Catella Interim Report January - June 2021
Catella's core operations are developing well and we continue to make important progress in strategic areas. As a result, total income increased by 17 percent and operating profit by over 55 percent year-on-year, adjusted for operations being wound-down or divested.
Catella's core operations are developing well and we continue to make progress in important strategic areas. We increased assets under management, completed several major principal investments and were a very active partner on a strong property transaction market. As a result, total income adjusted for operations being divested or wound down increased by 17 percent to SEK 478 M. Adjusted operating profit (EBIT) also improved significantly to SEK 113 M, and increased by 55 percent year-on-year.
The strongest drivers behind this improvement are continued growth in assets under management in Property Investment Management (PIM) and a very strong quarter for Corporate Finance, where Catella acted as advisor on several major transactions.
Catella’s investments in the Principal Investments business area continue to make good progress and we announced five new projects in Sweden, Germany and Spain in the quarter. No properties were divested in the quarter, and accordingly the business area did not recognize any income.
As previously communicated, the winding down of IPM’s operations is progressing as planned, which reduced operating profit/loss for the quarter by SEK 103 M, of which goodwill impairment amounted to SEK 39 M. In June, Catella submitted an application to return Catella Bank’s license to CSSF and a decision is expected in the second half of this year. This resulted in Group operating profit/loss, including operations in divestment or being wound down, of some SEK -31 M.
Strong growth in Property Investment Management continues
Assets under management increased to SEK 112 Bn, an increase of nearly SEK 15 Bn year-on-year adjusted for the divestment of CAM France. The increase was primarily driven by inflows to residential funds and new mandates in the British asset management business.
Operating profit/loss for the quarter was SEK 84 M, an increase of over 10 percent driven by the sustained increase in fixed management fees (+7%) and a larger share of performance fees. Development of three new funds started in the quarter, including CRIM Elithis Towers residential fund with a focus on developing energy positive residential housing across Europe, and we are already noticing interest from investors.
In the first half of 2021, PIM’s assets under management increased by SEK 11 Bn (adjusted for the divestment of the French Asset Management operations), and has returned average annual growth of 31% since 2015.
Increased focus on principal investments
Demand for residential and logistics properties remains strong, and the Principal Investments business area announced new projects in and after the end of the quarter. These included a project in central Düsseldorf where Catella will be developing a new landmark focused on sustainability, energy efficiency and modern working. After the end of the quarter, we also announced a fourth project through partly owned Infrahubs. A logistics property of approximately 25,000 m2 will be completed in the commercial node of Ljungby, fully let to PostNord TPL AB with a rental agreement spanning 10 years. Like in previous projects, construction will be characterized by sustainable methods and materials, and energy efficiency.
Principal Investments’ total development projects amounted to close to SEK 2.7 Bn in total investments at the end of the quarter, of which SEK 688 M was comprised of Catella’s capital and shareholder loans. This corresponds to an increase of SEK 1.2 Bn and SEK 0.4 Bn on the previous quarter.
Attractive partner on the transaction market
As usual, the second quarter was intensive in terms of transactions, and Catella presented one of its strongest quarters ever. Income increased by close to 80 percent to SEK 188 M and operating profit/loss improved to SEK 43 M (-3).
Catella Corporate Finance acted as advisor in connection with several major transactions across all major markets. We saw the highest activity in Sweden and France, where the breadth of Catella’s offering was reflected in assignments where we acted as transaction advisor for commercial and residential properties, and offered debt and IPO related advisory services. It is very satisfying to see all the hard work pay off after a challenging year for transactions during COVID-19, particularly in large transactions such as the divestment of Biblioteksparken A/S in Denmark and Studentbostäder i Linköping AB.
We continue the work of developing a total offering in all major markets in Europe.
Catella’s refined focus makes us an attractive partner for advisory services and property investments through funds and property management. We are currently reviewing opportunities for launching more funds and partnerships in order to meet market demand, both in specific niches and in new markets. Interest in Catella’s funds remains strong and in addition to growth in assets under management, future committed capital amounts to nearly SEK 10 Bn, makes us well prepared for decisive action.
In addition, we continue to make principal investments in segments and countries that meet our internal return requirements. We foresee continued strong demand, mainly for logistics properties where Catella has a strong and sustainable offering to end customers through partner companies in Sweden and on the continent.
The Corporate Finance operations will continue to develop its total offering that has been successfully rolled out in Sweden and France throughout Europe, and its breadth will make Catella an even more attractive transaction partner for external partners as well as internally, which generates further synergies.
At the end of the quarter, the financial position remained strong at SEK 1,790 M in cash and cash equivalents, and an equity/assets ratio of 37 percent, which enables continued profitable growth.
In order to meet our already high ambitions in terms of sustainability and being a clear and attractive capital partner, we have appointed an ESG manager. The inflow of institutional capital to the ESG sector continues to grow, and to develop ESG-products is a prioritized focus for the whole Catella Group.
I am personally pleased with the new management team, which has already generated a new drive that permeates all of Catella. With the new Group management and our excellent leaders throughout Europe now in place, I am confident about our ability to successfully deliver on our strategy, which we will present to all our employees throughout Europe over the coming quarter.
Christoffer Abramson, CEO and President
Stockholm, Sweden, 20 August 2021
For further information, contact:
Mattias Brodin, CFO, tel. +46 (0)8 463 33 10
Invitation to presentation of the Interim Report
Catella will be presenting the Interim Report and answering questions in a teleconference today 20 August 2021 at 9 a.m. CET. The presentation will be in English and will be made by Catella’s CEO and President Christoffer Abramson and Catella’s CFO Mattias Brodin. To participate in the teleconference, go to www.catella.com or call +46 (0)8 505 583 53.
The information in this report is mandatory for Catella AB to publish in accordance with EU’s Market Abuse Regulation and the Swedish Securities Market Act. This information was submitted to the market, through the agency of the below contact, for publication on 20 August 2021 at 07:00 a.m. CET.