The Catella AB (publ) Annual Report for 2021 has been published today and is available to download at www.catella.com.
For further information, please contact:
Michel Fischier
Head of Investor Relations and Group Communications
+46-8-463 33 86
michel.fischier@catella.se
Following Friday’s press release on Catella winding down its German Corporate Finance operations, Catella today announces the decision to exit its Corporate Finance operations in the Baltics.
Both decisions were based on a strategic review of the Corporate Finance business area with the aim of identifying markets where Catella Corporate Finance has a strong market position or an opportunity to reach a solid and profitable position.
“As with our German Corporate Finance operations, we have concluded that we will not be able to reach the strong market position that is necessary to be successful in the Baltics. Exiting the German and Baltic Corporate Finance markets means that we can now wholeheartedly focus on growth and expansion of our remaining five strong markets and our pan-European offering in Debt Advisory. Corporate Finance is at the heart of Catella, and we are excited about our future growth in our core markets. It is never an easy decision to wind down an operation and I extend my best wishes to the Baltics team going forward.” says Christoffer Abramson, CEO Catella
The exit will take place during the second quarter of 2022 and have limited impact on financials.
Following a strategic review of the Corporate Finance business area, Catella has decided to wind up its operations in Germany. The review was aimed to identify markets where Catella Corporate Finance has a strong market position or an opportunity to reach a strong and profitable position.
The review has resulted in the decision to close down operations in Germany in order to allocate time and resources to develop and strengthen Corporate Finance operations in the other countries.
Catella has begun negotiations on the planned measures with full regard to local legislation and practice. The planned measures are expected to lead to restructuring costs amounting to approximately SEK 20 Million, which will be charged to the first quarter of 2022.
“Corporate Finance is an important and integrated part of Catella that not only contributes positively to Catella’s operating profit but also with significant synergies and market intelligence to our other two business areas, Property Investment Management and Principal Investments. While we perform well in markets where we have a relevant market share, we have not achieved the profitability we strive for in Germany. Therefore, we have made the difficult decision to close our operations in order to wholeheartedly focus and strengthen the offer in the markets where we can further consolidate our presence, ”says Christoffer Abramson, CEO Catella.
Germany will remain as Catella’s largest market after the restructuring, through the property funds in Catella Real Estate AG (CREAG) and Catella Residential Investment Management (CRIM) as well as the property development company Catella Project Management (CPM).
Catella co-owned Infrahubs has recently signed an agreement to develop a logistics facility in Vaggeryd for Svenska Retursystem AB (SRS). In connection with this, Infrahubs acquires a land area amounting to 78 000 square meters.
The 30,000 square meter building will be fully let to SRS with a 15-year lease contract. Catella’s ownership share is 40%.
The facility will be built in accordance with the Sustainability Certification Miljöbyggnad Silver and have one of Scandinavia’s largest roof-mounted solar cell panels with an estimated annual production of 3.7 GWh. SRS will start leasing the building in Q2 2023.
”We are pleased to develop a new, modern and sustainable facility for Svenska Retursystem. SRS contributes to the reuse of load carriers for large parts of the grocery industry and energy efficiency as well as circular flows of water will be prioritized areas in the construction process. The agreement confirms Infrahubs strong position as a modern logistics property developer with sustainability and automation in focus and affirms the strong property development platform we are developing in Infrahubs with five ongoing projects,” says Christoffer Abramson, CEO of Catella.
Through partly owned Infrahubs, Catella develops sustainable logistics facilities that meet tomorrow’s requirements of modern and highly automated solutions. Within the Infrahubs portfolio, three other properties are currently being developed, located in Ljungby, Vaggeryd and Örebro. A fourth property has been completed and is fully let in Norrköping.
“Strong close to a successful year”
The fourth quarter was a strong end to an exciting 2021, during which we have largely implemented our strategic shift towards a property-focused company and demand for our services and products remains solid. Growth in assets under management in the final quarter amounted to SEK 11 Bn, largely driven by strong inflows to property funds. We closed the year with assets under management of SEK 123 Bn, corresponding to an increase of 21 percent year to date, adjusted for the divestment of CAM France.
Total income in Q4, adjusted for divested or terminated operations, improved by 34 percent to SEK 633 M. Adjusted operating profit (EBIT) also showed a strong improvement by around SEK 100 M to SEK 140 M.
At times it has been a challenging journey, but we finally returned the banking license, divested the remaining part of the mutual funds operations and liquidated IPM. Today, Catella has the robust platform for growth we have strived for and we can fully focus on further developing our three business areas and taking advantage of the significant synergies between Property Investment Management (PIM), Principal Investments (PI) and Corporate Finance (CF). Our entire management team has been too involved in the restructuring and I personally look forward to a 2022 where we can focus entirely on growing and refining Catella’s business.
