1.1 Expected development of results of operations and assumptions concerning target attainment in 2018
THE GROUP IN GENERAL
The company has entered the 2018 financial year in a spirit of optimism and expects to successfully exploit market opportunities for its institutional and private investors once again in the form of attractive property fund products. On this basis, PATRIZIA is again anticipating strong transaction performance and growth in assets under management, with fee income from investment management continuing to increase and stabilise as a result.
Assets under management are expected to see organic growth of between EUR 2.0bn and EUR 3.0bn in the 2018 financial year. Taking into account the acquisitions of TRIUVA and Rockspring Property Investment Managers, the company expects its assets under management to increase to just over EUR 40.0bn by the end of 2018.
Including the earnings contributions from the acquired companies, PATRIZIA is forecasting an increase in operating income from EUR 82.2m in 2017 to between EUR 85.0m and EUR 100.0m in 2018.
Assets under management
Assets under management
|EUR 82.2m||EUR 85.0-100.0m|
1 including acquisition of Sparinvest Property Investors
2 including acquisition of TRIUVA and Rockspring Property Investment Managers on the basis of pro forma assets under management
ASSUMPTIONS CONCERNING THE OPERATING INCOME FORECAST
Operating income of between EUR 85.0m and EUR 100.0m is expected for 2018. The following section discusses the assumptions and expectations underlying this forecast.
PATRIZIA is anticipating management fees for asset and portfolio management services of between EUR 162.5m and EUR 170.0m. The expected organic growth and the initial consolidation of the acquisitions TRIUVA and Rockspring Property Investment Managers are expected to result in a significant increase of 74–82% compared with 2017.
The company expects the transaction market to remain active in 2018 and is forecasting transaction fees of EUR 55.0–62.5m based on a transaction volume of EUR 4.5–6.5bn.
Income from performance fees is determined by the yields achieved in excess of the agreed target yields. These result from the realisation of value-adding measures in particular. PATRIZIA expects to generate performance fees of between EUR 50.0m and EUR 70.0m in 2018.
Fees from service business are expected to total between EUR 267.5m and EUR 302.5m. In addition, disposals of properties held by the company and co-investments are expected to generate around EUR 39.0m.
Operating costs, which primarily comprise staff costs and non-staff operating expenses, are forecast at between EUR 210.0m and EUR 230.0m. This means the ratio of operating costs to average assets under management is expected to improve from 0.80% in 2017 to between 0.53% and 0.57% in 2018 also as a result of the acquisitions made.
A more precise forecast will be issued in the course of the year based on the company’s operating performance.
1.2 Expected development of net assets and financial position
The consolidation of the acquisitions TRIUVA and Rockspring Property Investment Managers in the course of the financial year will result in changes in the company’s net assets and financial position that cannot be described conclusively at present. Even after the consolidation of these two companies, however, PATRIZIA expects to have substantial cash and cash equivalents that are significantly in excess of the liabilities from the bonded loan.
1.3 Dividend policy
The Managing Board and Supervisory Board of PATRIZIA Immobilien AG are proposing that the HGB unappropriated profit for the 2017 financial year in the amount of EUR 405.3m be used to pay a dividend of EUR 0.25 per share, with the remaining amount being carried forward to new account. Shareholders will be given the option of receiving the dividend payment in cash or in the form of shares in PATRIZIA Immobilien AG.
Based on the proportion of IFRS consolidated net profit attributable to the shareholders, which amounts to EUR 55.0m for 2017 and shares outstanding as per 31 December 2017 entitled to receive dividends, this corresponds to a distribution of EUR 22.4m, a distribution ratio of 40.7% and profit carried forward of EUR 382.9m.
Based on the assumption that existing treasury shares are owned by third parties at the time of distribution this corresponds to a distribution of EUR 23.1m, a distribution ratio of 42.0% and profit carried forward of EUR 382.2m.
1.4 Management’s overall assessment of the outlook for 2018
PATRIZIA SET TO ENJOY FURTHER POSITIVE DEVELOPMENT IN 2018
The acquisition of Sparinvest Property Investors, TRIUVA and Rockspring Property Investment Managers will lead to a substantial improvement in PATRIZIA’s market positioning, the further internationalisation of its business and a significant increase in stable and sustainable income from property management. With the market environment expected to remain positive, PATRIZIA expects its planned organic growth and the positive influence of the companies acquired to allow it to significantly expand its real estate assets under management and achieve a further increase in operating income.
The outlook for 2018 and the statements concerning subsequent years take into account all events that could affect PATRIZIA’s business development that were known when the consolidated financial statements were prepared.
Further information can be found in the Annual Report 2017.