Earnings call transcript: Cattella Group sees 39% revenue increase in Q4 2024

Cattella Group reported a strong fourth quarter for 2024, with net revenue increasing by 39% year-on-year to SEK 2.3 billion. Despite restructuring costs impacting earnings before interest and taxes (EBIT), which increased nearly sevenfold, the company improved its cash position to SEK 900 million. The equity ratio stood at 37% as the company navigated a recovering market. According to InvestingPro analysis, the company maintains strong financial health with a GOOD overall score of 2.75, supported by robust cash flows that sufficiently cover interest payments and a moderate debt level.

Key Takeaways

• Net revenue surged 39% year-on-year to SEK 2.3 billion.
• EBIT increased significantly despite restructuring costs.
• Cash position strengthened to SEK 900 million.
• European real estate transactions grew by 20%.
• Strategic focus on expanding investment management assets under management (AUM).

Company Performance

Cattella Group’s performance in the fourth quarter highlighted its strategic focus on cost reduction and market expansion. The company successfully merged its German fund platforms, creating a €10 billion investment platform across 15 European countries. This move aligns with the company’s goal to grow its investment management AUM and improve corporate finance profitability. The reduction in fixed expenses by over SEK 200 million since 2022 underscores Cattella’s commitment to efficiency and cost management.

Financial Highlights

• Revenue: SEK 2.3 billion, a 39% increase year-on-year.
• EBIT: Increased nearly sevenfold, including SEK 90 million in restructuring costs.
• Fixed costs: Reduced by SEK 33 million in Q4 and SEK 76 million for the full year.
• Cash position: Increased to SEK 900 million.
• Equity ratio: 37%.

Outlook & Guidance

Cattella Group remains optimistic about market recovery, driven by improved financing conditions. The company has outlined three strategic priorities: deconcentrating principal investments, enhancing corporate finance profitability, and expanding investment management AUM. Cattella aims to launch fewer but larger international scalable products, targeting a 15-20% internal rate of return (IRR) on investments.

Executive Commentary

Interim CEO Daniel Gorosh expressed confidence in the market’s recovery, stating, "We have the worst behind us and the market will slowly start to recover." CFO Michel Fichier added, "We see these revaluations bottoming out," highlighting the company’s positive outlook on valuation stabilization. Gorosh also emphasized Cattella’s strategic positioning, saying, "Our house view is that we are well positioned to reap the benefits of the continuously improved market."

Risks and Challenges

• Market volatility: Potential fluctuations in real estate transaction volumes.
• Restructuring costs: Continued impact on financial performance.
• Competition: Strong presence required in diverse European markets.
• Economic conditions: Sensitivity to broader macroeconomic factors.
• Execution risk: Challenges in achieving strategic priorities.

Q&A

During the earnings call, analysts inquired about the timing of the Cactus (NYSE:WHD) divestment, to which the company acknowledged uncertainty. Cattella also addressed questions on AUM growth, projecting positive momentum in the coming years, contingent on market recovery. Performance fees were discussed, with potential increases linked to the broader market’s recovery trajectory.

Full transcript - Caterpillar (NYSE:CAT) Q4 2024:

Conference Operator: Welcome to the Cattella q four twenty twenty four report presentation. For the first part of the presentation, participants will be in listen only mode. During the questions and answer session, participants are able to ask questions by dialing 5 on their telephone keypad. Now I will hand the conference over to the CEO, Daniel Garoche, and CFO, Michelle Fishier. Please go ahead.

Daniel Gorosh, Interim CEO, Cattella Group: Good morning, everybody, and welcome to Cattellas’ interim report for the fourth quarter of twenty twenty four. My name is Daniel Gorosh and I am the interim CEO of Cattellar Group. And together with Michel Fichier, CFO and Head of Investor Relations, we will walk you through the highlights of the quarter and the full year of 2024. After the presentation, we will open up for a Q and A session and the material and reports are as always available on our website. I’d like to start the presentation with a brief overview of Cattellas starting on page three.

Today’s Cattella manages SEK155 billion in assets under management with a revenue base of SEK2.3 billion and with operations in 12 countries and assets in 16, backed by nearly 500 employees. So we could flip to next page. We 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 are supported by a long term growth trajectory as portfolio allocation to real assets is increasing. Nearly 70% of our income stems from fixed recurring revenue, providing stability to the business as a whole.

