Hello and welcome to the Alstria H1 2025 Results Conference Call. 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 am pleased to present Olivier Elamine, CEO. Please begin your meeting. Thank you very much, and welcome from cloudy Hamburg this afternoon for the First Conference Call for Alstria as a private company. For the last 20 years, we were holding up those calls as a public company, and this is the first time we're moving to the private company format. We have kept the call public, as you can see and hear. We have changed a bit the format to focus more on the credit side, but it's probably our first tentative to do that, so it's likely that we're going to be able to improve going forward. If you have feedback on the way we're presenting things, we're also happy to take it on board and discuss it further down the line. I'm moving forward to the presentation. I've passed on the duty to update and forward-looking statement. As you know, Alstria is now a 100% private company. We have finalized, or Brookfield has finalized a squeeze-out, and so we are now, Alstria are not traded anymore. The only public instruments which are still outstanding are the bonds, which we intend to keep, and we intend to keep on, therefore, doing those calls and this communication. We have amended the articles of association of the company, so the company is not a REIT anymore, as you know, and the new name of the company is alstria office REIT-AG, and the intention is then going to be to migrate the holding company to Luxembourg through the reorganization and convert the company into a Luxembourg S.A., which will change the name once again into Alstria S.A. We are also in the process, as you know, of spinning off our operating activity into alstria advisors GmbH, which will remain headquartered in Hamburg. Alstria advisor will host all the workforce, which is currently in Alstria and will be advising the holding company, which will hold the assets. This process is ongoing and should take place in the course of the summer, and this would result, from an accounting perspective, into the deconsolidation of Alstria advisor, and we would be accounting it as equity. I'll come back to that in a minute. All of those reorganizations have no impact on the long-term strategy of the company, which remains unchanged. Our aim is to acquire and manage elderly properties, properties that are in deep need of CapEx, and through our ownership, transition them into the next life cycle. We think that there's a tremendous opportunity to be doing that in the German market, and we're looking forward to doing that furthermore once the whole reorganization steps are over. Moving now to the most interesting part of the call, which is related to the business. If we looked at the half-year and how things have developed, the good news here is mainly that the leasing activities have been very, very strong in the first half of 2025. It continues to be strong as we speak. We just announced recently the signature of a long-term lease, in essence, with one of our tenants for TIF there on 18,000 square meters. That shows the dynamic of the letting market, and we're also seeing a bit more activity on the transaction market. We have sold in the first six months two assets. We have signed recently an SPA for a smaller asset in Berlin, and we are seeing more activities and more green shoots in the marketplace, mainly through private funds, family offices, and owner-occupier. We do expect that the market is going to slowly revert back to normal, with our expectation the situation should normalize within the next two to three years. In that context, our revenue has remained pretty much stable at EUR 87.4 million. The slight decline that we had this quarter is mainly linked to seasonal effect. It shouldn't impact our year-end result. We are confirming our guidance here. Our FFO is down mainly as a result, and as expected, from the increase in financial cost, which is impacting the FFO. The EPRA NTA is up by 0.4, and our net LTV has improved slightly, which also reflects the path that the company is moving forward with. One of our main goals, from a balance sheet perspective, would be to reduce the leverage as we move forward. If we looked at the portfolio, there hasn't been any material change since last time we spoke, with the value per square meter at around EUR 3,000. The weighted average lease length, which is pretty much stable despite the fact that we're a bit older, the wealth of the company remains around five and a half years. The construction rent at EUR 201 million, and the EPRA vacancy rate is stable at 8.5%. The leasing market, as we discussed briefly, is really the very positive things which are happening right now in the market. The major change that took place in 2025 was that large corporates are back in the market. Although in 2023, 2024, we barely signed annual leases which were bigger than 2,500 square meters, we have signed a substantial number of large leases this year, which explains why the volume within Alstria's number is substantially higher than what they were the year before. We're going back from what we can see right now to a full normalization compared to where we were prior to COVID. I would expect that overall letting volume in the market is going to increase as well because we're obviously not the only one benefiting from that. We clearly took advantage of the large corporate coming back in the market and almost doubled the amount of space that we leased in the half-year to 116,000 square meters and securing around EUR 110 million of income for the future, which is, as I said, almost double the result last year. The second half of the year is starting also very, very strongly, and we're seeing this dynamic continuing in the market. That's really a very positive impact. Those numbers obviously do not reflect yet in our gross rental income. There's usually like a six to eight-month period of time between the moment where we sign the lease and the moment where the rental income shows up on our P&L. We have a slight decline in the gross rental income, but as I said before, this is mainly seasonal. We expect to recover that by year-end. The fund for operation, we discussed