Good morning, ladies and gentlemen, and welcome to the conference call of DIC Asset AG regarding the Q3 results 2022. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions following the presentation. Let me now turn the floor over to Sonja Wärntges. Please go ahead. Thank you very much. Good morning, ladies and gentlemen. A very warm welcome to DIC's 2022 9 months results conference call. Today, I'm joined by my colleague Patrick Weiden, CCMO of DIC Asset, and my colleagues from accounting and investor relations. As usual, we will give a short presentation of the highlights of our nine months results 2022, followed by a Q&A session. Ladies and gentlemen, as you all know, we are currently experiencing major changes these days. The major uncertainties, particularly with regards to energy supplies and prices, the stability of supply chains, and the development of inflation, are leading to a clouding of the economy in Germany. At the same time, a recession is expected in 2023, and also the real estate industry is not unaffected by the challenges of the political situation. The real estate investment market is being significantly slowed down these days. Among investors, there is little intention to sell in these times, and rising interest rates are curbing investors' appetite to buy. The returns of our owned and well-managed portfolios are strengthened, thanks to CPI-linked rental contracts and to robust letting markets. This is where our robust business model proves its worth, and the mix of our portfolio creates stability. In addition, our decision to significantly strengthen the logistics asset class by the majority takeover of VIB at the beginning of the year has given us even greater resilience. Therefore, we are firmly convinced that we are in the best possible position for the future, namely by the right strategy, which means our growing platform of EUR 14.5 billion is generating a higher share of recurring and predictable income, thanks to the strong growth of the commercial portfolio. Our investment focus on the attractive asset classes, logistics and office, along with a high portfolio diversification and the future positioning of VIB as a logistic expert within the DIC group. Second, are underpinned by a clear 360-degree management approach, which means we are continuing to achieve strong letting results in the market, along with higher rents from indexations. A product pipeline for the institutional business with shifted focus from core plus to logistics, value add and management through ESG. A clearly defined ESG strategy and a roadmap for the DIC group. Finally, backed by a solid financial and balance sheet structure, which is driven by a stable property valuation expected at year-end to 2022, an increasing share of green financial instruments to around 40%-50% by 2027, a consistent and reliable dividend policy while we keep our focus on the goal of deleveraging and reducing our LTVs to below 50%. Ladies and gentlemen, let me now summarize the operational and financial performance of the first nine months, 2022. Far, we have notarized EUR 368 million of transactions across all business segments. On top of that, we added EUR 2.3 billion of assets to our commercial portfolio through the acquisition of VIB in April 2022. This made us the leading platform for commercial real estate with special focus on logistics and office in the German market. Year on year, our real estate platform grew by 27% to assets under management of EUR 14.5 billion. The institutional business segment now reached almost the level of EUR 10 billion. Despite a challenging investment market and signs of a recession, the letting markets are performing well with high take-up volumes noted by the brokers. According to the brokers, two key factors are driving the office market performance. First of all, the labor market, which means robust. Second, the corporate balance sheets, which are predominantly positive and indicate that many companies are relatively healthy while going into a possible recession. In the context of this general uncertainty and the robust fundamentals in the letting markets, the office space take up in the Big Seven cities over the first nine months of 2022 reached nearly 2.8 million square meters, an increase of 29% compared to the same period last year. For logistics spaces, the broker CBRE just announced that vacancy rates across Europe reached 2.3%. That means 50 basis points lower compared to the previous period. Due to the low availability of space, many tenant inquiries cannot be satisfied at present. The imbalance between supply and demand continues to put positive pressure on rents. Several logistics hotspots recorded a renewed increase in prime rents in the third quarter. This positive letting market development is also reflected by our letting results. We achieved a high letting performance of 296,300 sqm and generated a total rental growth of 4.2% on the platform. The successful leases represent a total of EUR 37.5 million of annualized rents. Both rents on a per square meter basis for office and logistics increased year-on-year. The platform's 2022 lease expiry volume fell to just 1% as a result of the strong letting activities. Around 73% of leases expire in 2026 or later. Now, looking at the profit and loss statement of the first nine months of 2022, we want to highlight the following. The development of both of our main income streams is nearly