Interim / Quarterly Report • Nov 20, 2017
Interim / Quarterly Report
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| 9 months 2017 | 9 months 2016¹ | ||
|---|---|---|---|
| in EUR k | 01.01.—30.09.2017 | 01.01.—30.09.2016 | Change |
| Revenues | 163,006 | 163,935 | −0.6% |
| Total operating performance | 157,068 | 154,492 | 1.7% |
| EBITDA | 48,194 | 34,047 | 41.6% |
| EBIT | 43,960 | 29,248 | 50.3% |
| EBT | 39,159 | 19,302 | 102.9% |
| Operating income ² | 46,594 | 43,913 | 6.1% |
| Net profit for the period | 30,293 | 10,835 | 179.6% |
1 adjusted = without Harald portfolio
2 For the definition of operating income, please refer to page 8
| in EUR k | 30.09.2017 | 31.12.2016 | Change |
|---|---|---|---|
| Non-current assets | 259,446 | 258,813 | 0.2% |
| Current assets | 952,715 | 734,446 | 29.7% |
| Equity (excl. non-controlling shareholders) |
740,754 | 749,342 | −1.1% |
| Equity ratio (excl. non-controlling shareholders) |
61.1% | 75.4% | −14.3 PP |
| Non-current liabilities | 323,606 | 47,506 | 581.2% |
| Current liabilities | 146,110 | 194,720 | −25.0% |
| Total assets | 1,212,161 | 993,259 | 22.0% |
| ISIN | DE000PAT1AG3 |
|---|---|
| SIN (Security Identification Number) | PAT1AG |
| Code | P1Z |
| No. of shares as of 30.09.2017 (issued) | 92,351,476 shares |
| No. of shares as of 30.09.2017 (outstanding after share buy-backs) | 90,141,581 shares |
| Nine months 2017 high ³ | EUR 18.72 |
| Nine months 2017 low³ | EUR 14.67 |
| Closing price as of 30.09.2017³ | EUR 17.63 |
| Share price performance (nine months 2017)³ | +11.7% |
| Market capitalisation as of 30.09.2017³ | EUR 1.6bn |
| Average trading volume per day (nine months 2017) 4 | about 190,000 shares |
| Indices | SDAX, DIMAX |
3 Closing price Xetra-trading
4 All German stock exchanges
Financial Calendar and Contact Details
for the period from 1 January 2017 to 30 September 2017
The first nine months of 2017 have been an active and successful period for PATRIZIA with operating income increasing by 6.1% to EUR 46.6m (nine months of 2016: EUR 43.9m). The previous year's figures were adjusted to reflect the effects from the sale of the Harald portfolio ¹.
Assets under management (AUM) rose by EUR 1.9bn to EUR 20.5bn, from EUR 18.6bn at the end of 2016.
In the first nine months of 2017 acquisitions of EUR 2.2bn and sales of EUR 0.8bn were successfully concluded, resulting in a reduction of total transaction volume after an exceptionally strong transaction volume last year.
Total service fee income from investment management services increased by 5.2% to EUR 128.8m compared to EUR 122.4m in the prior period. Management fees of EUR 66.7m are unchanged versus the prior period, which included EUR 8.0m in revenues from property management – a business that was sold at the beginning of 2017. The loss of revenue incurred following the sale was compensated for by an increase in management fees driven by growth in assets under management. Transaction fees decreased to EUR 31.4m after exceptionally strong transaction volumes in 2016. Performance fees rose significantly to EUR 30.7m.
1 The residential portfolio 'Harald' was acquired by PATRIZIA on 18 May 2015 in an off-market transaction. The 13,500 apartments in German metropolitan regions were sold to Deutsche Wohnen AG on 27 November 2015. The transaction became effective in 2016.
| 9 months 2017 | 9 months 2016 | ||
|---|---|---|---|
| in EUR m | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Management fees | 66.7 | 66.8 | −0.2% |
| Transaction fees | 31.4 | 48.6 | −35.4% |
| Performance fees | 30.7 | 6.9 | 343.4% |
| Total service fee income | 128.8 | 122.4 | 5.2% |
PATRIZIA issued a bonded loan of EUR 300m on 22 May 2017. The issuance received strong demand and was oversubscribed several times. The bonded loan is structured in three tranches of five, seven and ten years with an average coupon of 1.50% p.a., which is partly fixed and partly floating. The additional liquidity from the bonded loan helped to increase the already strong financial flexibility which will in turn support further growth. The volume and the very attractive terms of the bonded loan confirm the strong cash flow profile and robust capital structure of PATRIZIA. The cash available for further growth, including the funds from the bonded loans, amounts to EUR 740.7m as of 30 September 2017.
On 22 June 2017, the Annual General Meeting of PATRIZIA Immobilien AG approved the management's proposal to carry forward the profit from the 2016 financial year to the full amount and to perform a capital increase in the ratio of 10:1. The corresponding change to the Articles of Association was entered into the Commercial Register of the Company on 5 July 2017. On 20 July 2017, the new shares were allotted to the authorised shareholders and the first day of trading followed on 21 July 2017. After the issuance of the bonus shares, PATRIZIA's share capital amounted to EUR 92,351,476.
On 8 August 2017, PATRIZIA announced a public share buy-back offer. The acceptance period for this share buy-back offer ended on 7 September 2017. During the course of the public offer, the Company acquired 2,011,980 treasury shares at a purchase price of EUR 17.40 per share.
A subsequent share buy-back programme of up to EUR 15.0m, announced on 13 September 2017, was completed on 30 October 2017. As of 30 September 2017, the Company held a total of 2,209,895 treasury shares through acquired and settled repurchases.
PATRIZIA confirms its expectation for net organic growth in AUM of EUR 2.0bn to approximately EUR 20.6bn in 2017. Including the acquisition of Sparinvest Property Investors in October 2017, which is mentioned in the Events after the Reporting Period section, PATRIZIA expects a net increase in AUM of approximately EUR 3.0bn to approximately EUR 21.6bn.
PATRIZIA increases its earnings guidance for 2017 due to higher than expected performance fees in the fourth quarter of 2017. Management now expects an operating income of slightly above EUR 75.0m, compared to a previous range of EUR 60.0m to EUR 75.0m.
Delivering on key performance indicators in the first nine months of 2017
As of 30 September 2017, PATRIZIA was managing real estate assets of EUR 20.5bn, a total increase of EUR 1.9bn from EUR 18.6bn at the end of 2016. Of these assets EUR 14.3bn were located in Germany and EUR 6.2bn abroad.
In the first nine months of 2017, operating income increased by 6.1% to EUR 46.6m (nine months of 2016: EUR 43.9m). 2016 operating income was adjusted to reflect the contribution from the disposal of the Harald portfolio. The Harald portfolio was acquired by PATRIZIA in May 2015 and sold at the beginning of 2016 generating a profit of approximately EUR 200m.
Operating income is a key performance indicator for PATRIZIA. It is calculated based on earnings before tax (EBT) in accordance with IFRS, adjusted by non-cash effects from the valuation of investment properties and unrealised currency changes, the amortisation of fund management contracts, transaction-related taxes and minorities concerning the Harald portfolio, as well as reorganisation expenses. It includes realised valuation differences from the sale of real estate assets held as investment property as well as realised currency changes.
Development of supplemental performance parameters:
In the period under review, total fee income from management services increased by 5.2% to EUR 128.8m, compared to EUR 122.4m in the first nine months of 2016. Totalling EUR 66.7m, management fees reached a comparable level to the prior year, which included EUR 8.0m in revenues from property management – a business that was sold at the beginning of 2017. This decrease was offset by an increase in management fees due to the growing volume of assets under management. At EUR 31.4m, transaction fees were below the very strong prior-year figure. Performance fees rose significantly to EUR 30.7m year-on-year. 0 20 40 60 80 100
PATRIZIA collects several contractual fees for the management of real estate assets. The management fees relate to the asset, fund and portfolio management services provided. In addition, PATRIZIA generates transaction fees upon acquisitions and sales of assets as well as performance fees when defined target returns are exceeded.
From January to September 2017, PATRIZIA generated EUR 12.7m of investment income, compared to EUR 14.5m in the same period of 2016.
Investment income comprises principal investments (investments on PATRIZIA's own account) and co-investments. Income from principal investments includes sales profits as well as rental income from these investments. Income from co-investments is treated as income from participations. 0 2 4 6 8 10
In the first nine months of 2017, PATRIZIA completed acquisitions of EUR 2.2bn and sales of EUR 0.8bn, resulting in a reduction of total transaction volume after an exceptionally strong transaction volume last year. 0 1 2 3 4
In the period under review, EUR 1.2bn of equity for investments was raised from institutional and retail clients, compared to EUR 1.5bn in the first nine months of 2016. 0,0 0,3 0,6 0,9 1,2 1,5
PATRIZIA's core business is the investment management of real estate assets and portfolios throughout Europe for institutional and retail clients. PATRIZIA generate income from management services as well as investment income from co-investments and principal investments. In accordance with this, the Company's activities can be split into three categories:
In the course of the third-party business, investment funds are structured, placed and managed for institutional investors as well as for retail investors using PATRIZIA's own regulated and unregulated investment platforms. These funds are structured without any equity investment from PATRIZIA. For the management of these funds and related assets, PATRIZIA generates stable and recurring management fees. In addition, PATRIZIA generates transaction fees upon acquisitions and sales of assets, as well as performance fees when defined target returns are exceeded. Third-party business contributed EUR 13.8bn to the Group's total assets under management as of 30 September 2017.
PATRIZIA's third-party business also includes individual mandates, which totalled EUR 2.0bn as of 30 September 2017. For the first time this figure included the Commerzbank Tower in Frankfurt am Main, the acquisition of which by a Korean investor was already signed in 2016 ('signing'), but was not closed until 31 July 2017 ('closing').
| in EUR m | Assets under management |
Equity commit ments |
of which already in vested equity |
of which outstanding |
Number of vehicles |
|---|---|---|---|---|---|
| Third-party business | 13,843 | 9,610 | 7,972 | 1,638 | 57 |
Through co-investments, PATRIZIA in collaboration with its clients also invests own capital in real estate properties within the value add and opportunistic category. The investments demonstrate PATRIZIA's commitment to the client and to the transaction. In addition, PATRIZIA generates management fees in a similar way as with its third-party business, as well as income from participations. PATRIZIA shareholders therefore profit from the performance of an attractive and diversified pan-European real estate portfolio. Co-investments contributed EUR 6.6bn to the Group's total assets under management as of 30 September 2017. PATRIZIA invested EUR 0.2bn of equity in co-investments.
No significant changes in PATRIZIA's co-investments occurred in the first nine months of 2017. Further details can be found in PATRIZIA's 2016 Annual Report on page 56.
In general, PATRIZIA is active as an investment manager for institutional and private clients and therefore seeks to avoid conflicts of interest with its own investments. Principal investments, i.e. transactions on PATRIZIA's own account, are therefore either structured as interim financing for closed-end retail funds or early stage investments with the intention of being included in institutional funds at a later point in time. In addition, PATRIZIA has a principal investment in a legacy portfolio of single residential unit sale assets. Equity invested in principal investments as of 30 September 2017 amounted to EUR 0.1bn.
In the period under review, around EUR 100.0m principal investments and properties held temporarily on the balance sheet were either sold (e.g. in Glasgow,UK) or transferred into closed-end retail funds and subsequently deconsolidated. Further details can therefore be found in PATRIZIA's 2016 Annual Report on page 57.
Please refer to the subsequent discussion of the economic position for how principal investments contribute to PATRIZIA's results.
