LEADING IN PAN-EUROPEAN REAL ESTATE - Company Presentation | November 2019 - PATRIZIA
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LEADING IN PAN-EUROPEAN REAL ESTATE Company Presentation | November 2019 PATRIZIA | © 2019
Agenda • Equity Story • Financials 9M 2019 • Appendix PATRIZIA | © 2019 2
Equity Story
A leading global partner for real estate investment in Europe
Strong track record built over the past 35 years
More than More than
35 42bn Top 10
years of real estate assets under investment manager
experience management (EUR) in Europe1
Strong local presence: Strong performance: Strong potential:
24 11% 548m
offices globally average IRR for available liquidity
serving our clients investments in Europe for investments (EUR)2
Data as at 9M 2019 | 1 According to leading industry ranking by PropertyEU and Institutional Real Estate, both issued in 2019 |2 Adjusted for temporary consolidation of warehoused assets and liabilities
for Living Cities residential fund, see slide 40
PATRIZIA | © 2019 3
Equity Story
PATRIZIA‘s growth driven by client demand
AUM growth directly translates into growing and strongly recurring management fees
+23.0% p.a.
320.2 307.0 – 330.0 Total service fee
70
income1
300
60
50 211.9 180.0 – 185.0 +26.0% p.a.
188.6 175.3 Management fees1
40 165.2
140.0
150
30 117.5
89.1 93.2 45.0 +30.5% p.a.
72.8 81.5 41.0
20 68.1 – AUM growth
50.1 44.0
35.6 21.9
10 18.6
14.6 16.6
11.8
6.9
0 0
2012 2013 2014 2015 2016 2017 2018 2019e
AUM (EUR bn) Management fees (EUR m) Total service fee income (EUR m)
1 Fee income growth below AUM growth as DAWONIA management fee is not linked to AUM
PATRIZIA | © 2019 4
Equity Story
Predictable management fees and diversified client base
69% of our AUM have a maturitiy of more than 10 years
Maturity breakdown of AUM1 Equity commitments by clients2
76%
2%
11% 61%
18%
29%
69%
20%
7%
>10 years/unlimited 5–10 years
2–5 years
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
42.6 bn 18.4 m
47 %
Assets under Real estate assets Active investment
management under management strategies
11% 6% 0.2%
5%
4% 25%
4% 8%
34%
5%
AUM by AUM by AUM by
geography sector risk style 53%
12% 21%
64%
22%
24%
Germany UK & Ireland Office Residential Core Core plus
Logistics &
France & Belgium Nordics Retail Industrial Value add Opportunistic
Other (Healthcare,
Netherlands Other Infrastructure Hotel, etc.)
Data as at 9M 2019; AUM based on total real estate/infrastructure under management and administration; AUM by risk style based on vehicle level breakdown
PATRIZIA | © 2019 6
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
Helsinki
Stockholm
> 6,000
deals screened Copenhagen
Manchester
(2018) Dublin Hamburg
Amsterdam
Thames Valley
Berlin Warsaw
London Frankfurt
Brussels
Augsburg (HQ)
Paris Munich
> 75
transactions made
3
~ days
on average 1 transaction
Milan
(2018) completed every 3 days
Madrid
Information as at Q2 2019. ⚫ Local Asset & Development Management professionals (incl. local country teams). ⚫ Transactions professionals
PATRIZIA | © 2019 7
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 allocations to Low interest rate environment is here to stay real estate Consolidation Clients reduce number of Clients focus on selected pan-European platforms investment managers with broad product offering PATRIZIA | © 2019 8
Equity Story
Leading investment managers benefit from structural growth
Investors are consolidating the number of managers they invest with
EUR 32bn
of AUM needed to be
+113% amongst the Top 10
in six years
EUR 15bn
of AUM needed to be
amongst the Top 10 ✓ With EUR 42bn+ PATRIZIA
is currently well positioned
✓ Ready for further growth in
order to stay relevant for
our clients
2012 2018
Source: www.irei.com; only assets in Europe
PATRIZIA | © 2019 9
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 performance/ price EBIT acquired efficiencies2 EBIT acquired
transaction fees
2018 of acquired
entities after
taxes (25% M&A EBIT
assumption)1 multiple 7.9x
ROCE3
12.7%
ROE4
14.3%
1 Not included in acquisition pricing | 2 Efficiencies realised, run-rate from 2019 | 3 Return on capital employed | 4 Return on equity based on equity ratio of 67% and tax rate assumption of 25%
PATRIZIA | © 2019 10Equity Story
Mean bond-yield-spreads remain at historic highs
Real estate continues to be an attractive asset class vs bonds
DISCOUNT PREMIUM
600 BP
400 BP
200 BP
0 BP
-200 BP
-400 BP
-600 BP
2019 Q2
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 Q1
2010 Q1
2012 Q1
2014 Q1
2016 Q1
2018 Q1
Office Spread BP Retail Spread BP Logistics Spread BP
• The gap between prime yields and the corresponding national 10-year government bond yields is historically high
• Although it is unlikely that this gap will continue to increase, it will nevertheless remain at a level making European real estate
an attractive investment opportunity, even with rising interest rates
Data as at 30.06.2019 | Source: PATRIZIA, Refinitiv, PMA
PATRIZIA | © 2019 11Equity Story
Investment pressure continues
Global under-allocation to real estate to drive growth
By type of investor Allocations
Average allocation to real estate | as % of overall portfolio Increase 50.0%
Maintain 40.7%
Current allocation Target allocation Decrease 9.3%
11.1% Investment style preferences
10.3%
9.7%
Value add 51.1%
7.8% Core 39.1%
7.0%
6.5% Opportunistic 9.8%
2019e
A minimum of EUR 72.4bn of new capital is expected to be
invested into global real estate in 2019
Insurance
Pension Fund
SWF/Govt' Inst
Company
Source: ANREV / INREV / PREA Investment Intentions Survey 2019; survey among 154 institutional investors, managing EUR 730.1bn real estate AUM
PATRIZIA | © 2019 12Equity 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
6%
companies
11%
> 350 46% Savings banks
Banks, endowments
institutional
investors & corporates
27% Private investors
Other
10% Germany
13%
20
UK & Ireland
>
11% geographies Rest of Europe
66%
Rest of World
Data as at 9M 2019 ⚫ PATRIZIA capital markets offices ⚫ Acquisition of Japan-based KENZO Capital Corporation, published on 09.01.2019, closing on 01.11.2019
◼ Markets with existing institutional investors and/or PATRIZIA capital markets operations
PATRIZIA | © 2019 13Equity 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
54%
3,000
3.000
2,500
2.500
of equity raised New
from existing clients clients