We see sustainability as part of conducting our business 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, And this is done through local teams with profound knowledge of their markets, leading us being a true vertically integrated pan European player. And we have a history of over thirty five years. And during that time, we’ve been established a pan European platform and a strong brand. So with that brief introduction, I’d like to start this quarter’s presentation with a short market summary on page six.

So we have had 12 quarters of declining or a hesitant market. We have noticed support for a recovering and growing market as Q4 transaction volumes showed an increase of more than 20% year on year. Strongest growth was noticed in the residential segment with a 45% growth year on year. And the trend in valuation of European real assets is that it continues to stabilize. After over two years of negative value adjustments, lowered interest rates as well as opportunities for financing opening up, the market is now at the point where yields are becoming attractive.

A significantly stronger and well founded interest in real estate investments is also something I and my colleagues are experiencing in our day to day operations. The increased activity level is seen foremost in a larger market, such as in U. K. And also in Sweden, whereas smaller markets in, for example, Finland still are experiencing limited market activity in terms of transaction volume. So with that brief market backdrop, I’d like to move on to page seven for some key financial and operational highlights of the quarter.

The improved market conditions are also reflected in our financials. As you can see, net revenue has increased by 39% year on year. The EBIT increased almost by a factor of seven, taking restructuring cost of NOK 90,000,000 into account. This increase was even higher. Worth repeating is that the result is both an effect of improved market conditions as well as efficiency initiatives we have carried out over the two last years.

If we then take a look into our business areas, there are a couple of things I’d like to highlight, and we can start with investment management. Summarizing the year and the quarter, we have had a larger inflow of capital than outflow resulting in a positive AUM development. And even though it’s not on the historical growth rates that we have become used to, we see this as a sign of strength. The ability to grow through asset management mandates with strong local teams managing underperforming assets and assets which require repositioning proves the resilience of our business model. This in a market where capital inflows to our core property funds have been muted.

In UK, our seed investment capital from some two years back of GBP 2,000,000 into strategic equities fund attracted capital from a large pension fund, deciding to invest SEK1.4 billion. This is an excellent example of how we can leverage both Cattella capital and competence into larger structures and managed assets. In Germany, we reached our milestone of €500,000,000 capital commitments into our logistics fund. And logistics is an asset class which has performed well in this market environment that we have experienced. Also in Germany, we finalized the merger of our two fund platforms into one, creating Cattellah Investment Management GmbH with EUR 10,000,000,000 in AUM and four twenty assets across 15 European countries.

In France, Cattellar Aquila, which we acquired a majority of in 2023, onboarded the fund assets in France, which we now will be managing in house. So if you turn to principal investments, the sale of the French logistic development, Pollexis, was finalized in November, releasing liquidity at the marginal profits. In Denmark, we invested in a new residential development project. And the investment is made together with a large international capital partner, capping our total capital commitment to SEK83 million over the development phase and securing long term mandate with recurring revenues and also at attractive returns, 15% to 20% IRR on the invested capital. And since I know that there will be questions on cactus, I can say that all is progressing according to plan even though a transaction of this size takes some time, especially in a market as it is.

We are engaged in dialogues with investors. And as market conditions are continuously improving, we stay positive that we will be able to close the transaction to our satisfaction. However, at this stage, I cannot share any additional information on specific timing or price, but I promise that we will get back with an update as soon as we have more specific information to share. For corporate finance, total number of transactions as well as volumes increased year over year. Especially the team in Spain was kept busy in the quarter and had a record quarter and year.

Besides having efficiency improvements and cost adjustments, which are also reflected in our P and L and EBIT improvement, despite lower revenue, we have also made some forward focused recruitments to capture growth in the returning markets. So before moving on to the business areas in detail, I’d like to discuss our route forward and our priorities for 2025 onwards on the next page. Me, together with management, started to review our strategy during the autumn and had a discussion with the board in December. What we concluded when reviewing our current strategy was that we had many, perhaps too many ongoing future focused initiatives. We have been successful with some, but really to advance our position going forward, we will need a more dedicated focus and fewer strategic priorities to secure the capacity and really focus on the how, I.

