Catella : Annual Report 2023

ANNUAL REPORT

2023

ANNUAL REPORT 2023

23

THE SUSTAINABLE LINK BETWEEN PROPERTY AND CAPITAL

THIS IS CATELL A

OPER ATIONS AND MARKETS

SUSTAINABILIT Y REPORT

SHARES AND SHAREHOLDERS

CORPOR ATE GOVERNANCE

FINANCIAL STATEMENTS

CO N TE N T S

T H I S I S C AT E L L A		OPE R AT IO N S A N D M A R K E T S	S U S TA I NA BI L I T Y R E P ORT
The year in brief	4	Corporate Finance	14	Sustainability at Catella	20
CEO's comment	6	Investment Management	16	ESG strategy	21
Strategy	9	Principal Investments	18	Environment	24
Sustainability	10			Social	28
				Governance	30
				EU taxonomy	33
				Sustainability data	36
				Auditor's review	40

S H A R E S A N D S H A R E HOL DE R S C OR P OR AT E G OV E R NA NC E		F I NA NC I A L S TAT E M E N T S
Catella as an investment	42	Board of Directors	52	Directors' Report	54
Shares and Shareholders	43	Group Management and Auditor	53	Consolidated Financial Statements	60
				Parent Company
				Financial Statements	110
				Auditor's Report	119

P. 2

THIS IS CATELL A

OPER ATIONS AND MARKETS

SUSTAINABILIT Y REPORT

SHARES AND SHAREHOLDERS

CORPOR ATE GOVERNANCE

FINANCIAL STATEMENTS

A SUSTAINABLE

INVESTMENT PARTNER

Catella was founded in 1987 and the head office is located in Stockholm. With around 500 employees at over 25 offices in Europe, Catella offers professional advice, innovative property funds and management mandates, and completes proprietary investment projects. The business is run through three business areas: Corporate Finance, Investment Management and Principal Investments. Since 2020, Catella has shifted its strategic focus towards property.

ANNUAL REPORT 2023

P. 3

T H I S I S C AT E L L A

OPER ATIONS AND MARKETS

SUSTAINAB ILIT Y REPORT

SHARES AND SHAREHOLDERS

CORPOR ATE GOVERNANCE

FI NA NC I A L STATEM ENTS

THE YEAR IN BRIEF

atella operates in 12 countries

1. and has a strong local presence with outstanding expertise on

the markets in which the company does business. A majority of Catella's companies are part-owned by partners, which generates an entrepreneurial culture and profit-sharing incentives that correspond to Catella's overall financial targets. The organisational structure promotes synergies through collaboration within and between the business areas.

The structure provides an established platform where employees from different countries and business areas can exchange knowledge and client contacts, and coordinate activities. This enables Catella to create innovative offerings that attract both local and international investors.

In 2023, Catella's sales totalled SEK 2.3 billion, with assets under management of SEK 152 billion and principal investments in development projects of SEK 1.7 billion at year-end.

Events in the year

In 2023, Catella continued to deliver on the strategy adopted in 2020, which involves a sharp focus on properties and wider expansion in terms of our offering, property types and risk categories.

Investment Management returned continued growth on a weak market. Assets under management have increased more than fourfold since the foundation of this business area in 2015. During the year, Catella continued to develop attractive offerings in sustainable investments

Our platform

A pan-European platform with a strong local

presence in 12 countries and 25 cities

Our expertise and our

offering

Focus on property investments in a broad range of risk

classes

Advanced advisory and capital market services

Purpose

Adding value together Combining entrepreneurial spirit with our European network and intelligence to deliver outstanding results for our clients

Market value	Total income*	Number of full-time
SEK Bn	SEK Bn	employees
2.9	2.3	512
As of 31 Dec. 2023	2023	2023
-10.8% change on previous year	-11% change on previous year	-0% change on previous year
Operating profit/loss*	Assets under management*
SEK M	SEK Bn
145	152
2023	As of 31 Dec. 2023
-82% change on previous year	+8% change on previous year

