Q1 2026 LEG Immobilien AG Earnings Call

Frank Kopfinger: Frank Kopfinger, as well as our COO, Volker Wiegel. You'll find the presentation document as well as the quarterly report and documents within the IR section of our homepage. Please note that there is also a disclaimer, which you'll find on page 2 of our presentation. Without further ado, I hand it over to you, Lars.

Speaker #1: Kuhling, as well as our COO, Volker Wiegel. You'll find the presentation document as well as the quarterly report and documents within the IR section of our homepage.

Speaker #1: Please note that there is also a disclaimer which you'll find on page 2 of our presentation. And without further ado, I hand it over to you, Lars.

Speaker #2: Thank you, Frank. Good morning, everyone, and thank you for joining our analyst and investor call today. Our message today is short and unambiguous. LEG is fully on track to deliver its 2026 targets.

Lars von Lackum: Thank you, Frank. Good morning, everyone, and thank you for joining our analyst and investor call today. Our message today is short and unambiguous. LEG is fully on track to deliver its 2026 targets. Rent growth, EBITDA margin, AFFO, and LTV are all moving within or towards guidance, and they are doing so on the back of the same disciplined operating model you have come to expect from us. Like-for-like rent growth came in at 3.7% on a clear path into our guidance corridor of 3.8% to 4%. The EBITDA margin expanded by 180 basis points to 77.4%, underlying the operational leverage of our platform. AFFO, our core steering metric, came in at EUR 58.6 million, fully confirming our full year guidance range.

Speaker #2: Rent growth, EBITDA margin, AFFO, and LTV are all moving within or towards guidance, and they are doing so on the back of the same disciplined operating model you have come to expect from us.

Speaker #2: Like-for-like rent growth came in at 3.7% on a clear path into our guidance corridor of 3.8 to 4%. The EBITDA margin expanded by 180 basis points to 77.4%, underlying the operational leverage of our platform.

Speaker #2: And AFFO, our core steering metric, came in at 58.6 million euros fully confirming our full-year guidance range. As a brief cross-check, operating cash flow developed in line with this picture, rising by 14.5% year on year.

Lars von Lackum: As a brief crosscheck, operating cash flow developed in line with this picture, rising by 14.5% year-on-year. Let me address the AFFO line directly because I expect questions on it. AFFO is slightly below last year, and the bridge is purely a timing and phasing effect. Two drivers. First, a deliberately more linear CapEx profile in 2026 versus a Q1 heavy ramp-up in 2025 on the back of the BCP integration. Second, a modest step up in cash interest as new financings are written at current rates. The investment spending is a phasing pattern, not a quality of earnings issue. Underlying cash generation, margin development, and rent growth all confirm the trajectory, and we therefore reiterate the full year AFFO range without any reservation. On valuation, we remain cautiously constructive for H1.

Speaker #2: Let me address the AFFO line directly because I expect questions on it. AFFO is slightly below last year, and the bridge is purely a timing and phasing effect.

Speaker #2: Two drivers. First, a deliberately more linear CapEx profile in 2026 versus a Q1 heavy ramp-up in 2025 on the back of the BCP integration.

Speaker #2: Second, a modest step-up in cash interest, as new financings are written at current rates. The investment spending is a phasing pattern, not a quality of earnings issue.

Speaker #2: Underlying cash generation, margin development, and rent growth all confirm the trajectory, and we therefore reiterate the full-year AFFO range without any reservation. On valuation, we remain cautiously constructive for H1.

Speaker #2: A flat-to-slightly positive result of up to plus 1%. Momentum may soften somewhat, as transaction volume stays subdued and buyers remain on the sidelines. But we do not see a reversal of the trend.

Lars von Lackum: A flat to slightly positive result of up to +1%. Momentum may soften somewhat. A transaction volume stays subdued and buyers remain on the sidelines. We do not see a reversal of the trend. LTV improved by 60 basis points to 46.2%, driven by disciplined cash generation and lower net debt. Our 45% target remains in reach. It has become more ambitious in the current environment. The direction of travel is unchanged, and the cash flow engine that gets us there is intact. Let me now turn to Slide 6. Slide 6 captures in one picture where LEG continues to stand out in a sector where the quality of earnings is increasingly being questioned. 5 points. First, the market. We operate against a backdrop of geopolitical tension, capital market volatility, and sticky deflation risk.

Speaker #2: LTV improved by 60 basis points to 46.2%, driven by disciplined cash generation and lower net debt. Our 45% target remains in reach. It has become more ambitious in the current environment.

Speaker #2: But the direction of travel is unchanged, and the cash flow engine that gets us there is intact. Let me now turn to slide 6.

Speaker #2: Slide 6 captures in one picture why LEG continues to send out in a sector where the quality of earnings is increasingly being questioned. Five points.

Speaker #2: First, the market. We operate against a backdrop of geopolitical tension, capital market volatility, and stagflation risk. Yet the structural driver of our business, the German housing shortage, is not cyclical.

Lars von Lackum: Yet the structural driver of our business, the German housing shortage, is not cyclical. Demand exceeds supply by a wide and widening margin. New construction continues to slow. Household numbers continue to rise even as net immigration flattens. LEG is positioned squarely in affordable housing in North Rhine-Westphalia, Germany's largest state by population and GDP. That is what underpins the durability of our cash flows. Second, the balance sheet. Here I want to be quantitative rather than narrative. Our 2026 maturities are fully covered on a pro forma basis. Liquidity stands at more than EUR 500 million. Our hedging ratio is around 98%. Our interest coverage ratio is at 4.2 times, comfortably above covenant requirements and strong in sector context. Average debt cost remains at 1.8%, a level few of you had in your forward models.

Speaker #2: Demand exceeds supply by a wide and widening margin. New construction continues to slow, household numbers continue to rise, even as net immigration flattens. LEG is positioned squarely in affordable housing in North Rhine-Westphalia, Germany's largest state-by-population and GDP.

Speaker #2: That is what underpins the durability of our cash flows. Second, the balance sheet. And here I want to be quantitative rather than narrative. Our 2026 maturities are fully covered on a proforma basis.

Speaker #2: Liquidity stands at more than 500 million euros. Our hedging ratio is around 98%. Our interest coverage ratio is at 4.2 times. Comfortably above covenant requirements and strong in-sector context.

Speaker #2: Average debt cost remains at 1.8%, a level few of you had in your forward models. The next sizable maturity is the 500 million euro bond in November 2027, which gives us the option to refinance gradually rather than under pressure.

Lars von Lackum: The next sizable maturity is the EUR 500 million bond in November 2027, which gives us the option to refinance gradually rather than under pressure. This is what genuine financing resilience looks like, measured in numbers, not objectives. Third, cash discipline. AFFO remains our core steering metric, and as long as we steer the company on AFFO, you have the assurance that we will not relever. The underlying cash dynamics support this approach. Operating cash flow rose by 14.5% in the quarter. It is AFFO, with its full deduction of investments, that anchors our capital allocation. Every additional euro of spending is benchmarked against a strict hurdle rate-driven investment logic. That same discipline is what preserves the firepower for selective opportunities when they arise, as we did with BCP. Fourth, strategic focus.

Speaker #2: This is what genuine financing resilience looks like. Measured in numbers, not objectives. Third, cash discipline. AFFO remains our core steering metric and, as long as we steer the company on AFFO, you have the assurance that we will not relever.

Speaker #2: The underlying cash dynamics support this approach. Operating cash flow, rose by 14.5% in the quarter. But it is AFFO, with its full deduction of investments, that anchors our capital allocation.

Speaker #2: Every additional euro of spending is benchmarked against a strict, hurdle-rate-driven investment logic. That same discipline is what preserves the firepower for selective opportunities when they arise.

Speaker #2: As we did with BCP. Fourth, strategic focus. We do what we are good at: managing value-creating assets in the affordable segment. We do not tie up capital in riskier, more capital-intensive businesses.

Lars von Lackum: We do what we are good at: managing value, creating assets in the affordable segment. We do not tie up capital in riskier, more capital-intensive businesses. Our disposal policy remains prudent. Non-core only at or above book value. The proposed scrip dividend supports the same logic, proactively strengthening the balance sheet versus a full cash dividend. Fifth, growth. As outlined at our full year call, we expect AFFO to grow by around 5% in the medium term. The drivers are tangible. Subsidized units coming off restriction in 2028 will add around 1 percentage point to rent growth. Green Ventures target approximately EUR 20 million contribution by 2028 on an aggregated basis. Digitalization and IR initiatives will deliver some EUR 10 million of efficiency gains by 2030. Together, these more than offset the refinancing headwinds we will face as we adjust to current rate levels.

Speaker #2: Our disposal policy remains prudent. Non-core only, at or above book value. The proposed script dividend supports the same logic. Proactively strengthening the balance sheet versus a full cash dividend.

Speaker #2: Fifth, growth. As outlined at our full-year call, we expect AFFO to grow by around 5% in the medium term. The drivers are tangible. Subsidized units coming off restriction in 2028 will add around 1 percentage point to rent growth.

Speaker #2: Green ventures target approximately 20 million euros contribution by 2028 on an aggregated basis. Digitalization and IR initiatives will deliver some 10 million euros of efficiency gains by 2030.

Speaker #2: Together, these more-than-offsets, the refinancing headwinds, we will phase as we adjust to current rate levels. So if you take one message away from this chart, business model continues to perform exactly as designed.

Lars von Lackum: If you take one message away from this chart, take this one: LEG's business model continues to perform exactly as designed. Predictable like-for-like rent growth, an expanding EBITDA margin, disciplined AFFO steering, and a quantitatively robust balance sheet. Our cash flow resilience is demonstrated by AFFO-based steering, fully covered financing, and a stable vacancy rate. In our view, that is the right lens through which to assess quality in our sector today. Cash resilience and discipline, not adjustments. It is a combination that remains rare in the current environment, and it positions us exceptionally well for the remainder of 2026 and beyond. Let's move to slide 7. After 3 months, we are well on track for our 2026 guidance and operational performance remains rock solid. Net quote rent grew by 3.3%, driven by strong like-for-like growth, partially offset by disposal effects.

