Aroundtown Sa U/Adr

Good morning, everybody. Thank you for joining us for Around Town's full-year 2024 Resort Call. You can view this presentation on Around Town's website, either on the Home section or under Financial Reports of the Investor Relations section. Guiding you through the presentation today will be CEO, Barak Barhen, CFO, Eyal Ben-David, Executive Director, Frank Rosin, Investor Relations, Timothy Wright, Chief Sustainability Officer, Limor Berman and representatives from Grand City Properties are also present. For the duration of the call, all participants will be on a listen-only mode. Following our presentation, you will have the opportunity to ask questions. With that, I would like to hand over to Barak and the rest of the team who will guide you through the presentation of our results.

Good morning, everyone, and welcome to our 2024 Financial Resort Presentation. 2024 presented an important year of stabilization, addressing and overcoming challenges. We started the year with significant macro uncertainties, elevated inflation levels and peak interest rates, which continue to have an impact on the real estate industry as a whole. However, throughout 2024, we saw the outlook improving with four interest rate cuts, signs of stabilization of the inflation rate and a better microeconomic outlook. Accordingly, we took a proactive approach which enabled us to improve our position significantly, both financially and operationally. We also took significant steps to enhance our financial position. We successfully executed capital market transactions, including perpetual note exchanges and tender offers and bond issuances. These transactions received a strong investor demand and reinforced our market standing Our strategic operation of perpetual exchanges allowed us to regain equity content under S&P's rating methodology while reducing future coupon payments. These measures, alongside bank financing and asset disposal, have strengthened our liquidity position and reduced refinancing risk. While deleveraging remained a priority, we continued to execute our operational strategy. We reopened large hotel properties and are continuously upgrading our portfolio, such as by converting selected office properties into service apartments. Our diversified asset base has provided resilience with robust operational growth across all main asset classes, but particularly from our residential and hotel portfolio, which have recorded a very strong year. We have seen valuation momentum turn positive, with recovery starting in the second half of the year. Our disposals and proactive financial measures throughout 2024 and prior periods have put us in a strong position to capture growth opportunities going forward. Looking ahead, we expect to see continued positive momentum in our operations, which we expect will continue to support growing property values. More details regarding these and other points will be given in the coming slides. We present an overview of our financial highlights for 2024 on slide 4. Net rental income was €1.2 billion for the year, decreasing only 1% compared to the previous year, despite the impact of the disposals. The decrease was partially offset by solid operational growth reflected by like-for-like rental growth of 2.9%. Adjusted EBITDA was 1.01 billion euros, slightly higher, but 1 percent, despite lower net rental income. We recorded FFO1 of 316 million euros, reaching the top of our guidance for this year after we had updated our guidance as part of our half-year results due to stronger than anticipated operational performance. The full portfolio was revalued externally as of December 2024. We recorded a small like-for-like value decline of a half percent in 2024 compared to the values of 2023, but positive 1.9 percent compared to June 24. EPRANTA per share of December 24 was 7.4 euro per share, unchanged compared to December 23. Cash and liquid assets amounted to 3.6 billion euros, signifying our strength liquidity position. LTV decreased to 42% compared to 43% as of December 23, and for 45% in June 24. Our BBB Plus rating was affirmed by S&P in December 24, as well as the negative outlook. More details on the financial results will be provided later in the presentation. Slide 5 highlights our strong progress in 24 and our strategic positioning for 25. In 24, we maintained strong operational momentum, particularly in residential and hotels, while keeping our average vacancy rate stable. A key market shift occurred as property valuation began to recover in the second half of the year. With the ACB's rate cuts, refinancing costs improved, supporting transaction markets and yields. Our proactive liability management reduced leverage and we strengthened liquidity through our capital market activities Since issuance of our bond in July 24th, we have seen our bond spread tighten significantly. This improvement in outlook, as well as the hard work on improving our credit metrics, has allowed us to maintain our credit rating despite significant headwinds. We keep a strong focus on strengthening our credit rating and continuing asset disposals and liability management to enhance financial flexibility, but also keep our eyes on potential external growth. Assuming market volatility reduced, we expect operational improvements to drive property revaluation further, and we remain proactive in managing our finance expenses. Moving to slide six, where we present a summary of our like-to-like rental growth, total like-for-like rental growth was 2.9%, with all sectors contributing positively to the result. The like-for-like rental growth in the residential portfolio was 4.4%, benefited from the wide supply-demand gap, resulting in low vacancy and steady rent increases. The like-for-like in the hotel portfolio was 2.9%, benefiting from continuous recovery as business and leisure travel returned to normal levels. We also expect to capture further rental upside by repositioning hotels. The like-for-like in the office portfolio was 1.8%, despite a slight decrease in occupancy. Here, our high revisionary potential can be utilized as a competitive advantage to maintain and attract tenants, as we are able to offer more competitive rents while still capturing part of the upside potential. This revisionary potential also positions the office portfolio well for operational growth once economic activity rebounds. We see an improvement in the operational sentiment of the office portfolio, which returned to office increasing and decreasing supply. We continue to see strong demand from governmental tenants, as well as from large corporations. On slide seven, we present the proactive liabilities management undertaking during the year. In 2024, we successfully strengthened our financing platform by returning to the capital market becoming one of the largest investment-grade real estate issuers in Europe. We raised 1.15 billion euros in senior unsecured bonds, 2.6 billion euros in perpetual notes and exchanges, and signed 360 million euros in new bank debt financing. This reflects our strong market access and the confidence of a diverse investor base. The proceeds from these issuances were strategically used for liability management, optimizing our capital structure and debt maturity profile. We repaid 1.2 billion euros in bonds, including buybacks and redemptions, reduced our perpetual notes balance by 300 million euros, and repaid 120 million euros in bank debt. Additionally, 480 million euros in bond redemptions have already been executed in early 2025. As a result of our proactive liability management and effective hedging strategies, we kept our cost of debt stable at 2%. On slide 8, we provide detailed overview of our revaluation results. We recorded a life-for-life positive revaluation of 1.9% since June 24, which results in full-year devaluation of 0.5%. This came despite higher cap and discount rates As a solid operational performance, particularly in the residential and hotel portfolio, offset the yield expansion in the year. The valuation result per asset type was positive 1.1% in residential, positive 4.2% in hotels, and negative 3.1% in offices. The recovery started in the second half of 24, partially offsetting the negative result of the first half, and with positive valuation across hotels, residentials, and offices. Looking ahead, while there is recently some uncertainty regarding future interest rates, we see the overall outlook as positive, and we believe operational growth will continue to offset the potential negative impact on yield and the positive momentum in transaction markets continues. Limoges, please continue on the next slide.

