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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Welcome to the Catella, Audiocast with teleconference Q4 2021. [Operator Instructions] Today, I'm pleased to present CEO, Christoffer Abramson; and CFO, Mattias Brodin. Please begin your meeting.
Thank you. This is Christoffer Abramson speaking. Good morning, everyone, and thank you for joining. I'd like to jump in and start this year-end presentation on Page 3. Most of you know Catella quite well, and we now operate within 3 property-focused business areas: Property Investment Management , Principal Investments and Corporate Finance.Catella now manages SEK 123 billion as pan-European Property Investment Management business and is a leading adviser in Corporate Finance in several large European markets. Principal Investments, where we invest our equity directly, has around SEK 1.1 billion of capital invested as of the fourth quarter with a growing number of partnership platforms.Let's move to Page 4, the key operational highlights during the fourth quarter. From a group perspective, we continue to deliver strong underlying growth and financial performance. During the quarter and shortly thereafter, we have progressed with simplifying the group structure, a very important step for all of us. The banking license was finally returned, bringing up capital to invest in development projects through Principal Investments and in other activities.On the 10th of January 2022, we sold the remaining shareholding in Catella fondforvaltning to Athanase. And the liquidation of IPM is progressing according to plan and is in the rearview mirror. We have continued to deploy capital into development projects, but we still have a strong liquidity position of SEK 1.4 billion, and that's well prepared to capture upcoming growth opportunities, investments, growth in new partnerships and potential M&A transactions.The strong financial year and the solid liquidity position enables us to increase the dividend to SEK 1 per share. In Property Investment Management, we continue our strong track record of growing assets under management with a record growth of SEK 11 billion during the quarter. During 2021, in total, assets grew by SEK 21 billion to SEK 123 billion. We're especially pleased to see strong interest and inflow through our sustainably focused funds with, for example, Catella European Residential III reaching a milestone of EUR 750 million in managed assets.Other exciting news were that our British operations, Catella APAM, were selected to manage a large part of Greater Manchester Pension Fund U.K. Property Portfolio. The prestigious mandate strengthening our position on the European landscape for institutional investors. We still have significant amounts of additional committed capital available for investments in 2022 and beyond, which makes us feel positive and confident about future growth.We'll move to Principal Investments. We invested another SEK 300 million in ongoing and new projects during the quarter, and we now have a total of SEK 1.1 billion of equity deployed in development projects. We are particularly excited about the new direct investment in the property, The Maltings, in the U.K. The property has considerable development potential, both in terms of new and improved commercial premises and residential properties. But mainly, it's an important step for us as we use our equity here to support the launch of new investment partner mandates, which is a key part of our European strategy.Out of the portfolio of our 16 Principal Investment projects, 7 will come to market during what will be a very exciting 2022. It starts with Infrahubs automated and sustainability-focused logistics property in Norrköping in Sweden. Catella Corporate Finance is the sell-side adviser in this transaction, highlighting further the synergies that we can capture within the group.Moving then to Corporate Finance. Corporate Finance has had a very successful quarter, especially with our Swedish operations having its strongest quarterly profit to date. We see increased demand for capital raising advisory services, and Catella advised both in the eQ Community Properties Fund structuring of a new EUR 700 million loan facility through our Debt Advisory business and as a financial adviser in connection with the IPO of Titania. The European market, again, for capital raising remains fragmented. And to meet customer demand for high-quality advisory services, we're already providing in certain countries and across country as well, we have established a new European business line within Corporate Finance under the name Debt Advisory. So on Page 5, we give a summary of the group's consolidated core results adjusted for discontinued and divested operations. Catella delivered a solid financial performance in the fourth quarter, with revenues at SEK 633 million, up SEK 161 million or 34% year-over-year. And operating profit of SEK 140 million, up around SEK 100 million and with a healthy margin of 22%. In Property Investment Management, PIM, as we sometimes call it, Property Investment Management has substantial inflows of SEK 26 billion during the year and SEK 11 billion in the fourth quarter alone. Fourth