Catella Follow

Since the decision in 2021 to focus on property operations, we have continued to deliver on our targets and advanced our position in prioritised markets. The focused Catella that we continue to build now summarizes its strongest year to date. The results are built on a dedicated strategy and efforts to strengthen our three property-focused business areas in 12 European markets. Our progress is also founded on our belief that qualified advice, investment management, and own investments generate value over time and therefore require a long-term approach from a social, environmental and investor perspective.
 
2022 was characterized by strengthening our position and product offering in existing markets, entering new markets, and by ending businesses with limited synergies and low profitability. This included acquiring a majority share in WPP in Poland (now Catella Poland), which opens up opportunities for growth and investments in an additional major European market with high potential. Through our UK company Catella APAM we also entered the Irish market where we are now pleased to offer our services. In Corporate Finance, we focused operations to five markets from a previous eight, and can now wholeheartedly focus on strengthening Corporate Finance on these remaining markets.
In addition to structural changes we also advanced in the area of sustainability. For example, we launched our second Article 9 fund under Sustainable Finance Disclosure Regulation (SFDR), which means that the fund’s investments have a direct positive impact on the environment and society, while also not negatively affecting other sustainability goals. The fund’s long-term ambition is to develop 100 energy-positive residential properties around Europe. In addition, we decided on our long-term ESG strategy and goals at group level, a very significant step forward for us.
 
Assets under management up 15 percent in the year
During the year, assets under management increased by SEK 18 Bn to SEK 141 Bn in Investment Management. Compared to the previous quarter, assets under management decreased slightly as an effect of the strategic sale of 34 residential properties in Germany and the Netherlands. The reason behind the transaction was to modernize the property portfolios and to release liquidity for new investments with an improved sustainability profile.

On a subdued transaction market with reduced investment appetite and lower capital inflows in the most recent quarter we are encouraged by that interest in products with a sustainability profile remains strong. We will continue to invest the substantial liquidity in funds in future-focused assets. In addition, we are pleased with our balanced offering and expertise in managing underperforming property assets in our management mandates, and we strongly believe that our Asset Management companies will grow ahead, as value-add and re-positioning mandates will be key market needs from 2023 onwards.

A strong year for Principal Investments
Principal Investments completed three sales of development projects in the year, which contributed to an operating profit exceeding SEK 180 M. Given the current market conditions, no divestments were made in the fourth quarter and we continue to lean on our strong financial position awaiting the market uncertainty to subside.
 
At the same time we continue to develop our projects according to plan, albeit at a slightly slower pace and identifying opportunities for the next long term value investments. The European property market will certainly be exciting in 2023 and we anticipate interesting investment opportunities that we can back by our strong liquidity.

At the end of the quarter, Principal Investments’ investments in six countries totalled approximately SEK 1.2 Bn in 9 projects.
 
Positive result despite slow transaction market
At the start of the year, a decision was made to discontinue Corporate Finance operations in Germany and the Baltics in order to wholeheartedly allocate time and resources to develop operations on the five remaining markets. The focus of the operations is behind the year’s positive operating profit of SEK 22 M despite a very slow transaction market during the second half of 2022.
 
Priorities looking ahead
In order to take the next step in our profitable growth journey, we have identified four prioritised areas that we will focus on over the coming years.

• Increase the product offering with a clear sustainability profile.
  Currently Catella offers two so-called dark green Article 9 funds, i.e. funds where the investments have a direct positive impact on the environment and society without adversely affecting any other sustainability goals. In addition, we also have other funds and mandates focused on realignment and repositioning of properties.
  Looking ahead, we will develop this offering further. We do this in part because it is the right thing to do for us as a company and because we have the competencies and market position to meet the substantial demand we see from investors.

• Broaden and adapt product offerings for various stages of the economic cycle.
  Catella already has a broad offering that suits investors in varying economic cycles. We are now taking the next steps in expanding our offering. Near term, we will launch strategies, mandates and services for the uncertain period we currently experience. This might include mandates for repositioning underperforming assets or expanding debt and capital advisory services. In parallel, we are developing the next generation of funds, investments and mandates based on a detailed analysis and our view on the future, ready to be launched from 2023 and onwards. 

• Strengthen synergies and further develop pan-European investment strategies.
  Catella currently has a strong position with a broad presence on the European market complemented by strong local connections and knowledge. We will continue to build on our unique position and offer pan-European investment strategies and mandates in areas where we assess that we can offer investors attractive returns. 

• Capitalise on our financial position to generate new business and expand on markets where we want to grow.
  We are well equipped to undertake investments in both companies and assets that we consider a close fit with Catella and that can contribute to our growth and profitability. Uncertain and sometimes turbulent market conditions increases possible opportunistic investments, which is facilitated by our liquidity position. We will continue to selectively analyse acquisition opportunities in business areas and in markets where we want to develop our operations.

With the strong financial position of Catella and in our funds, we look forward to investing in long-term value creation and to generate value for our customers, shareholders and society in 2023 and beyond.

Christoffer Abramson, CEO and President
Stockholm, 2023-02-10

Catella presents the Interim Report and answers questions today at 10 a.m. CET. To participate, go to
https://financialhearings.com/event/46280