Q2 2026 Instone Real Estate Group SE Earnings Call

August 6, 2026

Operator 2: Ladies and gentlemen, welcome to the publication interim report as of 30 June 2026, Essen, Germany conference call. I am Healy, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing Star and one on your telephone. For operator assistance, please press Star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Burkhard Sawazki, Head of IR and Capital Market Communication and Strategy. Please go ahead.

Operator: Ladies and gentlemen, welcome to the publication interim report as of 30 June 2026, Essen, Germany conference call. I am Healy, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session.

Speaker #1: I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session.

Operator: 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 Burkhard Sawazki, Head of IR and Capital Market Communication and Strategy. Please go ahead.

Speaker #1: You can register for questions at any time by pressing star and zero on your star and one on your telephone. For operator assistance, please press star and zero.

Speaker #1: The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Burkhard Sawazki, Head of IR and Capital Market Communication and Strategy.

Speaker #1: Please go ahead.

Burkhard Sawazki: Thank you. Good morning, everyone. Welcome to our Q2 2026 earnings call. Our CEO, Kruno Crepulja, and our CFO, David Dreyfus, will walk you through our presentation and give you an update on our current business performance and our outlook. As usual, this will be followed by a Q&A session. With this, I would like to hand over directly to Kruno.

Speaker #2: Thank you. Good morning, everyone. Welcome to our Q2 2026 earnings call. Our CEO, Kruno Crepulja, and our CFO, David Dreyfus, will walk you through our presentation and give you an update on our current business performance and our outlook.

Speaker #2: As usual, this will be followed by a Q&A session. With this, I would like to hand over directly to Kruno.

Kruno Crepulja: Hello everyone. Thank you for joining our Q2 earnings call. In an environment heavily influenced by geopolitical tensions, which have now lasted for far longer than any of us initially thought, we have reported a solid set of H1 figures. After a temporary demand shock at the start of the conflict in the Middle East, we saw a stabilization in investor sentiment and a steady return to more normalized sales ratios. We are definitely seeing a negative impact. Our business has still proven to be quite resilient, and our strong market position also helped us to protect against any margin pressure from the rise in energy costs and oil and energy-related building materials. The positive highlight was clearly the progress that we have made on our institutional deals over the last month.

Speaker #3: Hello, everyone, and thank you for joining our Q2 earnings call. In an environment heavily influenced by geopolitical tensions, which have now lasted for far longer than any of us initially thought, we have reported a solid set of H1 figures.

Speaker #3: After a temporary demand shock at the start of the conflict in the Middle East, we saw a stabilization in investor sentiment and a steady return to more normalized sales ratios.

Speaker #3: We are definitely, definitely seeing a negative impact, but our business has still proven to be quite resilient. Our strong market position has also helped us protect against any margin pressure from the rise in energy costs and oil- and energy-related building materials.

Speaker #3: A positive highlight was clearly the progress that we have made on our institutional deals over the last month. The attractiveness of our asset class for institutional investors is also underscored by the signing of a JV contract for our Düsseldorf vendor project with a GDV of around €480 million.

Kruno Crepulja: The attractiveness of our asset class for institutional investors is also underscored by the signing of a JV contract for our Düsseldorf Benrath project with a GDV of around EUR 480 million. Let me add some more color on sales activities before we go into the details later during this presentation. In our retail business, January and February are generally quiet months from the demand side, following a very busy year-end period. The recovery in demand during March and April was affected by increased macro uncertainty. Since May, we have been observing a steady recovery and retail sales are clearly above the previous year's level, but demand is still lagging behind our initial targets. Nevertheless, there are some factors that make us feel confident about further improving momentum in H2.

Speaker #3: Let me add some more color on sales activities before we go into the details later during this presentation. In our retail business, January and February are generally quiet months from the demand side following a very busy year and period.

Speaker #3: The recovery in demand during March and April was affected by increased macro uncertainty. Since May, we have been observing a steady recovery, and retail sales are clearly above the previous year's level.

Speaker #3: But demand is still lagging behind our initial targets. Nevertheless, there are some factors that make us feel confident about further improving momentum in the second half of the year.

Kruno Crepulja: First of all, the lead indicators are well above the previous year's level, still leaving room for catch-up effects with the normalization of the conversion rate. There's generally a stronger seasonality and sales starts will provide additional support. In our second customer segment, the institutional business, we are witnessing a positive development. In fact, we have made good progress on a number of projects, several of which, with a total volume of around EUR 150 million, are at an advanced stage. We believe that this is attributable to our attractive product offering with a high share of subsidized housing. Against the backdrop of attractive incentive schemes, this investment product is less vulnerable to the general turmoil. Another area impacted by the Middle East crisis is construction costs.

Speaker #3: First of all, the lead indicators are well above the previous year's level, still leaving room for catch-up effects with the normalization of the conversion rate.

Speaker #3: There's generally a stronger seasonality, and sales starts will provide additional support. In our second customer segment—the institutional business—we are witnessing a positive development.

Speaker #3: In fact, we have made good progress on a number of projects, several of which, with a total volume of around €150 million, are at an advanced stage.

Speaker #3: We believe that this is attributable to our attractive product offering, with a high share of subsidized housing. Against the backdrop of attractive incentive schemes, this investment product is less vulnerable to the general turmoil.

Speaker #3: Another area impacted by the Middle East crisis is construction costs. There's a stronger rise in energy-related building materials, but we are pleased to report that all of our projects are well within their budgets.

Kruno Crepulja: There's a strong rise in energy-related building materials, but we are pleased to report that all of our projects are well within their budgets. We are still benefiting from our strong market position. An important strategic step for us was the recent first signing of a JV with a high-profile international investor. The Ginkgo platform, part of Rothschild, has taken a 60% stake in our Düsseldorf Benrath project with a total GDV of around EUR 480 million at an early stage of the project. We acquired the land plot last year, and it was our plan from the very beginning to carry out this project with a partner in order to achieve greater diversification in large-scale projects, and also to generate an above-average return on our invested equity from additional income streams.

Speaker #3: We are still benefiting from our strong market position. An important strategic step for us was the recent first signing of a joint venture with a high-profile international investor.

Speaker #3: The Ginkgo platform, part of RoadShield, has taken a 60% stake in our Düsseldorf vendor project, with a total GDV of around €480 million, at an early stage of the project.

Speaker #3: We acquired the land plot last year, and it was our plan from the very beginning to carry out this project with a partner in order to achieve greater diversification in large-scale projects and also to generate an above-average return on our invested equity from additional income streams.

Kruno Crepulja: We are therefore happy that we have reached this agreement, which also underscores the attractiveness of this project and generally of our asset class for new international investors entering the German market. Let us now take a brief look at our financial KPIs for H1 2026. Adjusted revenues amounted to EUR 184.2 million. There is still a minor impact from weather-related lower construction outputs, but the key driver for the stronger expected H2 will be a significant rise in sales, including institutional deals in the coming months. Our gross margin remained at a very high level of 27.9%, which clearly represents a benchmark in our industry. This result is even slightly better than we anticipated despite rising costs for building materials. Although this margin level cannot be extrapolated, we feel very comfortable with our full year target of more than 24%.

Speaker #3: We are therefore happy that we have reached this agreement, which also underscores the attractiveness of this project and, generally, of our asset class for new international investors entering the German market.

