Deutsche Euroshop Ag Akt

Good morning, ladies and gentlemen, and moin from Hamburg. This is Hans-Peter Kneipp speaking. I'm pleased to welcome you to today's conference call and to present our financial results for the first nine months of our fiscal year 2025, along with an update on the company's recent developments and achievements. As always, I will be happy to take your questions following my brief presentation. On behalf of my entire team, thank you for taking the time and for your continued interest in Deutsche Euroshop. Let me start with an update on our business activities on slide two. Compared to the first nine months of 2024, we have seen a modest decrease in footfall of 0.2%, whereas our tenants achieved an increase of 2.2% in their sales. After a subdued first quarter, there has been a positive trend in both visitor numbers and tenant sales. I will provide further details, including a breakdown by sector, in a moment. Despite increasing rents, our revenues came down by 1.3% to 197.4 million euros, EBIT has decreased by 4.5% to 155.4 million euros, and FFO by 12.8% to 108.8 million euros. The lower results are attributable to higher deferrals, one-off allocation and cost effects, and increased financing costs in particular. This comes as no surprise. The results are largely in line with our planning and forecast, which we refine as usual with the nine-month figures and which I will discuss at the end of my presentation. I'm also pleased to report that our larger investment projects at several locations were completed on time and within budget, and I'll share further details on these later. Switching to slide three. In terms of funding, we are in a comfortable position after the latest financing measures and dividend payments with an LTV of 42% and a cash position of €376 million. As you know, we paid out a dividend of €2.65 per share, a total of €200.7 million in early July this year. Our funding position remains stable and all financing schedules for this year have been completed. Our next loan is only due in June 2026 and an early extension is already in the works. In June, we successfully placed our first green bond with an aggregate nominal amount of 500 million euros. The bond has a term of 5.3 years until October 2030 and an annual interest rate of 4.5%. The issue attracted strong investor interest and was seven times oversubscribed, underscoring Deutsche Euroshop's attractiveness as a borrower. The bond is listed on the Euro-MTF market of the Luxembourg Stock Exchange. Prior to the bond issue, Deutsche Euroshop received a long-term issuer rating of WB plus from S&P. The new bond is rated BBB minus by S&P, reflecting our strong investment grade profile. I'll move on to slide four. Deutsche Euroshop is taking forward-looking steps, not only in the area of sustainable financing, Yesterday, we published comprehensive ESG policies, which you will find on our website. Our new ESG policies include a code of conduct for employees and a code of conduct for business partners and suppliers, as well as topic-specific policies on climate protection and energy, water, and environmental protection and waste. On slide five, we take a closer view at our centers. Looking at the third quarter of this year, we have seen a plus of 1.4% in footfall and 3.9% in turnover. As already mentioned, in the first nine months of 2025, in total, we saw a minus of 0.2% in footfall and a plus of 2.2% in retail sales. This reinforces the positive trend we had already observed in the second quarter of the year. I probably don't need to tell you that the consumer environment remains challenging, influenced, among other things, by volatile political developments and geopolitical conflicts. However, we are seeing an improvement in consumer sentiment and an increase in our tenant sales, particularly in our foreign markets. German consumers remain more cautious and continue to spend comparatively little in retail compared to other European countries. In this respect, our portfolio may benefit from a catch-up effect if the consumer climate improves in Germany as well. This could be triggered by resurgence in economic growth, for example, as a result of structural measures and investment programs by the new federal government, which has been in office since May this year. Regardless of this, we and our tenants are looking ahead to the year-end and Christmas business with optimism. The peak shopping season will start in the next few days. I would now like to take a closer look at the individual retail sectors and their development in Germany in the first nine months of 2025 on slide six. This overview shows not only the development of turnover in the individual sectors, but also the respective share of total tenant turnover and floor space, as well as the occupancy cost ratio. Compared to the end of 2024, Our tenants in the German portfolio in the health and beauty segment performed well, achieving a 4.2% increase in sales. In particular, drugstores and pharmacies like Drogeriemarkt are the main drivers here and continue their success story. Our largest tenant group with