that briefly. The change in the fund for operation is mainly linked to the increase in interest costs and our SG&A, which is something we tend to be very careful about, still under control and are slightly down compared to where they were in the same period last year. Excuse me. If we move to the balance sheet with a net LTV at 54.5%, slightly down, 30 basis points down compared to where we were at year-end. Investment property is slightly up, reflecting both the impact of the CapEx and the disposal that we have made. The equity on the balance sheet is up as well, reflecting the net profit for the period, and our net financial debt is slightly up, simply reflecting the fact that we have a bit less cash on the balance sheet than we had at the beginning of the year, mainly reflecting the CapEx and the increase in investment properties. If we deep dive a bit more into the debt, our cost of debt is up at 3% compared to 2.8% at year-end, which is impacting the FFO. The net financial debt, we've discussed briefly, we currently have around EUR 1 billion of debt in the unsecured market and EUR 1.5 billion of debt in the secured market. The intent is to keep playing in both markets, and eventually, once the leveraging has happened at the balance sheet side, probably we reduce the amount of bank debt closer to EUR 1 billion as well and have a balance between bond and mortgage loans. That's something we will be working on over the next few years. The EUR 107 million of mortgage debt that you can see in 2025 has been repaid as we speak. We repaid that debt in July and the EUR 85 million, which is left as the last part of the bond for which we've put the cash aside when we refinanced with a bond in March. Our intention would be to refinance the 2026 and 2027 bond, most probably through the issuance of a new instrument either at the end of this year or early next year. A new slide we're adding back, focusing more on the credit side of the balance sheet, looking at the amount of unencumbered assets that we have, which is pretty much stable at EUR 1.7 billion. The consolidated EBITDA is slightly down, which essentially reflects the change in accounting policy rather than any operating impacts. Our coverage ratio is obviously also going down. We need to be at 1.8x. It's reflecting the increase in interest rate and financing costs, and that will be under pressure as we go. The intention, and we're managing that essentially through derivatives, is to stay closer to the 1.9x and stay ahead of the covenant. Our debt plus debt to equity on a standalone basis is at 60.9%, and the net LTV, we've discussed before, at 54.5%. If we move on now into what happened on the balance sheet since the beginning of the year, we have basically, as you know, issued a new bond at the beginning of the year together with a couple of mortgage loans. We have used those new financing to refinance. Our policy is essentially to use all new debt to refinance existing debt and hedge, but not to increase the leverage. We are trying to reduce leverage as we move back. We have been doing liability management and buying back part of the 2025, 2026, and 2027 bond, and the intention is going to be to do that again going forward. We had, at the 30th of June, around EUR 389 million of cash available, which is EUR 144 million of cash, and restricted on the balance sheet EUR 200 million of undrawn RCF and EUR 45 million of new mortgage loans that we have drawn down in the meantime. If we look at today's pro forma from the EUR 107 million mortgage repayment, we would have around EUR 282 million of cash available either on the balance sheet or through the RCF. I just wanted to spend a bit of time on the debt plus debt equity ratio, which is at 64.8% at the S&P definition, because if you remember, we had an equity commitment letter from Brookfield on which we could draw down if the debt in relation to debt plus equity, as defined by S&P in the September report last year, would be higher than 65%. This condition is not met, and therefore, the equity commitment letter cannot be drawn down and will be terminated. In the meantime, as you probably know as well, our shareholder has refinanced its liabilities and injected around EUR 500 million new equity. Where we had around EUR 800 million of debt before, we now have EUR 500 million of equity and EUR 300 million of new bonds, which was issued a few weeks ago. Within the overall structure of Alstria, there was a substantial increase in the overall equity by almost EUR 500 million, which obviously, from my perspective at least, materially strengthens the overall capital structure and gives us a good base to work out the leveraging process and move gradually back to our investment grade, which remains the aim of the company. As a reminder, from an Alstria perspective, from my seat, the debt at the whole core level remains equity. There is still no domination agreement, no cross-financing, no commitment whatsoever from Alstria to pay any dividend going forward to fund for those EUR 300 million. Those elements, which we've discussed in the past, are still relevant today and have not changed. The fact that we're now 100% private has not changed that situation. From an outlook perspective, we're confirming our guidance of EUR 192 million of revenues and an FFO of EUR 52 million. The investment market, as we discussed briefly, we're seeing a sign of activities. I'm very confident that we're going to be hitting our target in terms of sales for 2025. When I looked at what we sold already and what we have in the pipeline, that seems pretty much in reach. The leasing market is really the bright spot here where we are seeing still a lot of activity in the smaller lease market, but large corporate and large deals coming back to the market, which we feel is extremely positive going forward. I would expect that dynamic to remain. I think we're basically turning a page on the COVID period with the large corporate coming back into the market. That would conclude the presentation from my end. If there are any questions, I will be happy to take them. Operator. 