Q2 2026 Grand City Properties SA Earnings Call

August 12, 2026

Operator: Ladies and gentlemen, welcome to the Grand City Properties H1 2026 Results Conference Call. I am Sandra, the conference call operator. I would like to remind you that all participants are in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing Star and one on your telephone. For operator assistance, please press Star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to the company. Please go ahead.

Operator: Ladies and gentlemen, welcome to the Grand City Properties H1 2026 Results Conference Call. I am Sandra, the conference call operator. I would like to remind you that all participants are in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to the company. Please go ahead.

Speaker #1: Ladies and gentlemen, welcome to the Grand City Properties H1 2026 results conference call. I am Sandra, the call operator. I would like to remind you that all participants are in listen-only mode, and the conference is being recorded.

Speaker #1: The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star one on your telephone.

Speaker #1: For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to the company.

Speaker #1: Please go ahead.

Speaker #2: Good morning, and thank you for joining us for Grand City’s results call for the first half of 2026. You can view this presentation on Grand City's website, either on the home section or under Financial Reports in the Investor Relations section.

Michael Bar-Yosef: Good morning and thank you for joining us for Grand City's results call for the first half of 2026. You can view this presentation on Grand City's website, either on the home section or under Financial Reports of the Investor Relations section. With me today will be Chairman and Director Christian Windfuhr, CEO Refael Zamir, CFO Idan Hadad, and CCMO Michael Bar-Yosef. For the duration of the call, all participants will be in an only listen mode. Following our presentation, you will have the opportunity to ask questions. Please feel free to send us your questions via email also during the presentation. The email address is gcp-ir@grandcity.lu. With that, I would like to hand you over to Christian to start with the presentation.

[Company Representative] (Grand City Properties): Good morning and thank you for joining us for Grand City's results call for the H1 of 2026. You can view this presentation on Grand City's website, either on the home section or under Financial Reports of the Investor Relations section. With me today will be Chairman and Director Christian Windfuhr, CEO Refael Zamir, CFO Idan Hadad, and CCMO Michael Bar-Yosef. For the duration of the call, all participants will be in an only listen mode. Following our presentation, you will have the opportunity to ask questions. Please feel free to send us your questions via email also during the presentation. The email address is gcp-ir@grandcity.lu. With that, I would like to hand you over to Christian to start with the presentation.

Speaker #2: With me today will be Chairman and Director Christian Winfur, CEO Rafael Zamir, CFO Idan Haddad, and CCMO Michael Barriosas. For the duration of the call, all participants will be in listen-only mode.

Speaker #2: Following our presentation, you will have the opportunity to ask questions. But please feel free to send us your questions via email, also during the presentation.

Speaker #2: The email address is gcp-ir@grandcity.lu. With that, I would like to hand you over to Christian to start with the presentation.

Speaker #3: Good morning, and welcome to our H1 2026 results presentation. We are pleased to present a solid set of results for the first half of 2026, reflecting another period of strong operational performance.

Christian Windfuhr: Good morning and welcome to our H1 2026 results presentation. We are pleased to present a solid set of results for the first half of 2026, reflecting another period of strong operational performance. The economic environment continues to be shaped by ongoing geopolitical developments, including the situation in the Middle East, which create ongoing volatility in financial markets. Our portfolio locations benefit from strong fundamentals, and we do not observe a material impact on our operations. We also continue to monitor capital markets and interest rates closely. While these have been impacted, our bond spreads have remained mostly stable and both capital and transaction markets have stayed open, giving us comfort that the current environment is not creating any significant disruption to our access to liquidity or to our business. We also continue to maintain a solid financial position, providing firepower for external growth as well as downside protection.

Christian Windfuhr: Good morning and welcome to our H1 2026 results presentation. We are pleased to present a solid set of results for the H1 of 2026, reflecting another period of strong operational performance. The economic environment continues to be shaped by ongoing geopolitical developments, including the situation in the Middle East, which create ongoing volatility in financial markets. Our portfolio locations benefit from strong fundamentals, and we do not observe a material impact on our operations. We also continue to monitor capital markets and interest rates closely.

Speaker #3: The economic environment continues to be shaped by ongoing geopolitical developments, including the situation in the Middle East, which creates ongoing volatility in financial markets.

Speaker #3: Our portfolio locations benefit from strong fundamentals, and we do not observe a material impact on our operations. We also continue to monitor capital markets and interest rates closely.

Speaker #3: While these have been impacted, our bond spreads have remained mostly stable, and both capital and transaction markets have stayed open, giving us comfort that the current environment is not creating any significant disruption to our access to liquidity or to our business.

Christian Windfuhr: While these have been impacted, our bond spreads have remained mostly stable, and both capital and transaction markets have stayed open, giving us comfort that the current environment is not creating any significant disruption to our access to liquidity or to our business. We also continue to maintain a solid financial position, providing firepower for external growth as well as downside protection.

Speaker #3: We also continue to maintain a solid financial position, providing firepower for external growth as well as downside protection. On the operational side, we continue to see strong and supportive fundamentals across our portfolio locations, with demand for housing remaining robust and supply structurally constrained.

Christian Windfuhr: On the operational side, we continue to see strong and supportive fundamentals across our portfolio locations, with demand for housing remaining robust and supply structurally constrained. We recorded another period of solid rental growth, reaching 3.3% like-for-like, while also externally growing the portfolio. Looking at the financial profile following the perpetual notes transaction executed in Q2, we have now fully refinanced our perpetual notes stack with next call dates only in 2031, providing increased clarity and limiting potential negative impacts from market volatility. Following our robust financial position and after approval at the annual general meeting, we paid a dividend of EUR 0.30 per share for 2025 in July.

Speaker #3: We recorded another period of solid rental growth, reaching 3.3% like-for-like, while also externally growing the portfolio. Looking at the financial profile following the perpetual notes transaction executed in the second quarter, we have now fully refinanced our perpetual notes stack, with next call dates only in 2031, providing increased clarity and limiting potential negative impacts from market volatility.

Speaker #3: Following our robust financial position and, after approval at the Annual General Meeting, we paid a dividend of 30 cents per share for 2025 in July.

Speaker #3: Going forward, we have updated the dividend policy to 50% of FFO 1 per share, which we view as a good balance between an attractive return and positioning the company well for long-term value creation, while maintaining a prudent and strong balance sheet.

Christian Windfuhr: Going forward, we have updated the dividend policy to 50% of FFO1 per share, which we view as a good balance between an attractive return and positioning the company well for long-term value creation, maintaining a prudent and strong balance sheet. The strong operational performance was further reflected in the slightly positive full portfolio revaluation recorded in the H1 of the year, driven by operational growth. We will provide more details later in the presentation. On slide 3, we present a summary of our key financial results for the H1 of 2026. We saw a solid performance with net rental income up 3% and adjusted EBITDA up 3% year over year. This led to an FFO1 of EUR 91 million, in line with our full year guidance. Our balance sheet remains strong. As of June, our LTV stood at 33% compared to 31% at the end of 2025.

Speaker #3: The strong operational performance was further reflected in the slightly positive full portfolio revaluation recorded in the first half of the year, driven by operational growth.

Speaker #3: We will provide more details later in the presentation. On slide 3, we present a summary of our key financial results for the first half of 2026.

Christian Windfuhr: On slide 3, we present a summary of our key financial results for the H1 of 2026. We saw a solid performance with net rental income up 3% and adjusted EBITDA up 3% year over year. This led to an FFO1 of EUR 91 million, in line with our full year guidance. Our balance sheet remains strong. As of June, our LTV stood at 33% compared to 31% at the end of 2025.

Speaker #3: We saw a solid performance, with net rental income up 3% and adjusted EBITDA up 3% year over year. This led to an FFO 1 of €91 million, in line with our full-year guidance.

Speaker #3: Our balance sheet remains strong. As of June, our LTV stood at 33%, compared to 31% at the end of 2025. The LTV was impacted by acquisitions and investments in the period, partially offset by the operational results and positive property revaluations recorded in the period.

Christian Windfuhr: The LTV was impacted by acquisitions and investments in the period, partially offset by the operational results and positive property revaluations recorded in the period. The net debt to EBITDA and the interest cover ratio remained very strong at 8.7 times and 4.7 times respectively, and we maintain a strong liquidity position. Turning to EPRA NAV, which stood at EUR 4.6 billion or EUR 25.8 per share, driven primarily by strong operational performance and positive property valuations, partially offset by the dividend allocation, which was paid in July after the reporting date. We continued to maintain a low vacancy rate of 3.7% and achieved solid like-for-like rental growth of 3.3% as of June, supported by continued increase in in-place rents. Our portfolio as of June 2026 stands at 61,000 units, up from 60,000 units in December, following the closing of several acquisitions.

Speaker #3: The net debt to EBITDA and the interest cover ratio remained very strong at 8.7 times and 4.7 times, respectively. We maintain a strong liquidity position.

Speaker #3: Turning to APRA NTA, which stood at €4.6 billion, or €25.8 per share, driven primarily by strong operational performance and positive property valuations, partially offset by the dividend allocation, which was paid in July after the reporting date.

Speaker #3: We continued to maintain a low vacancy rate of 3.7% and achieved solid like-for-like rental growth of 3.3% as of June, supported by continued increases in in-place rents.

