PATRIZIA SE (PAT) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. I'm Timo, your Chorus Call operator. Welcome, and thank you for joining PATRIZIA's 3M 2023 Conference Call. [Operator Instructions]. I would now like to turn the conference over to Martin Praum. Please go ahead.

Welcome, everyone, to our first quarter '23 analyst and investor call. This is Martin Praum, Head of Investor Relations and Group Reporting speaking. I'm happy to have our CEO designate, Asoka Wohrmann and our CFO, Christoph Glaser, with us in the room today. Asoka was appointed only a few days ago, and I'm especially thankful he committed right away to attend today's call to briefly introduce himself to our analysts and investors. Christoph will afterwards provide an overview of the business development and our preliminary financial results for the third month as well as further details on the guidance for '23 followed by a Q&A session. Given Asoka only joined us beginning of the month, I ask you for your understanding that he will not be available for Q&A today. So Christoph and I will cover any questions you may have today as common practice in the last few quarters. During today's call, we will refer to the 3 months '23 results presentation, which you can find on our website in the section shareholders under most recent publications. The presentation includes the first quarter figures and details about our guidance for the fiscal year '23. In case of questions, the IR team is more than happy to take your calls. As usual, this call will be recorded and will be made available on our website. We will also, as usual, offer a call transcript for further reference. With that, I'd like to hand over to Asoka. Asoka, the floor is yours.

Thank you, Martin. Good afternoon, everyone. My name is Asoka Wohrmann, and I am very happy to be here today to introduce myself. Some of you may know me from my previous position as CEO of a stock market listed asset manager, DWS. So it's probably not a surprise to you that I very much look forward to meeting some familiar faces again, but also to meeting new analyst, colleagues, shareholders of PATRIZIA and potential new shareholders shortly. Before I start, I would like to ask for your understanding that I cannot comment on PATRIZIA's strategy and performance during today's call as I just came on board a few days ago. So give me some -- few weeks to deep dive into the organization and to get to know this great team better that build up PATRIZIA over the last decades. I will certainly be available for Q&A starting with the next analyst and investor call. Talking about decades, I am really honored that Wolfgang, the founder and the majority shareholder of PATRIZIA will hand over the CEO leadership of the company to me in the next months. But at the same time, will stay on board as an active colleague, member of the Board of Directors and majority shareholder. Handing over the CEO role to a new person after building and running the business for decades is always a super tough and important decision, and I appreciate the trust Wolfgang puts into me. But as you know him, he is a visionary and forward-thinking entrepreneur who takes bold decisions early and when they are best for the company. I must say I'm really impressed what he and the team have built over the last close to 40 years. Starting a business from scratch and developing it to close to EUR 60 billion assets under management investment manager with the emerging global footprint is something that truly impresses me. Now that brings you probably to the question, why did I join PATRIZIA. As you know, I have some experience in asset management and PATRIZIA to me, is at a decisive point in the evolution of the franchise. It is where some of the largest global asset managers stood 10 to 15 years ago. First, it is on the brink to develop from a leading pan-European to a leading global player in real asset investment management. Secondly, and from what I learned in talking to the Board of Directors and staff in the last weeks, it has a unique culture and all the ingredients to create something powerful that will last. And thirdly, I see significant opportunities in the alternative investment market globally and PATRIZIA offers a great real estate and infrastructure platform, but also the balance sheet power to successfully continue on its growth path. Will that power crystallize this quarter or next quarter, probably not that quickly. We continue to be a [ subcu ] environment with a lot of client hesitation to deploy capital and question marks regarding interest rate levels and the right asset allocation strategy. But for PATRIZIA, this situation, in my view, offers ample opportunities. Let me stop here and hand over to Christoph, who is in the best position to provide you with an update on our company. I very much look forward to meeting many of you shortly during one of our roadshows or broker conferences. And as you can hear, I am excited to be here and lead PATRIZIA through the next phase of its evolution. Christoph, over to you.