Speaker #2: Predictable, like-for-like rent growth, an expanding EBITDA margin, disciplined AFFO steering, and a quantitatively robust balance sheet. Our cash flow resilience is demonstrated by AFFO-based steering, fully covered financing, and a stable vacancy rate.

Speaker #2: In our view, that is the right lens through which to assess quality in our sector today. Cash resilience and discipline not adjustments. It is a combination that remains rare in the current environment and positions us exceptionally well for the remainder of 2026 and beyond.

Speaker #2: Let's move to slide 7. After three months, we are well on track for our 2026 guidance and operational performance remains rock solid. Net cold rent grew by 3.3%, driven by strong like-for-like growth, partially offset by disposal effects.

Speaker #2: The EBITDA margin improved by 180 basis points year on year to 77.4%. AFFO came in at 58.6 million euros, slightly below last year but, as I just outlined, this reflects a different investment phasing, not a change in earnings quality.

Lars von Lackum: The EBITDA margin improved by 180 basis points year on year to 77.4%. AFFO came in at EUR 58.6 million, slightly below last year. As I just outlined, this reflects a different investment phasing, not a change in earnings quality. We are bang in line with our guidance range. The same applies to FFO I, which we know remains an important reference for many of you. With this short overview, I hand over to Volker for the operational highlights.

Speaker #2: We are bang in line with our guidance range. The same applies to FFO1, which we know remains an important reference for many of you.

Speaker #2: With this short overview, I hand over to Volker for the operational highlights.

Speaker #1: Thank you, Lars, and good morning, everyone. Let me start with the rent development on slide 8. On a like-for-like basis, our average rent per square meter rose by 3.7% year on year reaching 7 euros and 15 cents.

Volker Wiegel: Thank you, Lars, and good morning, everyone. Let me start with the rent development on slide 8. On a like-for-like basis, our average rent per square meter rose by 3.7% year on year, reaching EUR 7.15. Pre-financed units continued to benefit from strong market momentum, achieving rental growth of 3.8%. By market segment, the range goes from a solid 3.5% in higher yielding markets to 4% in stable markets. This clearly underlines our operating strength and the resilience of the portfolio. 2026 is a cost rent adjustment year. As a reminder, we can adjust the cost rent for subsidized units every 3 years based on CPI development. This adjustment took place in Q1 and translated into a 3.3% like-for-like increase across our subsidized portfolio of around 30,000 units.

Speaker #1: Free-financed units continued to benefit from strong market momentum, achieving rental growth of 3.8%. By market segment, the range goes from a solid 3.5 in higher-yearing markets to 4% in stable markets.

Speaker #1: This clearly underlines our operating strength and the resilience of the portfolio. 2026 is a cost-rent adjustment year. As a reminder, we can adjust the cost-rent for subsidized units every three years, based on CPI development.

Speaker #1: This adjustment took place in Q1 and translated into a 3.3% like-for-like increase across our subsidized portfolio of around 30,000 units. On the breakdown of rental drivers, rent tables were the strongest contributor, accounting for 1.9 percentage points of the 3.7% like-for-like growth.

Volker Wiegel: On the breakdown of rental drivers, rent tables were the strongest contributor, accounting for 1.9 percentage points of the 3.7% like-for-like growth. Modernization and reletting added 1.3 percentage points, and the cost rent adjustment contributed 0.5 percentage points across the total portfolio. We continue to monitor new rent tables closely, and you will find our outlook on slide 24 in the appendix. To give some color, the new table for Mönchengladbach implies an uplift of around 6% for a typical LEG apartment. The table for Unna in Westphalia, an uplift of around 8%. All in all, we are well on track to deliver on our rental guidance for full year 2026. Finally, on like-for-like vacancy, we kept the rate stable at the previous year's low level of 2.4%.

Speaker #1: Modernization and reletting added 1.3 percentage points, and the cost-rent adjustment contributed 0.5 percentage points across the total portfolio. We continue to monitor new rent tables closely and you will find our outlook on slide 24 in the appendix.

Speaker #1: To give some color, the new table for managing Gladbach implies an uplift of around 6% for a typical LEG apartment. The table for Una in Westfalia an uplift of around 8%.

Speaker #1: All in all, we are well on track to deliver on our rental guidance for full year 2026. Finally, on a like-for-like on like-for-like vacancy, we kept the rate stable at the previous year's low level of 2.4%.

Speaker #1: Moving to investments on slide 9. In the first quarter, adjusted investments amounted to 98 million or 8 euros 82 cents per square meter, roughly a quarter of the full year volume which we expect to come in at more than 35 euros per square meter in line with guidance.

Volker Wiegel: Moving to investment on slide 9. In the Q1, adjusted investments amounted to EUR 98 million or EUR 8.82 per square meters, roughly a quarter of the full year volume, which we expect to come in at more than EUR 35 per square meter in line with guidance. Beyond the absolute level, we are deliberately steering towards a more evenly quarterly distribution in 2026. Last year, this was only partially possible as BCP had not yet been fully integrated in Q1. As a result, our Q1 2026 investments came in 17% above the prior year quarter. You will find an illustration of past quarterly investments patterns on the following slide. For 2026, please assume a markedly more even distribution across the year.

Speaker #1: Beyond the absolute level, we are deliberately steering towards a more evenly quarterly distribution in 2026. Last year, this was only partially possible as BCB had not yet been fully integrated in Q1.

Speaker #1: As a result, our Q1 2026 investments came in 17% above the prior year quarter. You will find an illustration of past quarterly investments patterns on the following slide.

Speaker #1: For 2026, please assume a marketly more even distribution across the year. On the composition, in Q1 2026, CAPEX accounted for 52.8 million or 4 euros 75 cents per square meter, while maintenance came in at 45.2 million euros or 4 euros and 7 cents per square meter.

Volker Wiegel: On the composition in Q1 2026, CapEx accounted for EUR 52.8 million or EUR 4.75 per square meters, while main-maintenance came in at EUR 45.2 million or EUR 4.07 per square meter. Our CapEx rate rose by 1 percentage point to 54%. Let's now turn to disposals on slide 11. Year to date, we have completed or signed sales for around 1,000 units with total proceeds of EUR 74 million. Of these, around 250 units were transferred in Q1 for around EUR 80 million. The remaining around 750 units of gross proceeds of around EUR 56 million are due to be transferred from Q2 onwards. Disposals were generally executed at or above book value, this is a deliberate and important point. We sell only non-core and only at or above book.

Speaker #1: Our cap rate rose by 1 percentage point to 54%. Let's now turn to disposals on slide 11. Year-to-date, we have completed or signed sales for around 1,000 units, with total perceived of 74 million euros.

Speaker #1: Of these, around 250 units were transferred in Q1 for around 18 million euros. The remaining around 750 units of gross proceeds of around 56 million euros are due to be transferred from Q2 onwards.

Speaker #1: Disposals were generally executed at or above book value, and this is a deliberate and important point. We sell only non-core, and only at or above book.

Speaker #1: Disposals serve our LTV management, not our earnings. You will not find recurring sales contributions during doing the heavy lifting in our P&L or in our cash generation.

Volker Wiegel: Disposals serve our LTV management, not our earnings. You will not find recurring sales contributions doing the heavy lifting in our P&L or in our cash generation. That is what makes our disposal contribution to LTV reduction credible and repeatable rather than opportunistic. Against the backdrop of a German residential transaction market characterized by fewer large volume deals and limited international investor activity. Additional context on slide 33 in the appendix. We remain confident in delivering on our disposal program. Our flexibility to offer smaller portfolios or even individual multi-family houses tailored to buyer needs is a structural advantage in the current markets. The total disposal program still comprised up to 5,000 units, including approximately 1,400 units in Eastern Germany. With this, I hand over to Kathrin Köhling.

Speaker #1: That is what makes our disposal contribution to LTV reduction credible and repeatable rather than opportunistic. Against the backdrop of a German residential transaction market characterized by fewer large volume deals and limited international investor activity, additional context on slide 33 in the appendix, we remain confident in delivering on our disposal program.

Speaker #1: Our flexibility to offer smaller portfolios or even individual multifamily houses tailored to buyer needs is a structural advantage in the current markets. The total disposal program is still comprised of up to 5,000 units including approximately 1,400 units in Eastern Germany.

Speaker #1: With this, I hand over to Kathrin.

Speaker #2: Thank you, Volker, and a warm welcome from my side as well. Let's turn to slide 12 and the AFF All Bridge for the first quarter.

Kathrin Köhling: Thank you, Volker, and a warm welcome from my side as well. Let's turn to slide 12 and the AFFO bridge for Q1. I will focus on the main movements. Net cold rent increased by EUR 7.6 million. Rent growth contributed EUR 8.9 million, partly offset by a EUR 1.3 million disposal effect. Net cash interest rose by EUR 3.7 million. This reflects both lower interest income from our liquidity position as well as the gradual upward reset of refinancing costs. The main reason for the slight year-on-year decline in AFFO was the higher level of investments, as Lars and Volker already explained. Importantly, this is a phasing effect, not a structural one. With AFFO of EUR 58.6 million, we are firmly on track for our full year guidance.

Speaker #2: I will focus on the main movements. Net called rent increased by 7.6 million euros. Rent growth contributed 8.9 million euros. Partly offset by a 1.3 million euro disposal effect.

Speaker #2: Net cash interest rose by 3.7 million euros. This reflects both lower interest income from our liquidity position as well as the gradual upward reset of refinancing costs.

Speaker #2: The main reason for the slight year-on-year decline in AFF All was the higher level of investments as last and Volker already explained. Importantly, this is a phasing effect, not a structural one.