Speaker #3: Our portfolio as of June 2026 stands at 61,000 units, up from 60,000 units in December, following the closing of several acquisitions. We will discuss these items in more depth later in the presentation.

Christian Windfuhr: We will discuss these items in more depth later in the presentation. Moving to slide 5, we present key data on the German residential market. The German housing market continues to face a structural supply and demand imbalance. New construction remains restrained, particularly in metropolitan areas, as land and construction costs stay elevated. This was reflected in the number of permits approved, which continues to sit well below the estimated number needed for demand. We are encouraged to see that policy changes are aimed at increasing the supply. The Bau-Turbo also municipalities to approve projects outside zoning plans, and in June, the government introduced the Aktionsplan Baukosten, a set of measures aimed at reducing construction costs, including digital permitting, faster planning, and tax breaks.

Speaker #3: Moving to slide 5, we present key data on the German residential market. The German housing market continues to face a structural supply and demand imbalance. New construction remains restrained, particularly in metropolitan areas, as land and construction costs stay elevated.

Speaker #3: This was reflected in the number of permits approved, which continues to sit well below the estimated number needed for demand. We are encouraged to see that policy changes are aimed at increasing the supply. The BauTurbo also allows municipalities to approve projects outside zoning plans, and in June the government introduced the Aktionsplan Baukosten, a set of measures aimed at reducing construction costs, including digital permitting, faster planning, and tax breaks.

Speaker #3: That said, completions are still expected to fall significantly short of government targets in 2026, and these measures are not expected to close the very significant gap.

Christian Windfuhr: That said, completions are still expected to fall significantly short of government targets in 2026, and these measures are not expected to close the very significant gap. Accordingly, available supply remained low and asking rents continued their upward trajectory. The fundamentals continue to impact our portfolio positively, reinforcing its resilience and growth potential. On slide 6, we address the topic that has been a recurring source of uncertainty for the German residential sector and where we have seen more clarity over the past months. For some years, the expropriation debate centered on Berlin has become a source of noise for the market. Our position on this topic has been consistent. We viewed this initiative with skepticism, saw much of the momentum as driven by electoral politics rather than by a workable housing solution, and have always argued that the answer for affordability is more supply, not less private investment.

Speaker #3: Accordingly, available supply remained low, and asking rents continued their upward trajectory. The fundamentals continue to impact our portfolio positively, reinforcing its resilience and growth potential.

Speaker #3: On slide 6, we address the topic that has been a recurring source of uncertainty for the German residential sector and where we have seen more clarity over the past months.

Speaker #3: For some years, the expropriation debate centered on Berlin has become a source of noise for the market. Our position on this topic has been consistent: we have viewed this initiative with skepticism, seen much of the momentum as driven by electoral politics rather than by a workable housing solution, and have always argued that the answer for affordability is more supply, not less private investment.

Christian Windfuhr: Our position on this topic has been consistent. We viewed this initiative with skepticism, saw much of the momentum as driven by electoral politics rather than by a workable housing solution, and have always argued that the answer for affordability is more supply, not less private investment.

Speaker #3: Measures that simplify construction and conversion, such as the BauTurbo, address the actual problem; expropriation does not. And in our view, it risks doing the opposite by discouraging the very investment the market needs.

Christian Windfuhr: Measures that simplify construction and conversion, such as the Bau-Turbo, address the actual problem. Expropriation does not, and in our view, risks doing the opposite by discouraging the very investment the market needs. We can see that our view is now increasingly shared by the federal level. In March, Berlin passed a framework law, but one deliberately built with constitutional guardrails that only takes effect in 2028, leaving room for prior review. Recently, in early July, the federal coalition agreed to introduce a law that would ban the states from using socialization legislation to transfer private rental housing into public ownership. This was taken up at the request of the construction ministers on the reasoning that the threat of socialization endangers housing construction and undermines Germany as a place to invest, very much the argument we have made ourselves.

Speaker #3: We can see that our view is now increasingly shared at the federal level. In March, Berlin passed a framework law, but one deliberately built with constitutional guardrails that only takes effect in 2028, leaving room for prior review.

Speaker #3: Recently, in early July, the federal coalition agreed to introduce a law that would ban the states from using socialization legislation to transfer private rental housing into public ownership.

Speaker #3: This was taken up at the request of the construction ministers, on the reasoning that the threat of socialization endangers housing construction and undermines Germany as a place to invest.

Speaker #3: Very much the argument we have made ourselves. The federal law is an agreed intention rather than enacted legislation. But we believe this is a meaningful signal that the federal government is actively seeking to remove this source of uncertainty and to provide legal certainty for housing investments.

Christian Windfuhr: The federal law is an agreed intention rather than an elected legislation. We believe this is a meaningful signal. The federal government is actively seeking to remove this source of uncertainty and to provide legal certainty for housing investments. Slide seven highlights the strong fundamentals of the London residential market, whose regulatory environment also strengthens the diversification profile of our portfolio. The softer rent regulations compared to Germany allows rental prices to reflect underlying market conditions quickly, which market rents capture fast. With market rents captured fast, sorry. London's rental market has continued to tighten in affordable and mid-income boroughs, which is the focus of our portfolio. Supply remains structurally short, with delivery falling short of new homes needed and approvals continue a downward trend in recent years.

Speaker #3: Slide 7 highlights the strong fundamentals of the London residential market, whose regulatory environment also strengthens the diversification profile of our portfolio. The softer rent regulations compared to Germany allow rental prices to reflect underlying market conditions quickly, which market rents capture fast.

Speaker #3: With market rents being captured fast, sorry. London's rental market has continued to tighten in affordable and mid-income borrowers, which is the focus of our portfolio.

Speaker #3: Supply remains structurally short, with delivery falling short of the new homes needed, and approvals continue a downward trend in recent years. On regulations, we have seen the Renters' Rights Act come into effect, introducing reforms to the eviction process and moving leases to rolling monthly terms with annual adjustments to the market level.

Christian Windfuhr: On regulations, we have seen the Renters' Rights Act come into effect, introducing reforms to the eviction process and moving leases to rolling monthly terms with annual adjustments to the market level. While this is widely described as the largest change in UK rental regulation in decades, none of these changes had a significant impact on our operations or our portfolio, which is maintained at high quality and where we keep a healthy and positive relationship with our tenants. The UK government has indicated that they already see positive impact from the reform, and both the housing secretary as well as the Prime Minister have ruled out the need for rent controls. All in all, fundamentals in London remain strong and continue to support asking rents and portfolio values going forward. Now please allow me to hand over to Refael.

Speaker #3: While this is widely described as the largest change in UK rental regulation in decades, none of these changes had a significant impact on our operations or our portfolio, which is maintained at high quality and where we keep a healthy and positive relationship with our tenants.

Speaker #3: The UK government has indicated that they already see a positive impact from the reform, and both the Housing Secretary as well as the Prime Minister have ruled out the need for rent controls.

Speaker #3: All in all, fundamentals in London remain strong and continue to support asking rents and portfolio values going forward. Now, please allow me to hand over to Raphael.

Speaker #2: Thank you, Christian, and welcome also from my side. Turning to slide 8, we present an overview of our diversified portfolio. As of the end of June, our investment property portfolio totaled €9.2 billion, increasing from December 2025.

Refael Zamir: Thank you, Christian, and welcome also from my side. Turning to slide eight, we present an overview of our diversified portfolio. As of end of June, our investment property portfolio totaled EUR 9.2 billion, increasing from December 2025. Berlin remain our largest location, representing 23% of our portfolio, followed by London at 21%, NRW at 19%, and Dresden/Leipzig/Halle at 15%, with the remainder spread across other strong metropolitan areas. Our external growth strategy remains focused on disciplined capital recycling and substantially selected acquisitions where we see clear value creation and FFO accretion while preserving balance sheet strength. During the H1, we completed approximately EUR 75 million of acquisitions in Germany at a rent factor of around 14x.

Speaker #2: Berlin remains our largest location, representing 23% of our portfolio, followed by London at 21%, NRW at 19%, and Dresden-Leipzig-Halle at 15%, with the remainder spread across other strong metropolitan areas.

Speaker #2: Our external growth strategy remained focused on disciplined capital recycling and substantially selected acquisitions, where we seek real value creation and FFO accretion, while preserving balance sheet strength.

Speaker #2: During the first half, we completed approximately €75 million of acquisitions in Germany at a rent factor of around 14x. This came in addition to the over €100 million new build turnkey portfolio in London signed previously and completed in two stages, with the first half recently completed, and the second half completed after the reporting period at an expected factor of 13x once fully rented.

Refael Zamir: This came in addition to the over EUR 100 million new build turnkey portfolio in London, signed previously and completed in two stages, with the first half recently completed and the second half was completed after the reporting period at an expected factor of 13x once fully rent. This newly built portfolio is expected to be fully let within few months, contributing partially to operating result in 2026 and fully from 2027. On the disposal side, we completed EUR 31 million. Mostly properties in a non-core location and condominiums. Regarding new potential acquisition, we continue to be highly selective in Germany with FFO accretive as a key condition. We do expect the pipeline to improve gradually in the midterm as funds continue portfolio cleanups and assets come to market through mortgage banking system.

