Hello, and welcome to the results Q1 2024. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Please note, this call is being recorded. Today, I'm pleased to present Olivier Elamine. Please begin your meeting. Thank you very much, and welcome from sunny Hamburg and hot Hamburg. Today, my name is Olivier Elamine, I'm the CEO of alstria, and I'm here today with Ralf Dibbern, which is heading our investor relation, to walk you through the Q1 2024 results for alstria. Before we go into the presentation, let me once again draw your attention to the disclaimer and the statement regarding forward-looking statement and the duty to update. And then without any delay, moving on to the highlight of the quarter. The business have developed pretty much in line with the company expectation with our revenue up around 7.5% year-on-year, which is a combined effect of some CPI which went through our PNL, as well as some of the leasing result from the year before. The FFO is at EUR 20.2 million, which is down 20% year-on-year. Again, here, it doesn't come as a surprise as this is essentially resulting from the increase in leverage on the balance sheet of the company. Our leasing results is around 25,000 square meters for the quarter, which is less than the same quarter last year. However, with a completely different mix, as we have a substantially higher number of new leases within our development portfolio, and a bit less lease extension, which is mainly due to the structure of the current leases. We had less leases that come to renewal in the first quarter this year. And all in all, that gave us, on the balance sheet side, an EPRA NTA of around EUR 9.30 per shares, and an LTV slightly down at 57.6%. Mainly as a result of the cash generated and the value stability in the portfolio for the first quarter. Moving on then to the portfolio update. The portfolio itself have not changed materially, there was no transaction this quarter. I come back in a minute on the transaction market. The average value per square meter is still from my perspective rather cheap, below EUR 3,000 per square meter, with a valuation yield stable, slightly short of 5%. The EPRA vacancy rate at 7.7%, and our contractual rent is currently standing at the date of reporting at EUR 197.9. It's probably a bit higher right now given that after the reporting date rental have increased following some additional indexation that kicks in. On the leasing side, the letting volume we've discussed briefly before, around 24,000 square meters. A clear shift toward new leases, and we're seeing a material increase in the new lease pipelines. We had less renewal than last year, which is not to speak about the fact that tenants are leaving. It's more. It has more to do with the fact that we had less leases due to renew, and therefore, less renewal for that matter. And the average rent per square meter actually keep on going up. The slight decrease that you see at EUR 45.4 this quarter is essentially linked to the fact that in the course of the quarter, we have registered additional 8,000 square meters of office space in one of our refurbishing projects, which brought down the average rent. If you were to correct from those 8,000 square meters, we would be round about at the same level than the quarter before. The... If we move now to the balance sheet on the investment property, there is no material change. There was no external valuation for the portfolio in Q1. The small changes that you see here mainly reflect the CapEx that were spent on the portfolio over the Q1 in our development project. The equity is again here relatively stable. The slight increase that you have here is essentially reflecting the net income for the quarter, and the net financial debt is slightly down quarter compared to year-end. That's again reflecting on the bond buyback that we have done, which have reduced slightly the amount of debt on the company balance sheet. The gearing to equity ratio, which is basically looking at the investment properties value in relation to our total equity, is improving slightly and getting closer to the 45, which is required by the REIT, which we need to correct within the next two years. The net LTV is slightly down, again, same cause leading to the same effect. That reflects both the cash balance on the company and the fact that there's a bit less debt following the buyback and the EPRA NTA at EUR 9.30 is essentially marginally impacted by the net income for the quarter. If we move now to the profit and loss, the FFO per share come up at EUR 0.11. It's down compared to where it was a year ago. And again, this doesn't come as a surprise. It's a full year impact of the releveraging that we have done on the balance sheet of the company. The rental revenue on there, and on the other end, are up 7.5%. We've discussed that briefly before, which is a combined effect of a bit of CPI and the leasing results. And the SG&A are down, and that again is reflecting the fact that some of the effects from the Brookfield transaction have been fading away. And we are keeping most of the cost of the company under control. If we move now to the financing side, and I know there's probably a lot of people out there which are focusing very much on that front. We have basically a sign-up in the course of Q1 for a new mortgage loan, for a total nominal amount of EUR 120 million. As we've discussed previously, we're using 100% of that amount to refinance our existing indebtedness. We have been buying back some of our bonds, and the table on the right side of the chart is basically summarizing all those buyback. The new debt that we have taken on board has a maturity of 5 years and a margin of 145 basis points over Euribor. So we're still in position to access decent financing on the mortgage side of life at the price, which is substantially more attractive than what we could find right now in the public debt market. So if we look and zoom out a bit from what happened last quarter, and we look at the overall debt portfolio of the company, our average cost of debt is again slightly up, which reflects the fact that we're borrowing new debt, which is more expensive than the debt we are currently paying. So we are at around 2.9%. The company has around EUR 2.5 billion of nominal debt, which is EUR 2.3 billion if you look at the net debt. And our maturity profile, putting aside a small, 24 maturity that we're in the process of finalizing as we speak, the next large refinancing that we have is, the bonds