Ladies and gentlemen, welcome to the Publication of Half Year Report 2024 Conference Call. I am Shari, the Chorus 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. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Martin Thiel, CFO. Please go ahead.

Yes, good morning, all, and many thanks for dialing in. This is Martin from TAG. Very happy to guide you through our half-year results. So we try to make it quite condensed and short so that we have enough time for Q&A afterwards. Let's start on page number four, which summarizes the highlights of the first-half in 2024. Looking at our results, FFO I came in at EUR88.1 million. That's nearly exactly the level that we had last year., despite the disposals we made in the German portfolio during the financial year 2023, which are now effective in full, and also to a certain part in the first-half of 2024. Our contribution to this very stable letting result was an increased like-for-like rental growth in the Polish -- in the German portfolio of 2.7%, that compares to 2.3% in the previous year. So a clear stronger like-for-like rental growth so far this year. And also the vacancy rate developed very well. We stand now at 4.2% at the end of the first-half, and that compares to 4.7% one year ago. Also in the Polish portfolio, the like-for-like rental growth is still very good at 4.5% after 10.8% last year. Clearly, this is a reduction, but as we said in the previous call, we expected that this like-for-like rental growth is to a certain extent normalizing after two very strong and exceptionally strong years 2022 with more than 20% and 2023 with more than 10% like-for-like rental growth. So we're still very pleased that like-for-like rental growth came out at more than 4%. Looking into the sales results. Main driver for the sales result is clearly the business in Poland. The adjusted net income from sales in Poland was stronger than in the previous year, so increased by 9% to now EUR34.1 million after EUR23.2 million in the year before. We handed over more than 1,300 units, compared to a little bit more than 860 units in the previous period. Looking at the current sales business, the number of sold units was lower, so 1,056 units we have sold compared to 1,817 in the previous period. But the sales volume, thanks to increasing prices, was still at nearly EUR200 million compared to EUR222 million in H1 2023. So a lower number of units sold. But on the other side, as already indicated in the calls before, sales price in Poland have seen a very strong increase, and increase of 20% year-on-year is still observable. Very important for this results call is to give you the message that the portfolio valuation loss in Germany was really moderate at 2.7%. And we clearly see the portfolio valuation losses coming down and we expect that the values now have reached a trough. So the valuation loss in the German portfolio was 2.7% in H1 2024 after more than 4% in the last half year valuation, and more than 7% in the comparable period of the previous year. So, all in all, after -- in the last two years, we have devalued the portfolio in Germany by nearly 20%, 19% to be more precise. And the portfolio valuation stands now at EUR1,040 per square meter, or a 6.5% gross yield. Looking at disposal results in Germany, we continued to sell in the portfolio. We achieved total sales prices of EUR78.4 million and expect net cash proceeds, so after repayments of bank loans, of more than EUR66 million. The average gross yield of the units sold is at or was at 5.4% -- 5.2%. That was even more than the previous financial year, where the average gross yield of sold units was 4.3%. Please be aware that the closing of roughly 720 units with net cash proceeds of EUR58.8 million occurred after the balance sheet date, so therefore we will have additional cash inflows after the balance sheet date, which is not yet reflected in full in the balance sheet as of end of June 2024. Despite the portfolio devaluation in Germany, the LTV was further reduced. At the balance sheet date, it was 46.6%. If you take into account the closing of the disposals after the balance sheet date, we are already at 46.3%. That means we are very close to our LTV target of 45%. And as we know that we will produce still good cash flows from the operational business in the second-half of the year, that we will have perhaps additional sales in Germany. We are very confident that we'll achieve the LTV target by year-end. Net debt to EBITDA and the ICR are still at very strong levels, so 9 times net debt to EBITDA and 6.7 times the ICR. And we are also very pleased that the rating agencies confirmed our very stable financing structure. So we received, I'm sure you have seen this, an upgrade in credit rating to Baa3 from Moody's back in May, and also Standard & Poor's stabilized the outlook from the BBB- rating