Deutsche Euroshop Ag Akt

Ladies and gentlemen, good morning from the team of Deutsche Euroshop in Hamburg. With me in this call are our CFO, Olaf Borckers, and our industrial relations team. Thank you for attending the presentation of our prelims of 2021 and an update on the situation in our centers and on the development of the Deutsche Euroshop Group. Before we start, one hint. You might hear from my voice that I caught a flu. I hope my voice is making it through the call. If not, I will hand over to my colleague, Olaf Borkas, and he will then take over. This information is just that you're not confused if it's necessary to switch. So I hope my voice runs through. And also, before we get straight to the facts and financials and the operations, which look relatively promising given the ongoing corona situation, I would like to mention that we, as all people, are looking with sorrow and concerns towards the war in the Ukraine. First of all, its human tragedy and then also, to a much lesser extent but not unimportant, its unknown commercial effects and also the impact on business and also our business. But now to our preliminary results. 2021 was hopefully the last year that has been substantially and directly impacted by Corona. As you know, 2022 still bears some of the negative impacts of the ongoing pandemic, however, so far to a much lesser extent. Therefore, talking about corona, we expect 2022 to be a transitionary year. I want to start with a short look back on the last two years of the pandemic. This will be useful to put the numbers and information that are contained in this presentation into perspective. The pandemic had, as reported, a strong impact on DES business. This impact is shown on slide 5. Here you can see the long shop closing periods in our countries of operation. Our home market in Germany, which accounts for approximately 80% of our income, was affected very hard with 187 days of a complete lockdown. The Czech Republic suffered from 235 days of closing, Poland 159, Austria 131 and Hungary 68 days. These numbers include the full lockdown days for non-essential shops. Yet, it is important to mention that the periods in between and right after the hard lockdowns were subject to limitations and impediments which had, depending on the segment, substantial influence on the business. The last hard lockdown we experienced in Austria, where most of the shops in our centers had to close for more three weeks, just as recently as last November, the November of 2021. In the recent weeks, we have seen a dynamic and somewhat pleasing improvement of the corona regulations in our foreign markets. As of today, as you can see on slide six, these measures are almost down to zero in the Czech Republic and Hungary, where the restrictions were abolished in the past few days, including the obligation of wearing a mask. In Poland and Austria, the mask requirement remains in place for the time being, and in Germany the situation is still somewhat different with various kinds of regulations, and we are in a kind of transitional phase also here. However, let's hope that the abolition of mask-wearing obligations fall away, sorry, the obligation of mask wearing obligations fall away in spring when the weather is improving. What are the developments in our centers? Since the reopenings end of Q2 2021, we have seen a similar pattern in our operational numbers as we have seen in summer 2020 after the first lockdown. People enjoyed the newly regained shopping freedom and a certain kind of normality. What we see is that people return to the malls and shops even though there are still destructive restrictions in place, as I just mentioned. In the third quarter, the footfall, please have a look on slide 7, remained at approximately 75% of pre-corona levels. For October, the number improved slightly to further 77%. Unfortunately, at the end of November, we experienced again various restrictions in our main market, Germany, until around mid-February 21, access to the retail, except basic supplies, was reserved for vaccinated or recovered visitors only. This deterred many customers and created also extra expenses for our tenants, who had to carry out the security checks by themselves. The additional lockdown in Austria I mentioned already. Naturally, all this had a detrimental impact on visitor numbers. Nevertheless, by end of February 2022, we had returned to a level of around 70% compared to pre-crisis levels. The ongoing closing periods had, as also already reported, also a dramatic impact on the tenant turnovers, as it is shown on slide 8. Compared to their 2019 levels, the turnovers of our tenants decreased on average to 35% in Q1, 58% in Q2 of 2021. In the third quarter, the turnover level improved nicely to 90% for our total portfolio and to 88% for our German centers. In Q4 2021, the restrictions caused another decline in our retailer sales. That's 84% of the pre-corona level that was achieved for Germany compared to 85%, so a similar number for the entire portfolio. In January 2022, this figure then dropped to 67% for the German portfolio and 76% for the overall portfolio, here once again caused by the newly introduced restrictions in Germany. On page 9, you can see our collection ratio since the start of the pandemic, which initially followed the pattern of the customer footfall and is strongly dependent on the lockdown periods. The collection rate represents here the ratio of received to invoiced rents, service charges, and marketing contributions, all calculated after corona-related concessions. For 2021, the number was 95%, and since the third quarter of last year, the collection ratio improved further, and it's now closely to normality. Early 2022, the collection ratio stands at 99%, with only very limited rents concession granted resulting from some cleanup for 2021. On the following three slides, I would like to give you a brief overview of our tenant structure and the composition of the contracts. Compared to the status of end of September 2021, our vault, see please on page 10, has nicely increased from five to 5.3 years. 