Logitech International S.A. Price & Performance (LOGI)

And just after the merger in the summer, we have reduced average interest cost from or 2%, 5% from almost 6%. We have refinanced a secured bond at a margin of €515,000,000 with an unsecured bond at a margin of €275,000,000 We have been included in the EPRA index and we have also seen a positive net letting for the full year of SEK5 million. Six months following the merger, we can see that the rationales behind the merger were true. We have reduced the central administration cost per square meter We're looking to invest in several Nordic countries at the moment, and the deal flow is massive. We have reduced the financing cost of SEK61 million per annum post the merger We have more bank contacts enabling us to grow in several markets at good financing terms. The liquidity in the share has increased by almost 7x if comparing the first half of the year with the second half of the year. We have seen a clear improvement when it comes to interest from both Nordic and international investors into the Logistia shares. And as mentioned, we were included in the APRA Index after the summer. We've done two major deals that are worth mentioning.

The first one is a Greenfield Development signed in Q4. We will develop 31,000 square meters of modern logistics for Intesport. And they've signed a fifteen year lease with us at Logistia. The development has started and we're looking to finalize these projects later on this year. Total investment cost is roughly SEK200 million, representing a year long cost of SEK7.5 percent. [indiscernible] Just a few days ago, we signed a deal where we're buying a fully let property in niche shopping The property comprised 45,000 square meters and is fully leased to the municipality of Nijsapin. On a six year lease in average. Yield on this investment is in the range of 9.5%. On this slide, we are presenting the current run rate including the most recent transactions. As you can see, there's been a large increase due to especially lower cost of financing. The income from Property Management per year end share was 97 and NOK1 per share if including the NESHI project at will be completed later this year. The knee shopping transaction alone will add 7% on the income from property management per share, giving us a total of SEK 1.7 per share. The portfolio composition is similar compared to the last quarter.

We still have high yields in all markets and long vaults. Occupancy rates standing at roughly 97%. We still have a high portion of triple net contracts at 91%. And as I said, longwall with an average of nine point seven years. We're happy to report positive net lettings in both the last quarter of this year as well as for the full [indiscernible] As you can see on this slide, Norway stands out when it comes to rental uplift and increased turnover. As for the yields, we foresee that the come or we foresee these coming down during this year in all of the Nordic markets and that's following a stronger transaction market and lower interest rates. Logistea revenue and net operating income are in line with expectations. We have a 4.5% increase in the like for like portfolio looking at the revenue. Apart from that increase, the revenue has been affected by the finalized project in AlingSource. Where the new lease with the annual rent of €16,000,000 began in December. [indiscernible] The net operating income came out at SEK216 million, And this down 1% from last quarter affected by both seasonality where obviously in some properties are responsible for utility costs which are higher during the colder months, but also by some rent losses.

All in all, the economic occupancy rate declined from 97.4% to 96.9%. The operating margin showing the net operating income in relation to the total income increased to 85.1% main reason for the increase is the new property portfolio lease structure after the merger with KMC. If we exclude the rent supplements and compare the rental income with the net operating income, our adjusted operating margin increased to 93.2%. And during the quarter, there has been a lot of activities in the loan portfolio. We bought back the SEK 900,000,000 NUC secured bond which had a margin of 500 basis points, and replaced it with a SEK 600,000,000 unsecured bond at a margin of SEK $2.50 75 basis points Together with some bank loans, these activities decreased our interest average interest rate from 5.6% to 5% in the quarter. Though these procedures came at a cost of SEK 48,000,000, which we in the report has class The profit from Property Management per share for 2024 is more or less the same as 2023. But if we exclude the bond buyer cost, we have increased the profit from property management per share by 18%. Looking at the key financial metrics, have through the newly issued bond and bond buyback decreased the secured loan to value from €48,000,000 to 43.6% The interest cover ratio, which is calculated on a last twelve months basis, increased to 2.1 times and is expected to increase even further with the Chris, average interest costs In October, our unsecured bond issued in 2021 matured which has together with the buyback of the €900,000,000 NUC bond decreased the share of bond loans in the total loan portfolio from 14% to 9%.

We are still positive towards the bond market. And estimate that we have the opportunity to use the capital market going forward without stretching the loan to value ratio too much. On this page, you can see some of the effects from our financing activities. Bear in mind that we have had average interest rate of 5.9% post merger which is now decreased down to 5%. Of the 60 basis points drop in the quarter, around 40 of them come from lowered margins and the rest from lower EBOS. We are currently working on negotiating lower bank margins even further with existing banks Also, we are looking into changing bank banks for loans that came with KMC with a goal to decrease the bank margins even further. Outside of The Nordics, we are considering and discussing local financing setups for our unencumbered assets in Germany, Poland and The Netherlands. And the key takeaways are that More decreases of the average interest are to be expected. And we have a good relationship with both existing existing and new banks, which are eager to lend into our real estate segment. Closing the books of the financial year 2024, we can look at some of the out outcomes for our financial targets and policies and risk limitations.

Large headroom for our loan to value targets coming in at a loan to value of 48.1%. Our interest cover ratio is projected to increase going forward. For 2024. The interest cover issue came out at 2.1% at a time [indiscernible] September, we sharpened and strengthened our financial targets The net asset value per share increased 15% in 2024, which is in line with our new targets. Also, the profit from Property Management per share increased by 18%. [indiscernible] Finally, the Board of Directors are proposing to the annual general meeting in May that there will be a dividend of NOK 0.1 per share for the financial year of 2024. The proposed dividend amounts to €47,000,000 and the dividend per share amount to about 9% of the run rate we have today.

