Conversion of shares in Catella AB

According to Catella’s articles of association a holder of a share of class A has the right to require that the share be converted into a class B share. Such conversion decreases the total number of votes in the company. After such a conversion has taken place, the company has an obligation under law to, in this way, publish information about the change.

During December 2023, 65,378 shares of class A have been converted into the same number of shares of class B. Thereafter, the total number of votes in Catella amount to 97,931,188.

The total number of registered shares in the company after the conversion amount to 88,348,572, of which 2,395,654 shares of class A and 85,952,918 shares of class B.

Nomination committee before the annual general meeting 2024

The nomination committee before the annual general meeting 2024 in Catella AB has been appointed in accordance with the current instruction for the nomination committee.

The nomination committee before the annual general meeting 2024 comprises Eje Wictorson, appointed by Claesson & Anderzén, Erik Eikeland, appointed by Alcur Fonder and Henrik Abrahamsson, appointed by Symmetry Invest. Eje Wictorson has been appointed as chairman of the nomination committee.

Information about the work of the nomination committee can be found on the company’s website, www.catella.com. Shareholders who wish to submit proposals to the nomination committee may do so in writing via e-mail to valberedning@catella.se or by post to Catella AB, Att: Nomination Committee, P.O. Box 5894, SE-102 40 Stockholm, Sweden.

The annual general meeting in Catella AB will be held on Wednesday, 22 May 2024 in Stockholm.

For more information, please contact:

Eje Wictorson
Chairman of the nomination committee
+46 70 600 19 58
eje.wictorson@claessonanderzen.com

Expanding and focusing in a continued cautious transaction market

Catella continues to advance on an uncertain market. The acquisition of Aquila Group added SEK 15 Bn in assets under management and a new source of capital from private investors. We continue to develop new products and solutions for investors in the new market environment. While we are expanding operations, we are simultaneously adapting the organization and our cost base to a market characterized by lower transaction volumes.

The global economy has entered a macro environment with high and volatile inflation, low productivity growth, and higher nominal interest rates (compared to the previous decade). We continue to see a higher-for-longer interest rate environment, causing continued downward pressure on riskier asset classes as the market adapts. Geopolitical risk compounds this view with the potential impact on the energy markets and the general inflationary nature of conflict. Real estate has become more heterogenous as an asset class and we believe that all property asset classes are set to bifurcate further. Segments with CPI-connected rental markets, somewhat higher yield levels, and low equity valuations are expected to outperform in the near term, with high ESG credentials an additional factor.

Office values are under intense pressure from ESG-conversion needs and from vacancies driven by new working models. However, the contrarian capital is starting to focus on prime supply-constraint locations, with the aim of redeveloping assets to prime ESG stock meeting the flexible office needs of the future. For the first time in a long time, market conditions now favor more active asset management over passive investing. In this challenging market, Catella’s pan-European offering of vertically integrated local experts and asset managers will help our clients succeed.

The impact of the rising yields in residential assets has been largely offset by rental growth. Significant housing stock is owned by the older demographic groups with lower debt level, while the high cost of debt will likely deter younger buyers and push that market back to renting. At the same time, the demand for and requirements of ESG-compliant assets keeps increasing, which should strongly support sustainable build-to-rent investments in the right micro locations. Catella already offers two separate pan-European Article 9 funds, and we are working to deliver a new offering that meets the growing demand for affordable and sustainable housing.

In other segments, we see ESG-compliant new construction space in Logistics and Industrial assets in high demand – the on-shoring trends and purchasing patterns here continue to point to growth with a simultaneously limited supply. Catella is developing attractive assets through our French platform, while our logistics fund continues to grow on the back of strong investor demand.

In an uncertain market with limited transaction activity, Catella continues to focus our operations while simultaneously advancing our positions. On the European market, transaction volumes decreased by more than 60 percent year-on-year, to EUR 22 Bn.

Reduced transaction activity affects all three business areas, while also requiring that we adapt our organization. We have been doing this on an ongoing basis during the year, and in the quarter we reduced headcount in several companies further, which generated some restructuring costs.

At the same time as we are adapting operations to the prevailing market conditions, we are expanding our business. In September, we completed the acquisition of 60 percent of Aquila Group for an initial purchase consideration of SEK 113 M. The acquisition adds more than SEK 15 Bn in assets under management and represents another step on our growth journey. With one of the largest independent operators in property investmentmanagement in France now on our team, we will benefit from key synergies with existing operations in France and Europe, while it is also of major strategic importance to broaden operations by adding a new source of capital from private investors through the French fund operations.

Sluggish market for capital raising

Lower inflows to traditional property funds is the natural consequence of higher interest rates, continued uncertainty, and lagging property valuations. However, interest in opportunistic investments is increasing, a market where we have solid competencies and where we are focusing our growth efforts.