Thank you, Barak. On slide nine, we provide a summary of our ESG progress and achievements in the year. We further increased the share of green certificate office properties in our portfolio, reaching 65% compared to 36% a year ago. As we mentioned last year, we started certifying our hotel properties with currently 30% green certified. We also continue to install solar panels, heat and power systems, and EV sockets across the portfolio. These measures support our continued progress to reduce demand GHG emissions. In 2024, we made significant progress on our CO2 emission path, and we have now managed to reach a reduction of over 30% compared to 2019 levels, and we are well on our way to reach our target of 40% by 2030. On the social front, we supported over 100 charitable projects with local partners through our foundation. We continue to maintain our high standards in relation to tenant service quality through our TUV-certified service center and enhanced digitalization feature, including an AI-powered chatbot for our residential tenants. Employee satisfaction is very important to us. We continue to promote the physical and mental well-being of our employees by offering training programs and career pathway opportunities. We remain included in several prestige indices, such as Dow Jones Best in Class Index in Europe, the Bloomberg Gender Equality Index, the MDAX ESG Plus Index. Our efforts in transparent reporting were acknowledged once again with our previous 2023 annual report, earning EPRA, BPR, and SBPR gold for the 8th and 7th consecutive years. respectively. We have also been featured in the S&P Global Sustainability Yearbook 2025, an exclusive list of just 780 companies selected best on their S&P Global CSA performance out of over 7,000 participants across 62 industries, setting us apart from our industry peers. Finally, we made it to the Software Analytics 2025 ESG top-rated companies list, and received top ratings from both SOST Analytics and S&P Global CSA, ranking within the top 4% and 5% of companies, respectively, demonstrating leading performance in our sector. Frank, please continue on the next slide.