Speaker #2: With AFF All of 58.6 million euros, we are firmly on track for our full year guidance. Slide 13 shows the key facts on our financing structure.

Kathrin Köhling: Slide 13 shows the key facts on our financing structure, and I want to spend a moment on this because this is where the resilience of LEG is most visible. Loan to value declined by 220 basis points versus Q1 2025, driven mainly by valuation effects and supplemented by disposals. Versus year-end 2025, LTV came down by 60 basis points, supported by strong cash generation and positive CapEx effects. Net debt fell by almost EUR 100 million, supported by two complementary sources. First, our recurring operating performance. It is reflected in disciplined AFFO steering and healthy operating cash flow. Second, our disposal program. While large volume transactions have clearly slowed market wide, our ability to place smaller portfolios and individual multi-family houses gives us continued execution capability where others may struggle.

Speaker #2: And I want to spend a moment on this because this is where the resilience of LEG is most visible. Loan-to-value declined by 220 basis points versus Q1 2025.

Speaker #2: Driven mainly by valuation effects and supplemented by disposals. Versus year-end 2025, LTV came down by 60 basis points, supported by strong cash generation and positive CAPEX effects.

Speaker #2: Net debt fell by almost 100 million euros. Supported by two complementary sources. First, our recurring operating performance. It is reflected in disciplined AFF All steering and healthy operating cash flow.

Speaker #2: Second, our disposal program. While large volume transactions have clearly slowed market-wide, our ability to place smaller portfolios and individual multifamily houses gives us continued execution capability where others may struggle.

Speaker #2: Over the medium term, this disposal stream is set to become a larger structural contributor to deleveraging, supported by a remaining pipeline of up to 5,000 units.

Kathrin Köhling: Over the medium term, this disposal stream is set to become a larger structural contributor to deleveraging, supported by a remaining pipeline of up to 5,000 units. Both levers work hand in hand, a recurring operating engine that funds the business and a targeted disposal program that takes leverage down structurally, even in a transaction market that is anything but easy. The average interest cost stood at 1.8%, 25 basis points above Q1 2025, and 14 basis points above year-end 2025. The average maturity slightly increased to 5.8 years, supported by around EUR 350 million of refinancing closed in Q1 at an average maturity of 9.5 years and an average interest rate of 3.8%. In 2026, debt of EUR 233 million will mature almost entirely in Q2.

Speaker #2: Both levers work hand in hand. A recurring operating engine that funds the business and a targeted disposal program that takes leverage down structurally. Even in a transaction market that is anything but easy.

Speaker #2: Leverage interest costs stood at 1.8%. 25 basis points above Q1 2025 and 14 basis points above year-end 2025. The average maturity slightly increased to 5.8 years supported by around 350 million euros of refinancing closed in Q1 at an average maturity of 9.5 years and an average interest rate of 3.8%.

Speaker #2: In 2026, debt of 233 million euros will mature. Almost entirely in Q2. With cash and cash equivalents of 508 million euros at the end of Q1, our 2026 maturities are fully covered on a performer basis.

Kathrin Köhling: With cash and cash equivalents of EUR 508 million at the end of Q1, our 2026 maturities are fully covered on a pro forma basis. The next material maturity is a EUR 500 million bond in November 2027. Our interest coverage ratio stood at 4.2 times, comfortably above the level required by our bond covenants. We also have ample headroom on all other bond covenants. The full overview is in the appendix for those interested. As Lars mentioned, we will most likely again offer shareholders the option of a scrip dividend. Assuming an acceptance rate broadly in line with last year's 38% and all else being equal, this would retain approximately EUR 85 million of liquidity within the company and have a positive LTV impact of around 40 basis points.

Speaker #2: The next material maturity is a 500 million euro bond in November 2027. Our interest coverage ratio stood at 4.2 times comfortably above the level required by our bond governance.

Speaker #2: We also have ample headroom on all other bond governance. The full overview is in the appendix for those interested. As last mentioned, we will most likely again offer shareholders the option of a script dividend.

Speaker #2: Assuming an acceptance rate broadly in line with last year's 38% and all else being equal, this would retain approximately 85 million euros of liquidity within the company and have a positive LTV impact of around 40 basis points.

Speaker #2: In an environment where the transaction markets remain difficult and rate movements can affect valuations, the script dividend is a deliberate balance sheet management tool.

Kathrin Köhling: In an environment where the transaction markets remain difficult and rate movements can affect valuations, the scrip dividend is a deliberate balance sheet management tool. In summary, the balance sheet is resilient, the maturity profile is well structured, and we operate from a strong financing position with ample flexibility going forward. With that, back to Lars.

Speaker #2: In summary, the balance sheet is resilient, the maturity profile is well-structured, and we operate from a strong financing position with ample flexibility going forward.

Speaker #2: With that, back to last.

Speaker #3: Thank you, Kathrin. Let me close with our 2026 guidance summarized on slide 14, which I am happy to fully reconfirm today. We expect a further improvement in cash generation with AFF All between 220 and 240 million euros.

Lars von Lackum: Thank you, Catherine. Let me close with our 2026 guidance summarized on slide 14, which I am happy to fully reconfirm today. We expect a further improvement in cash generation with AFFO between EUR 220 million and EUR 240 million. Continued growth on top of a strong 2025. FFO I is expected at EUR 475 million to EUR 495 million, supported by an adjusted EBITDA margin of around 78%. Our operational drivers, rent growth, and investment are likewise reconfirmed. On valuation for H1, a flat to slightly positive result of up to +1% with momentum potentially softening as transaction volumes remain subdued. The one area where we acknowledge sensitivity is LTV. Depending on the trajectory of inflation, interest rates, and the transaction market, our 45% target may become more challenging in its precise timing.

Speaker #3: Continued growth on top of a strong 2025. FFA One is expected at 475 to 495 million euros, supported by an adjusted EBITDA margin of around 78%.

Speaker #3: Our operational drivers, rent growth, and investments are likewise reconfirmed. On valuation for H1, a flat-to-slightly positive result of up to plus 1% with momentum potentially softening as transaction volumes remain subdued.

Speaker #3: The one area where we acknowledge sensitivity is LTV. Depending on the trajectory of inflation, interest rates, and the transaction market, our 45% target may become more challenging in its precise timing.

Speaker #3: Let me therefore be precise on this point. Circa 45% remains our clear commitment, and we have the levers to get there in our own hand.

Lars von Lackum: Let me therefore be precise on this point. Circa 45% remains our clear commitment, and we have the levers to get there in our own hand. AFFO based steering, a disciplined disposal program, and the scrip dividend as an additional balance sheet instrument. What we will not do is force the LTV down through value destructive disposals or through actions that would compromise the long term cash generation capacity of the business. Our deleveraging will be done on quality and on our own terms, not under pressure. To sum it up, LEG remains on a clear and consistent path, generating reliable cash flow discipline, and building long term value for shareholders and tenants alike. Cash flow remains king, and AFFO remains the right steering metric for our business.

Speaker #3: AFF All, based steering, a disciplined disposal program, and the script dividend as an additional balance sheet instrument. What we will not do is force the LTV down through value-destructive disposals or through actions that would compromise the long-term cash generation capacity of the business.

Speaker #3: Our deleveraging will be done on quality and on our own terms, not under pressure. To sum it up, LEG remains on a clear and consistent path, generating reliable cash flow, discipline, and building long-term value for shareholders and tenants alike.

Speaker #3: Cash flow remains king, and AFF All remains the right steering metric to for our business. Our 2026 guidance reconfirms the strength and the resilience of our model, measured again in numbers rather than narratives.

Lars von Lackum: Our 2026 guidance reconfirms the strength and the resilience of our model, measured again in numbers rather than narrative. With that, we conclude the presentation and look very much forward to your questions.

Speaker #3: With that, we conclude the presentation and look very much forward to your questions.

Speaker #1: Thanks, Lars, and with this, we begin the Q&A session, and we hand it over to you, Vicky, to guide us through the Q&A.

Frank Kopfinger: Thanks, Lars. With this, we begin the Q&A session, and we hand it over to you, Vicky, to guide us through the Q&A.

Speaker #4: Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue.

Operator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star then two. Questioners on the phone are requested to disable loudspeaker mode and eventually turn off the volume of the webcast while asking a question. Anyone who has a question may press star and one at this time. The first question is from Marius Fuhrberg, Bernstein. Please go ahead.

Speaker #4: If you wish to remove yourself from the question queue, you may press star, then two. Questioners on the phone are requested to disable loudspeaker mode and eventually turn off the volume of the webcast while asking a question.

Speaker #4: Anyone who has a question may press star and one at this time. The first question is from Marios Pastou, Bernstein. Please go ahead.

Speaker #5: Great. Thank you. Good morning, and thank you for the presentation. I've got two questions from my side. So firstly, of course, buyers are on the sidelines, but I'm interested to see how things are progressing with the various deals you've had under the discussion for a couple of quarters.

Marius Fuhrberg: Great. Thank you. Good morning, and thank you for the presentation. I've got two questions from my side. Firstly, of course, buyers are on the sidelines, but I'm interested to see how things are progressing with the various deals you've had in this discussion for a couple of quarters. Are you seeing any signs that those buyers are pulling away from any prior agreements being at your existing units or your land? Secondly, going back to your slide on the overall strategy, if those planned disposals are not possible and financing costs remain elevated, what changes? Thank you.

Speaker #5: Are you seeing any signs that those buyers are pulling away from any prior agreements, being at your existing units or your land? And then secondly, going back to your slide on the overall strategy, if those planned disposals are not possible and financing costs remain elevated, what changes?

Speaker #5: Thank you.

Speaker #3: Yeah, good morning, Marios, and thanks for your two questions. And I tried to give you an answer to those both. So with regards to the buyers' behaviors since the start of the geopolitical tensions in the Middle East, we have not seen buyers moving out of and processes, but certainly those processes dragging on and on and on.

