PATRIZIA reports operating income of EUR134.5m in 2019
Pan-European real estate investment firm PATRIZIA recorded an operating income of EUR134.5 million in 2019, exceeding the FY 2019 guidance of EUR120.0 to 130.0 million.
This compares to an operating income of EUR141.4 million 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 per cent.
Major driver for the strong results was organic growth generated throughout 2019 with a solid increase in management fees (up 8.8 per cent y-o-y to EUR190.9 million), significant growth in transaction fees (up 24.8 per cent to EUR65.3 million) and performance fees on continued high levels (down 0.7 per cent to EUR91.8 million) while cost growth (up 8.1 per cent to EUR227.2 million, adjusted up 4.5 per cent) remained below the growth of total service fee income (up 8.7 per cent to EUR348.0 million). Net operating expenses included non-capitalised technology expenses of EUR7.6 million to future-proof the PATRIZIA platform. On an adjusted basis operating cost growth was only 4.5 per cent. Non-capitalised technology expenses will be adjusted in operating income going forward.
Assets under management (AUM) increased 8.4 per cent to EUR44.5 billion, 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, says: “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, says: “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 EUR120.0 million to EUR140.0 million. 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.
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 EUR9.0 billion, an increase of 32.6 per cent compared to 2018 (EUR6.8 billion). PATRIZIA executed (closed) transactions of EUR7.6 billion during 2019 (compared to EUR5.2 billion 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 EUR5.5bn of acquisitions in 2019, an increase of 60.5 per cent on the prior year (2018: EUR3.4 billion) and EUR3.5 billion of disposals, up 4.1 per cent (2018: EUR3.3 billion). Total transaction volume in Europe declined slightly by 2.4 per cent from EUR315.2 billion in 2018 to EUR307.7 billion in 2019, confirming market share gains for PATRIZIA.
Equity entrusted to PATRIZIA and number of institutional clients increased
PATRIZIA raised around EUR3.2 billion of equity (up 24.5 per cent) 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 per cent 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 per cent of equity entrusted to PATRIZIA during 2019 came from investors with multiple fund investments on PATRIZIA’s platform.