Welcome to the Catella Q3 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions-and-answers session, participants are able to ask questions by dialing pound key-five on their telephone keypad. Now, I will hand the conference over to the CEO, Rikke Lykke, and CFO, Michel Fischier. Please go ahead.
Good morning and welcome to this webinar where we will present Catella's interim report for the third quarter of 2025. My name is Rikke Lykke, and today it's my first presentation of Catella's quarterly performance as the new CEO of Catella Group. Together with me, I have, as usual, Michel Fischer, CFO, and head of investor relations. Before we begin, I would like to share my first impressions of Catella. Since becoming the Group CEO at Catella, I have spent quite some time traveling across Europe to meet employees and to better understand the shared potential of Catella. Catella is a people-focused company with strong talent and expertise across the markets. We have a solid position locally and as a group, and we're supported by strong liquidity and a stable capital base. With this as a foundation, it gives us great opportunities to capture future growth in our markets.
However, there's still room to grow. By further improving alignment across the group, we can increase assets under management, become the preferred partner for transactions, attract top investors and clients, and most importantly, increase our shareholder value. With our presence in 12 European markets, we are well positioned to achieve these goals. We will continue to sharpen our strategy. At year-end, the principal investment business area will be integrated into core operations. Going forward, we do not intend to independently own or develop real estate assets. Rather, the aim of investments is to grow our assets under management in Investment Management. This is done through seed investments in new in-house 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 doing so, we will sharpen our focus on growing AUM and recurring fixed revenues as the originator of real estate investments. We also need to further align our core functions as most of our business is outside of Sweden. This will have an effect on the organization going forward. An important step was the announcement of Dominik Röhrich as our new Head of Investment Management starting March 1, 2026. With this background, we will take important steps towards building a leading Investment Management platform driving European growth, improving performance, and strengthening our institutional partnerships. Our commitment is clear: develop new products and investment vehicles, secure fixed fee revenues, grow AUM, provide advisory services, and optimize operations, all focused on maximizing shareholder value. With these brief reflections, let's walk you through the highlights of Q3 2025. As usual, we will open up a Q&A session after the presentation.
Starting with a brief overview of Catella, Catella manages nearly EUR 160 billion in assets under management, with a revenue base of EUR 2.5 billion and with operations in 12 countries and assets in 16, backed by nearly 500 employees. We currently operate in three property-focused business areas: Investment Management, Principal Investments, and Corporate Finance. Although real estate has had a couple of challenging years recently, we're supported by a long-term growth trajectory as portfolio allocation to real estate continues to increase. Nearly 60% of our income stems from fixed recurring revenue, providing stability to the business as a whole. This metric is also one of our key KPIs, and our strategic priority is to grow AUM, thereby increasing the fixed fee revenue base and generating shareholder value.
We see sustainability as part of our license to operate, both through long-term relationships with clients as well as through fund investments and investment projects. We manage our larger institutional investors' capital through funds and asset management mandates. This is done through local teams with profound knowledge of their markets, which means we are a true vertically integrated pan-European player. Catella has a history of over 35 years, and during that time, we've established a pan-European platform and a strong and reputable brand name to expand from. The transactional market has gradually started to recover after the low point we experienced in Q3 2023, following a two-year sharp decline of transactions. Transaction volumes are important for Catella as it generates variable revenues in Investment Management on top of the fixed fee revenues.
It is even more important for the Corporate Finance business area, where the majority of the revenues stem from transactional services. We continue to have an optimistic view on increased activity going forward. It is also supported by market data showing an upward trend. Fundamentals also continue to support an increased market activity, and these include lowered market interest rates, availability of financing, and stabilized values at attractive yield levels. At the same time, we're cautiously aware of potential setbacks which could emerge from tariff turmoil and overall increased uncertainties. Year-on-year, transaction volumes have increased by 15%. With this brief market backdrop, I'd like to move on to some key financial and operational highlights of the quarter. The third quarter was a bit weaker than last year. This was mainly driven by lower transactional revenues in Investment Management. These are nearly EUR 15 million lower year-on-year.
