Patrizia SE · XETR:PAT
Patrizia — 3M 2020 Earnings Presentation
49 slides from Patrizia's earnings presentation, May 2020
Slide 1: Leading in Pan-European Real Estate
FOR CLIENTS AND SHAREHOLDERS LEADING IN PAN-EUROPEAN REAL ESTATE Company Presentation | November 2019 Company Presentation 3M 2020 | May 2020 PATRIZIA | © 2020
Slide 2: Agenda
Agenda • Equity Story • Financials 3M 2020 • Appendix PATRIZIA | © 2020 2
Slide 3: Equity Story: A leading global partner for real estate investment in Europe
Equity Story A leading global partner for real estate investment in Europe Strong track record built over the past 36 years 36 >45bn Top 10 years of real estate assets under investment manager experience management (EUR) in Europe1 Strong local presence: Strong performance: Strong potential: 23 11%
Slide 4: PATRIZIA's growth driven by client demand
Equity Story PATRIZIA‘s growth driven by client demand AUM growth directly translates into growing and strongly recurring management fees 70 450 60 +25.0% p.a. 348.0 300.0 – 350.0 320.2 Total service fee 50 income1 300 200.0 40 211.9 – 188.6 190.9 190.0 +27.1% p.a. 30 165.2 175.3 Management fees1 14
Slide 5: Predictable management fees and diversified client base
Equity Story Predictable management fees and diversified client base 73% of our AUM have a maturitiy of more than 10 years Maturity breakdown of AUM1 Equity commitments by clients2 78% 5% 8% 63% 14% 49% 30% 73% 21% 7% >10 years/unlimited 5–10 years Top 1 Top 5 Top 10 Top 25 Top 50 Top 100 2–5 years
Slide 6: Attractive products across all asset and risk classes
Equity Story Attractive products across all asset and risk classes Our pan-European investment strategies are designed to best serve our clients’ needs EUR sqm 45.3 Assets under bn 16.9 Real estate assets m 76 % Resilient Core and management under management Core plus strategies 13% 7% 4% 24% 5% 11%
Slide 7: A critical success factor: Local & sector expertise
Equity Story A critical success factor: Local & sector expertise Creating alpha in today’s market requires insights, patience, local knowledge & active management capabilities Outstanding screening and execution skills Pan-European transactions, asset and development teams Stockholm > 6,400 deals sc
Slide 8: Real estate investment management market is growing
Equity Story Real estate investment management market is growing We are benefiting from the structural growth market for real estate investment management Demographic change Our clients’ capital is Aging population threatens conventional pension growing systems Lower for longer Increasing allocation
Slide 9: Investors' expectations are growing
Equity Story Investors’ expectations are growing Investors want more asset classes, bigger tickets and more global reach with preferred partners 2019: USD 151.0bn Record high in capital raised for Real Estate USD 43.5bn Combined volume three largest RE funds 39.0% Drop in funds closed (only 295) USD
Slide 10: Proven track record of accretive acquisitions
Equity Story Proven track record of accretive acquisitions Rockspring and TRIUVA are now part of the ONE PATRIZIA world Net purchase price reconciliation| EUR m Run-rate EBIT reconciliation| EUR m 35.4 22.0 349.3 40.0 313.9 18.0 Purchase Extraordinary Net purchase Recurring M&A Run-rate price perfor
Slide 11: Top investment managers accelerate growth
Equity Story Top investment managers accelerate growth AUM of leading real estate investment managers have more than doubled since 2012 To be a top 10 RE investment manager in 2023 you likely need: AUM EUR >60.0bn in Europe EUR >140.0bn EUR >140.0bn globally! // AUM EUR 71.0bn AUM EUR >60.0bn AUM AU
Slide 12: Mean bond-yield-spreads remain at historic highs
Equity Story Mean bond-yield-spreads remain at historic highs Real estates relative attractiveness vs bonds persists DISCOUNT PREMIUM 600 BP 400 BP 200 BP 0 BP -200 BP -400 BP -600 BP 1980 Q1 1982 Q1 1984 Q1 1986 Q1 1988 Q1 1990 Q1 1992 Q1 1994 Q1 1996 Q1 1998 Q1 2000 Q1 2002 Q1 2004 Q1 2006 Q1 2008
Slide 13: Investment pressure continues
Equity Story Investment pressure continues Global under-allocation to real estate continues to drive growth By type of investor Allocations Average allocation to real estate | as % of overall portfolio Increase 63.6% Maintain 28.1% Current allocation Target allocation Decrease 8.3% 12.40% 11.50% 11.