Speaker #2: This newly built portfolio is expected to be fully rented within a few months, contributing partially to operating results in 2026 and fully from 2027. On the disposal side, we completed €31 million, mostly properties in non-core locations and condominiums.

Speaker #2: Regarding new potential acquisitions, we continue to be highly selective in Germany, with FFO accretive as a key condition. We do expect the pipeline to improve gradually in the mid-term as funds continue portfolio cleanups and assets come to market through the mortgage banking system.

Speaker #2: In London, we view the landscape as potentially more attractive, as shorter finance maturities of 3 to 5 years compare to more than 10 years in Germany.

Refael Zamir: In London, we view the landscape as potentially more attractive as shorter finance maturities of three to five years, compared to more than 10 years in Germany, are creating refinance pressure, particularly among smaller developers, opening entry points into high quality, well-located assets at compelling pricing. As always, we do not set fixed disposal or acquisition volume target, so the strategy remain opportunistic and guided by pricing, return, asset quality, and reinvestment potential. On slide 9, we show the continued strong points of our operational performance, supported by positive market fundamentals, as we mentioned before. As of June 2026, our in-place rent increased to EUR 9.8 per square meter. On a like-for-like basis, total net rent growth was 3.3%, driven mainly by in-place rental growth, split between 2.1% from reletting and 1.2% from indexation. Vacancy remained low at 3.7%.

Speaker #2: ...are creating refinance pressure, particularly among smaller developers, opening entry points into high-quality, well-located assets at compelling pricing. As always, we do not set fixed disposal or acquisition volume targets, so the strategy remains opportunistic and guided by pricing, return, asset quality, and reinvestment potential.

Speaker #2: On slide 9, we show the continued strong points of our operational performance, supported by positive market fundamentals as we mentioned before. As of June 2026, our in-place rent increased to €9.80 per square meter, and on a like-for-like basis, total net rent growth was 3.3%, driven mainly by in-place rental growth, split between 2.1% from rerating and 1.2% from indexation.

Speaker #2: Vacancy remains low at 3.7%. As always, we note that this growth comes at low capex and is highly accretive to cash flow, and it's not the product of significant modernization projects or new construction.

Refael Zamir: As always, we know that this growth comes at low CapEx and high accretion to cash flow, and it is not the product of significant modernization projects or new constructions. Rental growth in Germany was recorded across all our key locations, with the highest rental growth increase recorded in Mannheim, Kaiserslautern, Frankfurt, and Mainz, as well as in Dresden and Leipzig. We also continue to see strong growth in London with over 3% rental like-for-like, with vacancy there at structurally low level just above 2%. Going forward, we expect London rental growth to align more closely with our German operation. Our annualized net rent reached to EUR 442 million, compared with an estimated market rental value of EUR 530 million, indicating upside potential of 20%. We expect to unlock this mostly through revisions upon reletting, with additional upside as market rents continue to trend upwards.

Speaker #2: Rental growth in Germany was recorded across all our key locations, with the highest rental growth increases recorded in Mannheim, Kaiserslautern, Frankfurt, and Mainz, as well as in Dresden and Leipzig.

Speaker #2: We also continue to see strong growth in London, with over 3% rental like-for-like growth, and vacancy there at a structurally low level just above 2%. Going forward, we expect London rental growth to align more closely with our German operations.

Speaker #2: Our annualized net rent reached €442 million, compared with an estimated market rental value of €530 million, indicating upside potential of 20%.

Refael Zamir: Our annualized net rent reached to EUR 442 million, compared with an estimated market rental value of EUR 530 million, indicating upside potential of 20%. We expect to unlock this mostly through revisions upon reletting, with additional upside as market rents continue to trend upwards.

Speaker #2: We expect to unlock this mostly through revisions upon re-rating, with additional upside as market rents continue to trend upwards. A supportive operating environment and this upside to market potential are expected to support like-for-like rental growth of over 3% for the foreseeable future, in line with our 2026 guidance.

Refael Zamir: A supportive operating environment and this upside to market potential are expected to support like-for-like rental growth over 3% for the foreseeable future, in line with our 2026 guidance. Continuing with slide 10, we present an update on the valuation of our portfolio. A full portfolio valuation was conducted by external independent valuers as part of our H1 2026 report. We recorded a slight positive like-for-like value change of 0.2%, net of CapEx, driven mostly by continued solid operational performance, supported by sufficient transaction activity. Including CapEx, the value like-for-like amount to 0.6%. This is reflected in the stable valuation parameters compared to December 2025. As of June 2026, the portfolio average rent factor stood at 20.4x, compared to 20.5x at the end of 2025, with average discount and capitalization rates broadly stable. Average value per square meter was EUR 2,353, which remained conservative and well below replacement costs.

Speaker #2: Continuing with slide 10, we present an update on the valuation of our portfolio. A full portfolio valuation was conducted by external independent valuers as part of our H1 2026 report.

Speaker #2: We recorded a slight positive like-for-like value change of 0.2%, net of capex, driven mostly by continued solid operational performance, supported by sufficient transaction activity.

Speaker #2: Including capex, the value like-for-like amounted to 0.6%. This is reflected in the stable valuation parameters compared to December 2025. As of June 2026, the portfolio average rent factor stood at 20.4x, compared to 20.5x at the end of 2025, with average discount and capitalization rates broadly stable.

Refael Zamir: This is reflected in the stable valuation parameters compared to December 2025. As of June 2026, the portfolio average rent factor stood at 20.4x, compared to 20.5x at the end of 2025, with average discount and capitalization rates broadly stable. Average value per square meter was EUR 2,353, which remained conservative and well below replacement costs.

Speaker #2: Average value per square meter was €2,353, which remains conservative and well below replacement costs. Looking historically at the portfolio on a like-for-like basis, we have seen lower valuation volatility, with moderate increases in times of growth and moderate declines in times of pressure.

Refael Zamir: Looking historically at the portfolio on a like-for-like basis, we have seen lower valuation volatility with moderate increase in times of growth and moderate decline in times of pressure, as movement have been driven primarily by rental and operational growth rather than market-driven revaluations. Looking ahead, our base case is for yields to remain broadly stable, with value development driven primarily by organic operating performance. Slide 11 illustrates how we constantly drive our in-house platform efficiently through innovations. Over more than a decade, we have progressively built out our digital and operational capabilities from digital tenant service and centralized in-house service center through standardized digital workflow, and today, to AI-supported human-led processes deployed across our operation. Looking ahead, we will continue scaling implementation and focus on emerging innovations to drive further efficiency gains. This is already reflected in our tenants matrix.

Speaker #2: As movement has been driven primarily by rental and operational growth, rather than market-driven revaluations. Looking ahead, our base case is for earnings to remain broadly stable.

Speaker #2: With value development driven primarily by organic operating performance. Slide 11 illustrates how we constantly drive our in-house price platform efficiently through innovations. Over more than a decade, we have progressively built out our digital and operational capabilities, from digital tenant service and a centralized in-house service center through standardized digital workflows, and today, to AI-supported human-read processes deployed across our operations.

Speaker #2: Looking ahead, we will continue scaling implementation and focus on emerging innovations to drive further efficiency gains. This is already reflected in our tenants matrix.

Speaker #2: The share of tenant requests handled through our property management app rose to over 17% in the second quarter of 2026, supported by strong app adoption.

Refael Zamir: The share of tenant requests handled through our property management app rose to over 17% in Q2 2026, supported by strong app adoption. Around 95% of the handover protocols are now completed digitally, and we are seeing high rates of digital move-ins and move-outs. Constant investment in our digital and AI capabilities improves tenant experience, builds up operational resilience, and increase cost efficiency across the platform, keeping our operating costs low and supporting our high EBITDA margin of around 80%. Now please let me hand over to Idan to present the financial results.

Speaker #2: Around 95% of the handover protocols are now completed digitally, and we are seeing high rates of digital move-ins and move-outs. Constant investment in our digital and AI capabilities improves tenant experience, builds up operational resilience, and increases cost efficiency across the platform.

Speaker #2: Keeping our operating costs low and supporting our high EBITDA margin of around 80%. Now, please let me hand over to Dan to present the financial results.

Speaker #3: Thanks, Rafael. On slide 13, we present our P&L results for the first half of 2026. Net rental income amounted to €219 million, an increase of 3%, driven primarily by strong like-for-like rental growth of 3.3%, supported by acquisitions completed during the period and partially offset by the impact of disposals in 2026 and from previous periods.

Idan Hadad: Thanks, Refael. On slide 13, we present our P&L results for H1 2026. Net rental income amounted to EUR 219 million, an increase of 3%, driven primarily by strong like-for-like rental growth of 3.3%, supported by acquisitions completed during the period, and partially offset by the impact of disposals in 2026, and from previous periods. Adjusted EBITDA increased by 3% to EUR 174 million, in line with the rental growth and broadly stable net operating expenses. Finance expenses rose to EUR 37 million, reflecting the full-period cost of debt raised in period, which have now full effect in this period. In H1 2026, we conducted a full revaluation of the portfolio, recording a positive like-for-like value change of 0.2%. This uplift was driven by our continued strong operational performance rather than by yield compression. This resulted in EUR 56 million of property revaluations and capital gains.

