Catella AB (publ)

Good morning, and welcome to Catela's Interim Report for the first quarter of 2024. As usual, I, Christopher Abramson, the CEO, together with Michel Fichier, our CFO and Head of Investor Relations, will walk you through the highlights of the quarter. After the presentation, we will open up for a Q&A session, and the materials and reports are, as always, available on our website. So to remind you and for potential new listeners, I'd like to start the presentation with a brief overview of Catella starting on page three. Catella operates in three property-focused business areas, investment management, principal investments, and corporate finance. We manage just over 150 billion Swedish kronor in our pan-European investment management platform. About 70% of the assets under management are managed in property funds and the other part in a significant number of asset management mandates across Europe. Principal investments is where we invest our own equity into a broad and diversified portfolio of European investment projects together with investment partners. The vast majority of our investments are managed by our own asset management companies across Europe. Managing our financial partners' investments as well as our own and generating additional fee revenue streams besides our targeted returns on our invested capital. Corporate finance is our real estate advisory and brokerage arm with leading positions in large European markets. Corporate finance is also an important internal advisor to our other business areas, investment management and principal investments. So with that brief introduction, I'd like to start this quarter's presentation with a market summary on page four. Not a pretty picture, obviously, but following up, let's call it a slightly improved market and also a better outlook in the fourth quarter of last year, the market has returned in the first quarter of 24 to being more cautious again. Overall transaction volumes, as well as capital inflows in the European market, remain very low, especially compared to the peak, of course, in 2021, and also showed a decline compared to the last quarter. Since the peak in 2021, transaction volumes have decreased by nearly 80%, and obviously a very tough market environment to operate in. Our view is that buyers, as well as sellers, continue to both wait for more predictable financing conditions and even the first actual interest rate cuts. At the same time, central banks, especially the Fed, continue to search for clear and predictive evidence of stabilized and lower inflation rates going forward. It also seems that most buyers have real patience waiting for values to continue to bottom out. Based on that continued uncertainty, we expect that it'll take a couple or a few more quarters before we see a clear turnaround in the transaction market. When this materializes, however, Catella can benefit from our strong position and pipeline that we see in all our business areas. So with that brief, not very positive market backdrop, I'd like to move on to page five for a summary of our key operational highlights of the quarter. So although the market continues to be quiet, we are focusing on adapting and evolving our business to be both resilient in the current environment and opportunistic looking forward. On the cost side, we made material adjustments to right-size our cost base during last year and have continued to make additional adjustments in 2024. So in addition to adapting the organization to a slower market, we've also made progress in other areas to capture growth opportunities going forward. As an example, we've developed an AI tool, artificial intelligence, that identifies locations suitable for various living development projects where the supply-demand disconnect for living options is substantial and potential for value growth is high. And that intelligence is currently being used in the launch, soft launch, I should say, of our new product offering, European Living Development. That's a strategy that's been developed for some time to meet the extensive demand for and, frankly, increasing shortage of modern, sustainable and affordable rental housing across Europe, which was most recently in the news this morning as a pretty significant political problem. Besides meeting the substantial undersupply in Europe, it also meets investor return requirements in a higher and possibly for longer interest rate environment. This, together with some other new product developments that we're working on, are currently being soft launched to investors across Europe and elsewhere. The ambition is to create the next generation of flagship products to support long-term AUM growth with substantial future returns. So also last year's acquisition and integration of Aquila Group into Catella also progressed as well. We and our new French colleagues are benefiting from the synergies of being an integrated part of a pan-European Catella. The initial seed investment in the newly launched PICA fund for retail investors has grown to a portfolio yielding competitive returns of about 8% with assets sourced by Catella colleagues in both the Netherlands and in Spain. And as a last point on group level, we continue to have a strong balance sheet and a very solid liquidity position, critical in this market, of course. And we continue to review several opportunities, but as always, we, as all other buyers, are somewhat patient, and the investment opportunities really need to prove the ability to tick all the boxes that Catella has for our own investments. Of course, meeting our return hurdles, also generating investment management fees, and having the right long-term majority partners investing alongside of us. We then continued to investment management. AUM, as its under management, ended broadly flat compared to the last quarter. We had some currency tailwinds, but these were offset by valuation decreases and by one asset management mandate in the UK, which came to an end. That mandate totaled close to 6 billion Swedish. and was initiated based on an aggregation strategy in London. Once the portfolio reached the targeted size, after over six years, the mandate has ended as a natural part of the strategy. And this is, of course, normal course of business in our asset management segments. Capital inflows into funds remain limited in the current market, like for most investment managers. But we see retained assets under management as a strength and a solid performance. Interest in pursuing investment in distressed assets and opportunistic investments continue to grow. And in parallel to launching our new flagship strategies that I mentioned earlier, after the quarter ended, we entered into a couple of new asset management agreements in this type of space, which is very encouraging. Overall, however, in this market, the outlook remains unchanged and relatively flat with valuation pressures for the coming couple of quarters. And at least until the market gets a little bit more confidence and certainty back, we are planning for a pretty flat outlook for AUM in the short term. Besides soft launching new product offerings, we firmly launched our second Contella Logistics Fund, which was developed based on continued investor interest from our first fund, but also for competitive returns and a strong outlook for certain types of pan-European logistics properties across Europe. And we're very excited about getting that product out in the market. And as a final point for investment management, I'd like to highlight that in that segment, as well as our other business areas, we have managed to broadly offset pretty drastically in some cases, lower revenues and volumes with cost reductions. And as such, we are now well-positioned not only to deliver a good fixed cost coverage, but also well-positioned to capture growth in an even more cost-efficient structure going forward. So our principal investments, as mentioned on our last earnings call, we sold the last development project from the divested ImproHubs platform in January. And the sales strengthened our liquidity position in the first quarter by around 280 million. And since the start that Cattell Infrared's joint venture has resulted in 225 million in profits to Cattell shareholders. Also after the quarter ended, we entered into an agreement to divest our logistics development project in France called Collaxis. We have about 270 million invested in this project. and expect to close the transaction in