46% of our contracts expire in 2027 or later. The occupancy ratio improved to 94.3% at the end of the year after its lowest level of 93.8% mid-last year. On slide 11, you'll find our top 10 tenants in comparison of size. This list had only some smaller shifts. TK Maxx entered the top 10 and Bestseller left that list. The sector mix is shown on slide 12. Here, the share of fashion has slightly increased, while the share of department stores and hypermarkets has decreased. On the fashion side, the very attractive retailer TK Maxx was one of the tenants with whom we were able to negotiate new contracts and thus additional space. The concept is currently one of the most successful tenants in this segment. Health and Beauty is also still on the rise. on the rise and I will go into more detail of our letting performance in 2021 later. So far the update on the situation in our centers. I'll now come to the financial results of 2021 and we'll start with evaluation of our shopping centers on slide 30. The valuations of our shopping centers were on average slightly down in a changed market environment. Including investment costs, the valuation result before tax was minus 54.7 million as of the end of last year. This corresponds to a slight average decrease of minus 1.5%. The stabilized net energy yield for our portfolio is slightly up and now stands at 5.45%. And as usually, the sensitivity of the valuation results to changes of the main value drivers is provided on that page in the table at the lower part of the slide. As reported, from the beginning of the pandemic and even the periods before, there was very little investment activity in the shopping center market with a limited number of transactions comparable to the centers of our portfolio. Looking at our specific segment, transaction activities could mainly be observed in regions which were less affected by the shop closings and corona or for very few landmark shopping centers. In the course of 2020, the pandemic and the increased uncertainty already had an immediate impact on shopping center yields. In 2022, the yields and thereby the discounted cap rates have been rather stable. So the main impact on valuation for last year came from the adjustment of market trends and capex assumptions. We had experienced these effects already in our valuation as of end of 2020 with, according to our appraiser, Jones Lang Lasalle, only slight changes in the first three quarters of last year and finally also end of last year. Let's now come to the P&L and the revenues. They are shown on page 40. Compared to prior year, 2021 was substantially more affected by the pandemic in the number of closing days. Again, most rents were invoiced according to their respective lease contracts. The major exception in that respect came from our Polish centers, where a specific legal situation led to temporary suspensions of rents for the lockdown periods. This accounted for minus 2.4 million. The overall decrease of rent, which amounts to a total of minus $12.3 million, was also influenced by the reduction of marketing mall income, income from parking, the less of turnover-based rent, and higher vacancy resulting from the insurgencies, as well as lower shop rents. In total, revenues decreased by 5.5% year-on-year to now $211.8 million. On the next page, we'll show the development of the EBIT. And the major financial effect resulting from the pandemic is reflected in the allowance for rent receivables. These allowances were made in relation to realized and or expected losses from rents in connection with tenant support measures, e.g. rent concessions, or in relation to the de facto likely insolvencies. Such allowances amount to 25 million for 2021 after 29.2 million in 2020. Overall, EBIT decreased by 5.4% to 152.5 million. The allowances for rent receivables have been determined based on the agreements with the tenants for the lockdowns starting end of 2020 and in other cases in which receivables were outstanding on the expected net rent reductions for the closing periods. To cover some of the rent losses, the company also applied for the Corona state aid in Germany, the so-called Ü3 program, which was introduced mid of 2021. Very complex calculation methods had to be employed and hurdle rates had to be achieved and documented. However, due to the mandatory very mechanical and not commercial way of looking at the damage incurred Deutsche Euroshop was only eligible for an amount of 2 million. This amount which had been formally granted in February this year is included in the other operating income of 2021. I now come to page 16 and also to the financial result. Such results improved by 6.7 million Interest savings of 4.5 million due to several favorable refinancing and an increase at equity operating profit of plus 2.6 million had a positive impact on the financial result. Minority profit share was nearly unchanged with minus 13.4 million. On the next page you see the EBT adjusted for valuation and that came down only slightly from 127.6 to 125.6, which is a minus of 1.6%. The corona-related decline in revenues and the rent concessions were partly offset here by the interest savings realized in 2021. Looking at the operating profit, the April earnings on the next page that meant the following. April earnings declined by 2.5 million to now 122 million. And on a per share basis, April earnings decreased from 2 euro and 2 cents to 1 euro and 97 cents. Let me now come to the consolidated profit of the group on slide 19. And the consolidated result increased from minus 251.7 to now plus 59.6 million. The main impact here is, of course, the obvious change from the valuation result. That's a plus of 309 million, roughly. And correspondingly, the earnings per share increased from minus 4.07 to 97 cents in 2021. And now let's look at the FFO on the next page. The FFO decreased slightly from 123.3 to now 122.3 or on a per share basis from 2 Euro to 1 Euro 98. Again, as a reminder, the FFO is