LEG Immobilien SE

Good morning, everyone, from Dusseldorf. Welcome to our call for our H1 Results 2025, and thank you for your participation. As our COO, Volker Wiegel, is today in his well-deserved summer holidays, you have today in the call our CEO, Lars von Lackum, as well as our CFO, Katrin Köhling, who will guide you through the presentation. You'll find the presentation document as well as the quarterly report and documents within the IR section of our homepage. Please note that there is also a disclaimer, which you'll find on page three of our presentation. And without further ado, I hand it over to you, Lars.

Thank you, Frank. A very good morning to all of you. Let's start, as always, with our summary slide on page six. It is, again, all about delivering strong financial IFRS and APRA results. Our H1 numbers provide clear evidence of that. AFFO is up by more than 15%, FFO1 by almost 11%, and EBITDA margin sits at a solid 78.6%. Consequently, we are narrowing our AFFO guidance towards the upper half of the original range. We expect AFFO now between 215 and 225 million euros. This translates into an again strong growth of 10% for the AFFO in 2025. We are also on track to achieve our operational targets, with like-for-like rental growth gaining further momentum at 3.2%. Therefore, we are confident to achieve our target range of 3.4% to 3.6% this year. Both occupancy and valuations have increased. with valuations rising by 1.2%, slightly ahead of our original guidance. Profitability has increased, as shown by a stronger EVTA margin. We integrated BCP faster than expected and realized some opportunities within our value-add business, leading us to raise our EVTA margin by 100 basis points to 77%. For the first time since autumn 2022, we are providing an indication for FFO1. We expect FFO1 to increase to between 470 and 490 million euros. This translates into a solid growth of 5%, taking the midpoint of that range into account. Please note that this is an indication only. FFO remains our core steering KPI for 2025. However, after having passed the valuation turning point and seeing stabilization of values, we follow the demand from many investors and analysts to provide more transparency regarding the development of the FFO1. We consider our LTV of 47.6% still to be work in progress. Rest assured that we will strive strongly to get it down to 45%. The combination of disposals and valuation gains will get us there. As of today, it might be reasonable to assume to get there in 2026. And with this, let me come to slide seven. You find a graph showing the impact on our financial KPIs, AFFO and FFO1 from our cycle management actions over the last years. FFO1, because it was the key steering KPI until end of 2022, And AFFO, it is the key KPI of LEG since 2023. We report both KPIs since our IPO in 2013, and we will do so in the future. Please note that both KPIs are shown on a per share basis and after minorities. We want to be completely transparent regarding the dilutive effects stemming from equity measures. For 2023 and 2024, the sole effect for our company comes from script dividends. To steer the company based on AFFO over the last two and a half years to cope with the biggest value decline of German residential properties after World War II has proven to be right. We expect AFFO per share to reach a new record level in 2025 and FFO1 per share to climb to the pre-crisis record level of 2022. The cash-focused KPI forced us to stick to simple and uncomplex measures to preserve the earnings base. We exclusively sold and sell down weak assets and new developed projects, the latter as we consequently stopped the cash-demanding project development business back in 2022. Disposal proceeds, the hard-to-take and certainly unpopular suspension of our 2022 dividend as well as the script dividends for 2023 and 2022 provided us with around 1 billion euros of cash. Still, all measures taken have neither jeopardized our earnings nor our cash flow base. We even took the