September or October. Realizing only a modest profit, but again, in this current market, we focus on making even more liquidity available for new investments going forward. And I think it's a pretty solid sign of strength to continue to divest and exit projects that were entered into a pretty tough market timing with modest profits. I know, of course, that many of you are interested in sales process of Cactus, our two residential towers in Copenhagen. And without having anything firm to report, I can just say that we are progressing with the sale as planned. So at the right value in terms, we could, as previously mentioned, enter into an agreement in the coming months. Of course, this is a very large asset and not a quick transaction to turn around, but cautiously optimistic there. And then finally for corporate finance, transaction volumes in the quarter came in at even lower levels than last year, which of course was reflected in the business area's top line. In the Nordics, we experienced a bit more activity than in continental Europe, but it's hard to read much more into this than timing of certain large transactions. Even though our Nordic colleagues have indicated a somewhat more positive feeling in the market and the pipeline is building up. The pipeline across Europe, I would say, for potential transactions is strong. It is especially in complex and large transactions, which is our speciality. it really continues to be challenging to get execution of these transactions in the short timeframe. They will happen, but it really takes quite a long time to close and therefore generate revenues. But with a lower overall cost base, corporate finance is in a good position to grow with and above the market when a more normalized volumes return. So let's move to page six. for a summary of the group's financial results in the first quarter. So total revenue decreased by $44 million as an effect of lower transaction volumes affecting all of our three business areas. And again, I'd like to remind everyone where we started here with the volumes in the market down 80% off the peak. So put those numbers in context here. EBIT ended at $4 million compared to $2 million last year. And it's also worth in the comparison there year over year that mark to market valuations of our seed investments in our various funds impacted EBIT negatively by $8 million. So a like for like basis, you know, up by about $10 million from last year. I would also say that having a higher EBIT despite a nearly 10% drop in revenues is the effect of our continued focus to adapt the organization throughout last year and also the beginning of 2024. And I would call that a pretty solid sign of resilience and adaptability in the market. And with the market volumes that we're talking about, Even a very modest result on the positive side, I think, is not too bad. We want something completely different, of course, but we're dealing with a market that we haven't seen in about 12 years. Investment management, AUM, has increased by 11 billion over the last 12 months. As already mentioned, there was a slight decrease in the first quarter driven by the large ended mandate in the UK, primarily. So despite a slower transaction market, the underlying business model continues to perform, and we maintain our emphasis on improving our fixed margins and developing new products. In principal investments, it was a quiet quarter, but with that last InfraHub sale and the agreement after quarter end to sell the logistics project in France at a small profit, we have materially stronger liquidity position going into this market environment. And then in corporate finance, we experienced a weak quarter as an effect of a very weak transaction market, but the lower cost base offsets some of that and leaves us in a pretty strong position to grow profitably when the market cycle returns. So let's move to page eight to discuss investment management in a little bit more detail. Since the inception, I think this is important, we keep Highlighting this is that we are a long-term company and a long-term investment, we would call for our investors. Since the inception of investment management, we have delivered a strong average annual growth rate of about 20%. And over the last 12 months, AUM has increased by 11 billion. Of course, the largest movement came from the acquisition of Aquila Group, adding a more diverse capital base. and additional competencies to meet opportunistic investor demand. And also, importantly, broadening the investor base also to retail investors. As mentioned, we see limited growth in funds in the near term and a pretty slow buildup of new capital into our new product offerings, even though, you know, if you get the right partner, it can be a bit of a one-time pop. which we're working on. New asset management mandates, however, is most likely the main source of growth during 2024, where our skilled teams across Europe have the history and competence of managing distressed assets and opportunistic investments in a very different market setting. And we, as I mentioned earlier, have already seen a couple of those coming in after the quarter end, which is very encouraging. So on page nine, for investment management, it's a very muted transaction market, of course. And with those volumes being very, very low, led to similar top line as the last quarter, the same quarter last year. Stable fixed fee revenues and very limited variable revenues. Again, showing a decent level of profitability with virtually zero market activity is a sign of our long-term strength and underlying profitability, which is really what we're working on improving continuously. And to increase our EBIT margin in this environment, again, I think is a sign of strength. We have continued to reduce the overall cost base, and additional initiatives are being pursued to even lower our fixed cost base relative to AUM going forward. It is critical. for the future that we continue to focus on efficiencies, scalability, fixed margins, and also investing in digitalization and further efficiencies as we launch new products. And we will continue to speak more about this throughout 2024. So let's go to page 11, an overview of principal investments. The principal investment portfolio consisted of eight active investment projects at quarter end. plus a number of smaller seed investments and equity co-investments in clients' aggregation mandates. The projects are well diversified across asset classes and geographies. And as you know, they are run by our local Cattell teams, thus securing the competence, execution, as well as additional revenues within the investment management business area. Founded on our strong financial position, we remain patient with our projects and we're ready to utilize our increased liquidity in new investment opportunities as they emerge. And from that perspective, with continued strengthening our liquidity and having our teams in place, this currently changing and challenging market with repricing of assets can be seen actually as a good opportunity. for Catella principal investments, whether that is in the next couple of quarters or a bit longer term remains to be seen. So let's focus on corporate finance on page 13. Tough, of course, transaction market remained weak and was even slower compared to the last quarter. Overall European transaction volumes were down 26% year over year and our revenues, Catella corporate finance reduced by similar figures. Of course, we have reduced OpEx cost base quite a lot. As you know, in the last couple of years, we also exited a couple of markets, which really has helped us remain close to a break-even point in this, frankly, brutal environment. And we can mitigate a lot of that revenue loss and You know, we are now, I think, I wouldn't call it restructured, but repositioned to return to even higher margins on comparable volumes going forward. As I mentioned earlier, the pipeline of transactions remains strong, but closing transactions and generating revenue takes a long time, so it's really hard to predict, even though We have a lot of activity going. It's really hard to predict exactly when those revenues materialize. But, you know, some encouraging signs. And again, if you have a couple of big complex transactions, the fee generation can be quite material. And so we'll see how that plays out in the coming couple of quarters. So with that, I'll hand over to Michelle, who will share our financial summary beginning on page 15.

