Our 'BBB-' long-term rating on Sweden-based property manager Catena AB (publ) and the positive outlook on the rating are unchanged following an announcement on 12 Mar. 2024 that the company has settled a directed equity issue, effectively increasing its equity capital by about SEK 2.1bn.
We estimate that the pro forma impact as of end-2023 would have led to NCR-adjusted net debt/EBITDA of 6.9x compared with the actual level of 8.4x, and an NCR-adjusted net loan-to-value (LTV) of 30.7% compared with 37.4%. In our most recent forecast (published May 2023), we expected net debt/EBITDA of 7.7x and net LTV of 38.2% by end-2023. While we view the projected improvements in credit metrics as positive, we also note the company's stated intention of using the increased liquidity for new projects and/or acquisitions. We consider this plan to be in line with our assessment of Catena's business risk profile and believe the company will not materially diverge from its strategy of not commencing any major project until a tenancy has been formally agreed.
In view of the company's growth ambitions, we consider it highly likely that its credit metrics will not remain at the pro forma levels mentioned above. We revised the outlook on the long-term rating to positive from stable in May 2023 on the basis of our belief at the time that Catena would maintain a conservative financial risk appetite despite continuing investments. At present we remain uncertain as to whether the company's growth ambitions will lead to a long-term financial risk appetite in excess of the levels we projected when the outlook was revised.
This commentary does not constitute a rating action.
Contacts:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Yun Zhou, analyst, +46732324378, yun.zhou@nordiccreditrating.com