Half Year 2026 LEG Immobilien AG Earnings Call

Operator: Ladies and gentlemen, welcome to the LEG Immobilien Q2 2026 conference call and live webcast. I am Ira, the conference call operator. I would like to remind you that all participants will be 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's my pleasure to hand over to Ms. Karin Widenmann from LEG investor relations. Please go ahead.

Speaker #1: Ladies and gentlemen, welcome to the LEG Immobilien Q2 2026 conference call and live webcast. I'm Irati Koros, your call operator. I would like to remind you that all participants will be listening remotely and that 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 N1' on your telephone. For operator assistance, please press 'star N0.' The conference must not be recorded for publication or broadcast.

Speaker #1: At this time, it's my pleasure to hand over to Ms. Karin Videnman from LEG Investor Relations. Please go ahead.

Speaker #2: Thank you, Maura. Good morning, everyone, and welcome to our earnings call. As always, we have LEG's entire management team on the call: our CEO, Lars von Lackum; our CFO, Katrin Koehling; and our COO, Volker Wiegel.

Karin Widenmann: Thank you, Moira. Good morning, everyone, welcome to our earnings call. As always, we have LEG's entire management team on the call. Our CEO, Lars von Lackum, our CFO, Kathrin Köhling, and our COO, Volker Wiegel. You will find the quarterly report as well as the presentation in the investor relations section of our website. Please note there is a legal disclaimer on page two of the presentation. With that, I would like to hand it over to you, Lars.

Speaker #2: You will find the quarterly report, as well as the presentation, in the Investor Relations section of our website. Please note there's a legal disclaimer on page 2 of the presentation. And with that, I would like to hand it over to you, Lars.

Speaker #3: Thank you, Karin. Good morning, everyone, and thank you for joining our H1 analyst and investor call today. Let me walk you through the six highlights on this slide.

Lars von Lackum: Thank you, Karin. Good morning, everyone, thank you for joining our H1 analyst and investor call today. Let me walk you through the six highlights on this slide. LEG is delivering on every dimension which we set out at the beginning of this year. First, rent. Like-for-like rent growth came in at 3.7% for H1, squarely within our full year guidance corridor. I want to highlight one quality element here specifically. 50 basis points of that growth came from cost rent adjustments. Further rent increases in the H2 will push this number into our target range of 3.8% to 4%. Second, EPRA vacancy. At 2.3% on a like-for-like basis, vacancy declined by a further 20 basis points. This is a clear signal of underlying demand strength across our portfolio.

Speaker #3: LEG is delivering on every dimension which we set out at the beginning of this year. First, rent: like-for-like rent growth came in at 3.7% for H1, squarely within our full-year guidance corridor.

Speaker #3: I want to highlight one quality element here specifically. Fifty basis points of that growth came from cost rent adjustments. Further rent increases in the second half will push this number into our target range of 3.8% to 4%.

Speaker #3: Second, APRA vacancy: at 2.3% on a like-for-like basis, vacancy declined by a further 20 basis points. This is a clear signal of underlying demand strength across our portfolio.

Speaker #3: It also tells you that supply remains the key issue in the market, while meaningful new supply remains absent from the market. Third, adjusted EBITDA.

Lars von Lackum: It also tells you that supply remains the key issue in the market, while meaningful new supply remains absent from the market. Third, adjusted EBITDA. Adjusted EBITDA grew by 2.3%, rising to EUR 368.1 million. This reflects the continued operational leverage of our platform. More revenue flowing through to earnings with cost discipline holding firm. With this, we are on track with our target of an EBITDA margin of around 78%. Fourth, AFFO. AFFO of EUR 110.5 million for H1 puts us fully on track for our full year guidance range of EUR 220 to 240 million. Guidance is confirmed across all line items. Fifth, valuation. Portfolio valuation came in at +0.7%, a result in line with our expectation of up to 1%. The market is moving carefully and constructively in the right direction. Sixth, LTV. LTV stands at 45.5%, effectively at our target level of approximately 45%.

Speaker #3: Adjusted EBITDA grew by 2.3%, rising to $368.1 million. This reflects the continued operational leverage of our platform—more revenue flowing through to earnings, with cost discipline holding firm.

Speaker #3: With this, we are on track with our target of an EBITDA margin of around 78%. Fourth, AFFO. AFFO of $110.5 million for H1 puts us fully on track for our full-year guidance range of $220 million to $240 million.

Speaker #3: Guidance is confirmed across all line items. Fifth, valuation: portfolio valuation came in at plus 0.7%, a result in line with our expectation of up to 1%.

Speaker #3: The market is moving, carefully and constructively, in the right direction. Sixth, LTV. LTV stands at 45.5%, effectively at our target level of approximately 45%.

Speaker #3: Let me flag one item for transparency. We expect a temporary technical uptick in Q3, driven solely by the timing of our dividend payout. This is a known and mechanical effect, not a shift in trajectory.

Lars von Lackum: Let me flag one item for transparency. We expect a temporary technical uptick in Q3, driven solely by the timing of our dividend payout. This is a known and mechanical effect, not a shift in trajectory. The underlying direction of travel on leverage remains unchanged, downwards, disciplined, and cash flow driven. This discipline is paying off, particularly in the current environment. Portfolio transactions in our current market are still at very low levels. Inflation concerns and rising interest rates, amplified by geopolitical tensions, have weighed heavily on investor sentiment. Overall, times are challenging. Against this background, we are in a comfortable leverage position. Therefore, we remain fully committed to our disciplined disposal strategy, selling only when pricing adequately reflects the intrinsic value of our assets. Let me now turn to slide six and our capital allocation logic. The principle is simple.

Speaker #3: The underlying direction of travel on leverage remains unchanged: downward, disciplined, and cash flow driven. This discipline is paying off, particularly in the current environment.

Speaker #3: Portfolio transactions in our current market are still at very low levels. Inflation concerns and rising interest rates, amplified by geopolitical tensions, have weighed heavily on investor sentiment.

Speaker #3: Overall, times are challenging. Against this background, we are in a comfortable leverage position. Therefore, we remain fully committed to our disciplined disposal strategy, selling only when pricing adequately reflects the intrinsic value of our assets.

Speaker #3: Let me now turn to slide 6 and our capital allocation logic. The principle is simple: every euro goes where it earns the most for shareholders.

Lars von Lackum: Every euro goes where it earns the most for shareholders. Today, that principle plays out in two phases. First, where we stand in H1 2026. Our LTV came down to 45.5% from 47.6% a year earlier. That is effectively at our target level of around 45%. Three levers got us there. Firstly, disposals of EUR 42 million all at or above book value. Secondly, a valuation result of plus 0.7% in line with our expectation of up to plus 1% for the half year. Thirdly, the take-up of the scrip dividend, which retains EUR 63 million of liquidity in the company. Our ongoing AFFO-driven steering avoids any overspending, and with that, any need to take on additional debt. The deleveraging path is on track despite the market volatility we have all had to navigate this year.

Speaker #3: Today, that principle plays out in two phases. First, where we stand in H1 2026. Our LTV came down to 45.5% from 47.6% a year earlier.

Speaker #3: That is effectively at our target level of around 45%. Three levers got us there. Firstly, disposals of €42 million, all at or above book value.

Speaker #3: Secondly, a valuation result of plus 0.7% in line with our expectation of up to plus 1% for the half-year. Thirdly, the take-up of the script dividend, which retains 63 million euros of liquidity in the company.

Speaker #3: Our ongoing AFFO-driven steering avoids any overspending and with that, any need to take on additional debt. So the deleveraging path is on track despite the market volatility we have all had to navigate this year.

Speaker #3: As soon as we have reached our LTV target, we see full potential options for capital allocation. You can find these options on the right-hand side of the slide, and we will reassess capital allocation priorities on a regular basis against market conditions.

Lars von Lackum: As soon as we have reached our LTV target, we see four potential options for capital allocation. You find these options on the right-hand side of the slide, and we will reassess capital allocation priorities on a regular basis against market conditions. The first is organic growth, driven by modernization and by our green ventures. That is the lever closest to our core operating business. Next to that, we would look at acquisitions or inorganic add-ons, selective opportunistic entry points where the numbers work and that only once our balance sheet has the headroom first. There is distribution to shareholders in addition to our existing dividend policy. Within this lever, our sustainable dividend policy carries priority. Share buybacks remain one additional option we keep available.

Speaker #3: The first is organic growth, driven by modernization and by our green ventures. That is to leave us closest to our core operating business. Next to that, we would look at acquisitions or inorganic add-ons.

Speaker #3: Selective, opportunistic entry points where the numbers work, entered only once our balance sheet has the headroom to fit. Then there is distribution to shareholders, in addition to our existing dividend policy.

Speaker #3: And within this lever, our sustainable dividend policy carries priority. Share buybacks remain an additional option we keep available. With a substantial discount of the share price versus the NTA, this option forms a natural hurdle rate for alternative uses of capital within the first.

Lars von Lackum: With a substantial discount of the share price versus the NTA, this option forms a natural hurdle rate for alternative uses of capital within the first. Finally, further deleveraging beyond the circa 45% range, a target. Rating headroom and refinancing flexibility have value in their own right, especially in a market that remains volatile. This option stays on the list for resilience and balance sheet flexibility, and that is exactly the discipline that got us there. The point I want you to take away is this: capital gets deployed where it earns the most, and that assessment stays dynamic rather than fixed. The discipline behind it is constant. The same AFFO-based steering that got our LTV down to 45% will govern how we use the next euro from here. That discipline is also exactly what carries into the overview of our H1 numbers on the next slide.

Speaker #3: Finally, further deleveraging beyond the circa 45% range: a target. Rating headroom and refinancing flexibility have value in their own right, especially in a market that remains volatile.

Speaker #3: So, this option stays on the list for resilience and balance sheet flexibility, and that is exactly the discipline that got us there. The point I want you to take away is this.

Speaker #3: Capital gets deployed where it earns the most, and that assessment stays dynamic rather than fixed. The discipline behind it is constant. The same FFO-based steering that got our LTV down to 45% will govern how we use the next euro from here.