brave decision to make use of the disposal proceeds in 2024, reinvesting it into growth. We bought the remaining 63% in BCP, a portfolio of not less than 9,000 units, and added growth to our platform. At the same time, we successfully kept the cash interest costs low. To do so, we sticked to an opportunistic refinancing strategy. Therefore, the average yield still sits at an attractive 1.54%. We are perfectly aware that further refinancings will increase cash interest costs going forward. Based on today's interest rate curve, Topline will outgrow this effect due to increases in rents and growth of the value-add business. Let me now give you some insights on the BCP effects on slide 8. Despite the complexity of the corporate structure, in Israeli enlisting and complex financing instruments, we were able to integrate BCP much quicker than originally expected. Growth of the portfolio by more than 25% since 2019 helped to build an outstanding expertise to integrate even complex portfolios. The swiftness of the integration enabled the realization of financial and operational synergies. Therefore, the BCP portfolio already contributes to the strong development of EBTA, FFO1, as well as AFFO, on a group level in 2025. While originally expecting BCP to have no relevant effect on the AFFO metric, we now project a more significant earnings impact. EBITDA margin of the BCP portfolio should make it to the overall group level already in 2025. Higher investments will have an impact on FFO1 and AFFO. We expect AFFO from BCP to contribute more than €5 million in 2025 compared to our initial plan. The successful integration of BCP is therefore one of the key reasons for our improved guidance for 2025. Going forward, we will no longer provide you with specific information on BCP as the acquired assets make up for just 5% of our portfolio and are now fully integrated into our platform. There is one exception. We will continue to report on our disposal efforts for the eastern part of the portfolio. To maximize price, we have decided to market regional sub-portfolios instead of continuing to offer the full portfolio. That will take a bit more time, but will bring better prices for our shareholders. Let me dive a bit deeper into the current state of disposals on slide 10. With transfer of ownership for around 1,500 residential units in Q1, we had a strong start into 2025. However, second quarter sales were strongly impacted by negative macro and geopolitical volatility and ended up somewhat muted. So, transfer was limited to 300 apartments. Overall, we transferred 1,800 units with gross proceeds of 143 million euros and net proceeds of 74 million euros in H1. Additionally, we notarized the sale of another 300 units for around 37 million euros. Those units are expected to be transferred by the end of the year and increase the total disposal volume to 180 million euros, a good result in a still demanding market. We currently market around 5,000 apartments, including BCP's Eastern German portfolio of around 1,350 units. Taking into consideration the progress of different portfolios in our sales funnel, we remain optimistic to achieve further disposals in Q3 and Q4. In all transactions, we continue to be rigorous on the price to maximize shareholder value. we will not transact if our price expectation is not being met. Exactly this is the reason for splitting VCP's Eastern German portfolio. The first round of non-binding offers for the complete Eastern Germany portfolio showed that the market is currently not open for portfolios of that size. The marketing of smaller portfolios will take more time, but will bring more liquidity and better prices. You might have noticed on slide 30 in the appendix an addition of 175 units in Q2 to our portfolio. These units are mainly completed new builds. We have slightly more than 200 units still under construction with completion in the year. And with this, I hand it over to Catherine for more details on the operations as well as the financials.

