Ludvika exit unlocks capital for diversified growth

Logistri has agreed to sell its Ludvika project to Hitachi Energy at a property value of SEK1,382m following the tenant’s exercising of its purchase option. While the option was known, the decision comes as a surprise to us, as our base case assumed continued ownership. The expected cSEK120m project profit, capital release and reduced concentration risk create opportunities for diversified growth, although replacing Ludvika’s contracted earnings requires solid execution.

Profitable exit creates financial flexibility. Logistri expects net proceeds of cSEK683m at completion in April 2027, after repayment of construction financing and cash settlement with Torngrund. Torngrund will also receive c5.3m B-shares at SEK16.50/share. Of the estimated SEK120m project profit, SEK19.6m was recognised in Q2. The transaction monetises development value and releases capital to build a more diversified property portfolio.

Reinvestment could exceed lost NOI. Including additional borrowing, Logistri estimates acquisition capacity of cSEK1.6bn. At an illustrative 7% acquisition yield, this could generate annual NOI of cSEK112m, versus Ludvika’s expected SEK91m. This provides a credible route to replacing the lost contribution across several assets. However, financing costs, property costs beyond NOI and the enlarged share count will determine whether cash flow per share improves.

Growth opportunity comes with execution risk. The sale removes a substantial contribution under a 15-year lease, weakening visibility around our previous earnings trajectory. The project profit is non-recurring, and delayed reinvestment could leave an earnings gap. Nevertheless, we see a profitable exit with meaningful reinvestment potential. Securing acquisitions at attractive returns and with durable cash flows is now the key potential catalyst, in our view.