calculated earnings-based. The number should therefore be analyzed by considering our cash collection ratio, which was, as mentioned before, 95% after end concessions in 2021. However, as mentioned before, the collection ratio has improved a lot since autumn last year, up to now currently 99% and to normality with only very limited rent concessions being granted. The receivables are still on a more elevated level in comparison to pre-corona, also naturally, but we are working with our tenants to recover them. I'm now coming to the balance sheet on page 21. Our total assets amount to 4.3 billion. This is just a small increase of 41 million compared with the reporting date end of 2020. Our consolidated liquidity as of end of last year stands now at 328.8 billion. This is a plus of 62.8 million. And the buildup of cash was, besides, of course, the normalization of the payment behavior of the tenants, also influenced by substantially lower investments in our properties over the last two years, as the works were largely stopped during the closing periods. In 2021, our liquidity was also influenced to some extent by some drawings of capex loans at an amount of 6.7 million. Total equity, including minorities, increased by 63 million, and at the end of 2021, Current and non-current financial liabilities stood at 1.5 billion, which was 39.3 million lower than at the end of 2020, and that was influenced by scheduled repayments, repayment of the credit line, and the drawing of the capex loans, the ones I just mentioned. Non-current deferred tax liabilities increased by 8 million to 333 million. Our equity ratio remains at a strong 55.6%, and the consolidated LTV now stands at 30.5%. A more reasonable number is the look-through concerning the LTV, and that's the LTV calculated fully proportionally according to the group share in the assets, and such LTV now stands at 33.3%, also a continued very reasonable and low number. On page 22 you'll find the APRA Net Tangible Asset. APRA NTA increased now to 38.43 per share. That's a plus of 2.8%. This is mainly due to higher liquidity and that was just partly offset by lower property values. This number equals to still huge discount on the current share price. And such discount is roughly 59% mid of March this year. In terms of return, our FFO yield is now at a record 12.5% and that with a very reasonable low LTV level. The improved numbers, the somewhat positive and stabilizing corona situation, as well as the operational outlook, hopefully should help to close that gap even though, of course, the terrible Ukraine war is having its negative impact also on the capital markets. On the next two pages, we give you some important information on our debt. Approximately 226 million of our consolidated bank loans expire in 2022, and currently our consolidated debt bears an average interest rate of 2.09%. The weighted maturity of our loan portfolio now stands at 4.7 years, including our non-consolidated loans. The weighted maturity of the portfolio stands at 4.9 years, with an average interest rate of 2.07%. On the right side of page 24, you will see that we have fixed a loan of 107 million already this year. After the presentation of such financials, I would like now to take another look on our letting performance in the past year. During the pandemic, we were able to extend lease contracts with many tenants, including our top ten tenants and other prime retailers, such as Apple, Kaufland, or also, lately, H&M, Rossmann, Thalia, or C&A. I also have talked about TK Maxx. A sample of such tenants is shown on slide 25. Additionally, we had negotiations with other major and well-known anchor tenants to newly move into our shopping centers. In some cases, we were already successful in agreeing with them to relocate from other retail spaces in the neighborhood of our centers into our centers. We made good progress, even though we are just in the hopefully final stages of the pandemic. Most retailers acknowledged and confirmed that stationary retail space, e.g. shops, are and will be a very important and dominant part in the market presence. While online sales grew significantly for stationary retailers during Corona, the cost of business and the return quotas, which we regularly hear, just leave room for little profit margins there. So the demand for stationary retail space is continuing to coming back, though not again on normal levels, given the situation of the last two years. In 2021, a total of 355 leases were concluded or extended for around 118,000 square meters of space. Of these 103 leases, or 28,000 per meter, came from our foreign centers. In Germany, measured by the number of contracts, 46% of them were with terms of one to four years, 24% for terms of five to nine years, and a further 30% for terms above 10 years. Abroad, the corresponding figures were 50%, 18%, and 32% respectively for contracts that with a duration of longer than 10 years. As mentioned before, our vault improved nicely from 5 to now 5.3 years. On slide 26 to 30, we have put together a few examples of exciting new tenants that have opened in our centers in the recent months. These include, for example, a new shop concept from IKEA in Wolfsburg in our shopping center. where visitors can configure their kitchen or wall unit with the help of IKEA staff and then order it straight away in that shop. In the Rhein-Neckar Zentrum, the new indoor skydive is very popular and is a strong addition to our center, which we would like to strengthen with even more highly attractive tenants soon. For example, right next to that spectacular entertainment facility, we just have signed up for the establishment of L'Osteria, with a thrilling gastronomy concept in a modern new freestanding building, integrating the new entertainment and leisure part with our center. Another example. In Dresden, a new Lego shop is attracting many new young and, you might not believe it, also old customers in our center. And, mainly most remarkably, in Dessau, the Scandinavian concept Rusta will move into