Preliminary results for FY 2019: Financial outperformance driven by strong European investment management platform and growth in client demand
PATRIZIA with strong momentum in client business 2019
- Operating income of EUR 134.5m exceeds guidance range of EUR 120.0m to 130.0m
- New equity entrusted to PATRIZIA by existing and new investors increased 24.5% y-o-y to EUR 3.2bn with multiple new domestic and international clients
- Record level in transaction volume (signed) of EUR 9.0bn (+32.6% y-o-y) and transaction volume (closed) of EUR 7.6bn (+45.8% y-o-y) in numerous thematic investment strategies
- Assets under Management (AUM) increased to EUR 44.5bn, up 8.4% y-o-y
- Operating income guidance for 2020 of EUR 120.0m to 140.0m implies further growth in recurring management fees and lower operating expenses, more than offsetting lower income from phase out principal investments
Augsburg, 17 February 2020. PATRIZIA AG, the global partner for pan-European real estate investment, recorded an operating income of EUR 134.5m in 2019, exceeding the FY 2019 guidance of EUR 120.0m to 130.0m. This compares to an operating income of EUR 141.4m in FY 2018, which contained significant revenue contribution from phase-out sale of principal investments and co-investment income. Excluding the sale of principal investments and co-investment income operating income increased 10.3% y-o-y.
Major driver for the strong results was organic growth generated throughout 2019 with a solid increase in management fees (up 8.8% y-o-y to EUR 190.9m), significant growth in transaction fees (up 24.8% to EUR 65.3m) and performance fees on continued high levels (down 0.7% y-o-y to EUR 91.8m) while cost growth (up 8.1% y-o-y to EUR 227.2m, adjusted up 4.5% y-o-y) remained below the growth of total service fee income (up 8.7% y-o-y to EUR 348.0m). Net operating expenses included non-capitalised technology expenses of EUR 7.6m to future-proof the PATRIZIA platform. On an adjusted basis operating cost growth was only 4.5% y-o-y. Non-capitalised technology expenses will be adjusted in operating income going forward.
Assets under management (AUM) increased 8.4% y-o-y to EUR 44.5bn, amongst others driven by net acquisitions for domestic and international clients in the European real estate market as well as transfer of asset management mandates to PATRIZIA.
Karim Bohn, CFO of PATRIZIA AG, said: “We have delivered on what we promised. The strong set of results confirm the leading position PATRIZIA has extended in all major European real estate investment markets. I am especially pleased with the momentum we have built up and the outperformance delivered to our clients. While the overall European real estate transaction volume slightly declined y-o-y in 2019, PATRIZIA was able to gain market share and deliver strong growth in transactions to our clients.”
Wolfgang Egger, CEO of PATRIZIA AG, said: “At the same time we have invested significantly in new technologies to become the innovation and tech leader in the European real estate investment industry to guide our clients through the coming change. We will continue to grow to the benefit of our clients, and our shareholders.”
Based on the continued organic growth, PATRIZIA expects to generate a 2020 operating income in the range of EUR 120.0m to 140.0m. In 2020 PATRIZIA expects a significantly lower revenue contribution from phase-out sale of principal investments and co-investment income – fully in line with strategy. The guidance therefore implies continued organic growth in total service fee income - especially management fees - and lower net operating expenses, further improving the quality of earnings.
Strong position in European transaction market
PATRIZIA confirmed its success in the European real estate transaction market with signed transactions across real estate sectors for its numerous thematic investment strategies totalling EUR 9.0bn, an increase of 32.6% compared to 2018 (EUR 6.8bn). PATRIZIA executed (closed) transactions of EUR 7.6bn during 2019 (compared to EUR 5.2bn in 2018). The increased volume of signed transactions confirms PATRIZIA’s strong deal-sourcing capabilities from which its global client base benefits.
In total, PATRIZIA signed EUR 5.5bn of acquisitions in 2019, an increase of 60.5% on the prior year (2018: EUR 3.4bn) and EUR 3.5bn of disposals, up 4.1% (2018: EUR 3.3bn). Total transaction volume in Europe declined slightly by 2.4% y-o-y from EUR 315.2bn in 2018 to EUR 307.7bn in 2019, confirming market share gains for PATRIZIA.
Equity entrusted to PATRIZIA and number of institutional clients increased
PATRIZIA raised around EUR 3.2bn of equity (up 24.5% y-o-y) from existing and new institutional, (semi-)professional and private investors which have been deployed into investment opportunities in strong, established markets across Europe. International capital accounted for 54.1% of all raised institutional capital during 2019, as international institutional organisations increasingly rely on PATRIZIA to invest on their behalf across Europe.
PATRIZIA added more than 20 new institutional domestic and international investors to its client base during 2019, bringing the total to over 400. At the same time 73.1% of equity entrusted to PATRIZIA during 2019 came from investors with multiple fund investments on PATRIZIA’s platform.
Full set of results due 19 March 2020
Further details on PATRIZIA’s 2019 earnings will be announced with the publication of its 2019 Group Annual Report on 19 March 2020.
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Guidance range 2020
Total service fee income
Net sales revenues and co-investment income
Net operating expenses1)
D&A. financial result and other items
1) FY 2019 includes non-capitalised technology expenses of EUR 7.6m, net operating expenses guidance for FY 2020 adjusted for non-capitalised technology expenses of EUR 11.6m
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Guidance range 2020
Assets under Management
Transaction volume - signed
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PATRIZIA AG has been active as an investment manager in the real estate market across Europe for more than 35 years. PATRIZIA’s activities include the acquisition, management, repositioning and disposal of residential and commercial real estate through its best-in-class local network in all key markets. As a global partner for pan-European real estate investment, PATRIZIA operates as a trusted and independent business partner of large institutional, (semi-)professional and private investors in all major European countries. PATRIZIA manages more than EUR 44 billion of real estate and infrastructure assets, primarily as an investment manager for insurance companies, pension fund institutions, sovereign funds, savings and cooperative banks. PATRIZIA is committed to responsible investments and positive social impact. The PATRIZIA Children Foundation has helped over 200,000 children in need worldwide for over 20 years, giving them access to education and greater opportunities to lead better lives. For further information, please visit: www.patrizia.ag.