PATRIZIA SE (PAT) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Timo, your Chorus Call operator. Welcome, and thank you for joining PATRIZIA SE 9 months 2022 Interim Statement Call. [Operator Instructions] I would now like to turn the conference over to Martin Praum. Please go ahead.

Welcome, everyone, to our 9-month 2022 Analyst and Investor Call. This is Martin Praum, Head of Investor Relations and Group Reporting speaking. I'm happy to have our CEO, Christoph Glaser, with us today to present to you an overview of the business development and financial results for 9 months 2022 as well as further details on the adjusted guidance for fiscal year 2022, followed by the Q&A session. During today's call, we will refer to the 9 months 2022 results presentation, which you can find on our website in the section shareholders on the most recent publications. The presentation includes the 9-month figures, details about our adjusted guidance. And in case of questions, you know that our team is always there to help. As usual, this call will be recorded, and it will be made available on our website, and we will also offer a call transcript for further reference. With that, I'd like to hand over to Christoph to start the presentation. Christoph?

Thank you very much, Martin. Good afternoon, everybody, and welcome to this call. I would like to start taking you away and briefly talk about what we see in the markets and what that means for PATRIZIA and what we're doing in that context. So if you would please turn to Page 4 to start with. Needless to say that we're all still faced this geopolitical risks and unusually high inflation rates. Interest rates are rising. So there's a lot of volatility, and both stocks and bonds are negatively affected by the current news flow. There's a lot of questions sealing around the future performance of other asset classes like real assets included. There's a bit of risk aversion on the investor side. A lot of people are sitting on the sidelines right now, especially probably in some aspects of the European real estate market. Quite a bit of investment activity has been good unfold. Now we see all of that to be somewhat temporary in nature, although of course, opinions differ as to what temporary means. But one thing as for sure, for the shorten terms of the market has kind of changed from a seller to biomarker. And for us, of course, the key question is, what does it mean for PATRIZIA SE and what should we do about that? So first of all, we do not expect any more stabilization of either the political environment or the market conditions in the short term. And because of that, we had to adjust our guidance for fiscal year 2022, which we already briefly talked about last week. In addition to that and what's probably more important management is actively taking action to address PATRIZIA's cost base, but also to reallocate resources, both human resources and capital to support selected critical growth initiatives. Because one thing we do not want to do as a company, there's a strong balance sheet and a strong culture and strong skills, we do not want to sacrifice our midterm strategy or at least the most important parts of that to short-term purposes. So there needs to be some balance. And so we talk a lot about rebalancing the company for growth. So with that, let's briefly go to Page 5, where we have summarized for you the adjustment of our guidance for 2022. This is really, in essence, not so much news as of today anymore because we communicated last Wednesday. So most of it you know, what is important for me to focus you on once again, is that against this backdrop of a sustained market uncertainty, a bit of client in activity and the slowdown in transaction activity. I just want to make it very clear where the drivers for the guidance adjustment are. And you can see here on the slide that roughly 60% of the guidance adjustment is driven by what I would call a reduced revenue expectations against the backdrop of a little bit lower AUM assumptions, but in particular, transaction fee income assumptions. And to a much lesser degree, slightly lower management fee assumptions. 40% of the guidance change is really driven by expected one-off expenses in reorganization, roughly half of it within the EBITDA space and roughly half of that below the EBITDA line, and it's reflective of measures were taken to future-proof procedure. And we do that quite decisively. So on the one hand, we are addressing the cost base, including personal expense, but not only we rightsizing capacities, which are not business critical, we are emphasizing a critical growth capacities. We support a strong and stable core business. So we're not going to put our service levels at risk. Our investors are at the forefront of our interest, and those interests will be protected. We will stay a reliable partner. There will be a bit of increased focus on flagship investment strategies and a lot of discretionary capital deployment. And our global diversification will continue beyond Germany, inside Europe into Asia and beyond in this infrastructure really across the globe. So the chart on the right side summarizes that. So once again, we're tackling the issue from 2 directions. We do avoid too much future cost increases. We're getting rid of things that are not core, and we're addressing our cost profile, as I mentioned before. Again, no sacrifice of core growth initiatives and underpinning our midterm strategy. With that, let's go to a couple of strategic and