similar to the last quarter. The rental income has seen a massive increase since the consolidation of VIB for the first time in the second quarter, which has continued in the third quarter. On the other side, the real estate management fees saw a sharp decrease as a direct result of the lower transaction activities since the second quarter. Compared to the first nine months of the last year, the net rental income grew to EUR 108.8 million, a plus of 67% driven by the VIB consolidation and strong like-for-like growth. Together with a recurring fee income of EUR 26.9 million from the institutional segment, the share of recurring income from our two business segments increased to more than 80% compared to last year. With EUR 76.1 million, the FFO in the nine-month result was a bit below previous year FFO, which was mainly the outcome of the lower fee income from transaction. In more detail, the net changes contributed to the development of the FFO year-on-year stem from the decrease of management fees, higher OpEx and an increased net interest result. These increases were almost fully compensated by additional net rental income and profit from associates from the takeover of VIB. By the end of September 2022, the NAV and adjusted NAV were almost unchanged compared to half-year results. NAV per share stood at EUR 18.54 and the adjusted NAV per share reached EUR 24.99. As usual, I would like to give you a quick update on our current financial structure. Our main priority is the refinancing of the bridge loan maturing in 2024. Already roughly EUR 100 million were paid back in the third quarter. We plan to refinance the bridge loan via free cash flow, cash flow from disposals, and using the available capacity of secured debt within the DIC group. We are managing our maturity profile foresighted using our existing cash and cash generated from our business activities to meet our debt services. We see the Green Bond 2026 currently trading at a very high discount to par, which in our view is not showing the true value and is probably not reflecting the robustness of our business model. Looking at the covenants of the Green Bond, we can assure that we have sufficient headroom, especially the covenant ICR shows our ability to meet our interest payments, and we do not see a risk from lower valuation of our portfolio with regards to our LTV figures. Let me conclude my presentation with our revised guidance for 2022. We confirm the latest updated guidance, including VIB effects on the main income streams. On the transaction side, we have updated our figures taking into account the low activity in the current market environment. On the acquisition side, we have reached our goal for the commercial portfolio after the takeover of VIB. For the institutional business, we have adjusted our acquisition target to the range of EUR 650 million-EUR 700 million. For the disposals, we have kept our target of planned disposals for the commercial portfolio. While we were cutting our plans for disposals for the institutional business down to zero. All in all, Funds from Operations is now targeted at a range of EUR 114 million-EUR 117 million, which is still an expected growth of 7%-10% compared to the generated FFO in 2021. Ladies and gentlemen, thank you for listening to our presentation today, and we are now ready to take your questions. Ladies and gentlemen, if you would like to ask a question, please press nine and the star key on your telephone. In case you wish to cancel your question, please press nine and the star key again. Please press nine and the star key now to state your question. The first question comes from André Remke. Please go ahead. Yeah. Good morning, Sonja. Thanks for the presentation. A couple of questions from my side. Starting with your comment on a property valuation towards year-end, that this all should be stable. Well, we see already some reactions in the market due to higher interest rates, let's say moving up 30, 40 bps higher in yields. What makes you confident that this will not affect your own portfolio? Is this overcompensated in total by rising CPI-linked rents? This is the first question, please. Yeah. Good morning, André. Thank you for the question. As you know, we have our valuers in place, and they are working on the valuation, so we are in discussion with them and we have got the first results there. So, we are very confident that the results stay nearly as the same range as the year before. A little bit higher maybe, so this is very stable. What makes me confident is that we are in a discussion with the valuers and, as you know, we need the valuation not for a fair value accounting, so only for our NAV. Therefore we have started the valuation, and we are nearly close to the end, so to say. What makes it happen is that we increased the rents, as you said, via indexation. We have in total more than 4% like-for-like growth, and this overcompensates the interest. On the other hand, we have a very granular and not a very high-priced portfolio. We don't have factors over 30 or something like this in our portfolio. It's very stable, granular. We see the renewals also with some rent increase, not only coming from indexation and the high amount of renewals. You can see that our tenants stay in the office, in the spaces. The indexation was done. It's very healthy on this side. The evaluators say this and see this in their portfolio. Yeah. Excellent. Thank you for