2,000
2.000
1,500
1.500
EUR bn
~12 1,000
1.000
500
Existing
clients
of equity raised
2015-2019e
0
2015 2016 2017 2018 2019e
Data as at 9M 2019; Leading: Positioned among Top 3 based on own competitor research | Equity raised including predecessor companies
PATRIZIA | © 2019 14Equity Story
Actively driving digitalisation is key
Joint
PATRIZIA at the forefront of innovation & technology
Forces
About Cognotekt
• AI (Artificial Intelligence) service provider using state-of-the-art Natural Language Processing to translate language into mathematical formulas
• With this approach Cognotekt operates with 100% accuracy, when extracting data or classifying documents
• Cognotekt’s services have already proven to be successful in other industries, including the insurance sector
Joint forces: Cognotekt, EVANA and PATRIZIA
• Strategic investment in Cognotekt in July 2019 follows the investment in EVANA in October 2018 and enables PATRIZIA to further leverage its AI
competency
• PATRIZIA fosters the collaboration of two complementary businesses, building a cutting-edge solution with benefits for its clients and the whole real
estate industry
• EVANA, the leading document, data and workflow platform will be supplemented with Cognotekt’s AI to extract data and classify documents with the
highest accuracy and elimination of false positives usually corrupting the data sets
Workflow
Document classified
& or data extracted Document will be stored into
EVANA automatically and
data extracted
Manual rework accelerated by
Document will be stored into
Cognotekt’s relevance
Document EVANA and data extracted
Document not classified classification
& or data not extracted
PATRIZIA | © 2019Equity Story
Giving back to society is part of our DNA
In 2019 PATRIZIA is celebrating the 20th anniversary of its Children Foundation
Environment
• Improved footprint of property portfolio
(e.g. EUR 14bn portfolio running on renewables)
• Sustainable construction (i.e. LEED, DGNB, BREEAM) for new
build and existing portfolios
• Green PropTech collaborations
PATRIZIA Children Foundation
• Foundation fully engaged since 1999
• Every single donated EUR goes into building schools & hospitals
(children’s homes) around the world
• Volunteering programme for PATRIZIA staff
• Access to education & healthcare for over 200,000 children
• PAT Art Lab
Corporate responsibility
• Member in best-practice associations (e.g. INREV, GRESB, ULI)
• Regular employee surveys since 2010
• Continued professional development of staff
• Innovation lab to future proof business
https://www.patrizia.foundation/en/
Data as at 9M 2019
PATRIZIA | © 2019 16Equity Story
Stronger for clients and shareholders
PATRIZIA share performance | as at 08.11.2019 PATRIZIA on the capital market
Closing price L6M YTD L12M • PATRIZIA is listed in the Prime Standard segment of
30.00
30.00 € Deutsche Börse AG and member of the SDAX, DIMAX,
EUR 18.66 +0.3% +11.8% +1.2%
25.00
25.00 € MSCI World Small Cap and other indices1
20.00
20.00 €
• Initial listing on 31 March 2006
15.00 • Market capitalisation as at 08.11.2019: EUR 1.7bn
15.00 €
• Average daily trading volume: ~80,000 shares
10.00
10.00 €
5.00
5.00 €
EUR/share
0.00
0.00 €
2013 2014 2015 2016 2017 2018 2019
Analyst recommendations | as at 08.11.2019 Shareholder structure | as at 08.11.2019
7 1.40%
8.05% First Capital Partner GmbH 2
∅ target price:
Union Investment Privatfonds GmbH 3
EUR 21.86
Allianz SE 4
30.57%
51.81%
2 resulting upside6: Other institutional shareholders
+17.1% Private shareholders
0
3.15% PATRIZIA AG 5
BUY HOLD SELL 5.02%
Source: Thomson Reuters, PATRIZIA share register | 1 CDAX, Classic All Share, DAX International Mid 100, DAXplus FAMILY 30, DAXsector Financial Services, DAXsubsector Real Estate, Prime All Share,
S&P GIVI Global Index, S&P Global BMI, S&P Intrinsic Value Weighted Global Index , S&P Low Beta Global Index | 2 First Capital Partner is attributable to CEO Wolfgang Egger | 3 According to the voting
rights notification of 31 October 2018 | 4 According to the voting rights notification of 2 August 2019 | 5 Treasury shares | 6 Based on closing price of EUR 18.66
PATRIZIA | © 2019 17Equity Story
Growing dividends in line with our business
Increase in dividend per share by 8.0% y-o-y
• Dividend for 2018 of EUR 0.27 per share all cash. Based on the FY 2018 net profit attributable to shareholders the proposal equals a
pay-out ratio of 48% (up from 43% last year) → i.e. part of cash to be retained for further inorganic growth while shareholders participate
in profit growth via cash dividend
• Future dividend policy is based on y-o-y growth in management fees and AUM with FY 2018 dividend of EUR 0.27 per share as starting point
• Management fees reflect PATRIZIA’s most stable and recurring income stream, AUM represent a key financial performance indicator of
the Group
Dividend per share (EUR) Dividend policy FY 2019 onwards
0.27
X% Y%
+8.0% Basis for
0.25
dividend
proposal
FY 2017 FY 2018 Growth in management Growth in AUM
fees (y-o-y) (y-o-y)
PATRIZIA | © 2019 18Equity 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 expertise
Build efficient platform
Best-in-class back-office & reporting based on smart IT, AI & automated services
Drive innovations
Early mover through anticipating market trends and changing tenant & client behaviour
Enhance stability
Reliable partner based on strong balance sheet, strong brand & increasing recurring income
PATRIZIA | © 2019 19Equity 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
PATRIZIA | © 2019 20Equity 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 additional segments is the natural next step in the evolution of PATRIZIA
Equity = Strategies that target investment in real assets equity tranche; Secondaries = Strategies that target investment in secondary units of existing real assets funds/partnerships/joint ventures/or
other relevant investment structures; Debt = Strategies that target investment in real assets debt tranche
PATRIZIA | © 2019 21Equity 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 44.0 – 45.0bn
3-5
years
2019e Strategic
target
PATRIZIA | © 2019 22Equity Story
… and directly translate into growth of fee income
Management fees could increase by 8 – 10% p.a. organically
Illustrative example
Performance fees
EUR 72.0 – 80.0m (hist. Ø: EUR 60.0m p.a.)