For reasons of transparency and clarity the performance of PATRIZIA is shown with and without the effects of the sale of the Harald portfolio in 2016 ('adjusted'). While there were no such effects in the first nine months of 2017, the comparative period of 2016 is presented both as adjusted and unadjusted. The discussion and analysis of the Group's earnings performance is described as 'adjusted' only.
Operating income is the Group's key performance indicator as it includes the total of all operating items within the income statement, adjusted by extraordinary and non-cash items. In the first nine months of 2017, PATRIZIA generated operating income of EUR 46.6m. This represents an increase of 6.1% compared to the previous year's figure of EUR 43.9m. The operating income and prior year comparison is shown in the following table:
| RECONCILIATION OF OPERATING INCOME – 9 MONTHS | ||||||
|---|---|---|---|---|---|---|
| 9 months 9 months 2016 adjusted¹ 2017 |
9 months 2017 |
9 months 2016 |
||||
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| EBITDA | 48,194 | 34,047 | 41.6% | 48,194 | 308,289 | −84.4% |
| Amortisation of fund management contracts ², depreciation of software and fixed assets |
−4,234 | −4,799 | −11.8% | −4,234 | −4,799 | −11.8% |
| EBIT | 43,960 | 29,248 | 50.3% | 43,960 | 303,490 | −85.5% |
| Finance income/costs | −2,695 | −3,225 | −16.4% | −2,695 | −4,894 | −44.9% |
| Gains/losses from currency translation |
−2,106 | −6,721 | −68.7% | −2,106 | −5,834 | −63.9% |
| EBT | 39,159 | 19,302 | 102.9% | 39,159 | 292,762 | −86.6% |
| Amortisation of fund management contracts ² |
1,476 | 1,476 | 0.0% | 1,476 | 1,476 | 0.0% |
| Harald portfolio – transaction-related taxes and minorities |
0 | 0 | 0 | −64,957 | −100.0% | |
| Net realised valuation gains from the sale of investment property |
374 | 1,315 | −71.6% | 374 | 1,315 | −71.6% |
| Reorganisation expenses | 3,578 | 13,732 | −73.9% | 3,578 | 13,732 | −73.9% |
| Expenses/income from unrealised currency translation |
2,007 | 8,088 | −75.2% | 2,007 | 8,194 | −75.5% |
| Operating income | 46,594 | 43,913 | 6.1% | 46,594 | 252,522 | −81.5% |
1 adjusted Harald portfolio
2 Fund management contracts that have been attained with the acquisition of PATRIZIA GewerbeInvest KVG mbH.
The items leading to the operating income are shown below in accordance with their position in the consolidated income statement.
In the first nine months of 2017, consolidated revenues totalled EUR 163.0m, comparable to the level seen in the prior year period. Revenues from management services – which include the majority of fee income items – increased in line with the strategic focus on investment management services while rental revenues and revenues from ancillary costs declined due to the reduction of principal investments.
| REVENUES – 9 MONTHS | ||||||
|---|---|---|---|---|---|---|
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Revenues from management services |
121,698 | 115,282 | 5.6% | 121,698 | 115,282 | 5.6% |
| Sales proceeds from principal investments |
31,924 | 31,703 | 0.7% | 31,924 | 517,797 | −93.8% |
| Rental revenues | 6,809 | 9,953 | −31.6% | 6,809 | 16,254 | −58.1% |
| Revenues from ancillary costs |
1,870 | 3,829 | −51.2% | 1,870 | 3,857 | −51.5% |
| Miscellaneous | 705 | 3,168 | −77.7% | 705 | 3,168 | −77.7% |
| Consolidated revenues | 163,006 | 163,935 | −0.6% | 163,006 | 656,358 | −75.2% |
1 adjusted = without Harald portfolio
Revenues from management services for the first nine months of 2017 increased by 5.6%, from EUR 115.3m to EUR 121.7m compared to the same period in 2016.
Consolidated revenues are of limited informative value as profit and loss (P&L) items shown beneath the revenue line must also be taken into consideration to obtain a complete picture of the operational performance.
Including the income from the co-investment GBW GmbH, which is shown in income from participations, total service fee income increased by 5.2% to EUR 128.8m compared to EUR 122.4m in the prior year period. The increased assets under management almost completely compensated for the expected loss of management fees following the disposal of the property management business. Transaction fees decreased to EUR 31.4m after exceptionally strong transaction volumes in 2016. Performance fees rose significantly to EUR 30.7m.
| TOTAL SERVICE FEE INCOME – 9 MONTHS | |||
|---|---|---|---|
| 9 months 2017 | 9 months 2016 | ||
| in EUR m | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Management fees (without income from participations) |
59.6 | 59.7 | −0.2% |
| Transaction fees | 31.4 | 48.6 | −35.4% |
| Performance fees | 30.7 | 6.9 | 343.4% |
| Revenues from management services | 121.7 | 115.3 | 5.6% |
| Income from participations (attributable to GBW) | 7.1 | 7.1 | −0.2% |
| Total service fee income | 128.8 | 122.4 | 5.2% |
Totalling EUR 31.9m, sales proceeds from principal investments in the first nine months of 2017 reached a similar level to the previous period. This is in line with the stronger strategic focus on investment management services and further decreasing volumes of principal investments. For example, in the third quarter of 2017, a principal investment office building in Glasgow, UK, was sold generating a profit for PATRIZIA. The comparative figures for 2016 include the proceeds from the sale of a principal investment in Manchester, UK.
Rental revenues decreased from EUR 10.0m in the prior year to EUR 6.8m in the first nine months of 2017. This was primarily driven by the disposal of properties (principal investments) as well as by the deconsolidation of properties, that were only temporarily held on the balance sheet and thus only temporarily generated rental income, into closed-end retail funds.
Revenues from ancillary costs decreased in line with rental income to EUR 1.9m (nine months of 2016: EUR 3.8m) and include revenues from the allocation of recoverable ancillary rental costs.
Miscellaneous items include transaction expenses which are charged to the corresponding investment vehicles. In the first nine months of 2017, such costs decreased to EUR 0.7m from EUR 3.2m year-on-year.
Total operating performance reflects PATRIZIA's performance more comprehensively than revenues. Other relevant items – such as changes in inventories that have to be seen in relation with revenues from the sale of principal investments – are recognised within total operating performance. In the first nine months of 2017, total operating performance increased by 1.7% to EUR 157.1m, from EUR 154.5m in the prior year period.
| TOTAL OPERATING PERFORMANCE – 9 MONTHS | ||||||
|---|---|---|---|---|---|---|
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Revenues | 163,006 | 163,935 | −0.6% | 163,006 | 656,358 | −75.2% |
| Income from the sale of investment property |
268 | 1,153 | −76.8% | 268 | 1,153 | −76.8% |
| Changes in inventories | −19,359 | −20,617 | −6.1% | −19,359 | −407,502 | −95.2% |
| Other operating income | 13,152 | 6,330 | 107.8% | 13,152 | 10,446 | 25.9% |
| Income from the deconsolidation of subsidiaries |
1 | 3,691 | −100.0% | 1 | 196,930 | −100.0% |
| Total operating performance |
157,068 | 154,492 | 1.7% | 157,068 | 457,385 | −65.7% |
1 adjusted = Harald portfolio
Income from the sale of investment property amounted to EUR 0.3m after EUR 1.2m in the first nine months of 2016.
In the first nine months of 2017, changes in inventories of EUR −19.4m (nine months of 2016: EUR −20.6m; −6.1%) were recognised. Asset sales from inventories decreased inventories by EUR 26.4m (nine months of 2016: decrease of EUR 26.2m). Prior year changes include – besides the privatisation of residential units – the disposal of a plot in Manchester, UK. Capitalisations of EUR 7.1m in the first nine months of 2017 (nine months of 2016: EUR 5.6m) increased inventories and are mainly attributable to maintenance measures and construction activities in connection with principal investments.
Other operating income increased to EUR 13.2m in the first nine months of 2017 (nine months of 2016: EUR 6.3m) and mainly include income from expired obligations (EUR 10.0m).
The income from the deconsolidation of subsidiaries relates to assets held temporarily on PATRIZIA's balance sheet until being placed in a closed-end retail fund of PATRIZIA GrundInvest KVG.
| RECONCILIATION OF EBITDA – 9 MONTHS | ||||||
|---|---|---|---|---|---|---|
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Total operating performance |
157,068 | 154,492 | 1.7% | 157,068 | 457,385 | −65.7% |
| Cost of materials | −11,411 | −15,737 | −27.5% | −11,411 | −20,479 | −44.3% |
| Costs for purchased services |
−8,977 | −10,762 | −16.6% | −8,977 | −10,762 | −16.6% |
| Staff costs | −59,780 | −62,642 | −4.6% | −59,780 | −76,651 | −22.0% |
| Other operating expenses | −40,167 | −31,764 | 26.5% | −40,167 | −41,664 | −3.6% |
| Income from participations | 13,680 | 10,256 | 33.4% | 13,680 | 10,256 | 33.4% |
| Earnings from companies accounted for using the equity method |
2,109 | 3,936 | −46.4% | 2,109 | 3,936 | −46.4% |
| Cost from the deconsoli dation of subsidiaries |
−750 | 0 | −750 | 0 | ||
| EBITDAR | 51,772 | 47,779 | 8.4% | 51,772 | 322,021 | −83.9% |
| Reorganisation expenses | −3,578 | −13,732 | −73.9% | −3,578 | −13,732 | −73.9% |
| EBITDA | 48,194 | 34,047 | 41.6% | 48,194 | 308,289 | −84.4% |
1 adjusted = without Harald portfolio
Cost of materials include construction and maintenance measures for owned assets, which are usually capitalised. Year-on-year, the cost of materials decreased by 27.5% from EUR 15.7m to EUR 11.4m in the first nine months of 2017.
Costs of purchased services largely include expenditure related to the white labelled funds of PATRIZIA GewerbeInvest GmbH, for which PATRIZIA only acts as a service provider. The costs for purchased services decreased by 16.6% during the period to EUR 9.0m in the first nine months of 2017, compared to EUR 10.8m in the previous year. Management income from white labelled funds decreased by 12.1% to EUR 10.0m in the first nine months of 2017 (nine months of 2016: EUR 11.4m) whereas respective costs decreased by 14.7% to EUR 8.0m (nine months of 2016: EUR 9.4m).
As of 30 September 2017, PATRIZIA employed 635 full time employees (FTEs). The decline compared to the previous year's 772 FTEs is due to the sale of the property management business. The reduced number of staff is reflected in staff costs as as shown in the table below.
| STAFF COSTS – 9 MONTHS | |||||||
|---|---|---|---|---|---|---|---|
| 9 months 2017 |
9 months 2016 adjusted¹ |
Change | 9 months 2017 |
9 months 2016 |
Change | ||
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
|||
| Fixed salaries | 35,272 | 38,156 | −7.6% | 35,272 | 38,163 | −7.6% | |
| Variable salaries | 14,065 | 14,090 | −0.2% | 14,065 | 28,090 | −49.9% | |
| Social security contributions |
6,724 | 7,640 | −12.0% | 6,724 | 7,641 | −12.0% | |
| Sales commissions | 1,633 | 2,822 | −42.1% | 1,633 | 2,822 | −42.1% | |
| Effect on long-term variable compensation² |
351 | −1,698 | −120.7% | 351 | −1,698 | −120.7% | |
| Miscellaneous | 1,735 | 1,632 | 6.3% | 1,735 | 1,633 | 6.2% | |
| Total | 59,780 | 62,642 | −4.6% | 59,780 | 76,651 | −22.0% |
1 adjusted = without Harald portfolio
2 Valuation changes of the long-term variable remuneration due to change in the share price
Staff costs decreased by 4.6% to EUR 59.8m during the first nine months of 2017 (nine months of 2016: EUR 62.6m). Fixed salaries declined by 7.6% to EUR 35.3m from EUR 38.2m in the prior year period due to a decrease in the number of employees. Variable salaries remained relatively stable at EUR 14.0m. Sales and distribution commissions decreased from EUR 2.8m in the prior year period to EUR 1.6m in the first half of 2017 due to reduced privatisation activity of residential units. Due to a positive share price performance, the long-term variable compensation costs amounted to EUR 0.4m, after a positive contribution of EUR 1.6m in the prior year period. Miscellaneous mainly refers to payments in kind.
