Total service fee income down 6.1% y-o-y to 151.8m (H1 2022: EUR 161.6m) as the growth of recurring management fees (+3.6%) could not fully compensate the market-driven decline in transaction and performance fees
EBITDA of EUR 28.4m (H1 2022: EUR 54.5m; -48.0%) significantly down y-o-y primarily due to larger positive one-off effects in H1 2022
Resilient AUM with only moderate decrease of -2.1% to EUR 57.9bn (31.12.2022: EUR 59.1bn)
Adjusted financial guidance: FY 2023 EBITDA expected in range of EUR 50.0 – 70.0m due to the continued muted transaction environment
PATRIZIA, a leading partner for global real assets, has published its H1 2023 financial results. PATRIZIA’s operating business was impacted by an environment of continued market uncertainty, high inflation and rising financing costs in the first half of the year.
AUM decreased moderately by -2.1% y-t-d to EUR 57.9bn (31.12.2022: EUR 59.1bn) mainly due to valuation effects of EUR -1.4bn during H1 2023. The comparatively small devaluation effects and general robustness of AUM are attributable to its broad geographical and sectorial diversification across real estate and infrastructure. In addition to that, PATRIZIA was also able to close smaller transactions on behalf of clients, resulting in net organic AUM growth of EUR 0.6bn even in the subdued market environment.
Recurring management fees continued to grow by +3.6% to EUR 120.6m (H1 2022: EUR 116.4m). At the same time the subdued market environment led to lower transaction fees amounting to EUR 4.1m (H1 2022: EUR 11.4m) and to a somewhat more modest decline in performance fees to EUR 27.1m (H1 2022: EUR 33.8m). Subsequently, growth in management fees could not fully compensate for the market-driven weakness, leading to a 6.1% lower total service fee income compared to last year (EUR 151.8m vs. EUR 161.6m). Nonetheless, growing recurring management fees continued to support financial results and PATRIZIA’s strategic target to further stabilise revenues and increase the recurring earnings profile remains unchanged.
Net sales revenues and co-investment income declined to EUR 2.9m (H1 2022: EUR 7.5m), mainly due to the profitable sale of one of the last remaining balance sheet properties in the UK (Trocoll House) in H1 2022.
Net operating expenses increased by 10.2% to EUR 126.3m (H1 2022: EUR 114.6m). Net operating expenses in the first half of the previous year were positively impacted by the profitable deconsolidation of a project development in Hamburg (Silver Swan) temporarily held on PATRIZIA’s balance sheet with a significant relieving effect of EUR 17.8m. Excluding deconsolidation effects and restructuring expenses, management held operating expenses flat y-o-y despite an increased cost base due to M&A consolidation effects and inflation.
In detail, personnel expenses saw a moderate increase to EUR -85.8m (H1 2022: EUR -82.5m; +4.0%) due to general inflation-related salary adjustments and long-term incentive provisions. The decrease in other operating expenses by -8.2% to EUR -38.4m (H1 2022: -41.9m) demonstrates PATRIZIA’s continued focus on cost containment.
Asoka Wöhrmann, CEO of PATRIZIA comments: “The market environment overall remains challenging, but PATRIZIA’s well diversified platform offers opportunities for clients to invest in the sectors we have high conviction in, which are those addressing the global megatrends of demographic change, digitalisation, urbanisation and decarbonisation. I am excited about driving forward the company’s next development phase and to delivering shareholder value. We will strengthen and diversify our German business and we will scale our investment offering globally. To help achieve this, we leverage the vast synergies between real estate and infrastructure to create even more value for our growing network of international clients and for our stakeholders.”
As a result, EBITDA fell to EUR 28.4m in H1 2023 (H1 2022: EUR 54.5m) and the EBITDA margin decreased to 18.3% (H1 2022: 32.2%), caused by the market-driven decrease in total service fee income and at the same time the increase in net operating expenses due to the absence of positive one-off effects from previous year.
With a solid net equity ratio of 71.4% and available liquidity of EUR 305.2m, PATRIZIA continues to be well positioned to take advantage of market opportunities as they arise, even in a subdued market environment. During H1 2023, management saw the first opportunities to co-invest and used existing liquidity to seed invest, especially in the infrastructure business.
Christoph Glaser, CFO of PATRIZIA SE adds: “We continue to operate in a tough market environment affecting revenue generation in transaction-related fees. Nevertheless, we benefit from the stream of stable and recurring management fees as the solid basis of PATRIZIA’s platform. To preserve AUM and recurring management fees, the active management of the current assets for the benefit of our clients is more important than ever. Furthermore, the effective management of our operating cost base has the utmost priority. At the same time, we will continue to support selected growth initiatives.”
As communicated to the market already on 27 July 2023, PATRIZIA together with its H1 2023 financial reporting adjusts its FY 2023 guidance range for EBITDA to EUR 50.0 – 70.0m (from previously EUR 50.0 – 90.0m) due to the current market environment. The guidance range for assets under management (AUM) is adjusted to EUR 57.0 – 62.0bn (from previously EUR 60.0 – 65.0bn). The guidance range for EBITDA margin subsequently changes to 16.7 – 21.2% (from previously 15.6 – 24.3%).
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 39 years. PATRIZIA manages around EUR 58 billion in assets and employs nearly 1,000 professionals at 28 locations worldwide. PATRIZIA is 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 helped around 280,000 children in need worldwide gain access to education and thus, has given them the chance of a better life over the last 24 years. You can find further information at www.patrizia.ag