Kategori: Catella

”The Board would like to express its sincere gratitude to Christoffer Abramson for his three and a half years as CEO and President. He has contributed to the streamlining of Catella and the company’s continued growth through a cautious and challenging market. At the same time, he has also implemented significant changes and successfully highlighted our strong synergies within the Group and strengthened our Pan-European platform”, says Sofia Watt, Chairman of the Board of Catella.

”Daniel Gorosch, currently CEO of Corporate Finance Sweden, has previously held CEO positions at Colliers Sverige and JLL Sverige and has solid experience in the transaction market. Overall, the Board is convinced that he can quickly and effectively take on the role as acting CEO and President and lead Catella forward in a market that is showing signs of cautious optimism”, Sofia Watt continues.

For further information, please contact:
Sofia Watt
Chairman of the Board
+44 75 01 191 317

Veronica Hjelte
Head of Group Communications
+46 8 643 33 17
veronica.hjelte@catella.se

An amount corresponding to the proceeds of the New Green Bonds will be utilised in accordance with the Company’s green bond framework, including to finance the repurchase of the Existing Bonds under the Tender Offer (as defined below).

In connection with the announcement that Catella contemplated an issue of the New Green Bonds, Catella has offered holders of the Issuer’s outstanding senior unsecured floating rate bonds with ISIN: SE0015660444 and with an outstanding nominal amount of SEK 1,250 million (the “Existing Bonds”) to tender (subject to a transaction cap) their Existing Bonds for purchase by the Issuer for cash (the “Tender Offer”) at a price of 100.95 per cent of the nominal amount, plus accrued and unpaid interest.

The Tender Offer expired at 12:00 CET on 29 August 2024. Settlement of the Tender Offer is expected to occur on or about 6 September 2024. The full terms and conditions for the Tender Offer are available in the tender information document, which is available in the following link: www.catella.com/bonds.

DNB Bank ASA, filial Sverige, and Nordea Bank Abp have acted as joint arrangers and bookrunners in connection with the issuance of the New Green Bonds and as dealer managers and tender agents for the Tender Offer. Advokatfirman Cederquist KB has acted as legal counsel.

The property transaction market remained hesitant in the second quarter. While inflation expectations continued to fall, central banks are generally cautious about interest rate cuts. In addition, elections were held in two of Europe’s largest economies and the Olympic Games were staged in Paris, which further slowed activity in our largest markets.
The value of European property assets has continuously fallen over the past seven quarters. However, the decrease in the last quarter was the lowest since the price correction began in the third quarter of 2022. With a touch of optimism, this can be interpreted as indicating that the market is slowly returning to levels where seller and buyer expectations will soon meet.

For Catella, we note that capital inflows and outflows in the core property funds business remain limited. We consider the latter a sign of strength in the currently challenging market conditions.
The Asset Management business delivered AUM growth from managing and developing property portfolios and repositioning assets to meet current market demands. This is evidence that our business model continues to generate growth opportunities even in a weaker and more hesitant transaction market.

Operating profit for the quarter was SEK 35 M, down SEK 53 M, mainly driven by significantly lower variable income in Investment Management (SEK -99 M) in year-on-year terms. In the quarter, we divested half our stake in asset management company CatWave to Söderberg och Partners, which already held 51 per cent in the company. The divestment had a positive effect on the profit of SEK 18 M, and in 2025 the remaining share of the operations are expected to be divested in 2025.
On the cost side, our initiatives aimed at increasing efficiency and digitalizing operations continue to yield positive results compared to the previous year, with costs down by SEK 55 M.

As part of our sustainability work, we published our first Principal Adverse Impact (PAI) report in the quarter. We consider it important to follow the EU regulatory framework for sustainable finance and to maintain a responsible investment strategy. In the quarter we also completed the United Nations Principles for Responsible Investment reporting (UNPRI) for the second year running. By being part of UNPRI we demonstrate that we maintain a responsible attitude and transparency towards investors and other stakeholders. As a further step on our sustainability journey, we are preparing for a green framework to enable the issuance of green bonds in the future.