Other operating expenses increased from EUR 31.8m in the prior year period to EUR 40.2m in the first nine months of 2017. The specific composition is shown below.
| OTHER OPERATING EXPENSES – 9 MONTHS | ||||||
|---|---|---|---|---|---|---|
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Advisory and audit fees | 13,824 | 6,855 | 101.7% | 13,824 | 6,966 | 98.4% |
| Rent, cleaning and ancillary costs |
5,205 | 5,212 | −0.1% | 5,205 | 5,331 | −2.4% |
| IT costs, communication costs and office supplies |
5,199 | 5,163 | 0.7% | 5,199 | 5,914 | −12.1% |
| Vehicle and travel costs | 3,618 | 3,813 | −5.1% | 3,618 | 3,813 | −5.1% |
| Advertising costs | 3,580 | 2,485 | 44.1% | 3,580 | 2,537 | 41.1% |
| Recruitment costs, training costs and costs for tem porary work |
1,554 | 1,360 | 14.3% | 1,554 | 1,360 | 14.3% |
| Contributions, charges and insurance costs |
1,470 | 2,433 | −39.6% | 1,470 | 2,445 | −39.9% |
| Commissions and other sales costs |
1,370 | 2,105 | −34.9% | 1,370 | 2,105 | −34.9% |
| Cost of Management Services |
1,127 | 322 | 250.0% | 1,127 | 5,979 | −81.2% |
| Other taxes | 528 | 174 | 203.4% | 528 | 174 | 203.4% |
| Miscellaneous | 2,692 | 1,842 | 46.1% | 2,692 | 5,040 | −46.6% |
| Total | 40,167 | 31,764 | 26.5% | 40,167 | 41,664 | −3.6% |
1 adjusted = without Harald portfolio
Advisory and audit fees totalling EUR 13.8m (nine months of 2016: EUR 6.9m) include transaction costs of EUR 7.7m (nine months of 2016: EUR 1.2m). Of these transaction costs, EUR 6.0m (nine months of 2016: EUR 0.0m) relate to deals that did not materialise.
Compared to previous year's period, larger deviations occurred in advertising costs (increase 44.1% year-on-year) due to an international branding campaign, cost of management services (increase of 250.0% year-on-year) due to property management costs and miscellaneous (increase of 46.1% year-on-year) due to aperiodic effects.
Income from participations and earnings from companies accounted for using the equity method PATRIZIA generated income from participations in the amount of EUR 15.8m, equivalent to an increase of 11.3% compared to EUR 14.2m in the previous year. The results include a positive contribution from the disposal proceeds of a participation in PATRIZIA Projekt 150 GmbH as well as increased income from participations. The co-investment in GBW GmbH generated EUR 9.5m, virtually in line with the prior period. The co-investment in WohnModul I – which is recognised as earnings from companies accounted for using the equity method – with an income of EUR 2.1m compared with EUR 3.9m in the first nine months of 2016 generated a lower income for accounting reasons. These are not related to an investment underperformance but rather related to aperiodic effects in income recognition. Income from participations and earnings from companies accounted for using the equity method include the investment income from co-investments, which is generated in addition to income from management services.
| 9 months 2017 | 9 months 2016 | ||
|---|---|---|---|
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| GBW GmbH | 9,515 | 9,528 | −0.1% |
| PATRIZIA Projekt 150 GmbH | 2,453 | 0 | |
| Retail funds business | 750 | 0 | |
| Harald portfolio | 645 | 645 | 0.0% |
| Winnersh Holdings LP (UK) | 174 | 0 | |
| Seneca | 141 | 78 | 80.8% |
| Miscellaneous | 2 | 5 | −60.0% |
| Income from participations | 13,680 | 10,256 | 33.4% |
| Earnings from companies accounted for using the equity method |
2,109 | 3,936 | −46.4% |
| Total | 15,789 | 14,192 | 11.3% |
As a result of an internal reorganisation initiated in 2016, expenses of EUR 3.6m were recognised in the first nine months of 2017, compared to EUR 13.7m in the first nine months of 2016.
PATRIZIA's net profit for the period increased strongly to EUR 30.3m, after EUR 10.8m in the first nine months of 2016.
| NET PROFIT FOR THE PERIOD – 9 MONTHS | ||||||
|---|---|---|---|---|---|---|
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| EBITDA | 48,194 | 34,047 | 41.6% | 48,194 | 308,289 | −84.4% |
| Amortisation of fund management contracts, depreciation of software and fixed assets |
−4,234 | −4,799 | −11.8% | −4,234 | −4,799 | −11.8% |
| EBIT | 43,960 | 29,248 | 50.3% | 43,960 | 303,490 | −85.5% |
| Financial income | 759 | 1,458 | −47.9% | 759 | 1,952 | −61.1% |
| Financial expenses | −3,454 | −4,683 | −26.2% | −3,454 | −6,846 | −49.5% |
| Gains from currency translation |
−2,106 | −6,721 | −68.7% | −2,106 | −5,834 | −63.9% |
| Financial result | −4,801 | −9,946 | −51.7% | −4,801 | −10,728 | −55.2% |
| EBT | 39,159 | 19,302 | 102.9% | 39,159 | 292,762 | −86.6% |
| Income taxes | −8,866 | −8,467 | 4.7% | −8,866 | −54,405 | −83.7% |
| Net profit for the period | 30,293 | 10,835 | 179.6% | 30,293 | 238,357 | −87.3% |
1 adjusted = without Harald portfolio
Amortisation of fund management contracts, the depreciation of software and fixed assets decreased to EUR 4.2m (nine months of 2016: EUR 4.8m; −11.8%).
Financial income declined to EUR 0.8m in the first nine months of 2017 compared to EUR 1.5m in the previous year. Financial expenses decreased to EUR 3.5m (nine months of 2016: EUR 4.7m; −26.2%) and losses from currency translation declined to EUR 1.9m from losses of EUR 6.7m in the previous year.
Income taxes increased to EUR 8.9m in the first nine months of 2017, up 4.7% compared to the previous year's period (nine months of 2016: EUR 8.5m).
| in EUR k | 30.09.2017 | 31.12.2016 | Change |
|---|---|---|---|
| Total assets | 1,212,161 | 993,259 | 22.0% |
| Equity (excl. non-controlling shareholders) |
740,754 | 749,342 | −1.1% |
| Equity ratio | 61.1% | 75.4% | −14,3 PP |
| + Bank Loans | 0 | 53,200 | −100.0% |
| + Bonded Loans | 322,000 | 27,000 | 1,092.6% |
| − Cash and cash equivalents | 531,949 | 440,219 | 20.8% |
| − Investment term deposits | 227,000 | 0 | |
| − Securities | 11,000 | 0 | |
| = Net cash (−)/net debt (+) | −447,949 | −360,019 | 24.4% |
| Net equity ratio ¹ | 83.2% | 82.1% | 1,1 PP |
1 Shareholders' equity (excl. non-controlling shareholders) divided by net assets (total assets less total debt covered by incremental cash) PP = percentage points
Equity decreased by 1.1% during the reporting period mainly due to the share buy-back programme. For details please refer to item 10 Treasury Shares of the Notes.
The Group's total assets in the period under review increased to EUR 1.2bn, compared with EUR 1.0bn at year end 2016, mainly due to the issuance of a bonded loan.
PATRIZIA's real estate assets were reduced by 33.4% from EUR 195.2m as per 31 December 2016 to EUR 129.9m as per 30 September 2017 – in line with its strategy.
| 30.09.2017 | 31.12.2016 | Change |
|---|---|---|
| 120,294 | 182,931 | −34.2% |
| 9,627 | 12,226 | −21.3% |
| 129,921 | 195,157 | −33.4% |
Out of the principal investments, EUR 120.3m were attributable to inventories and include principal investments for sale within normal business operations, as well as properties held temporarily for subsequent placement in a closed-end retail fund. The reduction in inventories by 34.2% compared to year end 2016 is due to the sale of a principal investment in Glasgow, UK, and the deconsolidation of properties which were only temporarily held on the balance sheet and in the meantime have been transferred into closed-end retail funds. Furthermore, EUR 9.6m relate to investment property, which was initially acquired for a longer-term holding period with the aim to generate rental income.
The capital allocation table provides an overview of all participations, assets under management as well as PATRIZIA's invested capital.
| in EUR m | Assets under management |
PATRIZIA invest ment capital |
Participation in % |
|---|---|---|---|
| Third-party business | 13,843.4 | ||
| Co-investments | 6,550.2 | 176.9 | |
| Residential | 5,382.3 | 138.3 | |
| GBW GmbH | 3,680.4 | 54.6 | 5.1 |
| WohnModul I SICAV-FIS | 1,701.9 | 83.6 | 10.1 |
| Other | 0.0 | 0.1 | 0.0 |
| Commercial Germany | 413.0 | 17.9 | |
| PATRoffice | 191.4 | 5.4 | 6.3 |
| Seneca | 197.9 | 4.9 | 5.1 |
| sono west | 23.7 | 7.5 | 30.0 |
| Commercial International | 754.9 | 20.7 | |
| Aviemore Topco (UK) | 288.8 | 12.8 | 10.0 |
| Citruz Holdings LP (UK) | 26.1 | 3.2 | 10.0 |
| Plymouth Sound Holdings LP (UK) | 44.9 | 1.8 | 10.0 |
| Winnersh Holdings LP (UK) | 395.1 | 2.9 | 5.0 |
| Principal investments | 128.6 | 124.5 | |
| Harald portfolio | 0.0 | 21.9 | 5.3 |
| Other | 128.6 | 102.6 | 100.0 |
| Operating companies | 0.0 | 20.6 | 100.0 |
| Investment capital employed | 20,522.2 | 322.0 | |
| Available bank balances and cash | – | 740.7 | – |
| Total investment capital | 20,522.2 | 1,062.7 | |
| Of which external capital (bonded loans) | – | 322.0 | – |
The Group's total financial liabilities increased to EUR 322.0m as of 30 September 2017 compared to 31 December 2016. The increase was driven by the issuance of a bonded loan in May 2017. In contrast, short-term bank loans reduced to zero compared to EUR 53.2m at the end of 2016, as no properties temporarily held on the balance sheet and due to being transferred into closed-end retail funds required interim financing as of 30 September 2017.
A bonded loan, issued in 2013 and due in June 2018, amounted to EUR 22.0m as of 30 June 2017 and is considered as a short-term liability. Since then, on 22 May 2017, PATRIZIA issued a bonded loan totalling EUR 300.0m. The issuance was very well received and was oversubscribed several times. The bonded loan is structured in three tranches of five, seven and ten years with an average coupon of 1.50% p.a., which is partly fixed and partly floating.
The development of the financial liabilities is shown in the table below.
| in EUR k | 30.09.2017 | 31.12.2016 | Change |
|---|---|---|---|
| Long-term bonded loans | 300,000 | 22,000 | 1,263.6% |
| Short-term bonded loans | 22,000 | 5,000 | 340.0% |
| Short-term bank loans | 0 | 53,200 | −100.0% |
| Total financial liabilities | 322,000 | 80,200 | 301.5% |
For a detailed schedule of maturities please refer to item 12 of the Notes.