Speaker #3: Let us now take a brief look at our financial KPIs for the first half of 2026. Adjusted revenues amounted to €184.2 million. There is still a minor impact from weather-related lower construction output, but the key driver for the stronger expected H2 will be a significant rise in sales, including institutional deals in the coming months.

Speaker #3: Our gross margin remained at a very high level of 27.9%, which clearly represents a benchmark in our industry. This result is even slightly better than we anticipated, despite rising costs for building materials.

Speaker #3: Although this margin level cannot be extrapolated, we feel very comfortable with our full-year target of more than 24%. Adjusted earnings after tax totaled €1.3 million.

Kruno Crepulja: Adjusted earnings after tax totaled EUR 1.3 million. This still low number is distorted by the low top line in H1, and as expected, it is also influenced by the more negative interest results from the increasing release of capitalized interest due to rising construction starts. In line with our planning, we expect a jump in earnings as revenues rise and operating and financial leverage unfold in the coming quarters. Sales volume increased to EUR 114.8 million. In our private customer business, sales increased by 26% year on year, despite the adverse impact from the macro environment. Supported by the institutional business, we are making good progress. By sales launches and generally stronger seasonality, we expect a strong acceleration growth in H2 2026. A stabilization of the situation in the Middle East will nevertheless certainly be a key precondition for this.

Speaker #3: This still low number is distorted by the low top line in H1 and, as expected, it is also influenced by the more negative interest results from the increasing release of capitalized interests due to rising construction starts.

Speaker #3: In line with our planning, we expect a jump in earnings as revenues rise and operating and financial leverage unfold in the coming quarters. Sales volume increased to €114.8 million, and our private customer business sales increased by 26% year on year, despite the adverse impact from the macro environment.

Speaker #3: Supported by the institutional business, we are making good progress with sales launches and, given generally stronger seasonality, we expect strong accelerated growth in the second half of 2026.

Speaker #3: A stabilization of the situation in the Middle East will nevertheless certainly be a key precondition for this. Moreover, worth highlighting, we generated a substantial operating cash flow of €42.7 million, further strengthening our financial firepower.

Kruno Crepulja: Moreover, worth to highlight, we generated a substantial operating cash flow of EUR 42.7 million, further strengthening our financial firepower. Based on business performance year to date and the continued positive trend in demand indicators, we confirm the lower end of our guidance for 2026. As the leading indicator for our business, and despite the adverse impact from the geopolitical tension, we expect sales to increase towards the lower end of the range of EUR 650 to 750 million. In line with our sales performance, we now expect adjusted revenues and adjusted earnings after taxes to come in towards the lower end of the prospective guidance range of EUR 550 to 600 million and net profit of EUR 35 to 40 million. As pointed out, we feel very comfortable with our gross margin target of more than 24%.

Speaker #3: Based on business performance year to date and the continued positive trend in demand indicators, we confirm the lower end of our guidance for 2026.

Speaker #3: As the leading indicator for our business, and despite the adverse impact from the geopolitical tension, we expect sales to increase towards the lower end of the range of €650 million to €750 million.

Speaker #3: In line with our sales performance, we now expect adjusted revenues and adjusted earnings after taxes to come in towards the lower end of the prospective guidance range of €550 million to €600 million, and net profit of €35 million to €40 million.

Speaker #3: As pointed out, we feel very comfortable with our gross margin target of more than 24%. Our sales ratio, shown in the upper chart, reflects a steady improvement in the demand situation after the start of the conflict and a return to more normalized levels.

Kruno Crepulja: Our sales ratio shown in the upper chart reflects the steady improvement of the demand situation after the start of the conflict and the return to more normalized levels. Sales in our private customer business are up by roughly 26% year on year, with momentum improving in Q2, which showed a year on year growth of 41%. Nevertheless, the effects of the increase in macroeconomic and geopolitical uncertainty, including volatility in interest rates, will ultimately lead to a shift in demand from private investors in the current financial year. Looking ahead, and the demand indicators support this, we do see good reasons to expect an accelerated sales recovery in H2, assuming the crisis continues to subside. We continue to see a good level of reservations, which leaves room for catch-up effects with a further normalization of the conversion rate from reservations to sales.

Speaker #3: Sales in our private customer business are up by roughly 26% year on year with a momentum improving in the second quarter which showed year on year growth of 41%.

Speaker #3: Nevertheless, the effects of the increase in macroeconomic and geopolitical uncertainty, including volatility and interest rates, will ultimately lead to a shift in demand from private investors in the current financial year.

Speaker #3: Looking ahead, and the demand indicators support this, we do see good reasons to expect an accelerated sales recovery in the second half of the year, assuming the crisis continues to subside.

Speaker #3: We continue to see a good level of reservations, which leaves room for catch-up effects with the further normalization of the conversion rate from reservations to sales.

Kruno Crepulja: We expect tailwind from additional supply we are bringing to the market from new sales starts. As mentioned in the past, all of these projects are tailored to the attractive tax incentive schemes for private investors. There is generally also strong seasonal pattern for our retail sales, with a strong bias towards Q4. We expect such a pattern also for the current financial year. We continue to see quite encouraging momentum in our institutional business. We are currently at an advanced stage for several transactions with a total volume of around EUR 150 million, and we are in concrete discussions for a number of additional deals. The current demand indicators point to full year sales volume in this customer segment that will exceed our forecast at the beginning of the year. We are confident that this will largely compensate for somewhat softer demand in the retail business.

Speaker #3: We expect a tailwind from additional supply we are bringing to the market from new sales starts. As mentioned in the past, all of these projects are tailored to the attractive tax incentive schemes for private investors.

Speaker #3: There is generally also strong retail sales with a strong bias towards Q4. We expect such a pattern also for the current financial year.

Speaker #3: We continue to see quite encouraging momentum in our institutional business. We are currently at an advanced stage for several transactions with a total volume of around €150 million, and we are in concrete discussions for a number of additional deals.

Speaker #3: The current demand indicators point to full-year sales volume in this customer segment that will exceed our forecast at the beginning of the year.

Speaker #3: We are confident that this will largely compensate for somewhat softer demand in the retail business. In our view, the positive signs of demand that we are seeing are attributable less to a general recovery in the transaction market and more to our specific product offering.

Kruno Crepulja: In our view, the positive signs of demand that we are seeing are attributable less to a general recovery in the transaction market and more to our specific product offering. It includes a high share of subsidized apartments, approximately 50%. Due to attractive incentive schemes for rent-controlled apartments in many federal states, this investment product is less affected by the volatility in interest rates. With new innovative product combining state-of-the-art design with low construction costs, we are ideally positioned for this business. We have also put a strong focus on this product in our acquisition efforts, as well as on projects with a shorter duration. This is paying off. On slides five and six, we provide an overview of the key market indicators relevant to our business.

Speaker #3: It includes a high share of subsidized apartments—approximately 50%—due to attractive incentive schemes for rent-controlled apartments in many federal states. This investment product is less affected by the volatility in interest rates.

Speaker #3: With our new, innovative product combining state-of-the-art design with low construction costs, we are ideally positioned for this business. We have also put a strong focus on this product in our acquisition efforts, as well as on projects with a shorter duration.