already in March. So that means we have two investment grade ratings available again. And this is, of course, a good tool for us to diversify our financing options. On pages five and six, you find more details on the highlights. I will not go into every number here, so let's go to page number eight that gives an overview about the development of the EBITDA, FFO, and AFFO. Just some comments on this. So we saw a reduction, if you look at the half year numbers in the EBITDA, by a little bit more than EUR1 million, so EUR120.1 million was the EBITDA for the first-half in 2024, compared to EUR1.7 million more in the previous year. This is mostly due to the disposals in the German portfolio. As I said, FFO I from the rental result was quite stable despite the disposals and we saw a higher AFFO as the modernization CapEx in the first-half was a little bit lower than in the previous year, but don't see this as a trend. So for the full year, you should expect a CapEx roughly on the level of 2023. On the right side, you see the calculation of the adjusted net income from sales in Poland. Again, half year 2024 was much stronger than the previous year, so we came out at EUR34 million compared to EUR23 million. That means we're also on a good way to achieve our guidance here, especially the FFO II guidance. And also for FFO I, if you take the first-half of 2024 already EUR88 million, annualize this sort of full guidance stands between EUR170 million and EUR174 million. That should be very much achievable. Page nine shows the EPRA NTA calculation. Basically, EPRA NTA flat, so a EUR0.02 increase despite the valuation losses we recorded in the first-half, as our business still produces good cash from the operational business. Page number 10 shows the financing structure. So the average cost of debt slightly increased to 2.3% after 2.2% at the beginning of the year. The LTV, as I said, is already close to the LTV target now with 46.6%, and pro forma, including the disposal after the balance sheet date at 46.3%. So very close to our target. As I said, good to have two investment grade ratings back. And as I mentioned in the past, the investment grade ratings were not so much needed for refinancing purposes. But of course, for us, investment grade ratings are a good tool, on the one side, to diversify our financing structure, and on the other side, to support the growth, especially for the Polish rental portfolio. Let's go to page number 12, where we give more insights on our rental growth and CapEx allocation. Important to point out that the rental growth is on a good way, as already indicated in the previous calls. So, analyzing the like-for-like rental growth a little bit further, the like-for-like rental growth without vacancy reduction increased from 1.8% in the previous year now to 2.1%. And including the effects of vacancy reduction, we came out at 2.7%. So also stronger than in the previous year. This is achieved still with moderate maintenance and CapEx that's shown in the chart on the top-right of the page, EUR22.2 per square meter. And this is really everything. So, maintenance and CapEx after EUR25 roughly the two years before. As I said before, you should expect that for the full year, this number will be roughly on the level of the two previous years. Page 13 shows the vacancy reduction, a quite similar development so far in the first-half of 2024 compared to the previous years. We know that always the first quarter and the first-half is a little bit weaker. So the slight increase of 20 basis points in the course of the year is exactly what we have seen last year. So that means for the second-half of 2024, we expect a reduction in our vacancy rate. And you know that we have guided for further vacancy rate reduction for the full year. So at year-end, we should be clearly below 4% with our vacancy rate. Page number 14 shows more details on the portfolio valuation in Germany. As I said, we have now developed the portfolio by 19% and this is a quite extensive devaluation. And we think we are now on a level where we have really reached the trough, so we do not expect any material devaluations anymore. If we look at the historical development on the right side, with a 6.5% gross yield, we are even higher and materially higher than in December 2019 where the gross yield was at 6.1%. On a per square meter basis, we are nearly exactly on the same level, like 4.5 or 5 years ago. And a 6.5% gross yield, which translates at perhaps something at 5.5%, 5.6% net yield. That should be also in a world with high interest rate, a very, very reasonable valuation level. So therefore, we are very optimistic that the periods of devaluation are now behind us. And this is also confirmed when we look at the transaction prices that we currently see in the market from our own disposals. So we're really now selling very