E, how to implement the strategies and priorities we see as the most important. So following this review, we have landed in three overall strategic initiatives for the group And the first one being to deconcentrate and to refocus principal investments. Looking ahead, we are firmly committed to decrease the concentration, I. E, to increase the diversification of our investment portfolio. And furthermore, we have refined the criteria for new investments.

So the investments need to be smaller in size. They need to be more diversified as it comes to asset class geography and duration. And primary focus for principal investments going forward will be to support the growth of investment management AUM through new funds or mandates. And also investments hurdles shall be meet with a 15% to 20% IRR but could also be lower if it secures long and recurring fixed fee revenue. So by narrowing down and focus the use of our own balance sheet going forward, our investments will fuel the growth of AUM and even further increase the stability of growing cash flows.

Secondly, even though we made already significant efficiency improvements and strengthened our corporate finance organization, we believe that we can do more to improve the underlying profitability and make sure to put the structure in place supporting growth. In here, I see a clear scope to create a better joined up business where we take advantage of our strong local organizations, but at the same time, make sure to offer a seamless offering to our pan European clients. And thirdly, besides refocusing principal investments to support AUM growth, we need to continue to grow our existing funds as well as launching fewer but larger international scalable products that should be supported by our own investment thesis, the Cattell House View. So 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. So with this as our priorities, we will continue to build Capella based on our core competencies, capital and competence, and by increasing AUM and fixed revenue over time, create sustainable and profitable growth, creating shareholder value.

So that was a little bit about future strategy. If we then move on to page 10 to discuss investment management in detail. Since inception, this business area has delivered a strong average annual growth rate of nearly 20%. Despite the more cautious market and lower interest from four core fund investments, we show growth for the quarter and full year in assets under management. In funds, there was a net inflow, primarily driven by larger residential funds, Cattella European Residential III, followed by Cattella Vonan Europa and Cattella Modernas Vonan with continuous interest from investors and finalized assets which have entered the funds.

In asset management, some mandates reach majority and assets were sold during the year, but a larger part of these were replaced by new long term mandates primarily in Finland, where AUM has nearly doubled over the year. And these are new mandates with a new focus where we aid investors to manage underperforming or even defaulted assets to reposition them and increase returns. And as I mentioned before, asset management provides a good balance to our business model and provides opportunities to grow in an environment where investor interest in core and core plus investments is limited. In this setting, our pan European reach coupled with strong on the ground local market competence is something investors and partners value highly, and that is a true differentiating factor for us. Moving on to page 11.

So the increased transaction activity led to an increase of nearly 40% in variable revenues compared to last year and it is the driver behind the increase of nearly SEK 40,000,000 in net revenues. OpEx ended at nearly SEK 190,000,000 in the quarter. This was mainly driven by an increase of transaction based variable expenses and one off restructuring costs amounting to SEK 9,000,000. Taking this into consideration, we demonstrate a significantly lower fixed cost base compared to one year ago. And through the merger of our German fund platforms, we will further harmonize operations and increase efficiencies going forward.

Besides the continued strong focus of our efficiency improvements, we continue our efforts of retaining and growing our asset management looking ahead. We can now turn to next page for an overview of principal investments. So our principal investment portfolio consists of nine active projects at year end plus a few smaller seed investments and equity co investments in client aggregation mandates. During the quarter, the logistic project Polaxis was sold, releasing liquidity at the marginal profits. Furthermore, an additional milestone payments were received for the forward funded Metz project.

Both strengthen our liquidity, which has been a key priority for us to manage during this part of the cycle. We also entered into new projects in accordance with our revised focus on principal investments. And in Denmark, as I mentioned, the investment in Vega will be made together with their large international capital partner and the structure caps our total capital commitment to SEK83 million over the development phase. At the same time, it builds AUM and secures long term mandates. This investment is also made at attractive returns, some 50% to 20% IRR on the invested capital.

In Berlin, we have entered a similar project structure, but that is currently at an early stage and we’ll come back on that further on. So all in all, in principal investments, we remain committed to our projects. Then based on our financial position, we have the opportunity to be patient and to protect value and generate shareholder returns. In parallel, we continue to view smaller investment opportunities as they emerge, like the ones we entered in Q4 with the ambition to grow AUM, gain new revenues through asset management mandates and generate returns on equity. So let’s focus on corporate finance now on page 15.