Lars von Lackum: Good morning, Marius Fuhrberg, thanks for your two questions, I try to give you an answer to those both. With regards to the buyers' behaviors since the start of the geopolitical tensions in the Middle East, we have not seen buyers moving out of end processes, certainly those processes dragging on and on. That is partly being driven by buyers' behavior, also by the financing banks. What we can see is a big reluctance of financing banks to really come to term sheets or even financing agreements, which unfortunately is postponing deals substantially. You made, with your question, also reference with regards to the biggest transactions we've been able to agree this year, which is the Galeria Heinrich-Heine-Allee plot in Düsseldorf. Hines has that call option.

Speaker #3: So that is partly being driven by buyers' behavior, but also by the financing balance. So what we can see is a big reluctance of financing banks to really come to terms sheets or even financing agreements, which unfortunately is postponing deals substantially.

Speaker #3: You may, with your question, also reference with regards to the biggest transactions we've been able to agree this year, which is the Gareth Heim plot in Düsseldorf.

Speaker #3: So Heinz has that call option. They are in very constructive and good talks with the city of Düsseldorf. And we are still very confident that we are going to see Heinz really making use of that call option.

Lars von Lackum: They are in very constructive and good talks with the city of Düsseldorf, and we are still very confident that we are going to see Hines really making use of that call option. Therefore, no change at that end as of today. With regards to our assumption with regards to the disposal volume, and we try to give you at least an insight with regards to the H1 development of values. With regards to all those geopolitical volatility, the change to energy prices, interest rates, et cetera, that is very difficult to foresee of how many of those disposals we will be able to do. What we definitely expect that we are getting closer to our 45% LTV target. Will we be able to reach it if we are not seeing a single transaction?

Speaker #3: So therefore, no change at that end as of today. With regards to our assumption with regards to the disposal volume, we tried to give you at least a hindsight with regards to the H1 development of values.

Speaker #3: With regards to all those geopolitical volatility the change to energy prices, interest rates, etc., that is very difficult to foresee of how many of those disposals we will be able to do.

Speaker #3: What we definitely expect, that we are getting closer to our 45% LTV target, will we be able to reach it if we are not seeing a single transaction?

Speaker #3: I think that will be certainly an uphill battle, but it depends on the further development, certainly not only of the disposals, but also the valuation we are going to see with regards to our assets and for H1, we are seeing a valuation increase of up to 1%.

Lars von Lackum: I think that will be certainly an uphill battle, but it depends on the further development, certainly not only of the disposals, but also the valuation we are going to see with regards to our assets. For H1, we are seeing a valuation increase of up to 1%.

Speaker #5: Okay. Thank you very much. So should we expect to see maybe some of those prior disposal agreements closing in the first half, or is there a kind of a longer road ahead to achieve that?

Marius Fuhrberg: Okay. Thank you very much. Should we expect to see maybe some of those prior disposal agreements closing in H1? Or is there a kind of a longer road ahead to achieve that? I suppose as a bit of a follow-up as well, if no disposals are possible at all, does anything in your strategy change to kind of get back to a period of growth?

Speaker #5: And I suppose as a bit of a follow-up as well, if no disposals are possible at all, does anything in your strategy change to kind of get back to a period of growth?

Speaker #3: Yeah. So with regards to disposals activity we have some of the disposals in our pipeline where we are now at a stage where buyers are just waiting for the reconfirmation by those financing banks that they will be there and that they are signing the financing contracts.

Lars von Lackum: Yeah. With regards to disposals activity, we have some of the disposals in our pipeline where we are now at a stage where buyers are just waiting for the reconfirmation by those financing banks that they will be there and that they are signing the financing contract. If that is going to take place, we are expecting notarizations of deals within H1, but nowadays it is very difficult to foresee. Yeah. Let's wait and see. Still, there are deals in the pipelines and we have also some notarization dates already being fixed and penciled in our diaries. Hope and certainly keep our fingers crossed that those are taking place as foreseen.

Speaker #3: So if that is going to be take place, we are expecting notarizations of deals within H1. But nowadays, it is very difficult to foresee.

Speaker #3: Yeah. So let's wait and see. Still, there are deals in the pipelines, and we have also some notarization dates already being fixed and penciled in our diaries.

Speaker #3: So hope and certainly keep our fingers crossed that those are taking place, as foreseen.

Speaker #5: Okay. Thank you very much.

Marius Fuhrberg: Thank you very much.

Speaker #4: The next question from Charles Boissier, UBS. Please go ahead.

Operator: The next question from Charles Boissier, UBS. Please go ahead.

Charles Boissier: Yes. Hi. Two questions from my side. First on what you just mentioned about the reluctance from banks. What are the funding conditions that are being referred currently in the market?

Speaker #1: Yes. Hi. Two questions from my side. First, on what you just mentioned about the reluctance from banks: what are the funding conditions that are being offered currently in the market?

Speaker #3: Yeah. So what we can see is that German residential is still seen to be the sweet spot for financing banks. So it is not the case that if you are a willing buyer, you will not be able to see financing offerings.

Lars von Lackum: Yeah. What we can see is that German residential is still seen to be the sweet spot for financing banks. It is not the case that if you are a willing buyer, you will not be able to see financing offerings. What you can still see is that there is a huge interest in doing due diligence by financing banks to not seeing degree of detail in the past. Those degree of detail includes evaluators, not only one or two, but a number of technical due diligence being done on assets, et cetera, which unfortunately is postponing processes. Therefore, there is enough financing capacity in the market, but to really get to a final contract, that takes time.

Speaker #3: But what you can still see is that there is a huge interest in doing due diligence by financing banks to not see a degree of detail in the past.

Speaker #3: And those degrees of detail include the valuators, not only one or two, but a number of technical due diligence being done on assets, etc., which unfortunately is postponing processes.

Speaker #3: So therefore, there is enough financing capacity in the market, but to really get to a final contract that takes time.

Speaker #1: Right. So does that mean that if they upon their own valuators, as you just mentioned, sometimes they come to the conclusion that the values should be lower on those portfolios than what you have in the book?

Charles Boissier: Right. Does that mean that if they're upon their own, their own evaluators, as you just mentioned, sometimes they come to the conclusion that the values should be lower on those portfolios than what you have in the book?

Speaker #3: No. What normally happens at Charles is that those valuators come up with numbers with regards to the market value, but the market value is normally not the point, especially if you do an asset-backed financing.

Lars von Lackum: No. What normally happens, Charles, is that those evaluators come up with numbers with regards to the market value, but the market value is normally not the point, especially if you do an asset-backed financing as a reference point. There is a certain valuation point which is below that market, and that valuation point is then the reference point for what they really are expecting as an LTV. Finally, it ends up in a way that you are, quote-unquote, getting 60% LTV, but this is for internal valuation purposes, a reference point which is comparing to the market value, normally a 40% leverage. That hasn't changed over the last year.

Speaker #3: As a reference point. But then there is a certain valuation point which is below that market, and that valuation point is then the reference point for what they are really expecting as an LTV.

Speaker #3: So finally, it ends up in a way that you are "getting 60% LTV," but this is for internal valuation purposes, a reference point which is comparing to the market value normally of 40% leverage.

Speaker #3: But that hasn't changed over the last year. So the leverage ratio has not changed because it is certainly driven by the fund brief law.

Lars von Lackum: The leverage ratio has not changed because it is certainly driven by the Pfandbrief law, so that adds the back securities with which German banks are refinancing themselves, which is restricting them with regards to the volume of LTV they can offer within a financing contract.

Speaker #3: So that adds back securities with which German banks are refinancing themselves, which is restricting them with regards to the volume of LTV they can offer within a financing contract.

Speaker #1: Very interesting. And the second question from my side on the Mitch Biegel. So if I look at appendix 24 in your presentation, you note that all the four cities where the Mitch Biegel was expected to be published a year to date have seen delays.

Charles Boissier: Very interesting. A second question from my side on the Mietspiegel. If I look at appendix 24 in your presentation, you note that all the four cities where the Mietspiegel was expected to be published year to date have seen delays. You already had some delays last quarter, but now it includes some of your key markets like Bielefeld and Düsseldorf. Could you help us understand, you know, what's driving those delays, but also to what extent this might impact your ability to deliver on the 3.8% to 4% rental growth for this year? Thank you.

Speaker #1: And you already had some delays last quarter. But now it includes some of your key markets like Bilfeld and Düsseldorf. So could you help us understand what's driving those delays, but also to what extent this might impact your ability to deliver on the 3.8 to 4% rental growth for this year?

Speaker #1: Thank you.

Speaker #3: Yeah. Charles. So please, it is not to be understood that those cities do that on purpose. Yeah. So it just takes time, and it is once again only an indication from our side to help you understand when we are expecting rent tables to be published.

Lars von Lackum: Yeah, Charles, please, it is not to be understood that those cities do that on purpose. Yeah, it just takes time, and it is once again, only an indication from our side to help you understand when we are expecting rent tables to be published. Yeah, there are certainly obligations, those cities sometimes just take longer to do the data collection, do the regression analysis, whatever. We certainly try to be as close as possible to the cities and to those rent table committees, it is not to be understood that those cities are on purpose delaying the publication of new rent tables.

Speaker #3: Yeah. There are certainly obligations, but those cities sometimes just take longer to do the data collection, do the regression analysis, whatever. We certainly try to be as close as possible to the cities and to those rent table committees, but it is not to be understood that those cities are on purpose delaying the publication of new rent tables.

Speaker #4: And it is not that these rent tables are not coming out eventually. For example, we had the queue we had for January. We expected the Munch and Gladbach rent table, and it just came out now as Volker mentioned.

Frank Kopfinger: It is not that these rent tables are not coming out eventually. For example, we had for January, we expected the Mönchengladbach rent table, it just came out now, as Volker Wiegel mentioned. It's not that the rent tables are not coming out, it's just the delay of a few months sometimes.