Transaction fees
(hist. Ø: EUR 55.0m p.a.)
EUR 55.0 – 65.0m EUR ~250.0m
EUR 180.0 – 185.0m
Management fees
3-5
years
2019e Strategic
target
PATRIZIA | © 2019 23Equity 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 44.0 – 45.0bn Grow 8 – 10% p.a. organically EUR 60.0bn
EUR 60.0bn
Structural growth market
Mergers & Acquisitions EUR 44.0 – 45.0bn Grow 15.0% p.a. (in)organically
+20.0bn
Active industry disruptor Total EUR 80.0bn
Improve qualitiy of earnings by
Quality of earnings 57.0%1 growing share of management >70.0%1
Increase share of recurring fees
earnings
Stable EBITDAR margin,
Efficiency EBITDAR margin²: 35 – 39% Scalability
but higher quality earnings
Digitalisation and scalability Total cost ratio: 0.48 – 0.53% Innovation & digitalisation
Total cost ratio:Agenda • Equity Story • Financials 9M 2019 • Appendix PATRIZIA | © 2019 25
Financials 9M 2019
Highlights
On track to deliver full-year guidance with improved earnings quality
9M 2019 Assets under management | EUR bn
• Assets under management (AUM) increased by 3.8%1 to
EUR 42.6bn y-t-d +3.8% 44.0 – 45.0
41.0 42.6
• PATRIZIA clearly outperformed the transaction market as at Principal investments
9M 2019 by showing double-digit growth in transaction volume; 1.2 0.1 1.3 0.1
transaction activity is expected to remain high in Q4 2019 with Fund of funds
several closings coming up
• Total service fee income up 11.5%, driven by higher management 39.8 41.2
Funds under
(EUR 141.6m; +10.9%) and performance fees (EUR 68.6m; +37.3%) management
• Operating income of EUR 97.7m flat y-o-y, but with further
improved earnings quality; total service fee income growth
compensated for lower income from the sale of phase-out principal 31.12.2018 30.09.2019 2019e
investments (EUR 22.5m in 9M 2018 vs EUR 10.7m in 9M 2019)
• Continued efficiency improvements as net operating expenses
are growing much slower than total service fee income
Operating income | EUR m
(+4.1% vs +11.5%)
120.0 – 130.0
98.1 97.7
Full-year guidance confirmed -0.4%
• Organic net AUM growth of EUR 3.0 – 4.0bn (i.e. 7.0% – 10.0%)
• Total AUM expected between EUR 44.0 – 45.0bn
• Operating income guidance of EUR 120.0 – 130.0m
9M 2018 9M 2019 2019e
1 All percentage rates in this section of the presentation refer to the comparable period of the previous year, unless stated otherwise
PATRIZIA | © 2019 26Financials 9M 2019
Operating income
Strong operating income of EUR 97.7m with improved earnings quality
Highlights Composition 9M 2019 | EUR m
• Total service fee income up 11.5% to EUR 233.7m
(9M 2018: EUR 209.7m) due to:
• Strong management fees with 10.9% growth y-o-y -49.8% +4.1%
due to organic and inorganic growth (Rockspring) +37.3% 19.1
• Transaction fees still 26.5% lower y-o-y, but
positive acceleration to continue in Q4 2019 68.6
• Performance fees up 37.3% y-o-y due to strong -26.5% -147.2
outperformance generated for our clients
+10.9% 23.5
• Net sales revenues and co-investment income
of EUR 19.1m down significantly y-o-y in line with -2.7%
strategic transformation: -0.4%
-7.9
• Principal investments contributed
EUR 10.7m after EUR 22.5m in 9M 2018 141.6
due to lower disposal volume of phase-out 98.1 97.7
principal investments
• Co-investments contributed EUR 8.4m
after extraordinary strong EUR 15.5m 9M 2018 9M 2019
in 9M 2018
Operating Manage- Trans- Perfor- Net sales Net D&A, Operating
• Net operating expenses up 4.1%, but still well income ment action mance revenues operating financial income
below the growth rate of management fees fees fees fees and co- expenses 1 result and
(+10.9%) and total service fee income (+11.5%) investment other items
income
Total service fee income
EUR 233.7m; +11.5% change y-o-y
1 Inter alia netted against other operating income of EUR 3.5m
PATRIZIA | © 2019 27Financials 9M 2019
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 11.5% to EUR 233.7m driven by: 330.0
• Organic growth in assets under management and – 100%2
consolidation of Rockspring (31.03.2018) 320.2 307.0
• Superior investment performance for clients
80.0
268.6 – 24%
• Management fees up 10.9% to EUR 141.6m due to organic growth 92.5
72.0
in assets under management and additional management fees 233.7
generated by Rockspring 65.0
211.9
• Recurring management fees contributed 60.6% to 103.4 – 19%
188.6 52.4 68.6
total service fee income 55.0
• Fees are partly included in revenues (EUR 134.5m) and 29.2 66.9
partly in income from participations (EUR 7.1m) 140.0 25.0 23.5
117.5 19.7 185.0
70.3 51.8
• Transaction fees nearly doubled from H1 2019 (EUR 12.1m) to 13.4 58.7 – 57%
9M 2019 (EUR 23.5m) and pipeline is well filled for Q4 2019 52.2 180.0
175.3
• Acquisition fees: EUR 12.1m vs disposal fees: EUR 11.4m 54.1 141.6
• Performance fees of EUR 68.6m partly included in: 81.5 89.1 93.2
68.1
• Revenues (EUR 50.4m) 50.1
• Income from participations (EUR 18.3m)
2013 2014 20151 2016 2017 2018 9M 2019e
• Full-year guidance confirmed 2019
• Total service fee income of EUR 307.0m – EUR 330.0m Management fees Transaction fees
Performance fees SÜDEWO performance fee
1 EUR 165.2m excluding SÜDEWO performance fee | 2 At mid-point of guidance range