Also, Corporate Finance had EUR 6 million lower revenue compared to the same period. We see this decline as a temporary setback, and in the fourth quarter, we expect transactional activity to pick up. In our industry, the fourth quarter is usually the busy period of the year. If we then take a look at our business areas, there are a couple of things I'd like to highlight. If we look at Investment Management specifically, the transactional revenue shortfall was largely mitigated by implemented cost and efficiency improvements, resulting in a result broadly in line with last year despite lower revenues. We're also pleased to report AUM growth, which increased by EUR 4 billion compared to the previous quarter and EUR 5 billion since the beginning of the year. The growth mainly stems from new asset management mandates, which more than outweighs the lower inflows to our funds offering.
Here, Catella's Investment Management has a unique offering with highly skilled local teams, with the ability to assist institutional investors to reposition assets through active asset management. Looking ahead, we see an increased demand for these services. On another positive note, as the market slowly recovers, it also supports transactions within our funds and thus transactional-driven revenues. Turning to Principal Investments, as mentioned, we will start 2026 integrating the business area into our core operations. Following the sale of Catella as a substantial shareholder profit, we have a lower concentration and lower risk in the historical portfolio of investments. We will continue to report on Principal Investments also in the fourth quarter. Following that, we will integrate our own balance sheet investments and the fee revenues and fair value changes stemming from minority investments together with larger institutional investors that we have and aim to make going forward.
Looking at the investment portfolio today, it contains eight property investments and four fund investments. They are all processing according to expectation and plan. In Corporate Finance, as mentioned, the third quarter is usually seasonally weak, and this quarter was somewhat weaker than last year. While the Nordics showed an improved activity, continental Europe was slightly slower. As we enter the last quarter of 2025, we expect a significant increase of transactions based on the current pipeline we have. Before I started at Catella, I took the time to review the strategy we had laid out. I believe that the focus priorities that we have presented are the right way forward and a strategy that will contribute to shareholder value creation going forward.
By the deconcentration and refocusing of Principal Investments and also integrated with our core operations, it is highlighted that we will use our own balance sheet to grow AUM, increase our fixed revenue base, and focus on recurring revenues. I believe that own investments supporting increased—I believe in own investments to support increased and stable cash flow is the right and only way to generate increased shareholder returns. Secondly, we will continue to make efficiency improvements and strengthen the Corporate Finance organization. There is more work to be done to improve the underlying profitability and put a structure in place that supports growth. This work is, since the third quarter, headed by Daniel Gorosch. Besides these two priorities, we need to continue to grow our existing funds as well as launch fewer but larger internationally scalable products.
Investment Management is the main value driver of our business, and it is, of course, extremely important that we continuously create products that are relevant and that are in demand from our investors. As mentioned, the main driver behind AUM growth in this quarter and throughout the year was through new asset management mandates, which we, of course, are very pleased with. At the same time, we continue to focus our business development efforts on new products and strategies to raise capital for new scalable products meeting investor demands. With that, I underwrite our strategy and expect to show continuous progress over the coming quarters and years. Also, as I initially mentioned, since our operations are mainly outside of Sweden, we will make organizational changes to reflect where the revenue is generated and where the majority of our employees are situated.
I will now hand over to Michel, who will take us through some of the key highlights.
Thank you, Rikke, and good morning, everyone. Let me start by moving to page 10 to discuss Investment Management in detail. As you all know by now, Investment Management is our largest business area and has, since the start, shown an impressive average annual growth rate of over 15%. Despite the more cautious markets and lower interest for core fund investments, inflows continue to exceed outflows during the quarter. As Rikke previously mentioned, the main driver behind these inflows during the quarter and also the last 12 months has been the onboarding of new asset management mandates. Our offering continues to meet market demand for refined and repositioned assets, even in a cautious market environment.