As of 30 September 2017, PATRIZIA held available cash worth EUR 740.7m compared to EUR 394.2m at the end of 2016.
| in EUR k | 30.09.2017 | 31.12.2016 |
|---|---|---|
| Bank balances and cash | 531,949 | 440,219 |
| Investment term deposits | 227,000 | 0 |
| Securities | 11,000 | 0 |
| Short-term liquidity | 769,949 | 440,219 |
| − Transaction-based liabilities Harald portfolio | −22,230 | −36,021 |
| − Regulatory reserve KVGs | −6,900 | −6,900 |
| − Cash in retail funds business special purpose vehicles | −74 | −3,026 |
| − Shares of non-controlling shareholders | 0 | −84 |
| = Available cash | 740,745 | 394,188 |
Total short-term liquidity amounts to EUR 769.9m (year end 2016: EUR 440.2m). However, this amount is not freely available to PATRIZIA in its entirety. EUR 238.0m is invested in securities and deposits with a short-term notice period. Through the sale of the Harald portfolio, remaining transaction-based liabilities have been made, of which EUR 22.2m were not yet due at the reporting date. In addition, a cash reserve of EUR 7.0m has to be permanently held available due to regulatory requirements for the regulated investment management companies (KVGs) and the closed-end retail funds. In light of the above factors, the free cash balance available to PATRIZIA amounts to EUR 740.7m.
After the reporting date, the following relevant events have occured.
On 12 October 2017, PATRIZIA Immobilien AG acquired 100% of the shares in Copenhagen-based Sparinvest Property Investors (SPI), one of the leading global real estate fund of funds investment managers in the small- and mid-cap segment. The acquisition demonstrates PATRIZIA's strategy to broaden its product offering for its clients and, at the same, increases the global reach of PATRIZIA. Founded in 2005 by its managing partners in cooperation with Sparinvest, a Danish financial institution, SPI has become a major player in the real estate fund of funds segment. Working with a global network of select best-in-class operating partners, SPI's funds are invested across Europe, Asia and the Americas. SPI is a global expert in fund of funds investments with around EUR 1bn assets under management. The company currently manages four real estate funds with equity commitments totalling EUR 1.5bn. Despite becoming a fully owned subsidiary of the PATRIZIA group, SPI will retain full autonomy with regard to investment decisions concerning Consolidated Interim Management Report Business Performance 27 Events after the Reporting Period Development of the Risks and Opportunities
its funds. Due to the temporal proximity of transaction and preparation as well as publication date of this report, no purchase price allocation according to IFRS 3 could be performed.
In the course of the share buy-back programme, which the Management Board of PATRIZIA Immobilien AG has resolved in September 2017, PATRIZIA acquired and settled a further 650,956 shares in an amount of EUR 11.6m after the balance sheet date. The share buy-back programme was completed on 30 October 2017 after the target buy-back volume of EUR 15.0m was reached. As of 30 October 2017, the Company held a total of 2,796,417 treasury shares.
PATRIZIA Immobilien AG on 12 November 2017 announced that it has acquired TRIUVA Kapitalverwaltungsgesellschaft mbH.
TRIUVA is one of the leading providers of real estate investments in Europe. The company manages around 40 funds, partners with more than 80 institutional investors and consists of around 200 employees across its 15 European locations. The Frankfurt-based company focuses on commercial real estate in the office, retail and logistics sectors as well as infrastructure. Currently, TRIUVA manages real estate assets of around EUR 9.8 billion.
The acquisition increases PATRIZIA's assets under management by around 50 per cent to more than EUR 30 billion, placing the company firmly amongst the top 10 European real estate investment managers. Furthermore, this will broaden PATRIZIA's product range, enabling institutional and private investors to access new markets, asset classes and risk profiles with their investments.
In a first step PATRIZIA will acquire a majority stake in TRIUVA. Both parties agreed to not disclose the purchase price. The acquisition will be financed by existing liquidity. PATRIZIA will publish details with regards to the positive financial impact of the acquisition together with its full-year 2017 results in the first quarter of 2018. PATRIZIA expects the transaction to close at the end of the first quarter 2018 at the latest and to be earnings accretive in the year of acquisition.
PATRIZIA is exposed to both opportunities as well as risks in the course of its business activities. The Group has the necessary measures and processes in place to identify negative influences and risks in a timely manner in order to be able to respond accordingly. No significant new opportunities or risks have been identified by the Group since the annual statements for the 2016 financial year. The assessment of probabilities and the potential extent of damage has also not led to any significant changes in the assessment of risks and opportunities.
The statements in the risk report of the 2016 Annual Report still apply. Please refer to the risk report starting on page 82 of the 2016 Annual Report of PATRIZIA Immobilien AG. No other risks are currently known to the Managing Board of PATRIZIA Immobilien AG.
PATRIZIA confirms its expectation for net organic growth in AUM of EUR 2.0bn to approximately EUR 20.6bn in 2017. Including the acquisition of Sparinvest Property Investors (SPI) in October 2017, which is mentioned in the Events after the Reporting Period section, PATRIZIA in 2017 expects a net increase in AUM of approximately EUR 3.0bn to approximately EUR 21.6bn.
PATRIZIA increases its earnings guidance for 2017 due to higher than expected performance fees. Management now expects an operating income of slightly above EUR 75.0m, compared to a previous range of EUR 60.0m to EUR 75.0m. In this context PATRIZIA expects to generate transaction fees at the lower end of or slightly below the so far communicated range of between EUR 55.0m to EUR 65.0m for 2017. In terms of performance fees PATRIZIA however expects to generate fees above the previous range of EUR 29.0m to EUR 38.0m.
Augsburg, 13 November 2017
WOLFGANG EGGER KARIM BOHN ANNE KAVANAGH KLAUS SCHMITT CEO CFO CIO COO
This report contains specific forward-looking statements that relate in particular to the business development of PATRIZIA and the general economic and regulatory environment and other factors to which PATRIZIA is exposed. 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. Due to commercial rounding of figures and percentages small deviations may occur.
as of 30 September 2017
| ASSETS | ||
|---|---|---|
| in EUR k | 30.09.2017 | 31.12.2016 |
| A. Non-current assets | ||
| Goodwill | 610 | 610 |
| Other intangible assets | 33,922 | 35,416 |
| Software | 10,769 | 10,772 |
| Investment property | 9,627 | 12,226 |
| Equipment | 4,768 | 4,460 |
| Participations in associated companies | 83,742 | 85,923 |
| Participations | 101,284 | 102,033 |
| Loans | 14,444 | 7,015 |
| Long-term tax assets | 0 | 35 |
| Deferred taxes | 280 | 323 |
| Total non-current assets | 259,446 | 258,813 |
| B. Current assets | ||
| Inventories | 120,294 | 182,931 |
| Securities | 11,010 | 44 |
| Short-term tax assets | 6,796 | 11,941 |
| Current receivables and other current assets | 282,666 | 99,311 |
| Bank balances and cash | 531,949 | 440,219 |
| Total current assets | 952,715 | 734,446 |
| Total assets | 1,212,161 | 993,259 |
|---|---|---|
| in EUR k | 30.09.2017 | 31.12.2016 |
|---|---|---|
| A. Equity | ||
| Share capital | 90,142 | 83,956 |
| Capital reserve | 139,402 | 184,005 |
| Retained earnings | ||
| Legal reserves | 505 | 505 |
| Non-controlling shareholders | 1,691 | 1,691 |
| Currency translation differences | −11,267 | −10,803 |
| Consolidated unappropriated profit | 521,972 | 491,679 |
| Total equity | 742,445 | 751,033 |
| B. Liabilities | ||
| NON-CURRENT LIABILITIES | ||
| Deferred tax liabilities | 16,830 | 17,992 |
| Retirement benefit obligations | 693 | 648 |
| Bonded loans | 300,000 | 22,000 |
| Non-current liabilities | 6,083 | 6,866 |
| Total non-current liabilities | 323,606 | 47,506 |
| CURRENT LIABILITIES | ||
| Short-term bank loans | 0 | 53,200 |
| Bonded loans | 22,000 | 5,000 |
| Short-term financial derivatives | 0 | 0 |
| Other accruals | 18,060 | 27,627 |
| Current liabilities | 80,833 | 75,343 |
| Tax liabilities | 25,217 | 33,550 |
| Total current liabilities | 146,110 | 194,720 |
| Total equity and liabilities | 1,212,161 | 993,259 |
| 9 months 2017 | 9 months 2016 | |
|---|---|---|
| in EUR k | 01.01.−30.09.2017 | 01.01.−30.09.2016 |
| Revenues | 163,006 | 656,358 |
| Income from the sale of investment property | 268 | 1,153 |
| Changes in inventories | −19,359 | −407,502 |
| Other operating income | 13,152 | 10,446 |
| Income from the deconsolidation of subsidiaries | 1 | 196,930 |
| Total operating performance | 157,068 | 457,385 |
| Cost of materials | −11,411 | −20,479 |
| Cost of purchased services | −8,977 | −10,762 |
| Staff costs | −59,780 | −76,651 |
| Other operating expenses | −40,167 | −41,664 |
| Income from participations | 13,680 | 10,256 |
| Earnings from companies accounted for using the equity method | 2,109 | 3,936 |
| Cost from the deconsolidation of subsidiaries | −750 | 0 |
| EBITDAR | 51,772 | 322,021 |
| Reorganisation expenses | −3,578 | −13,732 |
| EBITDA | 48,194 | 308,289 |
| Amortisation of fund management contracts, depreciation of software and fixed assets |
−4,234 | −4,799 |
| Earnings before finance income and income taxes (EBIT) | 43,960 | 303,490 |
| Finance income | 759 | 1,952 |
| Finance costs | −3,454 | −6,846 |
| Currency result | −2,106 | −5,834 |
| Earnings before income taxes (EBT) | 39,159 | 292,762 |
| Income tax | −8,866 | −54,405 |
| Net profit/loss for the period | 30,293 | 238,357 |
| Earnings per share (undiluted) in EUR | 0.34 | 2.43 |
| The net profit/loss for the period is allocated to: | ||
| Shareholders of the parent company | 30,293 | 219,039 |
| Non-controlling shareholders | 0 | 19,318 |
| 30,293 | 238,357 |
| 9 months 2017 | 9 months 2016 | |
|---|---|---|
| in EUR k | 01.01.−30.09.2017 | 01.01.−30.09.2016 |
| Net profit/loss for the period | 30,293 | 238,357 |
| Items of other comprehensive income with reclassification to net profit/loss for the period |
||
| Profit/loss from the translation of financial statements of international business units |
−464 | −8,657 |
| Total result for the reporting period | 29,829 | 229,700 |
| The total result is allocated to: | ||
| Shareholders of the parent company | 29,829 | 210,382 |
| Non-controlling shareholders | 0 | 19,318 |
| 29,829 | 229,700 |
| 9 months 2017 | 9 months 2016 | |
|---|---|---|
| in EUR k | 01.01.−30.09.2017 | 01.01.−30.09.2016 |
| Net profit/loss for the period | 30,293 | 238,357 |
| Income taxes recognised through profit or loss | 8,866 | 54,405 |
| Financial costs through profit or loss | 3,454 | 6,846 |
| Financial income through profit or loss | −759 | −1,952 |
| Income from divestments of participations, recognised through profit or loss |
−2,453 | 0 |
| Amortisation of fund management contracts, software and equipment |
4,234 | 4,799 |
| Income from the sale of investment property | −268 | −1,153 |
| Costs from the deconsolidation of subsidiaries | 750 | 0 |
| Income from the deconsolidation of subsidiaries | −1 | −196,930 |
| Other non-cash items | −7,108 | 11,861 |
| Changes in inventories, receivables and other assets that are not attributable to investment activities |
−79,703 | 374,271 |
| Changes in liabilities that are not attributable to financing activities |
45,987 | 56,489 |
| Interest paid | −3,421 | −6,473 |
| Interest received | 316 | 1,564 |
| Income tax payments | −13,407 | −40,387 |
| Cash outflow/inflow from operating activities | −13,220 | 501,697 |
| Capital investments software and equipment | −3,045 | −2,381 |
| Payments received from the disposal of intangible assets and equipment |
0 | 45 |
| Payments received from the sale of investment property | 2,955 | 8,491 |
| Payments for the development of investment property | −90 | −321 |