Slide 14: Yield development
Equity Story Yield development Investors have seen significant nominal yield compression of real estate investments in recent years Office Retail Logistics Yield range Yield range Yield range European Prime Yield European Prime Yield European Prime Yield Long-term mean Long-term mean Long-term mean
Slide 15: Global clients with a strong European base
Equity Story Global clients with a strong European base Partnerships with a diverse mix of global institutional investors foster our understanding of clients’ needs Pension funds 1% 8% Insurance 9% companies 11% > 400 42% Savings banks Banks, endowments institutional investors & corporates Private i
Slide 16: Leading capital raising activity in the market
Equity Story Leading capital raising activity in the market PATRIZIA has invested significantly in its capital raising capabilities over the past years and is now reaping the rewards Institutional equity raised | EUR m 73% 3,500 3,000 of equity raised New from existing clients 2,500 clients 2,000 EU
Slide 17: Investment Ecosystem
Equity Story Investment Ecosystem Strategic global innovation and technology activities Our mission is to increase operational excellence, tech Selected Investments leadership and develop new business opportunities in a BrickVest (February 2020) client centric approach by: • PATRIZIA acquires the pl
Slide 18: Investment Ecosystem | BrickVest
Equity Story Investment Ecosystem | BrickVest PATRIZIA secures independence of BrickVest About BrickVest • Global and open digital investment platform for real asset investments • Founded in 2014 in London • Platform connecting various investor groups with deal sponsors and product providers • Trans
Slide 19: Social centrepiece: PATRIZIA Children Foundation
Equity Story Social centrepiece: PATRIZIA Children Foundation Creating an environment for education for more than 20 years What we are doing Example: Primary School extension Buyamba, Uganda • Initiating child cares, hospitals and schools to give children a safe Expand existing PATRIZIA Primary Scho
Slide 20: Stronger for clients and shareholders
Equity Story Stronger for clients and shareholders PATRIZIA share performance | as at 07.05.2020 PATRIZIA on the capital market Closing price YTD L6M L12M • PATRIZIA is listed in the Prime Standard segment of 30.00 30.00 € Deutsche Börse AG and member of the SDAX, DIMAX, EUR 19.94 -0.4% +7.2% +7.4%
Slide 21: Growing dividends in line with our business
Equity Story Growing dividends in line with our business Increase in dividend per share by 7.4% y-o-y • Dividend for 2019 of EUR 0.29 per share all cash. Based on the FY 2019 net profit attributable to shareholders the proposal equals a pay-out ratio of 50.7% (up from 48.3% last year) → i.e. part of
Slide 22: Strategy 2023 | A clear strategy
Equity Story Strategy 2023 | A clear strategy… Our aspiration for the next 3 – 5 years Expand investment opportunities Broad diversification through more geographies, more real assets & real estate debt Strengthen footprint Leading market insights through more international offices & more sector exp
Slide 23: Makes PATRIZIA stronger for clients & shareholders
Equity Story …makes PATRIZIA stronger for clients & shareholders Our aspiration for the next 3 – 5 years ✓ 1 Real assets investment manager ✓ 2 More diversified product offering ✓ 3 Larger international client base ✓ 4 Early mover in automation & technology ✓ 5 Stable income & higher company value P
Slide 24: Strategic Agenda | Expansion across quadrants
Equity Story Strategic Agenda | Expansion across 4 quadrants Leverage existing platform offering governance, research, capital raising and market services – bolt on boutiques Core Core + Value-add Opportunistic Equity Real Estate Debt Private Public Equity Infrastructure Debt Expansion into additi
Slide 25: Over 3-5 years AUM could increase by ~15% p.a. incl. M&A