a share of around 28% of sales and 41% of retail space in Germany is Fashion Textiles, which was able to achieve a slight increase of 0.2%. Food, including supermarkets and discounters, generated 0.7% higher sales, as did general retail, which includes bookstores, toys, household goods, and jewelry, as well as department stores. On the opposite side, shoes and leather goods, sports, electronics, and services have ended the first nine months in the red. Overall, our tenants in Germany increased their like-for-like sales by 0.2%, while our tenants abroad ended more positive at plus 2.3%. In total, we have seen an increase of 0.7% across our entire portfolio. In absolute terms, our tenants generated 2.2% higher sales as already outlined previously. And finally, this page shows that the average occupancy cost ratio, the so-called OCR, which is the ratio of rents and ancillary costs to be borne by our tenants relative to their revenues, is 11.3%. A healthy ratio that enables our tenants to be successful in our shopping centers over the long term and that shows you that our portfolio is well-balanced and not over-rented. Let us now turn to the financials and look at our revenues on slide seven. These came out slightly lower at 197.4 million euros after 200 million euros in the first nine months of 2024. This is a decrease of 1.3%. While contractual rents increased, revenue from rental income fell slightly overall due to rental incentives granted. Mainly due to the property tax reform, in German Grundsteuerreform, The revenue from property tax apportionments and insurance expenses decreased by 1.2 million euros. The breakdown between Germany and abroad has shifted slightly in favor of foreign countries, where we now have a 22% share. For our EBIT, let's have a look at slide 8. With a decrease of 4.5%, our EBIT came out at 155.4 million euros. A main driver here were increased shopping center operating expenses due to one-off expenses related to non-apportionable ancillary costs associated with the renewal of technical equipment. Noteworthy is that property tax expenses have fallen sustainably due to the already mentioned property tax reform. On slide nine, we come to the financial result, which decreased by 13.8% or 10 million euros and came down from minus 37.8 million euros to minus 47.9 million euros. Interest expenses increased by 8.8 million euros due to loan increases in the second and third quarter of the prior year, higher interest rates for follow-on loans, as well as the interest on our inaugural bond. The other financial results include interest income as well as 2.7 million euros expenses for the termination of swaps in the course of the early repayment of the underlying loans for Stadtgalerie Hameln and Stadtgalerie Passau. On slide 10, you can see that the EBIT excluding valuation came down from 125 million euros to 107.5 million euros, which is a minus of 13.9%. This reduction was caused by the downturn in EBIT, mainly due to higher center operating expenses, as well as in the financial result. As mentioned, the main effect was the increase in interest expenses. The interest income from short-term bank deposits was below the prior year at 3.3 million euros. How consolidated was 2011? increased by 13.3% from €82.5 million to now €93.5 million, mainly due to a higher valuation result. Correspondingly, EPS increased from €1.08 to €1.23. Please follow me now to page 12 and to the development of the FFO. The FFO decreased from €124.7 million to now €108.8 million or on a per share basis from €1.64 to €1.44 due to the lower EBIT as well as the lower financial result. Let me now turn to the balance sheet which you'll find on page 13. Our total assets after the bond issue amount to €4.55 billion. This is an increase of 186 million euros compared with the reporting date end of 2024. We fully repaid the loans for Herold Center Norderstedt and Stadtgalerie Hameln in June. Together 143.1 million euros and partly repaid a loan of 34.5 million euros for Stadtgalerie Passau in August. Our consolidated liquidity as of 30th September 2025 stands at 376 million euros. That is a plus of 163.6 million euros. Please keep in mind that we paid out a dividend of 200.7 million euros in early July. Total equity, including non-controlling interests, decreased by 101.5 million euros. As of 30 September 2025, current and non-current financial liabilities stood at 2.1 billion euros, which was 287.6 million euros higher than at the end of 2024, in particular due to the 500 million bond issue issued in June. Non-current deferred tax liabilities increased by 13.9 million euros to 364.7 million euros. Our equity ratio decreased to 44.9% and the consolidated LTV now stands at 42%. The APRA LTV calculated proportionally according to the group share in all assets, so to say on a look-through basis, stands at 44.2%. On page 14, let me give you some updated information on our financing structure. As just shown in the balance sheet, total debt amounts to 2.1 billion euros. On 30th September, our average interest rate stood at 3.2% and the weighted average maturity at comfortable 