Thank you, Lars, and good morning to everyone also from my side. On slide 11, you find more details on the rent growth per square meter realized in the first six months of the year. Like-for-like rent growth increased to 3.2%, and with that, it was 20 bps higher than in Q1. Therefore, we are still very confident to reach our target of 3.4% to 3.6%. This will translate into a like-for-like rent increase for the free finance part of more than 4%, and underpinning the underlying market dynamics. Rentable increases contributed 1.8%, while modernization and re-letting contributed 1.4% to rent growth, bringing current in-place rent for the portfolio to €6.93 at the end of the quarter. Like-for-like rent growth was solely driven by the free finance units with an increase of 3.7%. Rent growth in the first six months of the year was the highest in our stable markets, followed by the high growth markets and the higher yielding markets. There will be no adjustments of the cost rent for the subsidized units in 2025. The next adjustment will take place at the beginning of 2026. As a reminder, in 2028, roughly half of all our rent-restricted units will come off restriction and will provide us with a meaningful rent increase potential. Current difference between in-place and market rent for the units to come off restriction amounts to 55%. More details on that topic can be found on page 35 of the presentation. On page 12, we provide the usual details on our investments. In the first half of the business year, the adjusted investments per square meter increased by 7.1% to €16.51. €16.51 corresponds to roughly 45% of our full year guidance of at least €35 per square meter. So we are on the right track to reach our investment target as investments will further accelerate over H2. The total adjusted investments increased by roughly 11% to 184.4 million euros. The growth rate is higher than the per square meter growth rate as our portfolio is slightly bigger than in the first six months of 2024, mainly driven by the BCP acquisition. Let me briefly provide you with an update on our Value Aid business on slide 13. In the first six months, These services contributed $26 million to our overall FFO1, worth $19 million in the first six months of 2024. The growth is driven mainly by our subsidiary ESP, i.e., the subsidiary which provides energy and related services. The results of ESP benefit from a more stable underlying energy price, but also from a higher volume where we provide heat and energy contracting towards our tenants. Our green ventures will only be reflected once per year, i.e. at the end of the year via the annual account, given that these are all accounted for at equities. Given the startup character of those ventures, we do not expect a meaningful contribution on an FFO1 basis for 2025 yet. Until 2028, we target a contribution of an accumulated basis of around 20 million euros. And with this, I come to some financial highlights on slide 15. Net cold rent grew by 7% or 29.9 million euros to 457.8 million euros. The acquired BCP units contributed 24.7 million euros, whereas 13.9 million were due to the organic growth. Disposals had an opposite effect of 8.7 million euros. Recurring net operating income grew even stronger than net cold rent. A positive driver was the contribution from the value-add services, as I said. The recurring NOI increased by 9.6%, reaching €383.8 million. This improved the NOI margin, which rose by 200 bps to 83.8%. The adjusted added DA of €360 million translates into a margin of 78.6%. up 290 bps on the previous year and a solid base to increase our 2025 guidance for this key metric. FFO1 increased by 10.7% to 241.2 million euros. Please turn to the next slide where we will have a closer look at the AFSO. In the first half of the financial year, the AFFO increased by 15.4% to 126.6 million euros. The strong impact from rent growth was only slightly offset by a moderate increase in net cash interest of 6 million euros. I will give more insight into our financing profile in a few minutes. The column Others with a positive amount of 5.5 million euros mainly includes our biomass heating plant. On the investments, the rise in spending is in line with our guidance. We are gradually catching up with investments into the BCP portfolio after a short ramp-up phase following its integration and, as usual, expect slightly higher investments towards the end of the year. In terms of subsidies, we expect for the full year a total amount on the lower end of our original guidance of 20 to 25 million euros. All in all, we feel very comfortable in narrowing our ASFO guidance to the range of 215 to 225 million euros for the 2025 financial year. Let us now look at slide number 17 and the outcome of our most recent portfolio revaluation. By now, we feel very confident that the devaluation cycle has come to an end. Following the slight uplift at year end 2024, we saw a valuation result of plus 1.2% as of June, which was slightly above our initial expectations. In the stable and high growth markets coming from higher devaluations, the recovery was even slightly stronger with 1.3%. All in all, we expect this trend to continue with a trend line that is likely to rise in a U-shaped way and not in a sharp way. The cross-yield of our residential portfolio still stands at 4.9% and is still offering a decent spread to bond yields. The net initial yield, based on the APRA definition, is 3.8%. The average gross asset value per square meter for our residential property stands at 1,656 euros, ranging from an average 2,261 euros per square meter in high-growth markets to 1,144 euros in higher yielding markets. Finally, coming to slide 18 and LEG's current financial profile. All our remaining 2025 majorities have already been addressed for quite some time. The remaining debt mainly relates to our 400 million euros convertible due on September 1st, which we intend to repay and where we can rely on our very strong liquidity positions. At the end of June, we had 764 million euros of cash and cash equivalents, including short-term deposits. Furthermore, there are the undrawn revolving credit facilities, adding up to 750 million euros, plus an unused commercial paper program of 600 million euros. We are now focusing particularly on refinancing the 2026 maturities, continuing our opportunistic approach. Technically, 60% of the 2026 maturities are already covered by liquidity or end-signed loans. Our average interest rate stands at 1.54% at the end of June and is therefore below the previous year's figure of 1.66%. The corresponding average maturity is 5.5 years. The LTV stands at 47.6% at the reporting date, minus 30 bps compared to year end 2024, and minus 80 bps compared to Q1 2025. As the payment of the cash dividend took place on July 3rd, it will be included in the LTV in Q3. Investors representing 38% of the share capital chose to opt for the script dividend. Due to this high acceptance rate, we could keep €76.4 million in the company to strengthen our cash profile. We also continue to stand by our mid-term LTV target of 45% and our ongoing disposal program will support this. As usual, we provide important financing KPIs and bond covenants in the appendix on slide 41. Let me emphasize that our ICR still stands at a very solid 4.4 and that all the other bond covenants are also with ample headroom. And with this, I hand over to Lars for the guidance.