Speaker #4: So it's not that the rent tables are not coming out. It's just the delay of a few months sometimes.

Speaker #1: Very clear. Thank you.

Charles Boissier: Okay. Thank you.

Speaker #2: Thank you.

Lars von Lackum: Thank you.

Speaker #4: The next question from Paul May, Barclays. Please go ahead.

Operator: The next question from Paul May, Barclays. Please go ahead.

Speaker #5: Hi, guys. Hopefully, you can hear me. Thanks for taking my call. Sorry, I was if I repeated anything, I was just at something that my daughter's school, learning how to do math, funny enough.

Thomas Ruttler: Hi, guys. Hopefully you can hear me.

Paul May: Thanks for taking my call. Sorry, if I repeat anything, I was just at something at my daughter's school, learning how to do math, funnily enough. I had a couple of questions. I recall at Q4, you mentioned that when you last budgeted on a longer-term basis, that that was around October last year, if I recall correctly. Just wondered if you've updated that post, the sort of move in financing rates, and if that's had any impact on your longer term AFFO and FFO CAGR expectations. Second question, and apologies again if you've commented on this, but I think you mentioned at the full year results that the Mietspiegel tables had peaked in terms of the level of growth, and you expected lower growth moving forwards.

Speaker #5: So I had a couple of questions. Just I recall at Q4, you mentioned that when you last budgeted, on a longer-term basis, that that was around October last year, if I recall correctly.

Speaker #5: Just wondered if you've updated that post the sort of move-in financing rates and if that's had any impact on your longer-term AFFO and FFO CAGR expectations.

Speaker #5: And then second question, and apologies again if you've commented on this, but I think you mentioned that the fully results that the Mitch Biegel tables had peaked in terms of the level of growth, and you expected lower growth moving forwards.

Speaker #5: Just checking if that is still the assumption, given with where inflation is expected to go. And how that's going to affect over your medium-term rather than sort of the next 12 months, but medium-term rental growth expectations.

Paul May: Just checking if that is still the assumption given with where inflation is expected to go and how that's gonna affect over your medium term rather than sort of the next 12 months, but medium-term rental growth expectations. Thank you.

Speaker #5: Thank you.

Speaker #3: Yeah. Thanks a lot, Paul. And coming back to your first question, so we haven't rerun and redone our mid-term planning. So we always do it in autumn but certainly you're right to refer to that.

Lars von Lackum: Yeah. Thanks a lot, Paul. Coming back to your first question, we haven't rerun and redone our midterm planning, we always do it in autumn. Certainly, you're right to refer to that. Certainly the increase in interest rates are posing in a headwind. I think Kathrin can give you more details at which rates we are currently refinancing, that you get a flavor of what we've been able to agree with banks on in the current market. Certainly, we will need to take that into consideration going forward. With regards to the current indication we can give you, we are quite confident that we can stick to our midterm planning, with that, perhaps quick to Kathrin and a few numbers with regards to our latest financing.

Speaker #3: So certainly, the increase in interest rates are posing an aheadwind. I think Kathrin can give you more details at which rates we are currently refinancing.

Speaker #3: So that you get a flavor of what we've been able to agree with banks on in the current market. But certainly, we will need to take that into consideration going forward with regards to the current indication we can give you.

Speaker #3: We are quite confident that we can stick to our mid-term planning, but with that, perhaps quick to Kathrin and a few numbers with regards to our latest financing.

Speaker #4: Yeah. So so far, we have really quite confident with this year's numbers still. Given that the impact is not as big as when we look at the numbers from last year and this year, so maybe it's around 30 bits or something, but it's not that we have to refinance a lot.

Kathrin Köhling: So far, we are really quite confident with this year's numbers still, given that the impact is not as big as when we look at the numbers from last year and this year. Maybe it's around 30 bps or something. It's not that we have to refinance a lot. The impact is absolutely manageable from our side. What we have also seen is that spreads on the positive side are still quite tight. When we did the planning originally, the spreads were actually even a little bit higher than they are now. We are currently looking for a 10-year on the unsecured side, maybe at around 140, 150 basis points. This is still on the super quite tight side.

Speaker #4: So the impact is absolutely manageable from our side. And what we have also seen is that stress on the positive side are still quite tight.

Speaker #4: So when we did the planning, originally, the stress actually even a little bit higher than they are now. So we are currently looking for a 10-year on the unsecured side, maybe at around 140, 150 basis points.

Speaker #4: So this is still on the super quite tight side. And also on the secured side, we are currently looking at around 100 bits for 10 years.

Kathrin Köhling: Also on the, on the secured side, we are currently looking at around 100 bits for 10 years. That's quite a good number. This is definitely helping us. As I said, we settled the first EUR 350 million this year for our 3.8%. Everything is on track.

Speaker #4: That's quite a good number. And so this is definitely helping us. As I said, we just financed the first 300 or we settled the first 350 million this year for 3.8%.

Speaker #4: So everything is on track.

Speaker #5: And Paul, on your second questions on the rent table development, might be misunderstood that they decrease in growth. We just wanted to say that there's no accelerating in growth expected.

Volker Wiegel: Paul, on your second questions on the rent table development might be understanding that they decrease in growth. We just wanted to say that there's no accelerating in growth expected. It's more a plateau what we see. If you look at the numbers I mentioned for Unna, I think it's city. Only very few of you are aware where it is. Of 8%, it's quite decent growth, so we see that this is continuous to grow decently. Of course, as you mentioned, if inflation kicks in again, this will be reflected in rent tables, but we don't really hope for inflation for other reasons.

Speaker #5: So it's more a plateau. What we see and if you look at the numbers I mentioned for Una, I think it's a city only very few of you are aware where it is.

Speaker #5: Of 8%, it's quite decent growth. So we see that this is continuous to grow decently. And of course, as you mentioned, if inflation kicks in again, this will be reflected in rent tables.

Speaker #5: But we don't really hope for inflation. Other reasons.

Speaker #1: Well, thank you very much. Apologies. Can I have one quick last one? Just on the valuation expectation over the first half, I think it's sort of up to 1%, I think, is the number in the statement.

Paul May: Well, thank you very much. Apologies. Can I have one quick last one? Just on the valuation expectation over the H1, I think it's sort of up to 1%, I think is the number in the statement. How much of the valuers reflected that move in rates year to date? Are they looking at it as a sort of slightly transitory movement and therefore not much impact on yields? Have they not yet properly reflected that and we could see an increase in the H1 and possibly a decrease in the H2 when they sort of reflect that? Just trying to get an understanding is how they're thinking about it.

Speaker #1: How much of the valuers reflected that move in rates year to date? Are they looking at it as a sort of slightly transitory movement and therefore not much impact on yields?

Speaker #1: Or have they not yet properly reflected that? And we could see an increase in the first half and possibly a decrease in the second half.

Speaker #1: When they sort of reflect that, just trying to get an understanding as to how they're thinking about it.

Speaker #3: Yeah. Well, as you know, so cut-off date is 31st of March. And it's always a bit backward-looking. So is the full geopolitical conflict the change in interest rates being fully baked in into the latest valuation?

Lars von Lackum: Well, as you know, cutoff date is 31st of March. It's always a bit backward-looking. Is the full geopolitical conflict, the change in interest rates being fully baked in into the latest valuation? Most probably not. There might be an additional impact with the H2 numbers. As no one knows of how geopolitics development play out, how interest rates will develop over the coming months, I think it's too early to say. What we try to get across is at least what we've seen over the last three halves building up, a very positive momentum with regards to valuation. That has softened. Compared to last year, where we've seen increasing valuation uplifts in H1, H2, now in this H1, that's coming down. It will be somewhere between 0% to 1%.

Speaker #3: Most probably not, yeah? So there might be an additional impact with the H2 numbers. As no one knows of how geopolitical development play out, how interest rates will develop over the coming months, I think it's too early to say.

Speaker #3: What we try to get across is at least what we've seen over the last three halves building up very positive momentum with regards to valuation.

Speaker #3: That has softened, yeah? So compared to last year where we've seen increasing valuation uplifts in H1, H2, now in this first half year, that's coming down.

Speaker #3: So it will be somewhere between 0 to 1%. From our perspective, it's too early to talk about H2, yeah? Volatility is too high. There are market participants out there which are giving fully a guidance.

Lars von Lackum: From our perspective, it's too early to talk about H2. Yeah. Volatility is too high. There are market participants out there which are giving full year guidance. We do not see ourselves in that position. Therefore, all we can say is what we currently see with our H1 numbers.

Speaker #3: We do not see ourselves in that position. So therefore, all we can share is what we currently see with our H1 numbers.

Speaker #1: Cool. Perfect. Thank you very much. Hopefully, the world does calm down before then. But that's great. Thanks, guys.

Paul May: Cool. Perfect. Thank you very much. Hopefully, the world does calm down before then, but, that's great. Thanks, guys.

Speaker #3: Yeah. Thanks a lot.

Lars von Lackum: Yeah. Thank you all.

Speaker #2: The next question from Veronique Mertens, Vanlaskol Kempen. Please go ahead.

Operator: The next question from Veronique Meertens, Van Lanschot Kempen. Please go ahead.

Speaker #6: Hey, good morning, all. Thank you for taking my questions. True from my side. I believe you mentioned that you are bang in line with your guidance.

Veronique Meertens: Hey, good morning all. Thank you for taking my questions. It's through from my side. I believe you mentioned you are bang in line with your guidance, but when I look at your FFO I run rate, you're actually 3.5% below the low end and 5% from midpoint. I was wondering what will be the driver the rest of the year, or where you think you can make up to still reach your target for the full year.

Speaker #6: But when I look at your FFO1 run rate, you're actually 3.5% below the low end. And 5% from midpoint. So I was wondering what will be the driver the rest of the year or where you think you can make up to it to still reach your target for the full year.