Net revenue was on par with last year, but with differences between our different markets. Spain had a very strong quarter with our other four markets being at similar or lower levels. So even though net revenue was unchanged, EBIT came in stronger, highlighting the efficiency improvements being reflected in the P and L. To reiterate what we have previously said is that our corporate finance business area holds strong market positions in the five markets where we have operations. And with a couple of new recruitments and increased cost efficiencies, the business area is now in a better position to be a highly profitable business as the market now returns.

So I’ll now hand over to Michel, who will share the brief summary beginning on financial summary beginning on Page 17.

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: Thank you. Thank you, Daniel, and good morning, everyone. And to start by repeating what has already been mentioned, we summarize a strong end of the year in the fourth quarter with revenue top line mainly driven by increased transaction based revenues in investment management, setting aside net revenue from the principal investment sales of Polaxis. When I browse through the analyst comment this morning, I noticed that our restructuring cost had not been considered in their first takes of the results. And as we’ve mentioned previously, we continuously we have continuously throughout the year adapted the organization to a market with lower activity.

At a first glance, OpEx increased for the quarter and full year, but that was mainly driven by variable expenses and also one off restructuring costs. Our main focus, as you know, has been to reduce the fixed expenses. And for the quarter, as you can see on the slide, this decreased by $33,000,000 and for the full year, $76,000,000 And this is before taking restructuring costs into account. Those amounted to $19,000,000 in the quarter and $44,000,000 for the full year. $13,000,000 of that is what is highlighted in the report and that relates to severance costs and the additional cost of 5,000,000 is related to the merger of our two German fund platforms, taking us to a total of 19,000,000.

The corresponding figures for the full year, the severance cost amounted to $28,000,000 and the cost related to the merger amounted to $16,000,000 summing this up to $44,000,000 of of one off restructuring costs for the full year of 2024. So in summary, we conclude a solid year under the current market conditions and taking the one off restructuring costs, which I just mentioned into account, I would say that we end the year with more than solid results. Also worth highlighting is that since 2022, we have managed to reduce fixed cost by over $200,000,000 as you also see as also it’s shown on the slide. Turning to net EBIT, it showed an improvement of $59,000,000 and this then once again includes the one off restructuring costs of $19,000,000 If we then have a look below the EBIT line, net financial ended $71,000,000 better than last year, but this was mainly driven by FX tailwinds as the SEK depreciated during the quarter. Altogether, the last quarter of twenty twenty four ended significantly better than the last year at $59,000,000 and the same goes for the full year results of $30,000,000 If we then flip to page the next page.

And here after listening to feedback from some of our investors, we have refined our presentation of our net cash positions additionally. Amongst other things, we have also included our fund investments in this presentation. So end of quarter, the equity ratio our equity ratio stood at 37% and our cash position was $9.00 $1,000,000 an increase from $870,000,000 last quarter and $800,000,000 end of last year. And as I’ve mentioned on numerous occasions, to prudently maintain a strong balance sheet and cash position has been key for Cattellas throughout this market downturn. And the slide you see in front of you summarizes also how we look at our net debt or in our case 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. So if we then start on the left and move to the right, summarizing all our investments, these amount to approximately $3,200,000,000 If we then on top of that add our current cash position of $900,000,000 we reach a total of 4,100,000,000 If we then deduct our market debt and financing of projects and also adjust the cash position with working capital needs and bonus accruals, this takes us to a cash position of 1.3. So the the the background for this exercise is, of course, the hypothetical scenario. If we would divest all our current projects, value that cost and our fund investments, this would lead to a negative net debt, I.

E. Excess liquidity after the debt being repaid. And of course, in this hypothetical scenario, we would still have investment management and corporate finance as revenue generating businesses going forward. And to state the obvious, this is it’s not our ambition to divest our projects and we will continue to invest in our existing pipeline and also invest in new projects that meet the business areas long term return requirements of 15 to 20% IRRs and as Daniel mentioned, with a primary focus to fuel the growth of AUM in investment management. I think I’ll stop there and hand back over to you, Daniel.

Daniel Gorosh, Interim CEO, Cattella Group: Okay. Thank you, Michel. And before we conclude and open up for Q and A, I’d like to briefly summarize the quarter from our perspective. As we now have mentioned, our house view is that we have the worst behind us and that the market will slowly start to recover from this point fueled by significantly improved financing conditions, lower credit margins and an active bond market. Transaction (JO:TCPJ) volumes have already started to increase and we see an increased number of transactions as well as an increase in the average transaction size as well.