closely to our book values. That means slightly below or slightly above, and that should be also a confirmation for the valuation levels. Just as a side note, also the Polish portfolio was, of course, fully externally valued. It is so far as the rental portfolio is concerned that the sales portfolio as well as the cost, and the rental portfolio in Poland, we saw a valuation gain of around 3% to 4% valuation uplift. So contrary to Germany, the portfolio in Poland saw valuation increases, valuation uplifts in the last two years. Yes, let's look at a bit more at Poland. Page number 16 shows you the detailed data on the rental business. As I said, like-for-like rental growth after two exceptional strong years, now at 4.5%, which would be still a very good number. And the vacancy rate in the portfolio is already quite low. So it was 7.4% in June 2024. But if you look at the details, you'll see that in the city of Lodz, the vacancy rate was higher, and this is due to projects that have been finished very close to the balance sheet, also one project in Poznan. So therefore, if we look at properties that are longer on the market, so for more than one year in operation, then the vacancy rate is already down to 2.8% as of June 2024. And this is again a strong confirmation of the demand in the Polish housing market. Total portfolio stands now at 2,629 units. By year end, we will have a portfolio size of around 3,350 units, of course, also other units are currently under construction. Page 17 of the presentation shows the sales numbers in our business. As I said, the pure unit numbers units are down compared to the previous year. So 1,056 units sold in H1 2024. You know that our guidance for the full year was that we will want to sell around 3,000 units. Let's look at the second-half. We are still optimistic that sales numbers are picking up in the course of the year. Although prices have increased quite strongly and the sales volume, that means the cumulative purchase prices or sales prices are still strong in a good level. I mean, what do we observe in the Polish market at the moment? It's not the case that the demand is slowing down, but you know that at the end of last year, subsidy program for first-time buyers of apartments which granted them cheap loans has ended and a new subsidy program is under making. It has already been announced and already some details have been published, and it would be quite similar like the previous program, perhaps a little bit more targeted on the affordable housing, so a little bit more on families with lower income. But now you have simply the scenario that people are clearly waiting, is this new subsidy program coming through? So will it be effective in the third or fourth quarter? And that means we have a period where people simply wait until this decision is made. And the good news, I think, is that even if this new program is not coming, the demand will still be there. So then the uncertainty would be away and people would start to buy again. So therefore, we're still very optimistic that we will achieve good sales numbers, not only in the second-half of 2024, also in the years to come. Page 18 shows the revenue recognition. And just to remind you that the revenue recognition depends or is done at the point in time when we hand over the apartment. So we have the completed contract method in the P&L. Once we hand over the keys to the client, the revenue is recognized in the P&L. The first two quarters have been already strong, but traditionally, as you see here on this page, the fourth quarter of each year is the strongest and this is also expected for the year 2024. So therefore sales results, P&L wise, should be also in a good way in 2024. And finally, on page 20, you see an overview of our guidance. All guidance, all forecasts are fully confirmed this year. So FFO I still stands at EUR170 million to EUR174 million and the FFO II, including the sales results in Poland between EUR217 million and EUR223 million. And as the results for the first-half show in 2024, we should be on a very good way to achieve this. No new comments or outlooks on dividend. This is still depending on market conditions, and as said in the previous calls, we will definitely come back to this at the latest with the results for the third quarter where we also publish the guidance for next year. And if you look at market conditions, I already commented on transaction market, I already commented on devaluations now reaching the trough and we are optimistic that the market conditions are going here into a positive direction. But let's wait how the next weeks and months are developing, and again, we will come back on this in November. That's it from my side as an overview over the half-year results. Thank you so far for listening and now I'm, of course, very happy to take your questions.