this update. Second question relates to the valuation of the institutional business. This is included in the adjusted NAV and also for the adjusted LTV, it's important. What is your expectation here? Because at least here you're probably seeing a negative effect from a higher discount rate, or I'm completely wrong on that side. No, you are not completely wrong. The valuation for the institutional business is Unternehmensbewertung, yeah. We are finalizing also this at the moment. For this we need the plans for the next years. This is part of the evaluation there, and we have not finalized them. This evaluation is not ready yet. At the end of the day, you are right. It compares to the interest rate and it compares to the, I don't know in English, Risikoprämie, yeah. The Risikoprämie is, yeah, foreseen from the Wirtschaftsprüfer. They discuss what the right thing will be among the IDW at the moment. At the end of the day, we also think that there will be a loss in the evaluation. We can today not say how the number will look like there. Mm-hmm. This is one part of the valuation of the institutional business. What relates also to the NC business is the goodwill. Do you see here or what is the status with the discussions with the appraisers on this topic? Do you see a confirmation of this goodwill or do you see any kind of risk here? No, on one hand, we don't expect that there is no value in the institutional business. We don't know the exact number here. I cannot say on a serious basis how it looks like. We do not expect a number that brings us to a headroom of zero to have the goodwill to decrease the goodwill. There is so much headroom here that we don't see a chance that the goodwill will be impaired, you know. Okay. Excellent. On your path to lower the LTV, how confident are you that you bring this down already, at least on a pro forma basis until year-end via any kind of disposals? Is there a remaining risk or, I think, well, it's more or less done. No, we have a lot to do until the end of the year. As we had in the past, in the last three years, we always have done most of the business in the last quarter, and we have also to do a lot in the next 10 weeks. To say it clearly, we are working on transactions, and we are confident that we do some of them. At the end of the day, we can sign them until the end of the year, but we will not have the closing until the end of the year. What we can say at the end of the year, we have signed, and this means on a pro forma basis for the LTV X%. At the end of the day, this will happen, and you'll see it in our reports, I think, at the end of Q1 of the next year. We expect for end of the year, nearly the same range as we have now at the end of Q3. The effects we will hopefully get done until the end of the year, which you will see in the beginning of next year, will be around about 3% then. 3%. 3 p ercentage points, sorry. The right technology. 3 percentage points lower LTV from the disposals. Yes. Yes. Yes. Did I get it right? Okay. Yes. Perfect. There was a further way to go to lower the bridge financing of EUR 400 million. You highlighted, let's say, how you quoted it, consistent and reliable dividend policy. What is your dividend policy here, from year to year increasing and also for this year, the FFO will increase, but on the other hand, you have to pay down to the bridge. Would it be also in the cards to lower for a year the dividend payout, to pay down the highly, more and more expensive bridge financing? On the one hand, I told my colleagues last week. I think we have a market phase where you have to work much more than in other market phases to get your things done and to reach the goals we have set up. This is what we are doing here, and at the end of the day, what we do is we create a lot of options to reach our goals. Therefore, I'm confident that we do the right things and that we can pay back the bridge as soon as possible from different income streams, as I have said. I cannot say we have finalized this today, but I'm very confident that we will have finalized this until the end of the year. I can say more how we will pay back this and in what form and the exact date. But at the end of the day, we will pay back it, and we will do via different transactions, so to say. On the other hand, I forgot your second part of the question, sorry. Dividend policy. Dividend policy. Yeah. As always said, the dividend policy. We are a dividend paying company. We see ourselves so, and our payout ratios were in the past, around about 50% of the FFO. This is what we also expect for the future. The dividend comes from, not from the Konzernabschluss, but from the Einzelabschluss. Therefore, we are also very confident that, when we, as the company, ask our annual meeting that they will say yes. Yeah, we'll follow our suggestion that we also stay with this dividend policy in the future, yeah. Okay. Excellent. That's from my side. Thank you very much, Sonja. Thank you. The next question comes from Philipp Kaiser. Please go ahead. Hello, everyone, and thank you for taking my question. I just have three questions left. First, regarding the like-for-like rental growth, could you just indicate how much of this increase came from indexation of rent? Yeah, good morning. Yeah, we can indicate it's nearly 90%. Okay, perfect. Thanks. Switching to the institutional business and the real estate management fee, despite knowing your guidance on