Half Year 2026 alstria office REIT AG Earnings Call
Speaker #1: Austria, S-A-R-L. Throughout the call, all participants will be in a listen-only mode, and afterwards there will be a question-and-answer session. Please note this call is being recorded.
Speaker #1: Today I am pleased to present Maximilian Koch, CEO of Austria Advisors. Please begin your meeting.
Speaker #2: Hello everybody, and— Welcome to Austria Advisors for the first half-year of 2026. From Claudie Laxenberg today. As usual, I want to draw your attention to the disclaimer about any forward-looking statements and our duty to update.
Speaker #2: On the second page. But without further ado, let's dive into the presentation. In summary, Austria is on track with our strategy. We are deleveraging our balance sheet, we're selling assets, and we're building equity in the process.
Speaker #2: As you can see, we're moving in the right direction with equity up and ATV slightly down. And all of that is underpinned by solid operations.
Speaker #2: On the leasing front, we still see strong momentum in the business and have a good pipeline that makes us excited, and we're looking forward for the rest of the year.
Speaker #2: And on the transaction front, we sold 3 assets for a total of 64 million in the first 6 months of the year. If you've been with our portfolio.
Speaker #2: We have 103 assets in the major urban centers in Germany, and they are valued at 4.3 billion or 41 million euros per asset. And for Austria, you know, that size is important.
Speaker #2: We do find liquidity in the current market, where it's easier to transact with smaller assets at the moment. What you— what I also want to highlight here is the 3,000 euro per meter valuation that is fairly low in the German context, and that provides a good basis for us to invest into our buildings.
Speaker #2: Contractual rent remains around 200 million, and weighted average lease lengths are 5.7 years, with a prior vacancy stable around 9%. On the lettings front, let me give you a bit of background about the market currently.
Speaker #2: Because I would say there's an interesting dynamic at play, where some parts of the market you see vacancy going up, but rents are rising at the same time.
Speaker #2: And what we see is that rents are rising in quality space, where landlords are investing. And there's actually a scarcity of that space in the market.
Speaker #2: Now, obviously, with Austria's business model, that's exactly what we do. So we're producing the quality space, and that allows us to then tap into that supply-demand imbalance that we find.
Speaker #2: And where that brings us with our performance: leasing is performing to plan. We already secured 56 million of future cash flow from the leases that we've signed in the first half-year of this market.
Speaker #2: And you might ask yourself, how this compares to last year. Now, last year we had a very strong year. It's actually the second best leasing year in the history of the company that we had in 2025.
Speaker #2: That's due to the fact that we've been able to sign a number of large leases, especially in the city of Hamburg. Now, those leases, they take usually a long time.
Speaker #2: They're 18 months to negotiate, and then you can't time whether that happens in 2025 or 2026. Importantly, they do happen. So that's what we care about.
Speaker #2: And the other important thing for us is obviously that we make our space more valuable. Now, the new leases we're signing— we're signing at 28 euros per square meter.
Speaker #2: That's roughly— roughly double where the portfolio averages. And that, to us, is proof that the strategy is working. We track that growth, obviously, over time.
Speaker #2: You can see that at the bottom right half of the tape of the page. And where we take all rent and divide it by all office space, and over the long term here we track about 1.5 times inflation.
Speaker #2: And already 2.8% growth in the first half of this year alone. Now, on the investments, we sold 3 assets. In the first 6 months of the year.
Speaker #2: 64 million in total. But I also want to give you a bit of background about the strategy, how we address the sales that we're planning.
Speaker #2: So our disposal strategy breaks down in 3 parts. There's business as usual, as I call it. It's basically we take an asset, we harvest the cash flow, we invest, we refurbish, and then we sell it into the core market.
Speaker #2: We've done this. It's a new build asset that we sold in Mannheim. And you can see also that we sold it at 4.4% yield.
Speaker #2: So good success. And then the other 2 parts, I would call it, under the headline of sharpening our portfolio. And there, what we do is we're selling user-specific properties that, to us, pose a little bit of a binary risk at the end of the lease term, and more periphery assets.
Speaker #2: And then focusing the portfolio towards the urban centers where we're active. And here, we also sold one asset each. We sold a courthouse. And the user-specific properties and a town hall in the city of Dreiech.
Speaker #2: Outside of Frankfurt. The other point I would highlight here is that we sold those assets in line with book value. And even at the more difficult end of the portfolio, if you look at the periphery assets, even there, our values are pretty much in line with where we sell.
And then focusing the portfolio towards the urban centers where we're active.
Speaker #2: And that hopefully gives everybody comfort that our assets overall are fairly valued. And in line with our strategy.
And here, we also sold one asset. Last year, we sold a courthouse.
And the user-specific property is an IT Town Hall in the city of Dreieich.