Speaker #3: And that discipline is also exactly what carries into the overview of our H1 numbers on the next slide. Let me now turn to the financial overview.

Lars von Lackum: Let me now turn to the financial overview. The numbers on this slide confirm that we are fully on track for our 2026 guidance across every metric that matters. Starting with rents. Net cold rent stands at EUR 473.4 million, reflecting like-for-like growth of 3.7% in H1 and 3.4% on a reported basis due to effects from disposals. The key message is this: the rent trajectory is intact, predictable, and structurally supported. On the EBITDA margin, we came in at 77.8%, which is fully in line with our full year guidance. AFFO of EUR 110.5 million reflects the decline of 12.7% year on year for H1. I covered the bridge in Q1, CapEx phasing and cash interest step up, H1 confirms that reach. What matters now is the forward picture.

Speaker #3: The numbers on this slide confirm that we are fully on track for our 2026 guidance across every metric that matters. Starting with rent: net cold rent stands at €473.4 million, reflecting like-for-like growth of 3.7% in H1 and 3.4% on a reported basis due to effects from disposals.

Speaker #3: I will not repeat the details from the previous slide, but the key message is this: The rent trajectory is intact, predictable, and structurally supported.

Speaker #3: On the EBITDA margin, we came in at 77.8%, which is fully in line with our full-year guidance. AFFO of €110.5 million reflects a decline of 12.7% year-on-year for H1.

Speaker #3: I covered the bridge in Q1: Capex phasing and cash interest step-up. And H1 confirms that read. What matters now is the forward picture.

Speaker #3: With H2 expected to be meaningfully stronger, we are fully comfortable reiterating our full-year AFFO guidance of €220 to €240 million. The split between H1 and H2 is intentional and anticipated.

Lars von Lackum: With H2 expected to be meaningfully stronger, we are fully comfortable reiterating our full year AFFO guidance of EUR 220 to 240 million. The split between H1 and H2 is intentional and anticipated. The key levers will be slightly lower investments as well as subsidies, which we expect to materialize in H2. FFO1 came in at EUR 230.5 million, down 4.4%. The same phasing logic applies. Our full year FFO1 guidance of EUR 475 to 495 million remains intact, the H2 run rate implied by that range is clearly stronger than H1, which is exactly what we expect. On the key drivers, rent growth at 3.7% like-for-like, vacancy at 2.3% is the primary driver. The margin headwind from lower subsidies and higher investments is a pure phasing issue. The key takeaway from this slide is straightforward. H1 was solid, guidance is confirmed, H2 will be stronger.

Speaker #3: The key levers will be slightly lower investments, as well as subsidies, which we expect to materialize in H2. FFO1 came in at €230.5 million.

Speaker #3: Down 4.4%. The same phasing logic applies. Our full-year FFO 1 guidance of €475 to €495 million remains intact, and the H2 run rate implied by that range is clearly stronger than H1, which is exactly what we expect.

Speaker #3: On the key drivers, rent growth at 3.7% like-for-like and vacancy at 2.3% is the primary driver. The margin headwind from lower subsidies and higher investments is a pure phasing issue.

Speaker #3: The key takeaway from this slide is straightforward. H1 was solid, guidance is confirmed, and H2 will be stronger. Cash flow trajectory margin recovery and rent growth all point in the same direction.

Lars von Lackum: Cash flow trajectory, margin recovery, and rent growth all point in the same direction. We enter H2 with full confidence in the full year numbers. With this, I hand it over to Volker for the operational highlights.

Speaker #3: We enter the second half with full confidence in the full-year numbers. And with this, I hand it over to Volker for the operational highlights.

Speaker #2: Thank you, Lars, and good morning, everyone. I will start with the rent development on slide 8. On a like-for-like basis, the average rent per square meter in LEG's portfolio rose by 3.7% year on year to €7.21.

Volker Wiegel: Thank you, Lars, good morning, everyone. I will start with the rent development on slide eight. On a like-for-like basis, the average rent per square meter in LEG's portfolio rose by 3.7% year on year to EUR 7.21. This means we are comfortably on track to deliver on our rental guidance for full year 2026. Looking at the free finance segment of our portfolio, we see a particularly good performance in the stable and high growth markets with rent growth of 3.8% and 3.9% respectively. This clearly underlines the operating strength and resilience of our portfolio. 2026 is a cost rent adjustment year where we can also increase rents of our subsidized units based on the CPI development. As a result, the rents in our subsidized portfolios were up 3.2% compared to the previous year.

Speaker #2: This means we are comfortably on track to deliver on our rental guidance for full year 2026. Looking at the free finance segment of our portfolio, we see particularly good performance in the stable and high-growth markets, with rent growth of 3.8% and 3.9%, respectively.

Speaker #2: This clearly underlines the operating strength and resilience of our portfolio. 2026 is a cost rent adjustment year, where we can also increase rents of our subsidized units based on the CPI development.

Speaker #2: As a result, the rents in our subsidized portfolios were up 3.2% compared to the previous year. Regarding the breakdown of drivers, rent tables and modernization reletting each contributed 1.6 percentage points, while cost rent adjustment added a further 0.5 percentage points.

Volker Wiegel: Regarding the breakdown of drivers, rent tables and modernization reletting each contributed 1.6 percentage points while cost rent adjustment added further 0.5 percentage points. As always, you can find an overview in the appendix, it is on slide 26, of upcoming rent tables for top locations in our portfolio. To give some color on most recent rent tables, the new table for Bielefeld in Westphalia implies an uplift of around 8% for a typical LEG apartment, and the table for Gütersloh, also in Westphalia, of more than 7%. Finally, on vacancies. April vacancy rate came further down by another 20 basis points to a low level of 2.3%, reflecting strong demand for our assets and our ability to quickly refurbish and relet vacant apartments. Moving to investments on slide nine. In the first half, adjusted investments amounted to EUR 202 million, or EUR 18.19 per square meter.

Speaker #2: As always, you can find an overview in the appendix. It is on slide 26 with upcoming rent tables for top locations in our portfolio.

Speaker #2: And to give some color on the most recent rent tables, the new table for Bielefeld in Westphalia implies an uplift of around 8% for a typical LEG apartment, and the table for Gütersloh, also in Westphalia, of more than 7%.

Speaker #2: Finally, on vacancies: the April vacancy rate came down further by another 20 basis points, to a low level of 2.3%, reflecting strong demand for our assets and our ability to quickly refurbish and relet vacant apartments.

Speaker #2: Moving to investments on slide 9. In the first half, adjusted investments amounted to 202 million euros or 18 euros and 19 cents per square meters.

Speaker #2: This is well in line with our full-year target of more than €35 per square meter. It is also a more even distribution than last year, which was characterized by the gradual integration of BCP.

Volker Wiegel: This is well in line with our full year target of more than EUR 35 per square meter. It is also more even distribution than last year, which was characterized by the gradual integration of BCP. Hence the 10% increase in investments in H1 2026 compared to the previous year. In the first six months, CapEx accounted for EUR 112.3 million or EUR 10.11 per square meter, while we had maintenance expenses of EUR 89.7 million or EUR 8.08 per square meter. The cap ratio of 56% was unchanged compared to the previous year. Coming to slide 10 and our value add services. For LEG, these operations are both a strategic pillar and a growth driver. In the first half of 2026, the contribution to FFO1 before consolidation was EUR 28 million.

Speaker #2: Hence, the 10% increase in investments in H1 2026 compared to the previous year. In the first six month, capex accounted for 112.3 million euros or 10 euros 11 cents per square meters while we had maintenance expenses of 89.7 million euros or 8 euros and 8 cents per square meter.

Speaker #2: The cap ratio of 56% was unchanged compared to the previous year. Moving to slide 10 and our value-add services: For LEG, these operations are both a strategic pillar and a growth driver.

Speaker #2: In the first half of 2026, the contribution to FFO1 before consolidation was €28 million. Please note that this number only relates to the services shown on the left-hand side of the slide, which include, among others, the management and steering of refurbishment projects, technician and craftsman services, and our energy and heating business.

Volker Wiegel: Please note that this number only relates to the services shown on the left-hand side of the slide, which include, amongst others, the management and steering of refurbishment projects, our technician and craftsman services, and our energy and heating business. Our green ventures shown in the middle of the slide are not yet included in the FFO1 number shown here, but they will become a meaningful growth contributor over the next few years. With these ventures, we also contribute to decarbonization, one of the main and most urgent tasks in our sector. One of these ventures is termios, and I am pleased to say that the Fraunhofer-Gesellschaft scientifically confirmed the effectiveness of termios.Pro, the AI-supported thermostat. So far, only the basic functions of termios.Pro have been examined. These are precise temperature control and adaptive digital hydraulic balancing.

Speaker #2: Our green ventures, shown in the middle of the slides, are not yet included in the FFO1 number shown here, but they will become a meaningful growth contributor over the next few years.

Speaker #2: With these ventures, we also contribute to decarbonization, one of the main and most urgent tasks in our sector. One of these ventures is Termius, and I am pleased to say that the Fraunhofer Institute has scientifically confirmed the effectiveness of Termius Pro, the AI-supported thermostat.

Speaker #2: So far, only the basic functions of Termius Pro have been examined. These are precise temperature control and adaptive digital hydraulic balancing. The study confirms an average saving in energy consumption of 14%.

Volker Wiegel: The study confirms an average saving in energy consumption of 14%. This corresponds to an average annual savings of about EUR 170 for the tenant. This only applies to the basic version of the thermostat. With the rollout of additional functions, further savings can be expected. Let's now turn to disposals on slide 11. Year to date, we have completed or signed sales for more than 1,000 units, with total proceeds of EUR 78 million. Of these, 237 units were transferred in Q2 for around EUR 24 million. The remaining 552 units, with gross proceeds worth around EUR 36 million, are due for closing in H2 of this year. On slide 35, we have gathered external research figures on the German transaction market in H1 2026. The market is still characterized by a comparatively low number of large volume deals and scarcity of international capital.

Speaker #2: This corresponds to an average annual savings of about €170 for the tenant. And this only applies to the basic version of the thermostat; with the rollout of additional functions, further savings can be expected.

