Our 'BBB' long-term issuer rating on Sweden-based property manager Catena AB (publ) and the stable outlook on it are unchanged by announced plans for a new equity issue and acquisition. On 28 Aug. 2024, Catena said it plans to carry out a directed new share issue to raise about SEK 3.1bn. It also announced plans to acquire a newly built logistics property in Denmark of about SEK 5bn. The funds from the share issue are intended to fund acquisitions, support the company's development pipeline, and facilitate expansion through existing building rights and sustainable energy projects. The Denmark acquisition will involve a sale-and-lease-back transaction under which the tenant will contribute about 20% of Catena's rental income upon completion. We expect the 14-year contract to raise the company's average lease term to 6.8 years from 5.8 currently. We also expect Catena's average debt maturity to rise to 4.6 years from 3.6. Management anticipates closing the transaction by the end of the third quarter of 2024.
We believe that the share issue and the property transaction, if completed, will have only a marginal effect on Catena's credit profile. All else being equal, the equity issue should strengthen the company's balance sheet and have a positive effect on its loan-to-value and net debt/EBITDA ratios. However, in light of the prospective Danish acquisition and considering Catena's continued growth ambitions, we believe the company's credit metrics will remain under pressure as a result of future acquisitions and high investments. The current long-term issuer rating already reflects our expectations of continued portfolio growth. Accordingly, we anticipate that the rating and outlook will remain unchanged.
This commentary does not constitute a rating action.
Contacts:
Yun Zhou, analyst, +46732324378, yun.zhou@nordiccreditrating.com
Elisabeth Adebäck, analyst, +46700442775, elisabeth.adeback@nordiccreditrating.com