Thank you very much, Asoka. And once again, on behalf of the whole team, welcome on board. Great to have you on this call. Look, everybody, it's a privilege to be here again after we talked last time about fiscal year '22. As usual, we're going to cover strategic highlights and current trading first on a couple of slides. And after that, we will transition to a financial update and a bit more information about guidance. With that said, I will start on Page 4. And in addition to welcoming Asoka on board, I would also like to highlight to all of you once again that as of June 1, PATRIZIA will have a new Chief Operating Officer, Slava Shafir, who comes to us with an abundance of operational experience in relevant sectors across the Americas, Europe and other markets. And so we are happy to have Asoka on the team already, and we're also looking forward to welcoming Slava Shafir as of June 1. With that, let's go into the market and what we see there. And I would like to start on Slide 5 and briefly talk about what we see as of today and then maybe add a couple of comments as to how we see things evolve over the next couple of quarters. So at the moment, we're seeing an exceptionally low level of market activity and somewhat limited investment, especially in the real estate area, less so in infrastructure where there's more action going on. On the left side of the page, when you look at signed and closed transaction volumes and you compare the 3 months of '22 and the first 3 months of '23, you can see a drop of total transactions signed by around about 60%. And the transactions we did sign in the 3 months just behind us are 2/3 acquisition related and 1/3 disposition related. So again, we are more of a buyer than a seller because we're operating out of a position of strength. When you look at the closed transactions, the year-over-year drop is even more pronounced. And the EUR 300 million of transactions closed are purely acquisition-related transactions. So once again, you see what we always said would happen that we would become more of a net buyer and not a seller. And here, it's quite pronounced in the first quarter. Unfortunately, at the very low absolute level. And it also underpins that we saw some organic growth in the first quarter because everything we did close was acquisition related. Now equity raised has also been suffering on a year-over-year comparison basis by around about 90%, kind of expected. And the good news remains that we have around about EUR 4 billion of firepower available in the form of cash and structures in the form of committed capital and a fairly moderate leverage on top of that, which is quite reliable simply because we have access to 250 banks. Our product shell is well positioned. We've talked about that before. And is the firepower in structures and the sales access we have to our customer base, we do believe that we will gain momentum when investment activity returns. Now with that said, maybe a couple of additional comments, as I have been talking to our transaction and capital markets teams as recently as this morning. The second quarter is going to continue to be very weak. And we've said that before that the first half is going to be weak. I mean, April, in historical context, and you look back as far as 2009 has been the second worst month over that period of time on the real estate side. So the second quarter will be another weak quarter. We do believe there's a possibility that transactions will come back over the course of the third quarter and we feel moderately optimistic about the fourth quarter, which has also traditionally, from a seasonality point of view, be a good quarter. Key question remains when exactly that's going to happen and what the extent of it's going to be, and that will also drive the answer as to how much transaction volume will be generated, the mix of it and the transaction fee income related to it, and we'll get to that a little bit later. So with that, let's move on to the financial update and guidance section to Page 7, specifically. On Page 7, you can see that based on our relatively forward-thinking strategies deployed over the last couple of years and a bit of focused M&A. We do see both continued net organic growth and also M&A driven organic growth of our AUMs. And on a year-over-year comparison, looking at the end of the first quarter '22 and how things developed afterwards over the next 12 months, you can see that our AUM has grown by around about 5% from EUR 55.3 million to EUR 58.1 billion. And the organic growth component of that is relatively significant, and you still see