Outside of Frankfurt.
Speaker #1: So expect more from us.
Speaker #2: In line with those 3 disposal buckets. As we organize our sales processes. And with that, I hand it over to Andreas.
The other point I would highlight here is that—
We sold those assets in line with book value.
and,
Even.
Speaker #3: Thank you, Max, and hello everybody. So I will take you through the financial performance and the key credit metrics for the first half-year of 2026.
At the more difficult end of the portfolio, if you look at the periphery assets,
Speaker #3: So revenues are slightly lower compared to previous periods, but developed in line with our expectations and our plan. On the FFO, we have a significant increase by 37%.
Even there, uh, our values are pretty much in line with where we sell, uh, and that hopefully gives everybody comfort that our assets overall are fairly valued.
And, um, in line with our strategy.
To expect more from us, in line with those three disposable buckets,
Speaker #3: This improvement was mainly driven by the implementation of our hedging strategy, which reduced financing costs. As a result, the FFO margin increased to 41%.
Um, as we organize our sales processes,
And with that, I hand it over to Andreas.
Thank you so much, and hello, everybody.
Speaker #3: And based on that stable operating performance, of the company in the first half-year, and the benefits from the implementation of the hedging strategy, we have increased our full-year FFO guidance from 53 to 704 million.
So, I will take you through the financial performance and the key credit metrics for the first half of 2026.
So, revenue is slightly lower compared to the previous period.
Periods, but developed in line with our expectations and our plan.
Speaker #3: The revenue guidance remained unchanged at 192 million. Looking at the SG&As, which we reported, are slightly up by 10.6% compared to the pure period.
On death of all, we have a significant increase by 37%. This improvement was mainly driven by the implementation of our hedging strategy, which reduced financing costs.
As a result, the FFO margin increased to 41%.
Speaker #3: This, however, excluding the effects of the structural change the company did, so migrating to Luxembourg, spin-off of Austria Advisors, the underlying costs remained more in line stable.
Speaker #3: I will explain this to you effects in the next slide. are 2 effects. The first one is the agreement between Austria Saal and Austria Advisors, which is based on a cost-plus model.
And based on that stable, operating performance of the company in the first half year and the benefits from the implementation of the hedging strategy, we have increased our full year FFO guidance from €53 to €70.4 million.
The revenue guidance remained unchanged at €192 million.
Looking at the SGNA, which we reported as slightly up by 10.6% compared to the prior periods.
Speaker #3: And therefore, the SG&As reflecting and including the margin top-up here. And at the same time, we received the share of the equity encountered investments, so the profit of Austria Advisors.
This, however, excluding the effects of the structural change. The company did so migrating to Luxembourg spin-off of Austria advisor, the underlying costs remains more on line, uh, stable.
Speaker #3: Which is more in line with the marginal top-up here. The impact on the dated P&L is 70%. And the second point is that Austria Advisors pays office rent to the company, to Austria Saal, or specific to the SPVs of Austria Saal.
I will explain these effects to you, uh, in the next slide.
So,
From the structural change, I mean, there are...
Two effects. The first one is the agreement between Alstria and a True Advisor, which is based on a cost-plus model, and therefore, the SG&A is reflecting and including the margin top-up here.
Speaker #3: And with that, they gain rental income on one side, and on the other side, there are additional advisory expenses. The overall impact on the P&L is neutral.
and at the same time,
We received the share of the equity-encountered investments, so the profit of 33 ADV users, uh, which is...
Speaker #3: So adjusting for these 2 SG&As remained stable compared to the first half of 2025. And overall, the reported increase reflects only the new structure, rather than the increase in the underlying costs.
...more in line with the marginal top-up here. The impact on the consolidated P&L is €70,000.
And the second point is that Austria advises Pace office rank to the company, to our sphere Zoll or specific to the SPV so far.
Speaker #3: And the net impact on the consolidated P&L is very limited. Turning to the balance sheet, I mean, looking at the 3 buckets here, or the positions we choose, investment properties, remained almost stable.
and with that, uh,
They gain rental income on one side, and on the other side, there are additional advisory expenses. The overall impact on the P&L is neutral.
So it's just for these two effects.
The SG&A remains stable compared to the first half of 2025.
Speaker #3: There is sales of 64 million, which were compensated by CapEx. So online, quite stable. The equity increased by 1.8%. This is mainly driven by the profit generated over the period.
And overall, the reported increase reflects only the new structure rather than an increase in the underlying costs.
And the net impact on the consolidated P&L is very limited.
Speaker #3: And the net financial debt also remained stable. I will dig into more detail on the next slide. So overall, our balance sheet remained stable.
Speaker #3: With the equity moving in the right direction. So I mean, looking in a more detail on the deposition, on the next slide, so during the first half-year, we repaid our short shine beginning of April and our bond, which matured in June of 1503 million.