As we previously discussed, during this hesitant period, we are taking decisive steps to decrease efficiencies and restructured and strengthened operations at the same time as we have preserved liquidity and a strong capital position both at group and at fund level. So with these efforts, Cattellas is in a better position today as the market slowly now recovers. So our key takeaways from this quarter is that we continue to do the right things and we make progress. First, we are very proud of and we see this as a sign of strength, as I mentioned earlier, being able to grow the assets under management with larger inflows of capital than outflows in this tough market context. Further, we have managed to deliver strong Q4 with increased profitability as a result of implemented cost efficiencies.

Further on, during the quarter, we have divested several projects within our principal investments portfolio in line with our strategy. These divestments support continued investments in attractive development projects fed into other product strategies. And as we mentioned, as effective from front offices in the German fund business into Cattella Investment Management, in short, this move creates a €10,000,000,000 investment platform where we will be able to enhancing synergies and share resources under one phase to the markets. And lastly, we are now operating under a new and refined strategy that is centered around the three strategic focus areas to deconcentrate our investment portfolio within principal investments, to increase our profitability within corporate finance and also finally to grow our AUM within investment management by growing existing funds as well as launching fewer but larger international scalable products. So all in all, we are satisfied where we are and we see that we are well positioned to reap the benefits of the continuously improved market and we remain committed to even more focus on delivering improved results, thus increasing shareholder value.

So with that, we end this presentation and I’d like to thank you all for listening and now open up for questions.

Conference Operator: Please dial 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial 6 on your telephone keypad. The next question comes from Patrick Bratellius from ABG. Please go ahead.

Patrick Bratellius, Analyst, ABG: Good morning. Can you hear me?

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: Yes. Good morning, Patrick. Good morning.

Patrick Bratellius, Analyst, ABG: Good morning. Perfect. Yes, a few questions from my side then. If we start off by looking at the corporate finance, it delivered a much stronger result than we have seen earlier in 2024. However, we know that Q4 and Q2 can be a little bit lumpy given it’s where most transactions occur.

So how should we think about the coming quarters here? Can you, for example, elaborate a little bit how do you view the current environment compared to how it looked a year ago without guiding on any specifics on numbers? Because I know you don’t like to talk about that, but more of the market environment and how that has changed.

Daniel Gorosh, Interim CEO, Cattella Group: Yes, of course. I mean, we have seen continuously improved market activity. For example, as I mentioned, we have mentioned that transaction volume has increased month by month and also year over year. And for example, in take the Swedish example, we have now in December and January seen transaction volumes increasing with 100% compared with the same period one year ago. So we see a continuously improved environment even though we’re still, I mean, a bit from the high levels we have seen previously.

But the trend is very, very positive. And that is fueled by, as I mentioned, by significantly better financing conditions. So so, and also you can see, I think Nordics are a little bit ahead of the curve and and you saw that transaction volumes increased by 30% in The Nordics last year, whereas the average in Europe was a little bit 22%. So we see a continuous brighter market with much more activity.

Patrick Bratellius, Analyst, ABG: Sounds promising. Thank you. Moving over to Investment Management. We have seen negative revaluations effect on the asset under management for a couple of quarters in a row. When can we expect that to level out and disappear?

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: Well, I mean, once again, I mean, it’s hard to make predictions, especially about the future, but where we stand now and our house view, we see these, revaluations, negative revaluations bottoming out. And we see, I think it was last quarter, we mentioned that we saw the lowest levels of negative revaluations that have been seen since they started over two years ago. So I would believe this sort of next quarter is where we bottom out of property values across Europe.

Daniel Gorosh, Interim CEO, Cattella Group: And to comment on that as well, I mean, we can see that the price sorry, just to add on that, that in in the direct market, we are seeing prices being corrected already in certain asset classes, for example, in in both logistics and also in in residential, whereas valuations are lagging behind approximately six months, which is the case also this time. So you can see already in the direct market that this correction has already been taking place. Sorry.