Speaker #3: Adjusted EBITDA increased by 3% to €174 million, in line with the rental growth and broadly stable net operating expenses. Finance expenses rose to €37 million, reflecting the full-period cost of debts raised in prior periods, which have now fully taken effect in this period.

Speaker #3: In the first half of 2026, we conducted a full revaluation of the portfolio, recording a positive like-for-like value change of 0.2%. This uplift was driven by our continued strong operational performance, rather than by yield compression.

Idan Hadad: In H1 2026, we conducted a full revaluation of the portfolio, recording a positive like-for-like value change of 0.2%. This uplift was driven by our continued strong operational performance rather than by yield compression. This resulted in EUR 56 million of property revaluations and capital gains.

Speaker #3: This resulted in €56 million of property revaluations and capital gains. We recorded a profit of €129 million for the first half of 2026, compared to €210 million in H1 2025, with the decrease primarily reflecting a lower revaluation result compared to the previous period and higher finance expenses, partially offset by continued strong operational performance of the portfolio.

Idan Hadad: We recorded a profit of EUR 129 million for H1 2026, compared to EUR 210 million in H1 2025, with the decrease primarily reflecting a lower revaluation result comparing to the previous period, and higher finance expenses, partially offset by continued strong operational performance of the portfolio. Basic earnings per share for the period came in at EUR 0.49 compared to EUR 0.92 in H1 2025. Turning to slide 14, our FFO I and II results. FFO I came in at EUR 91 million in H1 2026, down from EUR 95 million in the same period last year. The main drivers of the decline were higher perpetual note attribution and higher finance expenses, along with higher contribution to minorities. Together, these more than offset the growth we saw in the adjusted EBITDA. FFO I per share stood at EUR 0.52 compared to EUR 0.54 in H1 2025.

Speaker #3: Basic earnings per share for the period came in at €0.49 compared to €0.92 in H1 2025. Turning to slide 14, our FFO 1 and 2 results.

Speaker #3: FFO 1 came in at €86 million for Q2 2026, down from €95 million in the same period last year. The main drivers of the decline were higher perpetual note attribution and higher finance expenses, along with a higher contribution to minorities.

Idan Hadad: The main drivers of the decline were higher perpetual note attribution and higher finance expenses, along with higher contribution to minorities. Together, these more than offset the growth we saw in the adjusted EBITDA. FFO I per share stood at EUR 0.52 compared to EUR 0.54 in H1 2025.

Speaker #3: Together, these more than offset the growth we saw in the adjusted EBITDA. FFO 1 per share stood at €0.52, compared to €0.54 in H1 2025.

Speaker #3: A higher perpetual note attribution comes from the refinancing we completed in May, when we issued €600 million of new perpetual notes at a coupon of 5.25%, and at the same time redeemed €603 million of notes that carried a coupon of 1.5%.

Idan Hadad: The higher perpetual note attribution comes from the refinancing we completed in May, when we had issued EUR 600 million of new perpetual notes at a coupon of 5.25%, and at the same time redeemed EUR 603 million of notes that carry the coupon of 1.5%. FFO II amounted to EUR 99 million, lower compared to EUR 146 million a year ago as a result of a much lower level of disposals in H1 2026 than in H1 2025, along with the lower FFO I. Over the period, we disposed of EUR 31 million of assets against around EUR 131 million a year earlier. The sales during the period were completed well above book value at a premium of 13% and at a margin of 34 over total costs, including CapEx. On slide 15, we present an update on our maintenance and CapEx activities.

Speaker #3: FFO 2 amounted to €99 million, lower compared to €146 million a year ago, as the result of a much lower level of disposals in H1 2026 than in H1 2025, along with a lower FFO 1.

Speaker #3: Over the period, we disposed of €31 million of assets, compared to around €131 million a year earlier. The sales during the period were completed well above book value, at a premium of 13%, and at a margin of 34% over total cost, including capex.

Idan Hadad: The sales during the period were completed well above book value at a premium of 13% and at a margin of 34 over total costs, including CapEx. On slide 15, we present an update on our maintenance and CapEx activities.

Speaker #3: On slide 15, we present an update on our maintenance and capex activities. Our focus remains on enhancing the overall asset quality of the portfolio and supporting rental income growth.

Idan Hadad: Our focus remains on enhancing the overall asset quality of the portfolio and supporting rental income growth. In H1 2026, total investment amounted to EUR 13.3 per square meter, stable compared to H1 last year, despite inflation of around 3% over the period. Of this, EUR 10.3 per square meter relates to repositioning CapEx and EUR 3 per square meter to maintenance. Additionally, we invested EUR 15 million in pre-letting modification, which includes the creation of new rental space and other measures supporting additional rental income in upcoming periods. We also invested a targeted EUR 2 million in modernization projects. These are aimed at upgrades such as balconies, elevators, and technical infrastructure to support higher rental levels. Investment in energy efficiency and CO2 reduction, such as window replacement and heating system upgrades, are allocated based on the specific nature and scope of each project.

Speaker #3: In H1 2026, total investment amounted to €13.3 per square meter, stable compared to H1 last year, despite inflation of around 3% over the period.

Speaker #3: Of these, €10.3 per square meter relates to repositioning capex and €3 per square meter to maintenance. Additionally, we invested €15 million in pre-letting modification, which includes the creation of new rental space and other measures supporting additional rental income in upcoming periods.

Speaker #3: We also invested a targeted €2 million in modernization projects. These are aimed at upgrades such as balconies, EEs, elevators, and technical infrastructure to support higher rental levels.

Idan Hadad: We also invested a targeted EUR 2 million in modernization projects. These are aimed at upgrades such as balconies, elevators, and technical infrastructure to support higher rental levels. Investment in energy efficiency and CO2 reduction, such as window replacement and heating system upgrades, are allocated based on the specific nature and scope of each project.

Speaker #3: Investments in energy efficiency and CO2 reduction, such as window replacements and heating system upgrades, are allocated based on the specific nature and scope of each project.

Idan Hadad: FFO for H1 2026 was EUR 52 million compared to EUR 54 million in H1 2025, lower mainly due to the lower FFO I. On slide 16, we present a case study that shows how our sustainability CapEx is translating into measurable improvements in asset quality. This is a building in Berlin where we replaced a gas-fired heating system with a hybrid air source heat pump supported by a buffer tank and a gas backup for peak demand. The works were carried as part of a larger investment program and quality enhancement, and therefore it made sense here to also increase the energy efficiency. The impact of this single measure was significant. The asset's energy performance certificate improved from an E rating to a C, with the final energy demand reduced by around 45%, moving the buildings from below to above the German stock average.

Speaker #3: It was €52 million compared to €54 million in H1 2025, lower mainly due to the lower FFO 1. On slide 16, we present a case study that shows how our sustainability capex is translating into measurable improvements in asset quality.

Speaker #3: This is a building in Berlin where we replaced a gas-fired heating system with a hybrid air-source heat pump, supported by a buffer tank and a gas backup for peak demand.

Speaker #3: The works were carried out as program and quality enhancements, and therefore it made sense here to also increase the energy efficiency. The impact of this single measure was significant.

Idan Hadad: The impact of this single measure was significant. The asset's energy performance certificate improved from an E rating to a C, with the final energy demand reduced by around 45%, moving the buildings from below to above the German stock average.

Speaker #3: The asset's energy performance certificate improved from an E rating to a C, with final energy demand reduced by around 45%, moving the building from below to above the German stock average.

Speaker #3: The renewable share now sits at over 65%, and the system is in line with the new GMOG requirements. We are already working to improve the assets with the lowest energy scores, irrespective of the regulatory timeline.

Idan Hadad: The renewable share now sits at over 65%, and the system is in line with the new GEG requirements. We are already working to improve the assets with the lowest energy score, irrespective of the regulatory timeline. The European framework, the EPBD, has now been transferred into German law through the GModG and imposed no renovation obligation on residential assets. We see energy efficiency investment as a driver of asset quality, lower running costs for our tenants, and reduced regulatory and CO2-related risk over the longer term. As the chart on the right shows, this continued work keeps our portfolio well ahead of the German average, both for multifamily and total residential stock. On slide 17, we present the update on our EPRA NAV metrics. EPRA NRV per share increased by 1% to EUR 29.2. EPRA NTA per share increased by 1% to EUR 25.8.

Speaker #3: The European framework, the EPBD, has now been transposed into German law through the GMOG and imposes no renovation obligation on residential assets. We see energy efficiency investment as a driver of asset quality, lower running costs for our tenants, and reduced regulatory and CO2-related risk over the longer term.

Speaker #3: As the chart on the right shows, this continued work keeps our portfolio well ahead of the German average, both for multifamily and total residential stock.

Idan Hadad: As the chart on the right shows, this continued work keeps our portfolio well ahead of the German average, both for multifamily and total residential stock. On slide 17, we present the update on our EPRA NAV metrics. EPRA NRV per share increased by 1% to EUR 29.2. EPRA NTA per share increased by 1% to EUR 25.8.

Speaker #3: On slide 17, we present the update on our EPRA NAV metrics. EPRA NRV per share increased by 1% to €29.2. EPRA NTA per share increased by 1% to €25.8.