PATRIZIA | © 2019 28Financials 9M 2019
Transaction fees
Transaction activity picked up in Q3 2019 and further acceleration is expected in Q4 2019
Highlights Transaction volume (closed/signed) | EUR bn
• Strong acceleration of signed transaction volume q-o-q, closed signed
e.g. residential in Germany and Dublin, logistics in France and Ø EUR 7.2
8.0
office in Germany; overall market volumes recovering since Q1 5.5bn 6.0
5.1 5.2 —
4.8 3.0 4.6
• For several transactions that were signed in Q3 2019 closing is 0.5 4.1 2.5 6.0
expected to follow in Q4 2019 with positive impact on AUM 0.7 1.9 2.8 2.0
• Growth in transaction fees also picked up in Q3 2019 and is 4.3 4.2 3.5
3.4 3.2 2.5 2.6
expected to continue to accelerate until year-end
• Acceleration of transaction activity is expected to continue in
Q4 2019 with positive impact on transaction fees; consequently 2013 2014 2015 2 20162 2017 2018 3 9M 2019e
our 2019 full-year guidance is confirmed Acquisitions Disposals 2019
European transaction volume| EUR bn1 Transaction fees | EUR m
• Lower transaction activity across all sectors 70.3
Ø EUR
56.6m 54.1 58.7 22.2
52.2 51.8 52.4 65.0
311.0 311.3 270.0
266.0 17.0 26.7 —
233.0 17.7 20.3 21.7
189.0 55.0
23.5
103.8 48.1
37.1 34.5 32.0 31.4 30.7 11.4
12.1
2013 2014 2015 2016 2017 2018 H1 2013 2014 2015 2016 2017 2018 9M 2019e
2019 Acquisition fees Disposal fees 2019
1 Source: PATRIZIA, RCA all property including: DE, UK, IE, DK, SE, NO, FI, NL, BE, FR, ES, PT, AT, IT, PL, CZ, HU and LX | 2016 transaction volume includes sale of Harald portfolio worth EUR 1.1bn; 2015
2
includes sale of SÜDEWO and acquisition of Harald portfolio totalling EUR 2.5bn | 3 In addition EUR 0.5bn mandates transferred to PATRIZIA that are not included in transaction volume, but increased AUM
PATRIZIA | © 2019 29Financials 9M 2019
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 %
50 1%
44.0 – 45.0 180 50.0%
1.21% 45.2%
45 42.9%
1.14% 1% 160 41.8% 45.0%
40 42.6 38.7%
41.0 3740.0%
– 41%
0.97% 0.98% 140 34.8%
35 1% 33.9% 35 – 39%
39.0% 39.2% 35.0%
0.82% 120 30.4% 36.2%
30 0.80%
1% 30.0%
100 23.8% 28.8%
25 25.0%
0.53%
20 0.47%1
1% 80
21.9 20.0%
18.6 60 18.2%
15 0.53% 0% 15.0%
16.6
14.6 – 40 13.3%
10 11.8 10.0%
0.48% 0% 9.6%
20 8.1%
5 6.9 5.0%
0 0% 0 0.0%
3
2012 2013 2014 2015 2016 2017 2018 9M 2019e 2012 2013 2014 20152 2016 2017 2018 9M 2019e
2019 2019
AUM EBITDAR incl. principal EBITDAR 2lalalaexcl. principal
Total cost ratio (in %) Margin (in %) investments investments
Margin (in %) 2lalala
• Scalability of operating platform continuously improves cost ratio • Margin transformation of business model nearly completed,
• Total cost ratio = Net operating expenses (incl. staff costs) divided i.e. from volatile principal investment to stable service fee income
by average AUM • Normalised margin expected in FY 2019 after peak in FY 2018
1 Annualised value | 2 2015 excluding SÜDEWO exit fee | 3 2016 excluding Harald profit
PATRIZIA | © 2019 30Financials 9M 2019
Solid financial position
Ample cash position to drive further growth and strategic development
• Strong balance sheet ratios and capital structure to facilitate further profitable growth
• Total available liquidity as at 30.09.2019 amounts to EUR 261.2m or EUR 547.9m adjusted
• The 9M 2019 balance sheet and liquidity KPIs are influenced by the consolidation of temporarily warehoused assets and
liabilities for PATRIZIA’s new Living Cities residential fund launched in November 2019
Strong balance sheet Significant liquidity
EUR m 30.09.2019 EUR m 30.09.2019
Total assets ⚫ 2,070.5 Bank balances, cash,
⚫ 376.1
Equity (excl. non-controlling deposits and securities
1,199.7
interests) - Regulatory reserve for asset
–26.1
Equity ratio ⚫ 57.9% management companies
- Transaction related liabilities
Cash and cash equivalents ⚫ 209.1 and blocked cash ⚫ –88.6
+ Deposits and securities +167.0 - Liquidity in closed-end funds
–0.3
business property companies
– Bank loans ⚫ –243.4
– Bonded loans –300.0 = Available liquidity ⚫ 261.2
= Net debt ⚫ –167.2
Available liquidity adjusted
547.9
Net equity ratio1 ⚫ 64.5% (for Living Cities)
Net equity ratio adjusted
79.3%
(for Living Cities)
⚫ Influenced by temporary consolidation of warehoused assets and liabilities for Living Cities residential fund, see slide 40 for more details
1 Net equity ratio: Equity (excl. non-controlling interests) divided by total net assets (total assets less liabilities covered by cash in hand)
PATRIZIA | © 2019 31Financials 9M 2019
Guidance 2019e
Full-year operating income guidance of between EUR 120.0m and EUR 130.0m confirmed
Assumptions 2019e Income composition FY 2019e | EUR m
• Total service fee income: EUR 307.0 – 330.0m
64% 69%
• Management fees: EUR 180.0 – 185.0m
90%
based on increased assets under management 30.0
with majority of acquisitions to close in H2 2019
80.0
• Transactions fees: EUR 55.0 – 65.0m 39% –
• Performance fees: EUR 72.0 – 80.0m 72.0
65.0
• Net sales revenues and co-investment income: 78% –
EUR 30.0m 55.0 -222.0
– 72%
185.0 78%
• Net operating expenses: EUR 207.0 – 222.0m -207.0
–
141.4 180.0
• Transaction volume: EUR 6.0 – 8.0bn -11.0 130.0
–