Speaker #3: This is paying off. On slides five and six, we provide an overview of the key market indicators relevant to our business. Despite heightened macro uncertainty and the recent rise in long-term interest rates, prices for new builds in Germany's top seven cities are stable to moderately increasing, underscoring the strong resilience of this asset class.

Kruno Crepulja: Despite heightened macro uncertainty and the recent rise in long-term interest rates, prices for new builds in Germany's top seven cities are stable to moderately increasing, underscoring the strong resilience of this asset class. The persistent shortage of residential space in metropolitan areas, combined with sustained healthy rental growth, remains the key driver of positive underlying market dynamics. This is especially true for high-quality, energy-efficient new builds. The price premium for energy-efficient buildings continues to rise, and the renewed spike in energy costs is likely to further reinforce this trend. The chart below shows rental growth in top cities based on data from bulwiengesa. Trajectory. Rents have continued to rise and the re-acceleration of inflationary trends should provide further support. Price inflation over time.

Speaker #3: The persistent shortage of residential space in metropolitan areas, combined with sustained healthy rental growth, remains the key driver of positive underlying market dynamics.

Speaker #3: This is especially true for high-quality, energy-efficient new builds. The price premium for energy-efficient buildings continues to rise, and the renewed spike in energy costs is likely to further reinforce this trend.

Speaker #3: The chart below shows rental growth in top cities based on data from Bulwingesa. While growth has moderated from elevated levels, it remains on a very robust long-term upward trajectory.

Speaker #3: Rents have continued to rise, and the re-acceleration of inflationary trends should provide further support. Price inflation continues over time. The latest data from the Federal Statistics Office point to an accelerating growth trend in construction costs since the start of the conflict in the Middle East, which is largely attributable to the rise in oil-based or generally energy-related building materials.

Kruno Crepulja: The latest data from the Federal Statistical Office points to an accelerating growth trend in construction costs since the start of the conflict in the Middle East, which is largely attributable to the rise in oil-based or generally energy-related building materials. Nevertheless, we haven't felt any tangible impact so far. With our market position, we are in something of a sweet spot, with still strong bargaining power vis-a-vis medium-sized construction companies. So far this year, we have seen only very slight increases in construction costs, which have even remained below our own cost assumptions. This is also reflected in our margin. Our suppliers are consequently absorbing the cost pressure in the margins, and this situation is unlikely to last indefinitely. We anticipate slightly higher construction price inflation next year. Turning to slide seven.

Speaker #3: Nevertheless, we haven't felt any tangible impact so far. With our market position, we are in something of a sweet spot, which still gives us strong bargaining power vis-à-vis medium-sized construction companies.

Speaker #3: So far this year, we have seen only very slight increases in construction costs, which have even remained below our own cost assumptions. This is also reflected in our margin.

Speaker #3: Our suppliers are consequently absorbing the cost pressure in their margins, and this situation is unlikely to last indefinitely. We anticipate slightly higher construction price inflation next year.

Speaker #3: Turning to slide seven, our gross development value remained broadly stable at €7.1 billion year to date, excluding our Schengen ventures, which have increased quite considerably with a future proportionate share of more than €1 billion.

Kruno Crepulja: Our gross development value remained broadly stable at EUR 7.1 billion year to date, excluding our share in joint ventures, which have increased quite considerably with a future proportionate share of more than EUR 1 billion. We have acquired projects with a GDV of almost EUR 700 million year to date, of which a larger share is expected to be allocated to our JV business. Looking at our fully consolidated project portfolio, the volume of projects under construction has increased from some EUR 2.7 billion to EUR 2.9 billion year to date due to rising construction starts. Nevertheless, we have maintained a low operational risk profile with 87% of the units under construction already sold. The pre-sold volume of EUR 2.5 billion provides high visibility for future revenues and cash flows. Of this revenue, not yet recognized amounts to more than EUR 400 million.

Speaker #3: We have acquired projects with a GDV of almost €700 million year to date, of which a larger share is expected to be allocated to our JV business.

Speaker #3: Looking at our fully consolidated project portfolio, the volume of projects under construction has increased from approximately €2.7 billion to €2.9 billion year to date, due to rising construction starts.

Speaker #3: Nevertheless, we have maintained a low operational risk profile, with 87% of the units under construction already sold. The pre-sold volume of €2.5 billion provides high visibility for future revenues and cash flows.

Speaker #3: Of this revenue, amounts not yet recognized total more than €400 million. We continue to create value through our business model by securing building rights for our land bank over time.

Kruno Crepulja: We continue to create value through our business model by securing building rights for our land bank over time. Over the past 12 months, we have made further progress on approvals, increasing our zoned land bank from EUR 1.7 billion to around EUR 2 billion. This enhances our flexibility and allows us to bring additional products to the market as soon as the market reopens more broadly, including the institutional segment. As mentioned, we remain active on the acquisition side after having acquired projects with a total GDV of around EUR 1.9 billion since the beginning of 2025. We are well on track to reach our acquisition target of more than EUR 2 billion. We have an extensive pipeline, and you can expect more land acquisitions in the coming months. We still see a very attractive window of opportunity to buy high-quality assets in key metropolitan areas, given increased supply and the very limited competition.

Speaker #3: Over the past 12 months, we have made further progress on approvals, increasing our zoned land bank from €1.7 billion to around €2 billion. This enhances our flexibility and allows us to bring additional products to the market as soon as the market reopens more broadly, including the institutional segment.

Speaker #3: As mentioned, we remain active on the acquisition side, having acquired projects with a total GDV of around €1.9 billion since the beginning of 2025.

Speaker #3: We are well on track to reach our acquisition target of more than €2 billion. We have an extensive pipeline, and you can expect more acquisitions in the coming months.

Speaker #3: We still see a very attractive window of opportunity to buy high-quality assets in key metropolitan areas, given increased supply and the very limited competition.

Kruno Crepulja: The current macro environment further supports this dynamic. We continue to prioritize short-term duration projects, which should further strengthen our growth profile over the next two to three years. As mentioned, we are also looking at opportunities in the subsidized and more broadly affordable housing segment. With that, I would now like to hand over to David for the financial section of the presentation.

Speaker #3: The current macro environment further supports this dynamic. We continue to prioritize short-term duration projects, which should further strengthen our growth profile over the next two to three years.

Speaker #3: And as mentioned, we are also looking at opportunities in the subsidized and, more broadly, affordable housing segment. With that, I would now like to hand over to David for the financial section of the presentation.

David Dreyfus: Thank you, Kruno. Let me now walk you through our H1 2026 results in a bit more detail, starting with our adjusted results of operations on slide nine. As mentioned by Kruno, in H1, our adjusted revenues were still below the prior year level. Looking ahead, we expect a significantly stronger revenue contribution from new sales in the H2 of the year, supported by the typical sales seasonality. In addition, we still have construction work to catch up on following the cold winter. We continued to deliver a very strong gross margin of 27.9%, once again reflecting our industry-leading profitability. Overall, construction costs came in slightly below our expectations, despite the rising costs for energy-related building materials. As pointed out, this is mainly attributable to our strong market position and also to our prudent cost assumptions.

Speaker #1: Thank you, Kruno. Let me now walk you through our H1 2026 results in a bit more detail, starting with our adjusted results of operations on slide nine.

Speaker #1: As mentioned by Kruno, in H1 our adjusted revenues were still below the prior year level. Looking ahead, we expect a significantly stronger revenue contribution from new sales in the second half of the year.

