Ladies and gentlemen, welcome to the Deutsche Konsum REIT's first quarter 2023-2024 financial results call. I am Jutta, the call's coordinator. I would like to remind you that all participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Christian Hellmuth, CFO, and Alexander Kroth, CIO. Please go ahead. Good morning, everyone. This is Christian and Alexander from Deutsche Konsum. Thanks for your time and interest this morning in DKR's Q1 financial results figures of the financial year 2023-2024. This morning, we have uploaded the presentation to our website. So for those of you who are not able to follow our webcast, please go to our website, open the presentation, click through it, and we will also refer to page numbers that you are able to follow us. As per usual, we will give a very quick overview of what has happened in the Q1, about the main issues, the main KPIs, and afterwards, we'll have time to answer your questions in the Q&A session. I would like to start on page four, which shows you what happened at a glance. Overall, we can say that the first quarter was very stable, very strong from an operative point of view. The main focus, of course, was also at the refinancing of the maturing corporate bonds, where I come to a little few or in a little while. Starting with the operational business, we can say it was strong and steady. Rental income has increased by almost 70% year-on-year to almost EUR 20 million. This was mainly due to a larger portfolio size compared to the first quarter of the prior financial year. The last acquisition took place Q1 of the prior year. Therefore, now it has contributed fully in the quarter to the rental income. Also, in the meantime, we had some rental increases because of the CPI linkages we have in the various rental contracts. That's what we do for many quarters now. We also had that in the last quarters. However, the net rental income has decreased by 2% to EUR 12.7 million. This was mainly due to higher Non-RECs and higher AM and PM fees, which jumped up a little bit due to a few extra things we had to solve here. But also, we had a slight change in the accounting of running costs, which are billed to the tenants. So we have decided to have a more defensive approach regarding the estimation of running costs, which could be billed to the tenants. We have to make an estimation every balance sheet date. And we have decided in the end of last year that we follow a more defensive approach. So there is no additional income out of running costs billings anymore. So this is a very defensive approach, and that explains why we had a drop here. Overall, the FFO was EUR 8 million. It came down by 21%, which mainly was due to the effect I just mentioned. But also, the financial results have decreased because of higher interest rates we have to pay. Of course, on a per-share basis, that means we have an FFO of EUR 0.23 cents per share on an undiluted basis or EUR 0.16 cents per share on a fully diluted basis. However, the AFO has tripled because compared to the prior year Q1, we had much less CapEx investments. You remember, one year before, we were in extensive revitalizations of two centers, Stralsund and Ueckermünde, where we had to invest extensive amounts. You can see, by the way, the outcome on the cover of this presentation, that was the revitalized market in Stralsund. Regarding KPIs, it remained basically solid. Of course, the LTV is at 60%. That's way too high given our actual target of around 50%. But this was impacted by the devaluation of the property portfolio last September. But in the meantime, it came down by one percentage point quarter-over-quarter due to regular amortizations of debt we do. The EPRA NTA on a fully diluted basis is €7.78 per share. It's slightly increased due to the positive period result of the Q1. And of course, as you may have noticed, the intrinsic value per share is much higher than the current share price. Of course, that has other reasons, maybe. We are coming to that later. But the intrinsic value of the portfolio is much higher from our point of view. The ICR is still comfortable at around 2.7 times the cash-based EBITDA, which is, I guess, very solid. The average weighted debt costs have slightly increased to 2.92%, including secure and unsecured debt, which is, I guess, still below current market conditions. And therefore, it's OK, I would say. Regarding our main focus we had in the last couple of months, this is the refinancing of the maturing bonds. There is one unsecured bond of EUR 70 million, which is maturing in April, and also another one, a secured bond of around EUR 36 million, which matures in May. Here, we are in final discussions, very constructive discussions with the bondholder. And in the meantime, we have defined some terms under which conditions a potential prolongation could be done. At the moment, we are working on that to meet all those requirements. And also, lawyers are working at this and do homework, which has to be made to be able to make a prolongation. That's where we stand at the moment. Overall, I can emphasize again