PATRIZIA SE
FY 2023 preliminary financial results in line with guidance: EBITDA of EUR 54.1m – PATRIZIA proposes sixth consecutive increase in dividends and signals cautious optimism for FY 2024

Augsburg, 28 February 2024 PATRIZIA, a leading partner for global real assets, today published preliminary, unaudited financial results for FY 2023. The Company successfully diversified its investment platform and delivered further organic growth in assets under management (AUM) through strategic investments for its clients into highly attractive market sectors underpinned by the major transition megatrends shaping economies and societies across the globe. Recurring management fees continued to grow in line with strategy, while transaction fees and performance fees remained impacted by market headwinds and temporarily subdued client investment activity.

Platform shows relative resilience in volatile market environment
PATRIZIA remained an active net buyer in the market with investments signed for clients more than offsetting disposals and redemptions. Nevertheless, market induced valuation pressure on Real Assets caused AUM to decline y-o-y. The overall reduction in AUM of 3.2% confirmed resilience in a challenging market environment. Debt levels in the funds managed remained low with an average LTV of 30.8%.

Positive investment activity in line with megatrends with diversified product offering as enabler
The investment activity for domestic and international clients supported the successful geographical and product diversification of PATRIZIA during FY 2023. Of the capital deployed in Real Assets, over a fifth was in the digitalisation of communities and smart city solutions through new fibre networks and broadband operators, while 20% was invested into the living sector that included major acquisitions of affordable and sustainable build-to-rent housing. Around 10% of capital was deployed in the global energy transition via investments in Electric Vehicle (EV) charging, energy distribution and renewables, and nearly 10% was committed to real estate and infrastructure credit opportunities. Investment activity targeted core European markets, the US and APAC.

EBITDA impacted by market headwinds and reorganisation with continued growth of recurring fees
Total service fee income came in at EUR 312.4m (-3.8% y-o-y) with recurring management fees (EUR 251.1m, up 4.2% y-o-y) the largest contributor and growth driver for total service fee income in FY 2023. Market headwinds lead to temporarily subdued client activity in the reporting year, particularly impacting transaction fees (EUR 14.7m, down 34.6% y-o-y) and also performance fees (EUR 46.6m, down 23.8% y-o-y). Net sales revenues and co-investment income contributed EUR 6.7m in FY 2023 (up 54.9% y-o-y).

Operating expenses increased to EUR 293.6m (up 4.7% y-o-y) in an inflationary environment, also impacted by increased reorganisation expenses of EUR 16.3m (up 63.9% y-o-y). 

At the same time, other income supported EBITDA with EUR 28.5m (down 5.9% y-o-y) in FY 2023, including positive one-off effects from to the reversal of earn-out liabilities (EUR 7.4m) and VAT refunds (EUR 4.6m). 

As a result, EBITDA came in at EUR 54.1m (down 31.5% y-o-y). Excluding the reorganisation result, the financial results FY 2023 on EBITDAR level therefore came in at EUR 69.9m and hence at the upper end of the most recent EBITDA guidance range of EUR 50.0 – 70.0m, albeit supported by other income mentioned above.

The gap between EBITDA and consolidated net profit attributable to shareholders of the parent company is primarily due to depreciation, amortisation and impairment of EUR -50.5m (up 16.5% y-o-y from EUR -43.4m). The M&A related amortisation of fund management contracts and licences amounted to EUR 17.0m in FY 2023. Additionally, a market driven impairment on consolidated seed investing/ warehousing inventory real estate of EUR 16.9m burdened FY 2023 results. Both items nevertheless did not impact operating cash-flow generation in FY 2023.

Solid balance sheet, liquidity and firepower
PATRIZIA continues to run a solid balance sheet with a net equity ratio of 69.0% and available liquidity of EUR 291.0m. In addition, available firepower in the funds managed adds up to EUR 3.4bn. This strong position is a competitive advantage in an uncertain market environment and offers financial flexibility both for investments for clients but also for strategic investments for PATRIZIA, if and when attractive opportunities arise in the market.