over that horizon, a very minor positive valuation effect, which is obviously in the more recent past, changed to a moderately negative trend in the recent short term. So net organic growth accounted for EUR 2.1 billion of year-over-year growth and is predominantly driven by infrastructure, office and residential. I don't think I need to comment the moderate positive valuation effects right now. And the M&A-driven AUM growth is largely driven by the consolidation of Advantage, which we happen to acquire on the first -- in December last year, and we've talked about that already. So organic growth and M&A are the historic key drivers for the AUM development over the last 12 months. And with that, let's look at the development between the end of last year and end of March, i.e., the first 3 months of this year. There we see, in essence, a stable AUM in a challenging market environment. And I think it speaks for 2 things. It speaks to the fact that we have a high-quality portfolio. What we do transact, we rather sell -- we rather buy than sell. And secondly, the quality of the portfolio is supporting that. So EUR 59 million downwards to EUR 58 million. And the main drivers are, again, a very moderate net organic growth component, a moderate negative valuation effect of EUR 0.7 billion. And then there is EUR 0.5 billion, which is linked to M&A and other components. And I would like to be a bit more specific here because traditionally, the first quarter is always a quarter where cash dividends are being paid to investors. So there is a bit of cash outflow from certain vehicles linked to that. So quite a normal thing to see here, and that is in that third bucket. So the key message here is perhaps that the net organic growth could not fully compensate for the negative evaluation effects, which is quite obvious, but expected. And the AUM guidance that we have given, which represents a range of EUR 60 billion to EUR 65 billion for the total year of '23 assumes that there will be an overcompensation of valuation effects by net organic growth over the course of the year, and this will have to happen over the course of the second half of the year, as I already alluded to before, hinging on the resumption of the transaction market. So that's in a nutshell, the short-term past and the comment on the short-to-midterm future. As you know, in that context, we do continue to believe that the valuation impact will be somewhere in the range of 4% to 5% negative for the full year. Having seen 1.2% so far year-to-date, we seem to be tracking all right in that respect. But there's more valuations coming in June and September and in December, but our modeling suggests that we're going to -- somewhere get into that space. And then we will see how acquisition and sales mix and transaction activity, it will stack up against that headwind. So with that, let's go to Slide 9. And there again, we are just want to point out that the high quality of our assets and the broad diversification of our AUM is our key factor with regard to its stable development. Diversification levels remain high across geographies, across asset classes and a couple of other parameters. Again, the total balance is virtually stable. If you ask me what we see in terms of trends today, we see definitely a flight to quality, have been seeing that for a while. We do see a lot of work around future proofing assets from an ESG point of view, and we made a huge effort in that respect. And then there's a lot of focus on tech-enabled assets in parallel. And the last 2 points, I guess, we're going hand-in-hand in a way because of a good fact-based assessment and the good ESG, future-proofing strategy, asset by asset is really what's going to differentiate us against competition going forward. With that, let's switch to the P&L, starting with Slide 10. And I have to say, I'm actually quite pleased about the dynamic that's been unfolding here over the last quarters, including the first quarter of this year because our recurring income has grown by 13.8% compared to the first quarter of last year, and that's EUR 7.5 million, which is very nice to see. As expected, transaction fee income has dropped to an all-time low or another 50% or 51% to EUR 1.1 million, and I had already alluded to that last time we talked that, that drop will continue and then hopefully see a V-shaped recovery later in the year. So when you look at performance fees, again, as anticipated in the past, still a continuation of a drop but less pronounced compared to transaction fees. And then again, the expectation is that here, you will see an