Thank you Kristoffer and good morning everyone. As we've already mentioned the quarter was negatively impacted by our lower variable revenues which is mainly an effect of the overall and very slow European transaction market obviously having an effect on all of our free business areas. The work to adapt the organization and to reduce costs during last year as well as beginning of this year, is now, however, also reflected in our numbers. And this is the main driver behind a slightly improved EBIT, despite the revenue shortfall. An additional impact, which is also market-related, is the mark-to-market get valuation of our fund investments in the principal investments business area, where these changes on valuation on fund investments to group EBIT from 12 million to 4 million, which we have in our report today. Looking below the EBIT line, FX effects contributed positively this quarter with nearly 56 million. But besides these positive FX revaluation effects, actual costs for current debt as an effect of increased market rates, mainly as the average interest on the outstanding bond increased compared to last year. Altogether, financial net ended at a positive 23 million, leading to a positive net profit of 26 million after tax for the quarter. Continuing to page 16 and looking at our balance sheet and financial position, and I would also, during this quarter, like to spend some time in deep diving into our balance sheets, mainly with the emphasis on our various levels of ownership and how that is accounted for on the balance sheets. The way that our balance sheet should be read is that overall majority of our liabilities are related to development projects and principal investments. These projects are in turn always valued at cost. So hypothetically, if all our projects were divested today, at cost, our net debt would be negative after adding cash, i.e. we would be holding more cash than our financial obligation. Since development projects are treated differently depending on Contella's ownership, we have provided the slide that you have in front of you to help you in your understanding. And we start with the projects where we have an ownership less than 50%. They are consolidated according to the equity method, i.e. our share of equity in the project is reflected online holdings in associated companies. Or investments not related to project developments, such as our holding in Pamika, the seed investments in Catella Fastighets Fund, the UK REIT Fund, and Aquila Group's Upeka Fund are classified as other non-current securities. Turning to investments where we have an ownership above 50%, these are fully consolidated, i.e. 100% on the asset as well as liability side. even though the ownership stake is less than 100%. Our majority-owned projects are therefore fully consolidated and reported as development and project properties. So in summary, our investments in development projects and seed investments are reported on different lines, depending on our ownership stake and the type of investment. If we then turn to our financial position, at the end of the quarter, we had an equity ratio of 36%, and our cash position was 1,150 million, which is up from 800 million at the year end. And that's following the sale of SRS in Jönköping. And with that, I'll hand back over to you, Christoffer.