[Operator Instructions] The first question comes from the line of Marios Pastou from Bernstein. Please go ahead.

Hi, good morning. Thank you for taking my questions. I've got a few questions om my side mainly related to Poland and also on guidance. Firstly, you refer to the new subsidy program under discussion in Poland. Any idea what proportion of your buyers could benefit from this based on the current criteria as they stand? Secondly, on your pipeline slide, there appears to be a chunk of the whole pipeline that has now shifted over to the to sell category. What's the driver here? And could more follow? And then finally, just circling back on your earnings guidance, as you mentioned, FFO II seems to be quite on the conservative side on an annualized basis. If we're seeing more handovers planned for the second-half or a greater weighting to the second-half, is there something more specific we need to consider here? Thank you.

Good morning, Marios. I'm very happy to answer your questions. I'll start with the first one, the new subsidy program. I would say that's very comparable to the previous subsidy program, which was effective in the second-half of 2022 and in the year 2023. So it's more targeted on lower -- yes, perhaps lower priced apartments, medium-priced apartments, which is then a smaller proportion of our portfolio. And if I remember well, I think we had in 2023 between 15% and 20% of our buyers that used that program. So that was still unmaterial, but not the full driver of our sales. But anyway, once such a program is in the market, clearly that helps, because that creates then demand throughout the market, and in fact, also helps us in selling other units. I hope that we have soon more clarity on this. I mean, this is a political discussion in Poland that we have a new coalition there. It's not just one party. So there are more parties involved, and one party currently is against it. But yes, be optimistic that the coalition will find a solution. And again, if this really is not coming through, if we will have a situation without any subsidy program, that's also not necessarily totally bad news, because then this uncertainty is out of the way. And currently, for understandable reasons, some buyers don't want to mistake to buy today, and then two months or three months later, they would have been able to buy with a subsidized loan. So therefore, we need some patience. But I'm optimistic that the situation is cleared quite quickly. The pipeline or the designation of land plots that we choose for the rental or for sales business has not shifted that much. So the overall strategy is unchanged. We want to get to 10,000 rental units by year-end 2028, and we're very optimistic that we achieve it. What we do from time to time is that we, for example, look at a new land bank and say, okay, that could be something which is interesting for the rental business, on the other side, then change the purpose of a project that we already own, of a land bank that we already own, and say, okay, then let's give this into the sales department or into the sales business. So there's always a certain swing, and this is not new. So this has been the case also in the last two to three years, but perhaps important to confirm that we're not planning to slowdown the rental business. To the contrary, I think now we are really investing again. Basically since the end of last year, we started new rental projects. So we will definitely have this unchanged goal of 10,000 residential rental units in Poland by year-end 2028. And the last number -- the last question was referring our FFO II guidance, and clearly we expect more handovers in the second-half of 2024. So therefore, you're right, the FFO II guidance, at first I look conservative. But with this handovers, it's always necessary and this is something technically that we really hand over the apartment on the 31st of December at the latest. A lot of apartments are finished in December. So it would be, of course, a pity if we are able to hand over the apartments only on the 1st of January and then the profit is in the next year, which is economically not really a difference or no difference. So therefore, we prefer to stick to the current guidance. Perhaps we are better, then we're, of course, happy, but especially in this business where you have this very strict IFRS regulation, when the profit is realized, perhaps good to have some freedom and not be under pressure if a handover of certain apartments is delayed by some days.

Okay, very clear. Thank you.

The next question comes from the line of John Vuong, Van Lanschot Kempen. Please go ahead.

Hi, good morning, Martin. Thank you for taking my question. Just on overall capital allocation. As you're getting closer to your LTV target, and you were saying that values are stabilizing and in troughing, how should we think about the use of proceeds on further disposals, if any disposals will be made?

Yes. Good morning, John. I think our clear preferred capital allocation is clear. We are investing currently to the very largest part in our Polish rental portfolio. It doesn't mean that we don't believe in the German market, but the benchmark is simply 7% to 8% gross yield on newly constructed apartments in cities like Warsaw, Wroclaw, Gdansk. So this is definitely attractive. So therefore, investments in the Polish rental portfolio are clearly the preferred capital allocation. If we were able to continue disposals in Germany, that would basically create even a little bit more equity, that therefore we could have the option to do even a little bit more in Poland. Currently, the equity part of a new investment is to the very largest part coming from the sales business in Poland. If we can add something from sales in Germany on top, that would be, of course, good. But it's not needed to get to the 10,000 rental units target that I just mentioned. So perhaps the focus is shifting now more into investments again or not, perhaps it is shifting more into investments and not so much to focus on deleveraging as we have already reached our LTV target. And perhaps a final comment on that, it's not necessary that we do massive disposals to reach the LTV target. So if you just follow the development of the last quarters also very naturally, we delever within our balance sheet as we produce quite a strong cash, not only from the German rental business, but also, for example, from the Polish sales business, which is then to a certain part we invested. So therefore, we are on a very natural way to reach our LTV target, and therefore, disposals in Germany could also be used to fund further growth in Poland.