operational highlights starting on Page 7 in organization. Firstly, because it always attracts a lot of attention. I'd like to give you a short update on one of our larger portfolios, which is the Dawonia portfolio, which PATRIZIA alternative investment manages on behalf of the dozens of very strategic, very important and very long-term-oriented investors. It's a fantastic portfolio is roughly EUR 5.4 billion assets under management. Associated with that is a profit entitlement, which is seen on our balance sheet to the tune of EUR 355 million after tax. And I'm very pleased to tell you that based on the strong relationships we have with our investor base, we have agreed to extend the investment phase beyond the 10-year mark into the midterm, which means that in the context of ongoing future discussions, we will agree with our investor base as to how to proceed long term this that vehicle. And we're going to do this in the context of a very constructive and strategic discussion and not being distracted by short-term market volatility. So all options are being kept open on the table. And of course, I cannot preempt those talks at this stage. The general entitlement to be where the profit share remains. It is actually slightly increased, let's say, sort of quarter mark, and we expect it to be kind of stable in the short term. So with that, let's move to Page 8 for a quick update on other strategically quite relevant forward-looking activities. In a very simple way, on the left side, I would like to talk a little bit about infrastructure. This is a huge topic for us now and going forward. And on the right side, I'd like to talk a little bit more about our traditional real estate investment business. Maybe before diving here into the detail of what's perhaps important to realize, once again, that until the end of last year, the treater was really more of a European and partially Asian real estate investment manager. And as of the beginning of this year, especially following the acquisition of Whitham, we're now really a well-diversified field asset investment manager with global transaction capabilities and global asset investment management capabilities. So what's really here on the slide, on the left side, you can see a couple of future-proof investments that we have done in line with our convictions and believes in certain megatrends. So in Norway, a new platform that will support decarbonization efforts in Norway around CCS capabilities in Italy. There's been a second investment in a smart street leading company, which we literally just announced Friday last week, if I'm not mistaken. And so we are very much able now to offer our investors well forward after product at the right time where the cycle is going and to achieve decarbonization targets worldwide. On the right side, you see a quite different portfolio of activities. So we invested in a couple of purpose-built student accommodation properties across Europe, 1 in Italy, 1 in Spain, great locations against the backdrop of a very significant demand. So the message here really being PATRIZIA as of 2022 is a globally acting real as an investment manager and the focus is both on real estate and infrastructure. And perhaps where the cycle is going, we see even stronger emphasis on infrastructure in the short and medium term, which will underpin the expected growth in the midterm. So with that, let's briefly talk about financials, and we'll start that by going into the assets under management development in 2022 on Page 10. So there's some good news here, which is summarized on the left side of the chart, compared to the year end of 2021, our assets under management continued to increase against the backdrop of partially adverse market environment already in the first 3 quarters of the year. Of course, a lot of it can be attributed to the completion of the Whitehelm Capital acquisition. We've talked about that in the past. But there's also been a bit of healthy net organic growth, a bit of positive valuation effect. Of course, as I said already before, last time we talked, some of those effects are kind of fading out a little bit in the short term. And so we really see still some of that. And those acquisitions have played quite a role here as well. Maybe one point to stress here is that when you think about it from a GM point of view, EUR 57.1 billion under management now, our debt levels at the fund level. So across our roughly 145 vehicles is actually quite low. It's at an average level of 31% right now. And in some of our larger, higher quality funds is even below the 30% mark. I'm making that point specifically to prep maybe some questions regarding valuation developments were higher interest rates to be paid on sort of medium and long-term debt facilities inside those funds could obviously for valuations. But in our world, that is comparatively speaking, less of a problem than for some other market participants. So we are way below market average here, which is quite advantageous from a portfolio resilience point of view at, maybe one, love comments on that topic. We've seen a lot of investors who contemplating to go all in with equity, certain topics. So there's quite an interesting dynamic here depending on where you are. What is equally important, when you talk about AUM is what we've tried to illustrate here briefly on Page 11. Because as you know, we're an asset-light player who is very actively managing investments across a broad institutional investor base and some retail clients. And