PATRIZIA SE (PAT) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Preliminary Results Financial Year 2024. I am Yusuf, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Tobias Ender. Please go ahead.

Welcome, ladies and gentlemen. Good afternoon, good morning, wherever you are. Thank you for listening in to our today's analyst and investor call for the preliminary results regarding the full year 2024. This is Tobias Ender speaking. Glad to have you here on the line. I'm happy to have also here with me CEO, Asoka Wohrmann; and CFO, Martin Praum. Asoka will present you an overview to the market environment and operational activity. Afterwards, Martin will guide you through our preliminary financials for 2024 as well as our guidance for 2025. This will be followed by a Q&A session. During today's call, we will refer to the result presentation, which you can find on our website in our IR section home under most recent publications. In case of questions after the call, our IR team is happy to take your call. As usual, this call will be recorded and will be made available on our website. We will also offer a call transcript for further reference. With that, I'd like to hand it over to Asoka to start the presentation. Asoka?

Thank you, Tobias. Dear ladies and gentlemen, a very warm welcome also from my side. The market environment in 2024 as the previous couple of years continue to be challenging. Look back, let me say that PATRIZIA has successfully navigated through the past 12 months. As we said in our 9 months results, the market improved slowly since the second half of 2024. Interest rates and inflation have stabilized. This has led to an overall stabilization in the valuation of the AUMs, which is better than we initially expected. Despite the challenges faced last year, when the right opportunities rose, we grabbed them. We invested more than EUR 1.8 billion on behalf of our clients in 2024. Infrastructure transactions contributed the most to the overall transactions volume, which is in line with market trends and attractiveness of infrastructure right now. In 2024, we developed and implemented also a new midterm strategy and set ourselves ambitious targets. We intend to reach an AUM worth more than EUR 100 billion by 2030. And we identified 5 strategic growth areas, and we have a clear plan how to drive this growth in the next years. Within those 5 strategic growth areas, we aim to raise EUR 30 billion of equity by 2030. These 5 growth areas are rail infra, which is the convergence of real estate and infrastructure as a new asset class driven by technology. Example for this emerging asset class include data centers, EV charging stations and rooftop solar panels. Then there is a European infrastructure. Infrastructure is currently the most popular asset class. And in Europe, the market is mature and ripe for our mid-market place to generate attractive returns. The third growth area is Living, where we coming also from. We have successfully delivered strong returns for investors in the Living sector for 40 years and are known for residential expertise. Fourth is Value Add. We have a strong track record in executing on value-add deals, generating the higher returns the risk class provides for our clients. Finally, we have Advantage Investment Partners or AIP called our independent multi-manager platform. The platform has delivered strong growth even in the challenging past few years and is forecasting greater growth in the midterm. Last year, we raised EUR 1 billion through 3 of growth -- key growth areas. EUR 0.4 billion was raised in real estate, EUR 0.3 was raised in European infrastructure, EUR 0.3 billion was raised through AIP. Coming from EUR 0.5 in 2023 means we doubled our fundraising achievements in 2024. But historically, we have seen higher inflows. And markets are gradually opening up for new investment in real assets. We don't expect the market to see a strong recovery in the first half of 2025, but we see higher investment activity, especially in the Living sector and value-add real estate. Both growth areas promise attractive IRRs. The ECB has started to lower interest rates again, supporting the real estate market and consequently, the end of the rise in prime yields. And this is supporting a positive outlook for the real asset markets in 2025 as well. With repricing behind us, the Living sector emerges