Speaker #4: Yeah. So happy to take your questions, Veronique. So we are still confident on the FFO1 number as we already said. I mean, you have to take into consideration that seasonalities are at play here also from on the FFO side.

Kathrin Köhling: Happy to take your questions, Veronique. We are still confident on the FFO I number, as we already said. I mean, you have to take into consideration that seasonalities are at play here also from on the FFO side. If you may have a look at last year's numbers, we were even a little bit lower on the FFO I side, and we ended quite comfortably at EUR 481 million FFO contribution at the end of the year. As we are not steering on the FFO, but on the AFFO for total numbers, we are not steering on in-between numbers on FFO neither. Of course, there are things that take place in between. For example, the capitalization ratio, when you look at it currently, it's at 54%.

Speaker #4: So if you may have a look at last year's numbers, we were even a little bit lower on the FFO1 side. And we ended quite comfortably at 481 million FFO contribution at the end of the year.

Speaker #4: As we are not steering on the FFO, but on the AFFO for total numbers, we are not steering on in-between numbers on FFO neither.

Speaker #4: So of course, there are things that take place in between. So for example, the capitalization ratio when you look at it currently, it's at 54%.

Speaker #4: If you look at.

Speaker #2: Ladies and gentlemen, please hold the line. We lost connection. We will reconnect shortly. Thank you. Ladies and gentlemen, the line is connected. You can go ahead.

Operator: Ladies and gentlemen, please hold the line. We lost connection. We will reconnect shortly. Thank you. Ladies and gentlemen, the line is connected. You can go ahead. Thank you.

Speaker #2: Thank you.

Speaker #4: Hi, Veronique. This is Kathrin again. So something new every time. So glad to be back. I think I lost you all when I talked about the capitalization ratio as one effect that is still changing over the year.

Kathrin Köhling: Hi, Veronique. This is Kathrin again. Something new every time. Glad to be back. I think I lost you all when I talked about the capitalization ratio as one effect that is still changing over the year, and that it will increase FFO I numbers. We are currently looking at 54% capitalization ratio. Last year's total number was 57. We still expect this to go up.

Speaker #4: And that will increase FFO1 numbers. So we are currently looking at 54% capitalization ratio, last year's total number was 57. We still expect this to go up.

Speaker #6: Okay. Thank you. That's clear. And then maybe my last question is, it seems that you're a little bit less confident on reaching that 45% LTV target.

Veronique Meertens: Okay, thank you. That's clear. Then maybe my last question is, it seems that you're a bit, little bit less confident on reaching that 45% LTV target, and you stick to your view that you're not selling below book value and so offering scrip dividend. Has it also crossed minds to lower this dividend significantly or cut dividend to reach that LTV target? Thank you.

Speaker #6: And you stick to your view that you're not selling below book value. And so offering script dividend. But has it also crossed minds to lower this dividend significantly or cut dividend to reach that LTV target?

Speaker #6: Thank you.

Lars von Lackum: Thanks a lot, Veronique. Exactly, that's the case. I think it's not necessary to cut dividend or do anything else. What we do is, on purpose, offer the scrip dividends. We think that is a measure which will help us to get closer to the LTV target. It's not being taken off the table. Please also get that message clearly from us today. We only say it's more ambitious. Yeah. In an environment where you have the head of the IEA saying that we are heading the biggest energy crisis in history. I think it would be premature to already now say we will for sure get to that 45%. You've also heard about the very soft transaction market in Germany.

Speaker #3: Thanks a lot, Veronique. Exactly. That's the case. So I think it's not necessary to cut dividend or do anything else. What we do is on purpose offer the script dividend.

Speaker #3: And we think that is a measure which will help us to get closer to the LTV target. And it's not being taken off the table.

Speaker #3: Please also get that message clearly from us today. And we only say it's more ambitious, yeah, in an environment where you have the head of the EAA saying that we are heading the biggest energy crisis in history.

Speaker #3: I think it would be premature to already now say we will for sure get to that 45%. And you've also heard about the very soft transaction market in Germany.

Speaker #3: So that certainly was expected to be different. Our hope beginning of March was that we are going to see an end to those geopolitical tensions in the Middle East much quicker.

Lars von Lackum: That certainly was expected to be different. Our hope beginning of March was that we are going to see an end to those geopolitical tensions in the Middle East much quicker. That unfortunately has not taken place. Therefore, what we try to get across, Veronique, we will do whatever is being needed from our side to get us close to there. That will be the scrip dividend, that will be disposals at above book value. Certainly, we will look and face the situation in the current environment where most probably there will be a lighter development of valuations than initially expected at the beginning of the year.

Speaker #3: That unfortunately has not taken place. So therefore, what we try to get across, Veronique, we will do whatever is being needed from our side to get us close to there.

Speaker #3: That will be the script dividend. That will be disposals at above book value. And certainly, we will look and face a situation in the current environment where most probably there will be a lighter development of valuations than initially expected at the beginning of the year.

Speaker #6: So if you indeed mentioned that there is so much uncertainty, doesn't that even increase the push to lower your LTV? So why be so strict around that selling at book values?

Veronique Meertens: If you indeed mention that there is so much uncertainty, doesn't that even increase the push to lower your LTV? Why be so strict around that selling at book values, especially since we are not even certain where book values are going to go in the future?

Speaker #6: Especially since we are not even certain where book values are going to go in the future.

Speaker #3: Yeah. So for us, Veronique, the book values are the best indicator for the current fair values because that is exactly what we are accounting for.

Lars von Lackum: Yeah. For us, Veronique, the book values are the best indicator for the current fair values because that is exactly what we are accounting for. Therefore, we do not see the need to now try to guess the next development of the book value. That is the incentive for ourselves to be as disciplined as possible with regards to sales. Therefore, what we will do is sell at or above book value, but not below that. We think it has paid out over the last two and a half years and will pay out for the next years.

Speaker #3: So therefore, we do not see the need to now try to guess the next development of the book value. But that is the incentive for ourselves to be as disciplined as possible with regards to sales.

Speaker #3: Therefore, what we will do is sell at or above book value, but not below that. And we think it has paid out over the last two and a half years.

Speaker #3: And it will pay out for the next years.

Speaker #6: Okay. Thank you.

Veronique Meertens: Okay. Thank you.

Speaker #4: Thank you.

Lars von Lackum: Thank you.

Speaker #2: The next question from Andres Toome, Green Street. Please go ahead.

Operator: The next question from Andres Toome, Green Street. Please go ahead.

Speaker #7: Hi. Good morning. A couple of questions, please. Firstly, on balance sheet management, since you are sitting on some cash that seems to be earmarked for debt repayment, I was just wondering if there is any potential for bond buybacks ahead of the term end, which potentially could be accretive way to address your upcoming maturities.

Andres Toome: Hi. Good morning. A couple of questions, please. Firstly, on balance sheet management, since you are sitting on some cash that seems to be earmarked for debt repayment, I was just wondering if there is any potential for bond buybacks ahead of the term end, which potentially could be accretive.

Andres Toome: Way to address your upcoming maturities. I'm just wondering how the math stacks up there from your perspective?

Speaker #7: I'm just wondering how the maths stacks up there from your perspective.

Speaker #4: Yeah. So sure. We are always looking also at potential liability management that we could do. I mean, it's part of our opportunistic refinancing. So far, we haven't identified any because you haven't seen us doing it.

Kathrin Köhling: Yeah, sure. We are always looking also at potential liability management that we could do. I mean, it's part of our opportunistic refinancing. So far, we haven't identified any because you haven't seen us doing it. But it's not off the table. We just have to take into consideration what costs the new money and does it make sense from that perspective. Yeah. Currently, we take the next EUR 233 million or EUR 32 million exactly in June to pay back another maturity that is coming.

Speaker #4: But it's not off the table. We just have to take into consideration what costs the new money. And does it make sense from that perspective?

Speaker #4: Yeah. So currently, we take the next 233 million or 32 million exactly in June to pay back another maturity that's coming.

Speaker #7: Understood. And then secondly, just with the general cost of capital, for your company becoming more expensive this year, I'm just wondering could you actually tilt to even higher disposal aims in aggregate?

Andres Toome: Understood. Secondly, just with the general cost of capital for your company becoming more expensive this year, I am just wondering, could you actually tilt to even higher disposal aims in aggregate, even though, you know, you sort of mentioned already that the pace of disposal at the moment, is a bit slower?

Speaker #7: Even though you sort of mentioned already that the pace of disposal at the moment is a bit slower.

Speaker #3: Yeah. Andres, so we would entertain whatever interest comes up in the market. Are we currently seeing investors being interested in really buying bigger? No, we don't.

Lars von Lackum: Yeah, Andres Toome, we would entertain whatever interest comes up in the market. Are we currently seeing investors being interested in really buying bigger? No, we don't. We try to give you a bit of a feeling for the development of the German transaction market and yourself, you are working for a house which has all the market insights at hand. You know of how transaction activity in the German market develops, especially transactions above the EUR 100 million are very rarely to find. The share of those has decreased from around 40% to 30% in the German market. We currently do not foresee a market now opening up so quickly that we would really see bigger transactions taking place this year, also not including any bigger transactions from LEG side.

Speaker #3: So we try to give you a bit of a feeling for the development of the term transaction market. And yourself, you are working for a house which has all the market insights at hand.

Speaker #3: So you know of how transaction activity in the German market develops. Especially transactions above 100 million euros are very rarely to find. So the share of those has decreased from around 40 to 30 percent in the German market.

Speaker #3: So we currently do not foresee a market now opening up so quickly that we would really see bigger transactions taking place this year. And also not including any bigger transactions from LEG's side.

Speaker #7: Understood. And I guess related to that, and from the previous sort of analyst as well, in terms of the price point that you're aiming for and, again, considering the fact that anything above, let's say, 100 million is quite a bit more difficult, is that just not the market price then from your perspective for these portfolios and assets?