extended U-shaped recovery taking us through the first half of the cycle, which is hopefully about to start in the second half of this year. So the total picture of seeing total service fee income increased by 1.1% to EUR 84 million almost, slightly above last year's level under the given circumstances, it's not great in absolute terms, but we do feel good about it, relatively speaking, and the quality of the mix has certainly improved, and that's something that will hopefully further future-proof the company and also support and carry our equity story in that respect, and that's what we feel good about. So if we leave that topic -- well, actually, let's say, before we leave that topic there, maybe one more comment on the composition of the performance fee because we usually do get that question anyway. The EUR 20.4 million that you see there are largely dominated by around about EUR 19 million of the contribution from the Dawonia portfolio, which is valuation-wise, extremely stable, operationally performing well. And we do believe that this contribution will remain a key pillar of our income profile going forward. And the levels of collaboration with our investors in that vehicle and the evolution of strategic thinking there are quite constructive and on a very, very good track. So with that, we go to the cost side of the P&L on Slide 11. Again, a story here that started to unfold, which we like to see because we do see that our strategic reorganization and cost containment has started to improve our net operating expected expenses as planned. They're down by 5.2% year-over-year. And if you compare it on a like-for-like basis, i.e., you back out the acquisitions we've made along the way, the saving on a sort of formal corporate PATRIZIA business component level alone normalized is actually even higher. So we feel very positive about that development, which again is primarily driven by active cost containment, both on the per-ex side and G&A as well as the ambition to maintain a positive operating leverage as a matter of principle between recurring income and costs. Now maybe one little add-on comment here with regard to general and administrative expenses, which are usually around about 1/3 of the total company's expense base after personal expenses being 2/3 of it. That part of the cost equation, it got down to the levels pre-acquisition of Whitehelm and Advantage Partners, i.e., a level of 2021 up, and we have hold that level after having acquired those businesses, and that gives us a quite significant advantage here. So the key message being the costs reflect positive outcome of recent reorg measures and show our ability for containment, quite due under the current circumstances and helping us to get the EBITDA equation into shape. Speaking about which, you can see the entire picture on the next slide, where you can reflect on the composition of our EBITDA which is benefiting from a continued increase in management fees or recurring income and a lower net cost drive, both of which support the earnings before income tax and depreciation. So up from EUR 26.4 million to EUR 27.2 million, so that's roughly 3%. The net sales revenue and co-investment income declined year-over-year. But that's fully in line with budget and strategy because some of you may recall that in the first quarter of last year, we had a positive one-off linked to the disposition of the U.K.-based assets, named Trocoll House, which we had is an on-balance sheet property, and that obviously didn't reoccur this time around. So the EUR 1.7 million is what it is. But again, the main messages here are recurring income up over compensating for transaction fee income loss and performance fee being softer and delivering EBITDA growth of 3%. So we kind of like what we see. It'll always be more, but under the circumstances, pretty decent performance. One thing that hasn't really changed, and if so in the right direction is the strength of our balance sheet. So I'd like to reflect on that once again a little bit on the next slide. It does provide for security and the ability to make strategic moves if we feel like moving them. Balance sheet and liquidity, KPI is relatively stable. So a net equity ratio north of 70%. Available liquidity, around about EUR 370 million. So quite rich. Certainly no need for any refinancing activities like you see elsewhere in the market. And we will most likely come up at the shareholder meeting in May and ask for an authorization to continue our ongoing share purchase or repurchase programs. So you will hear more about that when we meet. And treasury shares have