Catella AB (publ)

Welcome to the Cotella 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 5 on their telephone keypad. Now, I will hand the conference over to the CEO, Rika Luka, and CFO, Michelle Fishier. Please go ahead.

Good morning and welcome to this webinar where we will present Cartella's interim report for the third quarter of 2025. My name is Rege Luecke and today it's my first presentation of Cartella's quarterly performance as the new CEO of Cartella Group. Together with me, I have as usual, Michelle 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 reoccurring fixed revenues as the originator of real estate investments. We also need to further align our core functions as most of our businesses outside of Sweden. This will have an effect on the organization going forward. An important step was the announcement of Dominik Röhrig as our new head of investment management starting March 1st, 2026. With his 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. And as usual, we will open up a Q&A session after the presentation. So starting with a brief overview of Catella. Catella manages nearly 160 billion in assets under management with a revenue base of 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 reoccurring 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, following a two-year sharp decline of transactions. Transaction volumes are important for Cotella as it is 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. But 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 breakdown, 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 15 million lower year on year. Also, corporate finance had 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 business 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 4 billion compared to previous quarter and 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 Cactus at 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. But 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 an 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 25, 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 is 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 reoccurring revenues. I believe that own investments supporting increased, I believe in own investments to support increased and stable cashflow 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's 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 Gouache. 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. So 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 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 UK and Finland. In the quarter, AUM grew by nearly 4 billion with nearly 3 billion through asset management mandates and 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 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, but looking at historical Qs Q4s, you will note that the four quarter is generally the quarter where we earn most variable revenues. And 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 lower OPEX. And in this quarter, it specifically mitigated the 20 million revenue shortfall, leaving EBIT broadly unchanged. If we then flip to principal investments. Currently, we have 1.1 billion invested, where 0.8 billion is in investment projects and 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 Ketela's usage of own balance sheet for investments is not a separate business area, as our ambition isn't 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 end of this quarter, all current investments were progressing according to plans and expectations. And additionally, fund investment 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 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. But 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 30 million compared to last year. And 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 40 million compared to last year. If we stay on the items distorting comparability, Following the sale of Cactus, 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 10 million lower EBIT effects following the divestment of Cactus. If we then move on to items below EBIT, financial net, as you see, is substantially lower than last year. And 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 Cactus 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 28 million, which is slightly lower than last year, but 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 cactus, 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 1.6 billion, a decrease of 100 million compared to last quarter as the effect of the repurchase of bonds, which we carried out. And 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 1.4 billion if we then add our current cash position of the 1.6 billion we reach a total of nearly 3 billion if we then deduct our market debt and financing of projects this takes us to a cash position a bit north of 1.6 billion Our cash position alone exceeds our current debt, and 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 Cotella during the market downturn. And following the sale of Cactus, we now find ourselves with a significant excess liquidity. And this also gives us relevant headroom to pursue new investments aligned with our investment criteria, supporting AOM growth within investment management. It also enables further reduction of debts and other shareholder-friendly measures. With that said, I'll hand back over to you, Rikke.