“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.
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.