Solid 9M 2023 results but continued market uncertainties - initiation of cost programme impacting FY 2023 EBITDA and improving FY 2024 earnings quality

9M 2023 results: PATRIZIA has reached an EBITDA of EUR 50.2m and thus the lower end of the FY 2023 guidance range of EUR 50.0 - 70.0m already after nine months of 2023. EBITDA was driven by operating success during the third quarter but also supported by other operating income. Management is confident to deliver on its FY 2023 guidance range operationally.

Management however expects that the prolonged phase of market uncertainty as well as real asset valuations continuing to trend downwards will lead to pressure on the ability to generate performance fees going into FY 2024. In addition, management expects significantly lower other operating income within FY 2024 revenues, with planned growth in recurring management fees not expected to be able to offset this revenue pressure. As a result, management initiated a comprehensive review of the Company’s cost base which is expected to lead to reorganisation expenses of between EUR 10.0 – 20.0m in Q4 2023.

Management hence expects FY 2023 EBITDA to come in at the lower end of the so far communicated guidance range of EUR 50.0 – 70.0m due to these one-off charges. From FY 2024 onwards, these measures should bring PATRIZIA’s recurring cost base (personnel expenses, other operating expenses, cost of purchased services) closer to the level of FY 2021, which reflects a cost base before consolidation of two M&A transactions and before inflation started to accelerate.

These measures should ensure the Company not only safeguards certain profitability levels in FY 2024 but would also reflect a significant improvement in earnings quality with the vast majority of EBITDA expected to be generated from recurring management fees.

The current dividend policy is based on growth of AUM and growth of management fees. Management intends to base dividend payments on a profitability KPI of the Group going forward and will provide an update and a dividend proposal for FY 2023 together with preliminary financial results in February 2024.