Coop warehouse potential NOI of SEK 222-234m

DPS proposal of SEK 6.50 (5.75) vs ABGSCe at SEK 6.25

EPRA NAVPS premium of 90% on ‘20e vs sector at 27%

New CFO, Denmark expansion & potential COOP project
Since Q3’19, Catena has appointed a new CFO, expanded into Denmark and is in negotiations to develop an automatic warehouse for COOP. Sofie Bennsten replaces Peter Andersson as CFO at the end of April 2020. Bennsten was previously chief accountant and HR manager. In January, Catena acquired three properties in Denmark for SEK 235m at a NIY of 5.4%. Catena’s previous exposure to Denmark was just one property and at today’s conf. call, management confirmed that its expansion in Denmark would continue. In January, Catena and COOP entered into negotiations with Catena intending to acquire a property in Eskilstuna, to develop into COOP’s new automatic warehouse. The estimated investment stands at SEK 3.7-3.9bn or SEK 35-37,000sqm and Catena expects completion in 2023; applying a hypothetical yield on cost of 6%, the NOI would be SEK 222-234m, or 24-26% of 2019 NOI.

Cash earnings yield of 9% p.a. in ’20-21e
After the Q4 report, we raise our estimates related to the announced acquisitions. However, the lower than expected NOI margin, due to higher maintenance in 2019, make us lower the NOI margin by 60-70bp p.a. for ’20-‘21e. We forecast value uplifts of ~3.5% in ’20e and 3.0% in ’21e, coupled with a CEPS contribution of ~9% p.a., which takes EPRA NAVPS to SEK 230 and SEK 258 in ’20e and ’21e. These estimates imply EPRA NAVPS growth (adj. for DPS) of 17% and 15% in ’20e-’21e.

’20 P/CE of ~24x is in line with the Swedish sector avg.
Catena’s share has increased ~75% in 12m compared to the sector at ~60%. The strong share price derives from a one-year CEPS growth of 13% and a multiple expansion of ~55%, from ‘20e P/CEPS of ~15x in February 2019 to ~24x. Meanwhile, EPRA NAVPS has grown by 20% and P/EPRA NAVPS expanded by 46%, from 148% to 216%. The ‘20e P/CEPS of ~24x is in line wi
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