Speaker #3: EPRA NDV per share increased by 1% to €23.6. The increase across our NAV metrics was driven mainly by strong operational performance and positive property revaluation recorded in the period, and partially offset by the provision made for the dividend paid in Q3.

Idan Hadad: EPRA NDV per share increased by 1% to EUR 23.6. The increase across our NAV metrics was driven mainly by the strong operational performance and positive property revaluation recorded in the period, and partially offset by the provision made for the dividend paid in Q3. On slide 19, we turn to our financial profile. Our LTV ratios stood at 33% as of June 2026, up from 31% at year-end 2025. The increase was mainly the result of acquisition and investments carried out during the period, partially offset by the positive revaluations and operational cash flows generated over the H1. The EPRA LTV ratio, which treats perpetual notes as debt, stood at 45%. We remain committed to maintaining a conservative financial profile, which is a core pillar of our strategy and a key driver of long-term success.

Speaker #3: On slide 19, we turn to our professional financial profile. Our LTV ratios stood at 33% as of June 2026, up from 31% at year-end 2025.

Speaker #3: The increase was mainly the result of acquisitions and investments carried out during the period, partially offset by the positive revaluations and operational cash flows generated over the half year.

Speaker #3: The EPRA LTV ratio, which treats perpetual notes as debt, stood at 45%. We remain committed to maintaining a conservative financial profile, which is the core pillar of our strategy and a key driver of long-term success.

Speaker #3: Our leverage remains low, giving us the flexibility to capture external growth, which we expect to continue unlocking primarily through accretive capital recycling. The interest coverage ratio stands at 4.7 times, and, in addition, €6.6 billion, or 71% of the portfolio, remains unencumbered, ensuring strong access to bank financing.

Idan Hadad: Our leverage remains low, giving us the flexibility to capture external growth, which we expect to continue unlocking primarily through accretive capital recycling. The interest coverage ratio stands at 4.7 times, and in addition, EUR 6.6 billion or 71% of the portfolio remains unencumbered, ensuring strong access to bank financing. As of June 2026, cash and liquid assets totaled EUR 1.4 billion. Our cost of debt remained low at 2.1%, with an average debt maturity of 3.8 years or 5.2 years, adjusting for debt already covered by our strong liquidity position. On slide 20, we bring together the steps we have taken to solidify our financial position. Through proactive management and full refinancing of our perpetual notes, we are in a strong and conservative position that has allowed us to resume our dividend. On the perpetual notes, we have now refinanced the entire stack.

Speaker #3: As of June 2026, cash and liquid assets totaled €1.4 billion. Our cost of debt remained low at 2.1%, with an average debt maturity of 3.8 years, or 5.2 years adjusting for debt already covered by our strong liquidity position.

Speaker #3: On slide 20, we bring together the steps we have taken to solidify our financial position. Through proactive management and the full refinancing of our perpetual notes, we are in a strong and conservative position that has allowed us to resume our dividends.

Idan Hadad: On slide 20, we bring together the steps we have taken to solidify our financial position. Through proactive management and full refinancing of our perpetual notes, we are in a strong and conservative position that has allowed us to resume our dividend. On the perpetual notes, we have now refinanced the entire stack.

Speaker #3: On the perpetual notes, we have now refinanced the entire stack. In the second quarter, we issued €600 million of new notes at a coupon of 5.25%, following the transaction we executed in the fourth quarter of last year, and completed the tender offer on the notes with the first call date this year, which have now been bought back or redeemed.

Idan Hadad: In the second quarter, we issued EUR 600 million of new notes at a coupon of 5.25%. Following the transaction we executed in the fourth quarter of last year and completed a tender offer on the notes with the first call date this year, which have been now bought back or redeemed. Our perpetual notes have equity content under S&P methodology. With this, the next call date across the stack is only in 2031, giving us greater clarity on this part of our capital structure and limiting our exposure to market volatility. Following approval at our annual general meeting on 24 June, we paid a dividend of EUR 0.30 per share for the 2025 financial year in July.

Speaker #3: Our perpetual notes have equity content under S&P methodology. With this, the next call date across the stack is only in 2031, giving us greater clarity on this part of our capital structure and limiting our exposure to market volatility.

Speaker #3: Following approval at our Annual General Meeting on the 24th of June, we paid a dividend of €0.30 per share for the 2025 financial year in July.

Speaker #3: Going forward, we have updated our dividend policy to 50% of FFO 1 per share, which we view as a balance between an attractive return for shareholders and retaining the headroom to fund accretive growth while keeping our balance sheet conservative.

Idan Hadad: Going forward, we have updated our dividend policy to 50% of FFO I per share, which we view as a balance between an attractive return for shareholders and retaining the headroom to fund aggressive growth while keeping our balance sheet conservative. With this, allow me to hand over to Christian Windfuhr to conclude the presentation.

Speaker #3: And with this, allow me to hand over to Christian to conclude the presentation.

Speaker #1: Thank you, Edan. Allow me to point out that in the appendix, you will find more detail on our strategy, portfolio distribution, ESG, financial policy, analyst coverage, and more.

Christian Windfuhr: Thank you, Idan. Allow me to point out that in the appendix you will find more detail on our strategy, portfolio distribution, ESG, financial policy, analyst coverage, and more. On slide 22, I would like to confirm our FFO guidance for 2026. Our results for the H1 were in line with our expectations and put us in a good position to confirm our guidance. From the Q3 onwards, we will have the full impact of the new perpetual notes, which will have an offsetting effect on the FFO1 growth. Accordingly, we continue to expect FFO1 in the range of EUR 175 million to EUR 185 million, while internal and external growth is expected to support increasing EBITDA, more than offsetting the impact of last year's disposals. FFO1 is expected to be slightly lower in 2026 than in 2025.

Speaker #1: On slide 22, I would like to confirm our FFO guidance for 2026. Our results for the first half were in line with our expectations and put us in a good position to confirm our guidance.

Speaker #1: From the third quarter onwards, we will have the full impact of the new perpetual notes, which will have an offsetting effect on the FFO 1 growth.

Speaker #1: Accordingly, we continue to expect FFO 1 in the range of €175 million to €185 million, while internal and external growth is expected to support increasing EBITDA, more than offsetting the impact of last year's disposals.

Speaker #1: FFO 1 is expected to be slightly lower in 2026 than in 2025. For 2026, our guidance is like-for-like rental growth of around 3.5%, FFO 1 in the range of €175 million to €185 million, translating to FFO 1 per share of €0.99 to €1.05.

Christian Windfuhr: For 2026, our guidance is like-for-like rental growth of around 3.5%, FFO1 in the range of EUR 175 million to EUR 185 million, translating to FFO1 per share of EUR 0.99 to EUR 1.05. The dividend in the range of 50 to 53 cents following our updated dividend policy. As always, we aim to maintain our strong balance sheet and keep LTV below our 45% internal limit. Thank you for your attention, and allow me now to move to Q&A.

Speaker #1: The dividend is in the range of 50 to 53 cents following our updated dividend policy. As always, we aim to maintain our strong balance sheet and keep LTV below our 45% internal limit.

Speaker #1: Thank you for your attention, and allow me now to move to Q&A.

Speaker #2: Thank you. Before we invite you, Derek, to telephone questions, we would like to answer questions that we have received by email prior to this call.

Michael Bar-Yosef: Thank you. Before we invite your direct telephone questions, we would like to answer questions that we have received by email prior to this call. For simplicity reasons, the team has taken liberty to group similar questions in order to answer as many questions as possible. Allow me now to read out these questions. What is your view on the geopolitical situation and its impact on GCP?

[Company Representative] (Grand City Properties): Thank you. Before we invite your direct telephone questions, we would like to answer questions that we have received by email prior to this call. For simplicity reasons, the team has taken liberty to group similar questions in order to answer as many questions as possible. Allow me now to read out these questions. What is your view on the geopolitical situation and its impact on GCP?

Speaker #2: For simplicity's sake, the team has taken the liberty to group similar questions in order to answer as many questions as possible. Allow me now to read out these questions.

Speaker #2: What is your view on the geopolitical situation and its impact on GCP?

Speaker #1: The geopolitical developments continue to create volatility in the markets, but overall, we see the potential impact on Grand City Properties as manageable. Our portfolio locations benefit from strong fundamentals, and we do not observe a material impact on our operations.

Christian Windfuhr: The geopolitical developments continue to create volatility in the markets, but overall, we see the potential impact of Grand City Properties as manageable. Our portfolio locations benefit from strong fundamentals, and we do not observe a material impact on our operations. We continue to monitor capital markets and interest rates closely. However, we are in a solid financial position as a result of the measures we have taken in recent years. We hold EUR 1.4 billion in cash and liquid assets, alongside low leverage and a large share of unencumbered assets. In addition, following the refinancing completed in the Q2, our perpetual note stack is now fully refinanced, with the next call date only in 2031, giving us further protection against market volatility. Despite the increased uncertainty, our bond spreads have remained mostly stable, and both capital and transaction markets have stayed open with strong invested demand.

Speaker #1: We continue to monitor capital markets and interest rates closely; however, we are in a solid financial position as a result of the measures we have taken in recent years.