5.2 years. After issuing our 500 million bond in June, we remain in a good position with strong and sustainable investment-grade credit metrics, including an LTV of 42%, net debt to EBITDA of 8 times and interest coverage of 4.3 times. On the right-hand side, you can see Deutsche Euroshop's long-term diversified maturity profile in more detail. now including the bond maturing on 15 October 2030. Our next refinancing obligations do not arise until mid-2026, and we continue to refinance cautiously and early, as always. We summarized the key details of our green bond on slide 15. We reached a financial milestone by attaining a corporate rating and tapping the capital market for future corporate financing. By successfully placing our first bond in June, we've expanded our sources of funding and diversified our financing structure. As already highlighted, the 500 million Euro bond was seven times oversubscribed, reflecting the confidence that institutional investors place in the retail real estate market and Deutsche Euro Shop in particular. as well as the willingness to invest in our shopping centers as eligible sustainable projects in line with our green finance framework, which we have summarized on the following page, slide 16. We are well advanced in optimizing our capital and financing structure. With the publication of our green finance framework, we created the basis for the possible use of green financing instruments in the future. The framework has been rated excellent by Sustainable Fitch which is the highest possible rating. Coming to some news on our portfolio on slide 17. The food garden is the new highlight of the Main-Taunus Centrum near Frankfurt, giving it a new lively and urban atmosphere. The high-quality varied restaurant and food area opened in April. The food garden was 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 at high sustainability standards. The food garden is fully led to high quality tenants. Those of you who have not yet had the opportunity should check out the project on site. Our IR team is happy to provide guided tours as well. The feedback from customers and tenants is excellent and is impressively reflected in the center's footfall. Visitor numbers went up by 17% since the opening. By the way, this area is open seven days a week and is also very popular on Sundays. On slide 18, we have an update on the Rhein-Neckar Zentrum close to Mannheim. A larger investment project has just been completed and the center expanded with attractive tenants in gastronomy, sports and entertainment. Since February, a new and modern freestanding Losteria provides highlights from the Italian kitchen to our visitors. In addition, three exciting tenants moved into the renovated former Bauhaus building, providing plenty of retail-tainment, as we say. A trampoline park and a successful cycling store are each an attraction. An interactive indoor entertainment, so-called family action concept, with a dark light mini golf course and an escape room experience, will open next week. Only a few meters away, you can find an indoor skydiving center, which is running very successfully. These tenants are positively benefiting from each other and we expect further synergies with the adjacent existing cinema and restaurants, giving the entire center a further boost. This new leisure area has been given a name that sums up the diversity and vibrancy of the location, the Food and Fun Park. This new branding will become visible in the coming weeks. Finally, I would like to come to slide 19 and the forecast and outlook. In light of the developments over the first nine months of the year, we are refining our forecast for the financial year 2025. We expect revenue to be in the lower range and EBIT and FFO in the middle range of the original forecast. EBT excluding valuation is expected to be slightly below the original forecast, partly as a result of the increase in interest expenses due to the adjusted financing structure. In detail, we expect a revenue of 268 to 273 million euros, previously 268 to 276 million euros. An EBIT of 211 to 216 million euros, previously 209 to 217 million euros. An EBT excluding valuation of 144 to 149 million euros, previously 150 to 158 million euros. And finally, an FFO of 146 to 151 million euros, previously 145 to 153 million euros. Ladies and gentlemen, thank you for the confidence you have in the virtual euro shop. We expect the recent positive trend to continue for the rest of the year. Although there is certainly room for improvement in the overall retail environment, there are good reasons to be optimistic for the rest of 2025 and the coming year, 2026. You can rely on us to continue investing in our shopping centers in a targeted, strategic, and sustainable manner to create future value for our shareholders. Ladies and gentlemen, in light of our company's recent development, we can look back on an encouraging first nine months of 2025. We appreciate your continued support and engagement. That concludes my presentation. Thank you for your attention. I am now happy to take any questions. Valentina, back to you.

