Tag Immobilien Ag

Yeah, many thanks and good morning all. This is Martin from TAG. Many thanks for dialing in into our 40 years 2023 conference call. As always, I will try to give you a short presentation, point out the main messages from our side, and then afterwards, of course, we have plenty of time to discuss the results. So let's start with page number four, which is a comprehensive summary from our point of view, main messages we want to give you today. Firstly, we have achieved our FFO1 guidance, so FFO1 came out basically exactly in the middle of the guidance range at around 172 million. This corresponds to a reduction of 9% year-on-year, but this reduction is purely due to higher financing costs. So analyzing this a little bit more in detail, the EBITDR, so the operation results, was even better than in the previous year. On the one side of Germany, a little bit lower EBITDR due to disposals that we had not only in 2023, but also in 2022. But the Polish EBITDR from the rental business kicked in now stronger. So therefore, operationally, in terms of EBITDR, we've been better than in the previous year. But also the German portfolio performed quite well. Just to give some highlights, the vacancy rate in the residential units was down to 4.0%, so down by 50 basis points in the course of the year, and we achieved a total like-for-like rental growth in Germany of 2.3%. Secondly, we have outbeat our FFO2 guidance due to a very strong sales result in Poland. So FFO2 came out at 255.6 million. This is even more than last year, so 3% increase year on year, and also quite significantly above the guidance that we've given, which was between 240 and 246 million. The EBITDA from our sales business in Poland reached more than 100 million. And the adjusted net income from this Polish sales business came out at 82.8 million compared to 59.3 million in the previous year. So a quite strong increase in our sales result in Poland and even a little bit better than we expected. So Poland in general performed very well. You see this in the third point of the slide. The rental portfolio in Poland comprises, in the meanwhile, at year-end 2023, 2,400 finished units or units under operation. Further, 1,400 units under construction, like for the grant rules, were still at 11%, which is from our point of view very strong. And the vacancy rate for the units which were in operation for more than one year was down to a very low 2.2%. That's even more impressive was the sales result from our point of view. We sold in Poland nearly 3,600 units last year. And looking at the total sales volume, that increased to nearly 480 million in 2023 compared to 265 million in the financial year 2022. So a very strong increase, not only in sales numbers, but also in sales prices. We'll come back to that a little bit later in more detail. Of course, very interesting in this result score is for sure the valuation result. So we recorded another valuation loss of 4.1% in the second half, but this valuation loss was already much lower than the loss that we have recorded in the first half, which was 7.4%. So we clearly see that valuation losses are slowing down, that we are reaching perhaps the bottom of the valuation levels in Germany. We have recorded in the last 18 months already 16% of devaluation in absolute amounts that's 1.1 billion euros. So therefore we've done already a lot and therefore we expect not really material relation losses in the course of 2024, but I will come back to this also a little bit later. Disposals in Germany were quite successful in 2023. so nearly 1,400 units sold. Total sales were more than $213 million. And net cash proceeds, so that means after repayment of respective bank loans, of nearly $190 million. The average gross yield of the units sold in Germany stood at 4.3%. And despite the quite significant relation losses we recorded in the course of 2023, and that's point number five, and I think this is also a very important point for today, the RTV was stable. So we started in the year with 46.7%. At year end, 2023, came out at 47.0%. And I think this is definitely a good message. So we were able to keep the leverage stable with the measures that we've taken. So on one side, the good operation business, clearly strong sales results in Poland, but also the successful disposals in Germany helped in this regard, and also the dividend suspension. in financial year 2023 was something that helped us in keeping the LCV at that level. Looking forward, I think we're not too far away from our LCV target. We will also discuss this on the following slide. Also important to mention net debt to EBITDA and the ICR stand at strong 9.3 times and 6.0 times, so also the cash numbers when we look at leverage metrics are in very good shape. Coming to the next slide, I mean, we have discussed already some of the main numbers. I won't go through it in detail, but just pointing at the FFO per share metrics, the FFO1 came out as guided at 98 cents per share, and FFO2, and this is something I want to highlight, came out at €1.46. So if you compare this €1.46 with yesterday's closing price for the shares, which were around €12.30, it's a 12% FFO2 yield. And this is something we want to point out again. So please also look at FFO2 when analyzing our results, because FFO2 also includes a recurring business, recurring earnings, which is coming from our sales business in Poland. So this is, in the meanwhile, and has also been in last year, an important part of our sales results and our overall results. Coming to slide number six. I just want to show you, if you look at the column with the fourth quarter results, that as expected, this was very strong in Poland. You know that this has a seasonality to sales business, so we are recognizing the profit in the P&L on the very last day, meaning when we hand over the apartments to our customers, and this is to the very largest part, always in the fourth quarter of the year. So in the fourth quarter of 2023, we had revenues from sale of properties in Poland of $296 million. and the adjusted net income from Poland was 54.8 million, so 82.8 million a full year, and out of that material, 54.8 million alone in the fourth quarter. We have handed over 2,300 units in Poland, so as expected, this quarter was very strong for the sales result. Going a little bit more into the details, I want to continue on page number 9. It shows the EBITDR, FFO and AFFO calculation. I already mentioned that the EBITDR increased year-on-year by nearly 3 million euros, so the decline in FFO1 of 9% was completely due to higher financing costs. Perhaps you've already seen our guidance for the next year. We expect a stable FFO1 in 2024. And why is that? This negative impact from higher interest costs that we had in 2023 will not be that strong in the course of 2024 because we have repaid a lot of debt and we've especially repaid the bridge loan from the Robic acquisition in the course of financial year 2023. So this was, of course, for us, a quite strong relief for our earnings and our financing costs, and therefore FFO1 in 2024, which I think in this environment is already a success, will be stable. The AFFO was reduced by $17 million. This is absolutely nine with the FFO1 reduction. So that means the total capex that we spent in financial year 2023 was nearly unchanged compared to the previous year. Page number 10 shows the APRA NTA calculation. We saw a reduction of the APRA NTA by 12%, but this was purely the result of the portfolio devaluation. You see this here in the chart or on the slide on the right side, that a little bit more than 4 euro per share was the impact from the portfolio valuation. The business itself, so the net profit that we achieved, contributed to 1.7 euros per share to the NTA. Page number 11 shows the financing structure, and I want to mention two things. First of all, when we look at financings that are maturing in the course of 2024, 2025, and you see this on the slide, the average interest cost of these maturing financing are still at around 3% in 2024, 2.8% in 2025. So that means if you're going for refinancing today and without banks, we are perhaps at around 4% or even lower in these days for a new bank loan. Yes, we will have higher interest costs afterwards, but the step up that we see is not that material. So we can digest refinancing in these days in a world with high interest rates because the loans that we are currently refinancing already have a coupon which is in a range where the difference to the new coupon is not that used. So therefore, we expect, as already said, for 2024 and also, as a small outlook, for 2025, not too much pressure coming from the interested side on our results. And one word on our LTV target. As I said, we're quite proud that we managed to keep the LTV stable at 47%, which would be already good results. The ITV target stands at 45%, and we're not too far away. And what do I mean by saying this? We know that from our ongoing business, so from the cash that we generate from the German business as well as from the Polish business, especially from the Polish sales business, we've got a natural deleveraging. If we keep it in the balance sheet, and that's what we propose again to our shareholder, not to pay a dividend, but to keep the cash in the balance sheet, then we are, as a result, or as an impact from this operational result, already at our LCP target, or perhaps even slightly lower. And then, of course, it depends on the valuation result in 2024, if we see