Speaker #1: We hold €1.4 billion in cash and liquid assets, alongside low leverage and a large share of unencumbered assets. In addition, following the refinancing completed in the second quarter, our perpetual note stack is now fully refinanced, with the next call date only in 2031, giving us further protection against market volatility.

Christian Windfuhr: In addition, following the refinancing completed in the Q2, our perpetual note stack is now fully refinanced, with the next call date only in 2031, giving us further protection against market volatility. Despite the increased uncertainty, our bond spreads have remained mostly stable, and both capital and transaction markets have stayed open with strong invested demand. This gives us comfort that the current environment is not creating any significant disruption to our access to liquidity or to our business.

Speaker #1: Despite the increased uncertainty, our bond spreads have remained mostly stable, and both capital and transaction markets have stayed open with strong investor demand. This gives us comfort that the current environment is not creating any significant disruption to our access to liquidity or to our business.

Christian Windfuhr: This gives us comfort that the current environment is not creating any significant disruption to our access to liquidity or to our business.

Speaker #2: Like-for-like rental growth stood at 3.3% in the first half. What is driving it, and how do you see your performance developing going forward?

Michael Bar-Yosef: Like-for-like rental growth stood at 3.3% in the H1. What is driving it, and how do you see your performance developing going forward?

Christian Windfuhr: Like-for-like rental growth stood at 3.3% in the H1. What is driving it, and how do you see your performance developing going forward?

Refael Zamir: The like-for-like rental growth is in line with the level we have seen in the recent period and in line with our guidance of approximately 3.5%. Small fluctuations from period to period are normal, and it is impacted by several factors, such as timing of the rent increases, as well as minor fluctuations in occupancy, which are a normal part of our business. For the H1 of 2026, we recorded total like-for-like rental growth of 3.3%, with reletting contributing 2.1% and indexation 1.2%. Reletting is a bigger driver as it allowed us to capture the revisionary potential of the portfolio faster. We are seeing referenced rents continue to move in our favor with the 2026 Berlin mid-period set nearly 7% above the prior schedule, which increased the potential we captured on reletting.

Speaker #3: The like-for-like rental growth is in line with the levels we have seen in the recent period and in line with our guidance of approximately 3.5%.

Speaker #3: Small fluctuations from period to period are normal, and they're impacted by several factors such as the timing of the rent increases, as well as minor fluctuations in occupancy, which are a normal part of our business.

Speaker #3: For the first half of 2026, we recorded total like-for-like rental growth of 3.3%, with rerating contributing 2.1% and indexation 1.2%. Rerating is a bigger driver, as it allowed us to capture the revisionary potential of the portfolio faster.

Speaker #3: We are seeing reference rents continue to move in our favor, with the 2026 Berlin Mietspiegel figure set nearly 7% above the prior schedule, which increases the potential we captured on re-rating.

Speaker #3: In London, rental growth has coverage throughout our German revenue, just over 3%, consistent with what we guided, as vacancy there settled at structurally low revenue, just above 2%.

Refael Zamir: In London, rent and growth is coverage throughout our German level at just over 3%, consistent with what we guided as vacancy there settled at structurally low level, just above 2%. Going forward, we expect to continue unlocking the revisionary potential gradually through steady indexation and stronger reletting, supported by those fundamentals, keeping us well positioned to deliver on our full-year guidance.

Speaker #3: Going forward, we expect to continue unlocking the revisionary potential gradually through steady indexation and stronger reratings, supported by those fundamentals keeping us well positioned to deliver on our full-year guidance.

Speaker #2: How do you assess the valuation results for the period, and what is your outlook for the coming periods? How do you view the transaction market?

Michael Bar-Yosef: How do you assess the valuation results for the period, and what is your outlook for the coming periods? How do you view the transaction market?

[Company Representative] (Grand City Properties): How do you assess the valuation results for the period, and what is your outlook for the coming periods? How do you view the transaction market?

Refael Zamir: As part of our H1 report, we conducted a full external revaluation of the portfolio by independent valuers, and the result was 0.2% positive like for like net of CapEx and 0.6% including CapEx. This was supported by the continued strong operational performance of the portfolio, and there were no large movements in yield. Accordingly, our valuation parameters remain broadly stable compared to December, with the portfolio yield stable at 4.9% and the discount in capitalization rate broadly unchanged. We continue to hold the view that yields will remain broadly stable with gradual movement, and this is supported by market. Looking ahead, our base case is for organic value growth to be correlated with the operational performance of the portfolio, with yields remaining broadly stable, and in case of yield expansion, we expect this to be more than offset by operational growth.

Idan Hadad: As part of our H1 report, we conducted a full external revaluation of the portfolio by independent valuers, and the result was 0.2% positive like for like net of CapEx and 0.6% including CapEx. This was supported by the continued strong operational performance of the portfolio, and there were no large movements in yield. Accordingly, our valuation parameters remain broadly stable compared to December, with the portfolio yield stable at 4.9% and the discount in capitalization rate broadly unchanged. We continue to hold the view that yields will remain broadly stable with gradual movement, and this is supported by market. Looking ahead, our base case is for organic value growth to be correlated with the operational performance of the portfolio, with yields remaining broadly stable, and in case of yield expansion, we expect this to be more than offset by operational growth.

Speaker #3: As part of our H1 report, we conducted a full external revaluation of the portfolio by independent valuers, and the result was 0.2% positive like-for-like, net of capex, and 0.6% including capex.

Speaker #3: This was supported by the continued strong operational performance of the portfolio and there were no large movements in yields. Accordingly, our valuation parameters remain broadly stable compared to December, with the portfolio yield stable at 4.9% and the discount in capitalization rates broadly unchanged.

Speaker #3: We continue to hold the view that yields will remain broadly stable with gradual movements, and this is supported by the market. Looking ahead, our base case is for organic value growth to be correlated with the operational performance of the portfolio, with yields remaining broadly stable. In case of yield expansion, we expect this to be more than offset by operational growth.

Speaker #3: At the same time, we do not rule out selective yield compression over the longer term, especially in the scenario where financing rates come down, supported by strong demand, low supply, and high replacement costs.

Refael Zamir: At the same time, we do not rule out selective yield compression over the longer term, especially in the scenario where financing rates come down, supported by strong demand, low supply, and high replacement costs. But with the recent moves in the capital markets we see, it is more as a longer-term prospect than a driver for the coming period. The transaction market has slowed down in the past few months, following the volatility in the market. However, transactions have not been fully muted, and we see transactions in the European market being closed, including several larger deals. We do note that the summer months are usually quiet, and we will hopefully see the transaction volume increase after the summer and towards Q4, hopefully also supported by positive development on the geopolitical front.

Idan Hadad: At the same time, we do not rule out selective yield compression over the longer term, especially in the scenario where financing rates come down, supported by strong demand, low supply, and high replacement costs. But with the recent moves in the capital markets we see, it is more as a longer-term prospect than a driver for the coming period. The transaction market has slowed down in the past few months, following the volatility in the market. However, transactions have not been fully muted, and we see transactions in the European market being closed, including several larger deals. We do note that the summer months are usually quiet, and we will hopefully see the transaction volume increase after the summer and towards Q4, hopefully also supported by positive development on the geopolitical front.

Speaker #3: But with the recent moves in the capital markets, we see this more as a longer-term prospect than a driver for the coming period.

Speaker #3: The transaction market has slowed down in the past few months following the volatility in the market. However, transactions have not been fully muted, and we see transactions in the European market being closed, including several larger deals.

Speaker #3: We do note that the summer months are usually quiet, and we will hopefully see the transaction volumes increase after the summer and towards Q4, hopefully also supported by positive developments on the geopolitical front.

Speaker #2: How do you view your leverage position, and do you expect it to move materially?

Michael Bar-Yosef: How do you view your leverage position, and do you expect it to move materially?

[Company Representative] (Grand City Properties): How do you view your leverage position, and do you expect it to move materially?

Speaker #3: Our leverage remains conservative, with an LTV at 33% as of June—higher compared to December—as a result of investments, which we see as long-term supportive.

Refael Zamir: Our leverage remains conservative with an LTV at 33% as of June, higher compared to December as a result of investments which we see long-term supportive. EPRA LTV, which treats perpetual notes as debt, remains stable at 45%. Our strong financial position allowed us to resume the distribution of dividend. We have best-in-class ICR and net debt to EBITDA ratios, which is also a reflection of our conservative financial approach. Preserving a conservative financial profile remains a core pillar of our strategy. While our metrics give us ample headroom to support growth, we expect to fund that growth through capital recycling and our current liquidity, so we anticipate leverage staying low and below our board limits.

Idan Hadad: Our leverage remains conservative with an LTV at 33% as of June, higher compared to December as a result of investments which we see long-term supportive. EPRA LTV, which treats perpetual notes as debt, remains stable at 45%. Our strong financial position allowed us to resume the distribution of dividend. We have best-in-class ICR and net debt to EBITDA ratios, which is also a reflection of our conservative financial approach. Preserving a conservative financial profile remains a core pillar of our strategy. While our metrics give us ample headroom to support growth, we expect to fund that growth through capital recycling and our current liquidity, so we anticipate leverage staying low and below our board limits.

Speaker #3: April LTV, which rates perpetual notes as debt, remains stable at 49.45%. Our strong financial position allowed us to resume the distribution of dividends.