When we choose, um, investment properties, the value remained almost stable. Um,
There are sales of €64 million, which were compensated by capex.
So online, quite stable, the equity increased by 1.8%. This is mainly driven by the profit generated over the period.
Speaker #3: And at the same time, we raised new secure debt of 32 million. But overall, our gross financial debt decreased by 160 million. Which were so which were used from cash here.
And the net financial debt also remains stable. I will dig into more detail on the next slide.
So, overall, our balance sheet remains stable, with the equity moving in the right direction.
so, I mean, looking
Speaker #3: So the net financial debt stayed stable. So following this repayment, our average debt maturity remains at 3.7 years. And I think, importantly to say here, that we have no debt maturities in the next 12 months.
In a more detailed on on, on the that position on the next slide. So, during the first half year, we repaid, uh, our short chain beginning of April and our bonds which matured in, in June of 1503 is 3 million.
Speaker #3: And are in already in discussions for the refinancing of the bank debt in 2027. With that in mind, I mean, we have an undrawn RCF of 200 million.
And at the same time, we raised new secured debt of €32 million. But overall,
Speaker #3: And taking that together, I mean, this provides us with a stable liquidity position and sufficient financial flexibility here. So finally, let us look on the credit metrics.
Our gross financial debt, uh, decreased by 160 million, which were, uh, so which, which were used from, from from cash here. So the net financial debt stayed there.
So following this repayment, our average debt maturity remains at 3.7 years.
And, uh, I think it's important to say here that we have no debt maturities in the next 12 months.
Speaker #3: I mean, overall credit KPIs remain stable or improved slightly during the first half-year. So LTV and debt plus debt plus equity improved slightly. Uncovered assets remained almost stable.
And looking further ahead, we are already in discussions for the refinancing of the bank debt in 2027.
With that in mind, I mean, uh, we have an undrawn RCF of €200 million.
Speaker #3: On the consolidated EBDA, it increased slightly to 139 million. The main effects here are the lower real estate operating expenses, which we expect that this benefit continue in the future.
And taking that together, I mean, this provides us with a stable liquidity position and sufficient financial flexibility here.
so finally,
Let us look upon the credit metrics.
Speaker #3: The higher ABDA, I mean, together with the benefits from the implementated hedging strategy, supported the improvement of the consolidated coverage ratio. So we increased that from 2.4 times to 2.6 times.
I mean, overall, credit KPIs remained stable or improved slightly during the first half of the year, so LTV and, with that, also equity improved slightly.
Speaker #3: And as already communicated, our target is to stay well below well, above, sorry, well, above 2 times. So overall, our leverage metrics and the interest coverage remained stable and improved slightly.
Uncommitted assets remained almost stable on the consolidated EBITDA. It increased slightly to €2,039 million. The main effects here are the lower real estate operating expenses, which we expect this benefit to continue in the future.
Speaker #3: On the covenants, we remained fully compliant, so that's for all of the covenants. With our financial covenants over the period. And with that, I conclude the financial review and hand over back to Max for the outlook.
The higher abda. I mean together with with the benefits from the implemented uh hedging strategy supported the Improvement of the Consolidated coverage ratio. Um, so we increase that from 2.4 times to 2.6 times.
Speaker #2: Thank you, Andreas.
Speaker #1: Yeah. So I want to close with a bit of an outlook. And I mean, you look around, there's a lot of economic uncertainty all around us.
And as already communicated, our Target is uh to stay well below. Well above sorry. Well above 2 times.
Uh, so overall, our leverage metrics and the interest coverage remain stable and improved.
Speaker #1: Geopolitical and economic, I would say. But that said, leasing market is performing for quality assets. As we mentioned, and so we focus on our operations.
Slightly.
On the covenants, we remain fully compliant. So that's for all of the covenants, with our financial covenants for the period.
Speaker #1: We are not distracted by the noise all around us. And we stick to our strategy of improving our balance sheet, and the focus on building and leasing.
And with that, I conclude the financial review and hand over back to Max for the outlook.
Thank you, Andrea.
Yeah, so I want to close with a bit of an outlook.
Speaker #1: And so we come out of the 6 first of the first 6 months on plan. And you can expect us to perform in line with our guidance for the rest of the year.
Speaker #1: That guidance is 192 million for the revenue, and an improved guidance for the FFO of 74 million, as Andreas mentioned it. And with that, I open it up for Q&A.
And I mean, you look around, there's a lot of economic uncertainty all around us—geopolitical and economic, I would say.
Speaker #1: Thanks very much.
That said, the leasing market is performing for quality assets, as we mentioned, and so we focus on our operations. We are not distracted by the noise all around us.
Speaker #4: Thank you. Ladies and gentlemen, if you do wish to ask an audio question, please press star. Then the number 1 on your telephone keypad.
