Hello, and welcome to the Alstria Results H1 conference call. Throughout the call, all participants will be on listen-only mode, and afterwards, there will be a question and answer session. Please note, this call is being recorded. Today, I am pleased to present Olivier Elamine. Please begin your meeting. Thank you very much, and welcome from sunny and hot Hamburg this afternoon. My name is Olivier Elamine. I'm the CEO of alstria, and I'm here today with Ralf Dibbern, which you know well, is heading our investor relations presentation. Jumping into the presentation itself, a very short disclaimer on the duty to update and the forward-looking statement, and without undue delay, moving into the presentation itself. The operating business has moved according to our plan so far, with the revenue up 6.3% year-on-year. The FFO is down to 41.5 million EUR, 13% as expected, which is mainly reflecting the increase in financing costs. And we have a reasonably busy year on the letting activity, with substantial number of new leases, around 32,000 sq m and 20,000 sq m of extension. There is obviously less extension than last year, which has more to do with the structure of the portfolio, than anything happening in the market, but I'll come back to the letting market in a minute. On the balance sheet side, and again, we'll go into a bit more detail in a second. The EPRA NTA is at EUR 9.45 per share, and our net LTV is slightly down at 57.6%, versus 58.3% at year-end 2023. The portfolio itself, there is nothing much to report. Everything is very much stable. This year, there was no half year revaluation. As you know, we only do a year-end revaluation. The portfolio size, volume and rent has remained pretty much flat. Current vacancy rate, EPRA vacancy rate across the portfolio stand at 7.9%, with valuation yield at 5%, and there was no transaction activity across the quarter. Letting overview, we've discussed that briefly. We're still increasing the average rent per square meter on the portfolio, which stand at EUR 14.87 right now. We have signed a substantial number of new leases, mainly long-term leases, with an average WALT of 7 years, which reflect around EUR 40.5 million of future income. And have extended leases mainly on the short-term basis, with an average lease length of 2.7 years, which represents around 10.6 million EUR of future income. Obviously, signing new leases is the most encouraging things we have on the market. And we do see still an active letting market for the right asset at the right price, located in the right locations. If we move on to the balance sheet, the gearing equity ratio has improved slightly at 44%. It's still below the required 45%. The testing date, as you know, is once a year. Our net LTV, we've touched on that briefly, is down to 57.6. The investment property increase to EUR 4.32 billion is essentially reflecting the CapEx we have spent in the portfolio, and our net debt is virtually stable at EUR 2.3 billion. All the debt that we have taken over the quarter over the first half year has been used to refinance existing debt net. So, no movement in the net financial debt, actually, is hiding a lot of movement in the back with basically some bond buybacks have taken place and new mortgage financing being put in place as well. If we move on to the profit and loss statement, our gross rental income, we've discussed briefly, is up 6.3%, reflecting both new leases that have started over the period, as well as some indexation on existing leases. The Funds from Operations is down 13.5%, which is reflecting, again, here, the increase in financing cost. I'll go back to that in a second, and our SG&A are also down 10.5% to EUR 9.2 million for the first half year, which is reflecting a bit of savings that we've been doing on that front. If we look at the refinancing, we've stayed on the amount of debt which remained on the net debt, which remained reasonably stable. It's hiding a bit of activity in the background. We have taken on board 245 million EUR of new debt with an average maturity of 6.5 years, which is secured mortgage debt, and we've bought back 97.3 million EUR of bonds and refinanced one of our existing mortgage debt, and therefore, we've basically been reinvesting 100% of the proceeds of the new debt into refinancing existing liabilities, which we intend to continue doing in the future. You have on this slide a summary of the different bond buybacks that we have been doing over the last few months. We're obviously still interested in buying back our bonds whenever they're available. We are mainly reacting to inbound inquiry and not necessarily actively playing that on the market. We've also during the quarter extended EUR 150 million RCF to 2027. If we look now in a bit more detail in the financial costs of the debt, our cost of debt is up 0.3%, which is again 30 basis points, therefore not a surprise looking at our marginal