our portfolio is quite resilient for a second reason to not only the low level of leverage or loan to value, but also because of its diversity across geographies, risk classes and asset classes. That provides a lot of safety and security from a company point of view and less exposure under adverse market circumstances. -- maturity that you can see is actually very largely centering around long-term versus medium term or short term. In fact, you can say that roughly 95% are long term in nature, which is also not the norm in the market. But as I mentioned on our last call, our institutional investor base of roughly 500 key players is very strategic in nature, very long-term oriented and the relationships have been watched over up to 30 or more years in some cases. So that is very pleasant to observe. Maybe a couple of more points on the risk classification. So 80% of the AUM seem to be core or core in terms of strategies that are being followed. -- investments with the long-term feature in the portfolio will face a lower downward pressure. And so we will sell through the cycle. And the fact that we've been consistently following a fairly conservative valuation approach helps us as well. Some people have asked us recently whether some of our investors have a tendency to create their investments or to walk away. We don't see that. We do not see that. We have a strong stable investor base, long-term-oriented cash reach. We don't see any significant liquidation issues at all. And as I mentioned, the duration speaks for itself. To sum it up, are we immune to potential negative valuation impact in the -- as we leave 2022 or going to 23, no, we're not, of course, but it will be very small and very moderate and very measured in nature and relative to competitors, clearly favorable and the portfolio mix supports that assumption. With that, let's move to Page 12. Where I'm going to not really spend a lot of extra time because we've captured some of these points already. The geographic diversification has progressed. We're now almost 50% outside of our historical core market. That trend is going to continue. I expect us to be most of 50% in those other markets in the foreseeable future. From an asset class point of view, the degree of diversification is also increasing and improving and the risk styles, as I explained, largely core and cores. So we have a platform and we have the product offer that we need at the right point in time -- and so we're kind of opening the first chapter, Corporate its strategically here to become really global and really multi-asset to us and covering both infrastructure and real estate, makes us robust and gives us also confidence that we're able to go through the cycle. Let's talk a little bit more about the financial details here. And I guess we start with the composition of EBITDA 9 months year-to-date on Page 13. Look, it's obvious that our EBITDA came in a bit weaker than last year, which is regrettable, but the overall level was still relatively decent year-to-date. They emphasize that. And we continue to invest and further internationalize. Total service fee income at almost EUR 250 million, again slightly below last year's level of EUR 255 million, but it's a relatively moderate decline of 2.6%. And the recurring management fees, which is probably the most important thing here has actually grown by almost 19% to a level north of EUR 180 million. That is something that we like a lot because we are on a long-term trajectory to improve the quality of our earnings towards recurring reliable plannable income streams, and that trend has continued this year-to-date. And it will continue going into next year. So we will, in the future, be less dependent on transaction fee income performance fee income, although we will, of course, be happy to harvest this different when it comes. Net sales revenues and co-investment income has increased 16%. That was quite pleasant to see. But as you see in the middle of the chart, and I've already alluded to this, transaction fee income has dropped from a level north of EUR 30 million to somewhere around EUR 15 million and performance fees have dropped by about a quarter from a level north of 60 to 50. So that's really where we've seen some pressure. But net-net, the increase in recurring management fees has almost managed to compensate the this, which is something we feel good about, but it shouldn't distract us from the fact that the outlook for the fourth quarter is more negative on the transaction performance car outlook and our ability to compensate to that will eventually fade away in the short term. So that's also one of the reasons why we talked to about in change. So let's go to Page 14, where you see a little bit more detail here with regard to service fee income, transaction fee income and performance fee income. I'll keep it short. As I mentioned, we've reached 184, up 19% on the first category, and we're down on the second and third Overall, we managed to only compensate. So this is just again to illustrate all the relevant numbers year-to-date, 21 year-to-date 2022 and then also the outlook for 2022 as a total estimate. So in total, we're expecting our management fees for total year something between EUR 235 million and EUR 245 million. Transaction piece at a more moderate level, 20% to 25% and performance fees 55 to 60 million. That outlook is quite well substantiated for the remainder of the year. So we feel comfortable from a quality of estimation vis-a-vis the fourth quarter. Let's