Ludvika exit funds growth - Q3 review

Logistri reported Q3 rental income of SEK55.2m and NOI of SEK51.2m, both up 18% Y/Y and 2% ahead of our forecasts. EAFI of SEK22.4m beat by 2%, while adj. CEPS of SEK0.23 beat by 11%. We cut our 2027–28e adj. CEPS by 21–24% following the Ludvika sale, but maintain our fair value range of SEK15–22. The equity story centres on reinvestment in a larger, more diversified earnings base, in our view.

Underlying portfolio remains solid. The surplus ratio reached 92.7%, occupancy remained 99.8% and the remaining lease term was 8.1 years. Higher administration and financing costs left EAFI 2% below last year, while lower current tax supported the CEPS beat. Net LTV increased to 51.0%, with R12M interest coverage of 2.1x just above the 2.0x target.

Profitable exit releases capital. The Ludvika sale to Hitachi Energy at a property value of SEK1,382m is expected to complete in April 2027. Construction remains on schedule and budget. Logistri expects project profit of cSEK120m and net proceeds of cSEK683m after construction debt repayment and settlement with Torngrund, supporting cSEK1.6bn of acquisition capacity including borrowing.

Lower forecasts reflect lost rental earnings. The disposal removes Ludvika’s expected annual NOI contribution of SEK91m. Our earnings forecasts exclude unannounced acquisitions, explaining the CEPS reductions despite solid Q3 results. Replacing this contracted income depends on acquisition timing and returns, in our view.

Reinvestment drives the next phase. Our unchanged fair value reflects our scenario-based EPRA NRV model through 2030e, incorporating SEK800m of acquisitions in each of 2027 and 2028. At a 7% acquisition yield, SEK1.6bn should generate annual NOI of SEK112m, exceeding Ludvika’s contribution before financing costs. This would support growth and broaden tenant exposure. Acquisitions that increase recurring cash flow per share are the next potential catalysts delayed deployment and weaker acquisition returns are the key risks.