Thank you, Catherine. The excellent operation results, the seamless integration of BCP and the attractive financing structure of our group contributed to the presented strong set of financials. Therefore, we were able to adjust some elements of our guidance. Firstly, we expect the EBTA margin to improve by 100 basis points to around 77%. Secondly, we narrowed the original AFFO guidance range towards the upper half in absolute terms to 215 to 225 million euros. This translates into an increase of our core KPI AFFO for 2025 by around 10%. As we have clearly passed the turning point for valuations and see a further stabilization of values, we provide an indication of the FFO1 for the full year. We expect the FFO1 to be in the range of 470 to 490 million euros. This translates into a 5% improvement over last year and will shift earnings capacity towards pre-crisis record levels. I can also confirm that all other guidance items say unchanged. Catherine and I are now happy to take your questions, and I hand it back over to Frank. Thanks, Lars.

And with this, we begin the Q&A session, and I hand it over to you, Miruna.

Thank you very much. Frank, ladies and gentlemen, we'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You'll 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. Anyone who has a question may press star and one at this time. The first question from the phone comes from Veronique Mattens in Van Lanschot, Kempten. Please go ahead.

Hey, good morning all. Thank you for taking my questions in the presentation. Maybe first on the value app, as you mentioned, also for the guidance, it probably helps in moving it upwards. Do you see a further opportunity to accelerate this further besides the green thing that you mentioned? And does it also imply additional investments? Which brings me to my second question, as you mentioned specifically that FFO1 is not a steering KPI in 2025. Can we expect a change in that for 2026? Thank you.

Yeah, good morning, Veronique, and thanks for your question. So first, with regard to the value-add business, which was Certainly, and I think Catherine mentioned that, driven by a better-than-expected result from the energy daughter service company which we are running, and it's called ESB. So the volume which we were able to transact with regards to contracting has developed stronger than initially expected, and due to our focus of investments into heating systems, we expect that this certainly will be a driver going forward. So next to the green ventures where we are summarizing the earnings impact, and we will show that at the end of the year due to the equity accounting, DeCabo, Renovate, and Termius, we also expect that the additional value-add services will grow, and you might have seen that on the split out on the slide with regards to the FFO1 contribution from those value-add businesses and services we are operating that have developed in H1 better than expected, and we also expect to end up of those value-added businesses for the full year stronger than last year. With regards to your second question, the FFO1, yeah, you are right, so as of today, stick to AFFO as our steering KPI for 2025. However, and that was, I think, a strong demand from US analysts, but also by many investors, to give you, as soon as we have reached the turning point in the market for the valuations, also more transparency with regards to the development of the FFO1. This is exactly what we have started as of today. We are now providing not a guidance, but an indication for the development of the FFO1, which we expect to end up for the full year between 470 to 490 million euros. However, that is not a decision to get back to FFO1 through 2026 already, because we just want to see how values are developing. If we are going to see a further stabilization of values, yes, that might be something which we are considering, but as of today, we have not yet taken a decision to return to FFO1 as our core steering API.

Okay, that's very clear, thank you. One question on disposal. You've also obviously discussed the eastern portfolio. How about the rest of the disposals? Are there any ongoing discussions there, especially for North Rhine-Westphalia?

Yes. So the interest is strong, but what we once again learned from the market is that bigger transactions still are not the ones bringing the best liquidity. What we definitely are not willing to do is to give in on price. So therefore, in many markets, we were better advised to split bigger portfolios apart, which sometimes is even bringing us down to selling single and multifamily houses. So therefore, we've been a bit slower than initially expected with regards to disposals. However, looking into today's pipeline, it looks good. We have sales in different stages. of negotiations, so we are quite confident to see a pickup of sales in Q3, Q4 this year.