Speaker #2: Let's now turn to disposals on slide 11. Year to date, we have completed or signed sales for more than 1,000 units, with total proceeds of €78 million.

Speaker #2: Of these, 237 units were transferred in Q2 for around €24 million. The remaining 552 units, with gross proceeds worth around €36 million, are due for closing in the second half of this year.

Speaker #2: On slide 35, we have gathered external research figures on the German transaction markets in the first half of 2026. The market is still characterized by a comparatively low number of large-volume deals and scarcity of international capital.

Speaker #2: Against this background, our ability to offer smaller portfolios or even individual multifamily houses, sized to match buyer appetite, is a genuine structural advantage. We also stick to our disciplined approach.

Volker Wiegel: Against this background, our ability to offer smaller portfolios or even individual multi-family houses sized to match buyer appetite is a genuine structural advantage. We also stick to our disciplined approach. We sell only non-core assets and only at or above book value. Our total program still comprises up to 5,000 units. With this, I hand over to Kathrin.

Speaker #2: We sell only non-core assets, and only at or above book value. Our total program still comprises up to 5,000 units. With this, I hand over to Catherine.

Speaker #3: Thank you, Volker, and good morning to everyone also from my side. Let us now look at slide 12 and the outcome of our most recent portfolio revaluation.

Kathrin Köhling: Thank you, Volker. Good morning to everyone also from my side. Let us now look at slide 12 and the outcome of our most recent portfolio revaluation. The starting point is the market itself. The fundamentals of the German residential sector remain healthy, our own portfolio evidences that, with a vacancy rate of 2.3% and like-for-like rent growth of 3.7%. The valuation result of +0.7%, or EUR 135 million, is the fourth consecutive positive revaluation and confirms that the recovery in German residential values remains intact. The pace is more moderate than in 2025, that is what we told you to expect. At the Q1 call, we guided to a flat to slightly positive result of up to +1% for H1. The outcome has come in within that range. The step down versus the +1.8% in H2 2025 is macro driven, not portfolio driven.

Speaker #3: The starting point is the market itself. The fundamentals of the German residential sector remain healthy, and our own portfolio evidences that with a vacancy rate of 2.3% and like-for-like rent growth of 3.7%.

Speaker #3: The valuation result of plus 0.7%, or €135 million, is the fourth consecutive positive revaluation and confirms that the recovery in German residential values remains intact.

Speaker #3: The pace is more moderate than in 2025, and that is what we told you to expect. At the Q1 call, we guided to a flat to slightly positive result of up to plus 1% for H1.

Speaker #3: The outcome has come in within that range. The step down versus the plus 1.8% in H2 2025 is macro-driven, not portfolio-driven—geopolitical tensions, higher inflation expectations, and, as a consequence, a higher interest rate environment.

Kathrin Köhling: Geopolitical tension, higher inflation expectations, as a consequence, a higher interest rate environment. The operating parameters of the portfolio, such as rent and vacancy, all moved in our favor over the period. Our average gross asset value per square meter now stands at EUR 1,735, up from EUR 1,710 at year end 2025. The average gross yield amounts to 4.9%, ranging from 4.1% in our high growth markets to 6.3% in our higher yielding markets. Further details about the valuation results and our portfolio values can be found in the appendix on slides 23 and 24. On H2, we are confident in the resilience of our portfolio and in the structural strength of the German residential sector. What we will not do is anchor you to a valuation number six months out in a rate environment that is still moving.

Speaker #3: The operating parameters of the portfolio, such as rents and vacancy, all moved in our favor over the period. Our average gross asset value per square meter now stands at €1,735, up from €1,710 at year-end 2025.

Speaker #3: The average gross yield amounts to 4.9%, ranging from 4.1% in our high-growth markets to 6.3% in our higher-yielding markets. Further details and our portfolio values can be found in the appendix on slides 23 and 24.

Speaker #3: For H2, we are confident in the resilience of our portfolio and in the structural strength of the German residential sector. What we will not do is anchor you to a valuation number six months out in a rate environment that is still moving.

Speaker #3: We will give you our indications for the H2 valuation with the nine-month figures, as we always do. Let's turn to slide 13 and the AFFO bridge for the first half.

Kathrin Köhling: We will give you our indication for the H2 valuation with the nine-month figures as we always do. Let's turn to slide 13 and the AFFO bridge for the H1. AFFO came in at EUR 110.5 million against EUR 126.6 million in H1 2025. The main positive driver was higher net core rents, which contributed EUR 15.6 million. Of that, EUR 18.1 million came from organic rent growth, partially offset by a negative impact of EUR -2.5 million from disposals. The operating and administrative result was EUR 5.3 million lower year on year, mainly reflecting higher personnel costs. The EBITDA margin of 77.8% we are reporting today fully absorbs that. Net cash interest increased by EUR 10.3 million due to increasing refinancing costs in combination with a lower interest income.

Speaker #3: AFFO came in at €110.5 million, compared to €126.6 million in H1 2025. The main positive driver was higher net-corrid rents, which contributed €15.6 million.

Speaker #3: Of that, 18.1 million euros came from organic rent growth partially offset by a negative impact of 2.5 million euros from disposals. The operating and administrative result was 5.3 million euros lower year on year.

Speaker #3: Mainly reflecting higher personnel costs. The EBITDA margin of 77.8% we are reporting today fully absorbs that. Net cash interest increased by €10.3 million due to increasing refinancing costs, in combination with lower interest income.

Speaker #3: This is the gradual upward reset of our funding costs that we have been flagging as we refinance into current rates, and it is fully reflected in our full-year guidance.

Kathrin Köhling: This is the gradual upward reset of our funding costs that we have been flagging as we refinance into current rates, and it is fully reflected in our full year guidance. Other effects amounted to EUR -2.8 million, driven almost entirely by our biomass plant. The result of our subsidiary declined mainly due to higher prices for wood needed for the generation of energy. Finally, investments. Higher maintenance and CapEx net of subsidies reduced AFFO by EUR 13.4 million in H1. Roughly EUR 3 million of that relates to the phasing of subsidies. By this point last year, we had already recognized EUR 3.3 million. This year, we are only at EUR 0.5 million. For the full year, we still expect to end up around EUR 10 million in subsidies, with the bulk of it falling into H2. Overall, the delta to last year is phasing, not earnings quality.

Speaker #3: Other effects amounted to minus €2.8 million, driven almost entirely by our biomass plant. The result of our subsidiary declined mainly due to higher prices for wood needed for the generation of energy.

Speaker #3: Finally, investments. Higher maintenance and capex, net of subsidies, reduced AFFO by €13.4 million in the first half. Roughly €3 million of that relates to the phasing of subsidies.

Speaker #3: By this point last year, we had already recognized €3.3 million. This year, we are only at €0.5 million. For the full year, we still expect to end up around €10 million in subsidies, with the bulk of it falling into the second half.

Speaker #3: Overall, the delta to last year is phasing, not earnings quality. We expect H2 to carry the subsidies and the lower investments in the portfolio.

Kathrin Köhling: We expect H2 to carry the subsidies and the lower investments in the portfolio, and that is why we confirm our full year AFFO guidance of EUR 220 to 240 million without qualification. Let's turn to slide 14 and our financing structure. Starting with loan to value. We stand at 45.5%, down 210 basis points from 47.6% a year ago. That is very close to our target level of around 45%, a target we set out publicly and are now very close on delivering on. The composition matters. This came from both sides of the ratio. Property values rose on the back of the positive valuation result in our CapEx, while net debt came down. One word on the scrip dividend. Given the geopolitical and market volatility, take up on the scrip was lower than last year at 28.6% of the dividend.

Speaker #3: And that is why we confirm our full-year AFFO guidance of €220 to €240 million without qualification. Let's turn to slide 14 and our financing structure.

Speaker #3: Starting with loan-to-value, we stand at 45.5%, down 210 basis points from 47.6% a year ago. That is very close to our target level of around 45%.

Speaker #3: A target we set out publicly and are now very close to delivering on. And the composition matters. This came from property values rising on the back of the positive valuation result in our capex, while net debt came down.

Speaker #3: One word on the scrip dividend. Given the geopolitical and market volatility, take-up on the scrip was lower than last year, at 28.6% of the capital of the dividend.

Speaker #3: It nonetheless allowed us to retain €63.1 million of liquidity in the company and contributed around 30 basis points to our LTV. And let me flag one mechanical point before you model the third quarter.

Kathrin Köhling: It nonetheless allowed us to retain EUR 63.1 million of liquidity in the company and contributed around 30 basis points to our LTV. Let me flag one mechanical point before you model Q3. The dividend was paid after the balance sheet date, so the cash outflow is not yet included in the 45.5%. LTV will therefore move back up temporarily in Q3. Our average interest cost now stands at 1.82%. While this represents a modest increase compared to prior periods, it remains at a very competitive level in today's market environment. The average debt maturity is comfortably at 5.7 years, and our interest coverage ratio stands at a solid 4.0 times, comfortably above the level required by our bond covenants. We also have ample headroom on all other bond covenants. For those interested in more details, we've provided the full overview in the appendix.

Speaker #3: The dividend was paid after the balance sheet date, so the cash outflow is not yet included in the 45.5%. LTV will therefore move back up temporarily in Q3.

Speaker #3: Our average interest cost now stands at 1.82%. While this represents a modest increase compared to prior periods, it remains at a very competitive level in today’s market environment.

Speaker #3: The average debt maturity is comfortably at 5.7 years, and our interest coverage ratio stands at a solid 4.0 times—comfortably above the level required by our bond covenants.

Speaker #3: We also have ample headroom on all other bond covenants. For those interested in more detail, we've provided the full overview in the appendix. Our liquidity position remains strong at more than €450 million as of H1 2026.

