Aroundtown Sa U/Adr

Good afternoon, everybody. Thank you for joining us for Around Town's full year 2025 results 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 Bahen, CFO, Jonas Tintenort, Executive Director, Frank Rosane, Chief Capital Markets Officer, Timothy Wright, Chief Sustainability Officer Limor Behrman, Deputy CSO Kamaldeep Manattala, 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 afternoon and thank you for joining us for our call for year 2025 result presentation. As you have noticed, we have launched a share-to-share voluntary tender offer for GCP shares and therefore came out earlier with the results. We published our results in parallel with GCP, so both companies' most updated numbers are the base for the transaction. We also announced our decision to recommend to distribute a dividend for 2025 after three years without a dividend payout. We will start with the FY 2025 presentation, and after that, we will continue with the offer presentation. After both presentations, we will start the Q&A session. 2025 was a year of progress for the group. We benefited from more supportive economic backdrop with further rate cuts by the ECB, improving inflation dynamics, and improving sentiment across Europe. In Germany, the government's sizable stimulus package and long-term investment plans have created a more constructive environment, which is starting to show its positive impact on the microeconomic numbers, and this was first reflected in higher transaction activity and steadier financing markets. Against this backdrop, our portfolio delivered solid performance supported by strong fundamentals in residential and hotel, stable contributions from offices and continued progress on targeted conversions where new regulation provides additional flexibility and faster execution. Alongside our operational delivery, we advance our capital recycling strategy, redirecting capital from lower-yielding assets into accretive, high-quality opportunities under a disciplined, return-focused approach. We also continue to stringing our financial profile, executing a range of capital market transactions that extended our maturity profile and enhanced our funding diversification. These developments together with the stable performance of our portfolio placed us in strong position as we look ahead to 2026. We note that the market is again in uncertainties to do the war in Iran, which could escalate into a regional war. we are equipped with high liquidity to deal also with additional market volatility and have the cash required for our near-term maturities. On slide four, we present the key financial highlights for 2025. Net rental income amounted to 1.2 billion euros, stable compared to 2024, primarily supported by solid like-for-like rental growth of 3%, offsetting the impact of net disposals. Adjusted EBITDA amounted to nearly a billion, so about 1% compared to 24. FFO1 amounted to 288 million euros, in line with our guidance, down from 316 million euros in 24, mainly due to higher finance expenses. These negative impacts were mostly offset by operational growth. As part of 2025 annual report, the complete portfolio was revalued by external independent appraisers resulting in a positive like-for-like value growth of 3.1%, including capex, and 1.6% net of capex. The results were mainly driven by operational developments. EFRA NTA per share amounted to €7.8, higher by 5% compared to December 24. We are making ongoing progress toward obtaining green certificates for our assets, with 70% of our commercial portfolio now green certified, including 79% of offices and 65% of hotel assets. Liquidity is high and increased to €4 billion plus €900 million unused credit lines, maintaining wide covenant headroom. The APRA LTV was reduced by 2% to 58%, and our BBB rating was affirmed by S&P in December 2025. Given the further improvement in the environment in 25, supported by continued good volume of disposals and our proven access to capital, the company proposes to resume a dividend payment for 25. The proposed dividend per share for 25 is $0.08, based on payout ratio of around 30% of FFO1 and subject to approval at the AGM. Including the ongoing €250 million share buyback program for 26, the total shareholder return is expected to be more than €330 million this year. Furthermore, the company has also updated its dividend policy, and from 2026 onward, the payout ratio is set at 50% of FFO1 per share. Slide 5 sets out how we are positioned for growth in 2026. we have strong liquidity and that can support our internal and external growth together with keeping our financial profile healthy. On the operational side, we continue on focusing on delivering both internal and external growth, starting with a significant potential that is embedded with our existing portfolio. We continue to extract this throughout targeted operational improvements and by advancing accretive office conversion projects where the economics are compelling. We already started extracting more of this potential in recent periods and expect further acceleration of accretive projects in the coming years. All will support our beta growth going forward. Capital recycling will also remain a key driver. By selling assets at lower yields and reinvesting in opportunities