slightly reduced from EUR 6.5 million down, and that's because the first earn-out tranche for Whitehelm was delivered after cutting those accounts a couple of days ago. Whitehelm being in quite good shape and developing nicely, of course, under the current market conditions. Whitehelm also does occasionally see a couple of delays with regard to certain transactions, but the infrastructure markets are good. Valuations are expected to continue to grow in sort of mid-single-digit environment. And the teams are performing. So we feel good. So in summary, when it comes to balance sheet, good liquidity. We'll continue to actively deploy capital with a focus on strategic co-investments and M&A, if and when it makes sense and we will propose to continue the share buyback program. And at the moment, short term, the treasury shares are down from 6.8 million to 6.5 million because we addressed the first phase of the earnout for Whitehelm. The guidance-related comments I would like to make are summarized on the next slide. And simply speaking, we are confirming our guidance as we have issued it. So AUM guidance remains between EUR 60 million and EUR 65 billion. Our EBITDA guidance remains wide for now with a range of EUR 50 million to EUR 90 million, and we have made up our mind to keep it that wide for now because of the second quarter related comments I made earlier. We may choose to narrow our guidance here as we proceed through the year. But at this stage, it's too early. And again, as I mentioned before, the main driver for the width of the guidance is the remaining uncertainty still as to what's going to happen to the transaction markets in the second half of the year. Our EBITDA margin guidance also remains unchanged. Now of course, with the first quarter under the belt, we feel good as to where we stand, running up against these guidance ranges, especially on the EBITDA side and the EBITDA margin side, driven by both recurring income and cost performance. Obviously, the jury will be out on AUM growth and the resulting AUM levels versus guidance because the key drivers there, valuation outlook being within the range we expect maybe moderately better than we have communicated, i.e., 4 to 5% versus 5% to 6% on the other hand, the transaction activity is still very [ huge ]. So the key question is whether transactions with the right mix in terms of focus on acquisition of assets will overtake or overcompensate the currently unfolding moderate headwind from valuation development, and we will closely watch that over the course of the year. Depending on how it goes, the AUM outlook may get under a little bit of pressure or not and the EBITDA outlook may get into even better shape or not. So that's really the key points on the guidance. And with that, I would like to proceed to the slide where we summarize the key takeaways for the first 3 months of the year. And there's 4 points we've highlighted here for you. There's probably more we could talk about, but those are the 4 we consider most essential. So the market environment is very difficult or has been very difficult in the first quarter, probably one of the most difficult in the short, medium and long-term path. The AUM levels have proven to be very resilient, relatively resilient. And as I've said, valuation pressure is moderate. And new AUM additions will be the key question and the timing there. We have no pressure to sell for leverage reasons. We do have, generally speaking, low leverage across all our portfolios. We do rely on very equity-rich investors. We've talked about that in the past. And the management fee growth has managed to offset a temporarily weak transaction fee environment. Balance sheet is strong. So we will remain buyers and not become sellers. We do foresee decent EBITDA development, and we do have the financial flexibility to move. So as I mentioned before, depending on what opportunities arise, we could also see very quick and decisive action on either individual assets or portfolios or groups of portfolios or even M&A targets if they make sense, but they always have to be -- there will always have to be a strategic angle to that, either from a distribution, diversification point of view or from a product suite enhancement point of view or from a geographic expansion point of view. So we're watching along the lines of all these dimensions. So decent performance, despite a challenging environment, uncertainties remain for now and we keep relying on our strengths, and we keep truckin'. And with that, Martin, I guess, it's time to hand over back to the operator. Thank you very much.