then an adverse impact. But on the other side, we will also continue to sell assets in Germany. It's clear that the official program has ended, so that we have completed the 250 million sales program in the course of 2023. And the purpose of this program was to repay the whole big bridge financing. So this is done. But that does not mean that we stop selling assets in Germany. So we can be sure that we're also active on this market. So therefore, I think it's reasonable that we will also have some disposals in Germany in the course of 2024. And this helps us then to keep the LCV or to move the LCV forward. perhaps quite soon towards the LTV target. This is perhaps also something that you should take away for today. Coming to page number 13, I already mentioned that we saw an increase in the like-for-like rental growth when it comes to the what we call basis like-for-like rental growth. So that means the rent increases from existing tenants and from tenant turnover and from the monetization surcharge. So it was 1.8% compared to 1.5%, including the impact from vacancy reduction. We were at 2.3%. That's a little bit lower than the previous year, where the impact from vacancy reduction, because of higher vacancy rates at that time that we could reduce, was a little bit higher. Top right of slide number 13 shows your total investment, so that's maintenance and capex together. So we have not reduced our investments in the last two years. So we are at around 25 euros per square meter, which we are spending currently, which breaks down into roughly 7 euros per square meter maintenance and 17 euros per square meter capex. So that means we continue to invest in our portfolio. We are especially continuing to invest in modernization projects for more energy efficiency. So this is clear something that we have on the agenda, and we will continue to do this. Page number 14 shows the vacancy rate development. As already expected from our side, we saw a very strong fourth quarter. So there's a reduction of 60 basis points from September to 4.0%. So overall, that's a 50 basis points reduction year on year, even a little bit better than expected. And that shows us that also in our secondary locations, the demand for affordable housing in Germany continues to be very strong. Page number 15 shows the portfolio relation, and this is, of course, an important slide. First of all, I already said we have developed the portfolio in the last 18 months by around 16%. I think that should be quite in line with the relations that other peers have already done. If you look at the relation metrics, we are now at a gross yield of 6.3% and a price per square meter at €1,000. and 1,060 euros. The 6.3% gross yield, that's a gross yield if we look at the chart that we already had some years back. So we are, relation-wise, looking at the gross yield now back at the levels of 2018. And that gives us really comfort. So 6.3% gross yield in this interest environment where a potential investor is financing an acquisition with a bank loan at 4% or even lower. That clearly creates a positive cash flow. And therefore, we are very optimistic that we are reaching a kind of bottom regarding valuations. Yes, it's true, we expect some further valuation declines in the course of 2024. I mean, the honestly a little bit rounded number of 20% total valuation decline from peak to draft is, from our point of view, still valid. So, overall, in the course of 2024, we will see, from our expectations of today, quite strongly reduced radiation results in the sense of lower radiation losses in 2024. And that's good news because that helps us, of course, to work on our leverage. I already mentioned some ideas, some potential developments on our LCV. So we are clearly now more on the way that leverage is coming down as we see valuation declines bottoming out. Let's look a bit more into Poland. On page number 17, you see the portfolio data for our rental portfolio. As I said, the rental growth was quite strong, so year-on-year 11%. Like-for-like rental growth and the vacancy rate was down at 2.2%. Looking at the in-place years or the valuation growth here, it stands at 5.9%. We are convinced that we will see also further improvements in the coming years. So therefore, the investment idea of our rental business in Poland is still valid. We're building such portfolios at a 7% to 8% gross yield. We achieve a good like-for-like, strong like-for-like rental growth. And we also see relation improvements. Now we are already below 6%. We are quite optimistic that this number will go down so that we will see further valuation improvements in Poland in the following years. Page number 18 shows the development of the Polish rental business in terms of number of units. And important is to say that we started new investments. So we are growing here again in Poland. You know, for quite a time we stopped new rental projects as, first of all, refinancing was more important. But now, as we have a lot of liquidity in the balance sheet, especially in Poland, we are growing again. So the first projects have already started in the fourth quarter of 2023, 430 units. These are two projects, one in Gdansk and one in Wroclaw. Further, potentially 1,000 units or more to be constructed will start in the course of 2024. So we are growing again in Poland. We have the possibility to invest On one side, from the cash flow, from the cash surplus that we achieve as a sales business, which is between 50 and 60 million per year. And secondly, and that's also a message we want to highlight today, from refinancing the existing rental portfolio. So we have just signed the first mortgage-secured larger refinancing of our rental portfolio in Poland. with a loan of 90 million euros. And this is something that, of course, then gives us additional liquidity to build new rental projects. And for the refinancings for the rental portfolio we follow, we have financed this rental portfolio in the first step with TIG shareholder loans. Now we're doing step-by-step refinancing, releasing cash that we can use for further investments. So therefore, the important news is we are growing the rental portfolio in Poland again. Page number 19 gives you more insight into the sales result. As I already mentioned, we have strongly increased the number of units sold in Poland, 3,600 units in 2023 compared to 2,400 in the previous year. But also important to say it was not only increase in number of units, also sales prices in Poland increased quite significantly. So we saw sales prices increases in the market in our portfolio between 15 and 20%. And if you look at the slide and compare the fourth quarter of 2023 with the fourth quarter of 2022, you will realize in both quarters we've sold roughly the same number of units. So 715 at the end of 2022, 709 at the end of 2023. And if you look at the sales volume, that was 110 million in the fourth quarter of 2023 compared to 76 million one year ago. So that shows that based on the roughly same number of unions, as sales prices have increased quite strongly, the sales volume is increasing really maturely. Page 20 shows you the revenue recognition. As I already said at the beginning, not unusual, always the fourth quarter in our business in Poland is the strongest quarter. It's here the apartments are handed over. But again, please have in mind, this is something which is purely a P&L impact. The cash flow already starts earlier because when we sell an apartment, then from that point in time, the customer pays the purchase price by installments. And a final comment on page number 22, which shows the guidance for financial year 2024. We leave all the guidances unchanged. So we are guiding for a stable FFO1 in 2024 in a range of $172 to $174 million. regarding for roughly 9% reduction FFO2, which is coming from an expected lower Polish sales result. But please have in mind, this is an outcome or reflection as already described in the last earnings call from lower sales numbers in Poland in 2022, which will lead to lower handovers in 2024. So that means the strong sales numbers from 2023 will then contribute to the results two years later when the constructions are finished in 2025. So therefore, it's a one-time reduction in our sales results. Stronger results will follow from 2025 onwards. And one final comment on the dividend. Here, the proposal to the AGM will be unchanged as already communicated with the Q3 results last year. We are proposing to our shareholders to suspend the dividend once again, and on a potential dividend for the financial year 2024, we will decide or make a proposal or give guidance more towards the end of the year. And this is depending on market conditions. And, I mean, clearly we see that now value or the devaluations are bothering. I think there should also be some signs on the horizon that the transaction markets could be better in the course of the year. So these are all good signs, but let's wait for that in a first step and then decide on a dividend more towards the end of the year. For now, we feel comfortable that we keep the cash in the balance sheet. It's on the one side for leveraging and on the second side, and this is again important, we use this cash to grow the portfolio in Poland, which from our side gives our shareholders an attractive opportunity to grow in a fast-growing market. That's it from my side with the highlights for the full year 2023. Thank you so far for your listening. And of course, now I'm happy to take your questions.

Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. And the first question comes from John Wong from Kempen. Please go ahead.

Hi, good morning. Thank you for taking my questions. You mentioned that you expect that you get to a target at 45% LTV through retained earnings. Additionally, you also are looking at disposals in Germany, I suppose, at a bit more of an opportunistic pace. Taking this all together, what would you say that is a reasonable LTV tool? to target by year end.

Yeah, good morning, John. Well, if I continue my quite simple calculation, as I said, we have the natural deliberating process from the ongoing results. We keep the cash and the balance sheet because we're not paying a dividend. So this alone brings us already below the LTV target, so below 45%. Then, of course, it depends on any evaluation results that you pencil in into the model. Let's stay with the 20% total value decline from peak to top for a moment, so another 4% value decline in the course of 2020-2024. Please don't take this as an explicit guidance, but just to give you a range where we would expect a relation result, then we would need disposal in Germany, which are roughly half the size of 2023. So net cash proceeds of around $100 billion. to be at a 45% LTV. That's something that we have in our head. So I think it's a good chance that in the course of 2024 we get to the LTV target or very close to that.

Okay, that's very clear. And on those disposals, are there any ongoing negotiations or is this based on your feel that the investment market is opening up?

We are always on the market with portfolios and unchanged with smaller portfolios. It's really difficult to predict further developments in the investment market, but at the moment, our perception is more people are positive on that for reasons that are understandable. All the companies have devalued their portfolios, so that means perhaps a new price level is possible for transactions at the new book value. Interest rates are really now visible, coming down, although this is slightly inflation is coming down. So for quite a while, we are now in an environment where all the factors that you need to put in the model are more and more clear. So that's a positive, but let's see how this develops. If you ask me, do we see already really material data points in the market? I mean, everyone will give you this answer. No, this is not the case, but let's be optimistic for 2024. And we are reactive on the disposal market. I already mentioned that, yes, we have completed our disposal program, but clearly we will continue to sell. But a little bit more on an opportunistic basis, yes, it's not necessary to for the purpose of any refinancing to sell at any price so we can be a little bit more opportunistic slash disciplined.

Okay, that's very clear. Then moving on to Poland, how do you see like-for-like rental growth there? Because looking at slide 36, the growth on new stock is low single digits or even negative for Wroclaw. Well, your assets in that specific city on the operation for more than a year are already close to market rents.

Yeah, I mean, we would not be surprised if you see in 2024 a slowing down of the like-for-like rental growth. It should be very natural. We have seen extreme strong rental growth in the last two years. So 20% in 2022, more than 10% in 2023, So, I mean, we know that there's a pre-war in the Ukraine where it's like for like rental growth in this market segment, so new constructed apartments in the larger cities in Poland, which was perhaps 3% to 5% per annum. That should be also a reasonable mid-term rate, at least assuming that also inflation is coming down in Poland. So, therefore, we don't see this as a negative if after so strong years, The rental growth is perhaps stabilizing. We are absolutely convinced that mid to long term we will see here in Poland, because the demand is so strong, a really good and attractive rental growth over time.

Okay, that's clear. Thank you. That's it from my side.

And the next question comes from Thomas Neuholt from Kepler Schifrö Regos. Please go ahead.

Good morning. Thank you very much for the presentation and thank you for my questions. I have three of them and I suggest you take them one by one. Firstly, most important question for me is your capital allocation policy. I understand that you still have a cautious stance given the high uncertainties you still have. But on the other hand, you're talking about a stabilization of prices potentially this year, stable financing costs, ongoing rental growth, 12% FFO2 yield of of your stock. So I was wondering what are the key criteria for you to at least start to repay dividends or is also a share buyback something you potentially might consider giving your valuation?