And we stick to our strategy of improving our balance sheet.
Speaker #4: And if you'd like to withdraw a question, please press star. Then the number 2. Again, that will be star 1 to register your question.
And the focus is on building and leasing.
Speaker #4: Your first question comes from Pranava Boyidapu from Barclays. Please go ahead.
Speaker #5: Hi. Thank you for the presentation, and thank you for taking my question. I wanted to understand your hedging strategy a little bit. The cost of debt has gone up from 2.4% to 2.6%.
And so we come out of the 6 first of the first 6 months on plan and you can expect us to perform in line with our guidance for the rest of the year. That guidance is 192 million for the revenue and an improved guidance for the ffo of 74 million. As Andre has mentioned it.
And with that I open it up for Q&A. Thanks very much.
Speaker #5: And even then, like, you know, EBITDA has gone up only a little bit, but the consolidated coverage ratio has gone up, you know, by 0.2 percentage points.
Speaker #5: I was wondering how that works. And also, I noticed that the notional amount of your hedge all the hedges in place, is not the 4 billion, right?
Ladies and gentlemen, if you wish to ask an audio question, please press star, then the number 1 on your telephone keypad. If you’d like to withdraw your question, please press star, then the number 2. Again, that’s star 1 to register your question.
Your first question comes from.
Speaker #5: I mean, it's currently 4.2, and I think it was 4.8 last year. But your gross debt is only about 2.6 billion. So if you can just explain a little bit on how this hedging strategy works, and how it's helping the cost of debt, that would be really helpful.
Pranava Boy Dapu from Barclays, please go ahead.
Speaker #5: Thank you.
Speaker #3: So I mean, I would take over. I mean, cost of debt looking on the slide 10, I think you refer the main increase of the 2.4 to 2.6 is mainly driven by the repayment of the bond plus it had a coupon of 50 base points, which now is out.
Speaker #3: So it's a view. And then for the hedging strategy, I mean, you're right, it's more than our current debt. But it also depends because some hedges starts later, some hedges starts prior to that.
Hi, thank you for the presentation and thank you for taking my question. Um, I wanted to understand your hedging strategy a little bit, um the cost of debt has gone up uh from 2.4% to 2.6%. Um and even then like, you know, ebida has gone up only a little bit, but the Consolidated coverage ratio has gone up, you know, by 0.2 percentage points. Um, I I was wondering how that works and also, um, I noticed that the notional amount of your head, um, all the hedges in place is not the full billion, right? I mean, it's currently 4.2 and I think it was 4.8 last year, um, but your gross debt is only about 2.6 billion. So if you can, just explain a little bit on how this hedging strategy works, and how it's helping the cost of that, that would be really helpful. Thank you.
Speaker #3: So there is also a time-shifting of the hedges. So some hedges have a forward starting or forward starting. Some hedges are as of today.
Speaker #3: So with that, it depends.
Speaker #5: Do you have a sense of how your cost of debt will evolve, given that you have a lot of, you know, you have a future sort of future-proofed your cost of debt in some sense?
Well, I mean I would take over, I mean, because of that uh, looking looking on the slide 10, I think you refer uh, the main increase of uh the 2.4 to 2.6 is mainly driven by the repayment of the bonds, because it had a component of 50 basis points which now is out. So, it's that the view, um,
Then, for the, for the hedging strategy—uh, I mean, you're right, it's, it's more than, than our—
Speaker #3: I think we are, like, in between of the 2.6 to 3%. It's a spot where we will be in the future.
Speaker #5: Got it. Okay. Thank you.
Speaker #3: You're welcome.
Speaker #4: Again, ladies and gentlemen, if you do wish to ask an audio question, please press star. Then the number 1 on your telephone keypad. As there are no further questions, I'll turn the call back over to Max.
Current debt, but it also depends because some hedges start later. Some hedges start, uh, prior to that. So there is also a time shifting of the hedges. So some hedges have a forward starting, or forward starting; some hedges are as of today. So with that, uh, it depends.
um,
How will your cost for that evolve, given that you have a lot of, um...
You know.
You have a sort of future-proof—your cost of that, in some sense.
I, I think we are like, uh, in between of the 2.6, uh, to, to 3%. It's it's a spot where, where we will be in the future.
Speaker #1: Yeah. Thanks very much. Thanks for the question. Thanks for listening. And we speak again in a quarter from today. Thank you.
Got it, okay.
Thank you.
You're welcome.
Again, ladies and gentlemen, if you do wish to ask an audio question, please press star then the number 1 on your telephone keypad.
As there are no further questions, I'll turn the call back over to Max.
Yeah, thanks very much.
Thanks for the question. Thanks for listening. And we will speak again in a quarter from today.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