as a clear investor favorite because it is offering a compelling rental growth. The office sector in the meantime went from the lowest yielding sector in 2021 to the highest yielding in 2024. However, we believe secondary and outdated buildings, especially offices, will continue to see headwinds in the future. Infrastructure remains strategic growth area for PATRIZIA. Infrastructure transaction accounted for USD 300 million in 2024, only slightly down from the USD 325 billion or million figure in 2023. The U.S. had the highest amount of private infrastructure capital investment with Europe slightly behind it. However, both fell relative to the levels in 2023. But APAC grew year-on-year with strong deal volumes in the second half of 2024. In 2024, investment in renewable energies dominate the infrastructure deal flow. Capital raising for infrastructure remained relatively low with around USD 95 billion raised in 2024 and increasing by $1 billion compared to 2023. I have a small correction I said earlier about the -- talk about the infrastructure transactions. The infrastructure transaction accounted for USD 300 billion in 2024 and only slightly down from the USD 325 billion figure in 2023. PATRIZIA remain an active buyer in 2024. Acquiring assets on behalf of our clients worth EUR 1.8 billion and disposing assets for EUR 1.1 billion. Let me briefly highlight some key investments last year. We invested into the leading Italian waste treatment and recovery group expanding our energy from waste platform. We were the sole institutional lender to the debt facility raised by a renewable energy company in Portugal. In APAC, we successfully entered the Philippine market with 2 deals. First, in one of the country's leading rooftop solar developers; second, into a new urban mobility solutions platform. And our hard work in 2024 paid off early this year, a couple of strategic deals. A strategic investment into Aligned Data Centers, one of the leading data center providers in North and South America and we secured the new Italian headquarters of SAP. We will expand our organic AUM growth in 2025. Our clear ambition is to future-proof PATRIZIA in a world in transition. This year, we are laying the foundation for our growth path to more than EUR 100 billion in AUM in the midterm. We will focus our efforts on establish new attractive scalable investment solutions for our clients, and we step up our fundraising activity to create more value for our clients. Our ambitious plan is mission-critical, especially in the light of market conditions turning more favorable. Achieving attractive returns in the real asset requires a transition from asset allocation to active asset management. Asset managers need boots on the ground being closer to the assets to generate higher returns. This is clearly plays to our strength. And this is why value-add remains a key growth area for us where we can achieve double-digit IRRs for our clients. Living remains a strategic growth area for us. Living is far more than residential with attractive subsectors such as affordable housing, micro-Living, co-Living and senior Living in 2025. And we are very excited about the future growth opportunities in the new emerging real asset class. Ladies and gentlemen, we live in a world in transition. We can see and feel this every day. Apart from the geopolitical turmoil, we are witnessing, we see that economic and social change is driven by 4 powerful megatrends: the digital, the urban, energy and Living transitions. We call the DUEL megatrends and all are powered by technology. The digital transition with more connectivity, smarter solutions for buildings and infrastructure, where cloud services and artificial intelligence play a decisive role. The urban transition driven by the smartening up of our cities and buildings and smarter mobility within our urban environments. The energy transition to cleaner and renewable energy solutions, helping to combat climate change and create a more circular economy. Finally, the Living transition driven by geographic change, new ways of working and innovative solutions to build smarter communities, more affordable housing. We at PATRIZIA believe we are very well positioned to leverage the DUEL megatrends to offer smart and attractive investment solutions to our clients in the coming years. With that, I will hand over to our CFO, Martin Praum.