quarter profit margin amounted to 26%, driven by increased acquisition fees primarily as new properties were added to the property funds, while our continued growth in AUM generates fixed fees and an annual solid margin of 23%. As mentioned, further SEK 300 million was deployed into development projects through Principal Investments in the quarter, leaving total invested equity of SEK 1.1 billion. No sales were made in the quarter, but a pipeline of 7 properties, as I mentioned, will be completed and divested during 2022. Corporate Finance showed the best quarter to date, fueled by a very active transaction market and by Catella's broadened product offering. The expansion into capital raising advisory services continues to progress. And as mentioned, we advised in 1 IPO and the structuring of the significant new loan facilities, among many other things. We retained and increased our market share in our largest market. And notably, with the high number of transactions where Corporate Finance Sweden acted as adviser, generating the highest profit to date. And in Europe, we ended the year with an operating profit of SEK 71 million. On Page 6 for brief full year EBIT comparison. As we mentioned last time in our third quarter call, in 2020, our Principal Investments sold the Grand Central development project in Düsseldorf which generated an EBIT o SEK 229 million, split between both Principal Investments and Property Investment Management. Adjusting for this transaction, we can more clearly see that Catella's underlying performance improved significantly from last year, up nearly 90%, highlighting the strength coming both from increased fixed fees from our growing assets under management and from increased advisory fees.Clearly, creating fees and material equity gains is part of our normal course of business within Principal Investments. But I want again to stress that we should always look at the long-term profitability and growth rather than individual quarterly gains. From the portfolio we're building up, these types of exit gains should become more common, and we shouldn't have to do these sort of adjusted comparisons going forward. And 2022, obviously looking particularly exciting.The primary strategic goal with Principal Investments is to create recurring investment profits from a diversified asset base from a number of European investment platforms. And I think we will have a very different view of looking at this going forward. If we then move to Page #8 and discuss Property Investment Management in a little bit more detail.Summing up 2021, we can see that Property Investment Management grew assets under management by 21%, continuing a strong annual 23% track record since 2015. The growth continues to drive increased fixed fee income, which is our key underlying Property Investment Management metric. 2021 fixed fees ended up at SEK 676 million, up 23% compared to prior year. PIM continues to be the main growth engine of Catella, and we have a strategic focus on raising new capital and launching new sustainability focused on. It's encouraging to see this through as a very strong 11% quarterly growth in our fund platforms. Property Asset Management also showed healthy quarterly growth of 7%. The main contributor being the new mandate enter with the Greater Manchester Pension Fund by Catella APAM in U.K. On Page 9, we look at the AUM growth of Property Investment Management. As I mentioned, adjusted for the sale of CAM France in January last year, PIM has grown its assets under management by SEK 21 billion during 2021 with a particularly strong fourth quarter.A large portion of the growth stems from inflows into our modern residential funds with particular interest, which is -- we're very happy and proud about in sustainable assets. Notably, we had strong inflows into Catella Wohnen Europa and our dark green residential funds, Catella European Residential III. Total funds -- total property funds AUMs are now at SEK 90 billion. Growth in asset management AUM was limited during the year. But during the year, we also exited several low-margin mandates and sold successfully managed properties for gains, which leaves our asset management business in a stronger and in a good position to grow profitably with higher margins. Looking ahead, we have SEK 12 billion of unlevered committed capital ready to be deployed into our funds for additional growth in AUM through new acquisitions and continued progress in ongoing development in our various funds.On Page 10, we turn to the PIM, Property Investment Management P&L. Revenue has decreased somewhat on a full year basis, mainly related to the material performance fee we received in 2020 from Grand Central and the divestment of Catella Asset Management in France. But underlying net revenue growth was 12% The exits of CAM France and other low-margin mandates however resulted in a solid increase in our operating profit margin. This positive trend was even stronger during Q4, with a 33% net revenue increase, both from an almost 20% increase in fixed fees and from very high variable revenues due to the large number of property acquisitions into our funds during the quarter.We thus continue to feel positive about significantly