the former Karstadt space bringing here many assortments that were lost in the city with the department store closing. Another internationally renowned anchor tennis could also be signed up in Dessau and the name is to be announced soon. The signing up of new attractive anchors for Karlstadt building in Dessau is a big and quick achievement so short after the space became vacant. Leasing activities continue, of course, to be the main focus of our business in the current situation. Our occupancy ratio decreased during the long lockdown periods of the first half of the year to 93.8%. However, as mentioned before, such number improved since summer by 0.5 percentage points to now 94.3%. Besides the insurgencies, since the start of the pandemic, the occupancy ratio was also mainly influenced by regular replacements of larger tenants, like the large real market in our A10 center close to Berlin. As reported before, a substantial part of this space could be handed over to Kaufland already last year, but there is still some considerable space to be filled with new attractive tenants in due course. Talks are progressing and there is currently healthy interest for these larger spaces. Furthermore, the leaving of Karstadt department stores in two of our centers contributed end of last year still to the high vacancy. For Rathausen and Dessau, we found the solution already. It's just reported. For the other center, our Main Townhouse Center, the demolition of the old Karstadt building is underway. And there are various ideas for the newly created space, e.g. for attractive event gastronomy concepts, in an inspiring in and outdoor environment, potentially accompanied by open platform to be used for entertainment, dance, music, or other performances, and creating a real new and attractive urban space for our customers. Here, in the interim, for the rather lengthy planning, permitting, and construction process, we'll provide an attractive collection of food trucks to serve our customers even better under the new concepts are being introduced. On slides 31 and 32, you can see some impressive simulation for these ideas. Looking at the important topic of digitalization and the process here in the retail business, we connected also now our first international centers, the City Academy Klagenfurt in Austria, to the digital mall in 2021. Now 18 out of 21 of our shopping centers have this valuable link to the omnichannel world, and while the online availability check is now working for more than 1,000 shops and 3.7 million products in the ECE portfolio, now the setup and testing of deliveries out of the centers is an important but also complicated task, but important as preparation for the serving of the last mile delivery. The Digital Mall project is now ongoing in 65 centers, live in total. You can see a summary of the participating partners on page 33. Finally, I would like to come to slide 34 and look at the transaction market and the financing activities. Let me start with the financing first. As mentioned, we have already agreed with the bank on a 107 million loan with a maturity of 10 years and a fixed interest rate of 2.45% to refinance a loan for Altmarktgalerie in Dresden. And that loan would have become due end of this month. Currently, we are working on the refinancing of three additional loans with a total volume of almost 120 million. also becoming due this year. While the number of banks looking at retail financing, especially shopping centers, has decreased, we have received good interest for our refinancing in the market and will follow up on that in due course. We continue the regular dialogue with our banks, as before, also about the impact in the past of the pandemic on our financial governance. and until the reporting date all of our financial governance were either met or they were, under these extraordinary circumstances, temporarily suspended by the banks. As I've elaborated before, the transaction market has seen, not surprisingly in the given situation, a rather dry period. However, there are signs that the transaction market is slowly coming back even though it is currently again affected by the terrible Ukraine war. If such impact on investors and their financing bank stays limited, one may expect to see some transactions, maybe also in Germany this year. As we hear from the market, some transactions are currently being prepared. The year differential between shopping center assets and other real estate asset classes, e.g. office, residential, logistic, seem to be just too big to be ignored, especially now with the stabilization. The spike of interest rates may also support this shift of demand among real estate asset classes. Let me finally now look at our financial outlook on page 35. We expect total funds from operation of €1.95 to €2.05 per share for 2021, which still will be, in our expectation, a transitional year on the way to normality after Corona. Accordingly, we have applied a bit more conservative assumptions on rent write-downs in comparison to pre-Corona times. This forecast, again, assumes that the pandemic situation can be brought under lasting control without further store closures or significant restrictions on center operation a continued pickup of private consumer spending and an associated further recovery of the tenant turnovers, especially to the Easter sales coming up soon. And it also depends on the preservation of the recovered high collection ratios. This forecast is also based on the assumption that the Ukraine war hopefully is appeased soon and does not have a severe and or enduring impact on business activities in general. Ladies and gentlemen, remain optimistic as before, even though there's still some way ahead of us to come. Some countries have abolished all major restrictions on customers and operations already concerning Corona and we hope that this will be also the case for our home market in Germany soon. So for my presentation, thank you for listening and I'm happy to take your questions now. Operator, please go ahead.