Apart from the acquisition of Aquila Group, assets under management largely remained unchanged, adjusted for exchange rate effects, on the preceding quarter. We consider this a sign of strength given the current market conditions, and are pleased to see continued growth in assets under management in our Article 9 funds, which have the sharpest sustainability focus.

Investment Management’s profit amounted to SEK 26 M in the quarter, the result of a sluggish transaction market as well as some M&A and restructuring costs. Underlying fixed management fees continued to increase by 14 percent on the previous year, driven by increased assets under management. It is worth noting that income from Aquila Group was not included in profit for the quarter.

Looking ahead, Investment Management is holding strong in a turbulent market, with stable fixed revenues, extensive committed capital, and continued strong relationships with our investor base. In addition, we are seeing increased interest in more actively managed mandates, while the acquisition of Aquila Group opens up the prospect of new capital inflows from the private investor market.

Broader focus in Principal Investments

One of Catella’s strengths lies in that we co-invest in development projects with the aim of generating returns as well as attracting new business through management mandates. We also invest in new ideas generated within the organisation. This is an area that is set to expand in future, partly through additional investments in our funds in Sweden and the UK, as well as the fund now being launched within Aquila Group. We have also added our investment in Pamica to the business area. Catella was one of the first investors in Pamica, and further investments were made in the latest investment company, Pamica IV, this year.

Even if progress has been made in our investment projects, we anticipate that divestments of completed projects will remain limited in 2023. At the same time, we are seeing more opportunities for new investments that meet our return requirements as market prices continue to adjust and more opportunistic investment opportunities arise.

At the end of the quarter, Principal Investments invested a total of some SEK 1.7 Bn in 10 projects across six markets.

Advisory market remains hesitant

Transaction  volumes in the quarter were at their lowest since 2009, which naturally affects Corporate Finance. Income decreased by approximately SEK 20 M, which generated operating profit of SEK -6 M (6).

We continue to have a solid pipeline of transactions, but in order to realize these in the near future we would need to return to a more normalised transaction market, and it is difficult to predict when this is likely to occur.

New opportunities for growth and profitability

We continue to advance Catella’s positions on a sluggish market, while simultaneously adjusting our cost structure. We develop products and solutions adapted to the new market environment while simultaneously investing in digitalization, sustainability, and AI. These investments will drive scalability and competitive advantages in the longer term.

The current market conditions highlight the importance of being a resilient and forward-looking company that is able to adapt to a changing market environment. This is at the core of Catella’s business model and values.

Christoffer Abramson, CEO and President
Stockholm, Sweden, 27 October 2023

Catella presents the Interim Report and answers questions today at 10 a.m. CET. To participate, go to https://ir.financialhearings.com/catella-q3-report-2023

 

Catella completes acquisition of majority stake in Aquila Group

Catella’s acquisition of 60 percent of the shares in Aquila Asset Management SAS (“Aquila Group”) received regulatory approval earlier in September and today the transaction was completed. The Aquila Group, with over EUR 1.4 billion in assets under management, will complement Catella’s strong footprint in France and support the continued growth of the pan-European platform.

On June 2, 2023, Catella announced that it had signed an agreement to acquire 60 percent of the shares in the French independent real estate developer Aquila Group. The purchase price amounts to approximately EUR 9,6 million. The Aquila Group consists of Aquila Asset Management, founded in 2010, and the real estate investment fund management company Axipit Real Estate Partners, founded in 2021. Axipit offers innovative and differentiating solutions to both retail and professional investors.

“We are very pleased that we now have received all the necessary approvals to bring this important deal to completion. The acquisition means that we add another piece of the puzzle to our growth journey. With one of the largest independent players in real estate asset management in France now being a part of Catella, we will be able to leverage important synergies with our existing operations in Europe, while entering the French fund business for retail investors is of great strategic importance,” said Christoffer Abramson, CEO of Catella.

The addition of Aquila Group into Catella is an important part in Catella’s strategy to be an attractive partner for investors within the real estate sector globally. The acquisition will significantly strengthen Catella’s position both in France and globally.

“This is an example of how we can further capitalize on Catella’s strong financial position to expand into new businesses and markets. We will continue to increase the range of sustainable products, broadening our product offering to adapt to different stages of the economic cycle, as well as capture synergies and continue to develop our pan-European investment strategies,” said Christoffer Abramson.

The shares are acquired from local management who will remain minority shareholders. According to the agreement, an additional purchase price of approximately EUR 1 million could be paid if certain criteria are met. The acquisition is financed by Catella’s own capital.