[Operator Instructions] The first question is from the line of Andre Remke with Baader Bank.

Yes. Thank you for the presentation and your kind introduction, Asoka. A couple of questions from my side, please, starting with the portfolio valuation or asset under management valuation down by 1.2% on average. How much of the total asset under management has been revalued in the first quarter. Is this 1 quarter? And therefore, we could expect the 4% to 5%? Or how does the calculation look like? And also on the -- your largest asset Dawonia, has this been revalued, too, because there was a EUR 70 million, EUR 75 million lower value? Or was this cash outflow -- the cash dividend outflow. This is the first question, please.

Thank you very much. I'll certainly address them. Before I address both questions, quite directly. I would like to make one more comment to make sure that nobody misunderstood my comment on the continuation of the share buyback program. We are going to ask the general assembly of PATRIZIA shareholders in late May for authorization to continue it. And depending on the outcome of that, we will continue the program. Just to clarify that for the audience with doubt. Now back to your 2 questions, which are obviously very relevant in the current environment. So first of all, if we break down the company in the first step, you have -- we're starting with around about EUR 58 billion of assets. And then you have infrastructure in the mix where we generally see mid-single-digit positive valuation development. And then we do see a bit of cash in structures. And then we see a core portfolio of real estate which adds up to the upper half of EUR 40 billion to EUR 50 billion range. And in there, we have about 1,600 assets that we constantly revalue some of them annually, some of them bi-annually, some of them quarterly. We do run about 2,200 valuations. So compared to the number of assets under review, we do about 1.35x as many valuations simply because some get revalued several times during the year. Now when you break down this number of roughly 2,200 valuations or 135% of the asset number, about 32% of those happened in the first quarter, around about EUR 14 billion, then about 33% in the second quarter, then 29% in the third quarter and 41% at year-end. So obviously, in particular, year-end, but also half-year valuations are quite rich in terms of volume. And that's how you capture sort of on a rolling year basis, what you have to do. We -- so the first main message is we do value several assets more than once. And therefore, we do 2,200 valuations where we want [indiscernible] the time distribution I already explained. Because of that, it's important to look at the valuation trends that we saw inside the first quarter, but also what we saw, for instance, at the end of the year versus the beginning of last year, i.e., the 12 months before that. And it's also important to look at in aggregate over the last 12 rolling months, so perhaps spring '22 and how it developed towards spring '23. So inside 2022, we still, in aggregate, saw a positive valuation effect to the tune of north of 3%, between 3% and 4%. And then towards the end of the year, we started to see negative valuation effects linked to the fourth quarter valuations. And then we continue to see that now in the first quarter where we see about 1.2% of aggregate downward valuations. And when you ask me -- if you ask me where those are. So in the first quarter of this year, they were -- the most negative ones geographically were distributed across I would broadly say Northwestern Europe, so France, the U.K., Netherlands where we saw anything between negative 3% to 6% in aggregate. If you ask me what we saw across asset classes, we saw a negative development in other uses up to 8%, logistics, industrial, around 3% negative and then clinics and others maybe around 1% negative. But there were still asset classes where we saw sideward movements like commercial mixed use like hotel, like office mildly positive, retail mildly positive and also residential mildly positive. More pronounced positive health care and student housing, in particular, in some cases, up to 25%. So there are -- there's quite a mixed picture. And once again, before I answer the second question, what I was just referring to is for real estate because I was making the point earlier that on the infra side, we are seeing a stable positive valuation trend of around about mid-single-digit percentage points, so 4%, 5% for the infra side. Now to Dawonia. Dawonia, the portfolio of roughly EUR 5.5 billion under AUM is a very solid and very well-operated business, and I would like to give you some numbers. So you get a feel for how real this value stability in that portfolio is. So between the end of the third quarter and the end of the year, the Dawonia book value grew from -- sorry, mildly dropped from EUR 5.45 billion to EUR 5.38 billion. This little drop of EUR 70 million is reflective of 1.5%, but it does include 1% related to single asset sales in the Munich area, which means that only 0.5% relates to actual valuation changes. So around about EUR 50 million of the EUR 70 million of value drop are just assets which have gone out, by the way, at book value or slightly above. And the other EUR 20-or-so million are valuation effects. And that is around about -- sorry, 0.5%. So literally, a sidewards move. Now if you take that forward into the first quarter of this year, same picture, a very similar picture and even slightly better because now we're taking the EUR 5.38 billion, and they're going as of the end of March, something like EUR 5.37 billion. So there's only a EUR 10 million shift here, which is equal to 0.3%. So the sidewards movement continues and the super moderate negative change is actually getting smaller. So the portfolio is literally stable. And we always get the question why that is, well, first of all, high-quality assets. Secondly, locations, which are subject to the highest rent level changes in the past and in the present and in the foreseeable future in the city of Munich, we are talking about 20% to 21%. Secondly, when we did value these assets in the past, we have always valued them around the middle of the range bracket provided for certain market for certain groups of assets. We've never positioned them in the fourth quartile of that range like some of our competitors have. We also have always continued to deploy conservative and standardized and unchanged valuation measures. So in the up cycle, we have not let's say, [ eaten ] the potential, we have remained conservative, and we're now getting the upside of that of being relatively stable. And recent transactions suggest that values will continue to remain stable. So that's a fairly [ long-winded ] answer, but it's a very important question, and that's why I just decided to spend a bit more time on it, and it's important to understand that. So with that, let's go back to the next question, please.

