Deutsche Euroshop Uns/Adr

Ladies and gentlemen, good morning from the team of Deutsche Euroshop. I'm here on this call with our CFO, Olof Borkas, and our investor relations team. Thank you for joining us for the presentation of our results for the first quarter of 2021 and an update on the situation in our centers. We'll start with the later one. We'll find a map showing the situation in our centers and countries of business on page four. The good news is But at least for all of our centers abroad, shops beyond the daily goods sector are again open to do business while still subject to some limitations. Also in Frankfurt, Austria has been able to open up shops already since 8th of February this year, with potentially more restrictions to fall away mid of May, according to statements made by the Austrian government. Further openings were allowed in Hungary, And so April 7th in Poland as of May 3rd and in the Czech Republic as of May 10th. In Germany, as you will know, if you have followed our reporting in the recent months, a soft lockdown that started at the beginning of November of last year and then was tightened to a hard lockdown mid of December lasts until today with very few and short exceptions. the new infection infection or in english the infection protection act of the federal government the german which became applicable in april this is extensive and harmful clothing is expected to last potentially longer into or even through the second quarter of this year this law which is also called the bundesnote bremser or freely translated the federal emergency leaves the decision for corona-related business recipients with the local state government as long as the indices are below 100 infections per 100,000 inhabitants within a period of seven days. However, above the number of 100, it is mandatory for the state government to limit business to shops to click and meet, and above that number of 150 to click and collect only. At the local state levels, there exists unfortunately a variety of mandatory complex and sometimes confusing regulations, test requirements and click and X approaches. By no means a glory performance of the German politicians on various levels of the administration. Overall, this high level of restrictions led to the situation that stationary retail was and still is very limited and in most cases the click and X concepts were hardly profitable so far for the stationary retailers. So, we will have to continue to weather through the storm a bit longer, and as before, we'll focus on limiting the downsides for our business and also looking on the upsides. And such positive signs of potential release and improvements are there, and we have made a development to our main motto for our magazine, which was published alongside our annual report just recently. Anticipation. Anticipation of the time after Corona. People are looking, as observed before, forward to return to normality. What we, and not only we, continually see is that people quickly return to the malls and shops whenever they get the opportunity. It is positive to observe this to happen, even though there are and will be still destructive restrictions in place for some time, such as the limitation of the number of visitors, mask wearing requirements, or limited gastronomy offerings. In autumn last year, the footfall climbed back to 80% of pre-corona levels, and the footfall also improved visibly in the short opening periods in the first quarter of 2021. Glad to say that these levels were still below their normal levels given the extraordinary circumstances. We'll find the development of the footfall on page five. The long closing periods had and continue to have a strong impact on the tenant turnovers. However, the limited amount of numbers and data reported cannot be analyzed usefully. So the data provided on page six for Q121 are of limited explanatory power, but show the magnitude of the impact. Segments that had been hit more before are again affected high, such as textile, where the numbers show numbers as high as minus 70% in turnover. not surprisingly. On slide seven, you can see our collection ratio, which since the start of the pandemic, which follows to a certain extent the pattern of the customer footfall, and also is strongly dependent on the lockdown periods. The collection ratio represents the ratio of received to invoice rents, service charges, and marketing contributions always after corona-related concessions. For the full year 2020, this number was 89.6%. And for January to April, the number was 67%. So far, the update on the current situation in our centers and concerning our portfolio. And I will now come to the financial results for the first quarter of this year. Our revenues are shown on page eight. Compared to the prior year period, which was still mainly unaffected from the pandemic, the revenues show parts of the economic impact of the pandemic. Again, most grants were invoiced according to their respective lease contracts. The only exception in that respect comes from our Polish center, where this specific legal situation led to a temporary suspension of rent for the period of lockdowns. This amounts to minus 0.8 million. The remainder of the decrease in turnover, that is minus 4.5 million, comes from incidences, the loss of turnover-based rents, and higher vacancies. In total, revenues decreased by 9.2% year-on-year to 51.9 million. Our regional profile of business is shown on the lower right. of the slide with 84% of the revenues coming from our home market in Germany, which is compared on an international level, unfortunately most affected by the intensity and duration of the shop closings, at least as far as we can observe that. On page nine, we show you the development of our EBIT. And the major financial effect resulting from the pandemic is here reflected in the high allowances for rent receivables. These allowances were made in relation to realized and or expected losses of rent in connection with tenant support measures, e.g. rent concessions, or in relation to actual or likely insolvencies. Such allowances amount to 11.9 million for Q1. Overall, EBIT decreased by 34.9% to 31%. The allowances for rent receivables have been determined on the basis of agreements with tenants for the lockdown starting end of last year on other cases in which receivables were outstanding on the basis of the 50% net rent reduction for the closing periods. Let's come to page 10 and to the financial results. The financial result was nearly unchanged at 7.7 million. Several input factors almost neutralized each other here. Interest savings of 0.8 million euro and the lower minority result of plus 2.1 million had a positive impact on the financial result. And on the contrary, the equity result was 3.1 million lower due to corona-related declines in revenues and higher allowances for rent receivables in our JV companies. On slide 11, you see that EBT adjusted for valuation came down by 40.8 million to 23.7 million, which is a minus of 41.9%. Again, here, the main input factors were corona-related declines in revenues and higher allowances. Looking at the operating profits, the APRO earnings on page 12, that means the following. The APRO earnings declined by 