cost of debt right now. And that's a trend that we will expect is gonna continue in the near future as we refinance kind of a legacy debt with new debt with and the new interest rate environment being what it is. I think we need to expect that our cost of debt is gonna continue to up. Average debt maturity, despite being six months later, is still pretty much stable, which basically show our ability to still tap in the debt market and extend the average maturity of our debt. The next refinancing that we have is for September 2025, end of August 2025, September 2025. We have no, no liability left, between now and then. I also wanted to take the opportunity today to give you a bit of an update on the REIT status of the company. We're currently working on two different scenario, one where the company would retain the REIT. As you know, we're currently in breach of the free float requirement, which need to be cured by the thirty-first of December 2024. We currently have a bit less than 5% free float, whereby there's a requirement to have 15%, and the REIT equity ratio, which is below 45%, but we would have a bit more time to solve this one, as the deadline would be 31st December 2025. We are currently working on several work streams in parallel to restore the free float requirement by December 2024. However, most of those processes are basically out of our hands, as they involved one way or another some of our shareholders. Therefore, there is currently some kind of an uncertainty on whether or not we're gonna be able to maintain the REIT status at year-end. As such, we're disclosing a contingent liability with respect to that potential loss in our financial statement. The basically main impact here would be that we would need to book deferred tax liability on our balance sheet, which is obviously a non-cash item, but it would be reflected in our equity and in our kind of PNL for the year. And then there would be like a minority shareholder compensation which is required by our bylaws, which would have actually a very minor cash impact, if any, on the company, simply because it would reduce our mandatory dividend by the same amount. So net-net, it should be pretty much neutral for the company on a cash basis. There is obviously the exact amount of the deferred tax liability, mainly, will only be determined at year-end, once we have the valuation of the company, if we need to go into that situation, and we can't extend the REIT regime for at least another year. Looking back into the market, I think the positive things still in Germany is that the letting market remains strong and active. We're still seeing good tenant demand for quality space in most of the assets that we have currently on the market. The investment activity, I think, is not gonna be a surprise to anybody, still remain very much subdued, and we don't expect any material change in the course of 2024. We think 2024 is gonna remain a lackluster transaction activity, and so we're on our end continuing to focus our attention on refurbishing our assets and our pipelines, and we're making good progress on that front, and as I said, this is being very much supported by the letting activity and the tenant demand, which is generating, all in all, still reasonably attractive financial returns on the refurbishment that we're doing. We're still seeing rents increasing on the assets which are currently in demand, so that will be it on my side for this half year presentation. In summary, I think the financials of the company have developed according to what we would expect, with revenue slightly up and FFO down because of financial costs. The balance sheet is where it was supposed to do with no maturity before Q3 2025, which we're currently working on refinancing, and from a market perspective, we're still operating into a positive leasing environment. The investment market itself remain completely subdued and no expectation of a quick recovery in 2024 on that front, so I think we can move to Q&A if there are 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 one again to cancel. Once again, please press star one to register for a question. There will be a brief pause while questions are being registered. Your first question comes from the line of Michail Tsagkaris from Bank of America. Your line is now open. Hi, thank you. I had a few questions. I see that your RCF was downsized from EUR 200 million to EUR 150 million. Can you explain why? Yeah, I can, because one of the banks, which was involved in the RCF decided not to extend. Okay. The next question is, I know you no longer have been reporting your unencumbered assets, or I don't see that in your report, but can you tell me how much of your pool is unencumbered? Yeah, if you give me one second, but I think the difference between what we reported in year-end and this year should be probably EUR 160 million, which is a new mortgage loan that we've