that, there are still huge amount of fees to be generated within the last quarter of the year. Is that linked to the one fund you now postponed towards the next year? How's the visibility on fee income on that? Yeah, definitely. As you said, we have postponed two of the funds, and we are still in the process for establishing one fund. We have come to a certain point that we can say it's probable makeable until the end of the year. Therefore, we expect the fees coming from that fund until the end of the year. Therefore, we have the guidance given for our management fees, and we are today very sure that we can reach it. Okay. Thanks. The last question from my side is with regards to the two assets where Galeria is still a tenant. I think yesterday it was in the newspaper that buero.de eyes on 47 Galeria Kaufhof assets and also like the asset in Chemnitz and Leverkusen. Are you aware of that and is that a possible option, yeah, for those two assets? Or are you kind of favoring to do it by yourself as you did in the other tenanted assets earlier with Galeria. I have to say it clearly, it's very interesting for me to read a newspaper because I see it then in the newspaper it was a little bit sarcastic. To say it clear, we have no discussions with buero.de. We don't know them. It's very interesting to read it, but at the end of the day, as you know, we had the discussions with Galeria Kaufhof two years ago, yeah. They had left Bremen, the Kaufhof in Bremen. Until they had left, we had a new tenant there. We have now established a tenant. Also knowing that we have worked with Galeria to renew the contracts two years ago and to establish the inner cities of Leverkusen and Chemnitz, and to save the work for the people who are working for Galeria, we have made some decisions. At the end of the day, we cannot do this every two years. We have worked on other possibilities for these two assets, and we are in discussions with the community and with the town government and so on. We have plans there besides Galeria Kaufhof, and we will now speak to buero.de if they are really interested. On the other hand, there are other tenants who are interested in such things or maybe a totally other usage for the assets. We are in the planning phase here, but we have worked the last two years on that. We are also confident, we are specialists for commercial real estate, that we can do something else with the assets and bring them to a, yeah, to a new highlight, so to say. Okay, perfect. Thanks for that. Very helpful. That was also all from my side. Thank you. The next question comes from Stefan Scharff. Please go ahead. Yeah. Good morning, Sonja. Good morning, gentlemen. Most questions are gone, but I would like to ask, perhaps something has changed with the structure of investors as Asian investors might accept lower yields than investors from Europe or from U.S. Perhaps you can tell a little bit more, what you think about the yield development in general and what this could mean for the structure of investors investing in your funds. The second question is about the logistics funds and the plans here for next year or for the next one or two years as some of the VIB Vermögen properties might fit into new logistics funds. Thank you. Morning, Stefan. Yeah, thank you for the questions. These are the interesting ones also. As said, logistics is the most interesting asset class for investors at the moment, yeah. We also have, as you know, established an international sales force, so to say, in our institutional business one and a half years ago, because we have around about 180 investors in place here, but most of them are German ones, so this is an interesting market for us. We have done a lot there and also a lot of discussions with them, and you're totally right. At the end of the day, they want to invest in Germany, and they also see Germany as an interesting market, especially for logistics and light industrial, but also for office. Office, as you can imagine, offices which are green buildings, but also, offices which we call value add, manage to ESG, manage to green, name it. So offices with potential where we as commercial real estate specialists can do something. I call it that way. Manage to ESG or find new tenants or whatever, at first managed to ESG and then find new tenants. We don't see a shift in the institutional investor basis, so we have commitments in place. The positive effect of what you have seen, that we have no sales in institutional business, is that they all want to stay with their assets. Mm-hmm. Managed by DIC and are very lucky with them. At the end of the day, the existing investors want to stay and want to exist, but not until the end of this year. What we heard, and also Asian investors are interested. We cannot say anything about the U.S. because we have not talked to U.S. investors for the institutional business at the moment. Okay. The logistics funds in general and the schedule here? As said, what we want to establish next year is logistics and value add. We wanted to do this until the end of the year, but we see no possibility to close it until the end of the year. We will do it next year, and this is logistics and value-add managed to ESG, managed to green. Okay. Thank you very much. Thank you. The next question comes from Menelaos Tsakonas. Please go ahead. Hi. Good morning, and thank you for the transparency and the interesting thoughts. I have a few