Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cibus Nordic Real Estate AB (FRA:6N5, Financial) successfully carried out a directed share issue in September, raising 927 million SEK at a 20% premium to NAV, demonstrating strong investor support.
- The company has a strong acquisition pipeline, having made acquisitions worth approximately EUR43 million in 2024, with plans to continue using cash resources for further acquisitions.
- Cibus Nordic Real Estate AB (FRA:6N5) has increased its earnings capacity per share for the fifth consecutive quarter, indicating consistent financial growth.
- The company has actively engaged in refinancing and hedging, securing EUR84 million in interest rate hedging at attractive rates, which supports stable cash flows.
- Cibus Nordic Real Estate AB (FRA:6N5) maintains a diversified portfolio across four Nordic countries, with a focus on daily goods properties, which are non-cyclical and provide stable cash flows.
Negative Points
- The company reported a negative profit for the period of minus EUR5.5 million, primarily due to unrealized changes in property values and derivative movements.
- There is a notable drag on rental growth from occupancy, with higher vacancies in some properties, including non-food lease contracts that have become vacant.
- The Norwegian market presents limited acquisition opportunities due to less attractive yield spreads compared to other Nordic countries.
- Cibus Nordic Real Estate AB (FRA:6N5) faces double interest costs until all old bonds are called, impacting financials negatively in the short term.
- The company is exploring expansion into Continental Europe, which may divert focus and resources from existing Nordic markets.
Q & A Highlights
Q: Could you provide details on the divestments made during the quarter?
A: Pia-Lena Olofsson, CFO and Head of IR, explained that they divested four small non-strategic empty buildings in Finland at book value. These were very small and had been empty for quite some time.
Q: Why is Cibus Nordic Real Estate considering expansion into Continental Europe, given the fragmented Nordic market?
A: CEO Christian Fredrixon stated that while the Nordic market remains fragmented with growth opportunities, they see interesting prospects in Continental Europe. Their edge lies in understanding grocery retail dynamics, which they believe can be applied in similar markets outside the Nordics.
Q: What are the challenges in expanding the portfolio in Norway?
A: Christian Fredrixon noted that while there are assets to consider in Norway, the yield spreads are less attractive compared to other countries due to higher financing costs. They compare yield spreads across markets and currently find better opportunities elsewhere.
Q: Can you provide details on the recent acquisitions in Sweden and Denmark, such as rental value or acquisition yield?
A: Christian Fredrixon mentioned that they are not disclosing specific yields or rent levels but emphasized that the acquisitions are cash earnings per share accretive. The Danish properties are 100% occupied, while the Swedish acquisition has a small vacant expansion area.
Q: Regarding the Finnish acquisitions, when will the rental contributions start, and are there any rental discounts?
A: Christian Fredrixon stated that rental income for the Helsinki acquisition is already being received, although the store has not yet opened. It is standard to have short-term rental rebates for new leases. The construction-related acquisition costs are included in the total spend.
Q: What is the timeline for deploying the remaining acquisition capacity?
A: Christian Fredrixon indicated that while they have ongoing processes, they cannot promise a specific timeline for deploying the funds. They are focused on executing transactions that are favorable and beneficial.
Q: Can you clarify the negative occupancy drag on the like-for-like rental growth?
A: Pia-Lena Olofsson explained that the higher vacancies were due to properties acquired with lease guarantees that have matured, and some smaller non-food leases becoming vacant. They are actively working to fill these vacancies.
Q: Will the focus on Continental Europe reduce acquisitions in the Nordics?
A: Christian Fredrixon confirmed that they remain committed to growing in all four Nordic markets while also exploring opportunities in Continental Europe.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