that it's very constructive. That's why we are very confident that we will be able to present a solution in a couple of weeks. On the portfolio side, there were no acquisitions, of course. But we have closed the sale of the vacant former Real Hypermarkt in Trier at the end of December. So we have received the purchase price. And therefore, the transfer of title occurred at the beginning of January 2024. Currently, we are also in negotiations or discussions about selective property disposals. We're talking here about sales at around the book value. So we don't want to promise anything here. But it's possible that we will do some disposals, selective disposals, in a certain extent in the near future. So we'll see. Potential proceeds coming out of that would increase our financial flexibility. It would also help to repay some debt instruments gradually. Given that and due to the fact that we don't have 100% clarity on the bond refinancing and potential property disposals yet, we have decided not to give an FFO guidance yet. I guess when we will present the half-year figures in May, all of those issues should have been solved. I guess then we will be able to give a firm FFO guidance for the whole financial year. Just jump to page seven, to the property portfolio. Here, you can see that nothing much has changed. No acquisitions, no sales excepting the mentioned Trier sale closing. What has changed? When you look at the table on the left-hand side in the right column, you can see that the vacancy rate has dropped by almost one percentage point from 11.6% to 10.7% just by the Trier sale. But what is more important is that the WALT oscillates around five years as always. That shows you the quality of the properties as well. The tenants prolong their leases again and again, take their options. Yeah, so on the property portfolio side, I think everything is in a good order. Jump to page nine, which shows the tenant structure and the rent collection. I don't want to bore you at every presentation with the charts. But also here, the message is that everything is stable. Nothing much has changed. Two-thirds of rent collections is from non-cyclical rents. When you take into account DIY stores, then it's even 81%. Our biggest tenants or the most rent contribution comes from Schwarz, EDEKA, and so on, which are the most popular and creditworthy food retailers in Germany. So I think also here, everything is fine and stable. The property portfolio runs well. Quickly jump into page 12, which shows you how the market is valuing the property portfolio. When you start here at the right-hand side, at current share price level of around EUR 3.30, then on a fully diluted basis, that's a market cap of around EUR 165 million. When you add up the net debt outstanding, then you have a total portfolio value of around EUR 770 million. This is an intrinsic gross rental yield of around 11% given the low-risk profile of the property portfolio. I guess that's very poor valuation. But of course, we have to do some homework on the bond side before. Afterwards, once we have found a solution here, I guess the low-risk profile should be recognized also in this valuation of the property portfolio then again. Finally, I would like to jump to page 14, which shows the financing structure, as always, of the portfolio. Also here, the message is nothing much has changed yet. The total financial debt, when you look at the left-hand side at the top in the table, total financial debt has decreased a little bit by regular debt amortizations by around EUR 5 million. Total debt costs have slightly increased. As I mentioned, LTV is around 60%. And what happened was at the end of January that we were facing downgrading by Scope Ratings at a senior secured debt from double B to B and on a senior unsecured debt from double B minus to double C. This is a logical consequence of the fact that the maturing of the bonds is coming closer. We didn't have presented a solution here. But as you can read in the last Scope Ratings report, once we have addressed the bond refinancing, the rating should be upgraded quickly again. I think that's it, what I can tell you here. I think we are now open to taking questions in the Q&A session. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use only handsets when asking your question. Anyone who has a question may press star and 1 at this time. The first question comes from the line of Kai Klose with Berenberg. Please go ahead. Yes, good morning. I've got a few questions, if I may. The first one, you mentioned that you had in the rental income some contribution from CPI adjustments. Could you specify what was the amount in percentage terms? The second question is on the potential sale of selective assets. Could you quantify a little bit what kind of volume we are talking about or you're considering to sell? And the last question would be on the debt expiry in this year, the EUR 10 million promissory notes and the EUR 33 million bank loans. What are your plans here regarding the extension? Hi, good morning, Kai. Regarding the CPI increases, I must