Thank you, Asoka. Let's continue on Page 11 of the presentation. Asoka mentioned to you and talked about the fundraising activity and investment volumes. And both of these KPIs certainly have an impact on our AUM development, which you can see on Page 11. A slight decline of 1.5% year-on-year. However, for us, there are 2 important messages in this graph. First of all, we bought more than we sold for our clients. So we have net organic growth of EUR 0.7 billion, even in a bottoming-out year. Secondly, valuation impact has come down as well, only minus 0.9%. So we see really a bottoming out of the market. If you look at AUM development on a quarterly or sequential basis, then you will also see that AUM actually increased quarter-on-quarter from Q3 to Q4. As I said before, our investment focus was especially on infrastructure, Living and the multi-manager Advantage investment partners and we rather sold in the segment of office, retail and logistics. How did that impact our AUM split? Today, we reduced our exposure to office by 2 percentage points. We reduced exposure to retail by around 1.5 percentage points, and we increased our exposure to infra by more than 2 percentage points, meaning that meanwhile, around 18% of RM is exposed to infrastructure. Let's go to Page 12 of the presentation. Here, you see the composition of our P&L. As we mentioned in our release, we saw continued pressure on revenues by around 15%, and we counteracted against that with cost reductions of around 11%. Also worth mentioning here is a relatively high contribution from other income. And also, you will see that we continue to work on our cost base. We booked a reorg charge of net close to EUR 11 million in the year '24, which burdened the EBITDA. Perhaps 2, 3 points important to mention on this page. If you look at other income, then this is not simply other income driven by release of provisions, but also in here, there are certain deconsolidation effects which I already mentioned to you during earlier calls. So if you basically compare other income and net sales revenues and core investment income, there are 2 effects in yield growth that actually you should net with each other. In other income, around EUR 14 million is a deconsolidation effect and net sales revenues and co-investment income was burdened by a related effect by EUR 13 million. So actually, the net sales revenues and co-investment income bar should actually be higher and the other income bar should be lower if you analyze our numbers. The same is true for so-called recharges, which had a positive impact on other income, but at the same time, a negative impact on other pillars here, especially in operating expenses. So if you net that off, then you also see probably a more true picture about what was generated and what was one-off. As a general remark on EBITDA, I think we talk about a year in which the market bottomed out, and we safeguarded our EBITDA level, again, despite a reorg charge with EUR 45 million. Also worth mentioning that net income after minorities showed a material improvement year-on-year with over EUR 12 million as reported in today's IR release. Let's have a closer look at revenues on Page 13. Starting with management fees, you'll see a reduction of 9% year-on-year. However, we have to bear in mind that in '23, we had a larger contribution from development service fees for our clients and additionally from debt structuring fees in total, slightly over EUR 8 million. And if you adjust for that, the level that was achieved in these 2 areas in '24 was substantially lower than the decline is rather 5.9%. And these are really late effects of the lower AUM base that came in, in the year '23 versus '22. Transaction fees, stable, also confirming that there's a certain stabilization in the market. And lastly, performance fees, still, we saw a major decline, certainly driven by a new cycle beginning and lower realizations in the market. And as we mentioned before, we still have a good pool of performance fees which we can harvest in the next 2 years. But again, partially here, we are not in the driver's seat in the nondiscretionary mandates that we run. Let's go to the cost side. And I think here is an important message on Page 14. We did reduce costs by around EUR 30 million or 11%, reacting to the 15% revenue drop. We especially worked on head count costs and also on other operating expenses. But if you follow PATRIZIA in the past few years, I think this is the most material improvement in cost efficiency and cost base that the company delivered over the last few years. So we did address the issue and we're starting into the new cycle with a much leaner starting base for profitability. Let's go to Page 15, capital allocation. Here, we give you an overview on balance sheet capital -- on group balance sheet capital that we have invested in certain areas promoting our products, strategic co-investments, seed and warehousing investments. And you can see we, in total, invested close to EUR 470 million historically, which currently has a fair market value of around EUR 840 million. You will also see a certain bias towards residential exposure, which we still very much like because we like the market fundamentals and think that the money is well invested. As you've seen also in the past, we will actively manage that portfolio. And if there are market opportunities, we will increase positions or divest if it's appropriate. On Page 16, a quick update on our balance sheet. You will see that if we start with liquidity, liquidity has come down from the end of last year. However, this was primarily driven by the redemption of a bonded loan tranche. So we delevered the company further on group level. We also did co-investments and also paid the dividend. So these were the major drivers for the change in cash. Unchanged, we still hold around EUR 6.1 million of treasury shares, which are currently worth around EUR 50 million on our balance sheet. In terms of balance sheet ratios, unchanged. We think we have a very strong balance sheet with an equity ratio of 63% and net equity ratio of 69%. And this, then going to the next Page 17, also basically supported us and the Board of Directors in the decision to propose to shareholders in the next AGM an increased dividend of EUR 0.35. First of all, we wanted to deliver on the dividend strategy that we announced last year. Secondly, we think that the strong balance sheet allows such payments. And thirdly, if we look at operating cash flow, once it's published in our annual report it will be around EUR 13 million. However, also driven by special accounting impact, you would want to adjust for certain onetime elements here. And adjusted for that, the operating cash flow was rather in the region of EUR 40 million, so well covering the dividend payment that we propose to our shareholders this year. Lastly, Page 18, the outlook for '25. In terms of AUM, we think with the market bottoming out, with valuation stabilizing and with the growth initiatives we have started, in terms of midpoint growth, we target a 6% growth of AUM. And in terms of profitability, also focusing on further efficiency of the platform and further effects from cost cuttings we have already initiated, we believe that at midpoint in '25, we can grow EBITDA by 11%, then basically talking about a range of EUR 40 million to EUR 60 million. Again, focus will be on organic growth; secondly, on cost ratios, efficiency to deliver this result that we target. And with that, I would like to hand back to the operator to start the Q&A session.