Okay. Thank you very much.

Thank you.

The next question from the phone comes from Paul May with Barclays. Please go ahead, sir.

Hi. Just one question for a follow-up afterwards. You mentioned, I think, a number of times that the transaction market weakened due to uncertainty in Q2, yet surely German resi should be sort of an increased attraction during uncertain times. I think that's the sort of safe haven status of the asset class. Is it not more the case that the 50 bps and 30 bps increase in the German 30-year and 10-year bund have had more of an impact? and actually have deterred buyers in the market, receiving transaction volumes down quite materially quarter on quarter, down relatively materially year on year, 40 odd percent down on the year to date, the H1 transaction volumes versus the last, I think it's about eight or nine years, just quickly looking back. So at what point does the weak transaction market and the higher German Bund, which should act as a sort of valuation proxy to some extent. At what point does that actually start to affect the valuations? I know your cap rates actually compress, I think, in the valuation process, which sort of is out of kilter with what's happening in the sort of alternative markets. So just wondering your thoughts on that. You seem very confident that values are going up, everything's fine, but actually the data would probably suggest the opposite. So just wondering your thoughts there, perhaps.

Good morning, Paul, and thanks for your question. So let me start with the disposal part of your question, and Catherine will then follow up with regards to the impact on valuation. So with regards to disposals, I think it's always difficult to say that there is a one-to-one correlation between the demand for germ residential or changes in geopolitical volatility, and then just saying, okay, that is a one-to-one correlation that's impacting a buyer's decision. Certainly, and I think that is for sure, that if you are seeing a change in the underlying interest rates, that this has an impact on buyer's interest into germ residential. So, therefore, I think that definitely will be one of the decision paths Is it the only reason that we have seen a transaction market which has been lower than initially expected? I doubt it because it was really not the case that we heard from potential investors that they are not willing to dedicate resources towards due diligence. But unfortunately, the willingness to buy bigger tickets has decreased due to the uncertainties. This is what we can share as of today. So for our disposal pipeline, we are quite confident that we are going to see smaller deals happening over Q3, Q4. Will that size up again remains to be seen heavily dependent on how the volatility geopolitical as well as macro effects will develop over the coming months.

And with regards to the valuation question, as of today, we still feel very confident that we are on this U-shaped trajectory that we have already talked about quite often now in the last course also, from everything that we see in the market, given the high supply-demand imbalance in the German market. And given the still very nice step up between our gross yield of 4.9% and the Bund yield of currently around 2.6 to 2.7%, we do still feel very confident that this is a growth trajectory, not a very strong and fast one, but a slow and steady one, as we've always said. And this also is being supported by what we see in the market, like from the German lending banks, for example, they saw a 1.2% increase just for Q1. And, I mean, here we are talking H1.

Just sort of following up, I mean, I appreciate it's nice to say we have a U-shaped recovery, but as I say, that was when I suspect booms were moving in the right direction, not the wrong direction. I mean, how do investors think about the free cash flow? Because I think on a free cash flow basis, it's all for well and good saying your gross yield is higher than the 10-year. but the 10-year requires no cost. I appreciate there's no growth there, but the sort of net yield is, I suspect, probably negative spread to the German 10-year now, once you account for all the costs. And we can see that in your accounts. So I just wondered why still this confidence when you say everything you see supports a valuation increase, but boons are higher. I mean, the 30-year is almost at record highs, at least in the last 20-odd years. probably not 20, maybe it'll last 15 years, and the transaction volumes have reduced. So actually what you're seeing is the opposite. Surely it's not supportive of that valuation increase. I'm just trying to understand and reconcile the confidence in that valuation improvement. I mean, is it simply you value your assets and therefore they're going to go up, or is there actual hard evidence that is supporting a valuation increase over the first half?