Andres Toome: I guess, you know, related to that then, from the previous sort of analyst as well, in terms of the price point that you're aiming for, again, considering the fact that anything above, let's say, EUR 100 million is quite a bit more difficult, is that just not the market price then from your perspective for these portfolios and assets? You know, wouldn't you just need to accept that to get your deleveraging targets done?

Speaker #7: And wouldn't you just need to accept that to get your deal leveraging targets done?

Speaker #3: Yeah. So as you've seen, there wasn't much of a sales volume being included in our Q1 numbers. Still, LTV came down now to 46.2.

Lars von Lackum: As you've seen, there wasn't much of a sales volume being included in our Q1 numbers. Still, LTV came down now to 46.2. The difference between the 46 and the 45 is not huge. We still foresee an improvement going forward, not only because of the H1 revaluation, but also due to the disposals we have done so far. Therefore, from our perspective, no need to really adjust our approach. From our perspective, we can stick and will stick to that book value as the best proxy for the fair values to be realized in the market. This is what we will do also going forward. We will offer all the portfolios at book value and try to reach that reference point.

Speaker #3: So the difference between the 46 and the 45 is not huge. We still foresee an improvement going forward, not only because of the H1 revaluation, but also due to the disposals we have done so far.

Speaker #3: So therefore, from our perspective, no need to really adjust our approach from our perspective. We can stick and will stick to that book value at the best proxy for the fair values to be realized in the markets.

Speaker #3: And this is what we will do also going forward. We will offer all the portfolios at book value. And try to reach that reference point.

Speaker #7: Understood. Thank you.

Andres Toome: Understood. Thank you.

Speaker #4: Thank you.

Lars von Lackum: Thank you.

Speaker #2: The next question from Thomas Rothausler, Deutsche Bank. Please go ahead.

Operator: The next question from Thomas Ruttler, Deutsche Bank. Please go ahead.

Speaker #8: Hi. Morning. I've got one question on your non-rental business. I know you don't report on a quarterly basis, but maybe you could provide some update and what you expect for this year.

Thomas Ruttler: Hi. Morning. I've got 1 question on your non-rental business. I know you don't report on a quarterly basis, maybe you could provide some update and what you expect for this year.

Speaker #7: Well, that's unchanged from what we guided you for at the full year numbers. So this will grow basically in line with AFFO.

Volker Wiegel: Well, that's unchanged from what we guided you for, at the full year numbers. This will grow basically in line with AFFO.

Speaker #8: Would you say you see some headwinds given the current environment, also for the non-rental business?

Thomas Ruttler: Would you say you see some headwinds given the current environment also for the non-rental business?

Speaker #7: No. No. That's unchanged.

Volker Wiegel: No. No, that's unchanged.

Speaker #8: Okay. Thank you.

Thomas Ruttler: Okay. Thank you.

Speaker #4: Thank you.

Lars von Lackum: Thank you.

Speaker #7: Thank you.

Volker Wiegel: Thank you.

Speaker #2: The next question from Neeraj Kumar, Barclays. Please go ahead.

Operator: The next question from Neeraj Kumar, Barclays. Please go ahead.

Speaker #9: Morning, everyone. I'm just trying to understand a bit more about your refinancing strategy going forward. Do you see the unsecured bond market more attractive than the bank debt given the enhanced due diligence process from the banks you mentioned earlier?

Neeraj Kumar: Morning, everyone. Just trying to understand a bit more about your refinancing strategy going forward. As in, do you see the unsecured bond market more attractive than the bank debt given the enhanced due diligence process from the banks you mentioned earlier? Also, do you plan to refinance a lot of debt ahead of your debt maturities given the current spread level seems to be unchanged with the recent volatility in the rates market? What would be your preferred route for refinancing? Do you prefer to do through tap issuance of low coupon bonds to preserve your AFFO, or are you happy to do a benchmark size bond issuance going forward?

Speaker #9: Also, do you plan to refinance a lot of debt ahead of your debt maturities given the current spread level seems to be unchanged with the recent volatility in the rates market?

Speaker #9: And what would be your preferred route for refinancing? Do you prefer to do through TAP issues of low open bonds to preserve your AFFO, or are you happy to do a benchmark-sized bond issuance going forward?

Speaker #4: Hi, Neeraj. Happy to take your question. So on the refinancing part, we will just continue with what we have done also over the past years.

Kathrin Köhling: Hi, Neeraj. Happy to take your question. On the refinancing part, we will just continue with what we have done also over the past years. We will just continue to be opportunistic here. We like to stand on all the legs we are standing on currently. We like the secured bond market, we like the unsecured bond market, we like our convertible bonds, we like private placements. Did I miss something? I think I got it. This is also something where we will continue to play in. Depending on where we see the most opportunities coming up or rising, we will act. There is no immediate need to act, as you, as you said, because we are covered for this year. As we all know, next year's numbers are coming up.

Speaker #4: We will just continue to be opportunistic here. We like to stand on all the legs. We are standing on currently. So we like the secured bond market.

Speaker #4: We like the unsecured bond market. We like our convertible bonds. We like private placements. Did I miss something? I think I got so this is also something where we will continue to play in.

Speaker #4: And depending on where we see the most opportunities coming up or arising, we will act. There is no immediate action need to act, as you said, because we are covered for this year.

Speaker #4: But as we all know, next year's numbers are coming up. So we will try to be proactive, and we will try to be ahead of time.

Kathrin Köhling: We will try to be proactive and we will try to be ahead of time, but we also have to take into consideration what it costs us, and so it needs to make sense overall. We do not exclude any instruments, and we will just seize the opportunities when they come.

Speaker #4: But we also have to take into consideration what it costs us. And so it needs to make sense overall. But we do not exclude any instruments.

Speaker #4: And we will just see the opportunities when they come.

Neeraj Kumar: Nice to hear that LEG standing on all the legs. Thanks for that. Any update on your Moody's rating given the recent weakness you're potentially kind of referring to on the LTV metric?

Speaker #9: Nice to hear that legs standing on all the legs. Thanks for that. And any update on your Moody's rating given the recent weakness you're potentially kind of referring to on the LTV metric?

Speaker #4: Yeah. So we are still having the positive outlook for Moody's. We are still in constant talks with them. We haven't heard anything else. And we are still striving for the best.

Kathrin Köhling: Yeah. We are still having the positive outlook for Moody's. We are still in constant talks with them. We haven't heard anything else, and we are still striving for the best.

Speaker #9: Got it. Thank you. All the best.

Neeraj Kumar: Got it. Thank you. All the best.

Speaker #8: Thank you.

Kathrin Köhling: Thank you.

Speaker #4: Thank you.

Speaker #2: The next question from Jonathan Kownater, Goldman Sachs. Please go ahead.

Lars von Lackum: Thank you.

Operator: Next question from Jonathan Kownator, Goldman Sachs, please go ahead.

Jonathan Kownator: Good morning. Thank you for taking my questions. Three if I may. The first one, can you help us understand what was the yield on the disposals that you closed and signed this year, please? Second, on the scrip dividend, keen to understand if you think you're gonna continue going forward, or is that for this year? Maybe third question, what is happening on the regulatory debate side? Obviously, you have an update in your presentation, but just keen to understand if you expect any significant positive or negative developments for you on that front. Thank you.

Speaker #10: Good morning. Thank you for taking my questions. Three, five minutes. The first one, can you help us understand what was the yield on the disposals that you closed and signed this year, please?

Speaker #10: Second, on the script dividend, keen to understand if you think you're going to continue going forward or is that for this year? And maybe third question, what is happening on the regulatory debate side?

Speaker #10: Obviously, you have an update in your presentation, but just keen to understand if you expect any significant positive or negative developments for you on that front.

Speaker #10: Thank you.

Speaker #3: Yeah. Thanks a lot for that set of questions. And if I miss anything, Jonathan, please, please come back. So who is on the yield on disposals?

Lars von Lackum: Thanks, thanks a lot for that set of questions. If I miss anything, Jonathan, please come back. First on the yield on disposals. You might have seen that the number of transactions we've done has been very thin in Q1, and the breadth of those yields is enormous because on the one hand side, we certainly were able to sell single flats, which then sometimes come at yields around 2%, 2.5% up to something like 10% yields for a multi-family house with substantially additional maintenance and investment CapEx to be done. That is the breadth of disposals we were able to do.

Speaker #3: So you might have seen that the number of transactions we've done has been very thin in Q1. And the breadth of those yields is enormous because on the one hand side, we certainly were able to sell single flats which then sometimes come at yields around 2.5% up to something like 10% yields for a multifamily house with substantially additional maintenance and investment capex to be done.

Speaker #3: So that is the breadth of disposals we were able to do. And with regards to the script dividend, so we are offering this this year because 80 million if we translate those 40% of payout, which most probably will once again be executed in shares and not in cash.

Lars von Lackum: With regards to the scrip dividend, we are offering this this year because EUR 80 million, and if we translate those 40% of payout, which most probably will once again being executed in shares and not in cash. That certainly is help in the current situation where we see a thin transaction market and where is a bit of more uncertainty with regards to the future valuation development. Therefore, we consider the scrip dividend for this year to be helpful. Is that a decision to offer a scrip each and every year? No, it's not. We take the optionality and the freedom to decide this always with the next dividend on which we are deciding.

Speaker #3: That certainly is help in the current situation where we see a thin transaction market and where it is a bit of moo uncertainty with regards to the future valuation development.

Speaker #3: So therefore, we consider the script dividend for this year to be helpful. Is that a decision to offer a script each and every year?

Speaker #3: No, it's not. So we take the optionality and the freedom to decide this always with the next dividend on which we are deciding. So therefore, please do not take that as a decision also for the coming years.