[Operator Instructions]. The first question comes from Andre Remke from Baader Bank.

A couple of questions from my side, please. First, on AUM growth you are targeting for, what is the number of signed transactions as the volume last year, both for acquisitions and disposals? And what share of that has not yet closed in the '24 numbers? This is the first question, please.

Quickly just give me a second, Andre, I'll have that answer right away. The signed transactions was around EUR 2 billion for the year, of which around EUR 1.4 billion acquisitions and EUR 0.7 billion disposals. So also here, we've been net buyer in the market. And as usual, a certain part of that hasn't closed yet, so that will be a positive spillover for the year '25.

Okay. And on the valuation result, did I get it right that you had already a positive contribution in the fourth quarter?

A tiny small positive contribution in the fourth quarter, yes.

So should we expect this to go ahead, i.e., no further pressure on that in the next quarters?

Andre, in our planning, we have not included major valuation effects for '25, but this would certainly be a further supportive item for AUM growth. But in our business planning, it's based on organic growth, so more acquisitions than disposals in '25.

Okay. Perfect. And more in general question, there are some rising uncertainty concerning the higher federal debt and higher interest rates just recently. On the other hand, they are talking about infrastructure spending. Do you see any impact on your business arising from that?

Yes. Andre, I think it's a great question. I think, first of all, we have to look now really clear plans, and you have seen the German 10-year rates has reacted to the announcement effect quite heavily. But I do think we have to see the clear plans. But in general, in my opinion, the demand for infrastructure manifested earlier without these announcements already and very positively as we had outlined. But I do think after that, the investment climate for infrastructure will be much, much more positive. I am expecting, Andre, more programs have to come and have to be placed in the market, private public investments. And that's something we are looking on and very close, but it's too early to say what that will impact -- not impact PATRIZIA's clients and capabilities and also our plans. But in general, I'm seeing that as a positive trend because I think the governments have to contain the long-term rates on a lower levels to finance the budgets and finance and not to have a problem in refinancing of the debt, what they have already. So in my view, generally positive, not -- no precise answer what we can give at the moment because no precise plans are there. But I think in general, infrastructure, one, is very welcome. I do think, by the way, the new government will focus, and you can see in the U.K. government, European governments, but also German government have to focus on also on living sector to create an affordable housing approach to get the more buy-in from the societies is very positive for us if we go there in this direction.

Okay. Excellent. And the third question goes to the available liquidity. This is declining again. You mentioned the co-investments in warehousing. But for the first time, you have a net debt negative or you have a net debt position. What could we expect for this in next year? Will you become more cautious on further deployment of liquidity, at least as long as the already done seed investments are not passed to clients?

Yes, sure, Andre. First of all, and that is also what we're showing on one of the slides 15 in the presentation, we already have a relatively high exposure of our balance sheet capital to certain investment. So we will certainly very closely monitor that and also manage this portfolio more actively. As I said before, this could also mean a certain divestment in certain areas, generating liquidity. Coming to the first part of your question, we expect liquidity and also available liquidity to remain broadly stable, perhaps initially trending down a little bit, but then going up again towards the end of the year.

Okay. Then my last question on the reorg expenses. Do you expect further expenses also this year because the EBITDA of, let's say, midpoint EUR 50 million, this is lower than excluding reorg EBITDA of last year of EUR 56 million. So do you expect a reduction in the profitability?

No, Andre, first of all, we have not planned any reorg costs in our budget '25, but you have to bear in mind that basically, if you adjust for one-offs, then we start at a EUR 20 million lower base due to other income, adjust for the EUR 11 million reorg, then it's around about EUR 10 million lower base than what we have shown here with EUR 45 million. And then basically, the core of the story is that we expect a higher quality of earnings in '25 with the targets that we've given.