Good. Looking at the future, we see that there are still many good deals to be done in the Nordic markets. We have managed to build a portfolio of almost SEK 14,000,000,000, with an increased yield gap over time. The growth going forward forward will take place with a combination of buying single assets or portfolios We will continue to do CapEx investments into our own portfolio. Obviously, aiming to do more developments like we've done for NKT and doing for Intesport. And finally, we will continue to spend time on and analyze potential M and A activities. And to summarize, we have presented stable and good results for the full year. The run rate is currently at 1.07 per share. And we're well positioned to continue to grow the business. Thank you. And with that, we open up for questions. Please dial pound key 6.

On your telephone keypad. A question, please dial pound key 5 on your telephone keypad. The next question comes from Nicholas Wetherling from DNB Markets. Please go ahead.

Good morning.

I have two questions and starting off with the divvy, if you can talk [indiscernible] start to distribute capital here to shareholders. Sure. So On the growth.

Yes, sure. No, we have throughout had a policy that we should over time become a company that distributes parts of the profits to the shareholders. The Board now decided that this is a good starting point. It's a small dividend? It will not affect the potential or the possibility to continue to grow the company, but we it was decided that it's a good starting point and showing that investors into Logastia should expect dividend over time. So a small step but a sign that we have started send out dividend to the shareholders basically.

Okay, thanks. And my second second question is on the health of the tenants. I noticed you had one default during the quarter. If you look ahead, do you see more risk for default in the tenants list or how's the state of the tenant?

In general, one could say that we have had a list of tenants not performing well over, say, the past two, two point five years. Most of those tenants are now call it taken care of. They've either gone bankrupt or they are performing well. So the list of of, call it, bad payers, I. E. Paying rent late, etcetera, that list is much shorter now compared to a year ago.

Not meaning that we can promise there will be no more bankruptcies, but from what we can see today, the list is shorter and therefore the list or the risk is slightly lower compared to the previous quarter, we have to say.

Okay, great.

There are no more questions at this time. So I hand the conference back to the speakers for the written [indiscernible] Good. We just need to check if there are any [indiscernible] And there are a few How will you fund future acquisitions? Could you consider a cap capital raise?

And the question on that one is that we or the answer on that question is that we Have over the years been able to in some to some part, we pay with own shares in the acquisitions. So we're printing shares when buying a property or portfolio that we are continue to investigate if possible. We have done a capital raise the past two years, and it could absolutely be a situation where we find that doable. Of course, depending on how good the pipeline is and how good the transaction are or how much they increase for instance, NAV per share and the EPS So that could well be for the future that we are looking to do capital raise. Nothing decided though, I should say.

And then we have a question here. Central administration costs for in Q4, it must much higher than in the earnings capacity. Why And is it non re incurring costs? And we we foresee that the Central Administration cost is coming down [indiscernible] current run rate, the the central administration cost is based on the budget for 2025. Though in 2024, we had still some cost that we expect to disappear in 2025, or decrease, not disappear, but decrease, for example, admin costs for our Northern European property portfolio. Like for like rental income growth increased quite a lot in Q4.

Why?

Yes, we had an increase of 4.5% for the full year and increase in Q4 as well. I don't see the increase in Q4 being outstanding in any way. It's in line with our expectations. The things that had affected the like for like is, of course, indexations on the on the leases, but that has been in there since the January 1. 2024.

On funding, at some point would you consider a euro bond issue Potentially. We as you know, we did a non secured bond recently. At that time, we decided to do it in second provided that we grow the company and maybe in combination with more urine it could well be that we consider to look at the Eurobond market in the future. Next one in Swedish, is it more difficult to buy properties when the share price is almost in line with the with the net asset value. Not necessarily I would say in maybe half of the transactions we're paying all cash. In half, we're paying with or try to pay with part shares. And as long as we're traded at NAV or above, I think that probably helps the situation. So it's not difficult to find properties as such. We have a very large pipeline in all of the Nordic countries, I would say. We're seeing good deals and obviously a good example is the new shipping property that we just bought at a yield of 9.5% funding cost in Sweden today is depending on how long you go, say call it 4% or slightly above. So it's a massive yield gap.

And we're finding similar yield gaps in many of the Nordic countries. So we still believe there are good deals to be done. And therefore, we and you should expect future growth for the company.

Next one or one is [indiscernible] the vacancy has increased slightly. Is that worrying? Obviously, we never want to see increased vacancies, but we had a fairly large bankruptcy in Q4, okay, to sign new leases for parts of that premises, but not all, and that affects the overall vacancies. With that said, we have also signed a new lease within the spot of 31,000 square meters.

They will start paying rent once we finalize the property later on this year. And we have had a positive net let for both the quarter and the full year. So it a bit of a mixed bag. We're happy with the new leases signed, but obviously, we never want to see higher vacancy rates, but we're not it's not worrying as such. We believe that we're at a stable point and hopefully we can decrease vacancies over time. Another one, can you comment a bit on the run rate in Chinese for Morgan? Of course, So we we have presented first, we're presented the as per year end, And then we've added the knee shopping property We have also for this quarter added the income from Property Management per share. So [indiscernible] per share, quite a huge increase since the merger, to be honest, and that's driven by, as we said, lower financing costs and that we have done a few very good deals. And as we said, yes, the niche shipping property that one had 7% per share, which is obviously good. What's your view on divesting some of your non Nordics assets We are still in of the view that the non Nordic assets will be kept for the reason being high yielding extremely long leases and the properties are managed outside of of our Norwegian asset management office.

So kept for now. Another one on yes, that's one on capital raise. Let's see if there are something [indiscernible] know I think we're done. And if anything else pops up after the call, yes, let Filip or myself know and we'll try to answer any outstanding questions. And thanks for your time. Thank you.