Equity Story Over 3-5 years AUM could increase by ~15% p.a. incl. M&A… AUM of EUR 60bn organically and EUR 80bn incl. M&A are achievable EUR ~80.0bn Illustrative example EUR ~60.0bn EUR 44.5 bn 3-5 2019 years Strategic target PATRIZIA | © 2020 25
Slide 26: ... and directly translate into growth of fee income
Equity Story … and directly translate into growth of fee income Management fees could increase by 8 – 10% p.a. organically Illustrative example Performance fees EUR 91.8m (hist. Ø: EUR 60.0m p.a.) Transaction fees (hist. Ø: EUR 55.0m p.a.) EUR 65.3m EUR ~250.0m EUR 190.9m Management fees 3-5 years 2
Slide 27: Strategy for our clients spurs further growth
Equity Story Strategy for our clients spurs further growth Organic and inorganic growth lead to stronger platform Status Quo Measure Mid-term target Assets under Management EUR 44.5bn Grow 8 – 10% p.a. organically EUR 60.0bn EUR 60.0bn Structural growth market Mergers & Acquisitions EUR 44.5bn Grow
Slide 28: Agenda
Agenda • Equity Story • Financials 3M 2020 • Appendix PATRIZIA | © 2020 28
Slide 29: Highlights
Financials 3M 2020 Highlights Solid start into 2020 – increased AUM and management fees; updated guidance now reflects Covid-19 uncertainties Assets under management2 | EUR bn 3M 2020 • Operating income of EUR 24.7m up 2.9%1 compared to 3M 2019 +2.0% 46.5 – 48.0 44.5 45.3 • Assets under management
Slide 30: Operating income
Financials 3M 2020 Operating income Solid 3M 2020 and good visibility on H1 2020 results form a good basis for FY 2020 Highlights Composition 3M 2020 | EUR m • Total service fee income up 13.1% to EUR 80.4m (3M 2019: EUR 71.1m) due to: • Management fees with 3.6% growth due to +24.1% +14.2% grow
Slide 31: Total service fee income
Financials 3M 2020 Total service fee income PATRIZIA continues to grow while still delivering superior investment performance for clients Highlights Total service fee income | EUR m • Total service fee income up 13.1% to EUR 80.4m driven by: • Growth in assets under management and superior 100%2 tra
Slide 32: Transaction fees
Financials 3M 2020 Transaction fees Strong outperformance of the market confirms unique market access of PATRIZIA platform Highlights Transaction volume (closed/signed) | EUR bn closed 9.0 signed • Ongoing transaction activity for our clients in the beginning of the year drove transaction fees to EU
Slide 33: Performance fees
Financials 3M 2020 Performance fees Superior returns for investors translate into attractive performance fees • Performance fees of EUR 17.4m in 3M 2020 as stable contributor to overall financial results and only slightly below last year’s levels • Performance fees emphasise PATRIZIA’s active asset
Slide 34: Profitability and costs
Financials 3M 2020 Profitability and costs Continued efficiency improvements propel profitability and cost ratios AUM vs total cost ratio | EUR bn vs % EBITDAR margin (+/- principal investments) | EUR m, LHS vs %1 50 46.5 – 48.0 1% 180 50.0% 45 1.21% 38.7% 45.3 1% 160 45.0% 44.5 42.9% 40 34.8% 41.0
Slide 35: Guidance 2020e
Financials 3M 2020 Guidance 2020e Guidance for 2020e implies further improved earnings profile Updated Assumptions 2020e Income composition FY 2020e | EUR m • Operating income guidance for FY 2020 broadened to EUR 100.0m to 140.0m to reflect uncertain Covid-19 impact on European real estate investme
Slide 36: Solid financial position
Financials 3M 2020 Solid financial position Rock-solid balance sheet and strong cash position make PATRIZIA well prepared for the crisis • Strong balance sheet ratios and capital structure to facilitate further profitable growth • Dividend payment of EUR 0.29 for FY 2019 reaffirmed, payment in July
Slide 37: Agenda
Agenda • Equity Story • Financials 3M 2020 • Appendix PATRIZIA | © 2020 37
Slide 38: Our competitive edge