Okay, that's very clear. And then just looking at Poland. Life-for-like is, of course, normalizing now that vacancy reduction is much less of a contributor given that the portfolio is much more up and running. But if I look at slide 32, if I look at the different cities, the market rental growth is low single-digits, except for Poznan. Could you maybe talk about the overall supply added to the different markets and whether this market rental growth is just muted more in the short-term and how you would see this develop over, say, the medium term, and the next 12 months, maybe even?

Yes, of course, I can comment on this. But firstly, just for -- as a clarification, the 4.5% rental growth in Poland, that's a number without any new projects that have been finished. So clearly, if you would put on top of this rental growth number additional rent from apartments that have been finished over the last 12 months, the rental growth would be higher. So it's really a like-for-like comparison, right, for the last 12 years. Currently, we are a little bit better than the markets. And you're right, on page 32, we give an overview of the rent development in the different cities. We see here Poznan currently with the strongest development. But perhaps this is also an outcome of the development in the last two, two-and-a-half years. So on the bottom of the page, you see, for example, also that Warsaw has seen an extremely strong rental growth in the last two years. Currently, in the last 12 months, it was only 1%. So it's an overall trend that Polish -- the Polish rental market has seen an exceptional strong growth in the last two years. A lot of people from the Ukraine came into the country, there's generally strong demand for housing, so therefore this is normalizing. But to give you an outlook for the next year, so 2025, 2026, we are very much convinced that rents will continue to grow, because also salaries in Poland are growing quite nicely. So the affordability ratio is not really hit that much. The demand is there and we are simply offering a very attractive product to our clients. So therefore, perhaps a year of normalization and then rental growth should pick up from '25, '26 onwards.

Okay. That's great. Thank you.

[Operator Instructions] The next question comes from the line of Celine Soo-Huynh from Barclays. Please go ahead. Celine Soo-Huynh: Hi, Martin. Just one question on your like-for-like rental growth. It's running at 2.7% currently, including vacancy reduction. And that's the higher end of your guidance. Vacancy contributed by 60 bps over the period. So it's the higher end of your guidance of 20 bps to 30 bps vacancy reduction for the year. And you've just said on the call that vacancy could end up below 4%, so a further reduction. So do you think there is upside risk for your 2.2% to 2.7% like-for-like rental growth guidance for the year? Thank you.

Yes, good morning, Celine. If you want upside, there is upside risk. But if you look at a like-for-like figure, clearly then you look at the last 12 months or the last four quarters. And in terms of vacancy reduction, the fourth quarter 2023 was also quite strong one. So therefore, if you look at the total like-for-like rental growth for 2024, this strong quarter would not be included. But again, we expect a good development, a strong development in vacancy reduction in the second-half of the year. And let's put this way, we are on a good way. And the guidance that we gave for total like-for-like rental growth should be fully achievable. And indeed perhaps we are at year-end still at the upper end of the guidance. Celine Soo-Huynh: Thank you.

The next question comes from the line of Simon Stippig, Warburg Research. Please go ahead.

Hi, good morning. Thank you very much for the opportunity to ask questions. First one would be on page 17, your sales volume in Poland and you commented on that as well. But I just wanted to have some clarification. If I compare the two half-year figures, then actually '24 is trailing the previous period. Is there any particular reason and what would be your expectation for H2 '24? And then maybe I continue asking the other question. The second would be your status in regard to financing of your Polish rental portfolio. And then on your Group, is there any thoughts about the convertible bond due in 2026? And then last one, quite interesting, and thank you for the detailed figure of the 15% to 20% of buyers of the last year that were supported by the subsidy program. And here I was wondering if you could also give some further detail on your buyers from abroad, especially your share of Ukrainians buying your homes? And is there any perceivable variation over the periods if you compare, for example, H1 share of buyers to the last year period? Thank you very much.