Good morning, Thomas. I'll try to explain how we think about cash flows in a company. On one side, we've got the Polish cash flow, which is producing a cash surplus from a safe business. of 50 to 60 million euros so as discussed we use this as equity for new rental projects in poland and on top of that is coming some financing for example from refinancing of existing portfolios or perhaps currently also financing for apartments under construction so that enables us really step-by-step based on cash flows that we create on our own to grow the rental portfolio in Poland. And we think that makes sense to continue that also in the interest of our shareholders because this really creates attractive returns. And on the second side, clearly we have the cash flow from the German business, the FFO of roughly $170 million. I mean, in previous years with a payout ratio of 75% of FFO, That's the cash that we keep currently in the balance sheet, which is a total amount of 120 to 130 million. And what's the situation right now? I mean, we have unsecured debt that is coming to you, not in large sizes this year. So it's, for example, 60 million promissory note. But we think in the current environment, it's simply better to keep the cash from the German business in the balance sheet, take this cash, repay such unsecured debt, and continue by doing this. If we are in an environment where transaction markets are more open, where it's not a big issue to sell a portfolio for 50, 60 million, where a private placement of a promissory note of 50, 60 million works again, or where we can do a private placement of a bond of perhaps 100 million, So, you know, we're not dreaming of the old world where everything was for free. Yeah, that's already another environment. So then we can also be, you know, more, how should I say, generous also with our cash flows in Germany and say, okay, the ongoing refinancing, that's not anymore an issue. We don't need to be conservative here anymore. So then we have the cash in the balance sheet to pay a dividend again. The signs are good for 2024, but as we said in the last call, we will wait with any comments on that until we give the guidance for the next year, which is then in November this year the case.

Okay, understood. My second question is on page 34 in the presentation. You mentioned that you're growing the bullish portfolio. However, if I compare 2023 figures to the figures you stated in the nine-month report, it seems to me that the build-to-hold portfolio declined by almost 10% in terms of SQM and also in terms of potential units in operation under construction or possible future units. Did you shift a part of that portfolio to the build-to-sell portfolio? Were there any other changes compared to nine months?

Yeah, that's quite regularly happening. So we, of course, always think about our pipeline, okay, which land banks or potential future units should be for sale, which for rent. We are quite flexible in this regard, which is good. At the moment, the sales business is running very well. So, therefore, it's absolutely important to have the land bank in place to So to be ready for the strong demand that we see in the market. So therefore, we shift in between the two segments. But we clearly have earmarked also a land bank for the build-to-hold business. We can also tell you that we will continue to invest in new land bank. So for the build-to-hold business as well as for the build-to-sell business. So we have, of course, enough to sell for the next two or three years. But You know, in this business, you already today need to look into potential sales in three years. So you need to acquire something that you can then develop, where you can then get the zoning, get the bidding permits and so on, and just to sell it in two or three years. So that's a continuous process.

Thanks. And my last question is, if you can give us indication what your spot financing costs for a secured and unsecured landing, let's say for a seven to 10 years financing process, currently would be if you talk to the banks.

But for secured financing, we know this very well. So for German secured financing, that makes a difference. I would say for 7 to 10 years, we're perhaps at 120, 130 basis points, depending on the portfolio. We can also give you now more indications for a Polish portfolio, as we did now in the first refinancing processes. We have also, to some extent, already completed that. Here the margins are more in the region of around 200 basis bonds. And when it comes to unsecured financing, it's extremely difficult for us to predict because we have not really outstanding corporate bonds trading. So there's just 125 million corporate bonds, which is listed, but it was a private placement held by one investor. So therefore, we have not really an exact curve that we can derive from our financing costs. Okay, understood. Thank you very much.

Next question comes from Thomas Rothäusler from Deutsche Bank AG. Please go ahead.

Hi, morning, everybody. A few questions. The first is on mortgage lending overall. I mean, considering some of the German mortgage banks currently in trouble, do you sense any limitations with regards to access to mortgage lending? Or did you see any deterioration of financing terms there? I think you just referred to 200 basis point spreads for mortgage lending.

Yeah, good morning Thomas. Again, this 200 basis points, this is mortgage financing in Poland. Oh, sorry.

Okay. Okay. Maybe you can provide us the terms for training.

Okay. Sorry, it was a bit hard and difficult to understand, but just to make this once again clear, so 200 basis points, Brad, that's for Poland, so Polish portfolio. In Germany, margins have not really increased over the last, two years perhaps slightly i gave this indication 120 130 basis points which is very much comparable to margins that we had two years ago clearly misappropriates only meanwhile higher and then your question regarding willingness to finance this willingness to finance is from our observation really still there And even with one of the banks, without mentioning any name that has been in the press, we just completed a refinancing some weeks back. So if it comes to a situation that we have then currently, so a portfolio or a bank loan is maturing, it's a financing that we had in the books for seven or ten years, we have amortized the bank loan, the development of the portfolio was good. then asking the bank if the bank is willing to refinance the portfolio, the answer is a very clear yes. And we are also, of course, always approaching other banks, so the willingness to finance is absolutely there. I think there's one factor which is perhaps new for some investors, whereas two years back we discussed with banks when it comes to the loan amount LTVs. Today, the much more important figure is really the debt service cover ratio. and that's more limiting the bank loan. But in our portfolio, as you know, we have high-yielding properties. So therefore, all in all, we get at least the old loan amounts, and perhaps you have seen in the past presentations that we are not only able to renew the existing loan amount, we've also been able to increase the bank loan afterwards because we have the high-yielding properties, we have a good debt service cover ratio, This is perhaps for some portfolios in the lower-yielding segment different. So therefore, in this segment, the increase in loan is not that much possible compared to our portfolio.

Okay. Actually, on that background, just wondering, I mean, how would you assess the need to get back to investment-grade credit rating level you know how important is it for you and by when to get the access back there maybe you know and how and maybe how could a path look like for you to get back to let's enjoy this one yeah and that's two to two comments on that first of all

The good thing is, if you look at our numbers, we are already on investment grade level. I mean, you know that we are still investment grade at S&P, so typically minus, but with a negative outlook. So that's still a target to get it back to a stable outlook. And at Moody's, we are at BA1, so non-investment grade with a stable outlook. And here, the target is to get back to investment grade. If you look at the numbers again, LGV, Net Depth, WDR, ICR, and if you compare that with other real estate companies, On the same rating level, I mean, we are better, or with higher rated companies, we are at least on that level. So, you know, it's not something where we are under pressure to reduce the LTV or to improve the net debt to EBITDA. That's already there. I think the difficult situation in these days is also for rating agencies. And I think also this is getting better. Uncertainty around relations, around transaction market. I mean, you know all of this. So a rating agency clearly wants to get more confident at that, and I hope that we're very close to that. And then a positive rating action should follow. So, I mean, of course, it's not up to me to guide to any rating actions, but we're optimistic that we see here good developments in the course of 2024. And then as a second comment on that, A rating, investment grade rating, is of course something that we want to keep or to achieve in the sense of Moody's, but we don't need it for any refinancing processes in the course of this year or next year. So getting back investment grade rating from both agencies, getting also back the possibility to issue, for example, a corporate bond, that would of course enable us in the future possibilities for further growth. But it's not necessary for refinancing. I think this is already a good situation in today's world.

