease amount for the 10 years exceeds SEK 130 million and the net letting effect per annum is, as you can see, SEK 6 million. In Boras, we have signed a couple of leases. And part of that is to replace a lease that was terminated in 2025. So meaning that we will not have any vacancies. So we signed the lease before that premise is being vacated. It's actually 3 tenants in total. And as you can see, leases of 5.5 years and the net letting effect taking into account the terminated lease is SEK 1.6 million per annum. And the third lease is, you can say, extension or new lease with an existing tenant in Ljungby. Here, if you remember, we had a bankruptcy 1.5 years ago, and this is a property that we have been filling up over time. And now we signed this new lease, 4-year lease and the effect on the net letting per year is SEK 2.2 million. Moving on to the run rate. And following the completion of Intersport and the results of the Q4, we have an NOI of SEK 1.047 billion per year. And income from property management is now at SEK 603 million. The main drivers are new acquisitions, a lower cost of capital, lower cost of debt. And on the negative side, we have seen an effect from FX and of course, the rights issue we did in the summer of 2025. If we take the Q4 run rate and add the properties acquired beginning of this year, the income from property management is SEK 634 million which equals some SEK 1.24 per share. And more on the earnings capacity, which is obviously one of our top priorities to deliver on. You can see that we have managed to deliver steady growth quarter-over-quarter. And as I said on the previous slide, we are now at SEK 1.24 per share, taking into account the most recent acquisitions. As we have said before, and we have delivered on long stable income in all our markets. The leases in the non-Nordic countries are even longer, and Philip will talk more about recent financing in one of those markets. We also discussed the BEWI share started with 31% is now down to 25% and obviously, will continue to decrease in the pace we're buying other tenants. And also that what we have communicated in the past, this number should be taken down to below 20%, which is one of the criteria's to become investment great. As said, the occupancy remains high at almost 97%. We're showing a small positive net letting for the fourth quarter, as you can see. But as we said on the previous slides, the start of 2026 looks promising with a couple of new leases signed already. So with that, I'll hand over to Philip.

Thank you, Niklas, and good morning. Let's take a look at the earnings and results when we sum up the eventful year of 2025. The 3 key figures I want you all to take away from this chapter is the strong increases in profit from property management per share, the solid balance sheet and the decreased cost of financing. Logistea's revenue for the quarter increased to SEK 285 million compared to the same quarter last year of SEK 247 million. The increase is due to acquisitions during the year and also a smaller contribution from the like-for-like portfolio. The net operating income came out at SEK 251 million, an increase from SEK 215 million in the same quarter last year. Contributors to the increase are acquisitions and increases in the like-for-like portfolio, where property costs have declined due to renegotiated leases and decreased rent losses. The net operating income is, as I've seen in previous winter periods, still affected by higher property costs when it's colder outside, which is the main explanation of the difference from the previous quarter. Both revenues and net operating income were affected by negative FX changes, SEK 1 million in the quarter and SEK 14 million to SEK 15 million for the whole year for the revenues and net operating income. And the operating margin has increased and was in the last 12 months period around 91%. The adjusted operating margin, where we exclude the rent supplements from the revenues came in at 97%, an increase from 93% at the beginning of the year. Triple net leases and an active asset management are 2 main drivers for the strong key ratios. Profit from property management came out at SEK 135 million and in line with the estimates. The decrease from last quarter is due to the lower net operating income. And moving over to the profit from property management per share. If we exclude items affecting comparability, the increase in the quarter was 24% and for the year, the increase was 41%. And the main drivers for the annual growth apart from acquisition is the lowered cost of borrowing. Looking at our key metrics, the loan-to-value ratio has been stable around 48% during the whole year. We have a lot of headroom up to our financial limitation. And as I've said before, one should not be surprised to see the loan-to-value ratio exceed 50%, especially with the current transaction pace we have. With our interest cover ratio increasing and in combination with a solid net debt-to-EBITDA ratio, our balance sheet is prepared to be more levered. Looking at the credit maturities, we aim to shave the peaks and distribute maturities evenly over the period. The SEK 641 million maturing within the upcoming 12 months are in final discussion, mainly regarding terms. We still sense banking market with large appetite for our types of assets. And in the end of the period, we have bank relations with 13 banks across Europe. Here is an overview of our debt portfolio performance during 2025. We are proud to have decreased the average interest rate down from 5.0% to 4.4% during the year, driven by both decreasing market interest rates, but mainly from margin decreases from bank loans. So in the fourth quarter, we renegotiated SEK 1.4 billion, lowering the margin by an average of 16 basis points. The SEK 1.4 billion includes loan where we have managed to decrease the margin for the second time in 2025. Today, we are borrowing in the Swedish banking market at around 120 to 140 basis points. And looking at Norway and Finland, the margin is around 20 basis points higher. We have also, during the quarter, managed to finance unencumbered assets in the Netherlands with a long-term new financing of EUR 21.7 million from a large European bank. Looking back, we have closed the fiscal year of 2025. We managed to deliver on all our 4 financial targets and limitations. Profit from property management per share increased by 41%, as I mentioned earlier. The NRV per share increased by around 8% for 2025. But looking at a 5-year average, the annual increase amounts to 22.5%. The loan-to-value is still in the conservative zone and the interest cover ratio is continuing to increase now at 2.6x compared to 2.1x in the beginning of the year. 2025 has -- was the first year that we had a dividend and now the Board of Directors have decided to propose to the AGM a dividend of SEK 0.2 per share, equal to around SEK 102 million. The main reason behind the proposed dividend is that Logistea today has reached a level of earnings that allows a higher dividend that does not interfere with future growth. The proposed dividend is equal to around 20% of the profit from property management for 2025 and around 16% of the profit from property management in the earnings capacity on today's date. So the key takeaways from the finance side are the strong increases in the profit from property management per share, both historically but also going forward. We have a good position to grow -- to continue the growth journey with our solid balance sheet and improved margins in the bank on both new loans and in the current loan portfolio opens up for increased earnings. And with that, I will hand over back to Niklas.