We have also been successful in maintaining AUM in our funds over this slower period in the industry. Last 12 months, AUM growth amounted to nearly EUR 9 billion, with limited growth in funds and the growth was stemming from asset management mandates. The largest growth was seen in Denmark, followed by the U.K. and Finland. In the quarter, AUM grew by nearly EUR 4 billion, with nearly EUR 3 billion through asset management mandates and EUR 1 billion in property funds, mainly residential. If we move on to the next page, fixed fees have remained stable over the last four quarters, north of EUR 200 million. As we continue to have onboarded new mandates, this will support fixed revenue growth going forward from these levels. As already mentioned, variable revenues decreased compared to the seasonally stronger Q2.
Looking at historical Q4s, you will note that the fourth quarter is generally the quarter where we earn most variable revenues. This is something we also expect now when we enter the last quarter of 2025. As already noted, efficiency improvements implemented over the year and years have resulted in the effect of a lower OpEx. In this quarter, it specifically mitigated the EUR 20 million revenue shortfall, leaving EBIT broadly unchanged. If we then flip to Principal Investments, currently we have EUR 1.1 billion invested, where EUR 0.8 billion is in investment projects and EUR 0.3 billion in funds. As initially mentioned, at year-end, the principal investment business area will be integrated into core operations. We do this to clarify that Catella's usage of own balance sheet for investments is not a separate business area, as our ambition is not to own or develop real estate independently.
Instead, we make real estate investments through partnerships, funds, or co-investments where we hold a minority stake. The aim is to fuel AUM growth, increase fixed fee revenues, and thereby stability of cash flows, and thereby also generating shareholder value. As of the end of this quarter, all current investments were progressing according to plans and expectations. Additionally, fund investments' performance also contributed positively, with fair value changes supporting our EBIT. If we move on to Corporate Finance, here we saw a moderate decline in revenues, which also was reflected in EBIT. Worth noting is that last year, we had a reversal of provisions with a positive impact amounting to EUR 10 million. Adjusting for this, EBIT actually showed a slight increase despite the revenue shortfall, highlighting efficiency improvements coming through. The overall increase in willingness to transact, supported by improving market fundamentals, is supporting growth from these levels.
Our review remains cautiously optimistic, with more closings expected to come during the fourth quarter of 2025. If we then turn to page 17 for a view of the consolidated income statement, I've already walked you through the larger financial movements in the business areas in the quarter, and therefore I'll focus on the items below the EBIT line. Before we go there, we're pleased to show that our focus on efficiency improvements is reflected in overall OpEx going down. This is down now actually by nearly EUR 30 million compared to last year. As just mentioned, when I went through Corporate Finance, the reversal of the provisions there, if we would take that into account, the net effect is an OpEx decrease of nearly EUR 40 million compared to last year.
If we stay on the items distorting comparability, following the sale of Catella, we're not entitled, of course, to the rental revenues nor the guarantee fee on the senior loan, which we had on the assets. This is in some total EUR 10 million lower EBIT effect following the divestment of Catella. If we then move on to items below EBIT, financial net, as you see, is substantially lower than last year. This is both an effect of lower market interest rates affecting the coupon on our bonds, but also the repayment of the senior loan on Catella has significantly decreased debt and thereby interest costs. FX effects were negative in the quarter and at the same levels as last year. The net loss in the quarter ended at EUR 28 million, which is slightly lower than last year.
This is then explained by a low top line, which largely was mitigated by lower OpEx and interest costs. Worth to reiterate is that exposure to foreign currency has decreased following the sale of Catella, and that this also means that you should experience lower effects from currency fluctuations going forward. If we then move on to the next page and have a look at our financial position, we've shown this slide for a couple of quarters to illustrate how we view our balance sheet and net cash position. At the end of quarter, the equity ratio stood at 48% compared to 37% last year, and our cash position was EUR 1.6 billion, a decrease of EUR 100 million compared to last quarter as the effect of the repurchase of bonds, which we carried out. This, at the same time, reduced the market debt with the same amount.