Larger and more efficient fund platform
In order to take another step towards a stronger, more efficient, and larger fund platform in Investment Management, we communicated the merger of our two fund companies – Catella Residential Investment Management (CRIM) and Catella Real Estate AG (CREAG) in the quarter. CRIM’s focus is a fund offering aimed at European residential properties, while CREAG’s focus is commercial properties. By merging the front office in the new Catella Investment Management GmbH we are creating a more efficient function for capital raising, more coordinated investor relations, and stronger management and research operations. At the same time, CREAG can focus exclusively on cost-efficient growth, and on offering fund administration to Catella and external operators.
As previously mentioned, we have now actively started to raise capital for our new product strategy “European Living Development”. The strategy satisfies the extensive structural supply shortage of modern, sustainable and affordable housing in different segments. Supported by AI tools that identify attractive areas for investment projects and a higher return profile, it meets the investor demand of tomorrow. While the initial feedback from investors has been positive, both in terms of the strategy and pipeline, one must be humble by the fact that capital raising for new strategies takes longer in today’s market.

Assets under management in Investment Management totalled SEK 153 Bn in the quarter, which represents an increase of SEK 1 Bn in the previous quarter. As mentioned, growth is mainly derived from Asset Management and primarily Finland, where we signed several major mandates in the quarter.

Continued focus on completion
In Principal Investments, the focus remains on development and completion of existing projects for sale.
Our Kaktus investment project now has all lease agreements in place and we continue to look for the right buyer for the property.
Looking ahead, we are reviewing several potential investments, both in development projects where land prices have reached levels that support our return requirements and more European aggregation mandates with capital partners. With valuations that are now appearing to stabilize at a new level, we are seeing attractive investment opportunities.

Weak transaction market continued in second quarter
Although transaction volumes in Europe increased slightly on the previous quarter (+7 percent), volumes remained down by -59 percent compared to 2022, when the downturn started. We noted some increase in Corporate Finance activity in northern Europe, where a large degree of price corrections have already materialized. In southern Europe, and particularly in France, transaction volumes have been extremely low, driven by slower revaluation, political uncertainty and a challenging financing market.
In the second half of the year, we expect to see more deals completed in our pipeline.

Outlook
It is still too early to say that we have hit the bottom, but based on the dialogues we are having with investors, interest in investing in properties as an asset class is gradually increasing once again.
We have completed and are completing the necessary initiatives to increase efficiency and digitalize our operations. Some will take effect as early as this year, while others will contribute towards strengthening Catella’s growth and profitability when the market begins to recover.

Catella presents the Interim Report and answers questions today at 10 a.m. CET.
To participate, go to https://financialhearings.com/event/48741

Christoffer Abramson, CEO and President
Stockholm, Sweden, 21 August 2024

The annual general meeting resolved to re-elect the board members Tobias Alsborger, Johan Damne, Anneli Jansson, Samir Kamal and Sofia Watt and to elect Pernilla Claesson as new board member. Sofia Watt was elected as new chairman of the board of directors.

The annual general meeting adopted the income statements and balance sheets for the parent company and the group and resolved to discharge the board members and the chief executive officer from liability for the preceding financial year.

The annual general meeting further resolved to distribute dividend of SEK 0.90 per share, corresponding to a total of SEK 79,513,714.80, and that the remaining profit shall be carried forward. The record date for the dividend was set to Friday 24 May 2024. Payment to the shareholders is expected to be made from Euroclear Sweden AB on Wednesday 29 May 2024.

The annual general meeting also resolved to:

• determine the remuneration to the board members to SEK 635,000 to the chairman of the board of directors and SEK 390,000 to each of the other board members and, for work in the committees, SEK 145,000 to the chairman of the board of directors’ audit committee and SEK 112,000 to each of the other two members and SEK 55,000 to the chairman of the board of directors’ remuneration committee and SEK 40,000 to the other member;
• elect KPMG AB as auditor for the period until the end of the next annual general meeting, with the authorized public accountant Johanna Hagström Jerkeryd as auditor-in-charge;
• determine that remuneration to the auditor shall be paid in accordance with approved invoices;
• approve the board of directors’ remuneration report for the preceding financial year;
• adopt an instruction for the nomination committee that, save for certain editorial changes, corresponds to the previous instruction;
• amend the eighth paragraph of § 4 in the articles of association regarding reclassification provision;
• authorize the board of directors to, on one or more occasions during the period until the end of the next annual general meeting, with or without deviation from the shareholders’ preferential rights, resolve on a new issue of shares of Class A and/or Class B, in accordance with the terms and conditions of the board of directors’ proposal; and
• authorize the board of directors to, on one or more occasions during the period until the end of the next annual general meeting, resolve on repurchase and transfer of the company’s own shares of Class A and/or Class B, in accordance with the terms and conditions of the board of directors’ proposal.