A wide selection of active funds and management

mandates with a sustainability focus

Proprietary investments in development projects

alongside partners

How we create value for our

customers

• A revenue model focused on the best interests and needs of the client
• Local teams with profound insight into each market
• Diversification through presence in different markets and a variety of products and assets
• Value chain based on capital, products and Group synergies
• Strategic investment of Catella's proprietary capital in
  development­projects via Principal Investments

ANNUAL REPORT 2023

S.4

THIS IS CATELL A

OPER ATIONS AND MARKETS

SUSTAINABILIT Y REPORT

SHARES AND SHAREHOLDERS

CORPOR ATE GOVERNANCE

FINANCIAL STATEMENTS

and mandates for green retrofitting. During the year, Catella completed the acquisition of Aquila Group, which contributed SEK 15 billion in assets under management and a management platform that provides synergies, in France and Group-wide. The acquisition also means that Catella is taking a step into the French private client market for savings in property funds, providing a new segment for

• Launch of a new vision, purpose and values
• Re-vitalisingCatella's internal network and the training platform Catella Academy

• New milestone of SEK 152 billion in assets under management
• Acquisition of Aquila Group, which establishes Catella on the French market for property funds and asset mandates

• Strengthened capital raisings organisa- tion and development of next genera- tion investment offering
• Divestments of development properties within Principal Investments and strong liquidity, which has enabled continued

investments in attractive development projects

• Profit before tax of SEK 42 million in a year with an exceptionally weak market climate

access to capital.

In Principal Investments, Catella's proprietary investments totalled SEK 1.7 billion (1.2). Two development projects were completed and divested in the year, which contributed to the business area's profit of SEK 42 million. The business area continued to develop existing projects

in the year. A majority of projects relate to investments in sustainable projects to satisfy demand resulting from under-supply in Europe. Just after year-end, Catella divested the final property in the partnership with Infrahubs, which has focused on

Offices

25

OULU

TAMPERE

HELSINKI

TURKU

STOCKHOLM

GOTHENBURG

COPENHAGEN

MALMÖ

DUBLIN

MANCHESTER

Development of Assets under	Income distribution
management	by Business Area

SEK Bn					%
150
126
102
78
54					Investment Management 49%
30
				Principal Investments 32%
2019	2020	2021	2022	2023
Corporate Finance 19%

Property Funds

Property Asset Management

Income by country

developing modern logistics properties in Sweden. Since the start, the collaboration has generated SEK 225 million in profit after tax for Catella's shareholders. At year-end, the business area was engaged in ten development projects in six countries around Europe.

During the year, Corporate Finance continued to consolidate its strong market position in five countries, on a significantly weaker market. Compared to 2022, transaction volumes decreased by 46% which reduced business area operating profit by SEK 55 million to SEK -33 million.

