Strengthened position in a stabilised market
In summarizing 2024, I conclude that despite another year of a weak real estate market, Catella strengthened its position as a pan-European real estate investment company with three distinct business areas. Although the Group's total income was naturally impacted by prevailing market conditions, we successfully navigated a challenging market, increasing as-sets under management (AUM), safeguarding liquidity, and maintaining a strong operating profit over the year, despite a significant decline in variable income. We also maintained a strong balance sheet, positioning ourselves to capitalize on emerging opportunities as transaction market uncertainty diminishes. We concluded the year with a strong quarter, driven by a recovering market and implemented efficiency improvements, supporting an optimistic view for 2025.
| Progress during the quarter | Progress during the year |
| • Total income in the quarter amounted to SEK 1,045 M (540) | • Total income amounted to SEK 2,307 M (2,339) |
| • Operating profit attributable to Catella's shareholders was SEK 69 M (10) | • Operating profit attributable to Catella's shareholders was SEK 128 M (133) |
| • Non-recurring costs amounted to SEK 13 M (4) | • Non-recurring costs amounted to SEK 28 M (12) |
| • Profit attributable to Catella's shareholder was SEK 59 M (-75) | • Profit attributable to Catella's shareholder was SEK 30 M (-21) |
| • Earnings per share after dilution was SEK 0.67 (-0.85) | • Earnings per share after dilution was SEK 0.34 (-0.24) |
| • Assets under management (AUM) amounted to SEK 155 Bn at the end of the period, an increase of SEK 4 Bn compared to the third quarter of 2024 | • Assets under management (AUM) amounted to SEK 155 Bn at the end of the period, an increase of SEK 3 Bn compared to year-end. |
| Proposed dividend per share for the financial year is SEK 0.90 (0.90) | |
In the CEO comments for the third quarter, I mentioned that the European real estate market was showing cautious signs of recovery alongside increased transaction activity. This was driven by improved credit terms and lower interest rates. This positive trend continued in the fourth quarter, with overall transaction volumes in the European market rising by 22% compared to the same period last year.
While uncertainty remains prevalent, the gap between buyers and sellers is narrowing, and interest in property acquisitions as part of asset allocation is increasing. The market is gradually pricing in a lower cost of capital, and the overall outlook for the European property market remains positive with yields in certain segments stabilizing or even beginning to decline. This gives us reason to believe that the negative trend of declining property values over the past two years has reached its trough. All of Catella's business areas benefit from an active transaction market, and the improving market sentiment signals positive momentum for our operations moving forward.
Operating profit for the fourth quarter amounted to SEK 69 M (10), where the increase was driven by higher or stable income across all business areas. The results also reflect the success of our initiatives to continuously increase efficiency and reduce costs.
Full-year operating profit amounted to SEK 128 M (133). Although this represents a SEK 5 M decline from the previous year, factoring in a substantial reduction in variable fees (SEK -68 M), the underlying business delivered improved earnings and positive margin growth.
Balanced capital flows
The Investment Management business area takes pride in its continued success in balancing inflows and outflows within the core business. In a challenging market, it is impressive that AUM at the end of 2024 increased slightly compared to 2023.
Growth was primarily driven by residential property funds, and this segment also recorded the highest increase in transaction volume. It is particularly encouraging that our Article 9 fund, Catella European Residential III Fund, completed its first acquisition in Spain. The acquisition of a newly constructed residential property with 235 apartments in Madrid added nearly SEK 700 M to the fund's AUM, bringing the total to SEK 9 Bn.
After the end of the period, we completed the merger of our two fund management companies - Catella Residential Investment Management (CRIM) and Catella Real Estate AG (CREAG) - to form Catella Investment Management GmbH (CIM). The purpose is to enhance operational efficiency and expand capacity in fund management. The merger provides our customers with access to a stronger and more efficient sales organization, managing assets worth SEK 115 Bn across 25 funds with 420 properties in 15 European countries. A unified organization under a single brand enhances resource-sharing opportunities and facilitates the development of new products.