The slide you see in front of you summarizes how we look at our net debt, or in our case, the net cash position. As you all know by now, the overall majority of our liabilities are related to investments in development projects through Principal Investments. These projects are, in turn, always valued at cost. If we start from the left and move to the right, summarizing all our investments, these amount approximately to EUR 1.4 billion. If we then add our current cash position of EUR 1.6 billion, we reach a total of nearly EUR 3 billion. If we then deduct our market debt and financing of projects, this takes us to a cash position a bit north of EUR 1.6 billion. Our cash position alone exceeds our current debt.
If we were to divest all current projects at cost and liquidate other fund investments, this would further increase liquidity after full debt repayment. As I've emphasized repeatedly, maintaining a strong balance sheet and robust cash position has been a cornerstone for Catella during the market downturn. Following the sale of Catella, we now find ourselves with significant excess liquidity. This also gives us relevant headroom to pursue new investments aligned with our investment criteria, supporting AUM growth within Investment Management. It also enables further reduction of debt and other shareholder-friendly measures. With that said, I'll hand back over to you, Rikke.
Thank you, Michel. Before we conclude and open up for Q&A, I would like to briefly summarize this presentation. As I started today's presentation, I've initially taken the time to visit the Catella teams across Europe. This has convinced me that we have strong talent, local know-how, and relevant investor offering. This, together with a solid financial foundation, provides a strong foundation for developing and growing our company further. With an even stronger focus on how to make use of our balance sheet to increase AUM, attract top investors, we have a very good starting point to grow fixed fee revenue and enhance shareholder value.
However, to capture future growth, we will focus on improving further alignment across the group and strengthening core functions and leadership to reflect and strengthen our pan-European platform. We remain cautiously optimistic about a continued slow market recovery. Market fundamentals are supportive of this trend, with lower long-term interest rates and tightening credit margins significantly improved financing conditions and an active bond market. This, of course, comes with the caveat of an unforeseen increase in market uncertainties. With that said, I would like to thank you all for listening, and we're now opening up for questions.
If you wish to ask a question, please dial pound-key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound-key six on your telephone keypad. The next question comes from Emil Jonsson from DNB Carnegie. Please go ahead.
Good morning. Thank you. I'd like to start by asking, could you elaborate on how you plan on reporting the Principal Investments segment after 2025? Is Principal Investments and Investment Management going to be merged into the same segment, or have I misunderstood?
No, I think we'll get back to you with the exact details. What we aim to illustrate is the development or clarify the development fees that we get on the developments that we have together with investors. Also, with a clearer scope, present the fair value changes of the actual investments that we have on the balance sheet. From an investor perspective, we will get back to you with the exact details at Q1 latest. It will clarify both how own capital generates new fees into Catella and also how these investments perform according to our investment criteria.
Okay, that sounds good. Regarding the other projects currently in Principal Investments, some of them are expected to be finished in 2028 or even beyond 2030. Are they going to keep going as before?
Yes. I mean, they are progressing according to plan. They are historical investments, and we will continue to develop and perform on them going forward.
Okay. Regarding fixed fees in Investment Management, they came in at EUR 202 million this quarter. That's the lowest figure that we've seen in three years, even though AUM is up about 12% in that same time. Is there any explanation for what has driven that?
Yeah, you had to take FX into account here, which affects negatively with some EUR 5-EUR 6 million. And then we have grown AUM, as you've seen, but it takes a while from the onboarding of asset management before these revenues are recognized in the P&L as well. It is a slight delay and some FX into that.
Okay. Thanks. Have you seen any underlying sort of margin pressure on fixed fees in the past few years if you account for lag effects and so on?
Yeah, there's one more piece to this puzzle, and that is generally, when you look at asset management, fixed fee revenues, and compare these to fund fixed fee revenues, the asset management fixed fees are generally a bit lower. So there's a business mix in there. Then you have in the asset management mandates several additional layers which you do not see in fund fees when it comes to the variable revenues. For example, CapEx fees, letting, leasing fees, performance, promotes, etc. The fixed fees are generally a bit lower than in asset management mandates.
Okay, that's fair. One final question. You mentioned that since a lot of the organization is outside of Sweden, you're planning on making organizational changes. Could you elaborate a little bit on what you mean by that?