Speaker #1: Supported by the typical sales seasonality. In addition, we still have construction work to catch up on following the cold winter. We continued to deliver a very strong gross margin of 27.9%.

Speaker #1: Once again, reflecting our industry-leading profitability. Overall, construction costs came in slightly below our expectations, despite the rising costs for energy-related building materials.

Speaker #1: As pointed out, this is mainly attributable to our strong market position and also to our prudent cost assumptions. At least in the short term, the cost increases are borne by the suppliers.

David Dreyfus: At least in the short term, the cost increases are borne by the suppliers. While the H1 results cannot be extrapolated, we feel very comfortable with our margin target of more than 24%. The bulk of this year's construction work has already been locked in. Our platform costs were somewhat higher than last year. This was partially driven by non-recurring items. Despite general cost inflation, we do not expect a significant increase in platform costs for the full year 2026. Further down in the P&L, there was a stronger rise in net interest expenses, which was also fully in line with our expectations. The main factor was the scheduled release of capitalized interest due to increasing construction starts. Additionally, a minor effect comes from slightly rising net debt.

Speaker #1: While the H1 results cannot be extrapolated, we feel very comfortable with our margin target of more than 24%. The bulk of this year's construction work has already been locked in.

Speaker #1: Our platform costs were somewhat higher than last year. This was partially driven by non-recurring items. Despite general cost inflation, we do not expect a significant increase in platform costs for the full year 2026.

Speaker #1: Further down in the P&L, there was a stronger rise in net interest expenses, which was also fully in line with our expectations. The main factor was the scheduled release of capitalized interest due to increasing construction starts.

Speaker #1: Additionally, a minor effect comes from slightly rising net debt. The tax rate was also slightly higher and broadly in line with our full-year budget, reflecting lower expected profit contributions from joint ventures.

David Dreyfus: The tax rate was also slightly higher and broadly in line with our full year budget, reflecting lower expected profit contributions from joint ventures. The still very low bottom line result of EUR 1.3 million in H1 has only limited relevance for the full year. It is distorted by the low top-line level. The development in the previous year is not a good indicator for this year due to significant differences in the time-related distribution of revenues. Both operating and financial leverage will work in our favor, driven by the planned sharp rise in revenues in the second half of the year, partially from institutional deals, as mentioned by Kruno. Accordingly, we expect a very sharp rise in profits in the remainder of the year. Moving on to slide 10.

Speaker #1: The still very low bottom-line result of €1.3 million in H1 has only limited relevance for the full year. It is distorted by the low top-line level. The development in the previous year is not a good indicator for this year due to significant differences in the time-related distribution of revenues.

Speaker #1: Both operating and financial leverage will work in our favor, driven by the planned sharp rise in revenues in the second half of the year, partially from institutional deals, as mentioned by Kruno.

Speaker #1: Accordingly, we expect a very sharp rise in profits in the remainder of the year. Moving on to slide 10. Our balance sheet remains very strong, which is increasingly paying off, as we have started to deploy capital for accelerated future growth.

David Dreyfus: Our balance sheet remains very strong, which is increasingly paying off as we have started to deploy capital for accelerated future growth. Our still low loan-to-cost ratio of 16.9% and our net debt to EBITDA of 4.2 times at the trough of the earnings cycle continue to underscore our very solid financial position. As we have flagged in our last calls, higher investment activity will lead to a temporary increase in leverage ratios until cash conversion starts to kick in. However, you can rest assured that a strong balance sheet will remain a cornerstone of our business. Turning to the next slide. Over the past few years, we have repeatedly demonstrated the strong cash generation capability of our business model. Although we have now entered a new growth and investment phase, we have still generated substantial positive operating cash flow of more than EUR 40 million from pre-sold projects in H1.

Speaker #1: Our still low loan-to-cost ratio of 16.9% and our net debt-to-EBITDA of 4.2 times at the trough of the earnings cycle continue to underscore our very solid financial position.

Speaker #1: As we have flagged in our last calls, higher investment activity will lead to a temporary increase in leverage ratios until cash conversion starts to kick in.

Speaker #1: However, you can rest assured that a strong balance sheet will remain a cornerstone of our business. Turning to the next slide, over the past few years, we have repeatedly demonstrated the strong cash generation capability of our business model.

Speaker #1: Although we have now entered a new growth and investment phase, we have still generated substantial positive operating cash flow of more than €40 million from pre-sold projects in H1.

David Dreyfus: Since Q1 2025, we have acquired land plots for projects with a gross development value of approximately EUR 1.9 billion to date. We expect total acquisitions with a GDV of at least EUR 2 billion by the end of 2026, corresponding to cumulative acquisition costs of around EUR 300 million for 2025 and 2026. These investments will be financed partially on our own balance sheet and partially together with project partners. In addition to land investments, cash requirements will temporarily increase for projects that have entered the construction phase. This reflects the natural cash flow profile of retail projects, where working capital investments are required early on with cash flows turning positive as construction and sales progress.

Speaker #1: Since Q1 2025, we have acquired land plots for projects with a gross development value of approximately €1.9 billion to date. We expect total acquisitions with a GDV of at least €2 billion by the end of 2026.

Speaker #1: Corresponding to cumulative acquisition costs of around €300 million for 2025 and 2026. These investments will be financed partially on our own balance sheet and partially together with project partners.

Speaker #1: In addition to land investments, cash requirements will temporarily increase for projects that have entered the construction phase. This reflects the natural cash flow profile of retail projects, where working capital investments are required early on, with cash flows turning positive as construction and sales progress.

David Dreyfus: Building on the strong cash generation over recent years, our liquidity position at the end of the quarter amounted to nearly EUR 260 million, which is largely available to fund growth investments and the planned ramp-up in construction activity. In addition, we have undrawn credit facilities of more than EUR 130 million, providing further financial flexibility. Accordingly, the financing of our planned growth investments is fully secured. Chart 12 provides you with an overview of the current financing structure of our corporate debt. We just refinanced the promissory note ahead of schedule in June. In this process, we were able to increase the loan amount from EUR 20 million to EUR 45 million in collaboration with our financing partners whilst reducing borrowing costs. The note has a three-year term and will be repaid in 2029.

Speaker #1: Building on the strong cash generation over recent years, our liquidity position at the end of the quarter amounted to nearly €260 million, which is largely available to fund growth investments and the planned ramp-up in construction activity.

Speaker #1: In addition, we have undrawn credit facilities of more than €130 million, providing further financial flexibility. Accordingly, the financing of our planned growth investments is fully secured.

Speaker #1: Chart 12 provides you with an overview of the current financing structure of our corporate debt. We just refinanced the promissory note ahead of schedule in June.

Speaker #1: In this process, we were able to increase the loan amount from €20 million to €45 million in collaboration with our financing partners, whilst reducing borrowing costs.

Speaker #1: The note has a three-year term and will be repaid in 2029. This once again confirms the confidence of our financing partners, which they have in us.

David Dreyfus: This once again confirms the confidence of our financing partners, which they have in us in a challenging market environment. Turning to our outlook on chart 13. Based on our business performance to date and the current demand indicators, we can confirm the lower end of our forecast ranges for 2026. Let me give you some more insight. We expect a sales volume of at least EUR 650 million. Unlike the situation at the beginning of the year, we now expect a change in the sales mix. While we expect a somewhat lower growth in our retail business, we expect this to be largely offset by higher institutional sales. We have institutional deals with a volume of EUR 150 million in very advanced stages and a number of further transactions in promising discussions.