Yes. Thank you for the excellent answer -- many details. So as I get right, also the Dawonia portfolio will be valued on a quarterly basis, not once or 2 times a year, but on a consistent basis.

We were actually looking at that portfolio quarterly. There's obviously a fully fledged external effort in the mix once a year and also at the half year mark, a second one. And then if I'm not mistaken, at the first quarter and third quarter mark, we're doing -- the Dawonia team is doing it on an internal basis with some possibility of checks being done on the site. So 4 points of reference a year.

Okay. Perfect. Second question comes to the cost-cutting measures. We or you see first effects could we take the cost for the first quarter the kind of run rate for the following quarters? Or is there more to come? So you mentioned -- you referred to the level 2 years ago. I'm not looking in my model for this [ exact ] level, but more a general question is there more to come from cost-cutting measures?

Okay. So first of all, back to the basics. The -- on the per-ex side, where we see 2/3 of our cost base, there's a certain dynamic and then there's a certain dynamic on the G&A base. Overall, the actuals are quite promising, and we appreciate the upside they have generated versus our sort of expectations, but we are still a little bit cautious to suggest to take that as a run rate because the activity coming back over the course of the year, there's a possibility that we will track favorably, but not as favorably anymore as we have been tracking in the first quarter. So if I could take an internal perspective here, which we don't generate, we are -- we have delivered better than expected in the first quarter against our internal goals, but we are not yet entirely sold on the question whether all of that will be sticky whether some of it is just subject to time shift. And secondly, whether some of the expected increased business activities, especially in the front end may not lead to a run rate, which is not going to be quite as good as it was in the first quarter. So directionally, I would say, yes, you can take a shot at that. For the time being, I would say, if you do that, maybe cushion it a little bit between prior experience and what you've seen in the first quarter.

Okay. Perfect. So my last question goes to the performance fees. You mentioned the EUR 20 million roughly, which, let's say, completely related to Dawonia. Is it fair to assume that this is the largest part this year? You mentioned your expecting also for the second half, higher performance fees. But could you remind me where they should come from if you're expecting mostly acquisitions in the second half? And write-downs could probably -- I'm not sure if I'm correct, but I heard kind of performance fee.

Yes. Good. Look, so first quarter, very atypical in the sense that around about EUR 20 million were driven by -- around about EUR 19 million from Dawonia. And again, you'll see that contributor also next year and the year after, but at a slightly lower level. Then that said, for the total year, I mean, we haven't given guidance on the individual revenue streams this year because of the uncertainties in the market. But I guess you can expect the number for the total year maybe to be close to twice that level. And so which means in turn that there will be other contributors. We do currently see 1 other fairly strongly contributing vehicle in the later parts of the year, and we're tracking that obviously very carefully. We're talking around about another EUR 10 million there. And then there will be a few smaller items, which could generate another 0 to EUR 10 million of performance fee income, all of which would be adding up to something slightly [ in house ] of EUR 40 million. Obviously, it will be key to see those opportunities materialize. But as we're tracking them on a case-by-case basis, we feel reasonably confident that the transaction fee income line is the one that is very, very difficult to foresee at the moment. On the other two, we feel quite up to the game.

The additional performance fees you mentioned, will they only materialize if there is a disposal?

In principle, yes. And given the nature of the assets in question, the timing plans and the clients or the vehicles and investors they are sort of decked against. And given the fact that they are from a planning and agreement point of view locked in, I see those to be quite safe to assume.

Quite what, sorry?

Safe to assume.

The next question is from the line of Philipp Kaiser with Warburg Research.

Thanks for the presentation and congrats to the quite good to the despite the challenging environment. Just only one question left regarding your guidance. So after printing EUR 27.2 million EBITDA and assuming in guidance of EUR 50 million to EUR 90 million. Could you a bit elaborate on your scenario for the lower end of the guidance for the course of the year?

Yes. Look, the lower end of the EBITDA guidance is EUR 50 million, as you've seen. At the moment, I would say we're tracking, let's say, in the third quartile of the range probably. So north of the midpoint, and that's driven by all the things we've just discussed. And so the question will be what's going to happen to the third and the fourth quarter from a transaction fee income as a negative potential headwind. And what's going to happen to the stickiness of our cost performance, which we have so far seem to be quite okay. The 2 together contrary to management fee perspective and performance perspective are going to be the 2 drivers that will determine if our destiny is in that range. So at the moment, sort of assuming we're in the third quartile, if there's -- if the market doesn't come back at all, I think we will, for sure, drop into the second quartile of the guidance, i.e., below the midpoint, but I don't expect to -- sorry, can you still hear me?