Okay. And the last question is actually on your FFO. You made aware of the high relevance for your business. Just wondering what your thoughts are on reporting a group FFO, maybe as one of your peer staff.

Sorry, Thomas, it was a little bit hard to understand for me. Can you repeat the question?

It's like on your FFO, you know, you highlighted the relevance of FFO2 in your business. I mean, just wondering what your thoughts are on reporting a group FFO, including the FFO2.

Yeah, I know that companies including that in one figure. For now, we prefer to, you know, clearly show the two different income streams that we have. Business on the one side and then the safe business on the other side. And the thing that I wanted to point out also in this presentation is, yes, these are two different income streams, but we have two different income streams. You know, from time to time, we're reading some reports where then people look at PEG's FFO1 yield, and only looking at FFO1 yields, it's also important really to have in mind we have a second income stream, which is recurring, which is the Polish sales business, which then feeds into our FFO2. We prefer to have that separate because then it's more clear, but the point is more to make clear this income stream is there. It is recurring.

Okay, thank you.

And the next question comes from Kai Klose from Berenberg. Please go ahead.

Yes, good morning. I've got three quick questions. The first one is on page 17. You mentioned that you took up a 19 million loan for the Polish portfolio. If I understood that correctly, could you indicate which portfolio was given as collateral from your side? Second question would be on the valuation uplift. You point out there on 13.7 million for Poland. Just understand, is this a like-for-like number or not? So is it comparable to the German portfolio? And the last question would be on page nine regarding the cash taxes. I know it's a small number, but it went up from, I think, 0.5 for 2022 to 2.5. to a 2.5 for 23. So not a strong increase, but could you explain what caused the rise? Thank you.

Yeah, good morning. Hi, I'm Hassan with the questions on the Polish rental portfolio. First of all, the refinancing, we provided the investor with mortgages on projects in Wroclaw and Poznań, and these were projects that were already finished. And that was the start of the refinancing, as I said, We are also in negotiations with other banks regarding further refinancing. And in these negotiations, it's not only about already finished projects or already stabilized projects. We're also talking with banks about financing the construction process. And the portfolio, the fair value uplift, this 5% increase refers to the full portfolio. If you compare this 5% valuation uplift with indications or with numbers that we stated for the total sales market, where we said the price increase was 15% to 20%, you can ask the question, why is that lower? By what we observe in our relations in Poland, once we have finished the apartments, it's not on day one that we get the full valuation uplift basically to the market yield. So the values are here, let's say, a little bit more conservative. They really want to see that the units are rented out, that they are for a longer time on the market, that we have really a stabilized and growing rental cash flow, and then valuation uplifts will come. So I think there's a good chance that we see more valuation uplifts in the course of 2034. And the third question regarding the tax increase, I would say that the tax expense for 2022 was an ordinary low. 2023, we're on a more normalised level. We know that we're guiding also another slight increase by another two or three million for 2024. So that should be more a normalised level that we had in 2023 and that we expect in 2024. But nothing special behind it.

Thanks. Just a very quick follow-up, if I may, regarding taking up financing in Poland. You mentioned the spread for taking up debt in Poland. Is there a material difference between a collateralized portfolio as a kind of rental portfolio and the debts you took up now, which I read correctly, also will partially finance your construction activities?

Sorry, can you repeat the last part of the question, Kai?

The question was the 90 million you took up correctly is also partly to be used for construction activities. So it's not only on the rental portfolio.

No, sorry, let me make this more clear. This 90 million was completely for finished units. And we are in a discussion with banks also for financing the construction work, and I think this is the background of the question, what is the margin there? It could be slightly higher, but we're not talking about something completely different. Just to give you a rough estimate, perhaps we go more towards the 230, 240 basis points margin. So it's not a complete different world, and perhaps we can communicate something here in the course of 2024 already. Understood. Thanks so much.

And the next question comes from Simon Stipek from Warburg Research. Please go ahead.

Hi, good morning. Can you hear me well?

Yeah, good morning.

Perfect. Thanks. Also, my first question is in regard to the mortgage you constructed with banks in Poland, the amount of 90 million. In the last conference call, if I recall correctly, you mentioned 140 million and Now, you also said that you're in constructive talks and negotiations with banks to increase that amount. I just wonder, is that amount of 140 million still valid or is it lower or is it higher? And then also, I wonder that you closed it in March only and we talked about it in November. Is there any reason why it took so long? And also here the ATV on the 90 million on the portfolio then would be only at 36%. So is that then something you take into consideration as a valid ATV for the portfolio or is it rather that you are in these discussions and you want to increase your ATV to 140 million? Yeah.

Yeah, good morning, Simon. This $140 million is still valid. I think perhaps it will come out even a little bit higher. And this $90 million, that's not on the total rental portfolios, or we've not put a mortgage on every single asset. It's a part of the portfolio that we've refinanced. And the LTV was even slightly above 50% that we achieved. So when I remember guiding in the third quarter, we had a portfolio of around 280 million, and we said, well, 50% L3, that leads to 140 million of bank loans. So this number is still valid, and we're confident that we get even more bank loans on that. So this is This is unchanged, and it even looks a little bit better than we originally assumed. But the question, why does it take so long? It's similar to Germany. I mean, bank loans or mortgage-accrued financing take some time. Banks are asking a lot of questions also regarding energy efficiency and collecting a lot of data. In the end, and that's important, the outcome is still very positive. So it takes a month to get the financing then finally done, but we finally made it. And this is also something that will happen in the course of 2024 again. So yes, we need to be patient in this type of financing, but still the outcome, the terms are very attractive.

I can look it up, but the VBOR, what was your all-in cost combined with the VBOR?

This is a financing in Europe. So it's not a slotty-based loan, it's a fixed-rate five-year loan in Euro.

Okay, and you're all in cost?

That's slightly below 5%.

Okay, great. And then I wonder, your shareholder loan into Poland, how high is that now in total?