The first question comes from Kai Klose from Berenberg. Please go ahead.

Yes, very good morning, gentlemen. I've got a few questions from my side. First of all, some basic questions on the portfolio. What were the occupancy levels as of nine months, and what was the rent collection rate for the nine months?

Yeah, thanks, Kai, for this question. For the first nine months, we had an occupancy of... of around 95% and the collection rate was again close to 99%. Occupancy levels have changed in which way? Well, they have somehow improved. You have seen that in the half year we were around 94.5% occupancy rate, so now we are at around 95%. So it has improved somewhat over the last three months, but no major changes overall. So we know that our target is to be at around 5% vacancy, and that's where we are at the moment.

Thanks. And second question, could you indicate what is the split of the like-for-like rent growth? And you mentioned in the report, in the release, about rent, you talked about rent incentives. Could you be a bit more clear on that, also by regions and by segments? Sure.

Yeah, regarding the rent increase, you may have seen in the report there's a moderate increase of around 0.4% in rents, like for like. What is driving down revenue on the top line has been especially increasing rental incentives. So you know that over the past six to 12 months, we have made quite some progress in reducing our vacancy rate. Like one year ago, we were around 7%, which we considered as too high. And therefore, we had some achievements in attracting quite interesting tavernants, but at the cost of some rental incentives, which as a result, do drive down revenues by around 1.3% in summary. Also, something I think to highlight once again is that what is also driving down revenues is the property tax reform, as just discussed previously, which has nothing to do really with our revenues, but as it's it's an apportionment that we have in our revenue. It drives down revenues although it's good news for our tenants because they have to pay less taxes. So therefore this a little bit dilutes our revenue figures which are lower although we do have slightly increasing rents.

Thank you. Just to be clear, when you say 130 pips minus from rent incentives. So what was the contribution to the like-for-like from indexation? I guess it was positive, so I think that was then almost offset from rent incentives.

Yeah, as you know, so from incentives, that moves in line with inflation. So you're always starting with kind of plus 2%. What has driven down this 2% increase that you would expect from inflation year on year is, first of all, that we do still have higher vacancy rates, or we had vacancy rates in between, and also that we had some contracts at lower rents. So that is driving down rents in the first nine months, which, of course, you would like to avoid. But in the interest of attracting new new tenants, that's the decision we have taken. So from kind of the index increases, we have had some negative effects in terms of vacancy and lower rents, which gives you the 0.4% that we show in our report. And we have taken further rental incentives from them, which then brings you to the slightly negative development of the revenue. That makes it a little bit clearer.

Two last questions from my side. You mentioned you have repaid debt or loans on two malls. Are these two malls, Harman and Northerstedt, are these now unencumbered and are likely to stay unencumbered? And the last question is on the guidance range. So you have adjusted the range but not lowered the range. Why not be a bit more precise or coming up with a smaller range given the fact that we're already in the Q4 period?

Yeah, so first question regarding the repaid loans. Indeed, that was Herolstädter Norderstedt and Stadtgalerie Hameln. We fully repaid the loans, and the assets are now fully unencumbered, and we don't plan at the moment to take up further loans on these assets. So they will stay unencumbered for the time being. Regarding adjusting the range, yes, as usual, we have refined the range and have made it more precise. Why don't we make it – do we have further precision regarding the range? Well, that is more to some effects that come towards the end, like . You may remember last year where we have been pretty positively surprised by turnover ends. As you know, for the retail business, the last quarter, especially around Black Friday and Christmas, That's a very interesting one always for our sector. Therefore, we keep some more room for this in our guidance and to reflect some potential upside, but also for other reasons to reflect some downside. So yes, more precise range, but maybe not as precise as it was in the past because there are there are, at least in relative terms, a little bit more turnover ends that may be higher or lower, depending on the year-end business. Thank you very much. Thank you, Kai.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Hasbette Gneip for any closing remarks.

Ladies and gentlemen, thank you for your interest and your questions. As always, feel free to contact the IR team should you have any further inquiries. The entire Deutsche Euroshop team wishes you a happy and peaceful end to the year. We hope to see you soon at future investor or retail events, or even better, in one of our shopping centers. All the best, and tschüss from Hamburg.