Patrick Bratellius, Analyst, ABG: Thank you. And continuing on the drivers on asset under management. Inflow seems to have been SEK 17,000,000,000 in 2024, while the outflows was 15,000,000,000. How do you expect these to develop? Because in our in my thinking at least, given the improving market environment, the pickup in activity, all else equal, it should lead to all else equal more attractive dynamics where it’s expected to increase while outflow to decrease on the back of this.

Do you share this view? Or are you should we expect similar levels and this take a longer time before this translated into the AUM development the coming quarters?

Daniel Gorosh, Interim CEO, Cattella Group: No. We share that view as well. I mean, with a more positive market and also with more capital coming into to our business, we think that’s really the case that we see more inflows and outflows will decrease even though we we on European level, the fund business, I mean, we the the danger is not over. I mean, there are still some outflows in in we have seen competitors that have outflows, so we need to look at that very closely. But on the annual level, I think the trend is positive on that as well.

Patrick Bratellius, Analyst, ABG: Okay. Then taking those two answers into consideration, we should expect AUM to significantly increase then the coming years compared to what we have seen for the last few quarters. Am I reading you correctly?

Daniel Gorosh, Interim CEO, Cattella Group: We are not making any predictions, but we hope for that as well. So we are planning for that. So let’s hope that you’re correct in your analysis.

Patrick Bratellius, Analyst, ABG: Thank you. And then given this positive outlook on transaction activity, we usually see variable fees picking up, but you have been a little bit more conservative when you have talked about performance fees in the past for 2025. Can you do you have an updated view on your expectations on this? Is this reasonable to assume within 2025? Or is that more something that could be expected later in 2026 perhaps?

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: Patrick, as you know, that is totally related to the market development. So as you know and as we’ve discussed previously, the majority of our funds have high watermarks, which we need to reach before performance fees are to be considered. So it’s really connected to the value or valuation of real estate across Europe. And I mean, I wouldn’t be comfortable in predicting that for 2025. So, I have no clear answer to your clear and specific question.

Patrick Bratellius, Analyst, ABG: That is fair. That is fair. And as a last question then more on a broader strategic thinking. Following the Cactus divestments, which we expect to occur in 2025, how would you rank the priorities of using this strengthened liquidity that this transaction would lead to? Is it M and A, capital repatriation?

Or is it this acceleration with refocusing on principal investments? Can you please help to elaborate how you rank these priorities?

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: Well, it’s not really for me or us to rank. I mean, at the end of the day, it’s a board decision. But for you and the rest of you listening to know, I mean, all the points that you mentioned are, of course, things that need to be evaluated, and and we, of course, need to come up with, what we think at least is is the best position of of liquidity usage. So, sorry once again, I can’t give you a clear and answer to to that question, and we’ll go back to you when we are in that position.

Patrick Bratellius, Analyst, ABG: Perfect. Thank you. And just if I squeeze in a tiny question more is, should we expect Cactus divestment in H1 or in H2 of twenty twenty five?

Daniel Gorosh, Interim CEO, Cattella Group: Believe me, we are putting all our efforts behind this project. And as we have mentioned, we are not the long term owner on the Cactus project. We will come back when we have something more to tell you. We cannot really say anything more than that.

Patrick Bratellius, Analyst, ABG: Okay, fair enough. Thank you. Thank you for taking.

Conference Operator: The next question comes from Emil Janssen from DNB Markets. Please go ahead.

Emil Janssen, Analyst, DNB Markets: Good morning. Thanks for taking my question. I’d like to start by just asking, considering that interest rates have been falling for quite a while now, have you noticed any recent change in how easy it is to attract new inflows in investment management?

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: Well, I I think, you know, looking at the inflows versus outflows during the year, I mean, you should clearly see a trend as you follow us quarterly that, inflows have been stronger during the later part of of this year, which then gives an indication to your question.

Emil Janssen, Analyst, DNB Markets: At least part of that from my perspective could be from development projects being finished, which is otherwise not counted in AUM and shows up as an inflow, but has anything changed when it comes to attracting new capital from new investors?

Daniel Gorosh, Interim CEO, Cattella Group: Overall, it’s I mean, it’s improved environment, but I don’t have any specifics on that. But overall, we see both on core and core plus that is interest, but also on, for example, in the value add segment that it’s attracting a lot of attention and there is a lot of new capital coming in on the European arena. So as you say, as a consequence of the lower interest rates, the interest for this kind of investment vehicles are increasing.