Speaker #1: In a challenging market environment, turning to our outlook on chart 13: Based on our business performance to date and the current demand indicators, we can confirm the lower end of our forecast ranges for 2026.

Speaker #1: Let me give you some more insight. We expect a sales volume of at least €650 million. Unlike the situation at the beginning of the year, we now expect a change in the sales mix.

Speaker #1: While we expect somewhat lower growth in our retail business, we expect this to be largely offset by higher institutional sales. We have institutional deals with a volume of €150 million in very advanced stages.

Speaker #1: And a number of further transactions are in promising discussions. However, given the nature of the business, the lion's share of sales will only again be signed in the fourth quarter.

David Dreyfus: Given the nature of the business, the lion's share of sales will only again be signed in Q4. In line with the expected sales performance, we now expect both adjusted revenues and adjusted earnings after tax to come in towards the lower end of the respective guidance range of EUR 550 to 600 million and EUR 35 to 40 million. Against the backdrop of our margin performance year to date, we feel very comfortable with our margin target of more than 24%. Let me remind you that we again intend to pay a minimum dividend of at least EUR 0.43 for the financial year.

Speaker #1: In line with the expected sales performance, we now expect both adjusted revenues and adjusted earnings after tax to come in towards the lower end of the respective guidance range of €550 to €600 million and €35 to €40 million.

Speaker #1: Against the backdrop of our margin performance year to date, we feel very comfortable with our margin target of more than 24%. Let me remind you that we again intend to pay a minimum dividend of at least €0.43 for the financial year.

David Dreyfus: I would also like to reiterate that our guidance is based on the assumption that macroeconomic conditions do not deteriorate materially, and that the current geopolitical conflicts do not escalate further or persist in a way that would further weigh on private customer and/or institutional investor confidence. With this, I would like to conclude the presentation and hand over to the Q&A session.

Speaker #1: I would also like to reiterate that our guidance is based on the assumption that macroeconomic conditions do not deteriorate materially and that the current geopolitical conflicts do not escalate further or persist in a way that would further weigh on private customer and/or institutional investor confidence.

Speaker #1: With this, I would like to conclude the presentation and hand over to the Q&A session.

Operator 2: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered 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 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 Thomas Rothöhler from Deutsche Bank. Please go ahead.

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

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

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

Speaker #2: Anyone who has a question may press star and one at this time. The first question comes from the line of Thomas Rotheuser from Deutsche Bank.

Speaker #2: Please go ahead.

Thomas Rothöhler: Hi. Morning. A couple of questions. First one is, you expect a stronger sales mix towards the institutional business. Just wondering if you could explain how flexible you are in adjusting the product mix, and does this come also with special costs? What is your expectation regarding sales volumes for the retail and institutional business for this year?

Thomas Rothaeusler: Hi. Morning. A couple of questions. First one is, you expect a stronger sales mix towards the institutional business. Just wondering if you could explain how flexible you are in adjusting the product mix, and does this come also with special costs? What is your expectation regarding sales volumes for the retail and institutional business for this year?

Speaker #3: Hi, good morning. I have a couple of questions. The first one is: you mentioned you expect a stronger sales mix towards the institutional business. I’m just wondering if you could explain how flexible you are in adjusting the product mix, and whether this comes with any special costs. Also, what is your expectation regarding sales volumes for the retail and institutional business for this year?

Kruno Crepulja: Hi, Thomas. As mentioned, we have increased substantially the affordable and subsidized segments. Currently we are able, or we have in the sales process roughly EUR 450 million of sales volume, which is dedicated to subsidized housing. This is a very attractive financial and cash on cash yield scheme for investors, and we believe that a significant portion of our, let's say, year-end business dedicated to institutional sales will be subsidized housing. From cost perspective, from the very start, our strategy was to increase affordable housing activities. This, from our perspective, pays now really off. Regards to the split, initially we have planned for this year a bigger portion of B2C business. Through the conflict in Iran, we see some kind of dilution here.

Speaker #4: Hi Thomas. so as mentioned you know we we have increased substantially the affordable and subsidized segments. So currently we are able or we have in the sales process roughly 450 million of of sales volume which is dedicated to subsidized housing.

Speaker #4: And this is a very attractive, you know, financial and cash-on-cash yield scheme for investors, and we believe that a significant portion of our, let's say, year-end business dedicated to institutional sales will be subsidized housing.

Speaker #4: from cost perspective there is from the very start we you know our strategy was to increase affordable housing activities and this from our perspective pays no really off.

Speaker #4: regards to the split you know initially we have planned for this year a bigger portion of B2C business through the conflict in Iran we see you know some kind of dilution here so we believe that going forward the institutional business should lead us to roughly 50% of sales volume which is an increase in comparison to what we have guided initially but which is which is clearly I would say supported by the mix of product we have purchased in last 24 month which is short-term oriented and the with the including a significant portion of subsidized housing.

Kruno Crepulja: We believe that going forward, the institutional business should lead us to roughly 50% of sales volume, which is an increase in comparison to what we have guided initially. Which is clearly, I would say, supported by the mix of product we have purchased in the last 24 months, which is short-term oriented and including a significant portion of subsidized housing.

Thomas Rothöhler: Sure. Is it possible, could you provide more color on this subsidized product? This is something which exists already since quite a while, I think, in certain federal states. Yes, it's would be helpful to get a bit more color as it's a key assumption for your recovery for H2.

Thomas Rothaeusler: Sure. Is it possible, could you provide more color on this subsidized product? This is something which exists already since quite a while, I think, in certain federal states. Yes, it's would be helpful to get a bit more color as it's a key assumption for your recovery for H2.

Speaker #3: Okay. Is it possible you could provide more color on this subsidized product? This is something which has existed already for quite a while, I think.

Speaker #3: ...in certain federal states. And yes, it would be helpful to get a bit more color, as it's a key assumption for your recovery for the second half.

Kruno Crepulja: When you look at the last, from crisis start 2022, we always said that the subsidized housing was a very stable source of sales activities due to the fact that there's no impact by rise of interest rates because you have to put in your equity ratio. It's usually roughly 15%. Then there are different subsidy schemes dependent on the federal state and the cities, which usually have two components. One is, you get, for the investment, you get a subsidized loan and dependent on the federal state. For example, in Baden-Württemberg, where we have a number of projects, there's a very significant additional one-time pay off subsidy, which has not to be paid back. This leads them to cash on cash yields of investors which are significantly above the 4%, which is usually required.

Speaker #4: when you look at so when you look at the last you know from crisis start 2022 we always said that the subsidized housing was a very stable source of sales activities due to the fact that there's no impact by rise of interest rates because you have to put in your equity ratio it's it's usually roughly 15% and then there are different subsidy schemes dependent on the federal state and the cities which usually have two components.

Speaker #4: One is you get you know for the. Investment you get a you get a subsidized loan and dependent on the federal state for for example in Baden-Württemberg where we have a number of projects there's a very significant additional one-time payoff subsidy which is not which has not to be paid back and this leads then to cash on cash yields of investors which are significantly above the 4% which is usually required.