increased fixed fees going into 2022 and about our ability to grow with significant new capital to be deployed and a well-diversified higher-margin portfolio with a broad risk profile. On Page 12, just an overview of Principal Investments, our newest business area, and we continue to invest into a diversified portfolio project in different asset classes. The total portfolio now consists of 16 development projects in 6 European countries, and they continue to progress according to plan and within budget. In the fourth quarter, we started the construction in Seestadt, Dusseldorf, the first site in the initial phase of the project, which is a very long multiphase, multisite project. And the first phase here of 250 residential units are expected to be completed by the end of 2022. Other new development projects included direct investment in the U.K. property, which I mentioned earlier, The Maltings in Salisbury, U.K. It has considerable development potential, as I mentioned earlier. And the investment was made together with Catella APAM, and we are pleased to see this first step towards starting larger mandates and funds in that British market with Catella's equity as a support and driving force, something that we continue to do more across Europe.Seed investments and co-investments from our own balance sheet are an important strategy for how we can use our capital to strengthen existing and build new European platforms, which is a key thing that we aim to increase in 2022 and beyond. Let's go to Page 13, continue with Principal Investments. At the end of the year, Catella had a total capital of SEK 1.1 billion invested, with about SEK 300 million added in the fourth quarter.2022 will be, call it, something of a harvesting year for Principal Investments. Seven projects are on track to be finalized and divested during the year, starting with the largest Infrahubs projects in Norrköping in Sweden. For this transaction, the interest has been considerable, and it shows strong demand from investors for these types of assets. And the value, of course, for Catella having platforms creating a pipeline of projects throughout the years. Looking ahead, we continue to see a solid pipeline of opportunities, fulfilling our IRR requirements.And again, as we emphasized in our third quarter, Principal Investments is not or at least will not be a list of one-off significant profits. This is rather a new growth platform for partnerships and co-investments and continuous investments as can be seen both from the increased asset diversification, but mainly in strong partnerships and the way that we grow assets under management as well by investing our own equity. Very exciting future.On Corporate Finance and turning to Page 15. The year ended on a very strong note for Corporate Finance in a dynamic transaction market and with broader Catella product offering, all of which generated the business area strongest quarterly profit to date. To sum up, a really strong year. Operating profit increased from SEK 23 million to SEK 71 million, with fantastic, I would say, SEK 57 million in the fourth quarter alone. We are very proud of the 2021 results. But it is, of course, always challenging to repeat this type of activity in the transaction advisory field. It's a great business, but you start from scratch every year. And we have advanced our positions on our main markets. And we have acted as a financial advisor in more capital raising and in debt advisory, which is particularly encouraging given our strategic focus on precisely this.The year has started, I think, strongly. But again, it's always a challenge to repeat in this area. So I now hand over to our CFO, Mattias Brodin, to cover the financial summary, beginning on Page 17.
Thank you, Christoffer. And let me briefly cover the financial summary, focusing on ongoing operations. As Christoffer already mentioned, the strong quarterly revenue development was driven by solid growth in our fund platforms as well as a very strong last quarter of Corporate Finance. The revenue increase also naturally resulted in increase of OpEx related to higher performance-based salaries, a good expense to have.Operating profit for the quarter ended at SEK 140 million, representing a solid increase of nearly SEK 100 million compared to last year. Look at our key ratios of operating margin, earnings per share development and return on equity. We see that they are all stable or improving.Continuing to Page 18, where we look at the financial and liquidity position. Catella has continued strong balance sheet and equity ratio supporting our future growth plans, both in new investments and potential M&A activities. Total assets increased by SEK 1.2 billion to over SEK 5.4 billion. The increase is related to additional and new investments in our property development projects and the issuing of our senior bond, which increased the group's cash with SEK 480 million net. The liquidity at the end of the quarter amounted to SEK 1.4 billion. The return banking license freed up previously restricted capital, enabling investments in further business development and projects with further headroom if needed. That was all regarding Catella's financials, and back to you, Christoffer.