15.4 million to now 23.1 million. On a per share basis, the APRO earnings decreased from 62 cents to 37 cents. Let's move on to the consolidated profit of the group on slide 13. and such results decreased by 5.7 million to 22.3 million euro. The main impact here came from a reduced result from the standing assets, which contributed minus 15.3 million, and a positive effect from the variation result of plus 6.9 million euro. low investment cost, and a revaluation of an undeveloped plot of land based on an initial sale offer were the major input factors. Changes to other deferred taxes contributed a further plus 2.2 million. And if you want to follow me now to page 14, you can see the development of the SFO, which excludes the valuation results And here you see that the FFO decreased from 38.6 million to now 22.5 million, or on a per share basis from 62 cents to 36 cents. You'll find the detailed FFO calculation on the lower part of the slide. And it should be also mentioned here again that the FFO is calculated as usually earnings-based and therefore doesn't reflect untypically high receivables outstanding. cash flow of the company could therefore be analyzed by taking into account also the cash collection ratio. And this ratio after legally required or contractually agreed corona related temporary rent concession was, as mentioned before, 67% in Q1 2021. And now coming to the balance sheet on page 15. Our total assets amount to 4.23 billion. This is a slight decrease of 7.2 million compared to the reporting date end of 2020. Our consolidated liquidity as of end of March now stands at 244 million. That is even a slight plus of 8 million, excluding the effects from the drawing of the short-term credit line in an amount of 30 million over the balance sheet date end of last year. Total equity, including minorities, increased by 26.3 million at the end of the first quarter. Current and non-current financial liabilities stood at 1.51 billion, which was 34.5 million lower at the end of 2020 due to the scheduled redemption and repayment of the credit line. Non-current deferred tax liabilities stood almost at the same level at 327.1 million. Our equity ratio remains at a strong 55.3% and the consolidated LCV now stands at 32.5%. On a look-through basis, that is the LCV calculated fully proportionally according to the group share in all assets, the LCV now stands at 35.4%. also a continued very reasonable and low level on the next two pages we give you some information on our debt some 600 million of such debt matures in the next five years currently our consolidated debt is an average interest rate of 2.17 percent and the weighted maturity of our loan portfolio now stands at 4.9 years On the right side of page 17, you will see that we have fixed a loan of roughly 70 million for our city gallery in Wolfsburg, which is effectively to be refinanced end of June this year, already last year at a rate of 1.80% interest for 10 years. After this status report and the continued impact of the pandemic on Q1 2021, And looking confidently ahead, I want to give you a short outlook on our normal operations and our financing activities. And you will find the summary of such points on the next two slides, that is number 18 and 19. Leasing activities were and are, of course, the central key in the current situation. As reported recently, we could keep the weighted maturity of our lease portfolio at around five years. This shows that besides the big current challenges, stationary retail has its valuable place in the segment. In the course of the pandemic, we could also prolong these contracts with many tenants, including our top 10 tenants and also primary dealers such as Apple, Kaufland, or lately also H&M. Furthermore, we are in negotiations with other major well-known anchor tenants to newly come to our shopping centers in a given area, and in some cases even relocate from other retail spaces in the neighborhood of our centers. While this, especially in the current situation, is still to be proven and finalized, and it will take some time, it takes or it shows that the quality and attractiveness of our assets and locations is existent. Looking at the digitalization and the process in the retail business, we are happy to see and report that our first international center, the City Arcaden in Klagenfurt in Austria, has been connected to the digital mall end of March of this year. Now, 18 out of 21 of our shopping centers have this valuable link to the omni-channel world. While the online availability check is now working for 800 jobs and roughly 3 million products in the ECE portfolio, one important next step is testing the delivery out of the center, serving the last mile. The Digital Mall project is therefore ongoing, and now more than 60 centers are live in total, and you can see a summary of the participating partners on page 19. Looking at the financing activities, we are working on the signing and the disbursement of in total three loans on a proportionate basis amount of 166.4 million. And the due dates for such loans are end of June or end of July this year. Here we are on track. Given the length of the lockdowns and the unprecedented and extraordinary impact on our business, We had regular dialogues with our banks about potential impacts on our financial governance. As of 31st of March, all of our financial governance were met. Under the current circumstances, it is unfortunately still not possible to estimate the group earnings. The forecast will issue as soon as it is feasible. However, we are looking confidently ahead. We have a solid balance sheet, we have a low level of debt and a continued stable liquidity position. Additionally, the increasing vaccination status of the population in Germany and in our other markets will further help to reopen our shopping centers as soon as possible. We believe in the continued rational behavior of all market participants and all stakeholders including the governments this remains an important part of the demanding situation which is very extraordinary as we all know and at the end we are optimists and the state before we are in anticipation so far my presentation and i'm happy to take your questions now with my colleagues here

First question comes from the line of Rob Verde with Green Street. Please go ahead.

Good morning, gentlemen. It's Rob Verde here. A couple of questions. Firstly, on your leasing, I appreciate there's very little out there, but could you give me some quantitative numbers on what happened in the first quarter? So, for example, how are releasing spreads of some of the renewals? And also, where are you with tenant negotiations with rents that have not been paid in the last year? Are you giving concessions to these retailers to extend the leases to get the money in? And perhaps also just on new lettings, I know you say there's interest for people to join your centres. And what type of category of retailers are you seeing that in? Are you seeing some retailers who maybe want to open new physical stores for an increase in footfall, maybe in the second half of the year? That's kind of all my first question. Then I've got another one on some kind of the click and collect comments you made in your release.