move to Page 15, our net operating expenses. And we've made an effort here to explain that in quite some detail. You can see on the left side of the chart, 9 months 2021 at the level of EUR 166 million. And you can see that cost has increased, but it requires some explanation to allow you to put it into perspective. So there's an increase in staff costs, which is increase related to headcount change, which is mainly driven by the acquisition and consolidation of Whitehelm Capital, which came with around about 170 employees, if I'm not mistaken. There's some other operating expenses that we had to incur linked to organic cost growth. So no surprise there, but there have been a couple of one-off items linked to the preparation of the White Home acquisition and the execution of it and there's been other costs that have been positively impacted at the level of 7.4%. Now there's been one anomaly in here, which is important to point out in the net operating expense section, which is very clearly shown in our financial statements, we were able to deconsolidate very successful project development in Hamburg, which was only temporarily out by us in the balance sheet. And it had a significant relieving effect on net operating expenses to the tune of almost EUR 18 million. On the other hand, there have been also one-off items with negative impact in the space of a mid- to large single-digit demand linked to the organization expenses, among other things, to the tune of EUR 2.5 million, for instance, as of the month year-to-date. So that's the picture on net operating expenses, and we believe that we have provided here quite some detailed overview that helps you put it into perspective. With that, I go to Page 16, which continues to be one of my favorite pages and all these update calls because it speaks about the solid balance sheet and liquidity available, which provides us with a good amount of capacity to seize opportunities if and when they arise. And -- in the past, we may have discussed a lot whether it's good or that to have such a strong position. Today, I am feeling and I'm thinking that it's good to be in that position because it allows us to be on the buy side when the market becomes the virus market and when other parties have to sell, and we will directionally be more of a buyer on the buy side. Our equity ratio is at 66.1%. The net equity ratio is quite impressive, 72.6%, availability of EUR 361 million, and we are following our active capital deployment policy, which is geared around boosting our turbocharging key flagship vehicle strategies our infrastructure around real estate funds, 20 European portfolios following our research convictions. And an example there would be, for instance, deployment of EUR 30 million to boost our low-carbon infrastructure funds or to deployment of a few million euros to support our sustainable venture futures fund and so on and so forth. That said, our share buyback program shows good progress, which has crossed the 5% threshold. We're sticking to what we have decided to do, and we're executing as planned. No change to that. We're holding now almost 5 million treasury shares. And we feel good about going into a tough short-term period here transition between cycles. We do have reasons to believe it will come out a bit stronger. In some of the regular transactions that we may not see and some of the acquisitions we may not do in that context in some of the AUM that we may be missing in the context could be meeting maybe a tailwind coming from opportunities that may pop up when others sell and we're going to buy. So let's see how that's going to unfold. But the one thing that's important here is that we have the capacity to act if it makes sense. And so if the right stuff comes along in the reason of the price, we will take it. So with that, let's go to Page 17, where we once again summarized the updated guidance for the fiscal year 2022. Key message here is that and we've talked about this to some degree already, the guidance increase in cost is driven by reorganization efforts and one-off items that we will expect to see in the fourth quarter because in case of doubt, it's going to take a more conservative stance given the circumstances. And that in combination with the reorganization, we're going to execute this regard to personnel expenses in general, the administered expenses, which in totality will amount to something like EUR 20 million are equally split across these 2 categories. So that's one important message. And maybe it's also important to say that in our view, it's quite unlikely that all 3 revenue lines, which is the lower end of the guidance range -- at the same time, as a worst-case scenario, 10% correlated between the 3 items. So we feel good about what we have given into the market last week, and I just like to reiterate that today. The cost base is, of course, something that we can directly impact. And so that's what we do. Maybe compared to that, the revenue side is something where we are depending a bit more on external factors. But again, management fee outlook is quite well grounded in our existing AUM base and what we expect there. And as I mentioned before, the transaction performance, the outlook is also quite well substantially a bottom up and there's not much room for unallocated expectations. So with that, I would like to hand it back to the operator, I guess, Martin, to take questions, and we have quite a bit of time left here, more than an hour to address those. And so go ahead.