Yeah, I mean, when I look at our number of employees outside of Sweden versus here in Sweden, when I look at our revenue generation, Sweden versus rest of Europe, I am aiming to mirror over time our organization, our headquarter organization better. Sorry, I'm aiming to mirror the composition of our headquarter and location of some of our key services to mirror the organization better. Currently, we're in a situation prior to my start that the headquarter was situated only in Stockholm. 98% of our revenue is generated outside of Sweden. I do think it makes sense to have more of our headquarter services located across Europe. Dominik Röhrich is the first. Over time, we will look at more of these services that we provide to the organization from the headquarter to be located outside of Stockholm.
All right. That makes sense. That's all the questions that I had. Thank you very much.
Thank you, Emil.
The next question comes from Sauli Villen from Inderes. Please go ahead.
Hi, good afternoon. Sally from Inderes. I'm on the asset management side. I'm kind of curious to know how do you, as a new CEO, see the current profitability level there? Obviously, if we look at your peers, you're lagging kind of far behind at the moment. How do you see the current profitability level there?
May I ask you who you compare us to? Because if you compare us to pure asset management firms, you might be right. I don't know. If you're asking about other fund management firms, I think we actually have a higher share of asset management mandates than the fund management firms we compare ourselves to. Could you please clarify the question?
Yeah, yeah, yeah. I was more looking at the overall asset managers, basically, on the Nordic level. What kind of profitability are they doing currently?
I think most of the asset managers, I think you're referring to are also fund managers. Is that correct?
Yeah, yeah, mostly. Yes.
Okay. I'm not sure we are lagging that much behind, but please do bear in mind that compared to our competitors in the market, we also have another business unit called Corporate Finance. And that, of course, when we mix those two as Corporate Finance has had a weak transactional market over the past few years, that, of course, affects our overall margin.
Yeah, maybe adding to the pure asset management side. Yeah, referring only on the asset management side and just looking at your AUMs, I could see that, I mean, just trying to figure out what you see kind of an upside there on the profitability level side, purely on the asset management, not on the Corporate Finance.
Yeah. Maybe adding to, I mean, at least when we're looking at European competition, I mean, we have throughout the years and continue to have a fixed fee, fixed costs coverage, which not all of our competition does, actually. If you add the variable revenues, which were muted in the quarter, I mean, then, of course, you might be right.
Okay, okay, thanks. How much potential do you actually see on the pan-European model asset management, especially in the cross-border sales? I think in history, that's an area where there has been room for improvement.
I mean, when we specifically look at the asset management side of our business, I mean, we work with the larger institutional capital global and, of course, work with them when it comes to aggregation mandates that could be in the Nordics or one country specifically. There is more to be done there, I think, to have a more Nordic or Central European approach to helping our larger institutional clients.
Yeah, that makes sense. Finally, on the Nordic fund side, is there some fundamental reason that you do not have a larger offering on the Nordic fund side, like both open-end and closed-end? Obviously, at least looking from outside, it would seem kind of obvious that that would be an excellent fit for you.
Actually, that is one of the things that we are going to align even further across Europe, and it is a very good question. In the Nordics, we're actually known, our brand is known more for Corporate Finance than we are for Investment Management. Whereas in Europe, we're known for Investment Management, sorry, Investment Management and less for Corporate Finance. One of the key things that we are going to focus on going forward is a more diversified communication strategy in order to ensure that we actually do come forth to you and to the market with this distinction. In Denmark, we have.
Sorry. I mean, we do have Investment Management operations in Sweden with a mutual funds offering where we have EUR 0.4 billion of AUM.
Yes. In Denmark, we also have close to EUR 1 billion under management and more. We also have in Finland. Unfortunately, there seems to be a focus from the journalists on Corporate Finance in the Nordics. We actually have quite a substantial Investment Management AUM across the Nordics. When I speak to people from the industry, they are always surprised when I tell them how much we have under management in the Nordics.