So first of all, if even the Bund yield takes such a high place in the valuation as you suggest, the Bund yield has been quite flat over the last half a year. We started off the year with 2.8%, 2.9% of the Bund yield. In May, we were at 2.6%. Currently, we are also at 2.6%, maybe 2.64% or whatever it is today, right at this moment. So that is not actually indicating going up Bund years.

Sorry, I think the German Bund at the beginning of the year was 2.4. We're now at 2.6 at the beginning of the year. It's 2.367 according to Bloomberg. It's now 2.63 now. In March? In March. But we're going on the sort of year-to-date. I mean, values have increased. The only valuation you've done is... over the first half, you didn't do a Q1 valuation.

You can be assured that we did a proper DCF valuation on our entire portfolio. And as you know, it's not only our internal valuation, but it's also being supported by our external evaluator who also said that these values are what we are seeing in the market. And we are also being corroborated by the German lending banks and other bigger statistic players that you can see in the market.

Perfect. And just one clarification, apologies. So I think Vonovia yesterday, you know, confirming that CapEx is included in their like-for-like valuation number. So their 1.3 was actually more like 0.66, I think 0.7, something like that. I just wondered. In your 1.2, is that gross of capex spent or is it net of capex? Is it underlying for like or is it including capex? We have grown our portfolio by X. Just as a clarification. Thank you.

Of course, no problem. So it's excluding capex.

Perfect. Thank you very much. Thank you.

The next question from the phone comes from Andres Tommy with Queen Street. Please go ahead.

Good morning. I just wanted to hit firstly on your deleveraging process. And, of course, you have an LTV target of around 45%. But just wondering, where would you want leverage action to stabilize? And also thinking maybe from a debt-to-EBITDA perspective, if you consider that metric at all. I guess, are you just wanting to get to that level in terms of LTE45, or do you actually want to create a bit more of a buffer as well, because being more conservative just on balance sheet management perspective and giving yourself more flexibility for any future risk scenarios as well in terms of valuations?

Yes, thanks a lot. And good morning, Andrew, for your question. So with regards to our deleveraging strategy, we stick to our 45% LTV target, which we now expect to reach in 2026. So compared to earlier years, we are now quite confident that we are going to see that being reached in 2026. Do we want to go further than that 45%? We do not think that this is necessary, because if you look at what LTV we started into that crisis, which was a 44% LTV that moved out to at max around 49%, now once again coming down, we doubt that it is necessary for our business model, which is producing such stable cash flows, to over-equitize in a direction of below 40% or something. So therefore, we consider 45 to be a good target for the company and to operate at that level. With regards to net debt to EBITDA, that certainly is something which we are looking into. And from our perspective, that will certainly be positively impacted with an LTV of 45%. But it is not that we are providing any guidance on that or say that this isn't KPIs. And we follow also with regards to an outside guidance.

Just to follow up on that, in terms of net EBITDA, I guess, do you not think it would be useful to have that metric as part of their sort of key KPIs, just because also, you know, German residential generally is lower yielding real estate as a class?

Yeah, so it's not the case that we are not internally using it as a steering API, but not for external purposes.

Got it, understood. And then my second point would be around just internal growth and thinking through the MeachVeo rentables. I think in the past few years, they've come out quite strongly, maybe in high single digits. They seem to be perhaps trending a bit lower now. I'm just wondering, how do you see that trend playing out? And what do you think for the next sort of year or two, where should we expect those levels to come out at?

Yeah, very good question, Andreas. So with regards to rentables and certainly the setup of those rentable communities, we still see that not all rentables are a perfect reflection of the underlying market dynamics, and that might be also an observation which you made with regards to the mid-point increases which we have given you for some of the rentables just being published. The strongest negative impact which we are currently facing is certainly the prolongation of the rental break regulation, which has just been extended until the end of 2029. That is in combination with an extension of the number of TENS rental markets in which LEG is operating. So currently now making that subject to that regulation for around a third of our business, certainly a headwind for ourselves, which we assume to be a headwind of around 0.1% to 0.2% for this year. Certainly it will not have and did not impact our like-for-like rental growth, but I think this is certainly something which you should take into consideration. With regards to the supply-demand imbalance, that is certainly going to persist. and there was just a new number being published, the number of new started development projects compared to 2022 in 2025 has declined by more than 70%. I think that gives you an indication that not only for 2025 we are expecting only the addition of around 200,000 units, in 2025 of new products, but also for the next years to come, that number will be certainly negatively impacted. And that is something which, from our perspective, will lead to the effect that we are going to see a very stable rent growth over the next years and comparable to the level which we are currently seeing in the market.