Lars von Lackum: Therefore, please do not take that as a decision also for the coming years, because certainly at the current share price, the scrip dividend is something which will be dilutive and certainly something which we have taken into consideration while deciding on it. With regards to strengthening our balance sheet, we thought this to be the right measure at the current situation. With regards to regulation, and you've seen that we've added 3 pages on regulation. If you want to, I can certainly elaborate for the next hour about regulation in Germany. The most important point I think is, first of all, and although we are not active in Berlin, and all the noise around the expropriation discussion, we do not foresee that this is constitutional possible.

Speaker #3: Because certainly, at the current share price, the script dividend is something which will be diluted. And certainly, it's something which we have taken into consideration while deciding on it.

Speaker #3: But with regards to strengthening our balance sheet, we thought this to be the right measure at the current situation. Finally, with regards to regulation, and you've seen that we've added three pages on regulation.

Speaker #3: So if you want to, I can certainly elaborate for the next hour about regulation in Germany. And the most important point, I think, is, first of all, and although we are not active in Berlin, and all the noise around the expropriation discussion, we do not foresee that this is constitutional possible.

Speaker #3: So therefore, I think that is the most important point from a German residential landlord and a public listed entity to be known to each and every investor.

Lars von Lackum: Therefore, I think that is the most important point from a German residential landlord and a public listed entity to be known to each and every investor. Yeah. We do not foresee this to become law in Germany. The second part is with regards to rent regulations. You read about the rent regulation efforts in Berlin with regards to capping index links, capping furnished apartments, et cetera. All of that without an impact on our rental growth. We are not having many index rents. We do not do furnished apartments, et cetera. Yes, we see that there is additional regulation being put in place, but with no impact on our indices. The third point, which is of importance, it's all around the CO2 reduction efforts of the European Union and on a federal level.

Speaker #3: So we do not foresee this to be become law in Germany. The second part is with regards to rent regulation. So you read about the rent regulation efforts in Berlin with regards to capping index-linked capping.

Speaker #3: Furnished departments, etc. All of that without an impact on our rental growth. So we are not having many index rents. We do not do furnished apartments, etc.

Speaker #3: So yes, we see that there is additional regulation being put in place. But with no impact on our numbers. The third point, which is of importance, it's all around the CO2 reduction efforts of the European Union and on a federal level.

Speaker #3: You've seen that the Germans have decided to not come up with an obligation for each and every landlord to do additional investments into a CO2 reduction of its buildings.

Lars von Lackum: You've seen that the Germans have decided to not come up with an obligation for each and every landlord to do additional investments into a CO2 reduction of its buildings, which certainly is a positive. We also see that there is a better understanding for the needs of the industry, not only our industry, but also the energy industry and many other industries, that we need to come up with ways to reduce CO2 with a lower cost. That is something which is now also being considered and baked into the new heating law, the GEG, which we also explained, and that will certainly give us more freedom and will help to come up with more innovative, low cost alternatives towards just replacing fossil by heat pumps, but it will also enable us to do bivalent heating systems.

Speaker #3: Which certainly is a positive. And we also see that there is a better understanding for the needs of the industry, not only our industry, but also the energy industry and many other industries, that we need to come up with ways to reduce CO2 with a lower cost.

Speaker #3: And that is something which is now also being considered and baked into the new heating law, the G mod G, which we also explained and that will certainly give us more freedom and will help to come up with more innovative low-cost alternatives towards just replacing fossil by heat pumps.

Speaker #3: But it will also enable us to do bi-valence heating systems. So combining a heat pump and a fossil-based heating system and from our perspective, that's also a very positive development for German residential landlords.

Lars von Lackum: Combining a heat pump and a fossil based heating system, from our perspective, that's also a very positive development for German residential landlords.

Speaker #10: Okay. Thank you. If I just can follow up on the yield on disposals, what would be the average yield of the units that you've disposed or agreed to sell?

Jonathan Kownator: Okay, thank you. If I just can follow up on the yield and disposals, what would be the average yield of the units that you've disposed or agreed to sell?

Speaker #3: I do not have that number with me, Jonathan. Apologies.

Lars von Lackum: I do not have that number with me, Jonathan. Apologies.

Speaker #10: Is it on the high side? Is it towards the more towards the 10% or more towards the 2.5%? Just qualitatively will be enough.

Jonathan Kownator: Is it on the high side? Is it towards the, you know, more towards the 10% or more towards the 2.5%? Just qualitatively will be enough.

Speaker #3: So apologies. Frank will follow up on that one. And we've got that number. So apologies. I don't have it here. Yeah. Okay. Thanks, Jonathan.

Lars von Lackum: Apologies. Frank will follow up on that one, yeah, and give you that number. Apologies, I don't have it here. Yeah.

Jonathan Kownator: Thank you.

Lars von Lackum: Okay. Thanks, Jonathan.

Speaker #1: As a reminder, if you wish to register for questions, please press star and one on your telephone. The next question from Kai Kloss, Bärenberg.

Operator: As a reminder, if you wish to register for questions, please press star 1 on your telephone. The next question from Kai Klose, Berenberg. Please go ahead.

Speaker #1: Please go ahead.

Speaker #11: Hey. Yes, hey. Good morning. I've got a quick question on page 16 on the AFO calculation. Just on the direction of travel for the non-personal operating costs and non-recurring special effects.

Kai Klose: Hey. Yes, sir. Good morning. I've got a quick question on page 16 on the AFFO calculation. Just on the direction of travel for the non-personal operating costs and non-recurring special effects. In Q1 last year, they were pretty stable compared to Q1 2024. This time it was a bit of a stronger change, a higher change. Could you indicate maybe if there was anything special behind or some seasonal effect?

Speaker #11: Q1 last year, there were pretty stable compared to Q1 '24. This time, it was a bit of a stronger change, a higher change. Could you indicate maybe if there was anything special behind or some seasonal effect?

Speaker #10: Yeah. So hi, Kai. You see here the first effects of our digitalization initiative. When we were talking about how we want to reach 10 million in AFFO by 2030 and where we are changing our entire CRM system and stuff like that.

Kathrin Köhling: Hi, Kai. You see here the first effects of our digitalization initiative. You know, when we were talking about how we want to reach EUR 10 million in AFFO by 2030, and where we are changing our entire CRM system and stuff like that. You see the first effects here on that one. Part of this will also then end up in the non-recurring special effects and being taken out again. That's the effect you see here.

Speaker #10: So you see the first effects here on that one. Part of that will also be yeah. So part of this will also then end up in the non-recurring special effects and being taken out again.

Speaker #10: But that's the effect you see here.

Speaker #11: Just quickly, I see that in which of the four cost items or three cost items? Operating costs, special effects, or admin?

Kai Klose: Just quickly, I see that in which of the 4 cost items or the 3 cost item, operating costs, special items, or admin?

Speaker #10: You see it in the non-personal operating costs and the non-recurring special effects costs. And what else did you ask? Sorry.

Kathrin Köhling: You see it in the non-personal operating costs, in the non-recurring special effects costs. What else did you ask? Sorry.

Speaker #11: In the admin or the administrative expenses recurring. I was just curious.

Kai Klose: In the admin or the administrative expenses recurring, I was just curious.

Speaker #10: Yeah. Actually, a number that is lower than last year. Yeah?

Kathrin Köhling: Yeah. Actually a number that is lower than last year. Yeah.

Speaker #11: Okay. Thanks so much.

Kai Klose: Okay. Thanks so much.

Speaker #10: Thank you.

Lars von Lackum: Thank you.

Speaker #1: We have a follow-up question from Paul May, Barclays. Please go ahead.

Operator: We have a follow-up question from Paul May, Barclays. Please go ahead.

Speaker #12: Sorry, guys. Just had an incoming that I thought I'd ask as well. Just wondered on the accounting treatment of issuing a TAP issuance at a lower par value or lower absolute value versus a coupon.

Paul May: Sorry, guys. Just had an incoming that I thought I'd ask as well. Just wondered on the accounting treatment of issuing a tap issuance at a lower par value or so lower absolute value, versus the coupon. How does that get applied to FFO and AFFO? Because I understand under IFRS the amortization would come into it, but am I right in saying that it's just the coupon payment, not the full yield that gets reflected in FFO and AFFO? Sorry, apologies. It's quite a specific one, but just had that question. Thanks.

Speaker #12: How does that get applied to FFO and AFFO? Because I understand under IFRS, the amortization would come into it. But am I right in saying that it's just the coupon payment, not the full yield that gets reflected in FFO and AFFO?

Speaker #12: Sorry. Apologies. It's quite a specific one, but just had that question. Thanks.

Kathrin Köhling: No, happy to take your question. The, the coupon that we are actually paying goes into net cash interest and into the FFO and AFFO numbers. The accretion that you were talking about ends up in P&L, but not in FFO.

Speaker #10: We're all happy to take your question. So the coupon that we actually pay goes into net cash interest. And those in the FFO and AFFO numbers.

Speaker #10: And the accretion that you were talking about ends up in P&L but not in FFO.

Speaker #12: Perfect. Thank you very much.

Paul May: Cool. Perfect. Thank you very much.

Speaker #3: Thank you.

Lars von Lackum: Thank you.

Speaker #1: That was the last question. I would like to turn the conference back over to Frank Kopfinger for any closing remarks.

Operator: That was the last question. I would like to turn the conference back over to Frank Kopfinger for any closing remarks.

Speaker #13: Yeah. Thank you, Vicky, and thanks for all your questions. And as always, should you have further questions, then please do not hesitate and contact us.

Frank Kopfinger: Thank you, Vicky. Thanks for all your questions. As always, should you have further questions, please do not hesitate and contact us. Otherwise, please note that our next scheduled reporting event is on 4 August when we report our Q2 results. With this, we close the call, and we wish you all the best and hope to see you soon on one of the upcoming roadshows and conferences. Thank you. Goodbye, everybody.

Speaker #13: Otherwise, please note that our next scheduled reporting event is on the 4th of August when we report our Q2 results. And with this, we close the call, and we wish you all the best and hope to see you soon on one of the upcoming roadshows and conferences.

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