admit, I cannot give you a firm number. But it's always in the range of around 1.5%-2% year-over-year because in the last quarters, we have already did a lot of rental increases by CPIs. And I guess we now have run through the portfolio at a high extent. So the potential is coming down to do more rental increases in the next quarters. So that's why I guess this number comes down a little bit. Regarding sales volume, I would like to hand over to Alexander Kroth. But I guess we are very open-minded here. So we don't want to do any fire sales or don't want to sell a high amount of properties. But of course, I hand over to Alexander Kroth. Sorry. Well, good morning, everybody. Thank you for the question. Well, so we receive a lot of inquiries regarding our portfolio and our assets. And that varies from single assets to small packages to larger portfolios or share of the portfolio. But however, we are very selective. And we only want to sell whenever it's really accretive to us and whenever it helps our cause. So that's why it's hard to say right now as the market is still very cautious and very slow-going regarding transactions. So it's hard to say the exact volume that we are actually talking about. At this point, we can't really define which transactions are really worth mentioning or really worth considering as there are still a lot of factors that can impact the transaction proceedings. Also for us, of course, we will always look at the restructuring of the bond, which is right now our main concern. Only transactions which really help our cause, also in maybe restructuring the bond of some sort, are currently considered or really taken into focus. Unfortunately, also at this point, I can't really say something about the exact volume of the sales proceedings. Excellent. Regarding your third question, Kai, about the debt expiries, I guess, first of all, we have to find a solution about the maturing bonds we have mentioned. And afterwards, I guess all the other loans will be refinanced then afterwards. I think a part of that has to be repaid. But another bigger part, a larger part, can be refinanced or prolonged with banks because we are talking here about secured classic mortgage loans. And I guess once we have found a solution here with the bondholder, then the normal refinancing processes will restart again. And that's why we are also confident to refinance it then in a normal way. Thank you. Maybe just a very quick follow-up regarding sales. Of course, I can understand that you're currently in negotiations. But could you indicate to which extent disposals are kind of imperative to get the bond extension negotiated? Well, the sales are not really necessary for our discussions with the bond. Of course, it would help of some sort if we would sell specific assets which we could use. However, it doesn't. Not as necessity. And it's not part of our negotiations with the bondholder. So those are different processes. And also, that's why it's for us, of course, not the situation that we have to sell any assets. And that's why we are very cautious or we are in discussions. However, we are not letting ourselves be pressurized into sales, of course, because we know that our portfolio is very stable. We have a very, very good operating portfolio. And that's why we will only sell assets whenever, as I said, whenever it's really accretive for us and whenever it helps our cause. Thank you. Sure. The next question comes from the line of Manfred Gridl with Gridl Asset Management. Please go ahead. Can you hear me? Yes. Yes. Okay. Thank you. So it's a little bit regarding the similar topic you just discussed. Now, the two loans that you are renegotiating right now, you are currently paying approximately 2.1% on average for these loans. It's EUR 106 million. So I would say the market price for a loan like this is minimum 8% right now interest rate. So that would mean you would need to pay an additional EUR 6 million minimum in interest rate. And then you have the other EUR 40 million or EUR 43 million you need to refinance as well, which probably are also at a much lower rate than what the market price is today. So when you manage to refinance everything successfully, the additional debt cost would probably be anywhere between EUR 7 million-EUR 8 million, which is about the FFO, right? And then next year comes another EUR 150 million excluding the convertible. I don't really see how this is going to add up in a positive way for the shareholders. Okay. Thanks, Mr. Gridl. Let me answer this way. Of course, we want to reduce our debt. And what we are talking about is to prolong for a certain amount of time, which is short-term. And when we are able to do that and sell, of course, a higher quick payout, I would doubt that it's 8% at the moment. And 8% sorry, I hear an echo. Maybe you can go on mute if that's better. Yeah, I would say it's around 6%. And this is on a yearly basis. So the FFO of EUR 8 million was just for the first quarter. And what we want to do is to reduce that refinancing unencumbered properties we have with normal mortgage loans