| Payments for the acquisition of securities | −237,966 | 0 |
| 9 months 2017 | 9 months 2016 | |
|---|---|---|
| in EUR k | 01.01.−30.09.2017 | 01.01.−30.09.2016 |
| Payments for the acquisition of participations | −394 | −1,190 |
| Payments received from the equity reduction of participations | 735 | 0 |
| Payments received from the sale of participations | 2,456 | 0 |
| Payments for investments in companies accounted for using the equity method |
−5,171 | 0 |
| Payment received through distributions of companies accounted for using the equity method |
0 | 5,361 |
| Payments received from the repayment of shares of companies accounted for using the equity method |
9,456 | 6,565 |
| Payments for loans to companies in which participating interests are held |
−7,637 | −1,137 |
| Payments received from the disposal of consolidated companies and other business units |
14 | 333,695 |
| Payments for the disposal of consolidated companies and other business units |
−8,962 | 0 |
| Payments for the acquisition of consolidated companies and other business units |
1 | −42,366 |
| Cash outflow/inflow from investment/divestment activities | −247,649 | 306,762 |
| Borrowing of loans | 404,500 | 96,675 |
| Repayment of loans | −13,485 | −646,961 |
| Payments to non-controlling shareholders | 0 | −299 |
| Payments for buy-backs of own shares | −38.417 | 0 |
| Cash inflow/outflow from financing activities | 352,598 | −550,585 |
| Changes in cash | 91,729 | 257,874 |
| Cash 01.01 | 440,219 | 179,141 |
| Effect of changes in exchange rates on cash | 1 | −2,395 |
| Cash 30.09. | 531,949 | 434,620 |
| Share | Retained earnings |
||
|---|---|---|---|
| 0 | 0 | 0 | |
| 7,632 | −7,632 | 0 | |
| 0 | 0 | 0 | |
| 0 | 0 | 0 | |
| 83,956 | 184,005 | 505 | |
| 83,956 | 184,005 | 505 | |
| 0 | 0 | 0 | |
| 8,396 | −8,396 | 0 | |
| −2,210 | −36,207 | 0 | |
| 0 | 0 | 0 | |
| 90,142 | 139,402 | 505 | |
| capital 76,324 |
Capital reserve 191,637 |
(legal reserve) 505 |
| Total | Equity of non controlling shareholders |
Equity of the shareholders of the parent company |
Consolidated unappropriated profit |
Currency translation difference |
|---|---|---|---|---|
| 539,791 | 18,190 | 518,099 | 254,004 | −869 |
| −8,657 | 0 | −8,657 | 0 | −8,657 |
| 0 | 0 | 0 | 0 | 0 |
| −299 | −299 | 0 | 0 | 0 |
| 238,357 | 19,318 | 219,039 | 219,039 | 0 |
| 769,192 | 37,209 | 728,481 | 473,043 | −9,526 |
| 751,033 | 1,691 | 749,342 | 491,679 | −10,803 |
| −464 | 0 | −464 | 0 | −464 |
| 0 | 0 | 0 | 0 | 0 |
| −38,417 | 0 | −38,417 | 0 | 0 |
| 30,293 | 0 | 30,293 | 30,293 | 0 |
| 742,445 | 1,691 | 740,754 | 521,972 | −11,267 |
Long-term Liabilities
Revenues
as of 30 September 2017 (first nine months of 2017)
PATRIZIA Immobilien AG ('PATRIZIA', 'Company' or 'Group') is a listed German stock corporation. The Company's headquarters are located at Fuggerstrasse 26 in 86150 Augsburg, Germany. PATRIZIA has been active as an investor and investment manager in the real estate market for more than 30 years and operates in 15 countries across Europe. As an investment manager, PATRIZIA's services include asset and portfolio management, acquisitions and sales, and fund management mainly through its own regulated investment platforms and non-regulated investment structures. As a global provider of real estate investments in Europe, the Company operates Europe-wide for large institutional as well as retail clients. Currently, the Company manages assets with a value of EUR 20.5bn, mainly for insurance companies, pension fund institutions, sovereign wealth funds and savings banks.
The consolidated interim financial statements of PATRIZIA Immobilien AG for the first nine months of 2017 (1 January 2017 to 30 September 2017) were prepared in accordance with Article 37 (3) of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act) in conjunction with Article 37w (2) WpHG in line with IFRS and in compliance with the provisions of German commercial law additionally applicable as per Article 315a (1) of the Handelsgesetzbuch (HGB – German Commercial Code). All compulsory official announcements of the International Accounting Standards Board (IASB) that have been adopted by the EU in the context of the endorsement process (i.e. published in the Official Journal of the EU) have been applied.
From the perspective of the Company's Managing Board, the unaudited consolidated interim financial statements for the period ended 30 September 2017 contain all of the information necessary to provide a true and fair view of the course of business and the earnings situation in the period under review. Earnings generated in the first nine months of 2017 are not necessarily an indication of future earnings or of the expected total earnings for the fiscal year 2017.
When preparing the consolidated interim financial statements for the interim report in line with IAS 34 'Interim Financial Reporting', the Managing Board of PATRIZIA Immobilien AG must make assessments and estimates as well as assumptions that affect the application of accounting standards in the Group and the reporting of assets and liabilities as well as income and expenses. Actual amounts may differ from these estimates.
These interim consolidated financial statements have been prepared in accordance with the same accounting and assessment policies as the consolidated financial statements for the fiscal year 2016. For a detailed description of the principles applied in preparing the interim consolidated financial statements and the accounting methods used, please refer to the notes to the IFRS consolidated financial statements for the year ending 31 December 2016, which are contained in the Company's 2016 Annual Report.
The term 'Harald portfolio' used in these interim consolidated financial statements relates to a principal investment acquired in 2015. All related real estate assets were sold in the 2016 reporting period.
The interim consolidated financial statements are prepared in euros. The amounts, including the previous year's figures, are stated in EUR thousands unless stated otherwise. Please note that due to commercial rounding of figures and percentages small deviations may occur.
All of the Company's subsidiaries are included in the consolidated interim financial statements of PATRIZIA Immobilien AG. The subsidiaries include all companies controlled by PATRIZIA Immobilien AG. In addition to the parent company, the scope of consolidation comprises 92 subsidiaries. They are included in the consolidated interim financial statements in line with the rules of full consolidation.
In addition to this, two participating interests are accounted for at-equity in the consolidated financial statements. These are a participation in a SICAV (a stock corporation with variable equity in accordance with the laws of Luxembourg) and a participation in a joint venture.
Furthermore, 28.3% of the limited liability capital is held in one project development company (in the form of a GmbH&Co. KG), while 30% is held in the associated general partner. A significant influence cannot be executed due to provisions in the partnership agreement meaning that management can neither be exercised, nor can a significant influence be exerted on the management and that there is no entitlement to appoint members of the managing boards. Shares in this development company are accounted for at acquisition cost.
On the balance sheet date, three companies were not included in the scope of consolidation as they have only small or no ongoing business operations and are of less importance for the Group and for the presentation of a true and fair view of the assets, liabilities, financial position and profit and loss of the Group.
The number of consolidated companies, which are included in the consolidated financial statements within the scope of full consolidation, has developed as shown below during the reporting period.
| As of 01.01.2017 | 93 |
|---|---|
| Acquisitions | 2 |
| Foundations | 1 |
| Mergers | – |
| Deconsolidations | −4 |
| As of 30.09.2017 | 92 |
Significant transactions for the Group are explained below under company acquisitions, sales and restructuring within the Group. Due to materiality aspects the passages for company acquisitions and foundations are not displayed for the reporting period.
PATRIZIA Immobilien AG expanded its portfolio of products in 2015 by offering regulated closed end real estate funds for private investors. During the fund formation phase and the placement of the respective shares, these companies must provisionally be consolidated in the PATRIZIA Group. The companies listed below left PATRIZIA's basis of consolidation in 2017, with deconsolidation costs amounting to EUR 750k.
In addition, the Deutsche Wohnungsprivatisierungsgesellschaft mbH left the basis of consolidation in the reporting period with deconsolidation earnings amounting to EUR 1k.
Investment properties are those that are held for the purpose of earning rental income or for capital appreciation, or both. They are not owner-occupied or held for sale in the ordinary course of business. Investment properties are initially measured at cost. Following initial recognition, investment properties are measured at fair value. Any change herein is recognised as affecting net income in the income statement.
For a detailed description of the accounting methods used, please refer to the notes to the IFRS consolidated financial statements for the year ending 31 December 2016, which are contained in PATRIZIA's 2016 Annual Report.
Participations in Associated Companies include a 10.1% share in PATRIZIA WohnModul I SICAV-FIS with headquarters in Luxembourg.
The strategy of PATRIZIA WohnModul I SICAV-FIS is the purchase of different types of real estate assets, including project developments and assets for refurbishment. As an exit strategy, the sales of whole blocks as well as single units are planned.
Through its participation in PATRIZIA WohnModul I SICAV-FIS, PATRIZIA is subject to the usual real estate specific risks such as market activity in the event of single unit sales and project developments, but also to fluctuations in the interest rates.
The Group's share in the profit of PATRIZIA WohnModul I SICAV-FIS for the first nine months of 2017 is EUR 2,109k (nine months of 2016: EUR 3,936k).
During the reporting period, PATRIZIA WohnModul I SICAV-FIS distributed two dividends totalling EUR 9,456k to PATRIZIA Immobilien AG. The first distribution in the amount of EUR 4,955k was fully reinvested against the issue of new shares. Both distributions were credited against Participations in Associated Companies and so did not affect the income statement.
In the second quarter of 2017, the subsidiary PATRIZIA GQ Limited of PATRIZIA Immobilien AG acquired a 50% participation in Ask PATRIZIA (GQ) LLP (joint venture Gateshead), which is also reported under Participations in Associated Companies.
Participations include the following main holdings:
In the period under review, PATRIZIA sold off its participation in PATRIZIA Projekt 150 GmbH amounting to 10%. Please also refer to item 18 Income from Participations.
Inventories include real estate assets that have been acquired with the purpose of re-sale within the ordinary business cycle. Assessment and qualification of an inventory is carried out at acquisition.
PATRIZIA has defined the operating business cycle as three years as the majority of the units to be disposed of are usually sold during this time period. However, inventories remain classified as intended for sale, even if the sale is not realised within three years.
Inventories are valued at acquisition or production costs. Acquisition costs comprise directly attributable purchase and commitment costs. Production costs include the costs directly attributable to the real estate development process.
The decrease in inventories of EUR 62,637k is primarily related to the disposal of assets in the course of the deconsolidation of PATRIZIA GrundInvest München Leopoldstraße GmbH&Co. geschlossene Investment-KG as well as sales from the privatisation portfolio.
Cash and Cash Equivalents cover cash and short-term bank deposits that are held by the Group. The net asset value of these assets corresponds to their fair value.