[Operator Instructions] And the first question is from the line of Andre Remke with Baader-Helvea.

A couple of questions from my side. So starting with a market question. Could you elaborate a bit on -- more on the demand as the situation across your different product categories. We are all of the substantial in the European real estate market. But what about potential demand for infrastructure and real assets. So a category which you are more focusing on the situation be completely the same.

Okay, thanks very much for the question. Look, we're sitting on a quite a good pipeline still actually. And it's more of a by pipeline and sell pipeline, I'm happy to say. And if you ask me where the interest is, there's a lot of interest in infrastructure as an asset class. A lot of interest in anything that has to do with ESG and decarbonization -- we see still and we're happy about that because that's where we're good. We see a lot of flight to quality. And since our unit assets under management are usually high quality, we don't lose them, and we see more demand for them. Now not across every sector to the same degree. But the living sector keeps attracting a lot of attention, especially when you run research strategies as we do like Living Cities as an example. High-quality office is also in good demand, although it is very important here that the demand across the office asset class is very much differentiated depending on where you are, of course, and what type of assets you offer. But high-quality office demand, health care is an interesting other topic to talk about. But if you ask me what's really in high demand, I would probably name infrastructure first, as I mentioned. And the nice thing is that -- we have equity investment opportunities there. We have set investment opportunities there. global in nature, Asia, Europe and then CORP. And we look forward also to our sustainable cities vehicle, which will be quite interesting and some more stuff we're going to do on the infrastructure side. So that's a not show where we see most of the demand. And as I said, I think in times like these, it's equally important to be focused on losing less and acquiring more. And on the losing less side, I think we're in quite good shape because we already are in the quality space. One more comment if I before I forget, we actually had an interesting discussion about that topic yesterday. There is a trend towards preparing for value-add plays. So as the outlook of value at place improving in the short term, clients are positioning to consider benefit from that. And we are preparing for that as well, either with existing vehicles or to the setup of specific vehicles or if we need to, we would even think about temporary warehousing certain cool assets we get as well in place and then spin them out to existing new vehicles. Sorry, that was just an add-on comment, which you just bought in the.

But for all you mentioned, so there is still demand, but the execution is on hold. And this is the same, not only in real estate and in different topics, but also in infrastructure. And investment, et cetera.

I would say, at the moment, a lot of transactions are on hold on the real estate side. On the infrastructure side, I would not necessarily say that there is an ongoing flow of transaction happening. I just gave you 2 examples earlier today. So I would differentiate between the 2.

Okay. Okay. That's what I expected. So then a second question on your -- you mentioned selected growth initiatives. What does it mean -- do you mean , for example, the flagship investment strategy with that? Or what is the main focus here?

Yes. The pillars of our midterm growth strategy, which is aimed at, let's say, doubling the size of our business in the medium term and to globalize, they center around asset class diversification. Today, we're sitting on 11% of infrastructure in the AUM portfolio, in the midterm future, it should be somewhere around 25%, 30% perhaps. So that is a key pillar of our growth initiatives. And there are flagship funds associated with that, and we do intend to continue to allocate capital there human resources. And that is something we need to protect even in a down cycle because it makes a lot of sense and especially in a down cycle that part of the strategy makes a lot of sense. Then there's, of course, the geographic expansion into Asia, which is organic in nature. And we're making decent progress there. I'm very happy to report. We will be a bit more specific in that respect very soon. But focusing on some of the more established markets in East Asia and Southeast Asia, where we now have a license, we are on a good track. And that's also -- it's an early stage fledgling initiative, getting good traction and then that one we are protecting as well. And then, of course, there are the cornerstones of our existing strategy, which are changing, which we work around our German and European or national TransEuropean flagship funds, the TAP series, for instance, and so on [indiscernible] I mentioned already before. So the further nurturing of our German core business and the efforts to make it bigger and to be able to continue to rely on that. And to maybe spin it a bit more into value-add direction and one of the other locations play a key role and the same applies to our London managed TransEuropean funds, which are hugely important for us to grow. And so that's also 2 more key growth initiatives where capital is going, where human resources will be maintained or even increased -- and that's just 4 examples. So infrastructure, real estate, Asia, TransEuropean flagships on the pad side and the German flagships that we focus on. If you look at this at the fund or vehicle level, it's probably 20 to 25 vehicles that in aggregate would fall under these 4 last initiatives. And I've only given you 4 out of probably 8 or 9 that we are mentally focused on.

Okay. Perfect. Then on your cost-cutting measures, you apply EUR 10 million cost of that? What is the target cost reduction amount here? And could you -- are you able to say it increased equation? And what could be a potential time frame to reach the full effect out of that.