we take. And these mortgage loans are much cheaper than unsecured debt, of course. Maybe that we will have a jump in the average interest costs in the meantime. But once we have refinanced unencumbered properties, then we can gradually repay unsecured bonds. And overall, we can then get into the average market conditions for secured debt then again. Is there also a negotiation that the lender might swap from a loan into stocks that they say, "Well, we would rather like to get equity because the upside is much higher than when we take another loan"? Is that discussed as well? No. Okay. Thank you. Welcome. The next question comes from the line of [inaudible] Please go ahead. Thank you, gentlemen. Two questions from my side. One question on the P&L, on your rental revenues. First quarter rental revenues have been EUR 19.9 million. That's EUR 1 million less than in the fourth quarter. Maybe you can elaborate a bit on that, how that retreat in rental revenue comes? Yeah. Morning, Mr. Martin. Thanks for your question. Of course, there were two main reasons for that because one reason is that we have two locations where the anchor tenant is real, which has gone insolvent. And they have not paid rent anymore from November. And this had an effect here. So we haven't taken that out of the rental income. And another reason was also that we had some turnover-based rents in the prior quarter where we have billed to the tenants some more turnover-based rents additionally when we have received their turnover figures. And therefore, Q4 is also a little bit higher than the others. So these are the main reasons. Okay. Understood. Thanks. My second question would be a bit on the market, on your assets, mainly supermarkets, but also DIYs. Maybe you can share your observations of the market with us. So what's your impression on the demand-supply situation in your markets? What does that mean for prices and yields and rents in the assets that you have in your portfolio? So maybe I take over there. Also, thank you for the question. Well, in general, we are seeing that the market for our asset class is very stable, also coming from the corona times where the whole market, in general, was under pressure. We right now see a lot of or we have a lot of discussions with tenants who want to extend again, who want to also relet and also lease new vacant spaces. So we are always in or we are, in general, in very good discussions with our tenants. So this is rather positive for us. As you mentioned, the DIY sector, there, we are seeing a little bit of yeah, I wouldn't say pressure. But in general, they had not such a good year in 2023, which is not related to corona or any market specifics. It's rather because of the weather conditions, which have been very, very wet in the last season as far as we were told. So that's why, in general, the DIY market was not performing as well as it was supposed to be or as the DIY sector as such estimated. However, yeah, this is rather a weather situation, which didn't have really something to do with the market conditions or the market developments. So we are hoping for them. We are hoping for a better or nicer springtime that they will have their turnovers or their sales back to normal. But in general, also there, we are rather stable. And we are also there in good discussions regarding extensions of leases and so forth. So it's a rather positive situation that we are seeing. Okay. I see. So then maybe you're in a better position than, for example, your colleagues in residential because there, the transaction market is really dried up. Do you think the market in your assets is a bit more easy or more liquid? Let me put it like that. Well, definitely because that was our idea why we wanted to establish the company and why we wanted to focus our portfolio on this kind of retail, on retail for everyday use. So yeah, there, as we are always saying, it's anti-cyclical. And also during corona, it was performing very well. So yeah, we can't see any distress facing this sector of the real estate market, which is quite positive. Also, what we have to mention at this point, also our cyclical tenants that we have are rather not really found in the cyclical segment, as we want to put it, because as we have seen, for example, also for textile tenants that we have in our portfolio, they have rather better revenues, which is caused because they're rather textile discounters and not so much in the normal retail sector. Also there, we are actually in rather positive discussions with the tenants. That's just a side note. Okay. Okay. Thank you very much. Sure. As a reminder, if you wish to register for a question, please press star and 1 on your telephone. Ladies and gentlemen, there are no further questions. I would now like to turn the conference back over to Christian Hellmuth for any closing remarks. Thank you, everybody, for your time and interest. So if you have further questions, just write us an email or give us a call. We are around. And yeah, wish you a good day. See you all. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.