• Assets under management: EUR 44.0 – 45.0bn 120.0
FY 2018 FY 2019e
Operating Manage- Trans- Perfor- Net sales Net D&A, Operating
income ment action mance revenues operating financial income
fees fees fees and co- expenses result and
investment other items
income
Total service fee income % figure shows
307.0 – 330.0 9M 2019 vs 2019e
at mid-point
PATRIZIA | © 2019 32Agenda • Equity Story • Financials 9M 2019 • Appendix PATRIZIA | © 2019 33
Appendix
Our competitive edge
Excellent market access and local knowledge are key to our strong investment performance for clients
• Transactions worth EUR ~39bn completed since 2012
‘Turn to’ real estate investment
Transactions • Transaction market expected to remain active resulting in a
manager
estimated transaction volume of EUR 6.0 – 8.0bn for FY 2019
• EUR ~14bn of equity raised since 2012
Direct access to institutional
Fundraising • >350 institutional investors, largely invested in multiple products
investors worldwide
• Broad range of direct and indirect investment opportunities
• EUR 14.9bn of credit volume under management as at 9M 2019
Financing • More than 100 financial institutions providing debt funding Best-in-class financing capabilities
• 100% performing loans since PATRIZIA was established in 1984
• Consistently producing positive and competitive returns
Investment
for institutional, private and (semi-)professional investors Strong investment track record
Track Record
• Superior returns for value-add and private equity investments
• Multi-fund platform offering clients geographical, asset and
Product risk diversification across investment products Attractive product offering across
Offering • Investments through regulated funds, separate accounts all asset and risk classes
and co-investment vehicles
• Integrated pan-European asset management team with more
than 150 professionals in more than 15 European countries European network with
Expertise
• More than 35 years of experience with real estate only experienced local teams
• Top provider of German Spezialfonds (BVI 2018)
Data as at 9M 2019
PATRIZIA | © 2019 34Appendix
Our footprint
19 offices and 5 client relationship hubs across 18 countries guarantee close proximity to our clients and assets
Global fundraising… …for European real assets
Amsterdam Copenhagen Helsinki
London Augsburg (HQ)
New York Paris Stockholm
Seoul Tokyo
Hong Kong
Copenhagen
Manchester
Hamburg
Dublin
Amsterdam Warsaw
Berlin
Melbourne Thames Valley
London Brussels
Frankfurt
Luxemburg Augsburg (HQ)
Paris
28% Munich
Fund Management & 25%
Services Corporate
795
Milan
22%
Asset & Development 11%
Management Transaction Management
staff1
4% Madrid
Capital Markets & Client 10%
Services Other
Data as at 9M 2019 ⚫ PATRIZIA capital markets offices ⚫ Acquisition of Japan-based KENZO Capital Corporation, published on 09.01.2019, closing on 01.11.2019 ◼ Markets with PATRIZIA management
& capital markets operations PATRIZIA real estate investment & management offices | 1 FTE
PATRIZIA | © 2019 35Appendix 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 • Indirect real estate • Advisory services funds strategy strategies investing across the • Asset, development • Specific themes • Small club of like-minded • Designed to achieve globe management and/or • Institutional, private and institutional partners specific objectives of • Allows broad platform for direct real (semi-)professional institutional investors diversification of clients’ estate investments or investors real estate exposure funds PanEuropean Gran Via 21 European Diversified 1 PMM Global IV Madame Tussauds Europe, commercial Spain, retail & hotel Europe, diversified Global, diversified London, leisure Data as at 9M 2019 PATRIZIA | © 2019 36
Appendix
PATRIZIA GrundInvest
PATRIZIA’s closed-end funds business for private and (semi-)professional investors is developing fast
Investment volume1 | EUR m
• Since its foundation in 2014, PATRIZIA 800 Dresden
GrundInvest has launched 12 closed-end
Die Stadtmitte Mülheim
Sustained funds accounting for EUR 747m of AUM 700
Berlin Landsberger Allee
growth • More than 6,500 participations were 600 Frankfurt Smart Living
made by private and (semi-)professional
Frankfurt/Hofheim
investors 500
Garmisch-Partenkirchen
400
Mainz Rheinufer
300 München Leopoldstraße
• The average pay-out for the 2018 200 Kopenhagen Südhafen
financial year across all funds was 4.8% Den Haag Wohnen
Excellent before tax 100
Stuttgart Südtor
performance
• Nine out of ten funds offered investors a 0 Campus Aachen
pay-out above the original forecast 2016
1 2 3 4 5 6 7 8 9 10 2019
11
Distribution by real estate sector1
• September: start of syndication of the 6%
new fund „Die Stadtmitte Mülheim“ 6%
Office 2 Residential 3
32%
12%
New • October: launch of a new fund dedicated
explicitly to semi-professional investors Retail Hotel
products
• 2020: Expansion of target group to semi- 17%
Parking Other 4
professional investors across Europe 27%
1 Data as at 9M 2019 | 2 Offices and doctor´s offices | 3 Traditional residential and alternative residential, incl. senior housing, student housing, etc. | 4 Including storage areas, gastronomy, etc.