that mature in, in 2025, and then 2026, 2027, we basically have the ongoing maturities, which have not, materially changed since last time we spoke. If we move on finally, to the outlook here, again, there is no material change in the underlying markets. On the public side, we still have, a strong and active letting market, which is, really functioning well. We're still leasing up and have a very decent lease pipeline, especially, but not only on our refurbishment portfolio. On the investor market, we still see a very limited activity when it comes to the office space. There have been some transactions announced in the residential space, but in the office space, we're still seeing a very limited number of activities, and we don't expect that this is gonna restart massively between now and the end of 2024. I think a lot of that is also hinging on whether or not the ECB is gonna move interest rates in June, as I think the market is expecting. Probably a lot of market participants are trying to get some kind of direction of travel on the interest rate before jumping back in. And from a company perspective, we still have an impressive refurbishment pipeline, which offer us tons of opportunity, which we're trying to size as much as we can. And given the nature and the amount of the term demand that we have for those space, I think there are still a really interesting opportunities here to move the company forward. So to summarize, there was, I think, nothing really unexpected in the course of the quarter. The company have developed pretty much in line, which was we would have expected. The markets themselves have not materially changed from where they were a few months ago, with the leasing markets still dynamic and investment market still a bit subdued. With this, I would now hand over and welcome the question, if any. Thank you. If you do wish to ask an audio question, please press star one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing star two to cancel. Once again, please press star one on your telephone keypad to register for a question. The first question comes from the line of Kai Klose from Berenberg. Please go ahead. Yes, hello, gentlemen. Good afternoon. 2 quick questions from my side. The first one is on page 5 of the presentation, where you said that new leases have a WALT of 4.5 years. In the additional information in the chart book, you mentioned there are 2 larger leases having a WALT of 10 years, if I see that correctly. Could you explain the difference or why so many other leases have been signed at, for apparently much shorter leases? Hi, Kai. You said you had another question? Yes. Yeah, and the second question is, also on lettings, is, what, what do you currently see as a kind of normalized level of incentives? Of course, it's different asset by asset, but what's your current, experience in the markets? Yeah. So to the first question, I think what we're showing in the additional information is all the leases which are higher than 1,500 square meter. And on all those leases, which are essentially leases which are in the new development portfolio, most of them are coming from development portfolio, we are usually achieving substantially higher WALTs. I mean, you mentioned the 10 years, and that's between 7.5 and 10 years is what we would usually achieve in those kind of space. On the other new leases that we have signed, it has also to do with the fact that on some of the assets where we're trying to synchronize the end of the leases with a time period where we're gonna bring the asset back to a development stage. So to give you an example, we have an asset in Düsseldorf, which is gonna be empty around 2027. So if we have a vacant space today, we're gonna start to lease it around 2.5-3 years, not more than that, because we are trying to kind of synchronize all the leases and have the asset vacant at a given moment in time for us to be able to refurbish it and retrofit it when it's fully vacant. So the difference between the two numbers that you have seen and the reason why we have lower walls on some of the smaller leases, less than 1,500 square meter, is usually explained by that mechanism, where we're just trying to optimize the cash flow of the company level and therefore lease on a short-term basis while we wait for the asset to be empty. On the incentive side, look, it's still pretty reasonable, I would say, and I don't think the incentives have changed materially from where they were, even before COVID. We're still looking at somewhere between 8% and 10% of the value of the lease that you're providing as incentive, especially on newly refurbished space, which is more like a rare commodity right now in the market. The need for high incentives is not as strong. The letting market itself remain reasonably balanced, so we're not seeing right now the balance of power shifting, neither towards the landlord nor towards the tenants. So we have a reasonably balanced conversation with the tenants, and I would expect that this balance is gonna remain as we move forward. Again, this is mainly in space which is refurbished. If you have space which is older and where you know no CapEx has been spent, the situation might be a bit different, but that's usually not the amount—that's not the kind of space that we're putting on the market. That's it. Many thanks. The next question comes from the line of Pranava Boyidapu from Barclays. Please go ahead. Thank you. As you mentioned on the debt maturities, you don't have a lot due this year, and really, it's just the bonds due for the next three years. So have you started engaging with bondholders to understand how, you know, what are the options available to you, or are you planning to refinance with secured debt? Yeah. I mean, we have not engaged with bondholder because, and I assume every bondholder which is listening to this call is assuming that we would repay on the date where the bond is gonna be due, and and/or buy back some of the bond on the way to that date. And the intention that has not changed is to refinance that essentially through the mortgage market, correct. If I could just follow up. I think you mentioned before that the holdings you declare as a related party from Brookfield of these bonds are independent of the bond buybacks that you have done. Is that still the case? Yes. So Brookfield is an independent entity compared to us. We have different governance, and what we show on our website is our holdings. We do show the holding of Brookfield