with higher returns without compromising on quality, we can generate accretive growth. The current market environment is helping this approach as the recovery across sectors is uneven and creates attractive entry points for selective acquisitions. On the pair share profitability side, we are also reinvesting a portion of the disposal process back into the portfolio as part of the ongoing share buyback program, which supports value creation on a pair share basis. We see the share buyback as a relatively attractive alternative use of disposals proceeds at round book value and buying our shares at significant discount. The ECB's rate cuts and increased stability in financial markets created a more favorable environment by improving refinancing conditions, supporting yields, and encouraging more activity in the transaction market. On the financing front, we plan to continue strengthening our financial profile further The main focus here is further extending the average debt maturity profile and continuing to proactively manage financing costs. Furthermore, as we have seen issuance spreads decrease throughout 2025, we have been able to mitigate part of the higher finance costs, including of perpetual notes, by buying back relatively higher coupon instruments. We have already refinanced the perpetual note with a first call date in 2026, Only GCP's 1.5% perpetual note remains outstanding, which has its first call date in June 26. Together, these actions form a disciplined framework for operational execution and capital allocation, positioning us well for 2026. Kamaldeep, please continue on the next slide.

Thank you, Barak. Turning to slide seven, the portfolio demonstrates a well-balanced allocation across asset classes. We updated the presentation of the breakdown to present the development and invest portfolio separately. Hotels account for 20%, residential 33%, office 34%, logistics and retail 6%, and the development and invest portfolio 7%. We provide a further breakdown of the development and invest portfolio to their current use and envisioned use later in the presentation. Geographically, the portfolio remains concentrated in key metropolitan markets. Germany, the Netherlands, and London together represent 89% of the portfolio. Berlin constitutes the largest single city exposure at 23%, followed by London at 9%, Munich at 7%, and Frankfurt at 6%. These markets are characterized by strong underlying fundamentals and provide meaningful long-term value potential. Slide eight presents the continued strength of our operational performance, reflected in solid like-for-like rental growth across the portfolio. The results demonstrate the resilience of our diversified asset base. Residential assets representing 33% of the portfolio delivered like-for-like rental growth of 3.6%. Driven by strong market fundamentals, record low vacancy levels, and further uplift supported by our capital recycling activities. Hotels, which account for 20% of the portfolio, achieved like-for-like rental growth of 3.5%. This performance is driven by targeted investment into the portfolio and attractive contractual agreed rent step-ups, further supported by a stable operating environment that enables tenants to maintain healthy operations. Together, these two asset classes comprise 53% of the portfolio and continue to provide a strong foundation for rental growth. In offices, which make up 34% of the portfolio, we achieve like-for-like rental growth of 1.8% despite broader market headwinds, resulting in pressure on occupancy. This is supported by our gap to market rents, which give us a competitive advantage to retain and attract new tenants. Our office portfolio is well positioned to benefit from an increasing activity once the German stimulus package will be translated to stronger office demand. We are also advancing selected conversion initiatives, particularly into service departments and data centers, which demonstrates the portfolio's adaptability. The Bow Turbo regulation provides further momentum when labeling faster office to residential conversions. increasing flexibility and unlocking additional FFO and value potential. Development rights and invest portfolio account for 7% of the total portfolio. We are successfully completing office to service department conversions and several additional repositioning and conversion projects are currently underway and are expected to generate rent over the next years. On slide nine, we provide an update on the main portfolio KPIs. As of December 2025, the portfolio value stands at 25 billion and generates 1.15 billion in annualized recurring rental income, resulting in a rental yield of 5%. We note that the yields are based on current contractual rents and do not include future agreed rent ramp-ups. This is mostly relevant in the hotel sector, where significant contractual rent increases the recent hotel reopenings are yet to be included including the stabilized rents the hotel portfolio yield is 5.5 percent the vault remains solid at 7.2 years supported by a balanced maturity schedule that adds further downside protection epro vacancy stands at 7.6 percent up 0.1 percent in comparison to 7.5 percent in december 2024. and in-place rent has increased to 11.7 euros per square meter from 11.2 per square