Thank you, Mattias. So before opening up the Q&A and going through the sort of the formal part of the presentation, I would like to briefly summarize the quarter, summarize a little bit from our perspective on how we look at it. We have -- and I really want to start with this. We have finally completed the strategic transformation of Catella to a property-focused company. This has taken an unproportional and way too much time for the entire management for a long time. But now as we have returned the banking license, divested the remaining part of our mutual fund operations and exited informed portfolio management, our hedge fund, we can fully focus on growing and refining and improving Catella's 3 business areas and pursue further synergies as we grow Property Investment Management, Principal Investments and Corporate Finance.The business in our core operations continues to perform well. In our largest business area, Property Investment Management, we show the ability to continue to grow profitably, organically very strong inflows into our funds and mandates with nearly SEK 12 billion of committed capital to grow further in the coming quarters. Principal Investments continues to invest in regions and segments supporting the IRR targets. And 2022 will be the first material harvesting phase, as we call it, for our portfolio with 7 projects to be completed and divested during the year.The pipeline though for growth and reinvestment effectively of those profits continues to look promising, primarily through our various partnership platforms and the increasing number of co-investments and AUM supporting opportunities. In Corporate Finance, Catella remains strong in our major platforms through a broadened and attractive service offering and now including the launch of Debt Advisory as a new pan-European business line. Like numerous other companies, we have, in many ways, just started our sustainability journey, of course, in our funds and in our other products, it's been a focus for a long time. But as a group, this is now something that I and the entire management team are passionately focused on these macro trends and how sustainability, not just the environmental, but all aspects of sustainability. These trends and increased investor focus will have a profound effect on the real estate industry and the investor landscape, of course, with both major challenges in existing assets, in our portfolios and how you need to invest and change your focus, but also, of course, opportunities take leading positions.During the first half of 2022, Catella will finalize our sustainability strategy and goals, and we will clearly lay this out to the investor community in due course. We are continuously evaluating potential acquisitions and new partnership opportunities with the aim of strengthening our position and our geographical presence where it makes sense. Even though the market is relatively hot across Europe and the political landscape, unfortunately, today is somewhat challenging. We are looking at some interesting ideas that we believe fit our strategic thinking and growth objectives. Hopefully, we'll get back to that shortly.Finally, the strong financial year behind us, and our solid liquidity position enables us to increase the dividend to SEK 1 per share. So with that, I would like to thank all of you for your time today, and we will now open it up for questions.
[Operator Instructions] The first question comes from the line of Patrik Brattelius from ABG.
A couple of questions from my part. If I start with the Property Investment Management. So my first question is regarding your AUM base currently. Can you update us again of how much of the assets under management that are in closed funds? And how much of the AUM base that are in open funds where customers can withdraw their AUM quickly, so to say?
Patrik, I think that level of detail, we'll have to go back to you. I don't want to be SEK 2 billion off in either direction since I don't have that top of my head. But SEK 90 billion is in our property funds. And whether it's closed or open, as you know, regardless, there is a very long capital call window. So most of the funds, if they're not protected permanently, so to speak, they have at least, I think, a 12-month window in all funds. But we'll get back to you with the exact details.
Okay. Fair. My next question is regarding the high volatility that we've seen in the public markets here in the start of 2022. Do you believe this can lead to lower AUM growth here in 2022 compared to what you've seen historically? And are you seeing any signs that customers are more hesitant investments? And are you seeing any signs of increased request for outflows on the property funds?
Well, first of all, Patrik, if I could comment intelligently about the stock markets, I'd be doing something else for a living. And I'm not going to speculate how that -- where that is going or how it affects us. I don't think we can see that we've seen an impact from the stock market that doesn't affect us more than our shareholders, of course. But our investors remain equally focused as they have been on high-quality products, high-quality services and for us to continuously invest in attractive properties with meeting our return requirements.And all we can say is that, as evidenced by the fourth quarter, that continues to be very, very strong. And I don't see -- I don't think we have any other impacts that we can comment on.