We achieved additional milestones during the quarter, including capital investments of nearly SEK 6 Bn in Catella Logistic Deutschland Plus. In the UK, we launched Catella APAM Strategic Equities with the support of a major institutional investor, capital commitment of SEK 1.4 Bn, alongside our seed investment of SEK 25 M. We reached another milestone as Catella Aquila, in which we acquired a majority stake in 2023, assumed management of our French fund assets, previously managed by an external party.
Investment Management's AUM totalled SEK 155 Bn at year-end, reflecting an increase of SEK 4 Bn compared to the end of the third quarter.
Continued focus on value creation
In the Principal Investments business area, the focus remains on developing and completing existing projects for divestment. During the fourth quarter, the French development project Polaxis was divested. The divestment frees up capital, further strengthening liquidity and creating opportunities for new investments that meet our return requirements.
We are actively engaged in discussions regarding the upcoming sale of the landmark project Kaktus Towers in central Copenhagen. We are in no hurry, and securing an attractive price level is crucial given the substantial capital contribution. Considering my earlier comments in this report, the timing suggests that we will successfully close a deal that satisfies all parties.
Looking ahead, we are also evaluating new potential investments, but with a more defined focus, which I outline below in my discussion on 2025 and beyond.
Recovery in the transaction market
As previously mentioned, in Corporate Finance, we are seeing an improvement in the transaction market, albeit to varying degrees across different markets. In the fourth quarter, we acted as advisers in a growing number of transactions and observed a general increase in market activity. During the period of reduced activity, we demonstrated resilience and adaptability, seizing the opportunity to strengthen the organization and refine our operations. We are now well-positioned for a transaction market with higher activity and reduced uncertainty.
Outlook
For 2025 and beyond, we have refined and clarified our strategy, which is centred around three key strategic focus areas moving forward:
Diversify and sharpen the investment focus of Principal Investments. Our financial position has allowed us to continue investing in existing development projects despite the weakest transaction market since the global financial crisis. This has enabled us to preserve value in a cautious property market. Looking ahead, our key focus is to diversify the investment portfolio. As divestments progress, new investments will be guided by the strategic use of equity, with the aim of growing AUM in Investment Management and establishing a strong foundation for recurring revenue. This will take the form of seed investments for the establishment of new funds, co-investments with external capital partners to secure long-term asset management mandates, and investments in development projects alongside majority-owning capital partners. By leveraging our balance sheet to drive growth in AUM and recurring revenue, we steadily enhance stability and generate greater shareholder value over time.
Enhanced profitability and harmonized offering in Corporate Finance. The Corporate Finance business area was reinforced during the weaker market of recent years, while we simultaneously implemented cost-saving measures. Looking ahead, we are well-positioned for growth in line with the market turnaround, while further optimizing the strengths of our platforms to create value for our customers.
Focus on AUM growth in Investment Management. Thanks to the trust placed in us by our investors, we have built operations over the past 10 years that now manage SEK 155 Bn. Despite the stagnation of the past two years, our business model continued to deliver growth, driven by a balanced approach between fund investments and our expertise to manage and develop properties through mandates. By continuing to expand existing funds and launch new strategies, we cultivate growing, stable, and value-creating cash flows.
The refinement of our strategy aligns closely with our focus on property and reflects our ambition to leverage existing strengths. By further optimizing our core assets - capital and expertise - we aim to drive sustainable and profitable growth. By continuously assessing promising investment opportunities and regularly reviewing our capital structure, we aim to enhance shareholder value.
Catella presents the Interim Report and answers questions today at 10 a.m. CET.
To participate, go to https://financialhearings.com/event/48743
Daniel Gorosch, interim CEO and President
Stockholm, Sweden, 12 February 2025
For further information, please contact:
Michel Fischier
CFO
+46-8-463 33 86
michel.fischier@catella.se
About Catella
Catella is a leading specialist in property investments and fund management, with operations in 12 countries. The group has EUR 13,5 billion in assets under management. Catella is listed on Nasdaq Stockholm in the Mid Cap segment. Read more at catella.com.
This information is information that Catella AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2025-02-12 07:00 CET.
