Castellum (CAST) Q2 2024 earnings summary

Executive summary

• Income from property management increased 16.3% year-over-year, with total income rising to SEK 4,977 M and net operating income up 5.2% to SEK 3,391 M.

• Net leasing was positive at SEK 6 M, supported by new leases and ongoing divestment of non-strategic properties.

• Portfolio valued between SEK 135.8 billion and SEK 156 billion, with over 75% in Nordic metropolitan areas and a diversified tenant base, including 25% public sector exposure.

• Economic occupancy rate remained stable at 91.3%.

• Focus remains on tenant retention, leasing vacant spaces, cost reduction, and sustainability.

Financial highlights

• Direct property costs fell by 8%, mainly due to lower electricity costs; administration costs and central expenses also decreased significantly.

• Like-for-like rental income grew 2.6% year-over-year, with net investments at SEK -474 M as property sales exceeded acquisitions and project investments.

• Property values written down by SEK 1.6 billion (-1.1%) during the period; net income improved to SEK -103 M from SEK -3,820 M last year.

• Loan-to-value ratio at 37.5%, interest coverage ratio at 3.3, and average interest rate at 3%.

• Cash and unutilized credit facilities ranged from SEK 26.7 billion to SEK 28 billion at quarter-end.

Outlook and guidance

• Management expresses growing optimism in financing and tenant demand, with increased market activity and stable yields.

• Expectation to be net investors, focusing on new projects and existing portfolio investments.

• Value declines appear to have bottomed out, with stabilization expected as interest rates decrease.

• Regional cities and logistics expected to remain resilient, with quality and location driving performance.

• Ongoing cost reductions and strong financial position support future value creation.