Okay. That is fair. I just imagine that perhaps some customers might feel that they become overexposed to your niche compared to perhaps public markets if they -- when they're investing. But yes, okay. Another question I have was regarding the variable fees. So it was SEK 366 million here for the last 12 months. If you look into 2022, can you please try to elaborate a little bit on the underlying drivers why you believe variable fees will either increase or decrease compared to the last 12 months that we have seen?
Well, it's -- as you know, in variable fees, it's hard to speculate. We, of course, have some foresight into our performance-related fees, but that is only as of today. If you look at accumulated excess over-performance in certain funds where we have performance-based fees, those have been relatively consistent over the last few years. And I think we don't -- today, now there's a lot of uncertainty in the world, so we shouldn't speculate. But as of today, I think we're confident that we're at similar levels.With the rest of the variable fees, that is very correlated to the amount of acquisitions and dispositions we do in our portfolio. So all we can say is that with our projected and budgeted amount of AUM growth, we should hope that we are at somewhat of a similar level.
Okay. And then I would then move over to Principal Investments. And this is perhaps a little bit more of a provocative question, so excuse me. But the sale of Norrköping was listed already in Q4, and you sounded quite optimistic on the last quarterly report presentation. We have not seen any press release yet here in Q1 that the process has closed. Has the sales process gone according to plan? And are you expecting it to be able to close before the end of Q1? Or what is the reason for perhaps the delay?
It's a very fair question, Patrik. I missed the last question. Yes, we are confident that we'll close this in Q1. But it's a very simple reason. Our sales process, the best bid was from an investor that takes due diligence and care very seriously as most large institutional investors do. So we elected to maximize the price and go for a slightly longer transaction process, which is going according to plan. It's been a very detailed and solid due diligence. We have nothing but respect for our buyer, been performing extremely professionally. We cannot speculate, as you know, in the future. But we hope that in the next 3, 4 weeks or so, we should be issuing the press release. And the key for us is to make the best long-term business decision. And that was to allow our buyer, our investor to take enough care with the diligence process. And -- but yes, no, we feel very confident in and good about the transaction.
Interesting. Looking forward to that press release then. And my last question is then regarding the Corporate Finance. Last time, we saw high volatility in the equity markets and uncertainty during the corona crisis, this impacted the Corporate Finance department significantly. Have you seen similar signs that customers are being a little bit more hesitant to do Corporate Finance transactions here in the start of 2022? Or what are you expecting the start of the new year for this segment?
Well, first of all, the start of the year is usually relatively slow. Most people try to push through transactions at the year-end, and our first quarter is generally pretty modest. We have seen, I would say, two things. One is good continued core transaction activity. On the capital market side, we also see continued progress, especially, I would say, in Sweden. However, when equity markets become shaky, as you know, there might be delays or restrictions in the amount of IPOs and other significant capital raising.Again, we cannot speculate. We haven't seen it really or felt it, but I think if experience is anything to go by chance that there will be limited activity at least in the short term.
Can some of these transactions that was perhaps going to occur in Q1 be pushed into Q2? Or are you feeling -- or what are you thinking about that pipeline?
I don't know, to be honest. It could. But like I said, the core transaction market, we haven't seen an impact. Real estate investors and transactors are -- there's not a perfect correlation to the equity markets, obviously. It's an alternative to the equity markets in a lot of respects. But for the capital market side, of course, there could be an impact. But we haven't felt -- seen it or felt it dramatically yet. That's all I can say today.
The next question comes from the line of Jesper Von Koch from Redeye.
Congrats to the strong quarter.
Thank you, Jesper.
So I have quite a few questions, so just stop me if we're running out of time. So starting with Principal Investments, Seestadt, I've noticed that you've started renting out the apartments there. So could you specify at all how much you expect to invest in the first phase of that project?