PATRIZIA | © 2019 37Appendix
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
10.0%
10.0% 10.0%
10.0 % 10.0%
10.0%
9.5%
9.5% 9.5%
9.5 % 9.5%
9.5%
9.0%
9.0% 9.0%
9.0 % 9.0%
9.0%
8.5%
8.5% 8.5%
8.5 % 8.5%
8.5%
8.0%
8.0% 8.0%
8.0 % 8.0%
8.0%
7.5%
7.5% 7.5%
7.5 % 7.5%
7.5%
7.0%
7.0% 7.0%
7.0 % 7.0%
7.0%
6.5%
6.5% 6.5%
6.5 % 6.5%
6.5%
6.0%
6.0% 6.0%
6.0 % 6.0%
6.0%
5.5%
5.5% 5.5%
5.5 % 5.5%
5.5%
5.0%
5.0% 5.0%
5.0 % 5.0%
5.0%
4.5%
4.5% 4.5%
4.5 % 4.5%
4.5%
4.0%
4.0% 4.0%
4.0 % 4.0%
4.0%
3.5%
3.5% 3.5%
3.5 % 3.5%
3.5%
3.0%
3.0% 3.0%
3.0 % 3.0%
3.0%
2.5%
2.5% 2.5%
2.5 % 2.5%
2.5%
2006 Q4
2000 Q4
2002 Q4
2004 Q4
2006 Q4
2008 Q4
2010 Q4
2012 Q4
2014 Q4
2016 Q4
2018 Q4
2000 Q4
2002 Q4
2004 Q4
2008 Q4
2010 Q4
2012 Q4
2014 Q4
2016 Q4
2018 Q4
2000 Q4
2002 Q4
2004 Q4
2006 Q4
2008 Q4
2010 Q4
2012 Q4
2014 Q4
2016 Q4
2018 Q4
Data as at 30.06.2019 | Source: PATRIZIA, PMA
PATRIZIA | © 2019 38Appendix
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 Estate 42bn 1 Swiss Life Asset Managers 69bn
2 CBRE Global Investors 39bn 2 AXA Investment Managers – Real Assets 66bn
3 Aviva Investors 28bn 3 Blackstone 46bn
4 Aberdeen Asset Management 23bn 4 Aberdeen Standard Investments 46bn
5 IVG Immobilien AG 20bn 5 Credit Suisse Real Estate Investment Mgt. 45bn
6 AEW Global 19bn 6 CBRE Global Investors 45bn
7 UBS Global Asset Management (UK) 17bn 7 PATRIZIA1 42bn
8 RREEF Real Estate 17bn 8 Aviva Investors 39bn
9 Prudential Property Investment Managers 17bn 9 Deka Immobilien Investment/WestInvest 36bn
10 LaSalle Investment Management 15bn 10 M&G Real Estate 32bn
Source: www.irei.com; only assets in Europe | 1 PATRIZIA as at 9M 2019, including a small portion of non-European assets via PATRIZIA Multi Managers; ranking adjusted accordingly
PATRIZIA | © 2019 39Appendix
Excursus | Living Cities
PATRIZIA Living Cities Residential Fund Temporary consolidation of assets and liabilities on PATRIZIA’s
balance sheet
• Open-ended institutional real estate fund with a pan-European • As at November 2019 Living Cities holds a portfolio of EUR 650m in
core strategy and an initial target volume of EUR 1bn in assets high quality assets
• Living Cities is targeting residential assets in Europe’s most • Temporary consolidation due to timing between signing/closing of
exciting metropolitan areas real estate transactions and closing of fundraising/clients’ board
approvals; PATRIZIA expects deconsolidation before end of Q4 2019
• City selection guided by PATRIZIA’s proprietary European Cities
Ranking • A number of existing and new institutional investors from Europe
and Asia have committed to the fund so far, with further parties
• Focus on long term buy-to-hold strategies including multi-family
in advanced due diligence
housing (both BTR1 and PRS2), co-living, retirement and student
housing • Assets include an income-producing German residential portfolio
valued at over EUR 400m and consisting of nine apartment buildings
• Target LTV at fund level: 35%
in six of Germany’s leading cities, all built after 2000
• Launch of fund in November 2019 with EUR 650m of assets
• Two apartment developments, in Munich and Copenhagen, have
and an acquisition pipeline of approx. EUR 1.5bn
also been forward purchased by the fund for a total consideration
of EUR 205.4m, delivery in 2020
1 BTR = built-to-rent | 2 PRS = private rented sector
PATRIZIA | © 2019 40Appendix
Excursus | FY 2018 net profit attributable to shareholders
Net profit 2018 burdened by reorganisation expenses and amortisation of fund management contracts
Reconciliation FY 2018 | EUR m
141.1 -22.3 1.7
Retained profit
-36.7 for further growth
EUR 27.1m
-26.0
120.8
Dividend Pay-out ratio
58.1 -6.5 payment totalling of
51.7 EUR 24.6m 47.6%
(0.27 * 91,059,631 (EUR 24.6m /
shares outstanding) EUR 51.7m)
FY 2018
Operating Reorgani- Other EBITDA Amortisation Other Net profit Non- Net profit
income sation items1 of fund items2 controlling attributable
expenses management interests to
contracts shareholders
• Reorganisation expenses and amortisation of fund management contracts are the two most important single items explaining the difference
between Operating income and net profit attributable to shareholders.