clarifying questions, starting with the LTV calculation, just to make sure you fully consolidate both on the value side and the debt side, VIB there? Good morning. Yes, you are right. We fully consolidate them. If we back out the implied asset values from the adjusted LTV, that implies about EUR 485 million for your institutional business, which on an annual basis generates about EUR 35 million of EBITDA. That's a range of 15-16x right now on a multiple basis. I know I'm just giving back-of-the-envelope quick calculations here. I'm just trying to understand if that's correct or if I'm thinking about it completely wrong. Yes, that's actually a multiple of 15x-16x. PATRIZIA, for example, which is a larger comp, trades at 7.5 right now. Maybe you could shed some light why your valuation of this institutional business would be double? Hi, just Peer speaking. Maybe I can add some thoughts on this. As Sonja already mentioned, I mean, we are currently in the process of revaluation of the institutional business segment. Yes, we see some reductions, as Sonja mentioned, and we're currently in the process. But nevertheless, we still believe in the transaction market that it will pick up again next year. We have a clear plan on this, what we see, what we have in our pipeline, and what we can do as transactions next year. We strongly believe that we are here in a situation that the valuation is on that level fair from our perspective. Yes, if you take the numbers today and see the Q3 result, it's definitely a different picture, but it's not a long-term view we have here now. This is what we're discussing, at least on a three-year plan here. Understood. Of course, we all know that valuations across the real estate space are depressed right now. I just wanted to understand whether you take a forward look and how the valuation is done, basically. Then out of the large portion of debt you repaid between Q2 and Q3, was most of it or all of it at DIC level? 'Cause there is still some debt at VIB, right? Which I'm assuming is also fully consolidated in your balance sheet. Yes. Around about EUR 700 million is coming from VIB. That's stable quarter-over-quarter, probably, right? Yes. The EUR 200-odd million that was repaid was at DIC level. Yes, definitely. Great. Look, I will jump back on the queue. If I may ask one last question, you've probably disclosed this in your full year, or you will disclose it. You hold an asset on your balance sheet as EUR 100 million loans to related parties. Could you shed a little bit more light on that, please? Yes, we can do. These are related to projects we have financed in the past, and for that we have given a shareholder loan to related parties. We expect this to be repaid within short to midterm period when these projects are finalized. Understood. Last observation would be, it would be very useful, I think, for us to see on your debt maturities how much of that is VIB versus DIC to better understand, you know, the upcoming maturities. Thank you very much for your transparency today, and I'll jump back on the queue. Thank you. Thank you. Okay. At the moment, there seem to be no further questions. If you would like to state another question, please press nine and the star key on your telephone now. We have another question. It comes from Manuel Martin. Please go ahead. Yes, thank you. I've two questions from my side, please. First question is on your administrative expenses. I've seen that they declined in the third quarter to something like EUR 6.7 million. Could you elaborate a bit on that? Because that's quite a shift from EUR 10 million or EUR 12 million in quarter one and quarter two. What could we assume is a run rate for the admin expenses? Good morning, Manuel. It's written down. We had the one-time effect in the past, so we don't have it now. The run rate is the Q3 number, around about EUR 17 million, EUR 17.5 million. The one-time hit was around about EUR 10 million. Run rate is EUR 17 million and EUR 9 million. Means that's something like EUR 5 million-EUR 6 million. EUR 5 million-EUR 7 million, something like that, probably per quarter. Per quarter? Yeah. 17.5 per quarter? 17.5 per quarter. Yeah. On admin expenses. That would be higher than Q. The OpEx. We talk about the OpEx in total. Personal and administrative expenses. Okay. I see. Understood. Thanks. Second question, e xcuse me. Second question. Maybe a bit tricky, but on 2023, the next year, do you have any feeling how your markets could evolve there? I know it might be a bit too early in these times, but you have already given an indication that you're relatively positive on your institutional business. All in all, could you share with us a little bit your thoughts on 2023, if it's not too early? Yeah, definitely. We are thinking about the next one, and one to one and a half years on a day-to-day basis, and there are a lot of uncertainties, that's for sure. At the end of the day, we have to have our plans and make them. What we see on the interest side is that we think that the ECB will increase the rates for 2x-3 x. I don't think in the way they have done in the last 2 x, so maybe a little bit lower. I think following the decisions of the Fed, so they will stop and lower them in the first quarter, second quarter next year. We think that we will have stabilized the interest rate end of Q1, Q2 next year. I think if we have stabilized the interest rates and have a better picture how