Kruno Crepulja: We are seeing in markets cash on cash yields which are 5% plus. This brings you to the situation in the one or the other project that the price for subsidized housing is higher than the price for free finance housing. This is not everywhere the case, and I can't give you now exactly, let's say, the definition of it because there are plenty of variations of the subsidy scheme. In addition, what is also important, you get an additionally for the QNG 40 or KfW 40 standard, you get additionally also subsidized loans here additionally for the social housing. Overall, it's a very attractive scheme, but it depends from city to city, from state to state, and this is already reflected.

Speaker #4: We we we are seeing in markets cash on cash yields which are 5% plus and this brings you to the situation in the one or the other project that the price for subsidized housing is higher than the price for free financed housing.

Speaker #4: So this is not everywhere the case and I can't give you now exactly let's say the definition of it because because there are plently of of variations of the subsidy scheme and in addition which what is also important you get an additionally for the QNG 40 or KFW 40 standard you get additionally also subsidized loans here additionally for for the social housing.

Speaker #4: So overall, it's a very attractive scheme, but it depends from city to city, from state to state, and this is already reflected. If we acquire a project, of course we know exactly what are the parameters of the scheme, and we are pricing those parameters into the calculation.

Kruno Crepulja: If we acquire a project, of course, we know exactly what are the parameters of the scheme, and we are pricing those parameters into the calculation.

Thomas Rothöhler: Okay. Got it. The last question is on the retail business. You've planned quite some sales starts for this year. Just wondering if we should expect you to reduce these given the most sluggish demand here.

Thomas Rothaeusler: Okay. Got it. The last question is on the retail business. You've planned quite some sales starts for this year. Just wondering if we should expect you to reduce these given the most sluggish demand here.

Speaker #3: Okay, got it. The last question is on the retail business. I mean, you've planned quite a few sales starts for this year. Just wondering if we should expect you to reduce these, given the more sluggish demand here.

Kruno Crepulja: You have seen the increase of sales volume in H1. We are doing much better, 26% plus, we still have this macro uncertainty. What we see on the ground is that the product, this double depreciation scheme, is clearly a positive driver and it will stay a positive driver. What has changed through the Iran crisis is the banks need longer. The banks are asking for, let's say, higher interest rates for higher-leveraged projects. Let's say the difference between 100% financing before the crisis and today is like 1% interest rate. It's really a big step up, on the other hand, the depreciation scheme itself nevertheless stays extremely attractive.

Speaker #4: So you have seen the increase of sales volume, you know, in the first half year. We have been doing much better, 26% plus, and we still have this macro uncertainty. So what we see on the ground is that the product, this double depreciation scheme, is clearly a positive driver, and it will stay a positive driver.

Speaker #4: What has changed through the Iran crisis is the banks need longer. The banks are asking for, let's say, higher interest rates for higher-levered projects.

Speaker #4: So, in the—the—let's switch—let's say the difference between 100% financing before the crisis and today is like a 1% interest rate.

Speaker #4: So, it's really, let's say, a big step up. But on the other hand, the depreciation scheme itself nevertheless stays extremely attractive.

Kruno Crepulja: We believe that we will see a significant step up of B2C sales this year, clearly not at the level we initially have planned, this is due to the situation in Iran.

Speaker #4: So we believe that, you know, we will see a significant, let's say, step up of B2C sales this year, but clearly not at the level we initially had planned, and this is due to the situation in Iran.

Thomas Rothöhler: Okay. Thank you.

Thomas Rothaeusler: Okay. Thank you.

Speaker #3: Okay. Thank you.

Kruno Crepulja: You're welcome.

Speaker #4: You're welcome.

Operator 2: We have now a question from the line of Philipp Kaiser from Warburg Research. Please go ahead.

Operator: We have now a question from the line of Philipp Kaiser from Warburg Research. Please go ahead.

Speaker #1: We now have a question from the line of Philip Kaiser from Warburg Research. Please go ahead.

Philipp Kaiser: Yeah. Hello, everyone, and thanks for the presentation. Congrats to the outstanding gross margin. Thanks for taking my question. Just a couple follow-ups starting with the revenue side. Reaching the lower end, EUR 550 million, requires roughly EUR 360 million in H2 of this year versus roughly EUR 270 million last year. More than 30% up year on year in a period you described as still affected by dampened demand. How much of the EUR 360 million are already contractually secured through construction progress on sold units to get an idea of how much of it is linked to new contracts.

Speaker #3: Yeah, hello everyone, and thanks for the presentation. Congrats on the outstanding gross margin, and thanks for taking my question. Just a couple of follow-ups.

Speaker #3: Starting with the revenue side: so, reaching the lower end—€550 million—requires roughly €360 million in the second half of this year. Where does ‘roughly million’ last year?

Speaker #3: So, more than 30% up year on year in a period you described as still affected by demand. And how much of the €360 million is already contractually secured through construction programs on sold units, to get an idea of how much of it is linked to new contracts?

Kruno Crepulja: The share of revenues from already sold units is roughly EUR 330 million. The remaining volume, of course, has to be built up by new sales. If you take into account the lower number of the range, you come out with a lower number of revenues.

Speaker #4: So the share of revenues from already sold units is roughly 330 million. And the remaining volume is of course has to be has to be built up by by new sales.

Speaker #4: but if you if you take in account the lower number of the range you you come out with the lower number of of of revenues.

Philipp Kaiser: Perfect. Very helpful. Thanks a lot. Continuing on the guidance with regards to sales volume. Reaching the lower end also requires a huge portion secured for H2. Q4 last year was the strongest quarter ever, as far as I remember correctly, with EUR 270 million. Does the lower end assume even a better last quarter than last year? What would happen to the revenue recognition if we see the majority of those contracts may be signed mid-December rather than October? Any implications?

Speaker #3: Perfect. Very helpful. Thanks a lot. And then continuing on the guidance with regards to sales volume: I mean, reaching the lower end also requires a huge portion to be secured for Q4. Last year was the strongest quarter ever, if I remember correctly, with €270 million. Does the lower end assume even a better last quarter than last year?

Speaker #3: And what would happen to the revenue recognition if we see the majority of those contracts may be signed mid-December rather than October? Any implications?

David Dreyfus: I think this is reflected in the answer that you got from Kruno, your last part of the answer. Yes, we do expect Q4 to be the strongest quarter and stronger than last year in terms of sales. As usual, the institutional sales are finalized and completed very late in the year. Therefore, this will be the same case this year again.

Speaker #2: I think this you know is reflected in the answer that you got from from Kruno your your last part of the answer. but yes we we do expect the last quarter to be the strongest quarter and stronger than last year in terms of of sales.

Speaker #2: As usual, you know the institutional sales are finalized and completed very late in the year, and therefore, this will be the case again this year.

Philipp Kaiser: Perfect. Thanks a lot. Makes sense. With regards to institutional sales, in Q1, you pointed to roughly EUR 80 million of institutional deals in advanced negotiation. Now, no one is closed in H1. Is the macro environment you already described by the beginning of the presentation the only reason for no signings in the meantime or any other reasons I miss?

Speaker #3: Perfect, thanks a lot. Makes sense. And with regards to institutional sales in Q1, you pointed to roughly €80 million of institutional deals in advanced negotiation.

