Our 'BBB-' issuer rating on Catena AB (publ) (Catena) is unchanged following the publication of its fourth-quarter results.
Rental revenues climb, but higher costs keep margins in check
Catena posted strong results in the fourth quarter of 2021, ending a year that saw continual increases in rental revenues. However operating costs were also higher, resulting in a last-12-month EBITDA margin that was broadly unchanged from end-2020. Property revaluations in the fourth quarter amounted to SEK 1.1bn, mainly driven by yield compression, with unrealised value changes for the full year totalling SEK 2.3bn. The vacancy rate rose in the fourth quarter, to 5.3% from 4.1% in the third. However, we do not currently see this as a cause for concern as the change is modest and in some cases new lease contracts have already been signed.
Net loan-to-value continues to fall on higher property valuations
Catena's NCR-adjusted net loan-to-value (LTV) ratio improved to 43.8% at end-2021, markedly stronger than our expectation of 49.5%. The company's interest coverage ratio rose to 4.5x compared with 4.0x in the final quarter of 2020. We view these improved metrics as supportive of the company's financial risk profile, although our overall assessment of financial risk remains unchanged.
Figure 1. Catena key credit metrics, 2017–2021
| SEKm | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Total revenue | 894 | 1,093 | 1,187 | 1,268 | 1,393 |
| NCR-adj. EBITDA | 641 | 798 | 873 | 970 | 1,065 |
| NCR-adj. EBITDA-margin | 71.7% | 73.0% | 73.5% | 76.5% | 76.4% |
| NCR-adj. investment properties | 13,131 | 14,721 | 16,601 | 18,947 | 23,734 |
| NCR-adj. net debt | 7,473 | 8,236 | 8,984 | 9,658 | 10,407 |
| Total assets | 14,247 | 15,985 | 17,770 | 20,399 | 25,864 |
| NCR-adj. net debt/EBITDA | 11.7x | 10.3x | 10.3x | 10.0x | 9.8x |
| NCR-adj. EBITDA/net interest | 3.1x | 3.4x | 3.7x | 4.0x | 4.5x |
| NCR-adj. net LTV | 56.9% | 55.9% | 54.1% | 51.0% | 43.8% |
| Average remaining lease term (years) | 5.3 | 5.1 | 4.9 | 5.0 | 5.5 |
| Occupancy rate | 94.7% | 95.9% | 95.0% | 96.2% | 94.7% |
| Average debt maturity (years) | 1.9 | 1.4 | 1.3 | 2.2 | 3.3 |
| Average fixed-interest period (years) | 4.1 | 3.0 | 2.3 | 3.1 | 3.0 |
This commentary does not constitute a rating action.
Contacts:
Marcus Gustavsson, analyst, +46700442775, marcus.gustavsson@nordiccreditrating.com
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com