“Aquila has a successful history built on local expertise, and as we now join Catella’s European network, we form a very strong team, internally in Europe as well as on the French market. We look forward to be a part of Catella and our future journey” said Jean-Marc Sabiani and Gilles Barbieri, Founders and Managing Partners at Aquila.

For further information, please contact:

Michel Fischier
CFO
+46-8-463 33 86
michel.fischier@catella.se

Continued progress on value-creating activities in a slow transaction market

The calm transaction market in the first half-year has allowed us to increase our focus on long-term value creation throughout the organization. The agreement to acquire a majority of the French company Aquila was a step in this process. We have also continued the work of creating the next generation of investment products with focus on sustainability and a high degree of digitization. Despite a challenging economic environment, we have delivered a stable development of assets under management. 

Transaction volumes in Europe totalled EUR 24 Bn in the second quarter. This is the lowest level since the global financial crisis in 2008/09 and a decrease of over 60 percent year-on-year. Our decision to streamline operations and our focus on maintaining and strengthening our financial position benefits us in the current market climate. This allows us to invest in the company’s future during a hesitant market, both through real estate-, M&A- investments, and through long-term value creation in operational improvements and digital development.

In the quarter, we announced that we signed an agreement relating to the acquisition of 60 percent of Aquila. The French company comprises Aquila Asset Management and property fund manager Axipit Real Estate Partners, with a total of just over SEK 16 Bn in assets under management. The acquisition complements Catella’s existing Corporate Finance activities in France and provides a key piece of the puzzle to our continued growth ambitions for Europe. The integration of Aquila into Catella allows us to internally manage the French property holdings in our funds, and assume a relevant asset management position during interesting market conditions. In addition, the investment fund platform, Axipit, adds retail investments, a market that continues to grow in the current market. The acquisition is expected to be completed in September.

After the end of the quarter, Catella APAM (UK) was assigned a 12-month advisory mandate for Transport for London (TfL). This represent another prestigious assignment for our UK platform. Initially, the contract will involve assisting TfL’s wholly-owned commercial property company in understanding and realizing the potential of its assets, although in the longer term it may also open up opportunities for growth in assets under management.

Towards the end of July, we divested our 50 percent holding in Infrahubs and associated project companies for a purchase consideration corresponding to total invested capital, plus SEK 12 M for the value of the platform and assets. Through our partnership with Infrahubs we have successfully contributed to the Swedish market’s need for sustainable logistics solutions, and we wish Infrahubs every success on its continued growth journey. The transaction reduces our exposure to development projects and will free up additional capital for other growth investments.

Growth in assets under management
At the end of the quarter, assets under management in Investment Management totalled SEK 149 Bn, an increase of SEK 9 Bn from the start of the year. Completed development projects mainly contributed to the positive change, as well as exchange rate effects.
The Catella European Residential fund generated significant performance-based income in the quarter, although overall, variable income was lower as a direct result of reduced transaction volumes. However, growth over the past few years has increased the underlying income base from fixed management fees, which increased by 14 percent year-on-year. Capital commitments for future investments remain extensive and will largely be utilized in the funds’ development projects. Stable fixed income, capital commitments, and continued strong investor relationships mean that Investment Management stands strong in a turbulent market.

Focus on strengthening liquidity and new investments
The divestment of the logistics property in Vaggeryd was completed in the quarter, generating SEK 4.5 M in profit for Parent Company shareholders. Furthermore, the transaction increased liquidity by SEK 306 M.
We foresee limited divestments of completed projects in 2023. This is due to low transaction market activity and high uncertainty. However, we actively and continuously evaluate opportunities for new investments that meet our return requirements, mainly in co-investments with the aim of generating additional management mandates.
At the end of the quarter, Principal Investments’ investments in six countries totalled approximately SEK 1.5 Bn in 10 projects.

Advisory market remains quiet
As already mentioned, the transaction market remains hesitant. This affects all business areas, but mainly Corporate Finance. Income decreased by 38 percent year-on-year, resulting in negative operating profit of SEK -22 M (SEK 26 M). However, we expect some improvement in the second half of the year given the latent demand, although it is difficult to predict precisely how and when this will be realized.

Continued focus on value-creating investments and product development
Our breadth alongside local management competencies and a strong financial position provide us with significant opportunities. Lower valuations of potential acquisition targets provide us with the opportunity to expand our pan-European platform and to generate synergies. The dry powder in our funds provides the opportunity to grow assets under management. Our track record of navigating turbulent markets allows us to create the next generation of investment opportunities for our customers. A relatively calm transaction market also provides us the time and focus in creating long-term value in the organization. We have embarked on an exciting journey that I am eager to pursue.

Christoffer Abramson, CEO and President
Stockholm, 2023-08-18

Catella presents the Interim Report and answers questions today at 10 a.m. CET. To participate, go to https://financialhearings.com/event/46282