Speaker #3: Now no one has closed in the first half. Is it kind of the macro environment you already described at the beginning of the presentation the only reason for no signings in the meantime, or are there any other reasons I missed?

Kruno Crepulja: Well, I think the institutional business has always been more H2 oriented, and this also due to our project portfolio. We have started the sales activities in Q1. We have signed LOIs for EUR 150 million of volume, and these projects will be signed hopefully last weeks of Q3, but usually our experience is that they are Q4 oriented. Looking at the demand itself, I would say that our strategy to increase the affordable housing segment is clearly, from our perspective, the right answer to the current market in mind. We see that the investors, if you get to the cash-on-cash yields, resi in Germany in the metropolitan areas is the key, let's say, the number 1 pick when you look at real estate investors still. If you look at the subsidized housing that was attracted through the crisis.

Speaker #4: Well, I think, you know, the institutional business has always been more second-half oriented, and this is also due to our, let's say, project portfolio.

Speaker #4: We have we have started the sales activities in the first quarter we have signed you know LOIs for 150 million of of of of volume and these projects will be signed let's say hopefully last weeks of third quarter but usually our let's say experience is that that they are fourth quarter oriented.

Speaker #4: And and looking at the demand itself I would say that our let's say strategy to increase the affordable housing segment is clearly from our perspective the right answer to the current market in mind because we see that the investors if you get to you know the cash and cash yields re resi in Germany in the metropolitan areas is the key let's say the number one pick when you look at real estate investors still.

Speaker #4: And if you look at, you know, the subsidized housing that was attractive through the crisis, we believe that our strategy to focus on institutional business more in the affordable housing segment is the right answer.

Kruno Crepulja: We believe that our strategy to focus on institutional business more in the affordable housing segment is the right answer. Adding to this the double depreciation scheme, which is for the B2C business still in place. We also believe that the owner-occupier business will stay the smallest element in our sales activity. Focusing affordable housing for institutional buyers and the more mid to high price segment is more oriented to buy-to-let investors.

Speaker #4: And adding to this, you know, the double depreciation scheme, which is for the B2C business, is still in place. And we also believe that the owner-occupier business will stay the smallest element in our, let's say, in our sales activity.

Speaker #4: So, focusing affordable housing for institutional buyers, and the more, let's say, mid- to high-price segment is more oriented to buy-to-let investors.

Philipp Kaiser: Perfect. Thanks a lot. Crystal clear. My last one is on the booked risk provision. You booked roughly EUR 4 million for a tendering project into project cost, and also other current provisions rose slightly to, I think, EUR 45 million or EUR 44 million on financial risk provisions for individual projects. Could you shed some light on this risk provisions to get a better understanding? Would be helpful.

Speaker #3: Perfect. Thanks a lot, Chris Leclir. And my last one is on the booked risk provision. So, you booked roughly €4 million for a tendering project into project cost, and also other current provisions rose slightly to, I think, €44 or €45 million.

Speaker #3: On financial risk provisions for individual projects—could you shed some light on these risk provisions to help us get a better understanding? That would be helpful.

David Dreyfus: These are risk provisions in connection with one project, which we looked at. On that project, we had booked some of the costs at a lower level and expected, based on what we got in from different building providers, higher cost indications, and therefore built up our risk provisions on that project.

Speaker #2: This is our risk provisions in connection with one project which we, you know, looked at. On that project, we had booked some of the costs at a lower level and expected, you know, based on what we got in from different building providers, higher cost indications, and therefore built up our risk provisions on that project.

Philipp Kaiser: Okay, perfect. All of this is just related to one individual project?

Speaker #4: Yeah.

Speaker #3: Okay, perfect. But all of this is just related to one individual project.

Kruno Crepulja: Yeah. It has been the first offers we get for the construction activities, and we made this cost provision as a security for us.

Speaker #4: Yeah. It it it has been you know the first the first offers we get for the construction activities and we we made this let's say cost provision as a security for us yeah we'll see what where we come out but currently it's it's it's seeing let's say maybe the the picture is quite a bit better than what we initially thought.

Philipp Kaiser: Yeah.

Kruno Crepulja: We'll see where we come out, but currently, maybe the picture is quite a bit better than what we initially thought.

Philipp Kaiser: Okay, perfect. Thanks a lot. Very helpful all from my side.

Speaker #3: Okay, perfect. Thanks a lot. Very helpful. That's all from my side.

Kruno Crepulja: Thank you.

Speaker #4: Thank you.

Operator 2: We now have a question from the line of Oliver Schmidt from Metzler. Please go ahead.

Operator: We now have a question from the line of Jochen Schmittt from Metzler. Please go ahead.

Speaker #1: We now have a question from the lineup. Johan Schmitter from Metzler, please go ahead.

Oliver Schmidt: Thank you. Good afternoon. I have four questions, please. Firstly, to reach the lower end of the adjusted earnings after tax target, could you give a roadmap for the quarterly path? I respect that you will probably not give a detailed outlook for Q3, but may we expect an adjusted earnings after tax, say, at least in the mid-single digit EUR million range? That's the first question. Second question, could you give an indication for the adjusted net interest expenses to be expected for the full year? Third question, may we expect the result from joint ventures tend to be higher in the quarters to come than in Q2? Fourth and last question, which revenue contribution may we expect from the catch-up in delay in construction in H2? Thank you.

Jochen Schmitt: Thank you. Good afternoon. I have four questions, please. Firstly, to reach the lower end of the adjusted earnings after tax target, could you give a roadmap for the quarterly path? I respect that you will probably not give a detailed outlook for Q3, but may we expect an adjusted earnings after tax, say, at least in the mid-single digit EUR million range? That's the first question.

Speaker #5: Thank you. Good afternoon. I have four questions, please. Firstly, to reach the lower end of the adjusted earnings after tax target, could you give a road map for the quarterly path?

Speaker #5: I respect that you will probably not give a detailed outlook for Q3, but may we expect adjusted earnings after tax, say, at least in the mid single-digit euro million range?

Speaker #5: That's the first question. Second question: could you give an indication for the adjusted net interest expense to be expected for the full year?

Jochen Schmitt: Second question, could you give an indication for the adjusted net interest expenses to be expected for the full year? Third question, may we expect the result from joint ventures tend to be higher in the quarters to come than in Q2? Fourth and last question, which revenue contribution may we expect from the catch-up in delay in construction in H2? Thank you.

Speaker #5: Third question: May we expect the result from joint ventures to be higher in the quarters to come than in Q2? And fourth and last question: What revenue contribution may we expect from the catch-up in delay in construction in the second half?

Speaker #5: Thank you.

David Dreyfus: Let me start off with the first question. I think on a quarterly basis, it is probably right that we will see double digit towards Q2. It also depends heavily on if those institutional deals that Kruno just mentioned can be closed, or if some of them will only be closed towards the beginning of Q4. I think that is a shifting element. Currently we expect, based on where we are, that we will see double digit earnings in Q3. The second question.

Speaker #4: So so let me start off with the first question. I think on on a quarterly basis it is probably right that we will see you know double digit In the you know towards the the the second quarter.

Speaker #4: But it also depends heavily on whether those institutional deals that Kruno just mentioned can be closed, or if, you know, some of them will only be closed towards the beginning of the fourth quarter.

