PATRIZIA Annual Report 2023: Resilient platform but EBITDA impacted by market headwinds - cautious optimism for 2024 with focus on smart real asset investments

Augsburg, 21 March 2024 PATRIZIA today published its FY 2023 Annual Report and confirmed the FY 2023 financial performance communicated to the market with its preliminary results on 28 February 2024.

Market environment and financial results
PATRIZIA remained an active net buyer with investments signed for clients more than offsetting disposals and redemptions, demonstrating the resilience of the Company’s independent investment platform. Nevertheless, AUM declined by 3.2% to EUR 57.3bn due to valuation pressure in a challenging market environment. 

Total service fee income came in at EUR 312.4m (2022: EUR 324.7m). Recurring management fees of EUR 251.1m continued to grow compared to last year (2022: EUR 241.0m; +4.2%) partially compensating for the market driven decline in transaction fees to EUR 14.7m (2022: EUR 22.5m; -34.6%) and performance fees to EUR 46.6m (2022: EUR 61.2m; -23.8%). 

PATRIZIA reorganised operations and adapted its business focus to accommodate the lower level of client investments in the second half of 2023. Associated reorganisation expenses of EUR 16.3m (up 63.9% y-o-y) as well as the inflationary environment led to an increase in operating expenses to EUR 293.6m (2022: EUR 280.5m; +4.7%).

As a result, EBITDA came in at EUR 54.1m (2022: EUR 78.9m; -31.5%). Excluding the reorganisation result, EBITDAR amounted to EUR 69.9m which was at the upper end of the most recent FY 2023 EBITDA guidance range of EUR 50.0 – 70.0m.

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 a continued 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.

New dividend policy and dividend proposal for FY 2023 
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.

Based on a proposal by the Company’s Executive Directors, PATRIZIA’s Board of Directors will 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. Shareholders will vote on the dividend proposal during the 12 June 2024 virtual AGM. 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. 

Outlook for FY 2024
PATRIZIA is entering 2024 with cautious optimism. The current macroeconomic uncertainty remains a challenge for the majority of the Group’s clients, especially in the real estate sector. On this basis, the Company expects AUM in a range between EUR 54.0bn - 60.0bn in the 2024 financial year. The Company expects a further improvement in earnings quality driven by a solid development of management fees while contributions from performance fees and other operating income should be lower compared to FY 2023, resulting in an expected EBITDA range of between EUR 30.0m - 60.0m for FY 2024.

Strategic repositioning as smart Real Asset Player
PATRIZIA recognises that after more than a decade of favourable conditions for growth, the current state of the real asset markets, especially real estate, has substantially changed. Markets are undergoing a fundamental transformation impacted by profound shifts in our economies and societies. The four transition megatrends of digital transition, urban transition 2.0, energy transition and living transition, the so-called “DUEL” megatrends, will shape the real asset sector of tomorrow:

Digital transition – digitalisation and new technologies, like real time connectivity and AI have disrupted our way of living and doing business. This disruption will create new opportunities for future business models.

Urban transition 2.0 – cities will become centres of gravity for innovation, for new smart technologies, in particular to accelerate decarbonisation, and for new working models as well as modern living.

Energy transition – climate change and global warming have triggered a fundamental shift from fossil fuels to renewable energies with new investment opportunities in alternative sustainable ways of energy production and storage.

Living transition – modern living will change substantially driven by demographics, social needs and increasing demand for smart and affordable housing.

These megatrends will require new investment approaches to safeguard our clients’ AUM and capture new opportunities for value-creation. PATRIZIA wants to become a smart Real Asset Player with the clear ambition to being sustainable, market leading, ambitious, resilient, and tech savvy while investing in the megatrends of our time and generating attractive long-term value for our clients.

The combination of a strong in-house research and data intelligence team, local experts on the ground, forward-thinking value-add and decarbonisation strategies, as well as the deep understanding of technology, puts PATRIZIA in a strong position for delivering lasting value for its clients. As the real estate and infrastructure sectors continue to converge, investment strategies will increasingly become theme-driven rather than simply asset class driven.

In order to shape these fundamental changes in a world in transition and create a strong foundation for revitalising growth, 2024 will be dedicated to transforming the Company's strategy and ways of working.

The Annual Report 2023, further accompanying documents and the Remuneration Report 2023 can be found here.

The Sustainability Report 2023 can be found here from the end of April 2024 onwards.

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.