put in place. Okay, then the next one is, you know, you have EUR 150 million RCF, and you have around just under EUR 100 million in unrestricted cash. Are you looking to? How much are you looking to, of that, would you be interested to buy back bonds? Like, basically, how much cash would you wanna keep on hand before, you know, excluding for buying back bonds? I think for the time being, yes, we're still interested in buying back bonds. If they come, as I said, we don't have a standing buyback program. We're reacting to inbound inquiries. For us, I mean, I would be prepared to use at least the entire RCF volume to a certain extent to buy back bonds. It's still an attractive value proposition for us, so that's something we're still open to look into. But we haven't seen the material volume recently, so it's—b ut this thing come and goes. But we're still interested in buying. That's interesting. Then the next question I have is, you know, your bond is maturing in thirteen, you know, thirteen months from now. What's your refinancing plans? Have you, you know, Brookfield owns a lot, a lot of those bonds. Have you had discussions with them, or would they be willing to have—w hat they would be willing to do in a refinancing? I mean, refinancing is only thirteen months away. You must have a plan. Is there anything which you can share there? Yeah, I think our plan has not changed from what it was over the last 24 months. We're still raising debt in the mortgage market, and using that debt to basically refinance our bonds. That has not changed from- But your mortgage market debt is, what is it? It's around 5%. These are going to be— I mean, are you looking, you know, and, you know, your income on your properties is only 5% as well. Is that what you think your all-in funding costs are? How do you spend- Well, our- How your ICR are going to be? Our marginal cost of debt is 4.2% to 4.3%. And as a carry on the asset is something which is like kind of different, but it's higher than that. It's I mean the yield on the asset is closer to 5%. But in principle, yes, we're planning with the actual cost of debt, and I mean the interest rate environment is what it is. Haven't changed over the last 24 months. We know where it's going, and we're planning with the higher interest cost of it. And Okay. refinancing in the mortgage market with that. And then, I guess, you must know how much of the, you know, Topco loan about, you know, what's the balance, and how much dividends or, you know, your share, your owner needs. Is there anything you can share on that for us to be able to see how feasible this plan is? Yeah. I mean, so far, our dividend policy is we pay the minimum dividend required by law, and that policy have not changed. If it changed, we would need to basically, like, do an ad hoc announcement and inform our shareholders. We haven't paid any dividend this year. I think we haven't paid last year, if you put aside the special dividend, and so we still, as a REIT, we expect that, you know, the dividend on a yearly basis is around EUR 30 million, and that's the current plan, to stick with that dividend policy. Then, when Brookfield, I assume Brookfield has you know refinanced the shareholder loan. Is there anything which you can say on that, or do, or, you know, I think you should ask Brookfield. Okay. Unfortunately, they're not on this call. Then the next one is: Have you looked to buy back bonds from Brookfield, or if any of the bonds you bought have been the ones which have been owned by Brookfield? No, we haven't bought any bond by Brookfield. And then lastly, by year-end, if you are unable to, you know, get to bring back to cure your REIT status problems, how much extra tax liabilities would be added to your balance sheet? It's all disclosed in our financial statement, the half year, as a contingent liability. So far, if you assume a full, like a full tax rate, which is around 33% in Germany, it would be around EUR 370 million. But this would be, again, need to be refined and reworked, once we have the final value of the property at year-end, and we're more in position to determine the exact kind of tax rate that would apply to us, going forward. Okay. That, that's helpful. Thank you. You're welcome. Thank you. Our next question comes from the line of Pranava Boyidapu from Barclays. Your line is now open. Thank you. Firstly, to start off, you disclose your registered shareholder holdings of Brookfield. It's shown as EUR 110 million in your H1 report, but it says as of December 2023. I assume that's H1 2024, but that's considerably down from what you disclosed- Yeah. -in December 2023. I think that's a typo, which we have corrected in the meantime. I think the first version of the report that went out had a typo. The number have not changed compared to December 2023. I think it's two hundred and forty-three something. Okay, so Brookfield still owns all of them. They