Before the refinance or any potential repayments from this loan, we are at around $300 million. So basically, we have a $300 million rental portfolio finally constructed or under operation, and that was financed by a TEG shareholder loan. So I'm simplifying it a little bit, but this was the reason for the shareholder loan, and we are now refinancing that step by step.

Okay, and of the 90 million, will you return something into Germany or will you keep it in Poland to construct? I know you talked about the growth, but maybe there is more. You have a tap or an additional mortgage on another portfolio, potentially of 50 to 60 million, and then you keep these 50 to 60 million in Poland or you bring the 90 million now and back to Germany or the full amount?

No, no. It's very clear. We want to grow the portfolio in Poland again. And in Germany, we've got a good liquidity position in the meanwhile. So let's see how this develops over time. And, you know, when I talk about repayment of shareholder loans, there's always a tax impact on how we do this. But looking from the cash flow perspective or when you ask us where should the money be invested, it's a clear task now to grow the portfolio in Poland again.

Okay, great. Thank you. And maybe just one more in regard to refinancing. I know that in 2024 and 2025, step up is lower and I think it's very manageable. But if I look into 2026, then there's this convertible 470 million and the coupon is just 63 basis points. What's your approach or do you have looked into it a little bit and you have a plan to refinance it, maybe also reduce the whole potential refinancing amount of 470 million? There would be some additional insight into your planning there and would be very helpful.

Yeah, this $470 million conventional bond is indeed the last major financing we have ahead of us, and it's already good news. So if you look in the maturity profile, everything else is mortgage-secured financing in Germany, where we have just discussed this, we have broad access and get even higher loan amounts afterwards, smaller promissory notes, one privately placed corporate bond, smaller bonds in Poland, that's it. So the $470 million is the only material maturity, Second good news is it's still two and a half years to go. And as I said, the coupon is really low, so it's 0.625%. So it makes sense to use this a little bit more. It's also clear we will not wait until the very last date with refinancing that convertible bond. I mean, the strike price is at 32 or 33 euro. So we need to take into account that we need to repay it. But that's perhaps more something for, I would say, for the next year. And let's see. We just discussed our potential path back to investment-grade rating. Then we have also more financing opportunities. But even if this not happens, I mean, we have just proven in the last 18 months that we have repaid nearly $1 billion of unsecured debt, if necessary, with the help of disposals and so on. So I'm not concerned about this maturity. It's more a question of how is this most efficiently done.

Just maybe one last one in regard to your supervisory board changes. I know it's a supervisory board, but could you also comment on the need for this?

Yeah, there was one background which was, if you want a little bit more coming from the former side, Many institutional investors, as well as proxy advisors, require that the share of women in the supervisory board is more than 30%, not only in the total supervisory board, where we fulfilled this already, but also for shareholder representatives. And if you look at the shareholder representatives in the current supervisory board, we have a share of women of 25%. So therefore, we were very happy that Philipp Wagner, one of our supervisory board members for more than 10 years said, okay, I'm offering my resignation to Next AGM that you can replace my seat with a woman. So this was one argument. And then, I mean, supervisory board run the process and the outcome was that we identified or supervisory board identified Gabriela Grieger, is a new member of the Supervisory Board, and she's not only a woman, she's really an expert in the Polish residential market. And she's been, for example, on the Robic Supervisory Board for some years. She's already an advisor active in the Polish real estate market. And that's also, from our point of view, a helpful, you know, competence in the Supervisory Board to get even more knowledge than today in the Supervisory Board. So this was then basically the second reason for the change.

Okay, great. Thank you very much.

And the next question comes from Manuel Martin from AutoBHF. Please go ahead.

Thank you. Two questions from my side, please. One question would be regarding the devaluations. We have seen a clear deceleration in the devaluation momentum. Could you give us some color maybe on a regional split or how these property devaluations evolved or was it across the board? Maybe you can give us some words on that, please.

Yeah, good morning, Manuel. It's not really fair to say that the CEA extreme different developments. So it's in general really across the portfolio. What we realize a little bit, and that would be good news for us, that the more high yielding properties are perhaps more and more less hit by devaluations. I mentioned that during the presentation. I mean, we have already now... a growth yield in the portfolio of 6.3%, taking on account perhaps another slight valuation decline in 2024, we're at 6.5% or even higher. That's already a very reasonable growth yield if you finance such potential acquisitions with bank loans up 4%. So therefore, this is slightly more positive development in the higher yielding segment, I would say.

Okay, I see. And on the way how the evaluation was done, maybe you can give us a bit of flavor there because I can imagine that there were not a lot of data points in the market when it comes to transactions. So how was the evaluation concluded?

Yeah, but that was not much different compared to the last two or three evaluations. I mean, the transaction market is is quite new just now for quite a while. So this was nothing new. And what also gives us comfort, if you look in transactions that we've done in the course of 2023, penciling in further, just slight variation decline in 2024, then we are really very, very close or at levels where we've sold assets. So where we see some liquidity and that should also be a good proof that we are really now reaching the bottom already.

Okay, my second question would be regarding rental growth. Can you give us some information on what you are feeling or what you are seeing or anticipating in terms of rent tables to come and how could this affect the rental growth in Germany especially in your portfolio because for the time being The rental growth in the TAG portfolio seems to be a bit slower than versus Pierce. Maybe you can give us some light there.

Yeah, if you look in the guidance that we've given, which is also in the annual report and was already in the Q3 figures, you see that we are already indicating a higher like-for-like rental growth. So an increase by 30, 40 basis points, which is then, for the very largest part, coming from rent increases, for example, for existing tenants. So that means we're assuming, and we've seen that, that rents are increasing on back of higher mid-speakers or simply higher relating rents that we can achieve. So yes, clearly we see this trend also in our markets. And then if you do a comparison within the peer group, again, it's always important to analyze that really in detail. You know that we have not this huge modernization programs, at least not in the size that some peers have. So therefore, the rental growth from modernization is very naturally lower, but we are also spending less. And secondly, we are also not including any new constructed apartment in that rental growth figure. So therefore, if you look at the pure like-for-like rental growth without any impact from these two elements, the difference is not that huge.

Okay. And for the rental tables, any view on that? What do you think about that?

Yeah, as I said, we expect a higher rental growth, so that is increasing, and that also means that rent tables that come out, and you know that we have not two or three very important rent tables that determine the whole... rental growth of the group as the portfolio is quite diversified. But from the upcoming rent tariffs, we clearly expect a stronger increase compared to previous years.

Okay, thank you very much.