Sorry, I -- we couldn't hear the first part of that question, Jesper. If you don't mind, repeat it.
I said that I've noted that -- I noticed that you've started renting out the apartments in Seestadt. So could you specify how much you expect to invest in the first phase of that project?
We have not started renting them out, Jesper. We have started construction just now. So the completion there might be pre-leasing activity, but that's not on a material scale that we want to comment on. The total investment, we don't do forward-looking numbers, as you know, but it's 250 apartments. And as we get into each quarter, we can comment on how much has been poured into this development.Again, it's a very attractive development. We feel good about it. 250 units is quite a lot in a year. And I think it's the right tempo for that size of the city, and investor and rental demand looks solid. But again, as far as actual rental figures, it's far too early to comment.
All right. And so do you plan to like complete the whole construction of Seestadt before selling? And if so, why -- so if you could just please elaborate around how you look upon the risk level of the different alternatives?
Well, I think, as you know, Seestadt is a very long multi-stage, multi-phase and multi-asset-type investment. It's projected to go until 2030. So we have another 8 years of this -- 9 on years of this. And the first phase, look, if there's a remarkable offer on the table for a forward funding transaction, for example, we'll, of course, look at that. But our job is always to maximize investor returns. And if we feel that market sentiment remains strong and we have a better chance of higher profits by waiting until completion, that's what we'll do. We don't have a set strategy for any of our investments to exit. We evaluate that on a continuous basis. So I'm sorry that we can't speculate into that.
No, no worries. And also, like in -- just in general, for Principal Investments, do you have some plan of an optimal shareholding in each investments? And like -- yes, how long do you want to hold the investments? I guess it's a matter of like you want to build up a steady cash flow from this business and so on. So please elaborate.
Sure. I think like I -- like with the leasing or the exit process, there is no one single formula here. We do a few different things, which I think we should all consider co-investments, which is really designed to drive asset management and other mandates. Our equity portion in those could be 5%. It really is about supporting our investment partner. It is about supporting our asset management platform's growth potential. If an investor wants us to have skin in the game and be part of the transaction, and we feel that the asset is great, we'll co-invest and support it.And in those instances, we can be as low as 5%. As you've seen from our bigger investments, we're largely between 25% and 50%. I think that's -- I'm not saying it's a particular strategy. But since we deal with partnerships and partnership platforms, it is about growing together with our partners and take a reasonable equity stake in each project. Of course, as you know, there's a few where we have up to 100%, and that's situational. Some of these, we have rather small equity amounts but taking the whole possession. And for example, in the example of Kaktus in Copenhagen, we needed to take a bigger stake to see the transaction through. And I think we feel very confident that it's proven to be the right strategic decision. But again, it's a very fluid model. We co-invest at very low amounts. We can go up to high amounts if it's the right investment with our partners.But like as you pointed out, the key is continued stable cash flows through exits, not necessarily by hold, of course. We're not a developer planning to hold these for a very long time. So most of these investment horizons are within 2 years, I would say. Maybe 3 years if you start from the first sort of development phase to completion. So yes, it's a long-winded answer because it has a lot of different strategies depending on -- we have 16 developments and no strategy is exactly the same. But the key is that we keep growing platforms, to keep finding new partnerships and keep investing with great partners in projects that meet our return requirements and that supports our other business growth.
All right. So moving on to Kaktus, I noticed that you've had ad showings for the apartments with expected moving end date from July. So if you could just explore how this is going? And if you expect like full occupancy directly from July?
Well, I think -- well, we hope so. That would be great. I think the demand has been very strong. Look, in the end, you have to sign actual leases. But from the open house and the early lease interest, it's been -- well, I think our broker said it was the highest number of sort of registered interest that they've seen in the Copenhagen market. So we can't get much better than that. The proof will be the final leases and how far -- so far, strong interest, strong demand. Copenhagen is a fantastic city with really strong residential market. And I think both our location, the quality of the product, I'd say the uniqueness of the product and how it's positioned is very strong in the market. And we obviously have several commercial leases that we're about to finalize hopefully as well for -- the investor demand is there. We look forward to a very exciting first half or maybe the third quarter with regards to this transaction.