Kathrin Köhling: Our liquidity position remains strong at more than EUR 450 million as of H1 2026. In the first six months, we closed EUR 450 million of financing. These refinancings were closed at an average maturity of 9.3 years and an average interest rate of 3.9%. This was complemented by our new syndicated revolving credit facility of EUR 750 million. It replaces our previous facilities in full and it runs on a five plus one plus one structure. A five-year commitment with two one-year extension options against three plus one plus one before. That is a two-year extension of our committed backup liquidity agreed with our core banks. There are no 2026 maturities left which need to be refinanced. The next upcoming maturities in Q1 2027 are already covered by our available liquidity. Overall, the 2027 maturities amount to roughly EUR 1.1 billion, of which EUR 500 million will mature at the end of November 2027.

Speaker #3: In the first six months, we closed €450 million of financing. These refinancings were closed at an average maturity of 9.3 years and an average interest rate of 3.9%.

Speaker #3: This was complemented by our new syndicated revolving credit facility of 750 million euros. It replaces our previous facilities in full and it runs on a five plus one plus one structure.

Speaker #3: A five-year commitment with two one-year extension options, as opposed to three plus one plus one before. That is a two-year extension of our committed backup liquidity, agreed with our core banks.

Speaker #3: There are no 2026 maturities left that need to be refinanced. The next upcoming maturities in Q1 2027 are already covered by our available liquidity.

Speaker #3: Overall, the 2027 maturities amount to roughly €1.1 billion, of which €500 million will mature at the end of November 2027. We will continue to take an opportunistic and disciplined approach here, depending on market conditions.

Kathrin Köhling: We will continue to take an opportunistic and disciplined approach here, depending on market conditions. In summary, we said we aim to bring LTV to around 45%, and at 45.5%, we are within reach of this target. Q3 will show a temporary uptick due to the dividend payment, but we are confident of reaching the target level by the end of the year. Our 2026 maturities are closed out. The 2027 profile is well structured and already partially covered. Our backup liquidity now runs up to seven years, and we hold more than EUR 450 million in cash. We will continue to refinance, not under pressure, but on our own terms. With that, I'll hand it back to Lars.

Speaker #3: So, in summary, we said we aim to bring LTV to around 45%, and at 45.5%, we are within reach of our target. Q3 will show a temporary uptick due to the dividend payment, but we are confident of reaching the target level by the end of the year.

Speaker #3: Our 2026 maturities are closed out. The 2027 profile is well-structured and already partially covered. Our backup liquidity now runs up to seven years, and we hold more than €450 million in cash.

Speaker #3: We will continue to refinance, not under pressure, but on our own terms. And with that, I'll hand it back to Lars.

Speaker #1: Thank you, Catherine. Let me close with our 2026 guidance summarized on slide 15, which I am happy to fully reconfirm today. We expect a further improvement in cash generation, with AFFO between €220 and €240 million.

Lars von Lackum: Thank you, Kathrin. Let me close with our 2026 guidance summarized on slide 15, which I am happy to fully reconfirm today. We expect a further improvement in cash generation with AFFO between EUR 220 and 240 million. Continued growth on top of a strong 2025. AFFO one is expected at EUR 475 to 495 million, supported by an adjusted EBITDA margin of around 78%. Our operational drivers, rent growth, and investments are likewise reconfirmed. We made good progress when it comes to LTV and feel confident to reach our LTV target level of around 45% by the end of the year. Please note the negative, but purely technical effect of the dividend payment in Q3. To sum it up, LEG remains on a clear and consistent path, generating reliable cash flow, maintaining financial discipline, and building long-term value for shareholders and tenants alike.

Speaker #1: Continued growth on top of a strong 2025. FFO1 is expected at €475 to €495 million, supported by an adjusted EBITDA margin of around 78%.

Speaker #1: Our operational drivers, rent growth, and investments are likewise reconfirmed. We made good progress when it comes to LTV and feel confident that we will reach our LTV target level of around 45% by the end of the year.

Speaker #1: Please note the negative—but purely technical—effect of the dividend payment in Q3. To sum it up, LEG remains on a clear and consistent path.

Speaker #1: Generating reliable cash flow, maintaining financial discipline, and building long-term value for shareholders and tenants alike—cash flow remains king, and AFFO remains the right steering metric for this business.

Lars von Lackum: Cash flow remains king, AFFO remains the right steering metric for this business. Our 2026 guidance reconfirms the strength and the resilience of our model, measured again in numbers rather than narrative. With that, we conclude the presentation and look forward to your questions.

Speaker #1: Our 2026 guidance reconfirms the strength and resilience of our model, measured again in numbers rather than narrative. With that, we conclude the presentation and look forward to your questions.

Speaker #2: We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue.

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

Speaker #2: If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode, and eventually turn off the volume from the webcast while asking a question.

Speaker #2: Anyone who has a question may press star one at this time. The first question comes from the line of Marius Bastot from Bernstein.

Speaker #2: Please go ahead.

Speaker #4: Good morning, and thank you for the presentation and for taking my questions. I've got two from my side. They are broadly related, so I'll ask them together.

Marios Pastou: Hi there. Good morning, and thank you for the presentation and for taking my questions. I have got two from my side. They are broadly related, so I will ask them together. Firstly on disposals. I think earlier in the year you mentioned discussions were progressing on a couple of portfolios, but held back by the achievement of buyer financing. Can I check if any of those discussions have actually fallen away, and if we should therefore anticipate progress through H2, both in terms of portfolios and land sales? Shifting on to capital allocation. The options you have available and presented and considering where your shares are trading, is it fair to assume that if any larger disposal materializes from here, that they will be considered and allocated towards a share buyback? Thank you.

Speaker #4: So, just firstly on disposals, I think earlier in the year you mentioned discussions were progressing on a couple of portfolios but were held back by the achievement of buyer financing.

Speaker #4: So, can I check if any of those discussions have actually fallen away, and if we should therefore anticipate progress through the second half, both in terms of portfolios and land sales?

Speaker #4: And then shifting on to capital allocation. So, considering the options you have available and have presented, and considering where your shares are trading, is it fair to assume that if any larger disposal materializes from here, that will be considered and allocated towards a share buyback?

Speaker #4: Thank you.

Speaker #1: Good morning, Marius, and thanks for your questions. So, with regard to disposals and the portfolio transactions which we are working on, unfortunately, the volatility—especially driven by the geopolitical tensions back and forth in the Middle East and then also their effect on interest rates—was something which was really a big burden for transaction activity in the German market.

Lars von Lackum: Good morning, Marios, and thanks for your questions. With regard to disposals and the portfolio transactions which we are working on, unfortunately, the volatility, especially driven by the geopolitical tensions back and forth in the Middle East, and also their effect on interest rates, was something which was really a big burden for transaction activity in the German market. Therefore, unfortunately, H1 2026 even looks a bit lighter than the transaction volume in 2025, and that unfortunately was also unfolding with regards to our sales activities. We did not see portfolio transactions not happening due to financings, but what we have seen is that willing buyers have not been willing to notarize deals. Therefore, we are still in discussions also on bigger portfolios with interested buyers, but unfortunately, we have not been able to notarize those.

Speaker #1: Therefore, unfortunately, H1 2026 even looks a bit lighter than the transaction volume in 2025, and that, unfortunately, was also unfolding with regard to our sales activities.

Speaker #1: We did not see portfolio transactions not happening due to financings, but what we have seen is that willing buyers have not been willing to notarize deals.

Speaker #1: Therefore, we are still in discussions, also on bigger portfolios, with interested buyers. But unfortunately, we have not been able to notarize those. We still expect that, if the geopolitical tensions are hopefully coming to an end and we see a ceasefire or, even better, a peace agreement being in place, then certainly the stabilization will also translate into more visibility with regard to interest rates. That will hopefully then also give rise to those deals really becoming notarized.

Lars von Lackum: We still expect that if the geopolitical tensions are hopefully coming to an end and we see a ceasefire or, even better, a peace agreement being in place, that certainly the stabilization will also translate into more visibility with regards to interest rates, and that will hopefully also give rise to those deals really becoming notarized. With regards to capital allocation, as you already pointed out the fact that unfortunately the share price is still very low compared to the NTA, it is a natural hurdle to be looked at with regards to capital allocations and buybacks. Please also take note that firstly, and that was what we also try to get through to you, is that we are working on getting our LTV to the target level of 45%.

Speaker #1: With regard to capital allocation—and you already pointed out the fact that unfortunately, the share price is still very low compared to the NTA—it is a natural hurdle to be looked at with regard to capital allocation and buybacks.

Speaker #1: Please also take note that firstly and that was what we also tried to get through is to you is that we are working on getting our LTV to the target level of 45%.

Speaker #1: So, on the other side, that is a natural limit to whatever we think with regards to disposals and the return of capital towards shareholders.

Lars von Lackum: On the other side, that is a natural limit to whatever we think with regards to disposals and the return of capital towards shareholders. What we also wanted to get across is that highest priority is certainly also living up to our dividend policy. Yes, you are right, that is quite a hurdle to be made, and therefore, if we have sufficient disposals being realized and disposal proceeds, that a share buyback will be definitely something which we need to consider.

Speaker #1: And what we also wanted to get across is that our highest priority is certainly also living up to our dividend policy. So yes, you're right, that is quite a hurdle to be met, and therefore, if we have sufficient disposals being realized and disposal proceeds, then a share buyback will definitely be something we need to consider.

Speaker #4: Thank you very much for the comments.

Marios Pastou: Thank you very much for the comments.

Operator: The next question comes from the line of Andrew MacCreath from Green Street. Please go ahead.

Speaker #2: The next question comes from the line of Andrew McCreese from Green Street. Please go ahead.

Speaker #4: Yeah, hi, good morning. Thank you for the presentation. Two questions from my side, please. Just firstly, following on from Marius's question: why continue with the dividend while you're still deleveraging?

Andrew MacCreath: Yeah. Hi, good morning. Thank you for the presentation. Two questions from my side, please. Firstly, following on from Marios' question, why continue with the dividend while you're still deleveraging? That cash cost is a permanent headwind. If distributions are non-negotiable, would you not be better served by a split between dividends and buybacks, or just moving entirely to buybacks? That's the first question.

Speaker #4: I mean that cash cost is a permanent headwind. If distributions are non-negotiable, would you not be better served by a split between dividends and buybacks, or just moving entirely to buybacks?