LONDON

BERLIN

DUSSELDORF

WARSAW

MAASTRICHT

LUXEMBURG

FRANKFURT

PARIS

NANTES

MUNICH

VIENNA

	BOURDEAUX
						LYON
							NICE
		MADRID

Development of operating profit	%
and operating margin
SEK Bn

1,0				40
0,8				32
0,6				24
0,4				16
0,2				8
0				0
2019	2020	2021	2022	2023

Operating profit/loss, SEK Bn

Operating margin, %

Germany 42%

France 21%

Sweden 13%

Spain 8%

UK & Ireland 6%

Denmark 5%

Finland 3%

Benelux 3%

Poland 1%

ANNUAL REPORT 2023

P. 5

THIS IS CATELL A

OPER ATIONS AND MARKETS

SUSTAINABILIT Y REPORT

SHARES AND SHAREHOLDERS

CORPOR ATE GOVERNANCE

FINANCIAL STATEMENTS

CEO'S COMMENT

STRENGTHENED POSITIONS ON EXISTING AND NEW MARKETS

Christoffer Abramson

CEO and President

hen summarizing 2023, I do so

1. with cautious optimism for the future. Last year was character-

ized by a hesitant property market due to higher interest rates and increased geopolitical unrest, which contributed to reduced activity and higher required rates of return across Europe. The outlook brightened somewhat towards the end of the year as interest rate expectations fell and rents generally continued to rise, and our assessment is that most of the price adjustments are now probably behind us - although the precise timing of the turnaround remains uncertain. This suggests that the right conditions are in place for gradual market improvements from 2024 onwards, and thus also for us as a leading European operator. During the year, we continued to develop Catella and strengthen our position as a leading pan-European property manager, investor and advisor. The acquisition of Aquila Group of France was an important step in this direction.

The hesitant property market and growing economic uncertainty during 2023 resulted in significantly lower transaction volumes and higher required rates of return. Transaction volumes on the European property market fell by as much as 53 percent in 2023 in year-on-year terms, and are down 61 percent since the peak at the end of 2021. We need to go as far back as the global financial crisis of 2008/09 to see similar levels.

Naturally, market developments have affected us too, particularly the business areas Corporate Finance and Investment

Management. Although Catella's financial performance in 2023 was not as expected, we consider it a relative sign of strength that assets under management and fixed income increased, while we continued

to generate strong liquidity and a solid investment portfolio, despite the weak market conditions. Now that both inflation and interest rates are starting to stabilise and then head down, the conditions are right for gradually increasing transaction activity over the coming year, which will benefit Catella, alongside continued opportunities to invest at new price levels.

Catella continues to strengthen position on European property market

In 2023, we continued to develop the operations in line with our overarching growth strategy of building a strong pan-European platform that supports growth, profitability and increased syner- gies. This includes actively strengthening our position within our three business areas - Corporate Finance, Investment Management and Principal Investments

• which operate in twelve European countries. As an organisation, we need to continuously adapt to changing mar- kets and strengthen our position in areas where growth opportunities exist, while also ensuring an attractive offering, the right competencies and a relevant market presence. At the same time, we need to maintain a sharp focus on efficiency and costs throughout all cycles.

In 2023, the acquisition of Aquila Group in France was an important step on our growth journey. The acquisition complements our strong operations in Corporate Finance in France, and contributes to strengthening our pan-European offer- ing. Aquila Asset Management is one of France's largest independent property managers, with over EUR 1.4 billion in assets under management. The acquisition was also strategically significant as, through Axipit Real Estate Partners, one of two legs within the Aquila Group, it established us in a new important segment in the market for private capital just as new funds are most attractive due to higher required rates of return. During the year, we established a Group-wide function for capital raising through the recruitment of a Head of Capital Raising. The recruitment creates a total offering aimed at attracting global customers and capital, and thus expanding our investor base. We now have an experienced and competent team in London which, in close collaboration with local experts, can design tailor-made strategies for property investors globally. This is an excellent example of how we benefit from our strong entrepreneurial culture and local presence in terms of our institutional pan-European offerings.

At the same time as we are advancing on attractive parts of the market, the changed market climate has led us to adapt other parts of the organisation. In order to ensure good cost control and efficiency, we have been required to reduce headcount by some 30 roles. Most of these

ANNUAL REPORT 2023

P. 6

THIS IS CATELL A

OPER ATIONS AND MARKETS

SUSTAINABILIT Y REPORT

SHARES AND SHAREHOLDERS

CORPOR ATE GOVERNANCE

FINANCIAL STATEMENTS

positions were terminated through natural attrition, or because previous positions were not replaced, but also as a result

of an element of restructuring which incurred non-recurring costs of SEK 10 million in 2023. This kind of measure is always challenging for any organisation, but nevertheless necessary for long-term profitability.

Our shared culture lies close to my heart, and in 2023 we focused sharply on launching an updated Group-wide vision, purpose and values. It is critical for our continued growth that we move forward together and that each employee understands their role in ensuring our success

• this is perhaps best put in combination with two of our core values: Winning Together and Entrepreneurial Spirit. Our updated vision better reflects the Catella today, after our organisational refocus: "Your sustainable investment partner - together building the link between prop- erty and capital".