Let me put it this way. The amount of -- the amount of restructuring expense we're seeing right now that we will have to incur is around $10 million now, which is part of the negative guidance adjustment below the EBITDA line. We expect the payback of this to be, which is less than a year for sure. It's going to be significant in size, but it's measured in a way because we are not only removing cost, personnel expenses or G&A or it's not critical to core or where it's maybe questionable from a performance point of view. But we also, at the same time, closing gaps where we have resource gaps, executing growth strategy. And of course, as you would appreciate, in an inflation environment, you need to bear in mind that there will be headwinds stemming from inflation. That we will have, at least to partially address some of it, we will self-fund, but there has to be some moves. We need to look about what's happening in some of the annual sector markets or also in Europe in terms of cost of leading inflation. We have to address all of that as well across the employee base. So it's relit combination, but the payback will be quite swift. And as I also said, equally important, also coming out of 10 great years is to make sure that we don't add to our cost base as we have in the past, maybe occasionally done too easily. So the bar for that is substantially higher now. And the bottom line impact of what we do depends also a little bit on our growth profile in 2023 and as I mentioned already before inflation. But the strategy we're really driving here because we have the balance sheet strength is that, again, it's balanced between short and long term. a more focused growth strategy and an unrelenting review of what's not critical to daily business. It was not critical to investor service transactions and so on. And the company has become a lot more cell-tower and self-critical in that context.

Your target is to increase the profitability of the overall. So hence the past year you achieved 40% roughly EBITDA margin down to 35% this year below 20%, et cetera. Do you have a midterm group or a long-term EBITDA margin in your mind as a kind of, let's say, a sustainable margin within asset manager in real estate and real estate should earn...

That's a bit tough to comment on at the moment. I mean the level that we had at the 40% mark or so was, to some degree, driven by performance fee income and transaction fee income in an up cycle. So I would not necessarily consider that long-term sustainable bite quality of what we have today at a level of -- a level below that is much better, but the absolute level is lower. Now could you ask me about the range where we could be in the midterm of 30% to 40%. And it's grounded in the assumption that the short-term management fee income will be, I think, in good shape, as I mentioned, because we will do some deals. There will be some growth. valuation pressure should be moderate. We may do some opportunistic moves. And I think the income flows stemming from that, it will be quite reliable. Short-term transaction fees will be still suppressed in performance fees as well, and will only come back in the midterm. But if you then are in the midterm horizon, this resurrected transaction fees and perhaps also slowly improving performance fees, let's see. That in combination with a bigger AUM base. I think we can get back to that 40% level at some stage. And look, really, Q1 23 is still going to be depressed somehow. So for us, the key question is how quickly are we going to improve over the course of '23 to believing we're going to lead '22 with is it -- well, under this circumstance is okay pipeline, but is not comparable to how we left '21. So the early months of 2023 will still be tough, I would say. After that comes to summer and some opportunities. And in the second half, there are things may start again. But things will only start to normalize then later on towards the end of 2023, really and early 2024...

[indiscernible] Dawonia portfolio what is meant by midterm in respect to all, if you mentioned the term in with respect to investment case of the clients, your own stake and the profit contribution on your side are the congee time frames you agreed on? Or how should I read it? Or did you simply agreed not to decide in such a market environment right now?

Look, it's well known that the vehicle was conceived almost 10 years ago, and the original Lenten investment phase would have ended in late spring next year. As we are here together with very established and reliable and long-term investors. We have, of course, as part of our ongoing dialogues, decided collectively and quite anonymously that the last thing we want to do is to make important decisions under circumstances as they are. So we have simply bought us collectively enough time to sell through these short-term uncertainties and to think through options for the long term and to make those decisions when there is more stability. But I'm not going to talk about the specific data, I'm not going to talk about specific considerations because that would preempt internal discussions that I think the investors and PATRIZIA Se's alternative investments are pro maybe importantly, there is no significant change to the -- or shall I say, like conditions as they stand. So think about it like a midterm free. So free and a positive... Yes, what I expected. This is the right thing to do. And really, we are super pleased by the collaboration that we have with the strategic investors, and it's also a sign of trust. And it's a premium portfolio. I mean, it is a premium portfolio. We're not concerned about valuation pressure there. Rents are improving. Market trends, comparables are improving. When we occasionally sell units or blocks, we get good price at book or above even very recently. So it's the right thing to wait a little bit to things have come down.

[Operator Instructions] The next question is from the line of Manuel Martin with ODDO BHF.

2 questions from my side. Actually, one follow-up question on the progress of PATRIZIA Se in acquiring new clients. So we heard from you that you're quite optimistic on Asia that there might be some positive news flow in the pipeline. What about other regions, Europe or in particular, U.S.? Is there anything new in this difficult times?