Thank you, Michel. like nice to hand over with a very large liquidity number I'll take that so before we conclude and open up for Q&A I'd like to briefly summarize the quarter from our perspective on page 18 this is you know we we are in a in a brutal market and it's hard to predict exactly when and how things will will turn and in what segments but I think the The focus here, as always, is long term. We create long term value for our investors, long term opportunities and returns for our financial partners. And so let's talk a little bit about that. So the market environment is uncertain. And after seeing some glimpses of recovery in the last quarter, we experienced the slowest quarter since Q4 2021. during the beginning of the year. But again, the resilience and the actions that we've taken leads us to continue to deliver at least modestly positive results. This has an impact on Cotella and our muted revenues in all our business areas is something that we are struggling with. But what we do is focus on the right things and the right course of action to create long-term value for our shareholders. If we look a little bit about since the beginning of the market turning at the end of 2021, we have how focused intensely on adapting our business to create a much more resilient business model, at the same time being positioned for opportunistic and core growth. We take some examples. In the end of 2022, We made a very large disposal of assets in two of our biggest funds at pretty solid values, exit values, where we freed up significant liquidity, both for strong fund liquidity in general, which is critical when investors get a little nervous, and also for new investments at new price points when you recycle that capital in the funds. We also sold pretty large parts of our principal investments portfolio at strong profits early in the market correction, securing the capital needed to continue investments in ongoing projects that we support and continue to see potential in. And of course, the liquidity position that Michelle just mentioned is very strong to capture new opportunities at a completely different point of the cycle. We have also deployed some of that capital into new ventures, such as the acquisition of Aquila Group, where we also provided seed capital for growth in new fund strategies. And additionally, we have invested and continue to invest in artificial intelligence and new product development and other digitalization initiatives to increase our competitiveness. For new product development, capital raising takes time, not least in this environment. But with investment strategies based on research and supported by AI, our capital raising team has established a good foundation to capture future growth and beginning to hit the road now and really try to raise capital actively despite the market environment. And then besides investing for future growth, made the necessary cost reductions to meet a different landscape and a different market across the European transaction environment. After, we should always remember this, more than a decade of excellent consistent growth. This is a brand new world, if you will, at least momentarily. Simultaneously, we have focused on increased efficiencies by investing in various digitalization solutions, which jointly with a lower cost base and increased collaboration and synergies, that is creating an even more resilient and efficient Catella to support future profitable growth. So in conclusion, we will continue on the path of simply making the right decisions, both from a value protection and from an optimistic growth perspective in what we believe creates long-term value. and what we believe is sustainable, meeting investor demands, and, of course, makes sense throughout any business cycle. And with that, I'd like to thank you all for listening and open up for questions. Thank you.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Patrick Bertilius from ABG. Please go ahead.