Okay. And then very last question maybe. In '23, the impact from the earn-out payments there was roughly EUR 10 million. What was the number for '24? And do you expect any earn-outs this year?

The impact on our numbers '24 was around EUR 5 million in the P&L in Paris. And for '25 and '26, the accounting impact really depends on the target achievement of the infrastructure team. If they deliver a certain level of revenues and profitability, then a certain P&L burden might come into play. And if not, then also the P&L burden in Paris will materialize, but we have digested that in our guidance range.

And this earn-out structure lasts until '26 and ends there or?

Yes, correct.

The next question comes from Jochen Schmitt from Metzler.

I have 3 questions, please. Firstly, on the Dawonia fund, still you have not announced how to finally proceed with the Dawonia fund and the structure of your mandate in the future. And my question is, how has the Dawonia fund been included in your earnings outlook? Second question, does your outlook on '25 include any major nonrecurring items? And third and last question, did staff cost in Q4 include a release of a provision? These are my questions.

Yes. Thank you, Jochen. Let me take them one by one. First of all, Dawonia, we are still in constructive discussions with the investors of that fund. And I think we all agree that we want to extend that very successful mandate and portfolio, in our view, still one of the most successful residential investments in the German market. And also, as we mentioned before, it's a larger group of investors that we need to align for the extension, which simply takes a little while. But also here, in terms of performance of Dawonia, we are still very happy with the exposure. And also here, we've seen a valuation stabilization in the second half of the year. We have included a certain amount of Dawonia contribution in '25, specifically the profit participation and also the return on our 5% co-investment in the company as usual. Second point, no, we do not have included any nonrecurring items in the budget '25. And your last question was on staff costs, right?

Yes, exactly. It looks like Q4 delivered a relatively low number. So the question was, was there a release of a provision?

Yes. Sorry. The improvement in profitability in the fourth quarter also came from lower staff cost, as you know, in the quarters 1 to 3, we still assumed 100% bonus pool. And after the final target achievement, this was reduced in the fourth quarter and hence also helped to lower the [ Parex ] for the full year.

[Operator Instructions] The next question comes from Kai Klose from Joh. Berenberg, Gossler & Co. KG.

I've got 3 questions, if I may. The first one is on Page 13. Could you remind us what was the performance fee contribution in '23 and '24 from Dawonia? Second question is on the Page 11 regarding redemptions, which were EUR 0.9 billion last year, EUR 0.6 billion this year. What do you expect for '25? And the third question is regarding the dividend. Could you indicate maybe already what is the underlying EPS, which you use as underlying for the dividend decisions? So the question is, is the dividend covered or not?

Yes. Thank you, Kai. Let me start with the last one. In terms of EPS, we talk about EUR 0.14 per share out of my head. And so the dividend is, as I mentioned before, is not covered by EPS, but it's covered by operating cash flow. And as we said in our dividend policy, longer term, we want to have the dividend payments covered by our net income as well. As you might remember, in our net income, we have some special effects, for example, from the annual amortization of fund management contracts, which is noncash items, which has an impact of around EUR 11 million on our numbers. That is something you should bear in mind when it comes to dividend payout. In terms of redemptions, it is not only redemptions, but also cash flows paid to clients. So this is basically the annual dividends out of the funds paid to clients, which lowers the AUM base. And I think with the market bottoming out, something between EUR 0 and EUR 0.5 billion could be an assumption for payments in '25. And your last question was on the Dawonia impact in '24, the performance fee had an impact of around EUR 15 million.

Maybe to follow up on that. And what was the Dawonia '23? Second question, what were the real redemptions when I say it was redemptions and payouts to clients? What was the amount of redemptions in '24? And what do you expect for '25?

Okay. First of all, on Dawonia in '23, the impact was close to EUR 20 million. And in terms of real redemptions, we would really only talk about a handful of potential redemptions. So it's really not material in our view. But as we speak, Kai, I just want to make one addition to the question of Jochen Schmit before about the '25 budget. And I actually mentioned that you could argue that there is one-off included in '25, and this is the different accounting treatment for Whitehelm, which could burden Parex. And this is something that you could treat as if you look at the numbers. I hope that answered all of your question.