Yes. Thank you for the question, Manuel. Look, we're making progress with regard to new client acquisition, although it's a little bit slower right now, unexpectedly than it used to be until spring. In Europe, it's quite gradual, I would say, we raised something around EUR 1.8 billion, EUR 1.9 billion. Year-to-date, it's going to be north of 2% for sure, towards the end of the year. So not as great as we were hoping, but decent. And a lot of that comes from new clients. And Europe is gradual. In Asia, of course, we're starting from a very, very low level. sorry, I take that back. I was referring to the asset side. On the investor side, we're starting of course, a lower level compared to Europe, but still quite decent. So the acquisitions there are probably happening at a higher speed. The Middle East is going to be quite interesting for us. Let's see. There's a lot of money there, which needs to be invested and we're quite actively improving our sales and distribution and marketing activities there starting at the very top of the company, but we're also strengthening our capital market teams for that space. Same applies to Asia and in Asia, we do expect further growth now. That further growth is not only going to come out of PATRIZIA sort of proper, but also out of Whitehelm because Whitehelm has physical presence in Asia, quite a lot, not only on the infrastructure side, but also some pockets of real estate. So for us, that enables us to expand our sort of Japan and Korea and Singapore focused activities also into Australia and New Zealand. And so we do expect more clients to show up from the at side and a couple of assets to be picked up down under. So it should be quite interesting to see a bit of Asia growth, both on the investor and the asset side across those 4, 5 jurisdictions. We got license now. We've got the team we got teams on the ground and the white on capital in established so.

Second question also in relation to clients. I mean, the interest rate environment has dramatically changed compared to, let's say, a couple of years ago. The -- have you noticed any preference or shift in preference amongst your clients rather towards fixed income bonds? I mean, tertiary bonds are yielding higher coming back to actually attractive levels in terms of yield. Is there a shift preferring your bonds? Or do you see clients still striving to improve or to increase their real estate ratio in their asset allocation.

That's the question we have been pondering a lot for quite a few months already. Now interestingly, the short answer is we don't see a lot of change in behavior. And maybe it's important to ask ourselves what the key considerations here are. First of all, across our roughly 500 or so meaningfully since institutional investors. The question is our equity rate of average is not -- a majority is extremely equity-rich, pension funds, savings banks, sovereign wounds, whatever. Some of them feature very low cost of capital. That's also considerations. A lot of them are thinking about bonds as being too risky given the volatility from a valuation point of view. Some of them, especially in the case of PATRIZIA Se given our history, are -- let's give you an example. Say, we have more than 200 savings banks we're incorporating with on the debt funding side. And a lot of them are also institutional investors. And a lot of them have partly commercially and partly politically motivated investment strategies, the real estate focus, regional focus, certain core asset cost focus. There are a lot of -- a long way to go before they feel real pain from a return point of view. And that in combination of what I said before on the other features, puts quite a bit of inherent stability into our AUM base. And then -- some of those who have these specific strategies I just alluded to there. Then, of course, looking also into alternatives, but they kind of tend to stay with our portfolio of offers. So we will be discussing infrastructure, maybe not all of infrastructure but, say, telco networks or decarbonization-related efforts, maybe not in the first closing, but in a second closing. And so there's a lot of ability. And when there is a consideration of diversification, then very often it's stays within our product portfolio. And I see very rare occasions only of capital leaving and very few, and they're usually not strategic in nature and small inside certain vehicles, maybe certain minorities that have, I don't know, discretionary global considerations, and they operate differently than the majority of our core investors. So -- so we feel -- and maybe it's -- we need to be grateful for the history of the company here in terms of 34, 35 years of organic buildup on a client basis not trust as well.

Ladies and gentlemen, there are no further questions, and I hand back to Christoph Glaser for closing comments.

Look, we will be quite active, again, later in the fourth quarter going on the road across Europe and elsewhere. So we'll see some of you there. I look forward to meeting you again. We will talk a lot about the resilience of our business model and our midterm strategy when we meet and maybe also the one of our other operating highlights that will top in by them. And Look, maybe at the last point, I would say, our share had a tough time year-to-date. We are acutely aware of that. Don't like it. A lot of it is the market. Some of it is also ourselves. We're working on that as we just explained, and to get our operating business. Well, if I would make a smart outcome and at the end, I would say, given the current valuations you're getting our operating business kind of almost for free at the moment. And maybe that's an opportunity in some ways. So we feel good, and we're looking forward to sales through the cycle inflection point as an active player. And we appreciate your attention. Thank you very much.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.