Speaker #3: We have best in class ICR and net to debt a net debt to EBITDA ratios which is also a reflection of our conservative financial approach.

Speaker #3: Preserving a conservative financial profile remains a core pillar of our strategy. While our metrics give us ample headroom to support growth, we expect to fund that growth through capital recycling and our current liquidity, so we anticipate leverage staying low and below our board limit.

Speaker #2: How do you evaluate your strategy on acquisitions and disposals in the current market environment? Where is the deal pipeline more active?

Michael Bar-Yosef: How do you evaluate your strategy on acquisitions and disposals in the current market environment? Where is the deal pipeline more active?

[Company Representative] (Grand City Properties): How do you evaluate your strategy on acquisitions and disposals in the current market environment? Where is the deal pipeline more active?

Speaker #3: Regarding acquisition and disposal, our approach is unchanged, and we stick to disciplined capital recycling and highly selective acquisitions, with FFO acquisitions as the main principle.

Refael Zamir: Regarding acquisition and disposal, our approach is unchanged, and we stick to disciplined capital recycling and highly selective acquisitions with FFO accretions as the main principle. We do not set fixed volume targets for the simple reason that we do not want to find ourselves transacting just for the sake of meeting the target and not for creating value. As presented, in H1 2026, we completed around EUR 75 million of acquisitions in Germany, alongside the partial takeover of EUR 100 million in London, new build portfolio at attractive factor, while completing around EUR 30 million of disposal. The remainder of the London acquisition was closed recently after the reporting period, and we expect the full impact from the new acquisition to be reflected from 2027 onwards.

Speaker #3: We do not set a fixed volume target for the simple reason that we do not want to find ourselves transacting just for the sake of meeting the target, and not for creating value.

Speaker #3: As presented, in the first half of 2026, we completed around €75 million of acquisitions in Germany, alongside the partial takeover of a €100 million new-built portfolio in London at an attractive factor.

Speaker #3: While completing around €30 million of disposals, the remainder of the London acquisition was closed recently after the reporting period, and we expect the full impact from the new acquisition to be reflected from 2027 onwards.

Speaker #2: Have you seen changes in your financing conditions in recent months?

Michael Bar-Yosef: Have you seen changes in your financing conditions in recent months?

[Company Representative] (Grand City Properties): Have you seen changes in your financing conditions in recent months?

Speaker #3: The financing conditions and access to capital markets remain strong despite market volatility, with spreads on our bonds broadly stable at low levels, similar to where they were at the beginning of the year.

Refael Zamir: The financing conditions, access to capital markets remains strong despite market volatility, with spreads on our bonds broadly stable at low levels, similar to where they were at the beginning of the year. Given our capital market access, combined with our large pool of unencumbered assets and established bank relationships, we view ourselves in a solid position to access funds at attractive pricing. We have no near-term refinancing pressure. Our liquidity comfortably covers bond maturities up until the end of 2027. We expect to come to the market opportunistically, for instance, as part of liability management exercise, if conditions support it.

Idan Hadad: The financing conditions, access to capital markets remains strong despite market volatility, with spreads on our bonds broadly stable at low levels, similar to where they were at the beginning of the year. Given our capital market access, combined with our large pool of unencumbered assets and established bank relationships, we view ourselves in a solid position to access funds at attractive pricing. We have no near-term refinancing pressure. Our liquidity comfortably covers bond maturities up until the end of 2027. We expect to come to the market opportunistically, for instance, as part of liability management exercise, if conditions support it.

Speaker #3: Given our capital market access, combined with our large pool of unencumbered assets and established bank relationships, we view ourselves in a solid position to access funds at attractive pricing.

Speaker #3: We have no near-term refinancing pressure. Our liquidity comfortably covers bond maturities up until the end of 2027. We expect to come to the market opportunistically, for instance as part of a liability management exercise, if conditions support it.

Speaker #2: How much are your perpetual coupon expenses this year and next year?

Michael Bar-Yosef: How much are your perpetual coupon expenses this and next years?

[Company Representative] (Grand City Properties): How much are your perpetual coupon expenses this and next years?

Speaker #3: Having fully refinanced the perpetual note stack in the second quarter, the perpetual notes attribution will be around €53 million for 2026, in line with our guidance expectation, and then normalize to a full-year attribution of €60 million from 2027 onwards.

Refael Zamir: Having fully refinanced the perpetual notes debt in Q2, the perpetual notes attribution will be around EUR 53 million for 2026, in line with our guidance expectation, and then normalize to a full-year attribution of EUR 60 million from 2027 onwards. We have been proactive in managing our perpetual notes with the next call date only in 2031. We have now increased clarity regarding this component of our capital structure.

Idan Hadad: Having fully refinanced the perpetual notes debt in Q2, the perpetual notes attribution will be around EUR 53 million for 2026, in line with our guidance expectation, and then normalize to a full-year attribution of EUR 60 million from 2027 onwards. We have been proactive in managing our perpetual notes with the next call date only in 2031. We have now increased clarity regarding this component of our capital structure.

Speaker #3: We have been proactive in managing our perpetual notes, with the next call dates only in 2031. We now have increased clarity regarding this component of our capital structure.

Speaker #2: Those were the questions that we received prior to this call. We can now open the session for your questions. We would appreciate it if you could ask all your questions at once, and we will answer them one by one.

Michael Bar-Yosef: Those were the questions that we received prior to this call. We can now start the open session for your questions. We would appreciate if you can ask all your questions at once, and we will answer them one by one.

[Company Representative] (Grand City Properties): Those were the questions that we received prior to this call. We can now start the open session for your questions. We would appreciate if you can ask all your questions at once, and we will answer them one by one.

Speaker #1: We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on the telephone. You will hear a tone to confirm that you have entered the queue.

Operator: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered a queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Kai Klose from Berenberg. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press star, then two. Participants are requested to disable loudspeaker mode while asking a question.

Speaker #1: Anyone who has a question may press star and one at this time. The first question comes from Kai Closer from Berenberg. Please go ahead.

Kai Klose: Yes, good morning. I have got two questions. The first one, could you indicate what is the annualized rents of this year's acquisitions? You mentioned a couple of, or some assets in London might come into the portfolio in installments or in stages. Could you indicate what is the, let's say, total annualized rents of these acquisitions in London and Germany? Secondly, what is currently the exposure in Germany into non-residential, like elderly care homes? Thanks.

Speaker #4: Yes, good morning. I've got two questions. The first one: Could you indicate what the annualized rents are for this year's acquisitions? You mentioned a couple of—or some—assets in London.

Speaker #4: I might come into the portfolio in installments or in stages. Could you indicate what is the, let's say, total annualized rents of these acquisitions?

Speaker #4: In London and Germany. And secondly, what is currently the exposure in Germany to non-residential like? Thanks.

Speaker #3: Thank you, Kai, for your question. We acquired €130 million in assets in the first half of this year. We also have another €50 million coming in Q3.

Refael Zamir: Thank you, Kai, for your question. We acquired EUR 130 million assets in the H1 of this year. We also have another EUR 50 million coming in Q3, so we completed that as well after the reporting period. So it is a total of EUR 180. We acquired around a multiple of 13, 14 multiple blended on the 180. So once they fully contribute, we will do 180 divided by 14. I think that is around EUR 12 million or so. But I will have to calculate that afterwards. But 14 multiple is what we had. Yes, it will take a bit time for the London acquisitions. As you know, we bought properties that are turnkey developments, but we have to relet them in full, and we hope to see already in the next few months, full operation there, and it will be implemented in our P&L and results. Thank you. Next question, please.

Speaker #3: So we completed that as well after the reporting period. So it's a total of 180. We were acquired around a multiple of 13–14, multiple blended on the 180.

Speaker #3: So, once they fully contribute, we'll do 180 divided by 14. I think that's around 12 million or so, but I'll have to calculate that afterwards. But 14 multiplies what we had.

Speaker #3: And yes, it will take a bit of time for the London acquisitions. As you know, we bought properties that are turnkey developments, but we have to re-let them in full. We hope to see them ready in the next few months for full operation there, and it will be implemented in our P&L and results.

Refael Zamir: Yes, it will take a bit time for the London acquisitions. As you know, we bought properties that are turnkey developments, but we have to relet them in full, and we hope to see already in the next few months, full operation there, and it will be implemented in our P&L and results. Thank you. Next question, please.

Speaker #3: Thank you. Next question, please. Sorry. Okay. So we're now looking to increase exposure to non-residential. So no change here. We focus on non-residential, as we've done before, and hopefully we continue acquiring assets with similar characteristics to what we've done.

Kai Klose: No.

Refael Zamir: Sorry.

Kai Klose: Exposure to non-resi.

Refael Zamir: Okay. We are now looking to increase exposure to non-resi, so no change here. We focus on non-residential, as we have done before, and hopefully we continue acquiring assets of similar characteristics that we have done so far. Thank you.

Speaker #3: So far. Thank you.

Kai Klose: Check.

Speaker #1: The next question comes from Ellis Acklin from First Berlin. Please go ahead.

Operator: The next question comes from Ellis Acklin from First Berlin. Please go ahead.