Great.

Thank you. Thank you.

For any further questions, please press star and 1 on your telephone. The next question comes from Manuel Martin with Odo. Please go ahead.

Thank you, ladies and gentlemen. Two questions from my side, please. On BCP, to catch up there a bit, when you say that the BCP integration went faster than previously thought, could you give us some color what was faster, or is it maybe you can give us a little bit of flavor there, please?

Good morning, Manuel, and certainly thanks for your question. So I think it was an overall quicker integration than we initially assumed. If we start with the financials, I think Catherine and the CFT team did a tremendous job in just doing the refinancing as quickly as possible. We've been able to pay back on the ILS-denominated bonds quickly, did a refinancing exercise there, and we also got rid of some higher-yielding secured financings also. So that was realizing synergies on the financial side quicker. If we look into the integration in our processes, taking over people and really doing a full integration, also that was quicker than initially assumed. So I think it is paying off that we over the last years since 2019 have now scaled up the company by around 25% and that brings about quite a lot of knowledge also with regards to the integration of bigger portfolios and that was also quite a smooth transition of those assets into the offices which we are having. and they were able to absorb that quite quickly. And finally, certainly the IT system also now being sized to the stage where we can also absorb bigger portfolios quite quickly. So all of that translating then in that stronger contribution than initially assumed of that 5 million euros ASFO wise already in 2025. I hope that adds a bit of color what happened really over the last months with regard to the integration of BCP.

Yes, thank you. That's very helpful. My second question and last question also on BCP. Maybe you can remind us what's the current status is there Is there still this option in the game? Because at the moment I can't remind the exact status of what's next in BCP, where there's something still to do.

Yeah, very happy to give you an insight. So since 23rd April 2025, we are the proud 100% owners. So we did listed the company squeeze out has taken place. So no minorities being invested into BCP anymore. So therefore, nothing to mention with regards to the current ownership of the company. Certainly, we have integrated the 9,000 units. We are working also on a disposal strategy for the two bigger plots, which we have bought into Gersheim and Grafenburg. And therefore, I think we are well aligned with regards to the execution of the operational strategy for BCP internally and try to execute on the business case which we've set up for that part of our business. Great. Thank you very much.

Thank you.

The next question from the phone comes from Kai Close in Bernberg. Please go ahead, sir.

Yes, very good morning. Just a quick question from my side on page 22 of the F01 and AFO calculation. Just to understand the increase in allowances on rent receivables. Was this related to the BCP portfolio? There was also a bit of a stronger growth in the second quarter. In the second question, also here, the increase in the non-recurring special effects, the 8.5 million, which was 2.4 in Q1. Now we have 8.5 for H1. Could you give an indication what can we expect for the full year? Thank you. And what was behind that?

Yeah, sure, Kai. Happy to take your question. So on the allowances on rent receivables, of course, it's a normal, it's just a normal process. But also, of course, you have more allowances on rent receivables if you have more assets to take care of. So this is mainly a BCP effect. And also when you look at the non-recurring special effects, here the increase is also mainly due to the restructuring that we had to do on the BCT side. So you spotted it right on.

Okay. Thanks so much.

Ladies and gentlemen, that was the last question.

Okay, thanks. And thank you, everybody, for participating in the call. Thank you for your questions. And as always, please do not hesitate and contact us if you have any further follow-ups. Otherwise, please note that our next scheduled reporting event is on the 12th of November when we report our Q3 results. And with this, we close the call, and we wish you all the best and hope to see you soon on one of the upcoming roadshows and conferences. Thank you, and goodbye, everybody.