Shareholder capital management and new dividend policy
PATRIZIA’s Board of Directors will – based on a proposal by the Company’s Executive Directors – propose a dividend per share for FY 2023 of EUR 0.34 to shareholders. This reflects the sixth consecutive increase in dividend per share, equivalent to 3.0% y-o-y growth. Despite the temporarily subdued net income levels with consolidated net profit attributable to shareholders of the parent company down 20.8% y-o-y to EUR 5.8m, PATRIZIA’s continued solid operating cash-flow (EUR 73.8m in FY 2023) and strong balance sheet allow for a continuation of growing dividends to shareholders.

PATRIZIA has also adjusted its dividend policy at the beginning of the 2024 financial year. The Company strives to offer steadily growing dividends to its shareholders throughout market cycles, backed by its strong balance sheet and financial flexibility. Long-term, PATRIZIA aims to distribute more than 50% of the Group’s annual net profit attributable to shareholders in the form of dividends. The application of the dividend policy for future years is subject to the Group’s balance sheet strength, profitability, available liquidity and the general market environment.

Outlook for FY 2024
PATRIZIA is entering 2024 with cautious optimism. The current macroeconomic environment remains a challenge for the majority of the Group’s clients, especially in the real estate sector. Client investment activity is expected to pick up only throughout the course of FY 2024, assuming a normalisation of interest rate volatility and increased activity in the transaction markets once potential buyers and sellers agree on new price levels following the change in the interest rate environment. It is expected that the valuation pressure on real estate will continue into the 2024 financial year, leading to a broader AUM guidance range for FY 2024.

Nevertheless, due to its global platform and broadly diversified product offering, PATRIZIA expects to once again successfully exploit market opportunities for its institutional, semi-professional and private investors through its attractive real estate and infrastructure fund products. 

On this basis, PATRIZIA expects AUM in a range between EUR 54.0bn – 60.0bn in the 2024 financial year. EBITDA is expected in a range between EUR 30.0m – 60.0m, which – based on the expectation of lower contribution from performance fees and other operating income compared to FY 2023 – should reflect a further improvement in earnings quality.

Management comments
Asoka Wöhrmann, CEO of PATRIZIA SE, said: “Despite the market remaining very challenging in 2023, we still invested significant capital in attractive sectors underpinned by long-term market transitions and successfully diversified our global real assets platform. While we expect market headwinds to continue into 2024, we are cautiously optimistic that a stabilisation of interest rates and inflation will help to slowly revive investment activity as the year progresses. At the same time, we are confident that the continued improvement in our earnings quality combined with enhanced cost efficiency as well as broadening our product offering in infrastructure and real estate will make our investment platform even more resilient to future market turbulences.”

Christoph Glaser, CFO of PATRIZIA SE, adds: “In a very difficult environment PATRIZIA delivered organic AUM and recurring management fee growth – both confirming decent relative resilience of our platform. General valuation pressure and market-driven weakness in transaction and performance fees nevertheless took its toll and negatively impacted our bottom-line profitability. We took action and addressed cost efficiency in 2023 further to be better prepared for a longer and choppier market recovery. At the same time, we are uniquely positioned to take market opportunities together with our clients, backed by our strong balance sheet. A net equity ratio of 69% and available liquidity of close to EUR 300m give us financial flexibility which, more than ever, is a great asset to have in the current market environment.”

Link to preliminary financial results presentation: https://ir.patrizia.ag/en/

PATRIZIA: A leading partner for global real assets
With operations around the world, PATRIZIA has been offering investment opportunities in real estate and infrastructure assets for institutional, semi-professional and private investors for 40 years. PATRIZIA manages approx. EUR 57bn in assets and employs around 1,000 professionals at 28 locations worldwide. PATRIZIA has been making an impact since 1984 by helping children in need, since 1992 in close collaboration with Bunter Kreis (“colourful circle”) in Germany for aftercare of children with severe diseases and since 1999 through its support for the PATRIZIA Foundation. The PATRIZIA Foundation has given more than 600,000 children and young people worldwide access to education, healthcare, and a safe home to get the chance to live a better self-determined life over the last 25 years. You can find further information at www.patrizia.ag and www.patrizia.foundation