Through the issuance of a EUR 300,000k bonded loan on 22 May 2017, the Company has increased its options and flexibility for further strategic growth.
Through its active liquidity management approach, liquid assets were invested in short-term, near-money market financial assets. EUR 11,000k was invested in short-term securities and these investments are reflected separately in the balance sheet. Furthermore, EUR 227,000k was invested in short-term investment term deposits with a duration of more than 90 days. These are shown in the balance sheet under current receivables and other current assets.
| in EUR k | 30.09.2017 | 31.12.2016 |
|---|---|---|
| Bank balances and cash | 531,949 | 440,219 |
| Investment term deposits | 227,000 | 0 |
| Securities | 11,000 | 0 |
| short-term liquidity | 769,949 | 440,219 |
| − Transaction-based liabilities Harald portfolio | −22,230 | −36,021 |
| − Regulatory reserve KVGs | −6,900 | −6,900 |
| − Cash in retail funds business special purpose vehicles | −74 | −3,026 |
| − Shares of non-controlling shareholders | 0 | −84 |
| = Available cash | 740,745 | 394,188 |
The Company's share capital at the balance sheet date was EUR 90,141,581 (31 December 2016: EUR 83,955,887) and was divided into 90,141,581 (31 December 2016: 83,955,887) no-par value shares (shares with no nominal value). The development of equity is shown in the consolidated statement of changes in equity.
In the reporting period, the Management Board of PATRIZIA Immobilien AG has resolved to acquire treasury shares, therefore PATRIZIA launched a public share buy-back offer, which closed on 7 September 2017. A further share buy-back programme was completed on 30 October 2017.
Treasury Shares are composed as shown in the table below.
| Number of shares |
Price per share in EUR |
Total value in EUR |
|
|---|---|---|---|
| As of 01.01.2017 | 0 | 0 | |
| Purchases of shares: Public share buy-back offer 2017 |
2,011,980 | 17.40 | 35,008,452 |
| Purchases of shares: Share buy-back programme 2017¹ |
197,915 | 17.22 | 3,408,403 |
| As of 30.09.2017 | 2,209,895 | 38,416,855 |
1 acquired and settled buy-backs as of 30.09.2017
As of 30 September 2017, shares of non-controlling shareholders amounted to EUR 1,691k (31 December 2016: EUR 1,691k).
These shares of non-controlling shareholders are classified as insignificant by PATRIZIA.
The maturity profile of financial liabilities is shown in the tables below.
| in EUR k 30.09.2017 |
2018 | 2022 | 2024 | 2026 | 2027 | Total |
|---|---|---|---|---|---|---|
| Bank loans | 0 | 0 | 0 | 0 | 0 | 0 |
| Mortgage loans | 0 | 0 | 0 | 0 | 0 | 0 |
| Bonded loans | 22,000 | 91,500 | 124,000 | 0 | 84,500 | 322,000 |
| Total financial liabilities |
22,000 | 91,500 | 124,000 | 0 | 84,500 | 322,000 |
| in EUR k 31.12.2016 |
2017 | 2018 | 2019−2025 | 2026 | Total | |
| Bank loans | 0 | 32,450 | 0 | 0 | 32,450 | |
| Mortgage loans Bonded loans |
0 5,000 |
0 22,000 |
0 0 |
20,750 0 |
20,750 27,000 |
The change in financial liabilities results primarily from the issuance of a bonded loan worth EUR 300,000k in the second quarter of 2017 as well as from the deconsolidation of the companies PATRIZIA GrundInvest Mainz Rheinufer GmbH&Co. geschlossene Investment-KG and PATRIZIA GrundInvest Objekt Mainz Rheinufer GmbH&Co. KG. Furthermore, the equity bridge loan of PATRIZIA Immobilien AG, which relates to PATRIZIA GrundInvest Den Haag Wohnen GmbH&Co. geschlossene Investment-KG, which was sold in 2016, was repaid in the full amount.
As of the balance sheet date, two bonded loans are shown in the consolidated interim financial statements. The bonded loans totalling EUR 22,000k (maturity: 30 June 2018) are reported under current liabilities.
The bonded loans of EUR 300,000k, which were issued in the second quarter of 2017, consist of three tranches with terms of five, seven and ten years. These bonded loans are shown in the consolidated financial statement under non-current liabilities.
Long-term Liabilities amount to EUR 6,083k (31 December 2016: EUR 6,866k) and essentially consist of long-term components of the management participation plan, which is described in detail under item 9.2 in PATRIZIA's 2016 Annual Report.
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
|---|---|---|---|---|---|---|
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Revenues from management services |
121,698 | 115,282 | 5.6% | 121,698 | 115,282 | 5.6% |
| Sales proceeds of principal investments |
31,924 | 31,703 | 0.7% | 31,924 | 517,797 | −93.8% |
| Rental revenues | 6,809 | 9,953 | −31.6% | 6,809 | 16,254 | −58.1% |
| Revenues from ancillary costs |
1,870 | 3,829 | −51.2% | 1,870 | 3,857 | −51.5% |
| Miscellaneous | 705 | 3,168 | −77.7% | 705 | 3,168 | −77.7% |
| Consolidated revenues | 163,006 | 163,935 | −0.6% | 163,006 | 656,358 | −75.2% |
1 adjusted = without Harald portfolio
The revenues from management services include income from asset and fund management, transaction-related commission income and performance-related fees and manager remuneration.
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
|---|---|---|---|---|---|---|
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Income from expired obligations |
10,001 | 3,498 | 185.9% | 10,001 | 3,498 | 185.9% |
| Income from payments in kind |
602 | 700 | −14.0% | 602 | 700 | −14.0% |
| Income from the decrease in the general provision |
244 | 287 | −15.0% | 244 | 287 | −15.0% |
| Income from reimburse ment of lawyers' fees, court costs and transac tion costs and payments of damages |
83 | 1,226 | −93.2% | 83 | 1,226 | −93.2% |
| Insurance compensations | 3 | 51 | −94.1% | 3 | 51 | −94.1% |
| Other | 2,219 | 568 | 290.7% | 2,219 | 4,684 | −52.6% |
| Total | 13,152 | 6,330 | 107.8% | 13,152 | 10,446 | 25.9% |
1 adjusted = without Harald portfolio
Income from expired obligations mainly results from the final settlement of bonuses, litigation costs/risks after court settlement and from reduction of an indemnification obligation.
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
|---|---|---|---|---|---|---|
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Renovation and construction costs |
7,833 | 10,246 | −23.6% | 7,833 | 10,734 | −27.0% |
| Ancillary rental costs | 3,204 | 4,852 | −34.0% | 3,204 | 9,106 | −64.8% |
| Maintenance costs | 374 | 639 | −41.5% | 374 | 639 | −41.5% |
| Total | 11,411 | 15,737 | −27.5% | 11,411 | 20,479 | −44.3% |
1 adjusted = without Harald portfolio
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
|---|---|---|---|---|---|---|
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Advisory and audit fees | 13,824 | 6,855 | 101.7% | 13,824 | 6,966 | 98.4% |
| Rent, cleaning and ancillary costs |
5,205 | 5,212 | −0.1% | 5,205 | 5,331 | −2.4% |
| IT costs, communication costs and office supplies |
5,199 | 5,163 | 0.7% | 5,199 | 5,914 | −12.1% |
| Vehicle and travel costs | 3,618 | 3,813 | −5.1% | 3,618 | 3,813 | −5.1% |
| Advertising costs | 3,580 | 2,485 | 44.1% | 3,580 | 2,537 | 41.1% |
| Recruitment costs, training costs and costs for temporary work |
1,554 | 1,360 | 14.3% | 1,554 | 1,360 | 14.3% |
| Contributions, charges and insurance costs |
1,470 | 2,433 | −39.6% | 1,470 | 2,445 | −39.9% |
| Commissions and other sales costs |
1,370 | 2,105 | −34.9% | 1,370 | 2,105 | −34.9% |
| Cost of Management Services |
1,127 | 322 | 250.0% | 1,127 | 5,979 | −81.2% |
| Other taxes | 528 | 174 | 203.4% | 528 | 174 | 203.4% |
| Miscellaneous | 2,692 | 1,842 | 46.1% | 2,692 | 5,040 | −46.6% |
| Total | 40,167 | 31,764 | 26.5% | 40,167 | 41,664 | −3.6% |
1 adjusted = without Harald portfolio
Advisory and audit fees totalling EUR 13,824k (nine months of 2016: EUR 6,855k) include transaction costs of EUR 7,670k (nine months of 2016: EUR 1,168k). Of these transaction costs, EUR 5,977k (nine months of 2016: EUR 0,00k) relate to deals that did not materialise.
For the first nine months of 2017, Income from Participations totalled EUR 13,680k (nine months of 2016: EUR 10,256k) and contains the investment income from co-investments in GBW GmbH, Harald portfolio, Winnersh Holdings LP (UK) and Seneca (nine months of 2016: GBW GmbH, Harald portfolio and Seneca) as well as from the retail funds business.
In addition, PATRIZIA earned investment income from co-investments totalling EUR 2,453k from the sale of the participation in the PATRIZIA Projekt 150 GmbH.
Income from participations is composed as shown in the table below.
| 9 months 2017 |
9 months 2016 |
||
|---|---|---|---|
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Services provided as shareholder contributions | 7,098 | 7,111 | −0.2% |
| Investment income from co-investments | 6,582 | 3,145 | 109.3% |
| Total | 13,680 | 10,256 | 33.4% |
| 9 months 2017 |
9 months 2016 adjusted¹ |
9 months 2017 |
9 months 2016 |
|||
|---|---|---|---|---|---|---|
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
Change |
| Interest on bank deposits | 130 | 48 | 170.8% | 130 | 88 | 47.7% |
| Other interest | 629 | 1,410 | −55.4% | 629 | 1,864 | −66.3% |
| Financial income | 759 | 1,458 | −47.9% | 759 | 1,952 | −61.1% |
| Interest on revolving credit facilities and bank loans |
−643 | −1,866 | −65.5% | −643 | −5,821 | −89.0% |
| Other financial expenses | −2,811 | −2,817 | −0.2% | −2,811 | −1,025 | 174.2% |
| Financial expenses | −3,454 | −4,683 | −26.2% | −3,454 | −6,846 | −49.5% |
| Currency result | −2,106 | −6,721 | −68.7% | −2,106 | −5,834 | −63.9% |
| Financial result | −4,801 | −9,946 | −51.7% | −4,801 | −10,728 | −55.2% |
1 adjusted = without Harald portfolio
In the first nine months of 2017, the currency result in the profit and loss statement amounted to EUR −2,106k (nine months of 2016: EUR −6,721k). This includes realised currency translation losses amounting to EUR −98k (nine months of 2016: realised currency translation gains in the amount of EUR 1,367k).
| 9 months 2017 adjusted¹ |
9 months 2016 adjusted² |
9 months 2017 |
9 months 2016 |
||
|---|---|---|---|---|---|
| in EUR k | 01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
01.01.— 30.09.2017 |
01.01.— 30.09.2016 |
|
| Profit attributable to Group's shareholders | 33,061 | 18,244 | 30,293 | 219,039 | |
| Number of shares issued | 90,141,581 | 83,955,887 | 90,141,581 | 83,955,887 | |
| Weighted number of shares | 90,141,581 | 90,141,581 | 90,141,581 | 90,141,581 | |
| Earnings per share (undiluted, in EUR) | 0.37 | 0.20 | 0.34 | 2.43 |
1 adjusted = without reorganisation expenses after tax
2 adjusted = without Harald portfolio and reorganisation expenses after tax
Applying IAS 33.64, the weighted number of shares for the same period of the previous year from 83,955,887 to 90,141,581 was adjusted, assuming that the weighted number of shares throughout the year of 2016 corresponds to that of 2017.