Yes, good morning, Simon. I better start with the last question. Yes., also Ukrainians are buying apartments in Poland, and not only from us, also from others. Also people, for example, from Belarus have been on the market now active in the last two years. It's not a large share of our buyers, so I can't give you an exact estimate, but I would say this is below 10% of our buyers definitely. People from Ukraine, for example, can also get a mortgage in Poland, they're using that. And that means people from Ukraine are really settling down in Poland, which should be good news for the country. But to stay with the answers in Poland, you asked for the financing of our Polish portfolio. And I can also perhaps comment on this more generally, I think, for us in the last two or three years, clearly mortgage secured bank loan financing was the primary financing source, and we used that as in the past in Germany, quite intensively. We also started with that in Poland. Perhaps you remember that we announced already with the full-year figures for this -- for 2023 that we have signed a first material bank loan in Poland EUR90 million in the first quarter of 2024. We have additional discussions with banks about also other mortgage secured bank loan. So that works very well. But now we clearly have an additional financing tool. And in theory we had it also before, namely the unsecured financing market. But now we have two investment grade ratings back again to stable investment grade ratings. So that could be also an option for us to finance, especially the further growth in the Polish portfolio. So good to have this option. Looking at the convertible bond, that's clearly perhaps the last material refinancing we had ever ahead of us. But it's exactly now still two years to go. So the maturity of the convertible bond is in August 2026. So therefore, perhaps nothing for the very short-term. But I mean, clearly we have that in mind. And now as I said, we have more tools in the box when we look at refinancing of this convertible bond. But as I said, still some time to go. And I'm not sure, Simon, whether I have answered all the questions, but you can repeat if I've forgotten one.

No, that was actually, thank you very much, very informative. The one thing is, and I think you answered it, is the perceivable variation over periods in your buyer share. But as you said, it's very low or below 10%. I think it's non-material. Maybe just if I may one follow-up or one addition, could you -- maybe it also ties into the capital allocation question from my colleague before. Could you comment on your thinking or has your thinking around dividend payouts improved over the last quarter?

Perhaps, let me add one comment to the sales number, the sales volume. If you have a volatility in sales of units, or also volume, that's not unusual. For example, if we open a new stage of a project, then in the first weeks, the demand is very strong, we sell more, then it's normalizing. So that depends a little bit on projects that we're introducing into sales or the sales volume could also be higher if we sell a project which is a little bit more high priced or more in Warsaw compared to a project with a lower price in Poznan. So it's better to look at a yearly average and not so much at the differences between every quarter. So, just to give you a background. And regarding the dividend, again, we will come back to this at the latest with the new guidance for 2025 that will be published in November. So please understand that I cannot make any explicit comment. But in general, the market environment in the German residential market is clearly improving. Yes, we see evaluations now hopefully have reached the bottom, and we see on the transaction market that there is more liquidity and that should really be supportive for the business in general.

Okay, great. Thank you very much.

The next question comes from the line of Manuel Martin from ODDO. Please go ahead.

Hello, thank you. Hello, Martin, just one question left from my side. It has a bit to do with the like-for-like rental growth. Maybe you can describe us a bit your impression on the recent and upcoming rental tables in your regions to have an impression there, because for example, Magdeburg and Intel might be a topic or maybe there are other topics too.

Yes, good morning, Manuel. We are not so much dependent on certain niche players. The portfolio has a quite diversified structure. So, for example, if in a certain city, a niche player is coming or is compiled for the first time in Lodz this will be the case. That's not a main driver of the rents. That means on the other side, we can benefit from a quite stable development throughout the year. And if you look at the increase in rental growth, and if you analyze this in a little bit more detail, compared to perhaps to previous quarter, you see that the like-for-like rental growth from -- rents for existing tenants has increased, as well as the like-for-like rental growth from re-letting processes have increased. So I would describe it more as a stronger demand, more potential to increase rents throughout the market, and not so much attributable to certain impacts of certain regions where we, for example, saw a new rent table coming out.

Okay, thank you.

[Operator Instructions] There are no more questions at this time.

Good. Then many thanks all for listening to the call and for asking the questions. As always, if there's anything left, please feel free to contact our IR department or me directly, we're very happy to continue the discussions with you. Thanks for listening again. Have a good day and talk soon. Bye-bye.

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