Catena
Catena - Solidified operations in a growing RE market (ABG Sundal Collier)
2021-03-02 07:04
Occupancy at 96.2%; top tenants report good momentum
EPRA NAVPS +21% vs. ABGSCe +13%
5% above sector on P/CE, with 9% yearly CEPS growth
Cash yield >9% maintained in 2020Catena’s recurring PTP grew by 18% and was at SEK 176m in Q4 vs. ABGSCe at SEK 165. The full-year figure totalled SEK 719m, up 15% vs. 2019. A logistics divestment of SEK 157m (Örebro), a 84m automation solution deal (Nelly.com) and a cold storage investment of SEK 70m (Luleå) were the main transactions in Q4. Cash earnings grew by 15% in 2020 to SEK 719m, helped by +18% y-o-y growth in Q4. This cemented a high level cash yield (cash earnings contribution to EPRA NAV) of 9.4% in line with 2019 (9.8%) and ABGSCe (9.2%). Reserved credit losses for the year stayed at ~SEK 5m (SEK 7m in H1 and SEK 6m in Q3). Top tenants Postnord, DHL and Boozt further reported strong momentum in the first part of 2021 which bodes well for Q1. DPS was proposed at SEK 7.50 (6.50) vs. our estimate of SEK 7.
Total value changes in properties of SEK 687m in Q4
Property value changes of 3.9% in Q4 were the largest in both ’19 & ’20, prompting +6.7% for FY’20. New lettings, successful projects and lower yield requirements (5.5% vs. 5.8% 1y ago) were the catalyst behind this. In addition, higher value mainly explained the deleveraged balance sheet as net LTV fell by 3.1pp in 2020 to 50.1%. Moreover, the occupancy rate improved to 96.2% in 2020 (95.0%) and we argue it is likely to stay at these levels due to strong underlying demand. An improved cash position of SEK 411m (131m) enables growth via acquisitions or investments in projects. SEK 432m was the remaining investment volume in Q4, which could grow if the firm invests in more projects.
57% above the sector on P/NAV and 5% on P/CE
Catena’s share is up 2.3% YTD but down by 4.3% LYTD and down 12% since peaking in February ‘20; consequently, the ‘21e P/CE multiple has contracted from 22x to 20x and the ‘21e P/EPRA NAV multiple from 160% to 144%. The sector average is curren
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