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. First question is from the line of Thomas Roth Heusler from Deutsche Bank. Please go ahead.

Hi. Morning, everybody. I hope you can hear me. A couple of questions. Firstly, on the Russia-Ukraine crisis, I mean, maybe we can get a rough idea of what could be the most relevant impacts for your business. Then the second question on rent growth outlook. what what can we expect on rent growth given given higher inflation rates and what are the renewals and relating levels you you currently see uh the third question is on on capex capex budget um i mean wondering if you if you could provide a rough rough picture what capex level we we should consider uh looking ahead and the fourth question is on current financing conditions. Maybe you can provide a rough idea what kind of indications you have for banks.

Yes, we're happy to answer. But first of all, somebody whispered to me, Mr. Rotloiser, that you have a birthday today. So my congratulations. Oh, wow.

Thank you.

I have a good intelligence service working for me here. But now I come back to your questions, which are important. Russia, Ukraine. I mean, there is no direct impact in a sense if we all don't have in mind that Mr. Putin might touch European EU borders or NATO borders. What you have is indirect effects potentially on consumption. So some of our retailers told us that they still already feel that the last two weeks that the numbers get a bit weaker because it's just Yeah, another stimulus negative stimulus going forward so so far. It's not dramatic, but it's feelable It's a general mood. I mean if you want to consume you also want to feel good With some other effects we hear that from our scent in Poland for example that the people would rush to the hypermarket supermarkets and And we thought they would bring all the stuff at home because they were concerned of any whatever actions coming from Russia. But what they did is they really emptied the supermarkets to bring the food and stuff to the border of Ukraine. So having said that, it's more general impact on consumption mood. That's what I would expect. Of course, there will be some impact on our retailers, maybe with their supply chains that may also run through above or besides Russia. But it's hard to calculate for everybody. But no dramatic impact so far. With coming to rent, I mean, we're now hopefully after Corona on the final phase, and the rent income in comparison to pre-Corona is on a level around 10% lower. Such number resulting mainly from the insolvencies during and after the lockdowns that led to currently higher vacancy rates or rent concessions to support their respective tenants and to avoid further short-term vacancies. Furthermore, turnover rents, parking, mall, and shop rents have been adjusted downwards. So this is a number visible but digestible, and we expect the current level to be the base after corona, and we expect to grow our overall rent income slowly from there by reducing vacancy and including the effects from indexation. Having said that, demand for shops is recovering. However, the leasing market stays competitive. Talking about inflation, yes, it's good in a sense because our contracts are indexed. And if we see 3%, 4%, 5% this year, or in Poland they are talking about 5%, this is a positive effect. But one would have to see that you really can channel that through into rents midterm also. and because it also has a negative effect on our tenants because supply for them is also getting more expensive. Yeah, but there should be some effect potentially coming out of that. For our capex budget, yeah, we have told you before that the run rate, and we haven't changed it long term, is around 30 million roughly, but usually projects are planned front-loaded, and we are in the aftermath of, let's say, corona, And we haven't invested too much in the last two years just because we couldn't do it, wouldn't get planning from the governments for that. Nobody was working and the tenants were at home also a bit. So we will have a higher elevated level. So for the next years, we expect 40 million euro capex. But this is the difference of having spent two years more or less nothing. So the long-term run rate is 30 and the after corona for the next couple of years, it's maybe 40, but just mentioned for that effect. And then I think you had a question to financing. I'll hand over to Olaf Borckhaus.

