PATRIZIA SE (PAT) Earnings Call Transcript & Summary

Okay. And then a very last question, probably also more a general question on the transaction market turning now with all these closures and lockdowns in Europe, does this already have an effect on this business? I guess it's -- people are more used to work in this environment than in the past, in March or April. Is this a right observation?

Yes, that's certainly the case. I mean there are a few observations. First is, yes, people are getting used to it, in particular, in Germany, where we saw a country managing the pandemic relatively well. So people are getting used to it. The second lockdown, in particular, in Germany, is also different compared to the first lockdown, where we weren't able to do anything, really. And even during these times, during the soft lockdown in Germany, we continue to do business. So I would say, in the fourth quarter, as we said, actually, on Q2, we expected more activities in the fourth quarter. We're seeing more activities, people getting used to it and people getting used to do deals on a virtual basis, at least, partly. So that's really -- that is helping. But having said that, obviously, it's unlikely to be a bombastic fourth quarter compared to the previous years.

[Operator Instructions] And the next question comes from the line of Kai Klose of Berenberg.

I've got 2 questions. The first one is on Page 8. Could you indicate what was the split in the transactions, ideally, between sales and acquisitions by regions and by segments? So what were the investor preferences? And for the remaining EUR 2.4 billion of transactions to be signed in the fourth quarter, where do you see -- is what kind of split do you expect here? What are you currently working on? Is there a difference compared to the 9 months so far? Or is it a bit of repetition of what you have seen? And the second question would be on Page 9. Thanks for the illustration of the performance fee pool, where you mentioned as a footnote that the contribution is dependent on the client preferences and disposal activities. Could you elaborate a bit more on that, how these 2 points could impact the performance fee over the coming years?

Kai, yes, certainly, let's start with the first question on acquisition, on sales. We really -- if you dial back to the second -- to the call on the second on Q2, the majority of the deals at the moment really happen -- are happening in office and logistics. There are a few markets, which, for the obvious reasons, have basically closed or are still uninvestable for co-investors. And that is the U.K., for example, because of Brexit. It's a country where hardly anything happens. Shopping centers, high street retail, all of those sectors -- or hotels that are really hit hard and impacted by lockdowns. In those areas, there hardly happening any deals if at all. So the majority of the deals are happening in office and logistics, and there continues to be very high demand for resi, but we haven't seen a lot of resi deals at the moment. And where -- what you also see, by the way, is deals on the development side. So with our development business, we did a few deals this year, which will obviously take a few years to develop. But there's a very good market to get active on development sites when investors are rather cautious in getting into new ventures. With regard to your second question, on performance fees, I think, as always, performance fees highly depend on -- mostly on the date of disposal or a disposal decision. And the footnote is really referring to that. So what we have tried to illustrate on Page 9 is by simply showing, if you just take only Dawonia, which is to spend on the balance sheet at the moment, if we would realize those performance fees over a period of 5 years, for example, it will translate into a little more than EUR 70 million per year as opposed to collecting it in 1 year. But this is really up only an illustrative example. With regard to the shaded box on top of EUR 70 million, that's really a general unrealized reserve we have in the business that will realize over the next years depending on the disposal date, which is, as you know, Kai, simply part of the business.

Okay. And last question, could you give a bit more details on how the fundraising process or the fundraising has been in the kind of new regions we have been opening offices over the last 2 years? Have there been a bit more or lower interest in European real estate?

Well, let me say a few things generally about fundraising in this market, Kai. I mean we've raised north of EUR 1 billion this year, which is obviously below our targets, but this is simply effect of being unable to travel, unable to -- on the client side to make investment decisions, when people simply can't meet or have other issues, where we continue to see traction in the business in Asia. And Asia is the continent which came back as opposed to Europe or the U.S., which is actually back into the market at the moment. And -- where we saw -- actually, I think, great success over the past 2 years, given that we've opened the offices in those regions only recently. Of the money we raised, Kai, I think it was just -- it was EUR 1.2 billion or EUR 1.3 billion. 3/4 of that money came from existing clients, and roughly 1/4 came from new clients.

And last question from my side. Is it too early to -- or do you already have an indication or a sense what kind of equity rating we can expect or you might expect for the next year? Or is it still a little early to think about that?

We're really hoping, Kai, that next year will be different compared to this year. We are hoping that, at latest, in the summer, the markets will start to normalize. We -- I do expect, obviously, I mean, depending on the timing of the vaccine and also the momentum we have on the [indiscernible] side, from the expectation for a vaccine, we expect the first quarter and the second quarter next year to continue to be difficult, but we expect the first half of 2021 to show signs of recovery. And in the second half, we expect the market to really come back. We expect that people -- the traveling will pick up again, people will be on the roads and transact on deal, done deals and also raise equity. So we -- I certainly expect next year that the money we will raise in the market will be significantly higher than this year. This is our current expectation.

And there are no more questions at this time. I hand back to Karim Bohn for closing comments.

Yes. Thank you, Haley. Now at the end, I'd like to make a personal remark. As many of you might have heard, Bankhaus Lampe will exit the equities business by the end of this year. So it's probably the last quarterly call we will have with the equity research analyst Georg Kanders from Bankhaus Lampe. And Georg has been in the business since -- I can't remember it, it must be decades now, also with us on calls. And the PATRIZIA claims to be a stable and reliable partner, and the same is true for Georg. He has covered PATRIZIA for many, many years and was quite critical at times, but always experienced, fair and diligent in his work. So Georg, the PATRIZIA team would like to say thank you for so many years of good collaboration. Thank you. We wish you all the best for the future, health and luck, and hope that our path will cross again. Now with that, I'd like to end the conference call. Looking forward to the next call, which will be on the full year financials. In the meantime, you know where to get us. Please reach out to us and to IR. And please stay well, safe and healthy. Thank you very much.