Continued ESG focus for sustainable growth

In recent years, we have accelerated our ESG work and taken further steps in the area of sustainability. The property sector and capital markets both have a significant responsibility to work towards sustainable development. For us, sustainability is a strategic priority that contributes to prepare society for future generations, but also to future-proofing our business and long-term growth. In order to further communicate this we have included it in

our vision, which now clearly signals what our customers can expect from us, and what we ourselves are striving for.

During the year, we continued to integrate sustainability throughout the organ- isation, where the highest priority was developing a product offering with a clear sustainability profile for our investors. Interest in sustainable investment remains high on the agenda, and sustainability aspects are a key feature of all our customer dialogues. We are developing a number of exciting projects from a social and environmental sustainability perspective, such as energy positive residential properties Gramercy Tower, Green Point in Copen- hagen and the conversion of offices into housing outside Amsterdam, described in more detail in the Annual Report.

From a compliance perspective, the EU-directives are being tightened further and we are making preparations ahead of the new guidelines for listed companies, Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS). In 2023, we carried out a preparatory analysis that showed that we already satisfy several requirements, and have a good foundation for continued implementation of the new standards. In 2024, we are continuing the preparations and carrying out a double materiality analysis in order to identify risks and prioritise measures going forward.

Growth in assets under management

In Investment Management, we continued to make advances and recorded good

underlying growth despite a weaker market climate. In 2023, assets under management increased by SEK 12 billion to SEK 152 billion, mainly driven by the capital inflow from the acquisition of Aquila Group, but also net inflows in other areas of the operations towards the end of the year. Since the foundation of the business area in 2015, assets under management have increased more than fourfold, with annual average growth of approximately 20 percent. This is largely because we have continued to develop an attractive fund offering and management mandates in sustainable investments, at the same time as delivering strong returns for our investors.

2023 was characterized by a hesitant transaction market and reduced investment appetite, which contributed to lower income and profit for Investment Management than the year before. This was mainly due to lower variable fees and some very positive performance-based income in 2022. Divestments in 2022 also provided excellent liquidity in several funds which, given the current market conditions, is extremely important both for operations and investments in a new market cycle. Even if profit growth has temporarily slowed as a result of more challenging market conditions, we continue to strengthen the underlying business and ensuring the conditions for future income and profit growth.

By offering property funds as well as management and development of properties through mandates, we have established a broad offering that can

withstand a range of market conditions and business cycles. The strong interest in products with a sustainability profile seen in recent years has increased further, and the gap between prime assets with a strong sustainability focus and other areas of the property market is widening, most clearly in the office premises segment to date. It is also clear that industrial and logistics properties have recovered faster in Europe compared to elsewhere as a result of changed supply chain management, e.g. nearshoring. In the residential segment, the gap between supply and demand for affordable and sustainable housing continues to widen. We believe that this is a major and growing problem in Europe that will require a sharp focus from private operators as well as political decisions. The limited supply, few development projects on the market, and stabilised construction costs create promising opportunities for Catella. Our strength lies in our local competencies and project management capac- ity, which pave the way for launching new products that meet these needs.

Proprietary investments create long-term value

The core of Principal Investments is to identify opportunistic investments and to drive projects that generate high value growth alongside partners and external investors. The aim is projects that generate total returns which on average exceed 20 per- cent, while creating strategic advantages for Catella's other business areas, mainly in the form of new management mandates. The

We noted that the strong interest in products with a sustainability profile seen in recent years has increased further

collaboration with Investment Management and its existing and new investment partners through diversified co-investments in Catella's product strategies is set to become an increasingly important part of Principal Investments' strategy.