Yes, thank you. Also, congratulations from my side. And a short picture regarding to debt. Debt is much more expensive than half a year ago. We see that our bank margins have increased by roughly 50 basis points between pre-Corona and post-Corona. Current bank margins are at 1.4% on average. That's still fine for us, though the 10-year swap has increased dramatically from May 2021, that point it was just 15 bps, and now in March 2022, it is 110 bps. So at the end, we end up with this Dresden loan at an interest rate of 2.45% and that is what we also have as indication for the three loans we are currently renegotiating starting in June and in September 2022. So I guess that the reduction of the average interest rate will slightly stop. and will slightly increase in the terms of 2022, hopefully standing at slightly at this level.

Just to clarify, the tracing loan is 2.45%. Exactly. Okay. Thank you.

You're welcome. As a reminder, if anybody would like to ask any further questions, please press star followed by one on your touchtone telephones. Yeah, then the next question is from the line of Paul Ruger from NQ. Please go ahead.

Hi, guys. Can you hear me?

Yes.

It's Paul from . Sorry for the... Yes, just a few questions on my side. Regarding your FFO per share pre-COVID, Why do you expect to be a normalized FFO per share in a post-COVID world, assuming the COVID is behind us? Regarding the reset of the rent, which I understood was minus 10%, what would be a cash flow per share, a normalized one?

I mean, we just started our forecast again for 2022, and I gave you the number and the hint that it contains some let's say, reservations concerning higher write-offs. But we are not in a position yet to give a mid- or long-term FFO per share. However, it should be then proving, of course, not having these extra reservations concerning write-offs going forward if the situation improves. And you might have just heard we still see some improvements coming from the financing side, but we cannot give so far a mid- or long-term view on the FFO. But it should improve from there, of course.

OK. So you don't expect any catch back with the 2019 level at any time?

Again, we haven't a forecast of that. It's, of course, a target to come back to that, but it's a lengthy process.

Yeah. OK. On the leasing activity, or maybe I missed a part of the presentation, but how is the leasing activity today? We've seen a huge increase in European peers. Did you experiment the same increase in leasing activity?

Yes, as I just mentioned, there's a good demand. It's coming back. It's, of course, not on pre-corona levels. We've mentioned how the 120,000 square meter we leased out last year. It's hundreds of contracts. That's a good demand. But it's, of course, still a bit refrained, especially gastronomy. They were just hit again by those restrictions over Christmas and beginning of the year, for example, in Germany. They are a bit more hesitant. They want to see that the situation calms down. But we have just introduced in the last year, maybe during Corona, 4 TK Max. I've mentioned some of the names that we brought to our shopping centers. There is demand for high-quality retail. And I expect that with normalization of the situation even to become better. But of course, it stays competitive, as we said, looking at rents and terms. But I think the situation is improving.

Okay. And regarding the valuation of the asset and the investment market, I mean, I guess it's stabilizing. What could trigger, in your view, a buyback of your shares so as to close the gap between the share price and the net asset value?