Thank you. Can you hear me?

We can hear you fine. Good morning, Patrick.

Perfect. Thank you. Good morning. Yes, a few questions from my side. First off, this asset management mandate that was terminated here in Q1, Can you elaborate a little bit, please, on the earnings contribution from that mandate?

Sure. It was, as with some of these longer term big aggregation mandates, you have a lot of upfront fees when you add assets. And currently, at a run rate at exit, this mandate had a revenue of some, I think, 4 million, depending on exactly the currency, but 4 million Swedish. And frankly, the net margin on that is, I wouldn't say it's immaterial, but it was a low margin project, which some of these aggregation mandates tend to be at the end of the cycle, unless you have an upside on the promoter, the exit, which in this case was not the case. About 4 million Swedish of revenues and relatively modest margins. So while we never like to lose any mandates, the impact on the AUM is, the headline there is a lot bigger than maybe the bottom line contribution.

Okay, perfect. Thank you. And then you mentioned Cactus and that you were cautiously optimistic.

but can you please for our understanding uh elaborate a little bit what is the delta here since uh the last time we spoke in connection to the q4 report what has happened since then oh well i can't say anything about what happens in in a in a live process but uh what has happened is you know the second to last commercial lease is final and the last outstanding commercial lease is basically one condition precedent from being also executed. So that means largely a completed asset. Then, of course, there will be tenant fit-outs and improvements needed for some time to create a fully stabilized asset. But good progress and fantastic occupancy levels and rental levels for the for the residential part in the in that sort of live process is you know we can't comment on that all we can say is that it's it's moving forward and I think we feel pretty good about having the optionality of being in some live discussions and if those are very good and we come to some agreement at the right terms we can execute And if not, we feel pretty confident that later on in this year when interest rate reductions hopefully take hold, you know, maybe an even broader core investor market will return and then we have the opportunity to exit at that time. So I think we feel pretty good. And, you know, the indications that we have on value are such that we would be able to transact on a positive note. Unfortunately, that's, as you know, about as much as I can say.

Perfect. That is good enough for me. Thank you. And then if we move over to this other principal investment project that you mentioned here, the Polaxis project, can you elaborate, please, a little bit on the IRR of this transaction and the liquidity impact?

Yeah, the liquidity impact is going to be 270 million, give or take. And IRR is not going to be one of our higher ones. But as I mentioned earlier, a lot of these projects that we're working on exiting at the moment were entered into, in hindsight, not at the best time. And I think for us and what we have showcased over the last few quarters and continue to do is, I'm not saying we're better than anyone, but what we have done is exit and get through this whole investment cycle so far without any material losses. And I think that's, if you look at other investors and other developers, that's pretty good. So to have a, you know, I think it's a high single digit IRR on this project, but to have a positive return and get a return on our shareholder loans and then the invested capital in this market is not too bad. And frankly, specifically the Polaxis project ties up quite a bit of capital, as I mentioned, about 270 million. And to get that out, and to be able to reinvest that with a modest profit from a pretty tough cycle, I think, is not bad. We have a very professional, very good buyer in the final phases there, and then just working on the closing process. But a successful exit of a pretty large, complex project, I think the buyer will also do well. because they have additional development opportunities on that site, which we thought was too much exposure and risk for Catala's balance sheet. It's a very big site. So I think in balance, we'll come out with a decent profit for our side, and it's not too bad overall.

Great, thank you. And did you say that that is expected to close in end of Q3, beginning of Q4?

Yes, it's hard to say exactly, but for us it doesn't really matter, but it has to be a good closing process, but it's likely to be September or October, so it's hard to say exactly which quarter.