Against the background of the uncertain market conditions that characterized last year, we have chosen to optimize the pace of our projects where there is flexibil- ity, and to focus on strengthening liquidity in the near future. We currently enjoy very good liquidity and preparedness for investing in existing and new projects, at the same time as demand is strong for development and conversion of properties in order to satisfy increased demands on energy performance and sustainability. In 2024, we expect several of the ongoing projects to be divested, raising further liquidity. We continuously evaluate new investment opportunities considered to have potential to satisfy our required rate of return and that can lead to new management mandates, which means that 2024 will be a promising year.

ANNUAL REPORT 2023

P. 7

THIS IS CATELL A

OPER ATIONS AND MARKETS

SUSTAINABILIT Y REPORT

SHARES AND SHAREHOLDERS

CORPOR ATE GOVERNANCE

FINANCIAL STATEMENTS

Hesitant transaction market

Last year was characterized by a hesitant market with significantly fewer property transactions, which resulted in lower income for the Corporate Finance business area. We have focused our offering for advanced advisory services in property transactions to five countries. Catella has a strong local presence on these markets, while also offering European scope for all property-related transactions for different categories of property owner and investor. 2023 as a whole was a weak year for Corporate Finance. Towards the end of the year, we saw some glimmers of light in the form of a stronger position on the Finnish, French and Spanish markets, even if we are still a long way off normal- ised levels. We are seeing growing demand for advanced capital advisory services

in connection with complex restructur- ing, an area where we have extended our scope and participated in several major transactions in the year. I would like to highlight our role as advisor to DNB in connection with the largest property transaction in Sweden in 2023, as well as our participation in the refinancing of the Blackstone-owned Kereby portfolio. This transaction was one of the largest in the Nordics in 2023. During the year, we also strengthened our Nordic organisation further through the recruitment of a new CEO of Corporate Finance in Sweden. This further increases the scope for developing our advanced capital advisory services in partnership with Investment Management.

Priorities going forward

Looking ahead, our focus is on continuing Catella's development in various parts

of the European property market, thus improving our prospects of achieving profitable growth in the coming years. We have previously identified four strategic areas to guide this work:

1. Increasing the supply of products with a clear sustainability profile
   We shall continuously develop our offering with the aim of having a direct positive impact on the environment and society
2. Broaden and adapt our product offerings
   We shall offer and launch strategies, man- dates and services adapted to prevailing market conditions and investors in differ- ent economic climates.
3. Strengthen synergies and develop

pan-European investment strategies

We shall utilize Catella's unique position with a broad presence and local expertise in Europe to offer investors attractive risk-adjusted returns.

4. Strong financial position enables new business and expansion

We selectively evaluate strategic invest- ments that contribute to our growth and profitability.

Catella is prepared for the future

When summarizing 2023, we can conclude that it was a historically weak year for the European property sector as a

whole. The changed economic conditions, with rising inflation and interest rates, contributed to a hesitant market. It is pleasing that, despite challenging condi- tions, we are continuing to strengthen our position as a leading pan-European property sector operator.

We are now looking to the future, as outlined above, with cautious optimism. We have a strong financial position, continuously launch new products based on a changed market, and will continue to reinvest in long-term value creation

in 2024.

Catella's success is based on a unique combination of entrepreneurial spirit, strong local presence and expertise on a pan-Eu- ropean platform, and access to capital.

I am confident that with even clearer direction and vision, we will expand in the markets where we want to grow to deliver an even more diversified product offering, with increased profitability through intraGroup synergies.

To conclude, I would like to thank all of Catella's employees, and all our customers and shareholders for their continued confidence in the year. I look forward

to continuing our growth journey by creating new business opportunities and investments that contribute to long-term value creation that benefits customers, shareholders and society alike.

Christoffer Abramson

CEO and President

Stockholm, Sweden, 11 April 2024

ANNUAL REPORT 2023

P. 8

THIS IS CATELL A

OPER ATIONS AND MARKETS

SUSTAINABILIT Y REPORT

S T R AT EGY

A SUSTAINABLE LINK

Since the start in 1987, Catella's strategy has been rooted in providing a broad range of services. The company offers advisory services for acquisitions and divestments, in combination with strong property funds and management mandates for investors within a broad spectrum of asset classes on all important European markets.