Yes. I mean, to run the numbers, we have—this is Swedish then—EUR 8.4 billion of AUM in Finland, EUR 8.7 billion in Denmark, and EUR 0.4 billion in Sweden, as I mentioned.
Sorry, I was in Europe.
Yeah, yeah.
I must admit I worked more in Europe. It is actually quite substantial what we have in the Nordics. It is just something that we have not been communicating as focused as we are going to do going forward. Close to EUR 24 billion under management in the Nordics.
That is good. Finally, as a new CEO, how do you see your M&A appetite? Do you more focus currently on the just executing on the strategy, or do you also see that M&A could play a part of your growth strategy? Thanks.
Yes. We are focusing on two things. We're focusing on the commercial side to organically grow the company with some great products that will attract key investors and cater to their appetite, the investor appetite at the moment. Possibilities of M&As is definitely there, though I would like and prefer to sit down and focus a little bit more on where and how, because we might strengthen some teams in some countries, and we might add on new capabilities in other countries. These are some of the things I'm going to work on going forward.
Okay, clear. That's all from me. Thank you very much.
The next question comes from Martin Wahlstrom from Redeye. Please go ahead.
Hello. Thank you for taking my questions. The first one is related to the integration between Principal Investments and Investment Management. I was just wondering kind of if this enables something that was not possible before or if it is more like a communication thing in how you want to be perceived.
I think this actually enables us to diversify our risk on our balance sheet investments. Going forward, we will focus on co-investments, seed investments into products and into developments with other majority capital partners. A case of Kaktus is not the aim going forward where we own and develop 100% on our own balance sheet. However, we will do minor investments in sites in order to make sure that we can prep them for development and then go out and seek investors for it. I think it's really key here that how we're going to utilize our balance sheet going forward with a diversification of a risk profile is to further grow our assets under management and to co-invest alongside other capital partners.
Another question related to integration. I don't know if you can comment on this, but will there be any effects on the cost side? Would you do some restructuring in that sense?
No, I don't think so, because where we have mostly invested our own balance sheet is into some of the products of our development teams. These are now being funded predominantly by majority capital partners, third-party capital partners. Actually, in the headquarter, we had a smaller team that were following and surveying these investments. They are now to work on other projects alongside me in order to further grow our AUM. That's going to be their focus. We're refocusing some teams.
In relation to M&A, you touched upon that as well. I was just wondering, and I'm not looking for any guidance or anything, but when you consider M&A, kind of what are some general pros and cons that you have to consider and what factors would you have to look at?
We will consider everything that strengthens our capabilities and widens our product offering. That's point one. It has to further strengthen our strategy and our growth in the future. For me, the creation of shareholder value, even though it's a term a lot of people are using, is key. A strong company with a focus on fixed revenue to weather all kinds of market conditions is key for our shareholders going forward. That is a key focus from us.
When it comes to what kind of M&As it could be, it could be strengthening local teams, could be opening up for new kinds of products in terms of, and let me be very clear, all real estate focused, very important, I think. We have not sat down yet and really set the strategy for M&A. I think what is key here is we have to have a very clear strategy of how, if we are to do M&A, how and where we will do it and reasons why. That is my work. I have only been here a few months. This is my focus going forward is to say, if, then why, and where. M&A is not always the answer to everything. It has to have a clear strategy and a focused integration in order to ensure that we make sure that one plus one does not add up to one and a half, but actually to at least plus two.
Just one final, a bit more detail-oriented question. Michel, you mentioned the delay there between an AUM increase and the corresponding increase to revenue. I was just wondering if you could elaborate a little bit on that. How long it will take, and is it the.
No, no. I mean, it depends on when during the quarter and quarters the mandate was actually onboarded. Obviously, if you onboard a mandate, a larger mandate late in the quarter, you will not see the full quarter revenue effects or EBIT contribution.
I see. Okay. That was all for me. Thank you very much.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any written questions or closing comments. Thank you all for listening in and for taking the time to ask questions. It's highly appreciated. We will now conclude this call and wish you all a great day.