Strong demand for Property Investment Management’s offering
For the full year, assets under management increased by SEK 21 Bn adjusted for the sale of CAM France (SEK 14 Bn). In addition to this sale, we terminated other low margin mandates, which means that PIM is now in a strong position for continued profitable growth. The considerable interest shown in our property funds with a clear sustainability profile was particularly pleasing. These include Catella European Residential III, Catella’s first “dark green” mutual fund, which reached a milestone of EUR 750 M in assets under management at the end of the year.
Asset management mandates also delivered solid growth, strongly supported by Catella APAM’s (UK) mandate to manage a larger part of Greater Manchester Pension Fund’s property portfolio in the UK. This is a prestigious assignment worth close to SEK 2 Bn, positioning Catella well toward major European institutions.
Full year EBIT was SEK 249 M, an increase of close to 40 percent (adjusted for SEK 53 M from Principal Investments’ sale of Grand Central).
Committed capital amounted to SEK 11.9 Bn at the end of the year, which will be activated as property funds invest in new development projects and properties.
Solid progress in Principal Investments’ development portfolio, with many projects to be divested in 2022
In the fourth quarter, Catella’s investments increased to SEK 1.1 Bn, with all 16 projects in six European countries continued to progress according to plan and within budget.
New investments included a SEK 72 M direct investment in the UK property, The Maltings, located in Salisbury. The property has considerable potential, both in terms of new and improved commercial premises and residential properties. The investment was made together with Catella APAM and we are pleased to see this first step towards starting larger mandates and funds aimed at the British market with Catella’s equity as the driving force. Seed investments and co-investments from our own balance sheet are an important strategy for how we can use capital to strengthen existing and build new European platforms, which we aim to increase in 2022.
During the first quarter of 2022, the sale of the logistics property in Norrköping is expected to be completed. The property has been developed together with Catella’s partly owned company Infrahubs.
The interest for the modern and sustainable asset with the largest solar power facility in the Nordic’s has been considerable and shows strong demand from investors for modern and automated facilities with long leases. An additional three logistics properties in Infrahubs’ portfolio are expected to be divested in 2022.
An active transaction market and growing demand for capital raising services benefit Corporate Finance
The year ended on a strong note for Corporate Finance, largely due to the dynamic transaction market and a broader Catella product offering, which generated the business area’s strongest quarterly profit to date. We advanced our positions in our main markets and acted as financial advisor in more capital raisings, which was particularly pleasing. For example, Catella was sole financial advisor in connection with eQ Community Properties Fund’s structuring of a new EUR 700 M loan facility, and also acted as financial advisor in connection with Titania’s IPO.
The European market for capital raising is fragmented, and to meet customer demands for high-quality advisory services we now offer our services and expertise through the pan-European business line Debt Advisory.
Operating profit for the full year increased by SEK 48 M to SEK 71 M. The corresponding quarterly figures were SEK 24 M to SEK 57 M, mainly driven by the operations in Sweden and France.
Continued progress towards a clear position in sustainability
Like numerous other companies, we have in many ways just started our journey with sustainability, but it is something that I and the entire management team are passionately focused on. These issues will have profound effects on the real estate industry and the investment landscape, with both major challenges but also opportunities to take a leading position. We completed Catella’s ESG materiality analysis in the quarter, which will lead to a sustainability strategy and sustainability goals across the group in the first half of 2022.
We have several good examples of Catella’s work with sustainability in existing properties and development projects. Logistic- and residential properties are developed on the basis of a clear sustainability agenda from the planning stage. We have recently entered into an agreement relating to the installation of geothermic heating in a Finnish residential property, a measure that is expected to reduce CO2 emissions by over 60 percent.
We also plan to develop our sustainable property fund offering further. We already offer investors the dark green fund, under SFRD Article 9, CER III, and Elithis Towers is in the start-up phase, a fund that develops energy-positive residential properties. In 2022, we will also focus on in-depth analysis of our existing property funds and mandates, with the objective of continuing to strengthen the portfolio and to drive the shift towards increased sustainability in the property holdings.
Outlook
Given the uncertainties surrounding the escalating conflict in our immediate European area, it is hard to provide a clear outlook. My wish and that of my colleagues across Europe is that the conflict is transient and that we can quickly return to the stability we deserve and have become accustomed to in Europe.
Together with all our employees and customers, we have a stable foundation to start from and our renewed focus means that we can fully concentrate on growing and developing our three business areas while utilizing the important synergies that exist. The return of the banking license also releases capital for additional principal investments.
We will continue to evaluate interesting acquisition opportunities with the aim of strengthening our position and our geographical presence, and will increase our focus on supporting new funds, mandates and investments through capital investments from our own Balance Sheet. Continuously creating new and developing exitsting investment and development platforms is in our entrepreneurial DNA and is a large part of how we as a company will continue to create value.
The hard work that now lies behind us has yielded good results for our customers, regardless of whether they invest in our funds, if we manage and develop their properties or act as transaction advisor. We will would like to continue this exciting work with the aim of generating more customer, societal and shareholder value in 2022 and beyond.
https://www.catella.com/globalassets/cision/documents/2022/20220225-catella-year-end-report-january-december-2021-0.pdf