• The increase in amortisation of fund management contracts (as part of other intangible assets) stems from the recent acquisition activity.
As an identifiable asset within the purchase price allocation, PATRIZIA amortises the value of fund management contracts over time
(between 1 – 29 years depending on length of contract). As at 31.12.2018 PATRIZIA accounted EUR 163m worth of fund management
contracts. These amortisations will continue to impact the Group’s net profit going forward, are however a non-cash item and hence adjusted
in PATRIZIA’s operating income calculation.
1 For a detailed reconciliation between operating income and EBITDA see PATRIZIA‘s 2018 Annual Report, page 40
2 Inter alia including depreciation of property, plant and equipment, financial result and taxes
PATRIZIA | © 2019 41Appendix
Capital allocation
Assets under Invested capital Invested capital Participations
30.09.2019 Management (fair value) (at cost)
EUR m EUR m EUR m in %
Third-party business 35.928.7 0.0
Co-investments 6.572.7 527.4 152.6
Residential 5.560.1 507.4 135.7
Dawonia GmbH 4.503.1 149.0 1 52.2 5.1
1
Dawonia performance fee claims 274.6 0.0 0.1
WohnModul I SICAV-FIS 1.057.1 62.1 62.1 10.1
Harald 21.5 1 21.3 5.1
Other 0.1 0.1 0.0
Commercial Germany 1.010.3 18.5 15.2
Alliance 198.7 5.3 1 5.2 5.1
1
Seneca 177.4 6.0 4.9 5.1
PATRoffice 1.3 1.5 1 1.1 6.3
sono west 48.5 1.0 0.0 28.3
TRIUVA/IVG logistics 365.2 3.9 1
3.3 2.1
TRIUVA/IVG commercial 219.2 0.8 1 0.7 11.0
Commercial international 2.3 1.5 1.7
Citruz Holdings LP (UK) 2.3 0.1 1 0.3 10.0
First Street Development LTD (UK) 1.4 1.4 10.0
Principal investments 60.5 50.8
Other balance sheet items 660.4 2
Tied-up investment capital 42.561.9 1.238.5
Available liquidity 261.2
Total investment capital 42.561.9 1.499.7
of which debt (bonded loans) 300.0
of which equity PATRIZIA
1.199.7
(without non-controlling interests)
1 Net of deferred taxes from valuation according to IFRS 9 | 2 Incl. goodwill, fund management contracts (included in other intangible assets) and Living Cities residential fund, see slide 40 for more details
PATRIZIA | © 2019 42Appendix
Reconciliation of operating income
EUR k 9M 2019 9M 2018 Change
EBITDA 95.104 83.904 13.3%
Amortisation of other intangible¹ assets, software and
-31.473 -6.954 352.6%
rights of use, depreciation of property, plant and equipment
EBIT 63.631 76.950 -17.3%
Finance income/expenses -2.965 -3.250 -8.8%
Result from currency translation 82 1.370 -94.0%
EBT 60.749 75.070 -19.1%
Changes in value of derivatives 0 51 -100.0%
Amortisation of other intangible assets¹ 19.954 2.701 638.8%
Realised changes in value of investment property (net) 3.960 8.015 -50.6%
Reorganisation expenses 9.354 14.252 -34.4%
Expenses/income from unrealised currency translation -643 -2.004 -67.9%
Operating income from participations (IFRS 9) 4.337 0 0.0%
Operating income 97.709 98.086 -0.4%
1 In particular fund management contracts transferred as part of the recent acquisitions
PATRIZIA | © 2019 43Appendix Consolidated income statement EUR k Q3 2019 Q3 2018 9M 2019 9M 2018 Revenues 63.096 79.889 242.920 239.995 Income from the sale of investment property 25 71 273 662 Changes in inventories -2.708 -4.355 -23.130 -26.058 Other operating income 3.469 3.943 9.514 12.140 Income from the deconsolidation of subsidiaries 585 138 585 317 Total operating performance 64.466 79.687 230.162 227.056 Cost of materials -1.717 -1.701 -3.209 -8.632 Cost of purchased services -3.326 -3.196 -11.278 -10.148 Staff costs -29.736 -32.928 -92.677 -89.850 Other operating expenses -17.075 -19.650 -47.472 -53.714 Impairment losses for trade receivables and contract assets -26 394 -486 -1.137 Income from participations 3.698 3.566 29.126 23.395 Earnings from companies accounted for using the equity method 0 2.101 292 11.562 Cost from the deconsolidation of subsidiaries 0 -376 0 -376 EBITDAR 16.285 27.897 104.458 98.156 Reorganisation expenses -2.842 -13.009 -9.354 -14.252 EBITDA 13.443 14.888 95.104 83.904 Amortisation of other intangible assets¹ and software, rights of use, depreciation of property, plant and equipment -7.725 -2.477 -31.473 -6.954 Earnings before interest and taxes (EBIT) 5.717 12.411 63.631 76.950 Financial income 521 437 1.384 1.170 Financial expenses -1.336 -1.341 -4.349 -4.420 Result from currency translation 205 108 82 1.370 Earnings before taxes (EBT) 5.107 11.615 60.749 75.070 Income taxes -2.452 -2.172 -14.760 -15.454 Net profit for the period 2.655 9.444 45.989 59.616 1 In particular fund management contracts transferred as part of the recent acquisitions PATRIZIA | © 2019 44
Appendix
Consolidated balance sheet | Assets
30.09.2019 30.09.2019 31.12.2018
EUR k ⚫ adjusted
A. Non-current assets
Goodwill 201.714 201.714 201.109
Other intangible assets1 147.179 147.179 166.562
Software 10.286 10.286 11.396
Rights of use 23.113 23.113 0
Investment property 3.241 3.241 8.308
Equipment 5.992 5.992 5.890