Appendix Our competitive edge Excellent market access and local knowledge are key to our strong investment performance for clients • Transactions worth EUR ~42bn completed since 2013 ‘Turn to’ real estate investment Transactions • Transaction market expected to remain active resulting in a manager e
Slide 39: Our footprint
Appendix Our footprint 18 offices and 5 client relationship hubs across 17 countries guarantee close proximity to our clients and assets Global fundraising… …for European real assets Amsterdam Copenhagen London Augsburg (HQ) New York Paris Stockholm Seoul Tokyo Hong Kong Copenhagen Manchester Hambur
Slide 40: Product overview
Appendix Product overview Direct & indirect investment opportunities allow our clients to achieve their individual portfolio objectives Commingled Funds Club Deals/JVs Separate Accounts Multi Manager Products Management Mandates • Open-/closed-ended • Targeted business • Individual, nimble • Indirec
Slide 41: PATRIZIA GrundInvest
Appendix PATRIZIA GrundInvest PATRIZIA’s closed-end funds business for private and (semi-)professional investors celebrates its 5th anniversary • In 2020 the team of PATRIZIA GrundInvest Investment volume | EUR m celebrates its 5th anniversary Sustained • Investment volume is now over EUR 1bn growth
Slide 42: Top EU investment managers
Appendix Top 10 EU investment managers Investors’ preference for diversification drives European consolidation EUR 23.7bn Increase by +96% EUR 46.5bn Average AUM Average AUM of the Top 10 in 2012 of the Top 10 in 2018 Pos. Investment Manager AUM (EUR) Pos. Investment Manager AUM (EUR) 1 AXA Real Est
Slide 43: Capital allocation
Appendix Capital allocation Assets under Invested capital Invested capital Participations As at 31.03.2020 management (fair value) (at cost) EUR m EUR m EUR m in % Third-party business 38,906.8 0.0 Co-investments 6,395.4 489.2 103.7 Residential 5,590.2 469.8 86.4 Dawonia GmbH 4,649.0 152.01 51.7 5.1
Slide 44: Reconciliation of operating income
Appendix Reconciliation of operating income EUR k 3M 2020 3M 2019 Change EBITDA 29,625 26,067 13.6% Amortisation of other intangible assets¹, software and rights of use, depreciation of property, plant and equipment -8,787 -11,586 -24.2% EBIT 20,837 14,481 43.9% Finance income/expenses -1,113 -1,036
Slide 45: Consolidated income statement
Appendix Consolidated income statement EUR k 3M 2020 3M 2019 Change % Revenues 66,586 57,742 15,3% Income from the sale of investment property 0 231 -100,0% Changes in inventories -1,545 -5,047 -69,4% Other operating income 2,057 1,919 7,2% Total operating performance 67,099 54,845 22,3% Cost of mat
Slide 46: Consolidated balance sheet | Assets
Appendix Consolidated balance sheet | Assets EUR k 31.03.2020 31.12.2019 A. Non-current assets Goodwill 207,853 210,292 Other intangible assets 125,727 131,895 Software 11,157 10,326 Rights of use 24,107 24,988 Investment property 1,835 1,835 Equipment 5,810 6,056 Associated companies accounted for
Slide 47: Consolidated balance sheet | Equity and liabilities
Appendix Consolidated balance sheet | Equity and liabilities EUR k 31.03.2020 31.12.2019 A. Equity Share capital 90,635 91,060 Capital reserves 147,561 155,222 Retained earnings Legal reserves 505 505 Currency translation difference -12,384 -4,818 Remeasurements of defined benefit plans according to
Slide 48: Financial calendar
Appendix Financial calendar 2020 July 1 ➢ Annual General Meeting 2020 (virtual AGM) August 6 ➢ Interim Report for the first half of 2020 November 12 ➢ Quarterly Statement for the first nine months of 2020 Invitations and dial-in numbers are provided in advance. For further information, please visit:
Slide 49: Contact
Appendix Contact KARIM BOHN MARTIN PRAUM Member of the Senior Managing Director Management Board | CFO Head of Investor Relations PATRIZIA AG T +49 821 50910-402 Fuggerstrasse 26 F +49 821 50910-399 86150 Augsburg M +49 151 19685445 Germany [email protected] LAURA WALZ MAXIMILIAN GERBER