Thank you, Philip. And to summarize 2025 for us, it's been a very active year. We're reporting, as you can see, strong financials, stable and strong financials. We have managed to grow the business by almost SEK 2.5 billion following acquisitions and development. We still have dry powder, making sure that we could act if we find good investment opportunities. The banking market is good for companies like us, and we have a strong balance sheet with LTV below 50%. And finally, the leasing market has improved, and we have already now in the beginning of the year, signed new leases that will affect the net letting by roughly SEK 10 million. With that, we open up for any questions, please.

[Operator Instructions] The next question comes from Emil Ekholm from Pareto Securities.

A couple of questions from me. Starting off with the Karlskrona acquisition, it is planned to close now mid-March according to the press release. Can you say anything about closing the Karlstad, Kumla and Lindesberg assets? When in Q1 do you expect to close them?

Yes. So starting with -- so I'll take the ones maybe not in the right order as you had. So Uddevalla and Trollhattan was closed this week. The properties in Lindesberg, Kumla, Karlstad also closed. And then finally, you had a question on the Karlskrona property on that one, let us double check with the colleague if that one is closed or not. It might be not. But let me -- we'll double check during the call on the Karlskrona one.

Perfect. And then you had a quite strong start in '26 in terms of leasing activity. No need to be specific here, but can you say whether the net leasing at least is positive so far in '26?

It is. So as I said, we have signed leases with a positive effect of roughly SEK 10 million beginning of the year on the net leasing. Obviously, the quarter is not done yet, but there is -- we see clear signs that the leasing market as such has improved, but also we see proof that our properties are attractive on the leasing market. So we without promising any too much, we're quite confident that the first quarter of 2026 will look -- will show good positive net lettings.

And then in the earnings capacity, since there is some rent uplift in the signed leases so far this year, is the effect from that included in the 13th February rental value figure?

No. On that one, we have taken the 21st of December figure and only added the acquisitions announced. So no other changes such as the leases I just mentioned or CPI or anything like that. So it's just that we have added the announced transactions.

Okay. Perfect. And then a little bit of a specific question on the valuation yield. On Page 11 in the Swedish report, you say that it's 7.3%, but in the English version, it's 7.1%. And then on Page 21 under the valuation section, it's the opposite with 7.3% in the English version and 7.1% in the Swedish version. So which one should be the correct valuation figure?

It should be 7.1%, but we'll confirm that to you and others after the call as well.

Okay. And then just lastly, on other income, it's 0 in this quarter, but SEK 11 million for the full year. How should we look at this number going forward?

Sorry can you repeat that one?

Yes. Yes. So other income is 0 in this quarter, but it's SEK 11 million for the full year. So how should we sort of view this figure going forward?

Yes. So in the other income of SEK 11 million, we have -- you can see income that we have not estimated to be like previous bankruptcies that we now get rents from. So going forward, I should put in maybe SEK 1 million or SEK 2 million per quarter since we have income from batteries starting to come in now in the first quarter.

The next question comes from Fredrik Skjerven from ABG Sundal Collier.

Two questions. First, on the Bofors industrial area in Karlskoga lease. When is the sort of switch between existing tenants and the new tenants happening? And is there a gap in between where you won't recognize any rent? That's the first one.

Yes. So on the Karlskoga lease, there will not be a gap on the overall rental value, and you can say partly driven by the fact that the upcoming rent is higher than the existing one. So there is a tenant in place for part of that building, and we have signed an agreement with them to move out. And then there will be some time for some TIs, making sure that the premises is fit for the new tenant. But overall, on a full year basis, you should assume the -- at least the rent in place for the existing tenants. And then obviously, going forward, it will be the SEK 6 million plus.

And the tenant will gradually move into the new until December of '26.

Okay. Very good. And then the second one, just to make sure, I think, Niklas, you mentioned previously that in the earnings capacity figure as of today, the only change versus year-end is acquisitions. I just wanted to see where you are on FX. Is that the same FX for both dates? And if so, is it the year-end figure?

Exactly. So it's the same FX used. So no other changes, so to say, between December 31 and today's date other than the transactions that we've signed.

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

Let's see if we have any questions. No, we don't.

But we can say closing of the Karlskrona property is expected to be in March this year.

And the reason why there is no set date is that this one goes under the ISP permission that we need from the authorities. So but as Philip said, during the March is intended. And this was -- and just to be clear, we got 2 properties in Karlskrona in the presentation. So the first one on Page 5, the bus terminal, that one is completed. And now we're talking about the second property on Page 9 in the presentation, the one partly or mainly leased to NKT. That one will be completed in March. Good. If there are any following up questions, just let Philip or myself know, and we'll answer those as well, of course.

Perfect. Have a good day.

Thank you.

Thank you.