Yeah, I think one very important equation is that, first of all, the stability, which we see to come back now, and now please leaving aside the Ukraine war, which has its impact, but it's really out of any control. It's just to get, looking at our stock price, getting the face back into, let's say, stationary retail. I've just mentioned before that we now with a leverage of roughly 35%, provide a yield of 12.5% with top placed German and European inner city real estate locations. So I think if this comes down and the market is just applying normal FFO multiples or yields to our FFO, the stock price should be quickly up much, much higher. But we can tell the market, we just can hint that it's stable. We can hint on the difference. But I think that's a bigger part than looking at the valuations, which is also important. And looking at the valuations, I think it's good to see more transactions. There were some transactions. They supported our valuation after the drop of 10% in 2020. But I think there needs to be more evidence. And then basically the trust coming back into, let's say, this asset class. But I'm sure it will come. to be honest, because people love to shop. We see them coming back. It now takes a bit longer due to the new restrictions, but I'm not concerned that the phase is not coming back.

Okay, thank you. And just last question on your dividend. What do you expect in the future in terms of level of distribution? Can you give some color on that?

As of today, and we have said that before, we plan to come back to a dividend strategy which is then sustainable and to pay, as we look at it as of today, a substantial and visible dividend. So we know that's important for the regular business case of that company. And we'll just discuss this end of next month with our supervisory board and we'll announce it end of April.

Okay, thank you very much. Welcome. Next question is from the line of Kai Klose from Berenberg. Please go ahead. Yes, good morning.

I've got a quick question on the pages 8 and 9 of the presentation, where you show the rent collection rate compared to the retail turnover. Is it fair to say that the rent collection rate in 2022 is maybe running a little bit ahead of retail turnover, or the other way around? Do your tenants need to still catch up in order to continue to afford the rents charged by your shop?

Yes, of course, they need to improve their turnovers, which are restricted by the mask wearing requirements and other things. However, there are state aid programs in place. They have been prolonged until I think it's now mid of this year. So there are means for them to get other ways of cash and being able to pay the rents, obviously. On the other hand, they also have now learned to live with the situation and to plan their stocking of their shops better. In the first lockdowns, they were full of, let's say, stock, which they then had to write off. And they are now, of course, a bit more cautious, knowing the volatile situation. So they have worked on the cost structures as well. But of course, In the midterm or rather soon, hopefully, the turnovers come back, and it would be great if it would happen with the Easter sales in April starting.

Thank you. And the second question on these activities you mentioned, could you indicate if the portion of the turnover-based rent has increased or if it has been introduced for the first time for a certain group of tenants?

It's a bit intermingled because we have, because of Corona, agreed with some of the tenants for the period of Corona and for some even the insolvency cases even a bit longer to switch to turnover rent. On the other hand, the share of turnover rents is, as I just have mentioned, come down because the turnovers now since two years are depressed by Corona. So it's hard to give a precise share. But it's not too much. It's maybe in the low single-digit region what probably has shifted from fixed to more, let's say, turnover-based. It's mainly with some very, let's say, strong anchor tenants. They prefer that model. They are willing to pay a high proportion of rent as turnover rent, but rather lower fixed rent, which necessarily do not mean that we have less rent afterwards. So it's a trend, yes, but it's just a slight trend. So no dramatic shift so far.

Thank you. And the last question, maybe talking about lease renewals or lease extensions with those tenants which were not materially affected by Corona, like the food anchor tenant. When you had a lease renewal there, could you indicate if and to which extent we had a rent uplift? So what was the rent reversion?

Yeah, I mean, there's an average number. There's individual cases depending on individual probability of a given shop. But we have mentioned that we have replaced one of the big hypermarkets in one of our centers. And we could, let's say, keep the rents where it was before and even the rent that we agreed before Corona started. So for certain kind of tenants, yes. It's stable for other kinds. The reversion is, of course, negative. And the average number is where we ended up, what I said before, that we are now roughly down by 10%, mainly vacancy and maybe lower turnover rents because the turnovers have to improve over time, but also because some shop rents have come down.

Thank you.

So overall the impact is, as I said, visible but digestible and we work our way from there up according to our plans if things normalize, which we all hope and expect.

There are no further questions at this time and I would like to hand back to Mr. Wilhelm Werner for closing comments. Please go ahead.

Again, thank you for joining us. I hope you like some of the operating number that we see and that the trust is coming back. and that the multiples and prices putting on our cash flow are hopefully adjusted to more normal levels, then the stock price should improve quickly. And yeah, we'll come back then with a dividend proposal end of April, according as of today, our planning. And yeah, I wish you a good day. Thank you.