Speaker #4: That's the first question.

Lars von Lackum: Thanks, Andrew. I waited for the second one, therefore, apologies for the delay. With regards to dividend, I think you've seen what happened to our share price in 2023 while we were deciding on not paying a dividend. We have a very strong investor base relying on a steady dividend to be paid. That is something which we want to live up to. We have a dividend policy in place, and we were not willing to change that because we want to give and ensure the trust that we are living up to that dividend policy by paying that dividend also going forward. We are not splitting the dividend now between dividend and share buybacks or anything else.

Speaker #1: Thanks, Andrew. Yeah, I waited for the second one, so therefore apologies for the delay. So, with regards to the dividend, I think you've seen what happens to the share price in 2023 while we were deciding on not paying a dividend.

Speaker #1: We have a very strong investor base relying on a rely on a steady cash a steady dividend to be paid. And that is something which we want to live up to.

Speaker #1: We have a dividend policy in place, and we were not willing to change that because we want to give and ensure the trust that we are living up to that dividend policy by paying that dividend also going forward.

Speaker #1: So, we are not splitting the dividend now between dividend and share buyback or anything else. We live up to the existing dividend policy, which says 100% of the AFFO to be distributed. And if we have disposal proceeds—you just heard us—it might make sense to use those disposal proceeds for share buybacks.

Lars von Lackum: We live up to the existing dividend policy, which says 100% of the AFFO to be distributed, and if we have disposal proceeds, you just heard us, it might make sense to use those disposal proceeds for share buybacks. Always taking into consideration the LTV, which we are wanting to get to a level of 45%.

Speaker #1: But always taking into consideration the LTV, which we are wanting to get to a level of 45%.

Speaker #4: Okay, that's clear, thank you. And then my second question, just on modernizations. Is the yield and cost that you're achieving accretive to your implied yield, rather than your book yield, given the market is pricing your portfolio well below NTA? I'd just be interested to know if this is accretive at the moment.

Andrew MacCreath: Okay. That's clear. Thank you. Then my second question, just on modernizations. Is the yield and cost that you're achieving, is it accretive to your implied yield rather than your book yield? Given the market's pricing your portfolio well below NTA, I'd just be interested to know if this is accretive at the moment. Thank you.

Speaker #4: Thank you.

Speaker #1: Yeah, as you know, Andrew, what we are not doing anymore is that full modernization approach, yeah, because that gives you the 8% on the cost, and the costs are not 100% of the cost but are mostly between 60% to 80% of the costs which you are incurring in a modernization exercise.

Lars von Lackum: Yeah. As you know, Andrew, what we are not doing anymore is that full modernization approach. That gives you the 8% on the cost, and the costs are not the 100% of the cost, but it is mostly between 60% to 80% of the costs which you are incurring in a modernization exercise. That mostly translates into a static return of around 5%. If you compare that at the current cost of capital, I think it's easy cross-read that this is something which you shouldn't do. Therefore, what we have done is to take those financial means and investments, and instead of going into full modernization, split them up more intelligently.

Speaker #1: So, that mostly translates into an aesthetic return of around 5%. If you compare that with the current cost of capital, I think it's easy to cross-read that this is something which you shouldn't do.

Speaker #1: So, therefore, what we have done is to take those financial means and investments and, instead of going into full modernization, split them up more intelligently.

Speaker #1: I I think Volken just gave you an example with regards to our green ventures and the thermostats which from our perspective are coming with a higher margin which are up and above the current cost of capital instead of sticking to the old world of doing full modernizations in our portfolio.

Lars von Lackum: I think Volker just gave you an example with regards to our green ventures and the thermostats, which from our perspective are coming with a higher margin, which are up and above the current cost of capital, instead of sticking to the old world of doing full modernizations in our portfolio.

Speaker #4: Yeah, okay, that's clear. Thank you.

Andrew MacCreath: Yeah. Okay. That's clear. Thank you.

Speaker #1: Thank you Andrew.

Lars von Lackum: Thank you, Andrew.

Operator: The next question comes from the line of Nicolas Vaysselier from BNP Paribas. Please go ahead.

Speaker #2: The next question comes from the line of Nicholas Veselier from BNP Paribas. Please go ahead.

Speaker #4: Hi, good morning. Hopefully, you can hear me. I just wanted to come back on the LTV. If I adjust for your dividend payment, I get to something close to 46.3%.

Nicolas Vaysselier: Hi. Good morning. Hopefully, you can hear me. I just wanted to come back on the LTV. If I adjust for your dividend payment, I get to something close to 46.3%. Now, I hear you're confident on reaching the 45% target. You have AFFO phasing in H2, that should accelerate. If I factor that in, I was wondering if reaching the target implies, A, that the buyer you have for the land plot, the development plot, the Düsseldorf region exercises option, I think it has until September. B, I was wondering what kind of asset revaluation you would be expecting then for H2 to reach that 45%. My second question is on green ventures. In 2025 for the full year, you disclosed EUR minus 4.2 million negative contribution here.

Speaker #4: Now, I hear your confidence on reaching the 45% target. You have IFFO phasing in H2 that should accelerate. If I factor that in, I was wondering if reaching the target implies: A, that the buyer you have for the land plot, the development plot in the Düsseldorf region, exercises its option—I think it has until September; and B, I was wondering what kind of asset revaluation you would be expecting then for H2 to reach that 45%.

Speaker #4: And my second question is on Green Ventures. In 2025, for the full year, you disclosed a negative contribution of minus €4.2 million here. I was just wondering how it has evolved in H1, and how do you see 2027 and 2028 unfolding on this item.

Nicolas Vaysselier: I was just wondering how it has evolved in H1 and how do you see 2027 and 2028 unfolding on this item?

Speaker #1: Yeah, thanks a lot for the question, Nicholas. So, with regards to the LTV and what we have penciled in for H2—on the one hand, certainly what we are expecting is that we are collecting some of the disposal proceeds. Volker has already lined out that, with regards to the 552 units with gross proceeds of around €36 million, those we are expecting for H2.

Lars von Lackum: Thanks a lot for the question, Nicolas. With regards to the LTV and what we have penciled in for H2. On the one hand side, certainly, what we are expecting that we are collecting some of the disposal proceeds. Volker has already lined out that with regards to the 552 units with gross proceeds of around EUR 36 million, those we are expecting for H2. Certainly, we also expect the land plots in Gerresheim to be transacted. Still the option is running, but we do not have any negative indication that Hines as the owner of that option is not making use of that until the end of September this year. With regards to revaluation, I think Kathrin has been loud and clear on that one. We just came out, and you know that we try to guide the market as quickly as possible.

Speaker #1: Certainly, we also expect the land plot in Gareth Heim to be transacted. So, still the option is running, but we do not have any negative indication that Heim, as the owner of that option, is not making use of that until the end of September this year.

Speaker #1: With regards to revaluation, I think Catherine has been loud and clear on that one. So, we just came out, and you know that we try to guide the market as quickly as possible.

Speaker #1: But we now, today, come out with that 0.7% valuation uplift for H1. Now, giving you a number for H2, while we have all that volatility around the geopolitical developments, interest rates, etc. in the market, that's impossible.

Lars von Lackum: That we now and today come out with that 0.7% of a valuation uplift for H1. Now giving you a number for H2, while we have all that volatility around the geopolitical and development interest rates, et cetera, in the market, that's impossible. Therefore, we are just a few weeks into H2. We promise once again to bring and deliver a proper guidance for H2 with our Q3 numbers in November. Unfortunately, as of today, it is impossible to state a number which makes sense. Secondly, with regards to green ventures. As you know, 2026 is the year of reaching breakeven, and certainly Volker is very keen to give you some more details with regards to how we do that.

Speaker #1: So, therefore, we are just a few weeks into H2. We promise once again to bring and deliver proper guidance for H2 with our Q3 numbers in November.

Speaker #1: But unfortunately, as of today, it is impossible to state a number which makes sense. Secondly, with regards to Green Ventures, as you know, 2026 is the year of reaching break-even, and certainly Volker is very happy and keen to give you some more details with regards to how we do that.

Speaker #3: Yeah that's right. No we will we guide it for break even in 2026 on the green ventures. We are very well on track with those bearing smaller investments like the carbon terminals and I pointed out to the Fraunhofer research piece which shows the effectiveness of the thermostat system and we are very comfortable to reach break even for these for the renovate which is more on the more heavy investment leaning side and as Lars pointed out the trend is not really shifting into these kind of modernization.

Volker Wiegel: That's right. We guided for breakeven in 2026 on the green ventures. We are very well on track with those bearing smaller investments like the dekarbo and termios, and I pointed out to the Fraunhofer research piece, which shows the effectiveness of the thermostat system, and we are very comfortable to reach breakeven for these, for the Renowate, which is more on the more heavy investment leaning side. As Lars pointed out, the trend is not really shifting into these kind of modernizations. It's more difficult to reach the breakeven there. We are striving hard to reaching overall breakeven result.

Speaker #3: It's more comfortable; more difficult to reach the break-even there, but we are striving hard to reach an overall break-even result.

Speaker #4: And what was the contribution for Green Ventures in H1?

Nicolas Vaysselier: What was the contribution for green ventures in H1?

Kathrin Köhling: We are not giving that number. Those are at equity consolidated companies. This line, you will see that at the end of the year with the final numbers.

Speaker #5: We are not giving that number. So, at equity-consolidated companies, this line—you will see that at the end of the year with the final numbers.

Speaker #4: Okay, makes sense. Thank you very much.

Nicolas Vaysselier: Okay. Makes sense. Thank you very much.

Speaker #2: Next question comes from the line of Veronique Mertens from Van Lanschot Kempen. Please go ahead.

Operator: Next question comes from the line of Veronique Mertens from Van Lanschot Kempen. Please go ahead.

Speaker #6: Hey, good morning all. Thank you for taking my questions. First, on the FFO guidance: yeah, you rightly point out H2 is going to be the better half.

Lars von Lackum: Hey. Good morning, all. Thank you for taking my questions. Perhaps first on the FFO guidance. You have pointed out H2 is going to be a better half. Could you give some more color on those different drivers? I appreciate EUR 10 million of subsidies and lower investments, but on your FFO, obviously lower investment has less of an impact.