the decisions will be done from the Fed and the ECB in the next months, also the transaction market and the investment market will come back. If you have a clear picture how the calculations can be done, you can decide better. Even if you are an institutional investor and have to decide whether you want to do real estate investments or not. We think that investment markets will be back end of Q2, beginning of Q3. I think on a little bit lower level than we have seen in the past, for sure. The indexation and the rental market at the moment is in a good shape. With the unemployment rates not increasing that much, we don't see a big decrease for office needs and logistics needs, especially not at all. At the end of the day, we see the markets coming back in the second half next year on a then stable basis, I think. We think 2024 the interest rates will be stable, maybe decrease a little bit. A good sign for real estate investment markets, especially for commercial real estate, yeah. The logistics markets are there. We have. I especially have talked a lot with tenants on the logistics side, and they all need space. They don't have space. They told me, "If you have something, even if it's 100 km, in the surrounding of 100 km, please let us know. Can we do something? Can you do something for us?" There's a real need for space, and this drives the rents and reduces the yields and also the accepted yields from institutional investors. Following the inflation, the results in prices, we will see in the upcoming months, but I think it will be stabilized mid next year. Okay. Very helpful. Thank you very much. Thank you. The next question comes from Jochen Schmitt. Please go ahead. Thank you. Good morning. Sorry, I missed part of the call. I apologize in case you have already addressed my question. It is on rent increases due to indexation. Could you comment on how much of the rent indexation you can realize? Or do you have often discussions with clients about possibly waiving part of the rent indexation, which are theoretically eligible to? That's my question. Good morning, Jochen. No, that question was not there until now. The question was how much of the rent increases indexation. I answered that with nearly 90%. Your question, we don't have discussions, I knew from. There may be a smaller tenant, like a cosmetic studio or something like this. But at the end of the day, some of our tenants have even got the second indexation this year, but there are no discussions at the moment. They all pay it, so we realize the indexation we have in the rental income number in the profit and loss. Thank you. Thank you. The last question comes from Thomas Neuhold. Please go ahead. Morning all. Just two quick questions for me left, also on indexation. Could you remind us the percentage of index leases you have across your portfolio? Or maybe you can split it between office and logistics. That would be my first one. The second question refers to the third party business, institutional business. I mean, we all know that the national market slowed significantly, and that no one knows really what's going on next year or in coming quarters, how the demand will develop. What would be in worst case your, based on your current EUR 10 billion assets under management, your recurring FFO, assuming no transactions, so no acquisitions, no disposals, just really a recurring number. That would be interesting to hear. Thank you. Yeah, good morning, Thomas. To your last question, we have recurring fees from the institutional business of around EUR 37 million this year. This is what is there. As said before, we have no indication that any of our institutional investors will get away from their commitments or something like this. As you see, nobody will sell anything this year. This is the run rate also for next year, a little bit higher than. On the other side, I have said that 80% of our income is recurring. I think you can calculate how much this means in the worst case for this year transferred to next year. We do not give a guidance for something like this, but you can calculate it on the numbers. I've forgotten the first question. I have to ask. Um [inaudible] How many contracts are? Yeah. It's over 90%, I think. 92% of our contracts have an indexation clause. Okay. Maybe on follow-up on that. Overall, you would expect that you see an acceleration of that effect, rent growth coming from indexation. Yeah. I think that the inflation rate will decrease next year because I think we have seen the effects from energy in this year. Yeah. Yeah. I don't have a crystal ball, but I don't think that we see next year inflation rates of 10 or more than 10%. They will go down. Also the indexation from the rents will go down. At the end of the day, this has to. But our tenants pay the indexation at the moment, and we don't have an indicator that they will not pay, and we don't have indicators that our big tenants or the really interesting tenants for us have an insolvency besides Kaufhof, Galeria Kaufhof, but we don't have it from the industry or from our office tenants at the moment. Okay. Thank you. Thank you. Okay. As this was the last question, let me hand back over to Sonja Wärntges for some closing remarks. Yeah. Thank you very much for being part of our presentation today. If you have any questions, please contact Max Bauer or Peer Schlinkmann or myself. We are ready for answering the question. Thank you. Bye.