Frankfurt-listed investor Patrizia Immobilien has told PropertyEU it is on the lookout for 'M&A opportunities' after posting a 72% profit increase in 2018.
Patrizia CFO, Karim Bohn, said: 'We will clearly continue to look out for M&A opportunities while our general rule still applies: it has to add value to our clients, either by enlarging our geographic reach or improving our product offering for institutional, (semi-) professional and private clients.'
The company said that its assets under management (AUM) increased 87.3% year-on-year to €41.0 bn, driven partly by the consolidation of corporate acquisitions, plus organic growth. Approximately €2.6 bn of funds was raised from institutional, (semi-)professional and private investors. Total service fee income grew 51.1% year-on-year to €320.2 mln, enhancing the stability of the business and its revenue streams. Operating income was up 72.0% to €141.4 mln.
Based on the current organic growth trajectory, the firm said it expected to generate a 2019 operating income in the range of €120-€130 mln, which it described as a 'normalised level', following the strong performance fees generated in 2018.
'Operationally, 2018 was an extremely active year for Patrizia and this has delivered strong results that are in line with our group strategy,' Bohn said. 'The proportion of the income we are now generating is increasingly from management fees, which offer a more stable, sustainable and higher quality source of revenue. The board has therefore approved an 8% increase in our dividend, from €0.25 to €0.27 per share.'
Future growth plans
'Patrizia will continue to strengthen its pan-European investment platform and global client relationship hubs,' Bohn said. 'With regards to our product offering, we have a number of attractive pan-European products in the market at the moment covering all asset classes and risk profiles.'
Bohn also said the firm was exploring other ways to diversify its income stream. 'In 2018, 55% of revenues came from management fees, 16% from transaction fees and 29% from performance fees – our plan for 2019 is to move this to 57% management fees, 19% transaction fees and 24% performance fees. The higher contribution from recurring fees will make our business more stable, while per se we regard performance fees as something positive – it confirms we created value for our clients.'
Proptech M&As
After acquiring a strategic stake in the artificial intelligence business Evana in 2018, Patrizia confirmed that further deals could include tech start-ups.
'Tech and innovation is of highest priority for Patrizia’s management and staff – we expect that tech will significantly impact the real estate investment industry and we feel that real estate is still five years+ behind other industries in this respect,' Bohn told PropertyEU.
'We spent a lot of brainpower on how the industry will change and what might disrupt our business – we hence want to be ahead of the game here and be best able to guide our clients through the coming change,' Bohn added. 'No doubt, we are screening other proptech businesses at the moment and at the same time will focus on integrating Evana’s opportunities into our operating business.'