All right. Good. So moving on to PIM, how do you weigh between AUM growth and achieving higher revenue generation for PIM? What I mean is that a higher turnover of your properties would render higher revenue generation, but lower growth versus just accumulating properties to grow AUM, if you could just elaborate?
Sure. Look, it's not about targeting revenue. It is about doing the right thing in every asset, not just every mandate or every fund. It is about doing the right thing for every asset. Of course, there will always be turnover in the portfolio, and it's about reinvesting the capital. We would not and should not ever turn over assets purely to make fees, revenues. That is not in the interest of our investors. Our duty as managers is to maximize and take best professional care of our investors' money, and that is what we do.Right now, for a long -- for some time, that has been to increase AUM in attractive assets. We have had some exits, but much higher acquisitions, and we continue to do so. We want to grow assets because our investors are trusting us with their money. We have continued -- we have excess capital that we continue to need to invest. All we can do is deliver outstanding returns. And a lot of our funds are up there in the rankings, and we continue to see capital inflows. But we do not transact to generate revenues. We only invest and transact to maximize our investors' profit.
All right. All right. Good. And so about your public funds, I mean those have shown very strong growth lately and also in January. But what is the plan for growing AUM going forward? Will that also focus on those existing public funds? Or is it more of new funds that will increase AUM?
Well, I think, look, the public funds are performing very well. And that will continue, if you will, investor interests. From new funds, I think special funds are probably today more -- a little bit more attractive. We have a broadened investor base of people who really work -- want to work closely with us on special mandates. And those partnerships are incredibly valuable to both parties, and we continue to develop those. It comes with slightly less administrative work as well to be quite honest. And I think that, at least in the short term, we will focus a bit more. But again, the continued growth in our public funds is fantastic. And as you said, you can see it, you can track it, but that comes with the daily valuation process. It's a lot of work. We are very happy to have all this trusted capital and -- continue to perform well, but we want to broaden that. And the more special funds, more separate mandates that we have with investors who want to partner very closely with us, I think the better.
All right. Good. So moving on to Corporate Finance. I mean this seems to develop very, very well. And you mentioned about the -- launching the Debt Advisory. So could you tell us more about like the underlying improvements that you've been working on and how these are developing?
Sure. I think over the last year, we've had a focus on higher-value transactions. Look, our core is real estate transaction advisory services. That's our bread and butter, and we're very happy and proud to be among the best in many markets. But that's a tough and competitive market, and we have to do more. And that's I think what we have successfully shown this year is that we can. We have done more capital raising activities. We have done more IPOs. We have done more debt advisory. And that is a trend that we want to continue.We have recruited and expanded sort of international cooperation to launch and win bigger mandates. A lot of the capital raising and a lot of debt advisory it's fragmented and very local. And I think by having a pan-European capability, we can target clients and transactions that we have not been able to in the past. And I think that's what we have -- we started to prove in 2021 and continue to work on in 2022.
Yes. Good. Because I was going into that about you saying that you have moved forward your position. Is that mainly impacting your potential in Corporate Finance or also the other parts of your company, just please elaborate?
Well, if we focus on Corporate Finance, we -- the strategic -- I wouldn't say it's a strategic shift. It is a focus on higher-value products. We have a number of -- we have an underlying core business, which is selling and transacting and advising in single assets up to large portfolios. But we also have, like I mentioned, sort of pan-European advisory focus -- pan-European debt advisory, which enables us to take on bigger mandates. We have in 2021, if we take France, which is our biggest market, very heavily increased our proportion of buy-side advisory, which is a tougher, but more profitable place to be.I think you either complete it or you don't, you get nothing or you get a lot. And we've shown with our overall property focus and expertise that we can deliver very complex transaction advice and buy-side support, which has been keeping us very busy and profitable even though other transaction volumes might have been a little soft in areas. So we also have a residential specialist platform working with development partners, and that provides a more recurring revenue stream.And those are all things that we're working on to both create more stability and to go into slightly higher margin areas. And again, it's not a simple one strategy. It's a lot of different strategies in several different countries and Pan-European as well.