Speaker #6: However, could you give some more color on those different drivers? I appreciate the €10 million of subsidies and lower investments, but on your FFO, obviously, lower investment has less of an impact.

Speaker #6: So is it fair to say that you're going to reach more the lower end of the guidance for FFO, or are we missing specific drivers for an acceleration in H2?

Veronique Mertens: Is it fair to say that you're going to reach more the lower end of the guidance for FFO, or are we missing specific drivers for an acceleration in H2?

Speaker #1: Yeah, thanks a lot for the question, Veronique. So, with regards to the FFO1 guidance, the same holds true as for the AFFO guidance. So, if we would have assumed to reach only the lower end, we would have narrowed down that guidance range to the lower end.

Lars von Lackum: Thanks a lot for the question, Veronique. With regards to the FFO1 guidance, the same holds true as for the AFFO guidance. If we would have assumed to reach only the lower end, we would have narrowed down that guidance range to the low end, but we haven't done so. Therefore, we are fully in line with our expectation to reach something between EUR 475 to 495 million. This is also holding true for the FFO1. You are rightly assuming that the lower investment with regards to FFO1 has a lower impact compared to the AFFO, because AFFO also includes the full CapEx. As Kathrin has already stated, the subsidies of EUR 10 million alone, I think, show you of how much stronger H2 will be, and that is the main driver for the change, certainly also with regards to H2.

Speaker #1: But we haven't done so. Therefore, we are fully in line with our expectation to reach something between €475 million to €495 million, and this is also holding true for the FFO 1.

Speaker #1: You are right in assuming that the lower investment with regard to FFO1 has a lower impact compared to the AFFO, because AFFO also includes the full capex.

Speaker #1: But as Catherine has already stated, the subsidies of €10 million alone, I think, show you how much stronger H2 will be, and that is the main driver for the change.

Speaker #1: Certainly, also with regards to H2.

Speaker #6: Okay, but H1 is 230. So, if I would add 10 million to that 240, I get to 470. So that's still quite a big gap towards the midpoint of 485, right?

Veronique Mertens: Okay. H1 is EUR 230 million, if I would add EUR 10 million to that EUR 240 million, I get to EUR 470 million. That's still quite a big gap towards the midpoint of EUR 485 million, right?

Speaker #1: It is, and therefore you can once again be confident that, due to other developments with regards to cost and others, we are confident to reach the €475 to €495 million.

Lars von Lackum: It is. Therefore, you can once again be confident that due to other developments with regards to costs and others, we are confident to reach the EUR 475 to 495 million.

Speaker #6: Okay, thank you. And then my second question comes back to probably a well-debated topic for a long time: your discipline around not selling below book values.

Veronique Mertens: Okay. Thank you. My second question comes back to probably a well-debated topic for a long time, your discipline around not selling below book values. You yourself highlight that at the current levels, there's not really an investment market. There are inflation concerns, rising interest rates. How comfortable are you with your own portfolio valuation and also the positive revaluation uplift that you just saw? What drives that discipline and what does it bring you? You are currently trading at a 30% discount to GAV, selling at a moderate discount would still be very accretive if you would redeploy it at a share buyback and create shareholder value. Yeah, curious to hear your view on that discipline.

Speaker #6: Because you yourself highlight that at the current levels, there's not really an investment market. There are inflation concerns and rising interest rates. So, how comfortable are you with your own portfolio valuation and also the positive revaluation uplift that you just saw?

Speaker #6: And so, what drives that discipline, and what does it bring you? Because you are currently trading at a 30% discount to GAV. So, selling at a moderate discount would still be very accretive if you would redeploy it into a share buyback.

Speaker #6: ...so, and create shareholder value. So yeah, curious to hear your view on that discipline.

Speaker #1: Yeah, thanks, and also, that question is a very fair one, Veronique. So, from our perspective, the values which we carry on our book are those values which are the right ones for the assets.

Lars von Lackum: Yeah. Thanks a lot also for that question. It's a very fair one, Veronique. Yeah. From our perspective, the values which we carry on our book are those values which are the right ones for the assets. Therefore, not selling at those book values would be just giving away shareholder value easily. As we are not under pressure and we do not want to throw money out of the window, we want to stick to the disposal policy we have in place for the last years, which brought us now close to the LTV target level. We do not see value into now selling below book value.

Speaker #1: Therefore, not selling at those book values would be just giving away shareholder value easily. So, as we are not under pressure and we do not want to throw money out of the window, we want to stick to the disposal policy we have in place for the last years, which brought us now close to the LTV target level.

Speaker #1: And we do not see value in now selling below book value. If we were to do so, please do not underestimate that certainly whatever you are disposing of below the current book value would also have an effect on the full balance sheet.

Lars von Lackum: If we would do so, please do not underestimate that certainly whatever you are disposing below the current book value would also have an effect on the full balance sheet, that is something which you should take into consideration. We do not think that this is worthwhile doing, we are not considering doing so going forward.

Speaker #1: And therefore, that is something which you should take into consideration. We do not think that this is worthwhile doing, and therefore we are not considering doing so going forward.

Speaker #6: Okay, that's clear and I appreciate the last point. But the question is, since that disciplined approach, there has also been an underperformance in LEG's share price versus your closest peers.

Veronique Mertens: Okay. That's clear, and I appreciate the last point, but the question is, since that disciplined approach, there has been also an underperformance in LEG share price also versus your closest peers. Isn't then at some point the question if this is indeed the right track to create or to maintain shareholder value?

Speaker #6: So, isn't that, at some point, the question—if this is indeed the right track to create or to maintain shareholder value?

Speaker #1: Yeah, so unfortunately, I'm not responsible for the share price. What I can do is make the best use of the capital that shareholders are providing.

Lars von Lackum: Yes. Unfortunately, I'm not responsible for the share price. What I can do is making the best use of the capital which shareholders are providing. We do not think to be well advised to, once again repeat that, sell below book value. We are confident that at a certain point in time, market will get that message, and it will also be reflected in the share price.

Speaker #1: We do not think it is well advised to once again repeat that we sell below book value. We are confident that, at a certain point in time, the market will get that message and it will also be reflected in the share price.

Speaker #6: Okay thank you.

Veronique Mertens: Okay. Thank you.

Speaker #2: The next question comes from the line of Thomas Rotheisler from Deutsche Bank. Please go ahead.

Operator: Next question comes from the line of Thomas Roethelisberger from Deutsche Bank. Please go ahead.

Speaker #7: Hi, good morning. I have a couple of questions. The first one is on subsidies. You expect roughly €10 million in the second half. I'm just wondering about the visibility here.

Thomas Roethelisberger: Hi, morning. Couple of questions. The first one is on subsidies. You expect roughly EUR 10 million in the H2. Just wondering about the visibility here. Is this a given?

Speaker #7: Is it, is this a given?

Speaker #1: Yes.

Kathrin Köhling: Happy to take your question, Thomas. On subsidies, we expect these are mostly things we have already applied for. Most of the times we have already handed in the applications. We are in the midst of the process of being awarded the subsidies. It just takes time now. Sometimes we still have to finish stuff in order to get the application process starting. We have a very good visibility overall on this number.

Speaker #6: Yeah, so I'm happy to take your question, Thomas. So, on subsidies, we expect these are mostly things we have already applied for.

Speaker #6: Most of the time, we have already handed in the applications, so we are in the midst of the process of being awarded the subsidies.

Speaker #6: It just takes time. Sometimes we still have to finish stuff in order to get the application process started. But we have very good visibility overall on this number.

Speaker #7: Yes. The second question is on rental growth. I mean, your run rate was 3.7% in the first half, which is close to the lower end of your guidance range.

Thomas Roethelisberger: Yes. Great. The second question is on rental growth. Your run rate was 3.7% in the H1, which is close to the lower end of your guidance range. Just wondering if your upper-end guidance range of 4% is still possible from current levels, and what would be the requirements actually?

Speaker #7: Just wondering if your upper-end guidance range of 4% is still possible from current levels, and what would be the requirements, actually.

Speaker #5: Well, the upper end would probably require some uptick in the churn, which we also do not really see. So it's more unlikely to reach it.

Veronique Mertens: Well, the upper end would require

Volker Wiegel: Probably some uptick in the churn, which we also do not really see. It's more unlikely to reach it. We haven't narrowed it down because it's steering and gearing the rent growth is quite complicated as it also depends on the rent table, on the dates of publications, and on the churn, which is very volatile sometimes, and more comes down than goes up. It's fair to say that it's not our basic assumption to reach the upper end.

Speaker #5: But we have narrowed it down, because steering and gearing the rent growth is quite complicated, as it also depends on the rent table on the dates of publications.

Speaker #5: And on the churn, which is also very volatile sometimes, it more often comes down than goes up. So it's fair to say that it's not our basic assumption to reach the upper end.

Thomas Roethelisberger: Basically you expect rather the lower end of the guidance range than the upper end?

Speaker #7: So, basically, you expect rather the lower end of the guidance range than the upper end.

Speaker #5: Well, we are within this range, and I think we narrowed it for good reasons.

Volker Wiegel: Well, we are within this range, and I think we narrow it for good reasons.

Speaker #7: My last question is on regulation, specifically the planned ban of expropriations at the federal state level. I'm just wondering, are you confident in the government to push that through?

Thomas Roethelisberger: My last question is on regulation and specifically the planned ban of expropriations, et cetera, at state level. Just wondering, are you confident on the government to push that through? Did you hear anything on the initiative recently?

Speaker #7: I mean, or did you hear anything on the initiative recently?

Speaker #1: Well, that's an incredibly difficult question, Thomas. I think the reason I've opted not to be in politics is because to foresee what politics really does is quite difficult.

Lars von Lackum: Oh, that's an incredibly difficult question, Thomas. I think reasons I've opted not to be in politics, because to foresee what politics really does, it's quite difficult. I think to hear loud and clearly from federal government that they are willing to take action with regards to Article 15 and prevent single states of making use of that Article 15 and expropriation in Germany without paying the full market value, I think that is a very good progress. From our perspective, as of today, we do not have any indication that this is not going to happen. I think federal politicians have understood how difficult it would be for them as well as the federal and single states to then secure refinancing of its debt at the same levels as of today.

