Nordic Credit Rating (NCR) said today that it had withdrawn its 'BBB' long-term and 'N3' short-term issuer ratings on Sweden-based property manager Catena AB at the issuer's request. At the point of the withdrawal, the ratings were affirmed and the outlook was stable.
Rating rationale
The affirmation reflected the company's strong position as one of the country's largest logistics property managers. Its property portfolio is mainly in prime locations, with long remaining lease terms and high occupancy rates. The rating also reflects the benefits of growth in e-commerce, solid profitability, and a commitment to growth through moderate financial leverage.
These strengths are balanced by Catena's growth focus, steady project volumes, and regular acquisitions. The acquisition of two new logistics properties in Landskrona, Sweden and Horsens, Denmark with Danish DSV Group as the main tenant, increased debt although partly funded by new equity. This move also increased Catena's tenant concentration, which was already considered high before these acquisitions. DSV Group is now Catena's largest tenant, with 20% of contract value. However, this concentration risk is mitigated by DSV's status as a leading transport and logistics company, in our view, and the acquisitions have extended Catena's lease maturity profile.
The mid-year acquisitions increased leverage, with NCR adjusted debt/EBITDA reaching 9.4x at year-end 2024. However, we expect this metric to improve in 2025 as the acquisitions contribute fully to EBITDA. Additionally, stronger operating efficiency improved Catena's EBITDA margin more than we expected. We anticipate the company's EBITDA interest coverage will continue to improve from 3.9x at year-end 2024.
Stable outlook
At the time of withdrawal, the outlook was stable, reflecting our expectation that Catena will maintain its revised growth strategy with more moderate financial leverage. This strategy was evident from two equity issues totalling approximately SEK 5.2 billion to fund properties valued at about SEK 7.8 billion. It further reflects our belief that Catena's landbank will enable growth at attractive yields despite increasing competition in the logistics subsector. Additionally, we think that the company's largest tenants are well-positioned to endure ongoing weak markets and modest consumption. We expect a positive long-term trend in e-commerce to benefit the subsector.
| Rating list | Withdrawal | To | From |
|---|---|---|---|
| Long-term issuer credit rating: | NR | BBB | BBB |
| Outlook: | - | Stable | Stable |
| Short-term issuer credit rating: | NR | N3 | N3 |
Contacts:
Yun Zhou, analyst, +46732324378, yun.zhou@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com
The methodology documents used for this rating are NCR's Corporate Rating Methodology published on 8 May 2023, NCR's Rating Principles published on 14 Feb. 2024 and NCR's Group and Government Support Rating Methodology published on 14 Feb. 2024. For the full regulatory disclaimer please see the rating report.