SHARES AND SHAREHOLDERS

CORPOR ATE GOVERNANCE

FINANCIAL STATEMENTS

STR ATEGY

Since the start more than 35 years ago, Catella has sought to be a natural and sustainable link between the property market and capital markets.

BUSINESS MODEL

The business model is based on the capacity of the organisation to translate deep expertise into relevant advisory services that create value and economic growth by investing Catella's own and others' capital in property.

VISION

ince 2020, Catella has shifted

1. its strategic focus towards the property sector. Within the

framework of this transformation, the scope of operations has been broadened by utilising Group equity. Catella creates returns, new collaborations and synergies in the Group through principal invest- ments, co-investments with partners and direct investments. The Company's unique competencies and expertise in property management generate high risk-adjusted returns for the Company and its partners. For Catella's part, this entails limited capital risks combined with active development initiatives alongside partners.

Increased focus on value creation and opportunistic investment

The last few years' market uncertainty has increased the potential for investments in development projects and opportunistic investments, which creates value over time. Catella can attract more international capital by gradually sharpening its focus on value-adding and opportunistic investments, and expanding the business in three dimensions: geographical mar- kets, property types and risk categories.

Your sustainable investment partner - together building the link between property and capital

PURPOSE

Adding value together - combining entrepreneurial spirit with our European network and intelligence to deliver ­outstanding results for our clients

OUR VALUES

Winning Together

Entrepreneurial Spirit

Value Creation

Empowerment

Future-Focused

ANNUAL REPORT 2023

P. 9

THIS IS CATELL A

OPER ATIONS AND MARKETS

SUSTAINABILIT Y REPORT

SHARES AND SHAREHOLDERS

CORPOR ATE GOVERNANCE

FINANCIAL STATEMENTS

STRATEGY

CATELLA

ALIGNMENT

• A STRATEGIC STEP FOR SUSTAINABLE

GROWTH	Catella's ambition is to create
conditions where perspectives
	can be exchanged and net-
	working take place, regardless
	of role in the company.

n 2023, Catella utilised a hesi-

1. tant market to adapt its values with the aim of strengthening

the company from within. In recent years, Catella has undergone a major transformation. The shift towards a clear property focus has entailed investments, while the journey also involved difficult decisions relating to liquidations and divestments.

On this basis, and in order to facilitate the focusing of Catella into the company that it is today, and to continue to build on a sustainable foundation ahead of the

future, a large part of 2023 was dedicated to establishing Catella's updated vision, purpose and values - Catella Alignment.

Catella has a unique market position. Through local expertise on a pan-Euro- pean platform, the company provides tailor-made solutions and advanced advisory services in property investments. Our customers trust us to deliver innova- tive, high-quality solutions and advisory services for their specific needs. This makes it even more important to clearly communicate our unique offering and values, both internally and externally.

The core of Catella's DNA lies in its strong entrepreneurial culture. In an accelerating market environment, and as a natural part of Catella's change process, the company has developed new strategies to further enhance the Group's unique synergies. Based on our strong entrepreneurship and local market expertise, the sharpened focus has enabled growth in terms of geographical expansion and asset classes.

Catella has more than 500 employees in 12 European countries. By utilising the overall intelligence and assets under management across national borders, we

create the conditions for exploring the opportunities and underlying values that exist in the company in order to ensure real long-term value creation for continued growth.

The initiative Catella Alignment emerged within this framework. A synchronised organisation creates even more opportunities to deliver results and add value for our customers and stakeholders. Catella wants all its employees to feel that they are part of something greater, and to really understand the value of the overall competencies and strengths present in

the company. The best ideas and solutions arise when the members of our teams work together. Together, we create even better prospects for success and future- proof Catella.

ANNUAL REPORT 2023

P.10