Speaker #1: So I think, to hear loud and clearly from federal governments that they are willing to take action with regard to Article 15 and prevent single states from making use of that Article 15 and expropriation in Germany without paying the full market value.

Speaker #1: I think that is very good progress. So, from our perspective as of today, we do not have any indication that this is not going to happen.

Speaker #1: I think federal politicians have understood how difficult it would be for them, as well as the federal and single states, to then secure refinancing of its debt.

Speaker #1: At the same levels as of today, so therefore, we are quite confident to see that law to be passed within the coming months.

Lars von Lackum: Therefore, we are quite confident to see that law to be passed within the coming months. Of how quickly that goes, there we are getting different messages, therefore very difficult to tell you when that happens. That it is going to happen, we are quite confident as of today.

Speaker #1: So how quickly that goes—there, we are getting different messages. So, therefore, it's very difficult to tell you when that happens. But that it is going to happen, we are quite confident as of today.

Speaker #7: Okay thank you.

Thomas Roethelisberger: Okay. Thank you.

Speaker #2: The next question comes from the line of Paul May from Barclays. Please go ahead.

Operator: Next question comes from the line of Paul May from Barclays. Please go ahead.

Speaker #8: Hi, guys. A couple of questions from me. Just on the first one—apologies to labor the point on the valuations and Bernie's question—but could you not simply write down your assets and then sell in line with book value in order to get the transaction volume and to manage your leverage that way?

Paul May: Hi, guys. A couple of questions from me. Just on the first one, apologies to labor the point on the valuations and Veronique's question. Could you not simply write down your assets and then sell in line with book value in order to get the transaction volume and to manage your leverage that way? Maybe that's not a possibility from what you're saying. Secondly, just wondered what level could you theoretically cut CapEx and maintenance to without either impacting portfolio quality, incurring a backlog of future CapEx requirements, or negatively impacting your total like-for-like rental growth, which includes obviously the return on that investment? Thanks.

Speaker #8: Maybe that's not a possibility, from what you're saying. And then secondly, I just wondered: to what level could you theoretically cut CapEx and maintenance without either impacting portfolio quality, incurring a backlog of future CapEx requirements, or negatively impacting your total like-for-like rental growth, which includes, obviously, the return on that investment?

Speaker #8: Thanks.

Speaker #1: Yeah, so thanks for the question, Paul. And unfortunately, certainly the answer with regards to Vernick's question is not different when you are asking it.

Lars von Lackum: Yeah. Thanks a lot for the question, Paul. Unfortunately, certainly the answer with regards to Veronique's question is not different when you are asking it. From our perspective, there is, from our perspective, no need to start disposing assets at lower prices compared to the current valuation. We believe in the current valuation, we consider that to be the fair market value of those assets. Yes, it takes us more time to dispose at those levels. If we look into the current setup of the company, from our perspective, no pressure to dispose at lower prices. With regards to hypothetical discussions on where to cut CapEx investments or something, apologies, I do not think that this is what we should do in that call. From our perspective, the current investment level is exactly the sweet spot currently to manage the portfolio.

Speaker #1: So, from our perspective, there is no need to start disposing of assets at lower prices compared to the current valuation. We believe in the current valuation.

Speaker #1: We consider that to be the fair market value of those assets. Yes, it takes us more time to dispose at those levels, but if we look into the current setup of the company from our perspective, there is no pressure to dispose at lower prices.

Speaker #1: With regards to hypothetical discussions on where to cut CapEx investments or something, apologies, but I do not think that this is what we should do in that call.

Speaker #1: From our perspective, the current investment level is exactly the sweet spot right now to manage the portfolio. You can trust us that, certainly, we always strive and we struggle with FOCA on a regular basis to keep that investment level under control.

Lars von Lackum: You can trust us that certainly we always strive, and we struggle with Volker on a regular basis to keep that investment level under control. You can't see, Kathrin is nodding. Therefore, this is what we currently discuss intensely, and we have reshifted investment levels over the last years quite dramatically. If you look back into 2019 to 2021, where we were of the belief that insulation of facades and full modernization is a valuable approach towards now replacing it with bright new ideas like the thermostats, doing more on the heat pumps, et cetera. I think that already shows you that we are not aware of that every euros which we are investing in the portfolio needs to come up with a decent return.

Speaker #1: So, you can't see, but Catherine is nodding. So, therefore, this is what we are currently discussing intensely, and we have reshifted investment levels over the last years quite dramatically.

Speaker #1: So, if you look back at 2019 to 2021, where we were of the belief that insulation of facades and full modernization is a valuable approach, compared to now, replacing it with bright new ideas like the thermostats.

Speaker #1: Doing more on the heat pumps, etc. I think that already shows you that we are not unaware that every year, what we are investing in the portfolio needs to come up with a decent return.

Speaker #1: And that is how we keep investments in the portfolio under control and ensure that we are realizing returns on those investments which are being needed.

Lars von Lackum: That is how we keep investments in the portfolio under control and ensure that we are realizing returns on those investments which are being needed.

Speaker #8: Okay, so just to be clear, there wouldn't be any reduction in the CapEx in future years to try and bolster the AFFO. We should assume a similar level moving forward.

Paul May: Okay. Just to be clear, there wouldn't be any reduction in the CapEx in future years to try and bolster the AFFO. We should assume a similar-ish level moving forward. Is that fair?

Speaker #8: Is that fair?

Speaker #1: So from today's perspective, what we need is more and smarter ideas to get CapEx down. That there are being able—that we are able to contribute to those smart ideas.

Lars von Lackum: From today's perspective, what we need is more and smarter ideas to get CapEx down. That we are able to contribute to those smart ideas, I think Volker and the team has proved it. That thermostat is incredibly cheap and delivers a 14% reduction in CO2. Therefore, going forward, certainly what we wish to strive for is get CapEx down. Just lying back and saying, "Okay, there are no smart ideas out there," that I think is not the approach of LEG. We will definitely try to identify the smartest ideas to get CapEx down going forward.

Speaker #1: I think FOCA and the team has proved it. That thermostat is incredibly cheap and delivers a 14% reduction in CO2. I think that's a huge, huge part of getting costs under control.

Speaker #1: And therefore going forward certainly what we will strive for is get CapEx down. So just lying back and saying okay there are no smart ideas out there.

Speaker #1: That, I think, is not the approach of LEG. So, we will definitely try to identify the smartest ideas to get CapEx down going forward.

Speaker #8: Perfect. Thank you.

Marios Pastou: Perfect. Thank you.

Speaker #1: Thank you.

Lars von Lackum: Thank you.

Speaker #2: The next question comes from the line of Pierre-Emmanuel Clouat from Jefferies. Please go ahead.

Operator: The next question comes from the line of Pierre Clouard from Jefferies. Please go ahead.

Speaker #9: Yes, good morning. Thank you for taking my questions. Actually, last time you admitted that you have at least some influence on the share price, even though you are not fully responsible for it.

Pierre Clouard: Yes, good morning. Thank you for taking my questions. Actually, you could admit that you have at least an influence on the share price, even though you are not fully responsible of it. I have a quick follow-up on disposals. You mentioned ongoing discussions with potential buyers, but are these discussions limited to the 5,000 units currently included in the disposal program? Are you also seeing interest for additional portfolios beyond these assets already earmarked for sale?

Speaker #9: Then I have a quick follow-up on disposals. You mentioned ongoing discussions with potential buyers, but are these discussions limited to the 5,000 units currently included in the disposal program, or are you also seeing interest for additional portfolios beyond these assets already earmarked for sale?

Speaker #1: Yeah, so on the 5,000 units, those are the ones we have identified currently, and those are the ones we currently have in the market.

Kathrin Köhling: Yeah. On the 5,000 units, those are the ones we have identified currently, and those are the ones we have currently in the market. What we will do afterwards once we have sold those, that will be up for discussion once we reach that point and when we see how market conditions are looking at that point in time.

Speaker #1: What we will do afterwards, once we have sold those—I mean, that will be up for discussion once we reach that point and when we see how market conditions are looking at that point in time.

Speaker #9: Okay, and for you, is it likely to execute on those 5,000 units by the end of this year, or at least have an agreement with potential buyers, or is it out of reach?

Pierre Clouard: Okay. For you, is it likely to execute on those 5,000 units by the end of this year, or at least have an agreement with potential buyers? Or is it 50/50?

Speaker #1: Yeah, so Pierre, I think H2 transaction volumes show how difficult the market is. So it's not that we are not striving to sell single multifamily houses, do privatizations, slice and dice portfolios in the way of getting those into the market and get them sold.

Lars von Lackum: Pierre, I think H2 transaction volumes show of how difficult the market is. It's not that we are not striving to sell single multi-family houses, do privatizations, slice and dice portfolios in the way of getting those into the market and get them sold. It is really the unwillingness of buyers, even after they've invested into technical due diligence, commercial due diligence, that really sit down with us and do not realizational deals. Therefore, as of today, I would be surprised to see the 5,000 units being transacted until year end. It is not the case that there are not bigger portfolios currently in the pipeline and under negotiation. Just keep your fingers crossed for us. We are working hard and whatever can be sold, we will be happy to then disclose over the next months to the market.

Speaker #1: It is really the unwillingness of buyers, even after they've invested into technical due diligence and commercial due diligence, to really sit down with us and do notarization of deals.

Speaker #1: So therefore, as of today, I would be surprised to see the €4,000–5,000 being transacted until year-end, but it is not the case that there are not bigger portfolios currently in the pipeline and under negotiation.

Speaker #1: So just keep your fingers crossed for us. We are working hard, and whatever can be sold, we will be happy to then disclose over the next months to the market.

Speaker #9: Okay, thank you. And my second question is on the land option. Can you remind us of the book value and the expected selling price of the land parcel on which INF holds an option?

Pierre Clouard: Thank you. My second question is on the land option. Can you remind us the book value and the expected selling price of the land parcel on which Hines holds an option?