Speaker #4: So I think you know that that is a shifting element. But currently, we expect, you know, based on where we are, that we will see double-digit earnings in Q3.

Speaker #4: The second question... Yeah, I think the interest—netted interest costs—should be approximately at €25 million. Yeah.

Kruno Crepulja: I think the netted interest costs should be approximately at EUR 25 million.

David Dreyfus: Absolutely. I think that can be extrapolated. That's right. Then you have the third question with regards to the joint venture contribution. Joint venture contribution, as we have already mentioned previously, that is related to one project in Berlin, which is coming to an end and therefore will be on a lower basis compared to previous years. It's coming down and can be extrapolated on the way that you see in our numbers. Lastly, you asked on the revenue breakdown. Please help me again, the last question you had.

Speaker #2: Absolutely. I think that can be extrapolated. That's right. And then you had the third question with regards to the joint venture contribution. The joint venture contribution, as we have already mentioned previously, is related to one project in Berlin which is coming to an end and therefore will be on a lower basis compared to the previous year.

Speaker #2: So it's coming down and can be extrapolated in the way that you see in our numbers. And lastly, you asked about the revenue breakdown in terms of—please help me again with the last question you had.

Oliver Schmidt: Yeah. Of course. The delay in construction, the catch-up which you expect for the H2. How could this translate into adjusted revenues? That's my question.

Jochen Schmitt: Yeah. Of course. The delay in construction, the catch-up which you expect for the H2. How could this translate into adjusted revenues? That's my question.

Speaker #5: Yeah, of course. The delay in construction, the catch-up which you expect for the second half—how could this translate into adjusted revenues? That's my question.

David Dreyfus: I think Kruno gave you sort of a split. I think that gives you an indication. From booked revenues, we have approximately EUR 330 million of booked revenues for the full year. Plus, the remainder EUR 220 coming from new sales. This gives you the EUR 330 distributed over the remainder of the year, the catch-up on the construction side.

Speaker #2: I think Kruno gave you sort of a split, and I think that gives you an indication. You know, from booked revenues we have approximately €330 million of booked revenues for the full year.

Speaker #2: Plus, you know, the remainder—220—coming from new sales. So this gives you, sort of, the €330 million distributed over the remainder of the year to catch up on the construction side.

Oliver Schmidt: Okay. Thank you very much.

Jochen Schmitt: Okay. Thank you very much.

Speaker #5: Okay. Thank you very much.

David Dreyfus: Welcome.

Speaker #4: Welcome.

Operator 2: As a reminder, if you wish to register for a question, please press star 1 on your telephone. We now have a question from the line of Manuel Martin from Oddo. Please go ahead.

Operator: As a reminder, if you wish to register for a question, please press star 1 on your telephone. We now have a question from the line of Manuel Martin from Oddo. Please go ahead.

Speaker #1: As a reminder, if you wish to register for a question, please press star and one on your telephone. We now have a question from the line of Manuel Martin from Oddo.

Speaker #1: Please go ahead.

Manuel Martin: Thank you. Gentlemen, two questions from my side. Maybe we can go through them one by one. The first question is on the strong margins you showed in Q2 and in the H1. Maybe you could give some color on the nature of these strong margins. What were the most important drivers there? Looking forward to H2, what would be the details driving down the margins? Maybe a final point on that, do you expect a bit more than 24% margin or a bit more significant than 24%? That would be the first question.

Speaker #3: Thank you, gentlemen. Two questions from my side. Maybe we can go through them one by one. The first question is on the strong margins.

Speaker #3: You showed in the second quarter and in the first half-year. Maybe you could give some color on the nature of these strong margins.

Speaker #3: What were the most important drivers there? And then, looking forward to H2, what would be the details driving down the margins? And maybe a final point on that.

Speaker #3: Do you expect a bit more than a 24% margin or a bit more significantly more than 24%? That would be the first question.

Kruno Crepulja: Sure. We have, of course, in the margin recognition, some seasonality, I would say. The 28% or 27.9% relates always to individual projects. There's a mixture when you look over the whole year. We have margin strong projects which are currently generating revenues. The question regards to the potential upside to the margin, as I already said in my information, I think we are doing quite well, or we did quite well in the H1 with our purchasing processes. We have stayed really meaningful below our calculated budgets. Now for the H2, it of course depends how strong will be the cost price inflation. We will see cost price inflation, but the question is how strong it is.

Speaker #4: Sure. So we have, of course, in the margin recognition, some seasonality, I would say. The 28%, or 27.9%, relates always, you know, to individual projects, and there's a mixture when you look over the whole year.

Speaker #4: So we have margin-strong projects which are currently generating revenues. The question regards the potential upside to the margin. As I already said in my, let's say, in my information, I think we are doing quite well, or we did quite well in the first half with our purchasing processes.

Speaker #4: So, we have stayed really meaningfully below our calculated budgets. And now, for the second half, it of course depends on how strong the cost price inflation will be.

Speaker #4: We will see cost price inflation, but the question is how strong it is. I believe that there's a very limited risk, from my perspective, that we will have a cost overrun.

Kruno Crepulja: I believe that there's a very limited risk from my perspective that we will have cost overruns, so there is some buffer. How big the buffer is, I can't currently say because it depends on the processes and the CPI growth.

Speaker #4: So there is some buffer, and how big the buffer is, I can't currently say because it depends on, let's say, the processes and the CPI growth.

Manuel Martin: Okay. I see. Second question, a quick one on the interest costs. Maybe you can give us an update on the marginal costs that you see for your corporate debt, if you were to take new debt, and also maybe on the project side, what could be there, the marginal cost?

Speaker #3: Okay, I see. Second question, a quick one: on the interest costs, maybe you can give us an update on the marginal costs that you see for your corporate debt if you were to take new debt, and also maybe on the project side, what could be the marginal cost there?

David Dreyfus: On the corporate side, I think we have a good indicator. As mentioned, we have just raised 45 million in a promissory note in June at the costs, all-in costs of approximately 5.6%. This gives you sort of the area on where we finance currently on the corporate level. On the project level, I think that is depending on where we are. We see margins somewhere around, and that has not substantially changed around 2% to 3%.

Speaker #4: So, on the corporate side, I think we have a good indicator. As mentioned, we have just raised €45 million in a promissory note in June.

Speaker #4: At the costs, all-in costs of approximately 5.6%. So, this gives you sort of the area on where we finance currently, on the corporate level.

Speaker #4: And on the project level, I think that is depending on where we are. We see margins somewhere around, and that has not substantially changed, around two to three percent.

Manuel Martin: Okay. Thank you.

Speaker #3: Okay. Thank you.

David Dreyfus: Welcome.

Speaker #4: Welcome.

Operator 2: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Burkhard Sawazki for any closing remarks.

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

Speaker #1: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Burkhard Sawazki for any closing remarks.

Burkhard Sawazki: Thank you for your participation. If you need further information, please do not hesitate to contact the Instone IR team. Thank you and goodbye.

Speaker #6: Thank you for your participation. If you need further information, please do not hesitate to contact the Instone IR team. Thank you, and goodbye.

Operator 2: 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.

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.

Speaker #1: Ladies and gentlemen, the conference is now over. Thank you for choosing CorusCall, and thank you for participating in the conference. You may now disconnect your lines.

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Q2 2026 Instone Real Estate Group SE Earnings Call

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