Great, thank you. And then my last question is coming back to a comment you made there on investment management that you see some additional cost initiatives within this segment in order to improve the margin. Can you please elaborate a little bit more on that?

Yeah, it's I would say less of the sort of very focused resource work that we did in in 23 and more of continued work on efficiencies consolidation of processes uh and digital solutions that optimize our performance and you know we're rolling out various systems where we've had the luxury of just a great market for for a long time and and now we're taking the opportunity to invest in in a lot more automation, a lot more simplifications. And that's going to benefit not only investment management, but all our business areas. A lot of these are tools that will be across Cotella and not just investment management. But there's an element of both centralization, consolidation, and automation of core uh operational processes uh that will that will you know obviously it takes a bit of time before that fully flows through the the bottom line but but it's the right long-term process and we're working on it very very actively at the moment of course thank you and if we try to break that down into two absolute numbers then what kind of uh expectations do you have that this could uh

drive in terms of absolute cost cuts?

Well, you know, we can't talk about projected numbers. So we are working around the clock to mitigate any revenue shortfalls in this environment. But most importantly, we're working on setting up a more efficient and more right-size Catella to grow in the future. But as you know, we can't talk about exact numbers for the forecast.

Okay, that is fair. Thank you. That was all for me.

All right. Thank you, Patrick.

The next question comes from Emil Johnson from DNB Markets. Please go ahead.

Good morning. Thanks for the presentation and thanks for also making the PDF report searchable this time. It's very appreciated. I want to start by asking, you mentioned that you want to launch some new products that are more suited for the way the market looks right now. Could you elaborate a little bit on what kinds of products those are and more importantly, what makes them What makes those products in particular more suited for how the market is now as opposed to a couple years ago?

Sure, of course. I think we've had both in our funds, primarily in our funds and somewhat in asset management for quite a long time, had an incredibly successful run as you've seen in our AUM development and profits in core slash core plus investment products. And that is really hard to sell in the current interest rate environment and the somewhat hesitant way of looking at allocation back into real estate at the moment. So what we've been working on for the last couple of years are a number of strategies based on our research. on uh broadening our offering to more value add and opportunistic strategies so that's the number one sort of uh change that we're taking broadening our product offering and and that you know it sounds obvious but it takes time uh when your organization is completely you know set up to deliver very specific types of investment strategies, especially from the fund side. Luckily though, for Cotella, given our experience with asset management across all our markets, where they're really specialists in value add and opportunistic investments with their respective partners. And of course our experience from principal investments, which is very optimistic, you know, we have that competence across the group and the, what we've been working on is doing the sort of group research on what we believe are the right products and then putting all the asset management entities in our head office investment resources together with our fund platforms to launch what we think will be the right products for the future. So I mentioned European Living Development earlier, I think hardly a day goes by in the news where we're not talking about a housing crisis in pretty much most European markets. And we're not alone in this space, but there is a need for pretty much every investor and every politician to take very, very swift action here, especially on the sustainable and affordable side. And that's what we're doing. We are trying to identify the right markets where the opportunities for value growth are the greatest and where we have our local confidence. And I think from being vertically integrated with our asset management entities across many European markets, that's a strength, a competitive strength that we have that many others may not have. And then, you know, I don't want to, you know, too soon but we have one or two other strategies that are being launched soft launched and marketed and not marketed per se but we're having the conversations with select investors that that suit these types of strategies could be a slightly different asset class that we have done in the past but most of them if not all are going to be in the value-added and optimistic space some core plus where we feel we have the right competence and the right pipeline. And that is new. And it takes a little bit of time to develop. And it takes, you know, in today's environment, quite a bit of time to raise the capital. But that's what you have to do. And again, you know, getting these up and running, that's for any investor in Catela's shares is, you know, you should look three, four, five, seven years ahead. This is where the future is. performance fees, the future real AUM growth will come from. And then, you know, we stand ready with the first class core products when that investor market returns.

All right. Thank you very much for the answer. And have you seen, if we compare to the end of the last quarter, have you seen any change in terms of capital flag for withdrawal in investment management?

I'm sorry, I missed that last sentence there.

Have you seen any changes in terms of capital for withdrawal?