haven't actually sold anything over this period? To my knowledge, that's correct. Okay. And all these holdings, and I think you just clarified that you haven't bought anything from them. Correct. So these are completely independent bond holdings, and they would not be canceled in any way, right? Is that correct? Correct. The only bond that could be canceled are the one which are owned by the company. I mean, Brookfield and us are two independent companies. This is why I mean, they're a shareholder, they're 95% shareholder, which makes them a very important independent company to the company, but we're still operating independently for them. And they do whatever they need to do and want to do with the bonds. They could also sell them back in the market, but so far, we have no way to access them or to do anything with them. The only bonds that we control are the ones which are owned by the company. Sure. And in your presentation, you mentioned that you have raised new debt of EUR 245 million with 6.5 years secured. That's the refinancing of the loan one, which is EUR 150 million down to EUR 125 million. Correct. And the drawdown on the 120 that you signed, I think, toward the end of 2023. Is that right? Yes, and we basically, the kind of difference between those numbers. If you add up those numbers, the difference was the bond buyback. Okay, got it. And you mentioned just now that, you know, you're willing to buy back the bonds in the market, especially, like, using much of your RCF. If you look at your debt profile, which is, you know, in Q3 2025, you've got a EUR 107 million loan and the 2025 bonds that are coming due. If you end up using much of your RCF buying other bonds, then what would the liquidity be left for you at that point, when you look at the 12-month liquidity? I think, again, maybe I need to clarify that. So what we're doing right now is we're still raising mortgage debt, and we're still having very good traction in that market. So our intention is to refinance the bond of 2026 by raising the amount of debt necessarily in the mortgage market. What I was saying is, if between now and then there is the opportunity to buy back bonds, and we have not raised the mortgage debt in the meantime, we would be using the RCF for the purpose for which it is, which is to bridge cash for a certain period of time without hindering the overall operation of the company. But clearly, at the end of the day, the intention is to refinance those bonds, not with the RCF, but with mortgage debt. So if you call me tomorrow morning and tell me, "I have a 25 million EUR bond I wanna sell to you," I'm probably gonna consider that positively. But from a cash perspective, I'm gonna be using the RCF to bridge the moment between now and the moment where we're gonna draw down on the next tranche of mortgage loans, which we're currently negotiating. Got it. And would you- Does that make sense? Yes. Good. Would you consider issuing in the unsecured bond market as well, if you know, spreads have been tightening and the yield on your bonds has been quite low in the recent past as well? So I think for us, at the end of the day, it's really an arbitrage between how much spread we've been charged in the mortgage market and what the spread we're gonna be charged in the unsecured market. And over the last, you know, 24-36 months, the mortgage market has been substantially cheaper than anything we can find in the bond market. It's a very basic kind of, I have two providers of capital, one of them is substantially cheaper than the other one. A bit more complex, but substantially cheaper. And so for us, it probably makes more sense to go into the secured market. If the situation was to change and the yield were to tighten dramatically, then we would obviously reconsider. Got it. And finally, would you consider buying the bonds from Brookfield? I know you mentioned you haven't so far, but if they come up to you and sell it- No. Is there anything that stops you from buying? I think we wouldn't be buying any bond from Brookfield outside of a structured, kind of, like a structured auction, essentially, so where we'd make, we would maybe making the exact same offer to everybody, but we wouldn't clearly. I mean, Got it. The answer is no. If you attend, then it's okay. Yes. Like, if you attend and they post- If they were to call me tomorrow and say, "Look, we have EUR 25 million of bonds, would you draw down on the RCF?" I would say no. Got it. Okay, I think that's all for me. Thank you. Thank you. At this time, there are no further questions. I will return the conference back to you. Thank you very much for your interest in the company. We're obviously still available if you have any follow-up question, either myself or Ralf, we'll be happy to address them as much as we can, and I'll be looking forward to speaking to you for the third quarter results, which is due sometime in November.