within our financial reporting, because we have to report them as related party transactions, but those are two independent holders, essentially. The bond that we hold for ourselves are basically going off our balance sheet, when you look at our consolidated financial statement, whereby the bond of Brookfield are the same than the bond that any third party investor would have. Okay, thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. The next question comes from the line of Guillaume Dubreuil from Columbia Threadneedle. Please go ahead. Hi there, sorry, I joined late. Could you just confirm that there is not going to be any consolidation of your bond holdings, as far as you're concerned, not Brookfield? Yeah. So for the time being, we're keeping the bonds that we own on the balance sheet. We're not canceling them. That's not to say... We always have the option to cancel them, but we have not done that. And from today's perspective, the likelihood is we're gonna hold them to maturity and then cancel them at the date of maturity. But there is, I mean, there is no kind of commitment to do that, to put it this way. It's, for us, there is no difference between canceling them and keeping them. We just keep them because it basically allow us to book the profit on the buyback at the point in time where we feel it's the most appropriate for the company. So the main driver for us in canceling or non-canceling the bonds is the moment in time where we want to book the profit. But I don't know if it makes sense what I'm saying. ... Yeah, but so should we think of them as also investments for you? So could you actually resell them in the market if it- No. If you could book a higher profit? No, I think that's not the intent. The intent is not to resell them. Again, the only reason why we have not canceled them yet is because there's a timing consideration about at what moment in time we're gonna pay the—we're gonna generate the profit. And the reason why this timing is relevant is because, as you know, as a REIT, we need to distribute 90% of the profit that we generate. And so we wanna make sure that at the moment where we book that specific profit, either we have loss we can offset it with, or we have the cash to pay the dividend. Okay, thanks. The next question comes from the line of Thomas Rothaeusler from Deutsche Bank. Please go ahead. Hi. Yeah, actually, I have one question. Just wondering if you could get any color from you on the further outlook for values and operational performance. I mean, if you look at values, I mean, do you think we are through most of the downward adjustment? And on operating performance just regarding vacancy and rental growth, what is your expectation? Well, thanks for the question, Thomas. I appreciate the trust in our wisdom in reading into the future. Look, on the rental market, I'm very positive on the prospect of the rental market, including the prospect for rental growth, at least in line with where inflation is. When it comes to, like, new repurposed space, the... What we're seeing right now in the letting market is that most of the corporates are looking to upgrade the quality of the space in which they are. And that doesn't mean that everybody is gonna end up into a luxury office, but everybody is moving up a bit the value chain when it comes to the quality of the office that you have. That's basically is still driving rent demand and also rental growth for those specific assets. Again, if you have an asset in which you're not investing anything, it's unlikely that's gonna generate any growth from a rental perspective. But if you do your homework and you provide an asset which has good credential from a new workspace concept and from what people call ESG performance, it's likely that you're gonna see rental growth trickling through. On the value of the real estate and the yields that is gonna come to the real estate, I think it's still too early to say whether we have seen the trough or we or they could go lower from where they are now. And the reason why I'm a bit cautious here is we haven't seen yet most of the distressed transaction going through the market. If you remember or if you listen to the call that we had for the year-end result, our view is that you first need to see some of the distressed transaction going through. And for the time being, a lot of the investments and a lot of the money which is looking to be invested in offices is sitting on the sideline because it's waiting for those kind of cheap, distressed assets to hit the market before the investments start again. And then depending on when the distressed assets are gonna hit the market, it might then have an impact on how values are looking at life. So the closer you are to your end and the closer you see, some of the distressed transaction, trickling through the market, the more likely it is that the value are gonna say, "Oh, now value are down." And then it's gonna take a few months or maybe a year, before values start creeping up again. So from a very short-term perspective, there might be some pressure left, on the value of real estate. But then if you take a step back, and you take more like a five or 10-year view on where we are, we're probably much closer to the bottom, than we are to the top. And so it's just the next few months where you can still see some pressure and selling pressure on the assets. But as soon as the distressed will be flushed through the system, I'm confident that you're gonna see the value recover, because the underlying fundamentals and the underlying economics are still relatively good. Okay. Thank you. That was helpful. Once again, star one on your telephone keypad to ask a question. Once again, it's star one for a question. Since we have no further questions registered, I'll hand the conference back to you, Olivier. Well, thank you very much. Thank you for your interest in the company, your interest still in the company. We appreciate you taking the time to be with us today. We will be speaking again for the half-year presentation, I think, in the course of August, early August. And in the meantime, if you have any follow-up questions, by all means, please feel free to drop us a line or call us, either Ralf or myself. We'll be happy to accommodate. Thank you very much for your interest. Wish you a good end of the day, and looking forward for the next time. Thank you. Bye-bye. Thank you. This now concludes our presentation. Thank you all for attending. You may now disconnect.