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 to register for a question. There will be a brief pause while questions are being registered. We do have our first question coming from the line of Florent Egonneau with Citigroup. Please go ahead. Hi. Good afternoon. Thank you for the presentation. I have three questions for you, please. The first one will be regarding the spin-off of Alstria advisor and its deconsolidation from the perimeter. Can you give a bit more color on the pro forma effect of that deconsolidation? How much revenue, EBITDA, and/or debt attached to this perimeter? The second question will be more on the leasing activity. I understand the gross figure has improved a lot quarter over quarter and year over year. When I look at actually the net number, it's still marginally negative. I see from the analytic part that you had about 20% of leases due for renewal next year. I just wanted to get a bit of color on how those renewals are going and updates on any large contracts at risk next year. Finally, more around the refinancing part. You have EUR 430 million of debt maturing over the next 12 months, mostly bonds, a bit of loans, and Schuldschein. Some loans have been taken out early July. Can you give us a bit of color on how you expect to tackle the rest of those maturities? Thank you. Yeah. On the deconsolidation of Alstria advisor, this would have a very minor effect. It's basically, I mean, it doesn't contribute to anything in terms of revenue. It's essentially a cost. The way it's going to be run in the future, the advisory agreement is a cost-plus basis. It will have a fairly limited impact. There is no impact on debt. There's no transfer of debt and a very limited impact on cash. We will probably leave up somewhere around EUR 5 million of cash within Alstria, the group that's going to be deconsolidated. It will not have a material impact from a number perspective. What it will change is that in Alstria's P&L, you will not have any more personnel costs. You will just have one line, which is like the fee which we pay to Alstria advisor. Again, this is a cost-plus. We don't have, like, there is no promote or any structure which is along those lines. Most of that income is going to accrue back to Alstria, which keeps 80% of the economic benefit in Alstria advisor. I would say it's fairly limited. On your second question with respect to the leasing, I'm not sure I, and maybe I can follow up with a question on my end. Essentially, as I mentioned during the call, the impact of the leasing we're signing this year is only going to be seen in the next few months because the leases we sign now are only going to start somewhere between 8 to 12 months down the road. There's a time lag between the moment where we sign leases and the moment where they actually end up hitting our P&L. The 20% lease that are due in the next year, I think there's nothing unusual about that. If you look at our weighted average lease terms, we have five-year average lease terms. Every year, we round about half, 20% of our lease that expire, and every year, around two-thirds of those are going to be renewed, and one-third is going to expire, and that's going to be replenished through our leasing process. There is really nothing unusual about that. I think the number for the lease that expire next year are substantially down because we are working right now on the leases that will expire within the next two years. On top of my head, we're probably around like 11% or 12% left for next year and almost nothing in 2025. With no major lease expiry due or something material, the largest expiry we have is in 2027 in Hamburg, an asset which is rented to the city of Hamburg, which we want to have empty because it offers a substantial opportunity to redevelop in Alter Steinweg, where we have around EUR 5.5 million of income, which we will lose when this asset is going to be empty mid of 2027. On top of my head, that would be the largest exposure that we have, like single exposure that will end in the next two years. I don't know if I answered your question on the leasing here. I'm just going to pause for a second. Yes, thank you. That was very clear. Okay. On the refinancing, we did repay already EUR 107 million earlier than was planned. We're currently working on an equivalent mortgage on the same portfolio to refinance it. That's going to help us to replenish our cash coffers for the refinancing of the bond, the 2026 and 2027. From today's perspective, the intention would be to go back to the market either in Q4 or Q3, I mean, end of Q3 or Q4 this year, or early next year, as we did the year before, to be able to take up the 2026 and 2027 maturity through a single bond. We're refinancing the mortgage loan. Usually, we just roll them over with the existing lenders, which is a standard practice. On the public debt, the intention, again, from today's perspective, would be to go back to the market within the next six months to refinance those. The point I wanted to make here is, technically, we could refinance everything we have in the mortgage market. There would be enough debts in the mortgage market, but the intention would be, at the end of the day, to continue to grow the company. If we want to grow the company, there will be a limit of what we can achieve in the mortgage market. For us, it's important to keep access to the bond market because without it, we will reach a limit in the size that the company can reach, and the intention would be to grow that. That's why one of our key targets from a financial perspective would be to reduce leverage as we go forward and crawl back toward the investment grade so we can kind of become more efficient in the bond market. The bond market today is substantially more expensive than what we achieve in the mortgage market. To give you an order of magnitude, the EUR 45 million loan that we just draw down on, which is a seven-year loan, has an all-in cost of around 3.2%. It's substantially cheaper than whatever we can achieve in the bond market. Nevertheless, the liquidity and the depth of the bond market is really what's attractive at the end of the day. Okay. Thank you for this additional color. Maybe one last question, if I may, is around your disposal target for 2024. Can you remind me the total target and how much has been signed