Maybe one sorry, maybe one last one from my side. What number you apply as you mentioned, operating cash flow was the reported number is operating cash flow per share for the dividend '23 and '24?

If you look at the stated operating cash flow in '24, then you would talk about EUR 0.14. But as I said, if you adjust because in this operating cash flow P&L accounting driven are certain onetime effects, if you would exclude that, then we would talk about an operating cash flow of EUR 40 million. So that would be EUR 0.43 around about as a basis.

The next question comes from Philipp Kaiser from Warburg Research GmbH.

Starting with just an understanding one on Slide 4, the target of the equity, the added up volume until 2030 for each of those growth areas adding up to EUR 30 billion. Is that right?

Yes, absolutely. And again, you have -- yes, you want to continue?

Yes. And when do you expect that the equity raise significantly speed up until 2030?

Yes. I do think -- look, in my opinion, '25, as I said, first half of the year is still sluggish. Last week or 2 weeks ago, we had in South France, the meeting. You can see there's interest, as I said, for transactions. They are looking -- many, many investor is looking for opportunities, also global investors in Europe, but they are not that confident that they will invest immediately next weeks and next month. I do think the second half of the year will show more, in my opinion, momentum and traction, but '26 and '27. And I do think in other plans, from '26 we are expecting more comfort is coming in to invest. That means real estate in all the 2 areas, as I said, in Living sector is, in my opinion, an evergreen now for the next 6, 7, 8 years, there's a backlog, a huge backlog in the societies and industry and politicians promise so much they have to deliver some way something. That's the one thing. And the second topic, I think Value Add, that's the name of the game as a risk class, what people are looking for because also with the higher, let me say, stabilized higher rates than 4, 5 years ago means I do think, first, there's opportunities in living, value-add people we are looking in -- there will be also logistics is not much, but I think offices will come in some years. So I do think from 27th on, we will see much more momentum in this cycle. But this cycle will be different than the last cycle. That means people will look -- have to look much more now, first of all, IRR perspective, they have to take. There is a more volatility in the market. And this cycle, we don't know the length will be not again 10 years plus. So therefore, I do think I'm expecting '27 will be a market what we can see as a great stronger momentum into our plan to EUR 100 billion. Again, we have a revaluation in and we have the EIP platform -- the clubbing platform in Copenhagen, what I mentioned is also bringing a part of the AUMs in. So our 2 layers, Real Estate, but also Infrastructure are the driver of the AUMs, but also, in my opinion, also for the top line is important.

Perfect. With regards to Page 18 and your guidance, you also stated that you expect to pick up gradually in the second half of this year. Are there any signs, hard facts for this pickup? And what of this pickup is already included in your AUM guidance? Do you need a certain pickup to achieve the lower end? Or is it like the pickup we spoke about the midpoint or the upper end to get a feeling what's already included and what do you see in the market already?

Certainly, first of all, we have a certain pipeline that's building up. And if you look at the growth to reach the lower end, that's EUR 1.6 billion of AUM growth that we need to deliver. And again, we were actually thankful and it's good we made the strategic acquisitions that we can offer our clients a broad product offering. So we're not only a monoline anymore, but we can offer infra. Especially value add is much more in the spot right now. And this is where we have interesting discussions with clients that are opening up to new investment ideas, and that's really supporting our view of how the year could run. No doubt, the recent German bazooka has had some impact on yields, on bond yields and many see that as a smaller shock to the market. But you also see that the market is digesting that the 10-year bond is also slowly coming back again because the market understands that there's not going to be EUR 500 billion issuance overnight in Germany and also this money will not hit the economy overnight. So interest rates, yes, do play a major role for our business, no doubt. But at the end of the day, it's more do we deliver solutions that our clients need? And this is exactly in the DUEL megatrends that Asoka mentioned, this is where demand is building up, and that's what we are convinced of.

Perfect. You already mentioned your pipeline. Will this current pipeline, bridge the gap between full year 2024 and the lower end of 2025 guidance already if you just execute this pipeline? Or do you need a certain pickup to reach the lower end?