In the reporting period, the weighted number of shares increased due to the issue of bonus shares by 8,395,589 and decreased due to the share buy-back by 2,209,895, which is described in section 10 Treasury Shares.
Segment Reporting categorises the business segments according to whether PATRIZIA acts as investor or as service provider. In line with the Group's reporting for management purposes and in accordance with IFRS 8 'Operating segments', two segments have been identified based on functional criteria: Investments and Management Services. In addition, the operating segments are split into German and International, based on the locations of the related assets. International subsidiaries continue to be reported as a total for the time being, due to the relatively low contribution of the respective national businesses to total revenues and results.
In addition, PATRIZIA Immobilien AG (corporate administration) includes the management of international subsidiaries as Corporate. Corporate does not constitute an operating segment with an obligation to report, but is presented separately due to its activity as an internal and transnational service provider. In previous years, services provided of 'Corporate' were offset internally on a monthly basis by the segments 'Management Services' and 'Investments' by a so-called 'Shared service fee', as the utilisation was an internal key performance indicator for Group Management. PATRIZIA has agreed that for the 2017 financial year this 'Shared service fee' is no longer relevant as a key performance indicator. The services provided will be internally allocated in accordance with tax regulations. In order to facilitate comparability between the segment reporting of 2016 and 2017, the figures for 2016 were adjusted by the 'Shared service fees' in the profit and loss account. From the financial year 2017, inter-company interest expenses and income between the Harald portfolio structure (investments) and PATRIZIA Immobilen AG (corporate), which occurred on the basis of the internal financing structures from the sale of the Harald portfolio, are no longer taken into account in the course of internal control. Therefore, related income and expenses are not shown in the individual segments. In order to facilitate comparability between the years 2017 and 2016, the previous year's figures have also been adjusted.
The elimination of intra-company revenues and interest charges, as well as interim results, is conducted via the 'Consolidation' column. The 'Corporate' column thus consolidates all internal services between the Investments and Management Services segments and the holding functions provided by PATRIZIA Immobilien AG within a country. It represents the external service provided by the Group in the region. Transnational consolidation is performed in the row 'Consolidation'.
The Investments segment primarily combines principal investments and participations.
The Management Services segment covers a broad spectrum of real estate services, in particular the acquisition and sales of residential and commercial properties or portfolios (Acquisition and Sales), value-oriented management of real estate portfolios (Asset Management) as well as strategic consulting with regard to investment strategy, portfolio planning and allocation (Portfolio Management) and the execution of complex, non-standard investments (Alternative Investments). Special funds are also established and managed including separate accounts via the Group's own investment management companies. Income from management services generated from co-investments, as well as from third parties, is reported in the Management Services segment. These also include income from participating interests that are granted as interim profits for asset management of the co-investment GBW.
The range of services provided by the Management Services segment is increasingly provided to third parties in line with PATRIZIA's AUM growth.
PATRIZIA's internal control and reporting measures are primarily based on the principles of accounting under IFRS. The Group measures the success of its segments using segment earnings parameters which, for the purposes of internal control and reporting, are referred to as EBT and operating income.
EBT, the measure of segment earnings, comprises: total revenues, income from the sale of investment property, changes in inventories, income and expenses from the deconsolidation of subsidiaries, cost of materials and staff costs, other operating income and expenses, reorganisation expenses, changes in the value of investment property, amortisation, as well as earnings from investments (including investments valued at equity) and the financial result and gains/losses from currency translation.
Certain adjustments are made in the course of determining operating income. Adjustments are made for non-cash effects from the valuation of investment properties and unrealised currency changes, the amortisation of fund management contracts, transaction-related taxes and minorities concerning the Harald portfolio, as well as reorganisation expenses. Cash-effective realised valuation changes from the sale of investment property and realised currency translation effects are added.
Segments generate inter-company revenues and these services are settled at market prices.
Due to the capital intensity of the segment, assets and liabilities in the investment segment account for the majority of the Group's total assets and liabilities. For this reason, no breakdown of assets and liabilities by individual segments is provided.
The individual segments are set out as follows. The reporting of amounts in EUR thousands can result in rounding differences. However, individual items are calculated on the basis of non-rounded figures.
| in EUR k | Investments | Management Services |
Corporate | Consoli dation |
Group |
|---|---|---|---|---|---|
| Germany | |||||
| Revenues from principal investments | 20,335 | 20,335 | |||
| Rental revenues | 5,066 | 84 | −42 | 5,108 | |
| Revenues from management services |
107,451 | −2,387 | 105,063 | ||
| Other | 845 | 171 | −2 | 1,014 | |
| Revenues | 26,246 | 107,705 | −2,431 | 131,520 | |
| International¹ | |||||
| Revenues from principal investments | 11,588 | 11,589 | |||
| Rental revenues | 1,647 | 1,647 | |||
| Revenues from management services |
61,571 | −778 | 60,793 | ||
| Other | 1,298 | 185 | 1,483 | ||
| Revenues | 14,533 | 61,757 | −778 | 75,511 | |
| Corporate | |||||
| Revenues | 554 | 554 | |||
| Consolidation | |||||
| Revenues | −44,478 | −101 | −44,579 | ||
| Group | |||||
| Revenues from principal investments | 31,923 | 31,924 | |||
| Rental revenues | 6,713 | 84 | 54 | −42 | 6,809 |
| Revenues from management services |
124,558 | 312 | −3,173 | 121,698 | |
| Other | 2,142 | 341 | 188 | −95 | 2,576 |
| Revenues | 40,778 | 124,983 | 554 | −3,310 | 163,006 |
| Details | |||||
| Total operating performance | |||||
| Germany | 17,218 | 111,107 | −2,431 | 125,895 | |
| International¹ | 6,260 | 64,406 | −778 | 69,888 | |
| Corporate | 6,320 | 6,320 | |||
| Consolidation | −44,903 | −131 | −45,034 | ||
| Group | 23,478 | 130,610 | 6,320 | −3,340 | 157,068 |
| in EUR k | Investments | Management Services |
Corporate | Consoli dation |
Group |
|---|---|---|---|---|---|
| Cost of materials and cost of purchased services |
|||||
| Germany | −6,965 | −14,592 | −21,556 | ||
| International¹ | −4,442 | −38,823 | −43,265 | ||
| Corporate | |||||
| Consolidation | 44,433 | 44,433 | |||
| Group | −11,407 | −8,981 | −20,388 | ||
| Change in value of investment properties |
|||||
| Germany | |||||
| Group | |||||
| Staff costs | |||||
| Germany | −27,797 | −27,797 | |||
| International¹ | −14,475 | −14,475 | |||
| Corporate | −17,508 | −17,508 | |||
| Consolidation | |||||
| Group | −42,272 | −17,508 | −59,780 | ||
| Other operating expenses | |||||
| Germany | −6,291 | −16,211 | 2,692 | −19,810 | |
| International¹ | −1,381 | −6,208 | 778 | −6,811 | |
| Corporate | −14,939 | −14,939 | |||
| Consolidation | 469 | 175 | 644 | ||
| Group | −7,673 | −21,950 | −14,939 | 3,644 | −40,917 |
| Income from participations and earnings from companies accounted for using the equity method |
|||||
| Germany | 6,055 | 7,850 | 13,905 | ||
| International¹ | 1,884 | 1,884 | |||
| Corporate | |||||
| Consolidation | |||||
| Group | 7,939 | 7,850 | 15,789 |
| in EUR k | Investments | Management Services |
Corporate | Consoli dation |
Group |
|---|---|---|---|---|---|
| Reorganisation expenses | |||||
| Germany | −2,157 | −2,157 | |||
| International¹ | −627 | −627 | |||
| Corporate | −793 | −793 | |||
| Consolidation | |||||
| Group | −2,784 | −793 | −3,578 | ||
| Amortisation of fund management contracts, software and equipment |
|||||
| Germany | −1,499 | −1,499 | |||
| International¹ | −184 | −184 | |||
| Corporate | −2,551 | −2,551 | |||
| Consolidation | |||||
| Group | −1,683 | −2,551 | −4,234 | ||
| Financial Result | |||||
| Germany | 357 | −915 | −558 | ||
| International¹ | −354 | 254 | −100 | ||
| Corporate | −2,043 | −2,043 | |||
| Consolidation | 5 | 5 | |||
| Group | 3 | −661 | −2,043 | 5 | −2,695 |
| Gains/losses from currency translation |
|||||
| Germany | −114 | −8 | −122 | ||
| International¹ | −2,055 | 34 | −2,021 | ||
| Corporate | 37 | 37 | |||
| Consolidation | |||||
| Group | −2,169 | 27 | 37 | −2,106 | |
| EBT (IFRS) | |||||
| Germany | 10,260 | 55,779 | 261 | 66,300 | |
| International¹ | −88 | 4,377 | 4,289 | ||
| Corporate | −31,478 | −31,478 | |||
| Consolidation | −1 | 49 | 48 | ||
| Group | 10,171 | 60,156 | −31,478 | 310 | 39,159 |
| in EUR k | Investments | Management Services |
Corporate | Consoli dation |
Group |
|---|---|---|---|---|---|
| Adjustments | |||||
| Germany | 489 | 3,647 | 793 | 4,929 | |
| Significant non-operating earnings | −115 | −3,647 | −793 | −4,556 | |
| Changes in the value of investment property |
|||||
| Fund agreement amortisation | −1,476 | −1,476 | |||
| Reorganisation expenses | −2,157 | −793 | −2,950 | ||
| Unrealised currency changes | −115 | −14 | −129 | ||
| Realised fair value | 374 | 374 | |||
| International¹ | 2,053 | 484 | 2,537 | ||
| Significant non-operating earnings | −2,053 | −484 | −2,537 | ||
| Fund agreement amortisation | |||||
| Reorganisation expenses | −627 | −627 | |||
| Unrealised currency changes | −2,053 | 143 | −1,910 | ||
| Corporate | −31 | −31 | |||
| Significant non-operating earnings | 31 | 31 | |||
| Unrealised currency changes | 31 | 31 | |||
| Group | 2,542 | 4,131 | 763 | 7,435 | |
| Operating income | |||||
| Germany | 10,749 | 59,426 | 793 | 261 | 71,229 |
| International¹ | 1,965 | 4,862 | 6,826 | ||
| Corporate | −31,508 | −31,508 | |||
| Consolidation | −1 | 49 | 48 | ||
| Group | 12,713 | 64,287 | −30,715 | 310 | 46,594 |
| in EUR k | Investments | Management Services |
Corporate | Consoli dation |
Group |
|---|---|---|---|---|---|
| Germany | |||||
| Revenues from principal investments | 506,659 | 0 | 0 | 0 | 506,659 |
| Rental revenues | 12,141 | 3 | 0 | −59 | 12,085 |
| Revenues from management services |
0 | 119,729 | 0 | −21,249 | 98,480 |