And the next question comes from Markus Schmidt from Oro BHF. Please go ahead.

Yes, good morning. Thanks for taking the questions. I have a couple. First of all, on valuation, you said some weeks ago, I think in an interview with Reuters, said valuation could decline up to 30% from peak. So from today's perspective, you would rather see again the 20% decline when I understood that right. Maybe you could clarify this again. And then I have a couple of others.

Yeah, Markus, good morning, and thanks for asking this question. I did not change my view. But the 30% value declined, it was just a Reuters headline, which was honestly very misleading because that's not what I said. So also in this interview, if you look then in the interview or in other quotes, already indicated towards the 20%, and that's basically unchanged. And these take away the message that we've seen by far the highest part of devaluations already. And what I said in this interview is that, of course, a balance sheet, and in this context I refer to financial covenants, also need to be ready for anything that goes towards 30%. So I simply wanted to say that our covenants are really important so comfortable with it. We could digest even higher violations, but we are not expecting that again. So therefore, this headline in Reuters interview was unfortunately very misleading. There's no change in our view.

Yeah, I think everybody focused on the headline there more than maybe the text itself. And I think you had a slide in your deck where you said we have material headroom in terms of covenants. So this is good to know now. Then again on the disposal proceeds in 2024, I was a bit late to the call. I understood you aim for 100 million net proceeds this year. Is that right or is that wrong?

Yeah, that's correct. And again, I mean, we have not, you know, just an official disposal program like before where we exactly promised that that was the formal program. But if you ask us what is the a reasonable amount that we expect in the course of 2024, and also something that could then fit into our target to bring the LTV back towards our LTV target of 45%, then 100 million of net cash is the right number.

Okay, then in the meantime maybe a bit more positive question maybe from me. I mean in terms of rental growth in Germany and given the scarcity of supply, how would you see the structural rental growth evolving here as part of your valuation model? Is this in your appraisals now a component which is more positive for the valuation? At least I did not see any changes to the market rent parameters as part of your valuation. in the annual report, maybe a word how you see long-term rental growth changing here. This would be also helpful.

Yeah, this would definitely help. And also with this number, it's not the case that, you know, whether it changes from one day to another, it's just long-term assumptions. But, I mean, it's very clear that we see stronger rental growth in Germany in 2024, 2025 than in the past. I mean, you know, all these headlines about new constructed apartment numbers going down again, Germany still immigration and so on and so on. And then also this will kick into the valuation. So this will be a positive for valuation. So once we are in a stable interest rate environment, where we already are, and it's not necessarily interest rates are going down to get further valuation results, Also, then the operational performance will help us to grow the value. So, I mean, I'm not guiding for that in 2024, but that's quite quickly thereafter. We can see value increases simply on the back of better operational performance.

So, medium term, I think, is maybe the right phrase here. Okay. And then two questions left. One is on funding. I think you said that certain troubled lenders provide funding to EIGs. So could you just explain again how our refinancing discussions are ongoing generally with bank debt providers now and if you see more anxiety and if extension discussions have become more difficult? And secondly, how are your discussions with the promissory note lenders for the smaller refinancing and 2024 and the larger REFI in 2025 with that one investor. And any concerns on your side that this could become a challenge or are you relaxed for the time being?

No, we have no concerns because, for example, for the promissory notes and also if necessary for next year for the corporate bond, we will repay this. At a certain price, you can, of course, do everything, but we don't think that given our current rating situation, this is really an attractive source of financing for us. Whether this is with the help from disposals or also with, as in the past, with new bank financings. I mean, we simply repaid it. That's our base assumption. And that's definitely not a concern. And when it comes to bank lending, the willingness of giving us new bank loans is, I would say, absolutely unchanged. So I commented a bit earlier in the call that, yes, the processes take longer. Banks are collecting more data, especially when it comes to energy efficiency of the portfolio. That's, in the meanwhile, an important part of their financing process. But I cannot remember any situation in the last two years since we had this changed interest rate environment where we had problems in getting financing for our portfolio. And as I also said before, really helpful for us is that we have a portfolio that is a higher yielding portfolio. So that means that cash metrics, especially the debt service cover ratio, always looks good. And that enables us to get really still significant bank loan amounts. And this is, of course, for us a good situation.

Just in this respect, could you say what the unencumbered asset position is right now? I could not find it in the documents.

We have unencumbered assets in total of around 1.3 to 1.4 billion. And the largest part of that is our Polish portfolio. But as in German, we have unencumbered assets left.

Okay, good. And finally, on the rating, I mean, you said or spoke of a pass back to IG. So I have the rating agency signaled to you that you would likely receive an IG rating again. I mean, you have one at S&P with a negative outlook and one with Moody's. If you achieve the company-defined LTV below 45%, would this be enough for both agencies? or would they be more required to get to the stable, clear I.G. rating for both agencies?

First of all, a rating agency would never say, well, it's very likely that you get back to a certain rating stage. So they're more, you know, talking between the lines. And between the lines, the signs that we, or the signals that we receive are daily positive. And that's what I already said some time back, importantness. The LTV is already where it should be for investment-grade rating. The net debt to EBITDA is already on that level. The ICR is already there. So number-wise, we are already there. Liquidity is not an issue. Refinancings are done. I mean, we've proven that the Polish business is running well. It's more a debate about the overall environment in Germany, but I think also now with the release of the 40-year figures of all German residential companies, There should be more positive sentiment in the market that Vienna has now really reached, relation-wise, a kind of bottom, and this is, of course, something which is positive from a view of a rating agency.

So both agencies have an issue a little bit with that the Polish business is a development business. I think that is what I read in the past. Is still this the reason why they don't want to provide higher ratings? Because you said number-wise you are there with both agencies basically, but something is keeping them away, obviously. I mean, the sentiment is obviously not the best that is understood, and they will be cautious on this side. But you said, okay, if that sentiment, I want to rephrase, if that sentiment will improve a little in 2024, so nothing could stop you from receiving higher ratings, is this a base case for you then?

Yeah, basically yes. Let me just make it clearer. As of today, there's not really a concern about our Polish business. That was different in the course of 2022. I mean, remember the time when interest rates picked up We saw, for example, amongst German developers, all the sales numbers going more close to zero. And of course, was also then something where rating agencies looked at and asked as well, is this happening in Poland as well? It did not happen. So the Polish market really turned out to be very resilient. even on a lower number clearly, but people bought apartments, so the market was always there. We saw the strong increase in 2023, so in the meanwhile, I think both rating agencies see this as something positive.