Speaker #5: Yes, good morning, everyone. Thanks for the detailed presentation and for taking our questions. I have a question regarding the disposal economics, which seem to take a material uptick in Q2 versus the first quarter.

Ellis Acklin: Yes. Good morning, everyone. Thanks for the detailed presentation and for taking our questions. I have a question regarding the disposal economics, which seem to take a material uptick in Q2 versus the first quarter. It looks like you booked a 13% premium and a much higher margin. Maybe you could give some color on what that is attributed to, if it is based on a particular asset you sold, or is there some change in buyer appetite or achievable pricing? Just some further color on that would be appreciated. Thank you.

Speaker #5: It looks like you booked a 13% premium and a much higher margin. Maybe you could give some color on what that's attributed to—if it's based on particular assets you sold, or if there's some change in buyer appetite or achievable pricing?

Speaker #5: Just some further color on that would be appreciated. Thank you.

Speaker #3: Yeah, thank you, Alice, for the question. Yeah, we sold just over €30 million in the second half of 2026. It came out, yeah, above book value at 30%.

Refael Zamir: Yeah. Thank you, Ellis, for the question. We sold just over EUR 30 million in H2 2026. It came out above book value at 30%, one three. But these were mainly condos and non-core, but mainly condos. So I would not say it is not reflective of the full portfolio. But we do see still selling book value and above, similar as we did in the past two years. So we see the momentum stay as is. Next question, please.

Speaker #3: But these were mainly condos, and non-core, but mainly condos. So I wouldn’t say it is reflective of the full portfolio, but we do see sales still happening at book value and above.

Speaker #3: Similar as we did in the past two years. So, we see that the momentum stays as is. Next question, please.

Speaker #1: The next question comes from Niraji Kumar from Barclays. Please go ahead.

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

Speaker #6: Good morning, everyone. Two questions from my side. Firstly, with regards to Aroundtown's stake in your company, I was under the impression that it was 81.5% in April, and now it seems to be at 83%.

Neeraj Kumar: Morning, everyone. Two questions from my side. Firstly, with regards to Aroundtown stake in your company, I was under the impression that it was 81.5% in April, and now it seems to be at 83%. Just trying to understand if Aroundtown bought more shares of your company in the secondary market or there was something else driving this change. Second question is with regards to your plans to access the bond market. I see you have EUR 1.4 billion of cash and liquid assets, but that is more or less in line with your debt maturities until February 2027. Just trying to understand if you plan to run with a bigger cash balance going forward as well, or do you plan to repay the debt?

Speaker #6: So, just trying to understand if the change was around onboarding more shares of your company in the secondary market, or if there was something else driving this change.

Speaker #6: And second question is with regards to your with regards to your plans to access the bond market. I mean, I see you have a 1.4 billion of cash and liquid assets, but that is more or less in line with your debt maturities until February 2027.

Speaker #6: So, just trying to understand if you plan to run with the bigger cash balance going forward as well, or do you plan to repay the debt?

Refael Zamir: Thank you, Neeraj, for your questions. First on Aroundtown stake in Grand City. Yes, Aroundtown has increased their stake from 81.5% to 83%. I believe they bought in the market. If you have questions on that, you maybe should refer to Aroundtown. Aroundtown has indicated when they did the exchange to reach 89%, they had good acceptance within 81.5%, and since then, they probably bought in the market to reach 83%. As to your second questions on maturities and cash balances. We have EUR 1.4 billion of cash as we stand end of June. Already we did a big repayment of debt on 3 August. We repaid over EUR 400 million of bonds. We have more than EUR 100 million coming in September, and we have also around EUR 500 coming in Q1. From that, given all equal, we have still around EUR 300 million for the maturities of 2028.

Speaker #3: Thank you, Niraji, for your questions. First, on Aroundtown staking Grand City. Yes, Aroundtown has increased their stake from 81.5% to 83%.

Speaker #3: I believe they bought in the market. I mean, if you have questions on that, you maybe should refer to Aroundtown. But Aroundtown has indicated when they did the exchange to reach 89%.

Speaker #3: They had good acceptance, reading 81.5%, and since then they probably bought in the market to reach 83%. As to your second question on maturities and cash balances, we have €1.4 billion of cash as we stand at the end of June.

Refael Zamir: We have EUR 1.4 billion of cash as we stand end of June. Already we did a big repayment of debt on 3 August. We repaid over EUR 400 million of bonds. We have more than EUR 100 million coming in September, and we have also around EUR 500 coming in Q1. From that, given all equal, we have still around EUR 300 million for the maturities of 2028.

Speaker #3: Already, we did a big repayment of debt on the 3rd of August. We paid over €400 million of bonds. We have more than €100 million coming in September.

Speaker #3: And we also have around 500 coming in Q1. From that, given all equal, we still have around 300 million for the maturities of 2028.

Speaker #3: But you know us—we won't wait for 2028 to refinance it. We're also looking at the 2029s and the 2030s that are coming at a higher coupon, higher than the marginal cost that we have now.

Refael Zamir: But you know us, we won't wait for 2028 to refinance it. We're also looking at the 2029s and the 2030s that are coming at a higher coupon, higher than the marginal cost that we have now. It would make sense if the conditions of the market allow it to go and do a liability management ahead of time. But we have time. We have a year and a half to prepare for this, and hopefully we see the conditions right, and we go ahead. Thank you. Next questions, please.

Speaker #3: So it wouldn't make sense—if the conditions in the market allow it—to go and do liability management ahead of time, but we have time.

Speaker #3: We have a year and a half to prepare for this, and hopefully we see the conditions right and we go ahead. Thank you. Next question, please.

Speaker #1: The next question comes from Manuel Martin from Odobi JHF. Please go ahead.

Operator: The next question comes from Manuel Martin from Oddo BHF. Please go ahead.

Speaker #5: Thank you, gentlemen. Two questions from my side, please. The first one is: maybe you could give us some more background information on the higher LTV.

Manuel Martin: Thank you, gentlemen. Two questions from my side, please. The first one is, maybe you could give us some more background information on the higher LTV. It increased a bit. In other words, where did the money go to cause the increasing LTV? That would be the first question. Second question, a bit on the market. It seems that in Germany, resi prices and resi rents are losing a bit momentum, still increasing, but decelerating, apparently. Maybe you can give us your view on that, or maybe you can prove me wrong. These are the two questions, please.

Speaker #5: It increased a bit. In other words, where did the money go to cause the increase in LTV? That would be the first question. Second question: in Germany, Resi prices and Resi rents are losing a bit of momentum—still increasing, but decelerating apparently.

Speaker #5: Maybe you can give us your view on that, or maybe you can prove me wrong. These are the two questions, please.

Speaker #3: Thank you, Manuel. First, on the LTV: LTV went up slightly due to investments and acquisitions, resulting in an increase to 33%. Still, this remains at a very low level.

Refael Zamir: Thank you, Manuel. First on the LTV. LTV went up slightly due to investments and acquisitions, resulted in increasing our LTV to 33%, still at a very low level. As to the trends we see in the market. Look, we see rent growth have been very strong. We show the dynamics we see in Germany as well as London. We presented at the presentation. We see very good demand, very limited supply, and we don't expect that to change. If anything, we expect to continue seeing the demand getting stronger and supply getting lesser. As to prices, look, our valuations are in line with our expectations for H1. We'll see where it goes forward, but we believe rental like-for-like growth will more than offset what we see in the macro now. We see yields remain stable.

Speaker #3: As to the trends we see in the market—look, we see rent growth being very strong. We show the dynamics we see in Germany as well as London.

Speaker #3: We presented at the presentation. We see very good demand and very limited supply. We don't expect that to change. If anything, we expect to continue seeing demand getting stronger and supply getting less.

Speaker #3: As to prices—look, I mean, our valuations are in line with our expectations for H1. We'll see where it goes forward, but we believe rental like-for-like growth will more than offset what we see in the macro now.

Speaker #3: So, we see yields remain stable. If we continue and see volatility on the macro level, it could be all offset more, or offset less. If we see now stability, hopefully on the geopolitical level, we could start seeing also further, more of the like-for-like rental growth driving valuation growth.

Refael Zamir: If we continue and see volatility on the macro level could be it will offset more or offset less. If we see now stability hopefully on the geopolitical level, we should start seeing also further more of the like-for-like rental growth driving valuation growth. Thank you.

Speaker #3: Thank you.

Speaker #2: Thank you very much. Those were the questions for today. Thank you very much for your participation and for your questions. We look forward to meeting you in person at any of the future events that take place.

Michael Bar-Yosef: Thank you very much. Those were the questions for today. Thank you very much for your participation and for your questions, and we look forward to meeting you in person in any one of the future events that take place. We wish you a very good day, and hopefully, you have a chance to see the eclipse tonight. Bye-bye.

Christian Windfuhr: Thank you very much. Those were the questions for today. Thank you very much for your participation and for your questions, and we look forward to meeting you in person in any one of the future events that take place. We wish you a very good day, and hopefully, you have a chance to see the eclipse tonight. Bye-bye.

Speaker #2: And we wish you a very good day, and hopefully you have a chance to see the eclipse tonight. Bye bye.

Operator: Ladies and gentlemen, the conference is now over. Thank you for joining.

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Q2 2026 Grand City Properties SA Earnings Call

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