Speaker #1: Yeah, so unfortunately, Pierre, the NDA which we have signed with Heinz is very strict on the price. So, therefore, we are not able to give you the price for the land plot which we have agreed.

Lars von Lackum: Unfortunately, Pierre, the NDA which we have signed with Hines is very strict on the price. Therefore, we are not able to give you the price for the land plot which we have agreed. A bit of indication you can get from the reclassification we've done with regards to the values with regards to the land plot, which we have just included in our accounts. Unfortunately, we are not able to give you more details on those values.

Speaker #1: A bit of indication you can get from the retail certification we've done with regards to the values of the land plot, which we have just included in our accounts.

Speaker #1: But unfortunately, we are not able to give you more details on those values.

Speaker #9: And is this value included in the assets for sale line on your balance sheet or not?

Pierre Clouard: This value included in the asset for sale line on your balance sheet or not?

Speaker #1: Exactly. They are.

Lars von Lackum: Exactly. They are.

Speaker #9: Okay. Thank you very much.

Pierre Clouard: Okay. Thank you very much.

Speaker #1: Thank you.

Lars von Lackum: Thank you.

Speaker #2: The next question comes from the line of Florent Laurent Joubert from Auto BHF. Please go ahead.

Operator: The next question comes from the line of Florent Laroche-Joubert from ODDO BHF. Please go ahead.

Speaker #10: Hi good morning. So thank you to take my question. So actually I would have two follow up questions on the LTV. So my first question so we understand that to give guidance for the LTV ratio at the end of the year but if I understand correctly so you are not able to give any indication on the valuation of the asset at the end of the year.

Florent Laroche-Joubert: Hi. Good morning. Thank you to take my question. Actually, I will have two follow-up questions on the LTV. My first question, we understand that you give a guidance for the LTV ratio at the end of the year, but if I understand correctly, you are not able to give any indication on the valuation of the asset at the end of the year. Maybe just to understand, how comfortable are you with this guidance of 45% with the range of valuations that you can expect for the end of the year? That would be my first question. My second question, which is also linked to LTV.

Speaker #10: So maybe just to understand, how comfortable are you with this guidance of 45% with the range of valuations that you can expect for the end of the year? So that would be my first question.

Speaker #10: And my second question, which is also linked to LTV: So, beyond 2026, and assuming that you would reach your target of 45%, how important would it be for you to then target an LTV slightly lower than 45% to make sure that you will not come back after that to a level higher than 45%?

Florent Laroche-Joubert: Beyond 2026, assuming that you would wish your target of 45%, how would it be important for you to target then LTV slightly lower of 45% to make sure that you will not come back after that to a level higher of 45%? Thank you.

Speaker #10: Thank you.

Speaker #1: Yeah, thanks, Florent. With regards to the LTV target level of 45%, with 45.5%, we consider ourselves to be quite close. As already stated in the call by Catherine and by myself, please be aware of that uptick in Q3.

Lars von Lackum: Thanks, Florent. With regards to the LTV target level of 45%, with 45.5%, we consider ourselves to be quite close. As already stated in the call by Kathrin, by myself, please be aware of that uptick in Q3. Still not being willing to give you an indication with regards to the valuation for H2. We are still thinking that if we take into consideration disposal pipeline, et cetera, that we can reach the LTV target of 45% at year-end. From our perspective, that is very good news. What we do not want to do is now strive for a new LTV target level and something below that. We consider 45% to be a good level for our company and to steer that. Interest costs, which we can achieve with that, from our perspective, are at a good level.

Speaker #1: So, still not being willing to give you an indication with regards to the valuation for H2, we are still thinking that, if we take into consideration the disposal pipeline, etc.

Speaker #1: That we can reach the LTV target of 45% at year-end. From our perspective, that is very good news, and what we do not want to do is now strive for a new LTV target level—something below that.

Speaker #1: We consider 45 to be a good level for our company and to steer that. Interest costs, which we can achieve with that from our perspective, are at a good level, and we are in sound territory with regards to our rating level.

Lars von Lackum: We are in sound territories with regards to our rating level. Therefore, while reaching that, this will give us then the room to also think about the different options which we laid out with regards to the capital allocation policy, and therefore, from our perspective, no need to steer the business at a lower LTV level.

Speaker #1: So therefore, while reaching that, this will give us then the room to also think about the different options which we laid out with regards to the capital allocation policy.

Speaker #1: And therefore, from our perspective, there is no need to steer the business at a lower LTV level.

Speaker #10: Okay. Thank you very much.

Florent Laroche-Joubert: Okay. Thank you very much.

Speaker #1: Thank you.

Lars von Lackum: Thank you.

Speaker #2: As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Mark Mozzi from Bank of America.

Operator: As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Marc Mozzi from Bank of America. Please go ahead.

Speaker #2: Please go ahead.

Speaker #11: Thank you very much. Good morning, everyone. I just wanted to know, what are the reasons why you do not release and report your NDV in your reporting?

Marc Mozzi: Thank you very much. Good morning, everyone. I just wanted to know what are the reasons why you do not release and report your NDV in your reporting?

Speaker #1: You are asking if we are not reporting.

Kathrin Köhling: You are asking if we are not reporting.

Speaker #11: What are the reasons—or maybe I just haven't been able to find it—but what are the reasons why we don't have full disclosure in terms of EPRA net asset value?

Marc Mozzi: What are the reasons, or maybe I haven't been able to find it, but what are the reasons why we don't have the full disclosure in terms of EPRA net asset value? As a consequence, the NDV is not reported, which is far more important for you guys with such a big amount of deferred tax liabilities than the NTA. Which is creating a confusion around the discount to book value and around the implied discount to core asset value, implied yield, and so on.

Speaker #11: And as a consequence, the NDV is not reported, which is far more important for you guys with such a large number of different tax liabilities than the NTA.

Speaker #11: Which is creating confusion around the discount to book value, the implied discount to gross asset value, implied yield, and so on.

Speaker #1: We are reporting the EPRA NTA, which is from our perspective the most important figure every quarter, and you will find the NDV in the full year figures.

Kathrin Köhling: We are reporting the EPRA NTA.

Marc Mozzi: Yeah

Kathrin Köhling: From our perspective, the most important figure every quarter, you will find the NDV in the full-year figures.

Speaker #11: Okay, but I was just wondering why Vonovia and you do not report that number on a quarterly basis, which is an important number. Well, everyone else does, but maybe there is a specific reason I'm not able to catch from our side.

Marc Mozzi: Okay. I was just wondering why Vonovia and you do not report that number on a quarterly basis, which is an important client number, while everyone else it does. Maybe there is some specific reason I am not able to catch from outside.

Speaker #1: Yeah, I count for Vonovia, but we are offering you this number once a year.

Kathrin Köhling: I cannot speak for Vonovia, but we are offering you this number once a year.

Speaker #11: Okay, thank you. On the guidance for the FFO for the year—sorry to come back to that one—but what has been the reason why you haven't been able to narrow that range at this stage of the year, where you have visibility on the subsidized amounts, €10 million, you said, and the tables for your rental growth, which in theory should accelerate in H2?

Marc Mozzi: Okay. Thank you. On the guidance for the FFO for the year, sorry to come back on that one, what has been the reason why you have not been able to narrow that range at this stage of the year where you have visibility on the subsidized amounts, EUR 10 million you said, you know the tables for your rental growth, which in theory should accelerate in H2. What has been the moving part which has not been helping you to narrow the range?

Speaker #11: What has been the moving part that hasn't been helping you to narrow the range?

Speaker #1: Yeah, so from our perspective, Mark, there is no need to narrow down the current range. From our perspective, there is the development in place which we expected according to our plan.

Lars von Lackum: From our perspective, Marc, there is no need to narrow down the current range. From our perspective, there is the development in place which we expected according to our plan. The forecasts are showing that we are on our path in the right direction. From our perspective, therefore, we are happy reiterating that we will be able to deliver an FFO1 in the range between EUR 475 to 495 million. Unfortunately, also with regards our business, there are moving pieces. Those moving pieces, one of them you mentioned already is the subsidized parts, but there are also other pieces, and that includes certainly the contribution of our value add businesses, but also others, which are contributing to some uncertainty with regards to the final numbers of the FFO1.

Speaker #1: The forecasts are showing that we are on our path in the right direction, and from our perspective, therefore, we are happy reiterating that we will be able to deliver FFO 1 in the range between €475 million to €495 million.

Speaker #1: Unfortunately also with regards to our business there are moving pieces and those moving pieces one of them you mentioned already is the subsidized part but there are also other pieces and that includes certainly the contribution of our value add businesses but also others which are contributing to some uncertainty with regards to the final numbers of the FFO1 and therefore as of today we are not able to narrow down that range but we are confident to reach something within that range of 475 to 495 million euros.

Lars von Lackum: Therefore, as of today, we are not able to narrow down that range, but we are confident to reach something within that range of EUR 475 to 495 million.

Speaker #11: It's interesting that you mentioned narrowing down, because I was thinking more about narrowing up, but that's interesting. Okay. Thank you very much for that. Very clear.

Marc Mozzi: It's interesting that you mentioned narrowing down because I was thinking more about narrowing up, but that's interesting. Okay. Thank you very much. That's all here.

Speaker #1: Thanks a lot for your questions.

Lars von Lackum: Thanks a lot for your question.

Speaker #2: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Karin Wiedenmann for any closing remarks.

Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Karin Wiedenmann for any closing remarks.

Speaker #1: Thank you, Maura, and thank you all for your participation. Should you have further questions, the IR team is available. Please do not hesitate to contact us.

Karin Widenmann: Thank you, Maura, and thank you all for your participation. Should you have further questions, the IR team is available. Please don't hesitate to contact us. With that, we close the call and wish you a pleasant day ahead and say goodbye for now.

Speaker #1: And with that, we close the call. We wish you a pleasant day ahead and say goodbye for now.

Speaker #2: Ladies and gentlemen, the conference is now over. Thank you for choosing Caruscall, and thank you for participating in the conference. You may now disconnect your lines.

Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

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