No, we would not. It's not already locked in at this stage. We would need a certain element of new business. But I think that this bread and butter business are normal, especially for this part of the cycle.

Okay. Perfect. Then it comes to the staff costs down 30%. And you already mentioned that the most material achievement. Do you see any further potential perfect with the exact number, but I don't get it, I guess. So but kind of a feeling how much more inefficiency might be or can be reduced in the next couple of years or from the personnel expenses of your staff base? Are you as lean as possible once the market comes back?

Yes. Thank you for the question. First of all, I can confirm that our budget and guidance for '25 is not based on significant increase in revenues. As we said before, it's an assumption for a modest recovery biased towards the second half from that, that you can derive that, yes, we see further efficiency potential on the cost side, especially you will see that some of the measures we have taken will only come into full effect in '25 because there's always a time when you reduce staff, and that is something which will benefit in the '25. And also, I mentioned that before, we took a reorg charge in the fourth quarter of last year. And also from that, where we see some cost savings potential that will impact '25.

Okay. So, overall effect, looking at the entire cost base, same potential as last year possible?

What do you mean with the same potential? You mean that we can reduce cost by another EUR 30 million? I think this would probably be a little bit over-aggressive, but I think we can confirm that a downward trend in cost is something that we certainly have as our internal ambition.

[Operator Instructions] The next question comes from Manuel Martin from ODDO BHF.

Two questions from my side, please. A follow-up question on the guidance for the full year 2025. The AUM guidance points to an increase in assets under management from EUR 56 billion reached in 2024 up to EUR 58 billion minimum in the guidance. While the EBITDA guidance leaves a bit room to the downside, not a lot, I must say, but EUR 40 million low point would be below the EUR 45 million achieved in 2024. Could there be another negative aspect coming into the P&L despite growing AUM? Maybe you can elaborate a bit on this, please?

Sure, Manuel. If you look at the composition of our results in '24, and I mentioned that before, you had this element of other income and part of that was recurring and part of that was non-recurring. And in our budget, we have assumed a much lower, rather close to 0 impact from other income. So basically, you have to catch up for that, and that implies a certain growth in business driven by equity raise, driven by investments and driven by AUM growth. So it's by no means we talk of profitability, rather the target for higher quality of income in '25.

Okay. I see. Second and last question, on a follow-up question on the staff costs. The efficiencies you gained in 2024 regarding staff costs. Could you give us some details on the fields where you achieved these redundancies, whether it's concerned purely, I don't know, middle office, back office or also a bit front office? Maybe you can give us a flavor there, please.

Yes. Since 2023, we reduced more than 100 FTEs if you look into that. But that is now I think it is more than 100. But I do think what we have focused in '24 since we also installed our new investment platform, but also new organization, we took nearly 10% of our senior management people, we reduced. It's important, in my opinion, also for the messaging for the organization. That's one thing. We reduced the complexity. We had created now bigger teams. We look no -- we are creating more platforms. We are integrating more all that duplication, all that has led that we really reduce our staff costs. We will further refine that all. And I think middle and back offices, we reduced more in '23 than in '24. '24 was more due to the reorg of the organization since July, what we started. So I think in '23, as I said, middle back now in refinement on also in the senior management levels.

The next and last question is a follow-up from Kai Klose, Berenberg.

Sorry, it's me again. I've got 1 last question on Page 21 of the presentation regarding the balance sheet structure. Do you intend to sell the real estate logistics portfolio and the 2 value-add offices in '25? And the second question on that, what have you budgeted as warehousing assets for this year?

Kai, we haven't made a decision on that, so we can't comment on whether and when we want to sell that. As I said, we will closely have a close look at the exposure, and we do that on a regular basis. We look where the market develops and when there are good opportunities, then we'll execute. And for the time being, I would assume that, again, the warehousing exposure will stay rather stable with smaller changes throughout the year.

Ladies and gentlemen, this concludes our Q&A session. I would now like to turn the conference back over to Martin Praum for any closing remarks.

Thank you, everyone, for listening in and for all the questions that you had. We very much look forward to discussing further with you during the coming conferences and roadshows and hope to speak and see you then. Thank you, everyone. Have a good day. Bye-bye.

Thank you.