At the annual general meeting, the company’s largest shareholder Claesson & Anderzén informed that its proposal for a long-term warrant-based incentive programme for members of the board of directors had been withdrawn.

Following a more positive outlook in the fourth quarter of 2023, the market returned to being more hesitant in the first quarter of 2024. Transaction volumes and capital inflows on the European market remain very low compared to the peak in 2021. In a situation where central banks continue to search for evidence of stabilized and lower inflation, we expect that we will have to wait a few more quarters before we see a clear turnaround in the transaction market. While our pipeline for transactions is stronger than it has been for some time, most transactions continue to take historically long to complete and the proportion of completed deals remains relatively low.

In line with a hesitant market and the associated lower revenues, we are reviewing and adjusting our cost base. Compared to the same quarter last year, total income decreased by SEK 44 M, but we simultaneously reduced costs by SEK 46 M which led to a slightly improved operating profit of SEK 4 M (2). The comparison includes a negative change in market valuation of our fund investments by SEK -8 M.

At the same time as continuously cutting our costs, we have also made progress with other initiatives. For example, we have developed an AI tool that identifies locations for development projects where future demand for rental apartments is substantial and the potential for value growth is high. The tool is currently being used in the launch of our new product “European Living Development”. This product strategy has been developed to meet the extensive demand for, and growing shortage of, modern, sustainable and affordable living in Europe. At the same time, it also meets investors’ increased return requirements.

In general, capital raising continues to take longer to complete, but as interest rate expectations stabilize and financing terms improve, we expect the investment market to pick up.

Unchanged assets under management
Assets under management in Investment Management totalled SEK 151 Bn in the quarter, slightly down on SEK 152 Bn at year-end. The background to the decrease primarily relates to a finalized asset management mandate in the UK. The mandate totalled close to SEK 6 Bn and was initiated over six years ago based on an aggregation strategy in London, and once the portfolio reached the targeted size, the mandate was ended.

Profit for the quarter amounted to SEK 32 M (31), where income was slightly down on the previous year although this was offset by lower costs. After the end of the quarter, we entered into a few new mandates which support the business area’s long-term growth.

Project developments and divestments according to plan
In the quarter, we completed the sale of the final logistics property in the Infrahubs partnership. In Catella Logistics Europe, we completed and transferred the logistics property in Barcelona, and for the Isoparc project in France we chose to reclaim the invested capital relating to the land acquisition and continue our role as project developer. Principal Investments currently has investments of approximately SEK 1.4 Bn divided over 8 projects in Denmark, France, the UK and Germany.

Other development projects are proceeding according to plan and dialogues relating to future divestments are also progressing according to expectations.

Having further strengthened our liquidity, we are well equipped to invest in new projects that satisfy our required rate of return and that can lead to new management mandates.

Transaction market more sluggish in the quarter
As mentioned, transaction volumes in the quarter remained at low levels. This was reflected in Corporate Finance’s revenue, which decreased by -14 per cent year-on-year. While the business area has adapted its cost structure, the exceptionally low transaction volumes generated a slightly increased loss.

By focusing operations over the past 12 months, we are prepared and in a good position to grow cost-effectively as the market recovers and our pipeline is realized.

Outlook
With a more efficient organization and lower cost base, Catella continues to launch attractive products adapted to longer-term market expectations. With our pronounced ESG focus, use of AI, and shared intelligence across the Group, we continue to hone our offering while awaiting market stabilization and a return to more normalized transaction levels. Overall, these initiatives ensure that we are in a strong and resilient position for continued profitable and sustainable growth.

Catella presents the Interim Report and answers questions today at 10 a.m. CET. To participate, go to https://financialhearings.com/event/48740

Christoffer Abramson, CEO and President
Stockholm, Sweden, 06 May 2024