Castellum (OTCPK:CWQX.F) Update / Briefing Transcript

Summary of Castellum's Webcast and Q&A Session Company Overview - Company: Castellum - Industry: Commercial Real Estate - Geographic Focus: Predominantly in Sweden (92% of assets), with some presence in Finland, Denmark, and Norway through Entra [2][3] Key Points from the New Strategy "Back to Basics" - Core Focus: Shift from growth to profitability, aiming for a return on equity (ROE) of at least 10% [3][6] - Transaction Pace: Increase in the pace of property transactions to optimize the portfolio [3][4] - Decentralized Management: Reverting to a decentralized property and asset management structure to enhance local accountability [4] - Cost Awareness: Increased focus on cost management, including staff reductions at headquarters, expected to save approximately SEK 50 million next year [5][46] Financial Policies and Targets - Capital Allocation: Strict focus on shareholder value, with all investments needing to meet the 10% ROE target [6][8] - Dividend Policy Change: New capital distribution policy allows for dividends or share buybacks, maintaining a minimum of 25% of income from property management [7][8] - Financial Targets: Maintain an LTV (Loan-to-Value) ratio below 40% and an interest coverage ratio (ICR) above three times [9][36] - Investment Grade Rating: Commitment to maintaining an investment grade rating, with changes to bond terms to facilitate asset rotation [9][10] Portfolio Management - Asset Composition: Diverse portfolio including office, public properties, light industry, warehouse, logistics, hotels, and retail [12][13] - Future Growth: Potential for growth in Denmark if profit opportunities arise; no set target to limit operations to Sweden [13] - Entra Holdings: Positive outlook on Entra, with no immediate plans to change the current holding strategy [15] Cost Reduction and Efficiency - Cost Reduction Initiatives: Focus on continuous improvements and cost awareness, with a target of SEK 50 million savings from staff reductions [5][46] - Asset Rotation Strategy: No specific targets for asset types to be sold; decisions will be based on expected returns rather than asset class [43][44] Market Conditions and Future Outlook - Long-term Perspective: ROE target of 10% is viewed over a business cycle of 7 to 10 years, acknowledging current market challenges [36] - Speculative Projects: Future projects should meet or exceed existing portfolio return rates, with a cautious approach to speculative developments [74] Additional Insights - Non-Commercial Properties: Almost all properties are classified as commercial, with minimal residential exposure [79][83] - Company Structure: No plans to split the company into smaller entities; focus remains on commercial real estate [83] This summary encapsulates the key points discussed during the Castellum webcast, highlighting the company's strategic direction, financial policies, and market outlook.