Yeah, we have. Positive, frankly. We look at this, I wouldn't say daily, but at least weekly. I have a very long-term sort of liquidity outlook for every single fund. And, you know, Most of our colleagues in our fund management businesses work on this very aggressively. It's a very defensive focus today, which is not the most fun, but it's critical. You have to help your investors make the right decisions and how to retain that capital. We have over the last couple of months retained and canceled redemption requests about a billion and a half just in the last couple of months. And that's a fantastic result, which is one of the key aspects of keeping our AUM flat. So we have on a net, if you exclude the large mandate that ended in the UK, the inflows and outflows are pretty much a zero sum game, which in this market is, I wouldn't say it's remarkable, but at least it's solid. We hope that everyone who's been working for the last 18 months on defensive will turn on the offensive soon enough, but keeping that capital in is absolutely critical, of course. We feel that we have the return history and the quality in our funds to keep investors invested and keeping their capital in. so far been successful of course there's a there's a pipeline of capital calls that we're managing constantly and and there'll be some outflows as as always happens but um you know we're also finishing development projects and getting some inflows and and manage it to keep keep aum flat at the moment all right that makes sense and um i'm also wondering what when you uh what

What behavior do you see among your counterparties when looking at new projects for principal investments? Are people sort of reluctant to do business or are they stingy on pricing or what's going on?

I think the observation currently is that it's very much a case-by-case basis. Most of our opportunistic partners, be it private equity funds or family offices that are looking at investing with us in some sort of strategies and how we're looking at, we might say this type of asset class in this region, we have a pipeline of five, six assets. It's going to be a great portfolio. I think the general sentiment is, okay, that's great. Let's take one asset at a time. Let's review the underwriting maybe in more detail than would normally be the case. And that's okay. As long as you have the right pipeline and you can show that the strategy is consistent and you get one or two assets and you build from there. So I'd say it's a bit more detailed. It takes a little bit longer and it's more, you know, asset by asset base at the moment. which of course takes a bit longer. Now, there's also quite a lot of capital on the sidelines, which means that every now and then, and I think even more maybe towards the end of the year, people are going to have to invest more in bigger transactions. And of course, that's something that we're working on. But doing the right thing for our partners and our investors, on an asset by asset is something that we have to do today.

All right. That makes sense. And in the income statement, there was large positive impact from other financial items. And I'm wondering how much of that line item is FX related?

I think we've discussed this before. The majority is FX related when it comes to other financial items.

I think it's about 50. I think Michelle mentioned it in the presentation. Offset, of course, by the interest expense on the bond. that brings your financial net to about 25.

All right, but those 50, I think 56 million, are those pretty much exclusively FX related or are there other things?

Yes, they are. Yeah, the majority is FX related. As we revalue the loans, internal loans, which the majority of them are in Euro or British pounds, which of course has been a positive impact on that specific line.

Yeah, but is there anything else significant in there that is not FX related?

Those are the big movements, which you will see on these lines. Of course, there are some other less smaller impacts as well, but the majority is ethics related.

All right, thanks. And one last question. When looking at Cactus, how much revenue does that property generate on an annual basis?

It is, let's see, what is it running today? About 60.

I mean, it's nothing we have disclosed externally for a starter, but as we've mentioned previously, it's a cash flow positive holding. And that puts us in a good position to hold this asset until we find the right buyer at the right terms to divest it.

obviously virtually fully occupied from a residential perspective, but the commercial revenues are still modest. It's not fully stabilized yet. But again, like Michelle said, let's call it neutral bottom line, which is an easy way to hold it at the moment. But look, we're not in this asset for short-term revenue generation. This is about creating the best possible assets to a prospective buyer and stabilize that at a great level.

I'm thinking for investors in Catela, it would be useful, I think, to have a better understanding of the operations in Cactus in order to be able to make a reasonable projection of what you could probably sell with that.

Yeah, but we can't comment on that email. I can't comment on a potential purchase price. What I can say is that we are discussing with investors obviously at a purchase price or a sales price for us that is higher than our cost base and we would not transact otherwise but that's as much guidance as we we can get I mean you guys all know roughly the square meter price in this area you can do a rough yield math on a stabilized asset but but you know that's not something that we can disclose and you're also not just got to remember you're not selling an asset based on the current revenues you're selling an asset based on a stabilized operating income. So it's hard to do exact math on what you would see in our income statement.