already? Yeah. Our plan is to sell around EUR 80 million this year. So far, we have sold and closed around EUR 17 million, and we have another eight or nine which are signed but not closed yet. We are working on substantially more than the EUR 80 million if we were to close everything we have, which is why I'm pretty comfortable that this should be achievable. We're really seeing, I think the benefit of Alstria is we have small assets, which are the more liquid assets right now in the marketplace. We're able to play in any investment market as long as there is a bit of liquidity and take advantage of it, which we're currently doing on the smaller side of the asset. Most of the buyers we're speaking to are family offices, private individuals, or owner-occupier, essentially. We haven't seen yet, at scale at least, the large institutional investors back in the market. I don't expect that to happen before 2026, 2027. Okay, thank you very much. Your next question comes from the line of Mary Pollock with CreditSights. Please go ahead. Hi. Thanks for taking the questions. I wanted to talk about the change in your presentation of LTV. It looks like you've brought your definition in line, your covenant definition, which is lower than what you were reporting previously. I guess my first question is, you've said in the past you want to be close to or below 50% LTV. Is that based on the reporting today in line with the covenant or the previous reporting? Also, on your fifth, oh, sorry. No, go ahead, please. On the 54.5% level for 1H, I'm struggling to get there. I was just wondering, is that pro forma for anything? I'll obviously check my numbers again. I'm sorry if I just can't seem to imitate how you're getting to 54.5%. I just wanted to check if there's any pro formas in there. I don't think there's any pro forma in there. My understanding is that we're basically taking the net debt in relation to the total balance sheet, but I haven't double-checked the number. There's no pro forma in there. When I say we're trying to get to 50% LTV, I mean we're not aiming at a specific number. We're trying to provide you a sense of direction. We did actually adjust, as you rightly said. We had two LTV which were published. One was more what was relevant from an equity perspective of the way equity investors were looking at it, which basically looked at the debt in relation only to the real estate assets. We had another definition of LTV, which is the one which is available in our bonds definitions, and this is what we're applying today. You're right. We did kind of simplify the communication by just keeping one LTV. We're working on this presentation for the first time. If the feedback we get is it's helpful to have both, then we can put both again. The aim here is really to reduce the LTV globally and to go back to a level which is going to be more consistent with where investment grade is going to be. Thanks. On your ICR. Sorry, if I may, there is on our website a document which is called Additional Information. This Additional Information document is going to give you the way, like the detailed calculation of the LTV. Thanks. I'll have a look for that. On your ICR, I think you mentioned this in your remark, you expect this ratio to trough around 1.9X. I was just wondering when you expect it to reach that level. I think somewhere in the course of next year. Our cost of debt is going up. The way it's calculated right now is just looking at the trailing 12 months. As we move forward, we're still benefiting right now from the low cost of debt we had at the beginning of the year. As we move forward, it's just going to almost naturally drop. I would expect it in the course of next year to be closer to 1.9. I thought that it might get close to 1.8, to be honest, but I obviously don't have a fuller picture of your derivatives in place or any other hedging that may offset the cost. We are managing that very closely with the derivatives to make sure we are still North of 1.8 because this is where we need to be. We are kind of updating our positions to make, because it obviously depends on where Euribor is and the part of our loans which are floating, a small part of floating below caps, have an impact on what we do. This is something we're adjusting on a constant basis. The intention is to be closer to 1.9. Thanks. Last one, I'm sorry if you've provided this on a previous call and I've missed it, but do you have some CapEx guidance for 2025, 2026, or investment guidance for how much you expect to spend? Yeah. We usually guide the market to the fact that we invest around EUR 150 million per annum on our CapEx every year. However, it's highly dependent on our ability to sell assets because we fund the CapEx through asset sales. If we sell less assets, the variable of adjustment is going to be CapEx from a cash perspective. Our business plan currently kind of planned for around EUR 150 million investment in the course of this year, I think EUR 110 million next year, and it goes up to EUR 150 million over the next few years. Let's assume like EUR 80 million sales this year and then sales volumes that grow up to EUR 200 million, which we reach in 2028. If for whatever reason the market on the investment side doesn't open up as fast or as slow as we expect it to open, we adjust with the CapEx. Thanks. Sorry, what was the number you said you're budgeting for this year? You said EUR 110 next year. EUR 140 million, EUR 150 million this year. Okay, thank you so much. Appreciate it. You're welcome. If you would like to ask a question, please press star one to register for a question. I'm showing no further questions at this time. I would like to turn it back to Olivier Elamine for closing remarks. Thank you very much for joining us today. Thank you for your interest in Alstria. We are available if you have any follow-up questions or if you have comments on the way we're presenting things here from a credit perspective. We're always keen to learn and adjust. Thank you very much for your attention, and I've been looking forward to speaking with you for the Third Quarter presentation. Thank you. Bye-bye. Thank you. This now concludes your presentation. Thank you all for attending. You may now.