Deutsche Euroshop Uns/Adr

I'm Hans-Peter Kneipp, Executive Director at Deutsch Euroshop. I'm very much looking forward to this call after unfortunately not being able to make the last one in March due to illness. Thankfully, Patrick, who is with me today, took over this call in his usual experienced manner and guided you through our annual results for 2022. Now that we have gone through most of 2023, let's take a glance at the nine-month figures and the developments in the company together. Clearly, our team's constant hard work is reflected in our nine months 2023 financial results, and I'm happy to take you through them and address any questions you may have. Let's dive into our performance and future prospects. Thank you for your time, and let's get started. You can find an update on our business activities on slides two and three. Compared to the first nine months of 2022, we have seen an encouraging increase in footfall of 11%, and 7.4% in the retail sales of our tenants. As a result, our tenants are generating sales that are higher than in the pre-COVID period. It is probably the last time we compare with pre-COVID era, as that comparison seems less and less appropriate. Shopping and the corresponding environment have evolved in the meantime, and we are well advised to now focus on future opportunities. Our revenues went up by 28.1% to 203.2 million euros and FFO increased by 34.5% to now 129.7 million euros. In terms of financing, we are in a very good position with an LTV of 32.4% and a cash position of 280.6 million euros. We have a steady funding situation and all our financings for this year are completed. Our next loan is only due in 2025, with major financing only coming up from 2026 on. As you know, we have paid out a dividend of 191.2 million euros in September. On slide four, we have a closer look into our centers. In Q3, footfall went up by 0.7%, and the turnover of our tenants by 4.3% compared to the prior year period. As already mentioned, looking on the first nine months of this year, we have seen a plus of 7.4% in footfall and 11% in turnover, as shown in the yellow bar chart. Consumption continues to be impacted by the effects of inflation and the war in the Ukraine, and the problematic conflict in the Middle East has certainly burdened the mood in the recent weeks. Nevertheless, we are optimistic about the Christmas business, which will soon be entering its peak phase. Before I come to the financial results of the first nine months, I would like to remind you that we acquired additional shares in six of our shopping centers early in January. These acquisitions were financed through a capital increase against cash and non-cash contributions. As a result of the acquisition of additional shares, four property companies previously accounted for using the equity method were fully included in the consolidated financial statements for the first time with economic effect from 1st of January 2023. When describing the results of operations, financial position and net assets of the group, I will provide this information on the basis of a comparable group, i.e. pro forma. The comparable group was prepared under the assumption that the acquisition of the six property companies had already taken place at the beginning of 2022. We have highlighted the effect in red for the 2022 figures on the following pages. So now let's start with the revenues on slide five. These came out slightly higher at 203.2 million euros after 197.5 million euros in the first nine months of 2022. This is a pro forma plus of 2.9%, which essentially comes from index adjustments and higher turnover rents. The breakdown between Germany and abroad has shifted slightly in favor of foreign countries, where we now have a 20% share. On slide six, you see that the EBT adjusted for the valuation increased from 109.1 million euros to 135.4 million euros which is a pro forma plus of 24.1% due to income from reversal of provisions for ancillary costs and maintenance, as well as lower value adjustments and consultancy expenses. Another positive impact came from the interest income with plus 3.7 million euros. Please follow me now to page 7 and to the development of the FFO. The FFO pro forma increased from 111 million euros to now 129.7 million euros or on a per share basis from 1 euro 49 to 1 euro 74 due to high operating results. I'm now coming to the balance sheet on page 8 where we naturally also see the effects of the acquisitions. Our total assets amount to 4.6 billion euros. This is a change of 344.1 million euros compared with the reporting date end of 2022. Our consolidated liquidity as of 30th September 2023 stands at 280.6 million euros, that is a minus of 54.4 million euros. Please keep in mind that we paid out a dividend of 191.2 million euros in September. Total equity, including minorities, increased by 170.5 million euros. As of 30th September 2023, current and non-current financial liabilities stood at 1.63 billion euros, which was 151.3 million euros higher than at the end of 2022. In particular, due to the liabilities from the minority acquisitions. Non-current deferred tax liabilities increased by 5.9 million euros to 340.3 million euros. Our equity ratio decreased slightly, but still stands at a very solid 55.2%, and the consolidated LTV now stands at a low 32.4%. The APRA LTV calculated proportionally according to the group share in all assets, so to say on a look-through basis, stands at 34.1%, a continued very low level. On page 9, we give you some information on our debt. There are no expiring loans this nor next year. Currently, our consolidated debt bears an average interest rate of 2.34%. The weighted maturity of our loan portfolio now stands at six years. Coming to some news on our portfolio on slide 10. As you know, we published new investment plans for the Main-Taunus-Zentrum, one of the largest and highest turnover shopping centers in Germany and among the jewels in our portfolio. A new highlight is to be added to the MTZ, giving it a new lively and urban center with a high quality, varied restaurant and food offering. New freestanding restaurant buildings are to be built until 2024, some with roof terraces, some with outdoor terraces, attractive landscaped exterior areas, and sophisticated architecture. The new food garden will be built on an area of around 7,000 square meters in the heart of the shopping center in place of a former department store building. The corresponding investment is around 28 million euros. Construction work has started, and I'm very happy to tell you that we are already almost completely pre-led with high-quality tenants. The grand opening is planned for spring 2025. Excuse me. There is also good news from Vierenheim, where the Rhein-Neckar Centrum is located. You will see those on slide 11. From next February on, a new and modern freestanding Losteria will provide culinary highlights from Italian cuisine. In addition, three exciting tenants will move into the completely renovated former Bauhaus building in the middle of the year, providing plenty of retail-tainment, as we say. An interactive indoor entertainment concept a trampoline park and a successful cycling store will each be an attraction. Already opened and only a few meters away is the indoor skydiving center, which has started very promisingly. All these tenants will positively benefit from each other and give the entire center a further boost. On slide 12, we want to show you that we play an active role in promoting the settlement of promising new tenants constantly adapt and enrich our portfolio. Here's just one example. In the last few months, the European retailer Pepco has moved into various spaces left vacant from an insolvent shoe retail chain. Pepco offers a wide range of clothing, household goods, and decorative items for the whole family at very competitive prices, corresponding to the current demand and providing even more variety to our shopping centers. This shows once more our constant commitment to continuously increase the attractiveness of our centers. Finally, I would like to come to slide 13 and the outlook. With 2023 as the first year without COVID-related restrictions, we expected and meanwhile see a continued improvement of the operational business. We will further strengthen our competitive position with forward-looking investments in our shopping centers. ESG investments are naturally becoming increasingly important and a strategic focus. Furthermore, we plan a focused optimization and diversification of our financing structure, depending, of course, on the further market and financing environment. After raising our forecast for 2023 in August and posting business performance in line with expectations in the third quarter, we are confirming our forecast for funds from operations of €2.08 to €2.18 per share for the full year 2023. Ladies and gentlemen, we remain optimistic in the face of changing markets and habits, which also present us with unprecedented opportunities. Our company is well prepared, and we welcome our participation in this endeavor. So far, my presentation. Thank you for listening. I'm happy to take your questions now. Sandra, please take over.

Ladies and gentlemen, at this time we will begin the question and answer session. Our first question comes from Andre Remke from Baader Bank. Please go ahead.

Good morning, sirs. A couple of questions from my side. First, thank you for the presentation. um the first question is on your vacancy um what is current vacancy and do you face any changes here today during the third quarter and what are your expectations regarding uh can see going forward with the first question please thanks andre for um for for this question um as you know we have um