All right. So -- and moving on to capital allocation. I mean after receiving the cash from Catella funds being sold the bank and the -- now the expected selling of both Norrköping and Kaktus and some other Infrahubs projects also, it seems that you have perhaps a too strong cash position. Do you expect everything to go into like a Principal Investments? And you also talked about M&A. Could you just talk about the capital allocation in general?
Of course, I think we cannot obviously comment on any financial position after December 31. But what I can suggest is that when we look at our actually available cash outside of our operating entities, that number has gone down to a relatively modest level now during the first quarter as we continue to invest. And I think we feel good about or at least relatively good about our capital efficiency, which is improving.We -- after we raised more capital at the start of last year, we have been a little heavy on the cash side, a little heavy on the balance sheet. And we have now invested a large amount of that. That is great. As you point out, we have 7 assets listed for sale in 2022. There'd be a lot of capital coming back. So our job is to continuously find new opportunities to invest, and we feel good about that.Most of this is likely, as you point out, to go into Principal Investments. That is the core strategy of invest with a 20% target return, put all our cash into development opportunities like that together with [indiscernible]. But as I mentioned in the report as well, we are looking at new partnership and M&A opportunities. And having a little bit of dry powder in a market where we want to be opportunistic is -- and hopefully, we'll have something to share this year.
All right. But would the -- like potential M&A, would that be more towards like the PIM kind of business? Or how do you look at it?
I don't think we should speculate or comment on that. We were looking big platforms that complement and support and strengthen our growth. And if that is supporting an entry into a new market or entering into a different type of investment management business, it can be either.
All right. All right. And so about like speculating about rising interest rates, like -- could you give us some color about like how you cope with the expected rising interest rates? Like is this an issue? And like if you think -- I think can do anything differently, like especially in PIM and Principal Investments?
Well, first of all, we don't speculate. I think us, myself, our team know as little as everyone else, where things will go in the future. What we do is make sure that our underwriting is always sound, that we never speculate on yield compression or any improvements in rents when we underwrite. We underwrite what we can see in front of us and that gives us enough margin to meet our return requirements.For PIM, obviously, as a parent company, we cannot dictate investment decisions in regulated funds. But what we do know is that reinvesting in assets is focused on meeting the yield requirements on our investors. And we cannot and should not buy properties with unsupportable low-yield levels considering where we can borrow. That has been our strategy during a yield compression environment, and will continue to be our strategy if rates go up.
All right. Good. And so finally, my last question about loss deduction -- or sorry, did you have anything else?
No, no, no. I'm happy you have a lot of questions. it's an interesting conversation.
Good, good. So about loss reductions. Like how large are these? And can you do anything to change your corporate structure anything to use these?
You said about a tax loss carryforwards?
Yes, exactly, like about using the loss deductions there ...
Sure. I mean we do have -- I don't know exactly what's listed on the balance sheet in our financials, and I can get back to you that. But we do have a significant amount of tax loss carryforwards on our balance sheet. The challenge for us, of course, is that we're a Swedish entity. And those have to be utilized by Swedish profits in 90-plus percent controlled companies. So historically and currently with a majority of our businesses being partnerships where we might own less than 90%, and the majority of our businesses being outside of Sweden, that ability is limited.Now, of course, as we try to grow our operations in Sweden and as we look at opportunities to acquire, that will be an important factor in how we structure. But I don't think we can comment any more details on that.
There are currently no further questions from the phone. I'll hand the conference back to you, speakers.
Okay. Well, I think if there are no further questions, we thank everyone for again for participating, for your continued interest in Catella, and we look forward to speaking with you in a few months. Thank you so much.