In the meantime, I mean, I read that wording sometimes still, partly developing business TIG, and I think that is what they take on the negative side, but obviously the performance there is quite strong, so maybe they can be convinced at one point. it's not a headwind really and then you will get your your higher ratings that is how i think about it maybe but but let's see um that was very helpful for me so thank you very much and the next question comes from stephanie dosman from jeffries please go ahead hello everyone thank you for taking my questions actually uh most of them have been answered earlier

But coming back on disposals in Germany, could you give us a bit more color on what kind of discount to appraisal values or at what kind of growth yield you achieve those? And how confident are you going forward? Who are the buyers? I remember that half of the transaction market in recent years was driven by listed players. So I was wondering about the profile of the buyers. And maybe a second question on your housing development business in Poland. What kind of, because you said prices were up 15 to 20% currently, but what is your expectation going forward on prices, development and margins, please?

Yeah, good morning Stephanie. Let's start with the second question about expectation for price increases of disposals or apartment sales in Poland. I think in our business plan, we have a price increase between 3% and 4%. As of today, this looks rather conservative because what happens in the market in Poland, more apartments are sold in each quarter than new apartments are coming to the market. So that clearly leads then to increasing prices Many developers and also we are not so much concentrating on the numbers of unit sales. We're concentrating more on optimizing prices. If the number of units sold is a bit lower, that's not an issue. As long as we can increase the prices, perhaps the sales volume is higher. So therefore, our business plan assumption of 3% or 4% should be definitely achieved. Perhaps we see even more. And then commenting on the German transaction market, as in the past, we don't see one specific buyer group that we want to point out. And when I remember or look into our disposals in the last 18 months, so in this first disposal program, it was really a group of buyers, really different kind of buyers, from a municipal housing company to a family office to a private equity company to companies who are doing privatization business. And I would say each of these buyers has then identified for him a certain price level. They said, okay, that makes all of this sense. And according to my business plan, I can achieve a reasonable return. And again, when I look in our portfolio relation, I simply can't confirm this. 6.3% growth yield. And that's already a very reasonable valuation level. The assets that we sold... We're at a lower gross yield, so we had a gross yield on average which was around 4.3%, I think. That's also success. Selling in this interesting environment at such levels is not easy, but again, the transaction market is not completely dry. So you can do transactions. I mean, the last D is actually missing. But for us, in our size, if we sell here 20, 30 million a quarter or whatever, that really nicely adds up to an amount that really helps us, for example, in our target of reducing the LTV further.

So maybe just to follow up on the 4.3%, could you give us a... some color on the breakdown by cities or what was the bulk of it?

I mean, there was one transaction also public because the buyer had a press release that was in the wider Berlin commutable portfolio. So that should be, I should say, a typical transaction that we did. But also, I mean, in fact, it's also a mix. We also sold some non-core assets to a more local buyer. So, again, it's not one special asset type, not one special buyer group. You really need to look into every potential pocket in these days. And then, again, it's not completely dry. We're still doing transactions. We're still doing transaction sizes that are enough for us. We can continue in this environment, but of course it would be great if the transaction market opens more so that we can do even more than in the last month.

Thank you. And I know 30% is not your case, your base case for valuation decline peak to trust. And I understand that it was rather a question of, you know, prepare your balance sheets just in case. But what could be the worst case? I mean, what could be the drivers to see more devaluation going forward? I mean, more than 20% peak to profit.

First of all, again, we don't expect this. And we talk about potential worst-case scenarios we don't expect. It will definitely not come from the operational side and not from the fact that we have too many apartments in Germany. This will be definitely supportive. And again, I mean, we had just this discussion some minutes back. This will then lead to this growing mismatch between supply and demand on one side to growing values. So, and then it's very simple, okay, a massive increase in interest rates. I mean, clearly this isn't something which is not helpful for valuations, but if this is a realistic scenario, we don't have this as a base case.

Sure, thank you.

And the next question comes from Daniela Lungo from First Centia Investors. Please go ahead.

Yes, thank you. I have a follow-up on what you mentioned about bank lending and what the banks are doing in terms of collecting more data, especially energy-related. I thought that was quite an interesting comment, and I wonder whether you would be able to give us a little bit more color on that, in particular as to... what I would be interested in. Do they have a specific threshold, for example, in terms of energy rating where they wouldn't even consider providing lending? Do they make some adjustments in terms of capex required to bring some portfolios to an energy rating that would be sufficient for them to provide lending? Are they considering different interest rates depending on the energy rate? Again, efficiency of portfolio, I mean, any color that you could provide in terms of that due diligence, call it, related to the energy rating that the banks are presumably doing would be great.

Yeah, we want the data and of course happy to do so. First of all, I can't really comment on any situations where one needs to refinance a portfolio with very low energy efficiency classes because we simply, in fact, do not really have them in the portfolio. Perhaps you maybe remember that less than 3% or perhaps less than 2% of our portfolio is located in the two lowest energy efficiency classes and nearly two-thirds as located, so in the three highest energy efficiency classes, A to C. So I cannot really comment whether there are financing issues in these situations, but what I can comment on is that basically banks are requiring more and more as strategy also for their portfolio that they're financing how energy efficiency is improved. It's not, you cannot see this in a sense of that they give us hard covenants, but they clearly expect a plan from us. And we say, okay, in the next 10 years, so for the next duration of the loan, we want to invest certain amounts because this is also in line with our general decarbonization plan. And that's, of course, something the banks are very interested in. This is the development that started, I would say, two or three years ago, and now it's more and more in place because they need to invest to demonstrate towards the regulator and towards their shareholders that they are improving their credit loan book and they want to have simply a path and a confirmed path from our side. But this is not really a burden for us because we are anyway investing in a portfolio to reduce CO2 emissions and this is completely in line with the bank expectations. But this is something which is in these days compared to two or three years ago.

Okay, thank you.

So, it seems there are no further questions at this time. So, I would hand back to Martin Thiel for any closing remarks.

Many thanks all for this call and many thanks for the questions. If there's anything left, so please feel free to contact Dominique from our art department or myself. Many thanks for listening to the call. Hope to see you soon, perhaps on our roadshows or upcoming conferences or then at the latest in our next conference call. Have a good day and bye-bye.