All right. That makes sense. Well, that's it for all my questions. Thank you very much. Great.

Thanks, David.

The next question comes from Martin Wallstrom from Red Eye. Please go ahead.

Yes, hello. Thank you for the presentation and the report. Good morning. My first question is related to corporate finance. If you could give some flavor on the different markets, are there any markets or geographical regions where you feel that you are underperforming and or do you see any need for future cost cuts or just more generally adopting a wait and see approach now until the market improves?

Well, first of all, I don't, you know, we have already over the last couple of years exited four markets in corporate finance where we felt that we were not as competitive as we should be. And we now are, we remain in five markets where we think we're very competitive and have strong positions. So that's question number one. As I mentioned, I think in the first quarter specifically, we had a stronger performance in our Nordic region. That is both maybe a little bit more activity in the market. We had a very strong market share in all our Nordic markets actually in the first quarter, even though the volumes in the markets were low, we had a solid market share. And, you know, also from a revenue perspective, one or two bigger transactions can have a significant impact in such a slow market. So, so that, um, but it was, you know, good news. And I think investor sentiment and activity here in the Nordics, uh, maybe a little bit ahead, uh, at least in this first quarter, uh, then continental Europe. I think we have a very, very strong position in the French market, uh, and a strong position in the Spanish market. Um, the Spain had a, excellent last 15, 18 months from a performance perspective. The French platform had a fantastic fourth quarter and a not so great first quarter in a pretty grim French market in the first quarter. So, no, I think this is a portfolio that goes up and down in pockets and that's a strength. And from a cost perspective, it's about being smart You know, this market going forward is about being quicker and more automated, having better digital tools at your disposal, be that analytic, analytical tools, research tools, underwriting tools, CRM systems, et cetera, to be as effective as possible. And Catella is and should remain a specialist corporate finance advisor in in complex high value transactions. We're not in this market to have the biggest flow or biggest volume of transactions. We should be the best advisor for our clients on complex advisory. And that's what we're working on, having the right resources, not the right number of resources, but the right resources and the right tools. But again, you have to continuously look at what you're bringing in when you look at your cost base. But there's no time for fluff or fat at the moment. So we're being smart. We're being prudent. We're having daily discussions, especially Michelle here, having daily discussions with pretty much every platform about what we're doing and what we're doing from what's an investment and what's a cost. And you've got to be smart about it. But no huge restructuring initiatives. We've made those calls already, and now it's about being smart.

Great, thank you. And for my second and final question, I was wondering if you could give some more information on CSTOP, the progress there, and what the initial steps would be for any potential investments in the project.

I'm sorry, the second part of that question?

I want to make sure I fully understood.

so kind of like what would be the initial steps uh for that part to be divested first such a problem right yeah you have uh one the first space which is called uh that is completed uh and now almost fully uh rented so fully let that's 248 apartments uh as the first phase uh which is I wouldn't say it's being marketed, but we are in discussions with select investors to exit that in 2024. It would be a conservative guess, I think. It's about finding the right both exit price and mechanism because you can sell this asset in a number of types of transactions and we're just trying to find the right approach there. So that would be exit number one. And at the moment, we are somewhat modest in putting more equity in, so probably looking at small steps forward on the overall infrastructure and smaller next phases, but waiting until we can recycle some of the equity from the first exit, where in the past we might have gone several phases at the same time, we're being a bit more cautious right now. But this is, as you know, a decade long huge project that we think is going to be fantastic for us. But at the moment, we're trying to be smart and prudent with the equity. Of course, making sure that this progresses a little bit because you don't want, as is the case with a lot of development projects in Germany, a standstill. That's not good for investors. It's not good for residents. So we are, of course, working on

making sure that that it continues to develop but at a reasonable pace that was all my questions thank you very much thank you there are no more questions at this time so i hand the conference back to the speakers for any closing comments

Okay, well, thank you very much for listening and for some very insightful and thought-provoking questions. We'll take those and do some further analysis, and we hope that everyone has a wonderful rest of the day, and we'll speak to you at the next quarter. Thank you.