meter in 2024. We note that EBPRA vacancy definition and applicable market standard does not include properties under major refurbishment or development. The development rights and investment portfolio accounts for 7% of the total portfolio. and includes around 700,000 square meters of existing space at circa 90% vacancy. The intrinsic potential of these developments and future rental income growth of the company will be extracted over the coming years. We present further breakdowns in the development portfolio slide. On slide 10, we look at the strength and resilience of our tenant base. Our portfolio remains highly diversified with over 3,000 commercial tenants alongside a very granular residential segment, thereby significantly reducing concentration risk. Our top 10 tenants together contribute less than 20% of total rental income, ensuring that no single tenant has a material impact on portfolio performance. The commercial lease expiry profile is well distributed, giving us flexibility in uncertain market environments and helping us manage renewals and re-lettings proactively. The portfolio has a reversionary potential of around 25%, including the impact of vacancy reduction and reaching market rent across both commercial and residential assets. On slide 11, we outlined the progress made on disposals in 2025 and how these proceeds support our broader capital allocation strategy. During the year, we signed 575 million of disposals and closed 790 million, 1% below book value, and at an average rental multiple of 20X. These transactions were mainly comprised of office and residential assets with additional sales of development, retail, and hotel properties. Geographically, the disposals were concentrated in NRW, Berlin, Frankfurt, Bremen, and non-core locations. Altogether, disposals were executed at 19% premium over total cost, resulting in 128 million of disposal gains and 415 million of FFO2. In addition to completed transactions, the company currently holds 650 million of investment property classified as held for sale. In addition to the acquisitions, a portion of the proceeds is being directed towards highly accretive share buybacks. In February, 2026, we launched a 250 million share buyback program at a significant discount to NAV, enabling us to convert disposal gains at book value directly into per share value by reinvesting into our own portfolio. If fully executed at prevailing prices, the buyback is expected to increase FFO1 per share by around 7% and NAV per share by approximately 5%. Our decision to launch the buyback comes on the back of successful deleveraging efforts over the previous years and was primarily driven by the high accretion on a per share basis. following our proven ability to refinance our debt maturities at attractive rates and after considering our current leverage. On slide 12, we show the achievements we have made with disposals over the past several years. Since 2020, we have executed more than 10 billion of disposals to third parties across all major asset types and locations. which have been executed at 2% above book value on average. This includes office, residential, hotels, retail, logistics, and development rights spread across more than 800 properties, carried out also during challenging periods, validating our ability to sell successfully. When measured against total cost, including CapEx, These disposals were executed at an average profit margin of around 28%, reflecting the value created by the company and our ability to subsequently crystallize this value. The large volume of disposals also demonstrates our ability to transact under a wide range of market conditions and provides validation for the strength of the portfolio. Part of the disposal proceeds were reinvested into acquisitions. As part of the $10 billion disposal volume, the group provided $0.8 billion of vendor loans in relation to a disposal volume of $1.4 billion. To date, we have collected over $1.1 billion for these transactions. $0.3 billion were converted to properties at a discount to book value, and less than $30 million remain to be collected in 2026. The model of selling with vendor loans in a period when banks were reluctant to finance deals proved itself very successful. On slide 13, in 2025, we have 500 million of property additions to the portfolio of mainly residential, office, and hotel assets, primarily located in Germany and London, with an average vacancy of 13%, of which $0.3 billion were converted from vendor loans. 40% of the acquisitions are residential properties, 30% offices, 5% retail, and the remaining development properties. To date in 2026, we have signed acquisitions of $175 million of residential properties in London and Germany. $350 million of acquisitions were completed through the tax fund. As a reminder, the rationale to build the tax fund is to raise new external equity for acquisitions without the need to issue new shares, which will be dilutive due to the big discount of our share price to NAV. We note that the tax fund does not and cannot acquire existing properties from the group, including GCP, and it cannot sell assets back to the group during the fund's term. We provide more details on tax, including key terms, in the appendix. Frank, please continue on the next slide.