Associated companies accounted using the equity method 67.348 67.348 76.141
Participations 538.543 538.518 499.241
Non-current borrowings and other loans 27.969 27.969 27.513
Deferred taxes 17.022 17.022 6.102
Total non-current assets 1.042.407 1.042.382 1.002.262
B. Current assets
Inventories 462.547 ⚫ 47.547 71.534
Securities 2.011 2.011 3.011
Current tax assets 17.929 17.929 15.585
Current receivables and other current assets 336.465 ⚫ 296.515 355.456
Cash and cash equivalents 209.147 ⚫ 407.260 330.598
Total current assets 1.028.098 ⚫ 771.261 776.184
TOTAL ASSETS 2.070.505 ⚫ 1.813.642 1.778.446
⚫ Influenced by temporary consolidation of warehoused assets and liabilities for Living Cities residential fund, see slide 40 for more details
1 In particular fund management contracts transferred as part of the recent acquisitions
PATRIZIA | © 2019 45Appendix
Consolidated balance sheet | Equity and liabilities
30.09.2019 30.09.2019 31.12.2018
EUR k ⚫ adjusted
A. Equity
Share capital 91.060 91.060 91.060
Capital reserves 155.222 155.222 155.222
Retained earnings
Legal reserves 505 505 505
Currency translation difference -12.376 -12.376 -15.605
Revaluation reserve according to IFRS 9 84.348 84.348 49.503
Consolidated unappropriated profit 880.986 880.986 862.421
Non-controlling interests 16.878 ⚫ 12.500 10.682
Total equity 1.216.622 ⚫ 1.212.244 1.153.788
B. Liabilities
NON-CURRENT LIABILITIES
Deferred tax liabilities 117.909 117.909 110.387
Long-term bank loans 163.394 ⚫ 0 0
Retirement benefit obligations 21.573 21.573 21.724
Bonded loans 300.000 300.000 300.000
Non-current liabilities 19.605 ⚫ 16.498 16.836
Leasing liabilities 15.619 15.619 0
Total non-current liabilities 638.100 ⚫ 471.599 448.947
CURRENT LIABILITIES
Short-term bank loans 80.000 ⚫ 0 0
Other provisions 15.316 15.316 23.530
Current liabilities 71.146 ⚫ 65.163 99.963
Short-term leasing liabilities 7.569 7.569 0 ⚫ Influenced by temporary
Tax liabilities 41.752 41.752 52.218 consolidation of warehoused assets
Total current liabilities 215.783 ⚫ 129.799 175.711 and liabilities for Living Cities
residential fund, see slide 40 for
TOTAL EQUITY AND LIABILITIES 2.070.505 ⚫ 1.813.642 1.778.446 more details
PATRIZIA | © 2019 46Appendix Financial calendar 2019 November 14 ➢ Quarterly Statement for the first nine months of 2019 November 14 ➢ Capital Markets Day 2019 (for institutional investors and equity analysts) 2020 February 18 ➢ Preliminary results 2019 March 19 ➢ Annual Report 2019 May 14 ➢ Quarterly Statement for the first quarter of 2020 July 1 ➢ Annual General Meeting 2020 August 6 ➢ Interim Report for the first half of 2020 Invitations and dial-in numbers are provided in advance. For further information, please visit: www.patrizia.ag. PATRIZIA | © 2019 47
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 investor.relations@patrizia.ag
LAURA WALZ MAXIMILIAN GERBER
Senior Associate | Investor Relations Associate | Investor Relations
T +49 821 50910-347 T +49 821 50910-351
F +49 821 50910-399 F +49 821 50910-399
M +49 151 41411174 M +49 151 24506188
investor.relations@patrizia.ag investor.relations@patrizia.ag
Disclaimer
The information contained herein is directed only at professional clients and intended solely for use by the recipient. No part of this document or the information herein may be
distributed, copied or reproduced in any manner, in whole or in part, without our prior written consent. This document is for information and illustrative purposes only. It does not
constitute advice, a recommendation or a solicitation of an offer to buy or sell shares or other interests, financial instruments or the underlying assets, nor does this document
contain any commitment by PATRIZIA AG or any of its affiliates. Whilst prepared in good faith, the information contained in this document does not purport to be comprehensive.
PATRIZIA AG and its affiliates provide no warranty or guarantee in relation to the information provided herein and accept no liability for any loss or damage of any kind whatsoever
relating to this material. The information herein is subject to change without notice.
This document contains specific forward-looking statements that relate in particular to the business development of PATRIZIA AG and the general economic and regulatory
environment and other factors to which PATRIZIA AG is exposed to. These forward-looking statements are based on current estimates and assumptions by the Company made in
good faith, and are subject to various risks and uncertainties that could render a forward-looking estimate or statement inaccurate or cause actual results to differ from the results
currently expected. PATRIZIA AG does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after
the date of this publication. Due to commercial rounding of figures and percentages small deviations may occur.
14 November 2019, PATRIZIA AG
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