| Other | 1,437 | 686 | 0 | −44 | 2,079 |
| Revenues | 520,237 | 120,418 | 0 | −21,352 | 619,303 |
| International 1 | |||||
| Revenues from principal investments | 11,138 | 0 | 0 | 0 | 11,138 |
| Rental revenues | 4,169 | 0 | 0 | 0 | 4,169 |
| Revenues from management services |
0 | 32,259 | 0 | −1,288 | 30,971 |
| Other | 4,623 | 256 | 0 | 0 | 4,879 |
| Revenues | 19,930 | 32,515 | 0 | −1,288 | 51,157 |
| Corporate | |||||
| Revenues | 0 | 0 | 3,443 | 0 | 3,443 |
| Consolidation | |||||
| Revenues | 0 | −14,362 | 0 | −3,181 | −17,543 |
| Group | |||||
| Revenues from principal investments | 517,797 | 0 | 0 | 0 | 517,797 |
| Rental revenues | 16,310 | 3 | 1 | −59 | 16,255 |
| Revenues from management services |
0 | 137,656 | 3,164 | −25,537 | 115,283 |
| Other | 6,060 | 912 | 278 | −225 | 7,025 |
| Revenues | 540,167 | 138,571 | 3,443 | −25,821 | 656,360 |
| Details | |||||
| Total operating performance | |||||
| Germany | 318,053 | 125,741 | 0 | −21,352 | 422,442 |
| International¹ | 15,054 | 33,174 | 0 | −1,288 | 46,940 |
| Corporate | 0 | 0 | 5,658 | 0 | 5,658 |
| Consolidation | 0 | −14,362 | 0 | −3,293 | −17,655 |
| Group | 333,107 | 144,553 | 5,658 | −25,933 | 457,385 |
| in EUR k | Investments | Management Services |
Corporate | Consoli dation |
Group |
|---|---|---|---|---|---|
| Cost of materials and cost of purchased services |
|||||
| Germany | −15,667 | −15,835 | 0 | 344 | −31,158 |
| International¹ | −5,145 | −12,072 | 0 | 0 | −17,217 |
| Corporate | 0 | 0 | 0 | 0 | 0 |
| Consolidation | 0 | 14,302 | 0 | 2,832 | 17,134 |
| Group | −20,812 | −13,605 | 0 | 3,176 | −31,241 |
| Change in value of investment properties |
|||||
| Germany | 0 | 0 | 0 | 0 | 0 |
| Group | 0 | 0 | 0 | 0 | 0 |
| Staff costs | |||||
| Germany | 0 | −46,023 | 0 | 0 | −46,023 |
| International¹ | 0 | −13,629 | 0 | 0 | −13,629 |
| Corporate | 0 | 0 | −16,999 | 0 | −16,999 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | 0 | −59,652 | −16,999 | 0 | −76,651 |
| Other operating expenses | |||||
| Germany | −34,427 | −11,661 | 0 | 21,237 | −24,851 |
| International¹ | −1,858 | −4,934 | 0 | 1,288 | −5,504 |
| Corporate | 0 | 0 | −11,758 | 0 | −11,758 |
| Consolidation | 0 | 60 | 0 | 387 | 447 |
| Group | −36,285 | −16,535 | −11,758 | 22,912 | −41,666 |
| Income from participations and earnings from companies accounted for using the equity method |
|||||
| Germany | 3,321 | 7,117 | 0 | 0 | 10,438 |
| International¹ | 3,754 | 0 | 0 | 0 | 3,754 |
| Corporate | 0 | 0 | 1 | 0 | 1 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | 7,075 | 7,117 | 1 | 0 | 14,193 |
| in EUR k | Investments | Management Services |
Corporate | Consoli dation |
Group |
|---|---|---|---|---|---|
| Reorganisation expenses | |||||
| Germany | 0 | −10,552 | 0 | 0 | −10,552 |
| International¹ | 0 | −970 | 0 | 0 | −970 |
| Corporate | 0 | 0 | −2,210 | 0 | −2,210 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | 0 | −11,522 | −2,210 | 0 | −13,732 |
| Amortisation of fund management contracts, software and equipment |
|||||
| Germany | −6 | −1,501 | 0 | 0 | −1,507 |
| International¹ | 0 | −102 | 0 | 0 | −102 |
| Corporate | 0 | 0 | −3,190 | 0 | −3,190 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | −6 | −1,603 | −3,190 | 0 | −4,799 |
| Financial Result | |||||
| Germany | 3,141 | −704 | 0 | 0 | 2,437 |
| International¹ | −259 | 243 | 0 | 0 | −16 |
| Corporate | 0 | 0 | −7,390 | 0 | −7,390 |
| Consolidation | 0 | 0 | 0 | 75 | 75 |
| Group | 2,882 | −461 | −7,390 | 75 | −4,894 |
| Gains/losses from currency trans lation |
|||||
| Germany | 887 | −73 | 0 | 0 | 814 |
| International¹ | −3,954 | 12 | 0 | 0 | −3,942 |
| Corporate | 0 | 0 | −2,705 | 0 | −2,705 |
| Consolidation | 0 | 0 | 0 | 0 | 0 |
| Group | −3,067 | −61 | −2,705 | 0 | −5,833 |
| EBT (IFRS) | |||||
| Germany | 275,302 | 46,509 | 0 | 229 | 322,040 |
| International¹ | 7,592 | 1,722 | 0 | 0 | 9,314 |
| Corporate | 0 | 0 | −38,593 | 0 | −38,593 |
| Consolidation | 0 | 0 | 0 | 1 | 1 |
| Group | 282,894 | 48,231 | −38,593 | 230 | 292,762 |
| in EUR k | Investments | Management Services |
Corporate | Consoli dation |
Group |
|---|---|---|---|---|---|
| Adjustments | |||||
| Germany | 1,420 | 13,143 | 2,210 | 0 | 16,773 |
| Significant non-operating earnings | −105 | −13,143 | −2,210 | 0 | −15,458 |
| Market valuation income derivatives | 0 | 0 | 0 | 0 | 0 |
| Market valuation expenditures derivatives |
0 | 0 | 0 | 0 | 0 |
| Fund agreement amortisation | 0 | −1,476 | 0 | 0 | −1,476 |
| Reorganisation expenses | 0 | −11,522 | −2,210 | 0 | −13,732 |
| Unrealised currency changes | −105 | −145 | 0 | 0 | −250 |
| Realised fair value | 1,315 | 0 | 0 | 0 | 1,315 |
| International¹ | 3,791 | −27 | 0 | 0 | 3,763 |
| Significant non-operating earnings | −3,791 | 27 | 0 | 0 | −3,763 |
| Fund agreement amortisation | 0 | 0 | 0 | 0 | 0 |
| Unrealised currency changes | −3,791 | 27 | 0 | 0 | −3,763 |
| Corporate | 0 | 0 | 4,181 | 0 | 4,181 |
| Significant non-operating earnings | 0 | 0 | −4,181 | 0 | −4,181 |
| Unrealised currency changes | 0 | 0 | −4,181 | 0 | −4,181 |
| Group | 5,211 | 13,116 | 6,391 | 0 | 24,717 |
| Operating income² | |||||
| Germany ³ | 276,722 | 59,652 | 2,210 | 229 | 338,813 |
| International 1 | 11,383 | 1,695 | 0 | 0 | 13,077 |
| Corporate | 0 | 0 | −34,412 | 0 | −34,412 |
| Consolidation | 0 | 0 | 0 | 1 | 1 |
| Group | 288,105 | 61,347 | −32,202 | 230 | 317,479 |
1 France, Great Britain, Luxembourg, Netherlands, Scandinavia, Spain
2 EUR 252.5m excluding taxes and minorities related to the Harald portfolio
3 EUR 211.8m excluding taxes of EUR 45.9 and minorities of EUR 19.0 related to the Harald portfolio
At the reporting date, the Management Board of PATRIZIA Immobilien AG was not aware of any dealings, contracts or legal transactions with associated or related parties and/or companies for which the Company does not receive appropriate compensation at arm's length consideration. All such transactions are conducted at arm's length and do not differ substantially from transactions with third parties.
The disclosures on related party transactions in section 9.3 of the notes to the consolidated financial statements in PATRIZIA's 2016 Annual Report remain valid.
Acquisition Sparinvest Property Investors (SPI)
On 12 October 2017 PATRIZIA Immobilien AG acquired 100% of the shares in Copenhagen-based Sparinvest Property Investors (SPI), one of the leading global real estate fund of funds investment managers in the small- and mid-cap segment. The acquisition demonstrates PATRIZIA's strategy to broaden its product offering for its clients and, at the same, increases the global reach of PATRIZIA. Founded in 2005 by its managing partners in cooperation with Sparinvest, a Danish financial institution, SPI has become a major player in the real estate fund of funds segment. Working with a global network of select best-in-class operating partners, SPI's funds are invested across Europe, Asia and the Americas. SPI is a global expert in fund of funds investments with around EUR 1bn assets under management. The company currently manages four real estate funds with equity commitments totalling EUR 1.5bn. Despite becoming a fully owned subsidiary of the PATRIZIA group, SPI will retain full autonomy with regard to investment decisions concerning its funds. Due to the temporal proximity of transaction and preparation as well as publication date of this report, no purchase price allocation according to IFRS 3 could be performed.
In the course of the share buy-back programme, which the Management Board of PATRIZIA Immobilien AG has resolved in September 2017, PATRIZIA acquired and settled a further 650,956 shares in an amount of EUR 11,592k after the balance sheet date. The share buy-back programme was completed on 30 October 2017 after the target buy-back volume of EUR 15,000k was reached. As of 30 October 2017, the Company held a total of 2,796,417 treasury shares.
PATRIZIA Immobilien AG on 12 November 2017 announced that it has acquired TRIUVA Kapitalverwaltungsgesellschaft mbH.
TRIUVA is one of the leading providers of real estate investments in Europe. The company manages around 40 funds, partners with more than 80 institutional investors and consists of around 200 employees across its 15 European locations. The Frankfurt-based company focuses on commercial real estate in the office, retail and logistics sectors as well as infrastructure. Currently, TRIUVA manages real estate assets of around EUR 9.8 billion.
The acquisition increases PATRIZIA's assets under management by around 50 per cent to more than EUR 30 billion, placing the company firmly amongst the top 10 European real estate investment managers. Furthermore, this will broaden PATRIZIA's product range, enabling institutional and private investors to access new markets, asset classes and risk profiles with their investments.
In a first step PATRIZIA will acquire a majority stake in TRIUVA. Both parties agreed to not disclose the purchase price. The acquisition will be financed by existing liquidity. PATRIZIA will publish details with regards to the positive financial impact of the acquisition together with its full-year 2017 results in the first quarter of 2018. PATRIZIA expects the transaction to close at the end of the first quarter 2018 at the latest and to be earnings accretive in the year of acquisition.
To the best of their knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the legal representatives of PATRIZIA Immobilien AG affirm that the interim consolidated financial statements give a true and fair view of the assets, liabilities and financial position and profit or loss of the Group. The interim management report of the Group includes a fair review of the development and course of business and the positioning of the Group, as well as a description of the principal opportunities and risks associated with the expected corporate development of the Group for the remaining financial year.
WOLFGANG EGGER KARIM BOHN ANNE KAVANAGH KLAUS SCHMITT CEO CFO CIO COO
| Date | ||
|---|---|---|
| 15 March 2018 | Financial statements 2017 with press conference and investor and analyst conference call |
|
| 9 May 2018 | Interim report for the first quarter of 2018 with investor and analyst conference call |
|
| 20 June 2018 | Annual General Meeting, Augsburg | |
| 7 August 2018 | Interim report for the first half of 2018 with investor and analyst conference call |
|
| 14 November 2018 | Interim report for the first nine months of 2018 with investor and analyst conference call |
| Investor Relations | Press |
|---|---|
| Martin Praum | Andreas Menke |
| T +49 821 50910−402 |
T +49 821 50910−655 |
| F +49 821 50910−399 |
F +49 821 50910−695 |
| [email protected] | [email protected] |
This interim report for the first nine months 2017 was published in the evening of 13 November 2017. It is a translation of the respective German report. In case of doubt, the German version shall apply. Both versions are available on our website:
www.patrizia.ag/en/shareholders/financial-reports/quarterly-reports/
Concept, Design, Editing IR-ONE, Hamburg www.ir-one.de
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