Emil Janssen, Analyst, DNB Markets: All right, thanks. And looking at variable fees in NOSMET management, they were up quite a bit year on year. Looking specifically though at the transactions that occurred in your AUM, should we consider this more of a more of a coincidence, you know, people wanting to get deals closed before year end and so on or a greater underlying proclivity to make transactions in in in your AUM?

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: Yes. So as what Daniel started with today was showing, you know, the the overall transaction markets, that have increased 22% year over year in the fourth quarter. And, you know, a lot of the transactions which occurred during the fourth quarter are transaction that we have considered, during, you know, larger part of 2024. And now as the market turns we can realize those. I mean for example our article nine fund buying a green property in Madrid, their first investment in that market and also divesting some properties, which also have been on the market and for discussion of divesting in the Benelux market region.

So, I mean, altogether, as you see increased transaction volumes and increased interest into, you know, holding real estate as an asset in your overall portfolio that of course, benefits us as a whole.

Emil Janssen, Analyst, DNB Markets: All right. Thanks. And the $13,000,000 in severance costs during the quarter, could you give some color on how much you expect that to ultimately shave off the OpEx line annually going forward? Is it $20,000,000 a year or more or less?

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: I mean, without inflation adjustments, then you should consider the majority of I mean, all else being equal, Emil. So, with the severance payments going out, the majority of those have not been, you know, new recruitments replacing people that have left. So all else being equal, yes. But then, of course, if the market grows and as Cattella grows, then, of course, we need to grow with the number of employees as well.

Emil Janssen, Analyst, DNB Markets: Yes, but all else equal, what’s the magnitude of the savings on the OpEx line?

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: I mean, here and now, without making any adjustments and assuming the same market as we have seen, it would be nearly one to one. Or as I mentioned, the majority of of, severance cost will also going forward be reflected in in reduced cost. And you see that also if you look at the total number of of employees. But once again, that is all else being equal and, you know, having a flat market from from where we are now.

Emil Janssen, Analyst, DNB Markets: All right. Thanks. And another question, the fact that the tax expense was so low in the quarter, is that just because of deferred taxes from previous quarters when earnings were negative or is there something else? And what should we expect in terms of a normalized tax rate going forward?

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: So the first part of your question, the answer is yes. For the second part is, of course, I mean, assuming normalized taxes, as corporate taxes based on our European composition.

Emil Janssen, Analyst, DNB Markets: All right. And just a final question. I know we’ve already talked about Cactus for a long time, but just one question. For transaction of this size, there would be a substantial due diligence process and so on. Now if let’s say that tomorrow you were to receive a bid that you’re more than happy with, how long would it then take to go through the whole process and close the transaction?

Daniel Gorosh, Interim CEO, Cattella Group: Approximately three months, I would say. If you have in a normal transaction, if it’s like a rather clean structure, transactional, this magnitude will take approximately three months from the receiving of a strong offer.

Emil Janssen, Analyst, DNB Markets: All right. That’s very helpful. Okay. Those are all my questions. Thank you very much.

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: Thank you. Thank you, Emil.

Conference Operator: As a reminder, if you wish to ask a question, please dial 5 on your telephone keypad.

Michel Fichier, CFO and Head of Investor Relations, Cattella Group: Before I hand over to Daniel, we received one question online from Max Adolfsson, regarding the the committed capital. And I guess that is capital commitments into investment management. And it’s on the same levels as we have gotten used for two over many quarters, 10,000,000,000 Swedish approximately. And it’s been on those levels during quite some time now because it’s been a market where it’s been tougher to deploy that capital into assets going into the funds. So we have seen throughout these two years a bit of a lower inflow at the same time the investments into new assets into the funds has been slower.

So it’s been fairly stable and hopefully we can deploy the capital quicker going forward and also getting more commitments into our funds going forward.

Daniel Gorosh, Interim CEO, Cattella Group: Good. Alright. So thank you all for listening in. As we mentioned, we are satisfied where we are, and we are also really positive towards the coming year here and we are now operating as we mentioned under our refined strategy. So we are looking forward to see you all again in next quarter and hopefully we’ll be able to report some good quarter, first quarter for 2025.

So thank you all for listening and

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