German investment management giant Patrizia reported a robust set of earnings for the first half of 2022 amid a volatile market environment which saw deal activity stall in Europe.
The Augsburg-based firm said that against a backdrop of geopolitical risk, elevated inflation and rising interest rates, it had benefitted from a strategy focused on ‘a resilient mix of real estate and infrastructure’ across multiple international – especially European - markets.
By diversifying its asset base over the last few years and increasing its geographic footprint, Patrizia said it was now well placed to weather the macro economic headwinds facing the market.
The acquisition of infrastructure investment manager Whitehelm Capital last year, which tripled its infrastructure assets under management (AUM) to €5 bn in one fell swoop, was a ‘transformational deal’ for the company and a key example of this diversification drive. At the time, Patrizia said it aimed to grow this segment to €15-20 bn in the mid term.
The Whitehelm Capital acquisition was one of the main factors underpinning growth in overall AUM, which increased by 16.7% in H1 to €56.2 bn compared with the year-earlier period. Infrastructure currently accounts for around 11% of Patrizia’s total AUM.
The company said that despite a ‘stagnation’ in the European real estate transactions market, it signed €2.7 bn of deals (+31.5% y-o-y) and closed €3.6 bn (+33.0% y-o-y) of transactions on behalf of its global clients in H1 2022.
Total service fee income remained virtually stable at €161.6 mln, down 1.8% year-on-year. Patrizia said the strategic shift in favour of recurring management fees, which amounted to €116.4 mln (+11.9% y-o-y) on the back of AUM growth, largely compensated for the expected decline in performance (-14.3% y-o-y) and transaction fees (-45.8% y-o-y), to €33.8 mln and €11.4 mln respectively.
As a result of higher operating expenses, EBITDA came in at €54.5 mln, a decline of 9.5% year-on-year.
Full-year 2022 guidance unchanged
Patrizia said it was maintaining its full-year financial guidance, with total service fee income set to come in at between €330 mln and €363 mln, and AUM reaching between €57 bn and €60 bn.
Going forward, the company plans to focus on further growth in its infrastructure business and other strategic opportunities, including M&A, as well as increasing its international exposure.
CFO Christoph Glaser commented: ‘Patrizia has fared well in a volatile market environment. We will closely monitor further developments and quickly adapt to any short-term market changes if and when they arise.
‘At the same time, we will use our financial flexibility for a capital allocation which is focused on accelerating organic growth in infrastructure, expanding our geographical footprint and taking advantage of new strategic growth opportunities, including M&A. Likewise, investments in Patrizia shares remain an attractive option for us.’
CEO Wolfgang Egger added: ‘For sure, we are facing continued uncertainty in a challenging market environment. But the structural demand for attractive long-term investment opportunities in real estate and infrastructure continues to grow.
‘Our recent client survey confirmed 64% our clients want to increase their allocation to infrastructure. Today, we offer our clients a much broader range of investment opportunities in real estate and infrastructure, in both, equity and debt solutions. This makes us a preferred partner to navigate our clients through the current market uncertainty.’
